The SBTi is a joint initiative of CDP, the UN Global Compact, the World Resources Institute (WRI), and WWF. It defines clear standards for how companies should reduce their greenhouse gas (GHG) emissions in line with the 1.5-degree target of the Paris Climate Agreement. The SBTi provides an internationally recognized framework for credible and verifiable decarbonization of companies. 

The Corporate Sustainability Reporting Directive (CSRD) does not explicitly require the use of SBTi but does call for alignment with a 1.5-degree-compatible reduction pathway as part of the Climate Transition Plan (CTP). As a result, the SBTi is increasingly becoming the standard. Many companies also require their suppliers to set their own targets in line with SBTi guidelines. This “supplier engagement” mechanism reinforces the trend toward scientifically based climate targets along the entire value chain.

The SBTi follows a clear five-step process for implementation: 

• Registration: The company officially registers on the SBTi services platform, thereby initiating the target-setting process. 
• Commitment: It publicly commits to developing science-based climate targets. 
• Develop targets: Based on its corporate carbon footprint (CCF) and defined parameters such as base year, scope, and target type, the company defines specific reduction targets for Scope 1+2 and Scope 3 (if relevant). 
• Submit & validate: The targets are submitted to the SBTi for validation and checked for compliance with the 1.5-degree or “well below 2-degree” (WB2°C) pathway. 
• Communicate & report: After successful validation, the company publishes its targets and reports regularly on progress. 

Companies can decide whether to set only near-term targets (5-10 years from year of submission) or also net-zero targets (by 2050). The latter are subject to stricter requirements in terms of data, target setting, and validation. The SBTi expects companies to have already identified significant measures for reducing emissions. 

Before companies define climate targets, they need a reliable carbon baseline (corporate carbon footprint, CCF). The SBTi checks the quality of the data basis and the selected system boundaries. Only a validated CCF enables a well-founded target calculation. The SBTi often asks detailed validation questions, particularly in Scope 3. Among other things, it checks the completeness of emission sources, system, and balance boundaries, GHG Protocol compliance, traceability, and data quality.  

To set objectives, companies must define several key parameters: 

• Base year: This should be as recent as possible, ideally no more than two to three years old, to ensure relevance and data quality.  
• Target year: For near-term targets, this may be no more than ten years after the year of submission. The year 2030 is often chosen, as it is also central to the CSRD context. 
• Ambition level: For Scope 1+2, the 1.5-degree pathway is mandatory, which requires a 42 percent reduction in emissions by 2030. For Scope 3, at least WB2°C (25 percent reduction by 2030) applies. A 1.5-degree pathway with a reduction of 42 percent by 2030 is also possible, but more ambitious. With a target year after 2030, the ambition increases accordingly. 
• Target type (Scope 3): Companies can choose between absolute targets and intensity targets. The latter relate emissions to an economic indicator, the “value added,” such as gross profit. 
• Scope 3 coverage: According to the current SBTi standard, 67 percent of Scope 3 emissions must be included in the target definition. Certain categories may be excluded. However, this limit is to be raised to 90 percent from 2030 (current draft of the SBTi new net-zero standard). Companies should take this into account now to avoid re-validation in 2030. 
• Optional targets: In Scope 1+2, companies can additionally define a target for the use of renewable energies (“Renewable Energy Target”). In Scope 3, a “Supplier Engagement Target” is possible. 

The choice between absolute and intensity-based targets is crucial for many companies. Absolute targets reduce overall emissions regardless of growth. They are considered robust, easy to communicate, and directly effective. They offer planning security, also regarding the CTP and necessary measures. However, strong growth makes it more difficult to achieve these targets, as absolute emissions usually rise with output. 

Intensity targets, on the other hand, scale with company performance, for instance in the form of emissions per euro of value-added and allow for flexibility in growth. However, they are more volatile, less transparent, and their climate impact is often indirect. In cases of strong growth, intensity targets can be more advantageous (more realistic to achieve), as absolute reductions are hardly achievable. In such cases, the SBTi allows absolute emissions to rise temporarily despite intensity reductions. In the long term, however, this can make it more difficult to stay on a net-zero path. 

The following figure shows how absolute and intensity-based targets differ and how much the corresponding absolute reduction in targets is from the base year to the target year. Depending on the growth scenario, absolute or intensity targets are easier to achieve (here it is assumed that a company aims to define ambitious but achievable climate targets). Specifically, the example shows that, starting from a growth rate of 5.6 percent per annum until the target year, an intensity-based target would be easier to achieve than an absolute WB2°C-scenario. Below this break-even point, an intensity-based target would mean a greater absolute reduction than an absolute WB2°C-target for the target year 2030. In this case, an absolute target would be recommended. In this example, absolute emissions rise from a growth rate of approximately 8 percent per annum despite a reduction in intensity until the target year. 

Before companies finally submit their climate targets, they should at least check their feasibility using a Climate Transition Plan (CTP) Light. This includes measures, assessments, and key levers for all emission areas (Scope 1-3). This is the only way to ensure that the ambitious targets are achievable. An SBTi target without concrete measures remains lip service. The CTP therefore forms the foundation for systematic implementation – with clear measures, budgets, milestones, and risk assessment. 

Recommendations for companies 

When SBTi becomes relevant for companies, they should keep the following points in mind:  

• Consider SBTi and CTP processes together: Set goals and check if they are ambitious but also feasible at the same time. 
• Critically evaluate target types: Absolute targets are usually more credible, while intensity targets may be more appropriate in cases of robust growth. A scenario analysis can help with the decision. 
• Use optional targets: Additional targets such as renewable energies or supplier engagement broaden the scope of the climate strategy and can enable additional functions. 
• Check baseline logic: Evaluate alternatives for base years – the chosen baseline should be realistic and compatible with internal control processes. 
• Ensure data quality: Only consistent, traceable CCF is accepted by the SBTi. Calculations may need to be adjusted to ensure comparability and transparency. 

SBTi targets are not a mandatory exercise in ESG reporting, but rather an expression of strategic responsibility. Combined with a solid climate transition plan, they become a key lever for decarbonization. Companies that combine science-based targets with realistic measures today are not only ensuring regulatory compliance. They are also securing a clear competitive advantage in an increasingly climate-conscious economy, where the costs of GHG emissions will rise in the long term. 

Jonas, C.