Science-Based Targets Explained

Key Takeaways

• Science-based targets are corporate greenhouse gas reduction goals aligned with the Paris Agreement’s aim to limit global warming to well below 2°C, ideally 1.5°C.
• The Science Based Targets initiative (SBTi) provides a framework for setting targets and independently validates them to ensure credibility.
• Companies adopting science-based targets commit to reducing emissions across their operations and value chains, driving innovation and long-term resilience.
• Setting science-based targets helps businesses manage climate risks, meet stakeholder expectations, and contribute to the global transition to a low-carbon economy.

What Is Science-Based Targets Explained?

A science-based target (SBT) is a corporate greenhouse gas (GHG) emissions reduction goal that is consistent with the level of decarbonization required to keep global temperature increase below 2°C compared to pre-industrial temperatures, as defined by the Paris Agreement. In essence, it is a target that aligns a company’s climate action with what the latest climate science deems necessary to avoid the worst impacts of climate change. The concept is operationalized by the Science Based Targets initiative (SBTi), a collaboration between CDP, the United Nations Global Compact, World Resources Institute (WRI), and the World Wide Fund for Nature (WWF), which defines best practices, provides technical guidance, and independently assesses and approves corporate targets.

Science-based targets differ from arbitrary emissions reduction goals because they are grounded in climate science and the global carbon budget—the finite amount of greenhouse gases that can be emitted while still having a likely chance of limiting warming to a specific temperature threshold. By setting a science-based target, a company commits to a measurable, time-bound reduction pathway that is consistent with the global effort to achieve net-zero emissions by mid-century. This approach provides a clear and credible framework for corporate climate action, moving beyond voluntary, incremental improvements to transformative change.

Overview

The Science Based Targets initiative was established in 2015, the same year the Paris Agreement was adopted, to encourage and guide companies in setting ambitious emissions reduction targets. The SBTi defines a science-based target as one that covers a company’s Scope 1 (direct) and Scope 2 (indirect from purchased energy) emissions at a minimum, and often Scope 3 (value chain) emissions if they are significant. Targets must be set for a timeframe of 5 to 15 years and must align with either a 2°C pathway or, increasingly, a 1.5°C pathway, which requires deeper and faster reductions.

The initiative has grown rapidly, with thousands of companies across sectors and regions committing to set science-based targets. The SBTi also develops sector-specific guidance for high-emitting industries such as oil and gas, power generation, and transport, recognizing that different sectors face unique challenges and opportunities in decarbonization. The framework is regularly updated to reflect the latest climate science, including the Intergovernmental Panel on Climate Change (IPCC) reports, ensuring that targets remain aligned with the most current understanding of the required emissions trajectory.

How It Works

The process of setting a science-based target typically follows a structured pathway. First, a company signs a commitment letter indicating its intention to set a science-based target. It then has a defined period (usually 24 months) to develop a target that meets the SBTi’s criteria. The target must cover all relevant emissions scopes and be based on one of the approved methodologies, such as the absolute contraction approach (reducing total emissions by a fixed percentage each year) or the sectoral decarbonization approach (SDA), which allocates the global carbon budget to specific sectors based on their share of emissions and growth projections.

Once the target is developed, the company submits it to the SBTi for validation. The SBTi’s technical team assesses the target against its criteria, which include ambition (alignment with 2°C or 1.5°C), boundary (coverage of emissions), timeframe, and reporting requirements. If approved, the target is published on the SBTi website and the company is listed as “committed” or “targets set.” Companies are expected to report their emissions annually and progress against the target, and the SBTi may require revalidation if the target is significantly changed or if the underlying methodology is updated.

For Scope 3 emissions, which often represent the largest share of a company’s carbon footprint, the SBTi requires that if they account for more than 40% of total emissions, a target must be set. This can be an absolute reduction target or an engagement target, where the company commits to having a certain percentage of its suppliers set their own science-based targets. The SBTi also provides guidance on the use of carbon credits: offsets are not counted toward near-term science-based targets, as the focus is on direct emission reductions within the value chain.

Importance and Impact

Science-based targets are a critical tool for aligning corporate action with global climate goals. By providing a standardized, science-driven benchmark, they help ensure that company commitments are not merely symbolic but are sufficient to contribute to the systemic change needed. The widespread adoption of SBTs can accelerate the transition to a low-carbon economy by sending strong market signals, driving innovation in clean technologies, and shifting investment away from carbon-intensive activities.

For individual companies, setting a science-based target can enhance reputation, build trust with stakeholders, and provide a clear strategic direction. It helps businesses anticipate and manage climate-related risks, such as regulatory changes, physical impacts, and shifts in consumer preferences. Moreover, companies with SBTs often report benefits such as improved operational efficiency, reduced energy costs, and increased investor confidence, as the targets demonstrate a proactive approach to long-term sustainability.

Benefits, Limitations and Trade-offs

Benefits: Science-based targets offer several advantages. They provide credibility and differentiation in a marketplace where greenwashing is a concern. They help companies stay ahead of evolving climate regulations and avoid stranded assets. They can also drive innovation by forcing a rethinking of products, processes, and business models. Additionally, SBTs are increasingly expected by investors, customers, and employees, making them a competitive necessity in many industries.

Limitations: Despite their strengths, science-based targets face challenges. Data availability and quality for Scope 3 emissions can be poor, making it difficult to set accurate targets. The cost of implementation, particularly for small and medium-sized enterprises (SMEs), can be high. The SBTi’s sector-specific guidance is still under development for some industries, leaving gaps. Furthermore, the initiative’s criteria may evolve, requiring companies to update their targets, which can create uncertainty.

Trade-offs: Pursuing a science-based target may involve short-term financial costs, such as investments in new technologies or changes to supply chains, which can affect profitability. There is also a trade-off between the depth of emission cuts and the reliance on carbon removals or offsets, which are not permitted for near-term targets but may be needed for residual emissions in net-zero strategies. Balancing ambition with feasibility is a constant challenge, especially for companies in hard-to-abate sectors.

Common Misconceptions

What Businesses and Governments Can Do

Businesses: Companies can start by committing to the SBTi and assessing their emissions footprint. They should engage leadership, set a clear internal carbon price, and develop a roadmap for decarbonization that includes energy efficiency, renewable energy procurement, and supply chain engagement. Publicly reporting progress and integrating climate considerations into corporate governance are essential steps. For SMEs, the SBTi offers a simplified process that reduces the administrative burden.

Governments: Policymakers can support the adoption of science-based targets by creating an enabling environment. This includes implementing carbon pricing, strengthening emissions reporting mandates, and providing incentives for clean technology. Governments can also align their own national climate targets (Nationally Determined Contributions) with the same science-based principles, and they can encourage or require large companies to set SBTs as part of climate disclosure regulations. Public procurement policies can favor companies with validated targets, further driving market transformation.