SBTi CORPORATE
NET-ZERO STANDARD
Version 1.2
March 2024
ABOUT SBTi
The Science Based Targets initiative (SBTi) is a corporate climate action organization that
enables companies and financial institutions worldwide to play their part in combating the
climate crisis.
We develop standards, tools and guidance which allow companies to set greenhouse gas
(GHG) emissions reductions targets in line with what is needed to keep global heating below
catastrophic levels and reach net-zero by 2050 at latest.
The SBTi is incorporated as a charity, with a subsidiary which will host our target validation
services. Our partners are CDP, the United Nations Global Compact, the We Mean Business
Coalition, the World Resources Institute (WRI), and the World Wide Fund for Nature (WWF).
Science Based Targets Initiative is a registered charity in England and Wales (1205768) and a limited company registered in England and Wales (14960097). Registered
address: First Floor, 10 Queen Street Place, London, England, EC4R 1BE. SBTI Services Limited is a limited company registered in England and Wales (15181058).
Registered address: First Floor, 10 Queen Street Place, London, England, EC4R 1BE. SBTI Services Limited is a wholly owned subsidiary of Science Based Targets
Initiative. © SBTi 2024
DISCLAIMER
Although reasonable care was taken in the preparation of this document, the Science Based
Targets initiative (SBTi) affirms that the document is provided without warranty, either
expressed or implied, of accuracy, completeness or fitness for purpose. The SBTi hereby
further disclaims any liability, direct or indirect, for damages or loss relating to the use of this
document to the fullest extent permitted by law.
The information (including data) contained in the document is not intended to constitute or
form the basis of any advice (financial or otherwise). The SBTi does not accept any liability
for any claim or loss arising from any use of or reliance on any data or information in the
document.
This document is protected by copyright. Information or material from this document may be
reproduced only in unaltered form for personal, non-commercial use. All other rights are
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reproduction permitted in accordance with the Copyright Act shall acknowledge this
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information.
The SBTi reserves the right to revise this document according to a set revision schedule or
as advisable to reflect the most recent emissions scenarios, regulatory, legal or scientific
developments, and GHG accounting best practices.
“Science Based Targets initiative” and “SBTi” refer to the Science Based Targets initiative, a
private company registered in England number 14960097 and registered as a UK Charity
number 1205768.
© SBTi 2024
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 3
VERSION HISTORY
Version
Update description
Release date
Effective dates
1.0 Corporate
Net-Zero
Standard
28 October
2021
28 October 2021
to 10 April 2023
1.1 Corporate
Net-Zero
Standard
Non-substantive revision. For a detailed list
of revisions made in V1.1, please refer to
Annex I of the Main Changes document for
V1.2 of the Corporate Net Zero Standard.
11 April 2023
From 11 April
2023 to 12 March
2024
1.2 Corporate
Net-Zero
Standard
Non-substantive revision. Relevant elements
of the Target Validation Protocol and
Corporate Manual (both retired) have been
consolidated into this version of the
Corporate Net-Zero Standard. For a detailed
list of revisions made in V1.2, please refer to
Table 1 of the Main Changes document for
V1.2 of the Corporate Net Zero Standard.
13 March
2024
From 13 March
2024
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 4
CONTENTS
ABOUT SBTi........................................................................................................................... 2
DISCLAIMER...........................................................................................................................3
VERSION HISTORY................................................................................................................ 4
CONTENTS............................................................................................................................. 5
GLOSSARY............................................................................................................................. 8
1. BACKGROUND TO THE CORPORATE NET-ZERO STANDARD..................................... 8
1.1 The Science Based Targets initiative........................................................................... 8
1.2 Purpose of the Corporate Net-Zero Standard.............................................................. 9
1.3 Who should use the Corporate Net-Zero Standard?....................................................9
1.4 The Corporate Net-Zero Standard Development process............................................9
1.5 How the Standard relates to other key SBTi documents............................................10
2. THE NET-ZERO STANDARD FRAMEWORK...................................................................12
2.1 Near-term science-based targets...............................................................................14
2.2 Long-term science-based targets...............................................................................14
2.3 Neutralization............................................................................................................. 14
2.4 Beyond value chain mitigation....................................................................................14
3. MITIGATION PATHWAYS IN THE NET-ZERO STANDARD.............................................16
3.1 The science behind science-based net-zero targets..................................................16
3.2 How mitigation pathways are used to inform science-based targets......................... 17
3.3 Overview of pathways and which companies should use them................................. 18
3.4 Transformative mitigation is required from all sectors................................................19
4. PROCESS TO SET SCIENCE-BASED TARGETS........................................................... 21
4.1 Select a base year......................................................................................................21
4.2 Calculate your company’s emissions......................................................................... 22
4.2.1 Develop a full GHG emissions inventory...........................................................22
4.2.2 Calculate emissions reported separately from the GHG inventory................... 24
4.3 Set target boundaries.................................................................................................24
4.3.1 Near-term science-based target boundary (scopes 1, 2, and 3)....................... 24
4.3.2 Long-term science-based target boundary (scopes 1, 2, and 3).......................24
4.3.3 Additional requirements for science-based target coverage............................. 25
4.3.4 Meeting SBTi boundary criteria with several targets......................................... 27
4.3.5 Setting a single scope 3 target or multiple scope 3 targets...............................27
4.4 Choose a target year..................................................................................................28
4.5 Target setting methods...............................................................................................29
4.6 Calculating near and long-term SBTs.........................................................................29
4.7 Target wording and communication............................................................................32
4.7.1 Overarching net-zero target.............................................................................. 32
4.7.2 Near-term and long-term science-based target wording................................... 33
4.7.3 Communicating targets..................................................................................... 33
5. THE CORPORATE NET-ZERO STANDARD CRITERIA AND RECOMMENDATIONS... 34
5.1 Background to the Corporate Net-Zero Standard Criteria..........................................34
5.1.1 Terminology.......................................................................................................34
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 5
5.1.2 Effective dates of updated criteria..................................................................... 35
5.2 General criteria...........................................................................................................35
5.2.1 Target boundary................................................................................................ 35
5.2.1.1 Organizational boundary.......................................................................... 35
5.2.1.2 GHG coverage..........................................................................................35
5.2.1.3 Scope coverage........................................................................................35
5.2.1.4 Emissions coverage................................................................................. 35
5.2.2 Method validity (near and long-term targets).....................................................36
5.2.3 Emissions accounting requirements..................................................................36
5.3 Net-zero target formulation.........................................................................................38
5.3.1 Net-zero definition............................................................................................. 38
5.3.2 Structure............................................................................................................38
5.3.3 Timeframe......................................................................................................... 38
5.3.4 Ambition............................................................................................................ 39
5.3.4.1 Scope 1 and 2 (near- and long-term targets)........................................... 39
5.3.4.2 Scope 3 (near- and long-term targets)..................................................... 39
5.3.4.3 Combined targets (near- and long-term targets)...................................... 40
5.3.4.4 Renewable electricity targets (near- and long-term targets).....................40
5.3.5 Beyond value chain mitigation...........................................................................41
5.3.6 Neutralization.................................................................................................... 41
5.3.7 Target formulation..............................................................................................41
5.4 Reporting, recalculation and target validity................................................................ 42
5.4.1 Reporting...........................................................................................................42
5.4.2 Recalculation and target validity........................................................................42
5.5 Sector-specific guidance............................................................................................ 43
5.5.1 Fossil fuel sales, distribution, and other business............................................. 43
6. SECTOR-SPECIFIC REQUIREMENTS.............................................................................45
7. ACKNOWLEDGEMENTS..................................................................................................52
ANNEX A: SUPPLEMENTARY GUIDANCE ON GHG ACCOUNTING................................54
ANNEX B: SUPPLEMENTARY GUIDANCE ON TARGET-SETTING METHODS............... 59
B.1 Cross-sector absolute reduction (all scopes).............................................................59
B.2 Sector-specific absolute reduction (all scopes)..........................................................59
B.3 Sector-specific intensity convergence (i.e., SDA, all scopes)....................................60
B.4 Renewable electricity (scope 2).................................................................................61
B.5 Physical intensity reduction (scope 3)........................................................................62
B.6 Economic intensity reduction (scope 3)..................................................................... 63
B.7 Supplier and/or customer engagement targets (scope 3)..........................................64
ANNEX C: CLASSIFICATION OF TARGET TEMPERATURE ALIGNMENT.......................65
C.1 Target classification rules...........................................................................................65
ANNEX D: REPORTING GUIDANCE................................................................................... 67
D.1 Where to disclose...................................................................................................... 67
D.2 Reporting guiding principles...................................................................................... 68
D.3 GHG emissions inventory..........................................................................................69
D.3.1 Full GHG inventory........................................................................................... 69
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 6
D.3.2 Data limitations................................................................................................. 69
D.3.3 Verification of GHG inventory........................................................................... 69
D.3.4 Worked example: GHG emissions inventory.................................................... 70
D.4 Target description...................................................................................................... 72
D.4.1 Description of the target....................................................................................72
D.4.2 Different levels of ambition by scope and/or activity.........................................73
D.4.3 Exclusions from emissions inventory and/or target boundary.......................... 73
D.4.4 Worked example: Target description.................................................................73
D.5 Target progress..........................................................................................................74
D.5.1 Progress in the reporting year.......................................................................... 74
D.5.2 Level of disaggregation.....................................................................................75
D.5.3 Worked example: Target progress....................................................................76
D.6 Substantial emission variations and changes in targets............................................77
D.6.1 Base year recalculation policy and threshold................................................... 77
D.6.2 Reasons for variation in emissions................................................................... 78
D.6.3 Worked example: substantial emission variations and changes in targets.......79
D.6.3 Recalculated and revalidated targets............................................................... 79
D.7 Actions towards meeting SBTs.................................................................................. 79
D.7.1 Information on emission reduction projects...................................................... 79
D.7.2 Information on contractual instruments (for scope 2 targets)........................... 80
D.7.3 Decarbonization pathway................................................................................. 80
D.7.4 Planned milestones and/or near-term investments for neutralization...............80
D.7.5 Planned actions or investments to mitigate climate change beyond your value
chain...........................................................................................................................80
D.7.6 Use of carbon offset credits and avoided (product-level) emissions.................81
D.7.7 Climate transition plan...................................................................................... 81
D.7.8 Worked example: actions towards meeting SBTs.............................................82
ANNEX E: GUIDANCE FOR COMPANIES IN LAND-INTENSIVE SECTORS.....................85
E.1 Background on FLAG emissions............................................................................... 85
E.2 SBTi FLAG Guidance................................................................................................ 85
E.3 Greenhouse Gas Protocol Land Sector and Removals Guidance.............................86
E.4 Which companies are required to set FLAG targets?................................................86
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 7
GLOSSARY
Terms, definitions and acronyms used within this document can be found in the SBTi
Glossary.
1. BACKGROUND TO THE CORPORATE NET-ZERO
STANDARD
The Intergovernmental Panel on Climate Change’s (IPCC) Special Report on Global
Warming of 1.5°C (SR15, 2018), was widely accepted as a warning that we must limit global
temperature rise to 1.5°C above pre-industrial levels and reach net-zero carbon dioxide
(CO
2
) emissions by 2050 for the best chance of avoiding catastrophic climate breakdown.
More recently, the IPCC’s Sixth Assessment Report (2021) has confirmed that climate
change is already affecting every region on Earth, its impacts increasingly visible in the form
of extreme weather, worsened droughts and heightened risk of forest fires.
Against this backdrop, companies are increasingly adopting net-zero targets. The number of
businesses committing to reach net-zero emissions has grown rapidly, but not all net-zero
targets are equal. Without adhering to a common definition, net-zero targets can be
inconsistent, and their collective impact is strongly limited.
While the growing interest in net-zero targets represents an unparalleled opportunity to drive
corporate climate action, it has also created a pressing need for a common understanding of
‘net-zero’ in a corporate context. Business leaders need a robust, science-based framework
for setting net-zero targets. Otherwise, they risk continuing to invest in business models that
are inconsistent with the goals of the Paris Agreement.
The Science Based Targets initiative (SBTi) developed the first global science-based
standard for companies to set net-zero targets, published in 2021. The SBTi Corporate
Net-Zero Standard gives business leaders confidence that their greenhouse gas (GHG)
mitigation targets are aligned with what is needed for a habitable planet, and it provides
clarity on business climate action to a wide range of stakeholders.
1.1 The Science Based Targets initiative
The Science Based Targets initiative (SBTi) is a corporate climate action organization that
enables companies and financial institutions worldwide to play their part in combating the
climate crisis.
We develop standards, tools and guidance which allow companies to set greenhouse gas
(GHG) emissions reductions targets in line with what is needed to keep global heating below
catastrophic levels and reach net-zero by 2050 at latest.
The SBTi is incorporated as a charity, with a subsidiary which will host our target validation
services. Our partners are CDP, the United Nations Global Compact, the We Mean Business
Coalition, the World Resources Institute (WRI), and the World Wide Fund for Nature (WWF).
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 8
1.2 Purpose of the Corporate Net-Zero Standard
The SBTi’s Corporate Net-Zero Standard (also referred to as the ‘Net-Zero Standard’)
contains guidance, criteria, and recommendations to support corporates in setting net-zero
targets to be validated by the SBTi. The main objective of this standard is to provide a
consistent and robust approach for corporates to set net-zero targets aligned with climate
science.
It is important to note that while the SBTi does provide some supplementary guidance on
GHG accounting, companies should refer to the suite of corporate Greenhouse Gas Protocol
standards on this topic.
1.3 Who should use the Corporate Net-Zero Standard?
The intended audience for this document is companies that wish to commit to setting and
submitting science-based net-zero targets for validation through the SBTi. This document
does not cover net-zero targets for financial institutions. The SBTi is developing a separate
Net-Zero Standard for Financial Institutions.
Small and medium-sized enterprises (SMEs) have the option to set targets using the
Corporate Net-Zero Standard or the streamlined SME route (where some of the details
contained within this document are not applicable). SMEs should refer to the SME definition
and the SME FAQ for more information.
Please note that the Corporate Net-Zero Standard should and in some cases must (e.g., for
companies with forest, land and agriculture activities) be complemented with SBTi sector
guidance whenever the sector and/or activity covered by the sector guidance is relevant to
the company. For example, a company with aviation, maritime, and financial services
activities is encouraged to set separate sector-specific targets for each of the activities
relevant to them based on SBTi sector guidance.
1.4 The Corporate Net-Zero Standard Development process
The SBTi initiated a scoping phase of work in 2019 to develop a framework enabling
companies to set robust and credible net-zero targets in line with a 1.5°C future. The
standard development process formally began after the SBTi’s publication of Foundations for
Science-Based Net-Zero Target Setting in the Corporate Sector in September 2020. After
publication, the SBTi convened a dedicated Net-Zero Expert Advisory Group (EAG), which
was to be the main consensus building body for the project.
The SBTi then developed detailed criteria and guidance in regular consultation with the EAG,
as well as the SBTi’s Scientific and Technical Advisory Groups. The SBTi requested
feedback from stakeholders to improve the standard through two public consultations and a
company road test. The standard was launched on 28 October 2021. Further detail on this
process can be found on the SBTi website.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 9
Figure 1. An outline of key milestones in the Corporate Net-Zero Standard development
process.
1.5 How the Standard relates to other key SBTi documents
The table below describes some of the key SBTi resources companies may find useful when
going through the target setting process. All resources, including translations, can be found
on the Resources and the Corporate Net-Zero Standard sections of the SBTi website.
Table 1. A mapping of key SBTi resources that companies should refer to when setting
science-based net-zero targets.
Topic
Document
Description
Target
commitments
Commitment Letter
Companies wishing to set targets through the SBTi – both for near-term and
net-zero commitments – should complete and submit the commitment letter.
Background and
technical
resources
Foundations for
Science-Based Net-Zero
Target Setting in the
Corporate Sector
This paper lays out the conceptual foundations for credible, science-based net-zero
targets for the corporate sector.
Pathways to Net-Zero:
SBTi Technical
Summary
Produced in collaboration with more than a dozen pioneering academics, IPCC
lead authors and mitigation experts, this technical summary provides an overview
of how the SBTi selected mitigation pathways to steer action.
Above and Beyond: An
SBTi report on the
design and
implementation of
beyond value chain
mitigation (BVCM)
This report provides suggestions to support the BVCM recommendation (R9)
included within the Corporate Net-Zero Standard. Its purpose is to support
companies in the design and implementation of BVCM strategies to accelerate
progress towards global net-zero.
Raising the Bar: An
SBTi report on
accelerating corporate
adoption of beyond
value chain mitigation
(BVCM)
This report draws upon SBTi research to consider both the barriers that limit private
sector adoption of BVCM, as well as the positive incentives that have the potential
to accelerate adoption. Based on the research findings, this report provides
recommendations for different actors, offering a shared vision and “theory of
change” for scaling corporate climate finance into BVCM over the coming decades.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 10
SBTi Glossary
This document provides a list of terms, definitions, and acronyms used within all
SBTi technical resources, including the Corporate Net-Zero Standard.
Setting targets
Getting Started Guide
for Science-Based
Target Setting
A simple, step-by-step flowchart helping companies understand how to set
science-based targets in their specific situation.
Corporate Net-Zero
Standard
This document, providing guidance, criteria, and recommendations to support
corporates in setting net-zero targets through the SBTi. The Corporate Net-Zero
Standard criteria, with which companies must conform to achieve validation, are
set out in Chapter 7 of this document.
Corporate Net-Zero
Standard Criteria
The criteria companies' net-zero targets must conform to to achieve validation. This
is a standalone version of chapter 7 of this document.
Corporate Net-Zero Tool
Target-setting tool to calculate long-term science-based targets in line with the
Corporate Net-Zero Standard.
Corporate Near-Term
Criteria
The criteria companies must meet to have their near-term targets approved as
science-based by the SBTi. These criteria are also included within this document.
Corporate Near-Term
Tool
Target-setting tool to calculate near-term science-based targets in line with the
Corporate Near-Term Criteria and the Corporate Net-Zero Standard criteria (for the
near-term element).
Engaging Supply Chains
on the Decarbonization
Journey: A Guide to
Developing and
Achieving Scope 3
Supplier Engagement
Targets
Guidance for companies that are considering or are already implementing their
SBTi scope 3 supplier engagement targets. Also relevant for companies that are
interested in exploring different supplier engagement tactics to address scope 3
emissions reduction.
SME Streamlined Target
Validation Route
SMEs have the option to use a streamlined process to set targets in line with
climate science for both near-term and net-zero targets. This route enables SMEs
to bypass the initial step of committing to set a science-based target and the
regular target validation process and to immediately set near-term science-based
targets for scope 1 and 2 emissions, and, optionally, net-zero targets by choosing
from one of several predefined target options.
Procedure for Validation
of SBTi Targets
This document provides a detailed explanation of the SBTi target validation
procedure. This is to be used in conjunction with other key resources.
Criteria Assessment
Indicators
The Criteria Assessment Indicators provide verifiable control points which will be
evaluated during the target validation process. Conformity with these indicators
determines companies’ compliance with the SBTi Standard(s) under which they are
submitting targets.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 11
2. THE NET-ZERO STANDARD FRAMEWORK
As described in more detail in Foundations for Science-Based Net-Zero Target Setting in the
Corporate Sector, there are many different transition pathways to help achieve global
net-zero emissions, each with different implications for our climate, nature and society.
Considering these implications, the Corporate Net-Zero Standard was developed with the
intention of guiding corporates towards a state of net-zero in a way that is consistent with
societal climate and sustainability goals and within the biophysical limits of the planet.
To reach a state of net-zero at the corporate level, companies must deeply reduce emissions
and counterbalance the impact of any emissions that remain. The SBTi Net-Zero Standard
defines corporate net-zero as:
● Reducing scope 1, 2, and 3 emissions to zero or a residual level consistent with
reaching net-zero emissions at the global or sector level in eligible 1.5°C-aligned
pathways; and
● Permanently neutralizing any residual emissions at the net-zero target year and
any GHG emissions released into the atmosphere thereafter.
To contribute to societal net-zero goals, companies are strongly encouraged to go further
than their science-based abatement targets to mitigate emissions beyond their value chains
(known as “beyond value chain mitigation”).
The Corporate Net-Zero Standard sets out four key elements that make up a corporate
net-zero target as depicted in Figure 2:
● Near-term science-based target
● Long-term science-based target
● Neutralization of any residual emissions
● Beyond value chain mitigation (BVCM).
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 12
Figure 2. Key elements of the Corporate Net-Zero Standard.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 13
2.1 Near-term science-based targets
What: These are 5-10 year GHG mitigation targets in line with 1.5°C pathways.
1
When
companies reach their near-term target date, they must calculate new near-term
science-based targets to serve as milestones on the path towards reaching their long-term
science-based target.
Why: Near-term targets galvanize the action required for significant emissions reductions to
be achieved by around 2030. Near-term emissions reductions are critical to not exceeding
the global emissions budget and are not interchangeable with long-term targets.
2
2.2 Long-term science-based targets
What: These targets show companies how much they must reduce value chain emissions to
align with reaching net-zero at the global or sector level in eligible 1.5°C pathways by 2050
or sooner.
Why: Long-term targets drive economy-wide alignment and long-term business planning to
reach the level of global emissions reductions needed to meet climate goals based on
science.
2.3 Neutralization
What: Measures companies take to remove carbon from the atmosphere and permanently
store it, counterbalancing the impact of emissions that remain unabated after the long-term
science-based target is achieved. Emissions that were excluded from the long-term target
boundary and GHG emissions inventory must also be neutralized.
Why: Although most companies will reduce emissions by at least 90% through their
long-term science-based targets, not all companies will be able to achieve complete
decarbonization and therefore some residual emissions may remain. These emissions must
be neutralized to reach net-zero emissions and a state of no impact on the climate from
GHG emissions.
A company cannot claim to have reached net-zero until the long-term science-based
target for all scopes is achieved and the company has neutralized residual emissions.
2.4 Beyond value chain mitigation
What: Mitigation action or investments that fall outside of a company’s value chain. This
includes activities that avoid or reduce GHG emissions, and those that remove and store
GHGs from the atmosphere.
Why: The climate and ecological crises require bold and decisive action from companies.
Decarbonizing a company’s value chain in line with science and reaching net-zero emissions
by 2050 is increasingly becoming the minimum societal expectation for companies.
Businesses can play a critical role in accelerating the net-zero transition and addressing the
ecological crisis by investing in mitigation action beyond their value chains. Additional
2
Despite this, if a company sets a long-term science-based target to reach the level of decarbonization required
to reach net-zero at a global or sectoral level in 1.5°C pathways within a 10 year timeframe, the long-term
science-based target is not required.
1
Since July 2022, the SBTi has required near-term targets covering scope 1 and 2 emissions to be aligned with
1.5°C pathways and scope 3 targets to be aligned with well-below 2°C pathways.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 14
investments like these could help increase the likelihood the global community stays within a
1.5˚C carbon budget but are not a substitute for the rapid and deep reduction of a company’s
own value chain emissions.
Please see the Beyond Value Chain Mitigation page on our website, the “Above and
Beyond: An SBTi report on the design and implementation of beyond value chain mitigation”
report and the “Raising the Bar: An SBTi report on accelerating corporate adoption of
beyond value chain mitigation (BVCM)” report for more information and guidance.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 15
3. MITIGATION PATHWAYS IN THE NET-ZERO
STANDARD
Through the Paris Agreement, parties and signatories committed to “holding the increase in
global average temperature to well below 2°C above pre-industrial levels and pursuing
efforts to limit the temperature increase to 1.5°C above pre-industrial levels.”
In the years since the Paris Agreement was signed, the need to limit warming to 1.5°C has
become even stronger. Against the backdrop of increasingly frequent and destructive
climate-related disasters, the IPCC’s SR15 report delivered a harrowing scientific
consensus: while impacts to human health, society, and nature associated with 1.5°C of
warming are worse than previously acknowledged, the risks associated with exceeding
1.5°C are far higher. To mitigate these risks, SR15 highlighted pathways that limit warming to
1.5°C with no or limited overshoot (overshoot <0.1°C).
3.1 The science behind science-based net-zero targets
As described in SR15, scenarios that limit warming to 1.5°C with no or limited overshoot
reach net-zero CO
2
emissions around 2050, accompanied by rapid reductions in non-CO
2
GHG emissions. These scenarios entail profound transitions in the global energy, industry,
urban and land systems that involve:
● Full or near-full decarbonization for energy and industrial CO
2
emissions achieving
a zero-emissions energy supply system by mid-century.
● Eliminating CO
2
emissions associated with agriculture, forestry, and land-use.
● Deep reductions in non-CO
2
emissions from all sectors.
● Removing CO
2
from the atmosphere to neutralize residual emissions and,
potentially, sustain net negative emissions that reduce cumulative CO
2
in the
atmosphere over time.
The different system transformations in 1.5°C mitigation scenarios occur simultaneously and
all of them are needed for society to reach net-zero emissions and limit warming to 1.5°C.
An understanding of the synergies and trade-offs between different climate change
mitigation scenarios and sustainable development should inform climate action.
Pathways used by the SBTi aim to steer voluntary climate action and contribute to achieving
the 1.5°C objective of the Paris Agreement and the Sustainable Development Goals (SDGs),
reaching net-zero CO
2
emissions at the global level by 2050 and net-zero GHG emissions in
2050 or later.
3
In aggregate, 1.5°C-aligned pathways used by the SBTi stay within a 500
gigatonne carbon budget under the assumption of about 20-40 gigatonnes of cumulative
CO
2
removal by 2050.
For a detailed overview of how the SBTi determines 1.5°C-aligned pathways for calculating
SBTs, please see Pathways to Net-Zero: SBTi Technical Summary.
3
Energy efficiency improvements, infrastructural innovation, and phasing-out fossil fuels—characteristic of IPCC
“low energy demand” scenarios—can help meet the 1.5°C goal with the fewest adverse impacts. The IPCC
states with high confidence that low energy demand scenarios have the most pronounced synergies with
sustainable development and the SDGs (IPCC SR15, Summary for Policymakers D.4.2). They also reduce
dependence on CO
2
removal, which can pose risks to biodiversity, food security, water resources and human
rights.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 16
3.2 How mitigation pathways are used to inform science-based targets
Mitigation pathways play a key role in setting science-based targets. For near-term
science-based targets, mitigation pathways inform the rate of emissions reductions or
emissions intensity reductions that are needed. For long-term science-based targets, they
inform the overall emissions reduction or convergence intensity that must be reached to be
aligned with net-zero at the global or sector level.
Because of this, near-term science-based targets are target year dependent, while long-term
science-based targets are target year independent. This means that a company’s reduction
target will differ depending on the target year for its near-term targets, but the reduction
target will not differ depending on the target year for its long-term targets. This is illustrated
in Figure 3 below. Because of this, companies will model long-term targets, and then set
their net-zero and long-term target date depending on when they aim to achieve the required
emissions reductions. Companies can select a target year of 2050 or earlier for long-term
targets, which depends on how quickly it aims to reduce its emissions.
Figure 3. Graph showing target year dependency of near-term science-based targets in
comparison to the target year independency of long-term science-based targets.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 17
Box 1. How are residual emissions determined for different sectors of the economy?
Residual emissions levels are grounded in what is needed to achieve net-zero CO
2
emissions at the global
level by 2050, limit warming to 1.5°C, and contribute to achieving the SDGs. In pathways used by the SBTi,
residual emissions at the cross-sector level reflect the 2020-2050 emissions reduction needed. At the
sector level, residual emissions reflect a sector-specific 2020-2050 emissions reduction or a 2050
convergence emissions intensity (except for the power and maritime transport sectors which use 2040
instead of 2050 due to an earlier net-zero year). The same pathways are used to calculate near-term SBTs
and residual emissions levels for long-term SBTs and together they:
1. Stay within the remaining carbon budget for a 50% likelihood of limiting warming to 1.5°C.
2. Reduce energy and industrial process CO
2
and methane (CH
4
) emissions by an amount roughly
consistent with the International Energy Agency’s (IEA) Net-Zero Emissions (NZE) scenario.
3. Mitigate forest, land and agriculture (FLAG) sector GHG emissions by an amount consistent with
the detailed land-sector roadmap Contribution of the land sector to a 1.5°C world (Roe et al., 2019).
4. Reach global net-zero CO
2
emissions by 2050, assuming at least low/medium CO
2
removal (1-4
gigatonne CO
2
/year), and net-zero GHG emissions in 2050 or later, depending on CO
2
removal
levels and different mitigation choices across pathways.
To meet these conditions, an economy-wide emissions reduction of at least 90% by 2050 from a 2020 base
year informs the level of residual emissions for most companies, as shown by the cross-sector pathway.
The IEA’s NZE scenario, which reduces energy and industrial process CO
2
emissions 95% between 2020
and 2050, has been an important reference for this calculation; but ultimately, SBTi’s approach to
developing the cross-sector pathway was holistic, building from an expansive body of literature and iterative
development with the SBTi’s Scientific Advisory Group. For more information on the cross-sector pathway
and sector-specific pathways used by the SBTi, please see the SBTi’s Technical Summary on Pathways to
Net-Zero.
3.3 Overview of pathways and which companies should use them
The SBTi offers a cross-sector pathway and sector-specific pathways for setting
science-based targets. Companies in the power generation sector and the FLAG sectors are
required to set SBTs using sector-specific pathways. Other companies can choose to use
either the cross-sector pathway or, if available, sector-specific pathways. Please see Table 4
in this document for further information on eligible pathways for each sector or activity.
Using the cross-sector pathway, companies can set near-term targets that reduce emissions
at a linear annual rate that is base year dependent. For scope 1 and 2 targets, if the base
year is on or before 2020, companies need to, at a minimum, reduce absolute emissions at
an annual linear reduction rate of 4.2% over the target period.
4
If the base year is after 2020,
companies will need to reduce at a higher rate that is at least the same amount overall as
targets with a 2020 base year and is consistent with limiting warming to 1.5°C. For example,
if a company is setting an absolute scope 1 and 2 target with a base year of 2022 and a
target year of 2030, the minimum linear reduction over the target period is 42% over the 8
4
The SBTi’s modeled pathways outline the minimum ambition required to meet a given temperature scenario.
Companies are encouraged to set targets that are more ambitious than the minimum required reduction.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 18
year period, and the minimum annual reduction is 5.25%.
5
Please refer to the Corporate
Near-Term Tool for further details. Some sector-specific pathways vary significantly from the
cross-sector pathway in the near-term, requiring steeper or more gradual emissions
reductions depending on the sector. Please refer to each applicable sector guidance for
details.
In the long-term, emissions in the cross-sector pathway are reduced by at least 90% and
most sector-specific pathways also reduce CO
2
emissions by 90% or more from 2020 levels.
Consequently, long-term science-based targets will be equivalent to at least a 90% absolute
reduction across scopes for many companies, regardless of whether the cross-sector
pathway or sector-specific pathways are used. For details on the eligible pathway and
methods for each sector, please refer to Table 4 in this document and the Getting Started
Guide for Science-based Target Setting.
Companies in heavy-emitting sectors often use sector-specific pathways to calculate both
near-term and long-term intensity targets. Other companies with scope 3 emissions from
heavy-emitting sector activities often use a mix of approaches to calculate targets. For
example, a real estate development company may have significant scope 3 emissions
attributed to both the steel and cement sectors. When setting targets that cover upstream
scope 3 emissions, these companies may use a sector-specific pathway to set intensity
targets as long as the pathway reflects both supply-side and demand-side mitigation where
relevant (see sector-specific guidance for more information). Companies are encouraged to
use the cross-sector pathway and reduce emissions on an absolute basis if emissions can
be mitigated by reducing demand for these products and services.
6
3.4 Transformative mitigation is required from all sectors
The figures below (4a and 4b) show the ambition of the cross-sector pathway and
sector-specific pathways used to calculate near-term and long-term SBTs. Figure 4a shows
the cross-sector and sector-specific long-term SBTs included in the Corporate Net-Zero
Standard. At the company level, absolute targets are based on the sector’s 2020-2050
absolute emissions reduction (orange bars and data labels), and intensity targets are based
on the 2050 convergence intensity (data labels only). For the power sector and maritime
transport sector, long-term SBTs are calculated based on 2040 instead of 2050 due to an
earlier net-zero year. Blue bars show the 2020-2050 sector average intensity reduction,
which may differ from company targets. Figure 4b shows sector-specific intensity pathways
(2020-2050) for the different sectors.
Companies – except those in the power generation or FLAG sectors – can generally opt to
use the cross-sector pathway. Please see Table 4 for details. Companies with activities in
sectors where emissions are reduced more in the sector-specific pathway (e.g., buildings,
6
For example, a consultancy company should not set intensity targets on its aviation transport emissions
because they have other means to reduce these emissions from the demand-side, e.g. reduce air travel.
5
In December 2021, the SBTi released guidance on base year adjustment calculations for companies with base
years in 2021 or later. This is due to the fact that the linear annual reduction (LAR) requirements for temperature
classifications (e.g., absolute 4.2% LAR for 1.5°C temperature classification and 2.5% LAR for well-below 2°C
temperature classification) were based on carbon budgets that were assigned in 2020. For that reason, for
companies that have a base year in 2021 or later, the SBTi requires the minimum ambition to be based on the
equation: % LAR x (Target year-2020). This equation accounts for the shortfall in emissions reductions relative to
the carbon budget modeled in 2020. This base year adjustment has been incorporated into the latest version of
the tool and criteria.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 19
cement, and steel) can still use the cross-sector pathway for two main reasons: (1) the
difference is small (<10% of base year emissions) and (2) companies are required to
neutralize unabated emissions regardless, which aims to counteract the impact of any
residual emissions and incentivize continued abatement once net-zero is reached.
Figure 4a (on the left): Cross-sector and sector-specific long-term SBTs included in the
Corporate Net-Zero Standard.
Figure 4b (on the right): Sector-specific intensity pathways (2020-2050) for different sectors.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 20
4. PROCESS TO SET SCIENCE-BASED TARGETS
Companies can take a variety of approaches to developing near-term and long-term
science-based targets; however, the SBTi recommends following the five steps described in
this section.
Figure 5. The SBTi recommends a five-step approach to setting science-based targets.
4.1 Select a base year
Companies need to establish a base year to track emissions performance consistently and
meaningfully over the target period. The following considerations are important for selecting
a base year:
1. Scope 1, 2, and 3 emissions data should be accurate and verifiable.
2. Base year emissions should be representative of a company’s typical GHG profile.
7
3. The base year must be no earlier than 2015.
4. Companies that have already set near-term science-based targets must use the
same base year for their long-term science-based target.
5. If more than one target is set, companies should use the same base year for all
targets within the target timeframe.
8
6. Scope 1 and scope 2 targets must use the same base year.
7. Scope 3 targets are recommended but not required to use the same base year as
scope 1 and scope 2 targets. For example, if scope 3 data is exceptionally difficult to
obtain or if the company has a historical scope 1 and 2 base year, it is permissible
that scope 1 and 2 targets use a different base year from scope 3 targets.
8. Base years across different scope 3 targets must be the same.
9. The SBTi does not accept multi-year average base years, unless this is specified in
the sector-guidance relevant to the company.
Various factors including, but not limited to, mergers, divestments, business function change,
and geographical implications may necessitate recalculations of the base year inventory
(and of the targets set) to ensure continued relevance and alignment to the GHG Protocol
8
This best practice is most applicable to emission reduction targets, i.e., absolute and intensity targets.
Companies’ renewable electricity, supplier engagement and customer engagement targets may and sometimes
must have different target years than emission reduction targets.
7
Companies must provide all the relevant GHG inventory data including a most recent year GHG inventory. For
submissions in 2024, a recent year inventory must be provided that is no earlier than 2022 i.e., allowable most
recent years are 2022 and 2023.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 21
Corporate Standard GHG accounting requirements and SBTi requirements. See Annex D of
this document ‘Reporting Guidance’ for further information.
4.2 Calculate your company’s emissions
4.2.1 Develop a full GHG emissions inventory
Companies are required to have a comprehensive emissions inventory that covers at least
95% of company-wide scope 1 and 2 GHG emissions and includes a complete scope 3
inventory.
9
The following points are important for aligning with the GHG Protocol Corporate
Standard and SBTi criteria.
Data quality: Companies should select data that is the most complete, reliable, and
representative in terms of technology, time, and geography. Companies should collect
high-quality primary data from suppliers and other value chain partners for scope 3 activities
deemed most relevant and targeted for GHG reductions. Secondary data is permissible but it
is better suited for scope 3 categories that are not significant in magnitude as it limits a
company’s ability to track performance. Please refer to Chapter 7 of the GHG Protocol
Corporate Value Chain (Scope 3) Standard for further guidance on data quality issues.
Ensure the target boundary is aligned with the GHG inventory boundary: A company
must select a single consolidation approach as outlined in the GHG Protocol Corporate
Standard (operational control, financial control or equity share) to (i) determine its
organizational boundary, (ii) calculate its GHG emissions inventory and (iii) define its
science-based target boundaries.
10
The organizational boundary should align with the
company’s financial reporting. Both the emissions inventory and target boundary must cover
all seven GHGs or classes of GHGs covered by the United Nations Framework Convention
on Climate Change (UNFCCC) and Kyoto Protocol, namely: carbon dioxide (CO
2
), methane
(CH
4
), nitrous oxide (N
2
O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur
hexafluoride (SF
6
), and nitrogen trifluoride (NF
3
).
For more information on organizational boundary setting, please see the GHG Protocol
Corporate Standard (WRI & WBCSD, 2004).
Determine how to treat complex business relationships (e.g., subsidiaries, joint
ventures, etc.): Complex business relationships can complicate how the GHG inventory and
thus the target boundary are drawn. The SBTi allows both parent companies and
subsidiaries to submit targets. Parent companies are required to include emissions from
subsidiary operations in their GHG inventory and target boundary according to the selected
consolidation approach, regardless of whether the subsidiary has approved SBTs. For more
information on subsidiaries, please see page 19 of the GHG Protocol Corporate Standard.
Include all mandatory scope 3 emissions: Companies must develop a complete scope 3
inventory based on the GHG Protocol Corporate Value Chain (Scope 3) Accounting and
Reporting Standard (WRI & WBCSD, 2011) and the Scope 3 Calculation Guidance. The
scope 3 inventory must include all relevant categories and all emissions sources categorized
as the minimum boundary in Table 5.4 (page 34) in the Scope 3 Standard. A complete scope
10
Using proxy data i.e., applying one reporting year's data to another reporting year is not permitted. For
example, a company may not apply base year emissions to the most recent year.
9
Exclusions in the GHG inventory and target boundary combined must not exceed 10% of total scope 3
emissions.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 22
3 inventory is critical for identifying emissions hotspots, reduction opportunities, and areas of
risk up and down the value chain.
Companies are expected to account for all scope 3 categories including downstream
emissions from intermediate products and services, where relevant. In the instance that a
company faces barriers to calculating emissions from one category of scope 3, the company
should demonstrate its best efforts to calculate these emissions, and this shall not preclude it
from providing reasonable estimates of emissions in other categories.
One approach to calculating scope 3 emissions is to first calculate a high-level screening
inventory that is typically based on secondary financial data. Many companies use a scope 3
screening tool as a first step in completing their scope 3 inventory. Over time, companies
should develop complete inventories and improve data quality, particularly for high-impact
categories (e.g., collect primary data from suppliers and other value chain partners), to better
track progress against targets. Emission factors must be representative of the corresponding
activities (i.e., country-specific emission factors should be used as a minimum) and the
potential uncertainty of the adopted average data should be clearly disclosed along with
planned actions to improve data quality over time. For more information on calculating a
scope 3 emissions inventory, please see the GHG Protocol’s Corporate Value Chain (Scope
3) Accounting and Reporting Standard. Several publications and calculation tools on the
GHG Protocol’s calculation tools and guidance page also offer help in calculating emissions
from various scope 3 categories.
Determine how to treat optional scope 3 emissions: Optional scope 3 emissions or
reductions are not counted towards the required target boundary for science-based targets
i.e., emissions within the “minimum boundary”.
11
Despite this, if companies have significant
optional scope 3 emissions and have levers to address them, they are encouraged to
calculate these emissions and set optional targets in addition to the mandatory scope 3
target(s).
More information on optional scope 3 emissions can be found in “Table 5.4 Description and
boundaries of scope 3 categories” in the GHG Protocol’s Corporate Value Chain (Scope 3)
Accounting and Reporting Standard.
Review relevant sector-specific guidance: For some sectors or activities, separate
sector-specific methodologies, frameworks, requirements, and tools apply. For more
information, visit the sector guidance webpage and please refer to Table 4 in this document.
Exclude the use of carbon credits: Carbon credits must be reported separately from the
GHG inventory and do not count as reductions toward meeting near-term or long-term
science-based targets. Carbon credits may only be considered as an option for neutralizing
residual emissions or to finance additional climate mitigation beyond their science-based
emission reduction targets.
Exclude avoided emissions: Companies are often interested in understanding the GHG
impacts of their products, relative to the situation where those products do not exist. Positive
impacts are commonly referred to as “avoided emissions”. Avoided emissions occur outside
of the product’s life cycle and therefore do not count as a reduction of a company’s scope 1,
11
For near-term science-based targets, companies must include 67% of mandatory scope 3 emissions, and for
long-term science-based targets companies must include 90% of mandatory scope 3 emissions. Optional
emissions do not count towards these thresholds.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 23
2 and 3 inventory. Please refer to the World Resources Institute’s paper on avoided
emissions for more information on avoided emissions.
4.2.2 Calculate emissions reported separately from the GHG inventory
Bioenergy: Companies that use bioenergy must report direct CO
2
emissions from biomass
combustion, processing, and distribution, as well as the land-use emissions and removals
associated with bioenergy feedstock. These emissions are reported separately from the
company’s GHG inventory, in line with Greenhouse Gas Protocol guidance.
Fossil fuels: Companies that sell, transmit or distribute fossil fuels are required to report the
use-phase emissions associated with those fossil fuels in scope 3 category 11 “use of sold
products” and cover the emissions from the combustion of the sold, transmitted, or
distributed fossil fuels with a target. For companies that transport or distribute, but do not
sell, fossil fuels, these emissions must be calculated and covered by a target but are
typically reported outside a company’s GHG inventory.
4.3 Set target boundaries
4.3.1 Near-term science-based target boundary (scopes 1, 2, and 3)
Near-term science-based targets must cover at least 95% of company-wide scope 1 and 2
emissions. When scope 3 emissions make up 40% or more of total emissions (scope 1, 2,
and 3 emissions), companies must set one or more emission reduction targets and/or
supplier or customer engagement targets that collectively cover(s) at least 67% of total
scope 3, considering the minimum boundary of each category in conformance with the GHG
Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard. Companies
in certain heavy-emitting sectors are required to include specific emissions sources or scope
3 categories in their science-based target boundary, please see Table 4 for a detailed list of
sector-specific requirements.
Using a scope 3 inventory, companies can identify which categories should be included in
the boundary of a scope 3 target(s) to meet the 67% threshold for near-term SBTs. The
relative importance of different scope 3 categories will vary by sector. Scope 3 categories
likely to be important (in terms of emissions magnitude) for companies in specific sectors
include:
● Consumer packaged goods: purchased goods and services (category 1)
● Food processing: purchased goods and services (category 1)
● Logistics: upstream transportation and distribution (category 4)
● Automotive: use of sold products (category 11)
● Electronics: use of sold products (category 11)
● Gas distribution and retail: use of sold products (category 11)
● Chemicals: end of life treatment of sold products (category 12)
4.3.2 Long-term science-based target boundary (scopes 1, 2, and 3)
Long-term SBTs must cover at least 95% of company-wide scope 1 and 2 emissions and
90% of scope 3 emissions. See Box 2 for more information.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 24
Box 2. The ‘expansive boundary’ approach for scope 3
A comprehensive target boundary is necessary for companies to make credible net-zero claims. However,
acknowledging the challenges that companies encounter with scope 3, the Corporate Net-Zero Standard
follows an expansive boundary approach and a gradual increase in ambition.
In the near-term (5 to 10 years), a scope 3 target is required when a company's scope 3 emissions
represent more than 40% of their total emissions. Near-term scope 3 targets need to cover 67% of scope 3
emissions and align with well-below 2°C ambition at a minimum. For long-term targets, the target
boundary increases to cover all material sources of emissions in the value chain (materiality threshold of
90%), decarbonizing in line with 1.5°C scenarios.
Figure 6. A visual representation of the ‘expansive boundary’ approach the Corporate Net-Zero
Standard takes to scope 3 target boundaries.
Increasing scope 3 target boundary coverage from 67% for near-term SBTs to 90% for long-term SBTs may
be challenging, but it will drive major opportunities to collaborate across the value chain to support
suppliers and customers to decarbonize. Through the expansive boundary scope 3 approach from the near
to long-term, companies have time to work through the complexity of scope 3 and long-term scope 3
reductions, focusing on their most material emissions sources in the near-term.
4.3.3 Additional requirements for science-based target coverage
Bioenergy and fossil fuels: Companies using bioenergy must include direct CO
2
emissions
from biomass combustion, processing, and distribution, as well as the land-use emissions
and removals associated with bioenergy feedstock within their target boundary, even though
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 25
these emissions are reported outside a company’s GHG inventory. Similarly, companies
transporting or distributing fossil fuels must include use-phase emissions in their target
boundary, even though these emissions may not typically be reported in a company's GHG
inventory.
FLAG targets: The SBTi requires companies that meet either of the following two conditions
to set a FLAG specific target separate from their target(s) for other emissions:
● Companies from the following SBTi-designated sectors are required to set a FLAG
target: forest and paper products (forestry, timber, pulp and paper, rubber); food
production (agricultural production); food production (animal source); food and
beverage processing; food and staples retailing; and tobacco.
● Companies in any other sector with FLAG-related emissions that total more than
20% of overall emissions across scopes 1, 2, and 3. The 20% threshold should be
accounted for as gross emissions, not net emissions (gross minus removals).
Companies meeting either of the above conditions must include emissions from land-use
change (LUC) using either direct LUC or statistical LUC, as aligned with the Greenhouse
Gas Protocol’s draft Land Sector and Removals Guidance.
A summary of near-term and long-term science-based targets required coverage is shown in
Table 2.
Table 2. Minimum boundary coverage for near-term targets and long-term targets.
MINIMUM % BOUNDARY COVERAGE BY SCOPE
GHG inventory scope
Near-term targets
Long-term targets
Scopes 1 and 2
95% minimum coverage
Scope 3
67% minimum coverage (if
scope 3 emissions are at least
40% of total scope 1, 2 and 3
emissions)
90% minimum coverage (all
companies)
SPECIAL BOUNDARY COVERAGE REQUIREMENTS BY EMISSIONS SOURCE
Emissions source
Near-term targets
Long-term targets
Use-phase emissions from sold or
distributed fossil fuels
Must be covered by a separate absolute reduction target
Direct CO
2
emissions from
biomass combustion, processing
and distribution, as well as
land-use emissions and carbon
Must be included in target boundary
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 26
removals from bioenergy feedstock
Sector-specific target boundary
requirements
See Table 4 for a detailed list of sector-specific requirements
Biogenic emissions and removals
FLAG companies are required to account for land-related emissions
(gross biogenic land CO
2
emissions and removals). This includes all
emissions from direct land use change (LUC) and land management
(biogenic CO
2
, N
2
O and CH
4
) related to on-farm activities.
Companies with land emissions below the 20% FLAG threshold (as
per FLAG-C1) that choose not to set a separate FLAG target must
account for gross biogenic land emissions separately but include
these emissions in the traditional (non-FLAG) target boundary.
Removals shall not be used in this case.
Companies with bioenergy emissions in scopes 1, 2 and 3 are
required to account for the biogenic emissions as per the SBTi C11
criteria (non-FLAG) criteria. This includes all emissions from direct
land use change (LUC) and land management (biogenic CO
2
, N
2
O
and CH
4
) related to on-farm activities.
4.3.4 Meeting SBTi boundary criteria with several targets
Companies often set several targets that collectively meet the boundary requirements
described above. Companies may consider setting targets covering emissions from various
sectors or different scope 3 categories. This approach is valid to meet SBTi requirements.
4.3.5 Setting a single scope 3 target or multiple scope 3 targets
In addition to targets covering scope 1 and 2 emissions, companies can choose to set
multiple, category-specific targets or a single target covering all relevant scope 3 categories.
They may also choose to set a single target covering total scope 1, 2, and 3 emissions. Each
type of target boundary has advantages and disadvantages.
1) A single target for total scope 1, 2 and 3 emissions
Example: Company A commits to reduce absolute scope 1, 2 and 3 GHG emissions
55% by 2030 from a 2017 base year.
Advantages:
● May provide more comprehensive management of emissions across the
entire value chain.
● Simple to communicate to stakeholders.
● Does not require base year recalculation for shifting activities between
scopes (e.g., outsourcing).
Disadvantages:
● May provide less transparency for each scope 3 category’s emissions and
reporting on progress.
● Requires the same base year for the different scopes, which may be difficult if
scope 1 and 2 base years have already been established.
2) A single target for total scope 3 emissions
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 27
Example: Company B commits to reduce absolute scope 3 GHG emissions 60% by
2030 from a 2019 base year.
Advantages:
● May provide greater flexibility on how to achieve GHG reductions across all
scope 3 categories.
● Relatively simple to communicate to stakeholders.
Disadvantages:
● May provide less transparency for each scope 3 category’s emissions and
reporting on progress.
● May require base year recalculation for shifting activities between scopes
(e.g., outsourcing).
3) Separate targets for individual scope 3 categories
Example: Company C commits to reduce absolute scope 3 purchased goods and
services GHG emissions 50% by 2030 from a 2019 base year. Company C further
commits to reduce scope 3 business travel and employee commuting GHG
emissions 55% per employee within the same timeframe.
Advantages:
● Allows customization of targets for different scope 3 categories based on
different circumstances.
● Provides more transparency for each scope 3 category.
● Adjustments to other scope 3 categories outside the specific target boundary
would not trigger a target recalculation.
● Easier to track progress of specific activities.
Disadvantages:
● More complicated to communicate to stakeholders.
● May require base year recalculation for outsourcing or insourcing.
● May result in shifting of emissions to other scope 3 categories, unless those
categories also have their own targets.
4.4 Choose a target year
Near-term targets must have a target year 5-10 years from the date of submission to the
SBTi, while long-term targets must have a target year of 2050 or sooner (2040 for targets
using the power and maritime transport sector pathways).
12
Because the ambition of long-term science-based targets is target year independent,
companies should begin by choosing any eligible target year. Based on the results of their
target calculation, the company may adjust their chosen target year depending on its ability
to achieve its long-term target.
12
Companies using the maritime transport sector guidance and its associated sector-specific pathway cannot
have a target year for near-term targets before 2030.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 28
4.5 Target setting methods
Science-based target methods are used to calculate near-term and long-term targets based
on a mitigation pathway and company inputs. Companies may choose from the methods
described in Annex B.
13
When using SBTi tools and resources to model targets, companies should note that the
outputs are minimum requirements. Companies are encouraged to set targets that are more
ambitious than the minimum percentage reduction values resulting from the tool. In some
cases, the minimum target ambition output will vary by different methods for a given
company. This is due to the differences in target formulation and variation among the
acceptable reduction pathways. For example, the minimum ambition required for a sector by
the intensity convergence method (i.e., SDA) may require more or less emission reductions
than the absolute reduction rate. To support the global transition to net-zero and
demonstrate leadership, companies should screen the available methods and choose those
that lead to the earliest reductions and the least cumulative emissions.
Certain types of target setting methods are not permitted because of the difficulty in
establishing whether these targets result in the necessary reductions as they do not
transparently demonstrate changes in emissions performance. In particular, targets to
reduce emissions by a specified mass of GHGs (e.g., “to reduce emissions by 5 million
tonnes by 2030”). Please see Annex B for a list of permitted target-setting methods.
4.6 Calculating near and long-term SBTs
There are important differences when setting near-term and long-term science-based
targets, as summarized in Table 3 below.
When calculating near-term targets, target ambition depends on the chosen base year and
target year. When a company uses a base year later than 2020, a base year adjustment
must be applied to calculate near-term target ambition (see Table 7 in Annex C). Additionally,
for companies using a base year earlier than the most recent year, scope 1 and/or scope 2
targets must also have sufficient forward-looking ambition (FLA) (see Box 3 for an
explanation on FLA).
On the other hand, calculating long-term targets does not depend on the chosen target year.
Companies must either use the Corporate Net-Zero Tool to calculate long-term
science-based targets, or, in some cases the relevant sector-specific tool. For example,
companies with aviation, maritime and steel activities may also choose to use the respective
sector-specific tools to calculate their long-term science-based targets.
13
This section does not cover methods that are specific to financial institutions. Please refer to Table 4 in this
document and to the Financial Sector Science-Based Targets Guidance for information on methods for financial
institutions.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 29
Table 3. A comparison of boundary, ambition, timeframe, and methods between near and
long-term targets.
Boundary
Ambition
Timeframe
Methods
What
percentage is
required for
the emissions
inventory
coverage?
What is the
ambition
level of
limiting
temperature
rise?
What is the
timeframe to
meet targets?
What are the eligible methods to set
targets?
Near-term
SBTs
Scope 1
and 2
95%
1.5°C
5-10 years
14
Cross-sector absolute reduction
Sector-specific absolute reduction
Sector-specific intensity
convergence (i.e., SDA)
Renewable electricity
Scope 3
If >40% of
total
emissions,
67%
coverage
Well-below
2°C
Cross-sector absolute reduction
Sector-specific absolute reduction
Sector-specific intensity
convergence (i.e., SDA)
Supplier/customer engagement
Scope 3 economic intensity
reduction
Scope 3 physical intensity reduction
Long-term
SBTS
Scope 1
and 2
95%
1.5°C
2050 latest
(2040 for
the power
and
maritime
transport
sectors)
Cross-sector absolute reduction
Sector-specific absolute reduction
Sector-specific intensity
convergence (i.e., SDA)
Renewable electricity (maintenance
target)
Scope 3
90%
Cross-sector absolute reduction
Sector-specific absolute reduction
Sector-specific intensity
convergence (i.e., SDA)
Scope 3 economic intensity
reduction
Scope 3 physical intensity reduction
14
The maritime transport sector cannot have a target year for near-term targets before 2030.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 30
Box 3. Forward-looking ambition adjustment for near-term scope 1 and scope 2 SBTs
The forward-looking ambition (FLA) adjustment is an adjustment that must be applied to calculate the
ambition of near-term scope 1 and 2 absolute and intensity targets that do not use the most recent
reporting year as the base year. It is a mechanism that rewards early action and ensures targets drive
continued mitigation during a company’s transition to net-zero, consistent with the Corporate Net-Zero
Standard. The “FLA adjustment” prevents companies from setting targets that have already been
achieved and at the same time it allows them to count past emissions reductions toward achieving
near-term SBTs. This incentivizes companies to reduce their emissions as soon as possible and ensures
that there is a science-based minimum ambition requirement available for companies that have taken
early action.
The FLA adjustment only applies to companies that do not use the most recent year as a base year, and
is automatically applied by the Corporate Near-Term Tool. If a base year earlier than the most recent year
is chosen, the tool will calculate minimum target ambition requirements and apply the FLA adjustment
accordingly.
The FLA adjustment may be applied to scope 1 and 2 near-term targets that use the cross-sector
absolute reduction method, the sector-specific absolute reduction method, and the sector-specific
intensity convergence method.
For all these three methods, the FLA adjustment depends on the base year, the most recent year, target
year, and the magnitude of past emissions reductions, as described in the following formula:
Where:
RTD = Percentage reduction (%) to date expressed as the reduction between base year and most recent year.
NZA = Percentage reduction (%) required for reaching net zero in 2050 from the chosen target base year (90%).
A
0
= Minimum target ambition (%) based on the cross-sector absolute reduction or sector-specific absolute reduction
before FLA adjustment.
In the formula above, the maximum value, either the calculated adjustment value or 0, is taken as the
FLA adjustment. By taking the maximum value, companies with a negative calculated adjustment value
will not have a reduction in ambition since 0 will be the greater of the two values. This approach means
companies will not have an ambition decrease when their most recent year emissions are greater than
their base year emissions.
The FLA adjustment formula shown above is applied to each scope separately. This means that for
combined scope 1 and scope 2 targets, the FLA adjustment will be calculated independently for each
scope to determine the combined scope 1 and scope 2 ambition.
For the cross-sector absolute reduction and the sector-specific absolute reduction methods, the
FLA of near-term scope 1 and/or scope 2 targets must be consistent with reaching net-zero by 2050,
assuming a linear absolute reduction between the most recent year and 2050. The closer a company
gets to reducing emissions 90% from the base year by the most recent year, the less they need to further
reduce emissions from the most recent year onwards for an eligible near-term SBT.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 31
For the sector-specific intensity convergence method, the FLA of near-term scope 1 and/or scope 2
targets must be consistent with reaching net-zero by 2050, assuming a linear intensity reduction or
intensity convergence between the most recent year and 2050. There are two options for ensuring that
FLA meets SBTi requirements when using the sector-specific intensity convergence method:
● Option 1: The emissions intensity reduction between the most recent year and target year is
equal to or exceeds the linear intensity reduction rate between the most recent year and 2050. In
this case, the formula above applies.
● Option 2: The emissions intensity reduction between the most recent year and target year is
consistent with the ambition required from the sector-specific intensity convergence between the
most recent year and 2050. In some cases, the FLA adjustment with the sector-specific intensity
convergence method using the most recent year will require a larger reduction than calculated by
the sector-specific intensity convergence using base year data.
4.7 Target wording and communication
Finally, it is important to consider how the net-zero target and underlying target(s) can be
expressed clearly and succinctly. There are three components that make up net-zero target
wording:
● Overarching net-zero target
● Near-term science-based target
● Long-term science-based target
Figure 7. Net-zero target wording structure.
4.7.1 Overarching net-zero target
The company net-zero date is determined by the latest long-term SBT target date.
Companies can express their overarching net-zero targets as:
Company X commits to reach net-zero GHG emissions across the value chain by [insert latest
long-term SBT target date].
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 32
4.7.2 Near-term and long-term science-based target wording
Companies must include the near-term and long-term science-based target wording within
their overall net-zero target. Please refer to the Procedure for the Validation of SBTi Targets
for details.
4.7.3 Communicating targets
It is important that companies communicate accurately and effectively about their
commitments or approved science-based targets along all stages of the SBTi journey. More
information can be found in the Communications Guide for Companies and Financial
Institutions and the Procedure for Validation of SBTi Targets.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 33
5. THE CORPORATE NET-ZERO STANDARD
CRITERIA AND RECOMMENDATIONS
5.1 Background to the Corporate Net-Zero Standard Criteria
The SBTi Corporate Net-Zero Standard Criteria was developed through extensive
stakeholder consultation, in collaboration with the Net-Zero Expert Advisory Group. It
includes all criteria that must be met for net-zero target(s) to be validated by the Science
Based Targets initiative (SBTi) as well as recommendations which are important for
transparency and best practice. It is important to note that criteria and recommendations are
subject to change and may be updated.
Although this document contains all criteria for setting near-term science-based targets,
companies should refer to the Corporate Near-term Criteria V5.2 if they wish to set
science-based near-term targets only.
These criteria apply to companies not classified as financial institutions or small and
medium-sized enterprises (SMEs). Financial institutions must set targets using the Financial
Sector Science-based Targets Guidance. SMEs may use the SME validation route or the
regular validation route to set targets.
Companies must also follow the GHG Protocol Corporate Standard, Scope 2 Guidance, and
Corporate Value Chain (Scope 3) Accounting and Reporting Standard.
The SBTi Corporate Net-Zero Standard V1.2 should be read in conjunction with the
Procedure for Validation of SBTi Targets, which describes the underlying process followed to
assess targets, the Criteria Assessment Indicators for near-term and net-zero targets that
detail the indicators used to determine conformance and non-conformance with criteria, and
the SBTi Glossary, which lists the terms, definitions, and acronyms used in this document.
5.1.1 Terminology
This document explains the criteria, which are requirements that companies must follow,
and recommendations, which companies should follow, to align with the Corporate
Net-Zero Standard. Unless otherwise stated (including specific sections), all criteria apply
to scopes 1, 2, and 3.
This document uses precise language to indicate requirements, recommendations, and
allowable options that companies may choose to follow.
● The terms “shall” or “must” are used throughout this document to indicate what is
required for targets to be in conformance with the Corporate Net-Zero Standard.
● The term “should” is used to indicate a recommendation, but not a requirement.
● The term “may” is used to indicate an option that is permissible or allowable.
The terms “required” or “must” are used in the guidance to refer to requirements. “Can” and
“is encouraged” may be used to provide recommendations on implementing a requirement
or “cannot” may be used to indicate when an action is not possible.
The letter “C” preceding a number indicates a criterion and the letter “R” preceding a
number indicates a recommendation.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 34
5.1.2 Effective dates of updated criteria
The Corporate Net-Zero Standard Criteria version 1.2 will be in effect as of 13 March, 2024.
Revised criteria and recommendations are marked with an asterisk (*).
5.2 General criteria
5.2.1 Target boundary
5.2.1.1 Organizational boundary
*C1 – Organizational boundary: Companies should submit targets only at the parent- or
group level, not the subsidiary level. Parent companies shall include the emissions of all
subsidiaries in their target submission, in accordance with the boundary criteria.
15
In cases
where both parent companies and subsidiaries submit targets, the parent company’s target
must also include the emissions of the subsidiary if it falls within the parent company’s
emissions boundary given the chosen inventory consolidation approach.
16, 17
*R1 – Setting organizational boundaries: The SBTi strongly recommends that a company's
organizational boundary, as defined by the GHG Protocol Corporate Standard, is consistent
with the organizational boundary used in the company’s financial accounting and reporting
procedures. Companies should use the same organizational boundary year-on-year. If a
company’s organizational boundary changes, they should refer to C33 of this standard.
5.2.1.2 GHG coverage
*C2 – Greenhouse gasses: The targets shall cover all relevant emissions of the seven GHGs
required by the GHG Protocol Corporate Standard.
18
5.2.1.3 Scope coverage
*C3 – Scope 1 and scope 2: The targets shall cover company-wide scope 1 and scope 2
emissions, as defined by the GHG Protocol Corporate Standard.
19
*C4 – Scope 3: If a company’s relevant scope 3 emissions are 40% or more of total scope 1,
2, and 3 emissions, they shall be included in near-term science-based targets. All companies
involved in the sale or distribution of natural gas and/or other fossil fuels shall set separate
scope 3 targets for the use of sold products, irrespective of the share of these emissions
compared to total scope 1, 2, and 3 emissions of the company. All companies shall include
emissions from all relevant scope 3 categories in long-term science-based targets.
5.2.1.4 Emissions coverage
*C5 – Scope 1, 2, and 3 allowable exclusions: Companies shall not exclude more than 5% of
total combined scope 1 and scope 2 emissions from either the boundary of the GHG
19
* GHG accounting that is not proven to adhere to the GHG Protocol accounting standard and the SBTi criteria
assessment indicators will not be accepted by the SBTi.
18
The seven GHGs are carbon dioxide (CO
2
), methane (CH
4
), nitrous oxide (N
2
O), hydrofluorocarbons (HFCs),
perfluorocarbons (PFCs), sulfur hexafluoride (SF
6
), and nitrogen trifluoride (NF
3
).
17
* Companies must integrate emissions from their structural changes into their GHG inventory within a
reasonable timeframe.
16
* Brands, licensees, and/or specific regions or business divisions of a company will not be accepted as
separate targets, unless they fall outside of a parent company’s chosen consolidation approach.
15
* As outlined in C2 to C7.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 35
inventory or the target boundary.
20, 21
Companies shall not exclude more than 5% of
emissions from their total scope 3 GHG inventory.
22
Scope 3 target boundary requirements
are outlined in C6 and C7.
*C6 – Scope 3 emissions coverage for near-term targets: Companies shall set one or more
emission reduction near-term targets and/or supplier or customer engagement targets that
collectively cover(s) at least 67% of total reported and excluded scope 3 emissions
considering the minimum boundary of each scope 3 category in conformance with the GHG
Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard.
23
*C7 – Scope 3 emissions coverage for long-term targets: The boundary of long-term
science-based targets shall cover at least 90% of total scope 3 emissions considering the
minimum boundary of each category in conformance with the GHG Protocol Corporate Value
Chain (Scope 3) Accounting and Reporting Standard. Exclusions in the GHG inventory and
target boundary shall not exceed 10% of total scope 3 emissions.
*R2 – Targets covering optional scope 3 emissions: Targets to reduce scope 3 emissions
that fall outside the minimum boundary of scope 3 categories are not required but are
nevertheless encouraged when these emissions are significant. Companies may cover these
emissions with a scope 3 target, but such targets cannot count towards the thresholds
defined in C6 and C7 for scope 3 emissions (i.e., these targets are in addition to the
company’s required scope 3 targets). For a definition of optional emissions for each scope 3
category, please see Table 5.4 (page 34) of the GHG Protocol Corporate Value Chain
(Scope 3) Accounting and Reporting Standard.
5.2.2 Method validity (near and long-term targets)
C8 – Method validity: Targets must be modeled using the latest version of methods and tools
approved by the SBTi. Targets modeled using previous versions of the tools or methods may
only be submitted to the SBTi for validation within 6 months of the publication of the revised
method or sector-specific tools.
5.2.3 Emissions accounting requirements
C9 – Scope 2 accounting approach: Companies shall disclose whether they are using a
location- or market-based accounting approach as per the GHG Protocol Scope 2 Guidance
to calculate base year emissions and to track performance against a science-based target.
The GHG Protocol requires measuring and reporting scope 2 emissions using both
approaches. However, a single and consistent approach must be used for setting and
23
* GHG accounting that is not proven to adhere to the GHG Protocol minimum boundaries and the SBTi criteria
assessment indicators will not be accepted by the SBTi.
22
The SBTi does not recognize emissions perceived to be “negligible” as a rationale for not reporting them. Even
if emissions from certain activities or operations are perceived to be negligible, these emissions still must be
quantified and reported in the reporting company’s GHG inventory or disclosed as an exclusion.
21
Where a company’s scope 1 or 2 emissions are deemed immaterial (i.e., under 5% of total combined scope 1
and 2 emissions), companies may set their SBT solely on the scope (either scope 1 or scope 2) that covers more
than 95% of the total scope 1 and 2 emissions. The company shall continue to report on both scopes and adjust
their targets as needed, according to the GHG Protocol’s principle of completeness, and as per C32 and C33.
20
* The total targeted scope 1 and 2 emissions shall be greater than or equal to 95% of total (reported +
excluded) scope 1 and 2 emissions. This means that a company shall not exclude 5% from the inventory
boundary and then also exclude a further 5% from the target boundary.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 36
tracking progress toward a SBT (e.g., using location-based approach for both target setting
and progress tracking).
*C10 – Scope 3 inventory: Companies shall complete a scope 3 inventory covering gross
scope 3 emissions for all its relevant emissions sources according to the GHG Protocol
Corporate Value Chain (Scope 3) Accounting and Reporting Standard.
24, 25
*C11 – Bioenergy accounting: CO
2
emissions from the combustion, processing and
distribution phase of bioenergy – as well as the land-based emissions and removals
associated with bioenergy feedstocks – shall be reported alongside a company’s GHG
inventory.
26
Furthermore, these emissions shall be included in the target boundary when
setting a science-based target (in scopes 1, 2 and/or 3, as required) and when reporting
progress against that target.
27
Land-based emissions accounting shall include CO
2
emissions from direct land use change
(LUC) and non-LUC emissions, inclusive of N
2
O and CH
4
emissions from land use
management. Including emissions associated with indirect LUC is optional.
Companies are expected to adhere to any additional GHG Protocol Guidance on bioenergy
accounting when released to maintain conformity with C11.
C12 – Carbon credits: The use of carbon credits must not be counted as emission
reductions toward the progress of companies’ near-term or long-term science-based targets.
Carbon credits may only be considered as an option for neutralizing residual emissions (see
C28) or to finance additional climate mitigation beyond their science-based emission
reduction targets (see R9).
C13 – Avoided emissions: Avoided emissions fall under a separate accounting system from
corporate inventories and do not count toward near-term or long-term science-based
emission reduction targets.
R3 – Biofuel certification: The SBTi recommends that companies using or producing biofuels
for transport should support their bioenergy GHG accounting with recognized biofuels
27
* Please note that companies that use/produce or have bioenergy within their value chain or intend to account
for bioenergy as a decarbonization lever over the lifetime of their target must include the following bioenergy
footnote in their target language: “*The target boundary includes land-related emissions and removals from
bioenergy feedstocks”.
26
* Negative emissions due to biogenic removals shall not be accounted for in a company’s target formulation or
as progress towards science-based targets. In addition, removals that are not directly associated with bioenergy
feedstock production are not accepted to count as progress towards science-based targets or to net emissions in
a company’s GHG inventory.
25
* Companies may use the Partnership for Carbon Accounting Financials (PCAF) Global GHG Accounting and
Reporting Standard for the Financial Industry to calculate financed emissions. However, emissions beyond the
minimum requirements of the Greenhouse Gas Protocol for Scope 3 Category 15 Investments as per Table 5.9
(page 52) of the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard shall not
count towards the mandatory boundary for scope 3 targets (see C6 and C7). Companies may, however, set
optional targets on these emissions (see R2).
24
* To determine relevance of scope 3 activities for inclusion in the target boundary, companies will be assessed
against minimum boundary in Table 5.4 and using the criteria in Table 6.1 of the GHG Protocol Corporate Value
Chain (Scope 3) Accounting and Reporting Standard. Please note that, although beyond the minimum boundary,
all transport-related emissions across all sectors must be reported on a well-to-wheel (WTW) basis in companies’
GHG inventories (well-to-wake for aviation and maritime transport). All use-phase emissions from third-party
distributed fossil fuels must be reported in scope 3 category 11 for all companies engaged in this type of
distribution activity.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 37
certification(s) to disclose that the data on land-related emissions and removals represents
the relevant biofuel feedstock production.
R4 – Bioenergy data reporting: The SBTi recommends that companies report direct biogenic
CO
2
emissions and removals from bioenergy separately. Emissions and CO
2
removals
associated with bioenergy shall be reported as net emissions, according to C11, at a
minimum. However, companies are encouraged to report gross emissions and gross
removals from bioenergy feedstocks.
5.3 Net-zero target formulation
5.3.1 Net-zero definition
C14 – State of net-zero emissions: Companies shall set one or more targets to reach a state
of net-zero emissions, which involves: (a) reducing scope 1, 2 and 3 emissions to zero or a
residual level consistent with reaching net-zero emissions at the global or sector level in
eligible 1.5°C scenarios or sector pathways and (b) neutralizing any residual emissions at
the net-zero target date – and any GHG emissions released into the atmosphere thereafter.
5.3.2 Structure
*C15 – Net-zero target structure: Companies shall set both near-term and long-term
science-based emission reduction targets according to the requirements outlined in this
standard. If a company sets a near-term target that meets long-term target requirements, the
target shall be accompanied by a long-term target that, at a minimum, maintains the same
level of emissions thereafter.
5.3.3 Timeframe
*C16 – Base year: The base year shall be no earlier than 2015. The company shall use the
same base year for its long-term science-based targets as its near-term science-based
targets. Scope 1 and scope 2 targets shall use the same base year.
28
The SBTi does not
accept multi-year average base years, unless this is specified in the sector guidance
relevant to the company.
C17 – Target year(s): Absolute and intensity-based emission reduction near-term targets
must cover a minimum of 5 years and a maximum of 10 years from the date the target is
submitted to the SBTi for validation.
29
Long-term targets shall have a target year no later
than 2050. For companies in sectors that reach net-zero before 2050 (e.g., power
generation), long-term science-based targets covering relevant activities must have a target
year no later than the sector's year of net-zero in eligible 1.5˚C pathways.
*C18 – Progress to date: The minimum forward-looking ambition of near-term targets
covering scope 1 and/or scope 2 emissions is consistent with reaching net-zero by 2050 at
the latest, assuming a linear absolute reduction, linear intensity reduction, or intensity
29
* For targets submitted for validation in the first half of 2024 (until June, 30), valid target years are 2028-2033
inclusive. For targets submitted in the second half of 2024 (from July, 1), valid target years are between 2029 and
2034 inclusive.
28
* Scope 3 targets are recommended but not required to use the same base year as scope 1 and scope 2
targets. Base years across different scope 3 targets must be the same.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 38
convergence between the most recent year and 2050 (not increasing absolute emissions or
intensity).
30, 31
R5 – Consistency: It is recommended that companies use the same base years for all
near-term targets.
5.3.4 Ambition
5.3.4.1 Scope 1 and 2 (near- and long-term targets)
*C19 – Level of ambition for scope 1 and 2 targets: At a minimum, scope 1 and scope 2
targets shall be consistent with the level of decarbonization required to keep global
temperature increase to 1.5°C compared to pre-industrial temperatures. This applies to both
near-term and long-term targets.
32
C20 – Absolute targets: Absolute reduction targets for scope 1 and scope 2 are eligible
when they are at least as ambitious as the minimum of the approved range of emissions
scenarios consistent with the 1.5°C goal or aligned with the relevant 1.5°C sector-specific
absolute pathway (long-term targets only).
*C21 – Intensity targets: Intensity targets for scope 1 and scope 2 emissions are only eligible
when they are modeled using an approved 1.5°C sector pathway applicable to companies’
business activities.
5.3.4.2 Scope 3 (near- and long-term targets)
*C22 – Level of ambition for scope 3 emissions reductions targets: At a minimum, near-term
scope 3 targets (covering total required scope 3 emissions or individual scope 3 categories)
shall be aligned with methods consistent with the level of decarbonization required to keep
global temperature increase well-below 2°C compared to pre-industrial temperatures. For
long-term scope 3 targets, this minimum ambition is increased to 1.5°C.
33
*C23 – Supplier or customer engagement targets: Near-term targets to drive the adoption of
science-based emission reduction targets by their corporate suppliers and/or customers
shall meet the following requirements:
● Boundary: Companies may set engagement targets across upstream or
downstream scope 3 categories.
33
* When a company uses fiscal years in its GHG accounting, the SBTi assesses minimum ambition based on
the calendar year (CY) where the majority of the months occur. E.g. FY2022 with a date range of April 2021 -
March 2022 it would be assessed as CY2021. In the case where a FY is evenly split across a CY (i.e., a FY ends
on June, 30), ambition is assessed using the later year in the date range. This approach is applicable to all
targets.
32
* When a company uses fiscal years in its GHG accounting, the SBTi assesses minimum ambition based on
the calendar year (CY) where the majority of the months occur. E.g. FY2022 with a date range of April 2021 -
March 2022 it would be assessed as CY2021. In the case where a FY is evenly split across a CY (i.e., a FY ends
on June, 30), ambition is assessed using the later year in the date range. This approach is applicable to all
targets.
31
* Companies shall provide all the relevant GHG inventory data including a most recent year GHG inventory. For
submissions in 2024, the most recent inventory shall be no earlier than 2022 i.e. allowable most recent years are
2022 and 2023. Companies should also note that using proxy data (i.e., applying one reporting year's data to
another reporting year) is not permitted. For example, a company may not apply base year emissions to the most
recent year.
30
* The most recent year used for scope 1 and scope 2 emissions shall be the same year. The most recent year
used for scope 3 emissions is recommended to be the same year as scope 1 and scope 2.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 39
● Formulation: Companies shall provide information in the target language on what
percentage of emissions from relevant upstream and/or downstream categories is
covered by the engagement target or, if that information is not available, what
percentage of annual procurement spend is covered by the target.
34
● Timeframe: Engagement targets shall be fulfilled within a maximum of 5 years from
the date the company’s target is submitted to the SBTi for validation.
35
● Ambition level: The company’s suppliers/customers shall have science-based
emission reduction targets in line with the latest version of the SBTi Corporate
Near-term Criteria.
C24 – Absolute targets (scope 3): Absolute targets for scope 3 are eligible when they are at
least as ambitious as the minimum of the approved range of emissions scenarios consistent
with the well-below 2°C goal (near-term targets), the 1.5°C goal (long-term targets), or
aligned with the relevant 1.5°C sector-specific absolute pathway (long-term targets only).
C25 – Intensity targets (scope 3): Intensity targets for scope 3 are eligible when they are
modeled using an approved sector-specific physical intensity pathway where applicable to
companies’ business activities or using eligible physical intensity or economic intensity
approaches. This applies to both near-term and long-term targets. Intensity targets on
upstream scope 3 categories must reflect both supply-side and demand-side mitigation
levers, where specified by sector-specific guidance.
*R6 – Supplier engagement: Companies should recommend that their suppliers use the
SBTi guidance and tools available to set science-based targets. SBTi validation of supplier
science-based targets is recommended but not required.
5.3.4.3 Combined targets (near- and long-term targets)
*C26 – Combined scope targets: Targets combining scopes (e.g., 1+2, or 1+2+3) are
permitted if the SBTi can review the ambition of the individual target components and
confirm each meets the relevant ambition criteria.
36
5.3.4.4 Renewable electricity targets (near- and long-term targets)
*C27 – Renewable electricity (scope 2 only): Targets to actively source renewable electricity
at a rate consistent with 1.5°C scenarios are an acceptable alternative to scope 2 emission
reduction targets over emissions from the generation of procured electricity.
37
The SBTi has
identified 80% renewable electricity procurement by 2025 and 100% by 2030 as thresholds
37
* Companies reporting scope 2 emissions using location-based methods can still set a renewable electricity
target provided they have the capacity to demonstrate active sourcing of renewable electricity through market
instruments.
36
* When submitting combined near-term targets, the scope 1+2 portion must be in line with at least a 1.5°C
scenario and the scope 3 portion of the target must be in line with at least a well-below 2°C scenario for
near-term targets. When submitting combined long-term targets, the scope 1+2 portion must be in line with at
least a 1.5°C scenario and the scope 3 portion of the target must be in line with at least a 1.5°C scenario. For
sectors where minimum target ambition is further specified for companies’ scope 3 activities, C35 supersedes
C26.
35
For targets submitted for validation in the first half of 2024 (until June, 30), valid target years are up to 2028
inclusive. For targets submitted in the second half (from July, 1) of 2024, valid target years are up to 2029
inclusive.
34
If measuring coverage by spend, the company shall provide an estimate of the emissions coverage associated
with that spend for validation purposes to demonstrate that criterion C6 has been met, by the supplier or
customer target alone, or together with other scope 3 target(s).
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 40
(portion of renewable electricity over total electricity use) for this approach, in line with the
recommendations of RE100.
38
Companies that already source electricity at or above these
thresholds shall maintain or increase their use of renewable electricity to qualify. For
long-term targets, companies shall maintain 100% renewable electricity procurement beyond
2030.
*R7 – Purchased heat and steam: When modeling targets using the Sectoral
Decarbonization Approach (SDA), companies should model purchased heat and steam
related emissions as if they were part of their direct emissions, i.e., scope 1.
R8 – Efficiency considerations for target modeling: If companies are using a method that
does not already embed efficiency gains for the specific sector, market – and the
decarbonization projected for the power sector is based on a 1.5°C scenario – these factors
should be considered when modeling electricity-related scope 2 targets.
5.3.5 Beyond value chain mitigation
*R9 – Beyond value chain climate mitigation: Companies should take action or make
investments outside their own value chains to mitigate GHG emissions in addition to their
near-term and long-term science-based targets. For example, a company could provide
annual support to projects, programs and solutions providing quantifiable benefits to climate,
especially those that generate additional co-benefits for people and nature. Companies
should report annually on the nature and scale of those actions.
39
5.3.6 Neutralization
*C28 – Neutralization of unabated emissions to reach net-zero: Companies shall remove
carbon from the atmosphere and permanently store it to counterbalance the impact of any
unabated emissions that remain once companies have achieved their long-term
science-based target, and for subsequent years thereafter. The neutralization of unabated
emissions applies to both the emissions reduction target boundary and to any unabated
emissions that have been excluded from the GHG inventory.
40
R10 – Neutralization milestones: Companies should disclose information such as planned
milestones and near-term investments that demonstrate the integrity of commitments to
neutralize unabated emissions at net-zero.
5.3.7 Target formulation
*C29 – Target formulation: Companies shall publicly set a net-zero target that clearly and
transparently communicates each of the target’s relevant components including (a) net-zero
40
* For example, a company with 100 tCO
2
e emissions in the base year excludes 1 tCO
2
e from its GHG inventory
and 1 tCO
2
e from its target boundary, resulting in 98 tCO
2
e covered by its long-term SBT. After reducing
emissions covered by its long-term SBT by 90%, this results in 9.8 tCO
2
e of residual emissions. Assuming the
exclusions remain constant, the company is required to neutralize 11.8 tCO
2
e (1 tCO
2
e from inventory exclusions,
1 tCO
2
e from target boundary exclusions, and the remaining 9.8 tCO
2
e).
39
Please see the SBTi “Above and Beyond: An SBTi report on the design and implementation of beyond value
chain mitigation (BVCM)” for details.
38
RE100 guidance states that setting a 100% renewable electricity target by 2030 at the latest shows a strong
level of leadership.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 41
target year, (b) magnitude of emissions reductions that will be achieved for near-term and
long-term science-based targets, and (c) a base year.
41
5.4 Reporting, recalculation and target validity
5.4.1 Reporting
C30 – Frequency: The company shall publicly report its company-wide GHG emissions
inventory and progress against published targets on an annual basis.
C31 – Reporting completeness: Companies shall publicly report information pertaining to
progress against validated targets, including separately reporting emissions and removals in
the annual GHG inventory.
R11 – Where to disclose: There are no specific requirements regarding where the inventory
and progress against published targets should be disclosed, as long as it is publicly
available. The SBTi recommends disclosure through standardized, comparable data
platforms such as CDP’s climate change annual questionnaire. Annual reports, sustainability
reports and the company’s website are also acceptable platforms.
5.4.2 Recalculation and target validity
*C32 – Mandatory target review: Companies shall review all active targets, at a minimum,
every 5 years to ensure consistency with the latest SBTi criteria.
42
If targets do not meet SBTi
criteria, then they shall be updated and revalidated. Companies with targets approved in
2020 or earlier shall review all active targets by 2025. Companies shall follow the most
recent applicable criteria at the time of resubmission.
*C33 – Triggered target recalculation: Targets shall be recalculated and revalidated when
significant changes occur that could compromise the existing target. The following changes
shall trigger a target recalculation:
● Scope 3 emissions become 40% or more of aggregated scope 1, 2 and 3 emissions
(applies only to near-term science-based targets).
● Changes in the consolidation approach chosen for the GHG inventory.
● Emissions of exclusions in the inventory or target boundary change significantly.
● Significant changes in company structure and activities (e.g., acquisition,
divestiture, merger, insourcing or outsourcing, shifts in goods or service offerings).
43
● Adjustments to data sources or calculation methodologies resulting in significant
changes to an organization’s total base year emissions or the target boundary base
43
* For example, a target recalculation may be triggered if a shift of goods and service offerings results in a shift
of emissions between scopes of already validated targets (e.g., if a company has a scope 1+2 target separate
from a scope 3 target, and emissions that were first in scope 3 are shifted to scope 1 or scope 2 because of a
change in the company's offering). A target recalculation may also be triggered if a company's current targets use
a metric that becomes irrelevant after a shift in goods or service offerings (e.g., if a car manufacturer stopped
selling passenger cars and pivoted to freight trucks, their use of sold products target would no longer be
appropriate to model with the sold vehicle pathway and “passenger-kilometers” would no longer be an
appropriate metric).
42
* Please note that the beginning of the review period for all active targets corresponds to the date of initial
validation of the oldest currently active target or the most recent target validation date of each target where all the
company targets were updated.
41
* Please note that the base year may be excluded from the overarching wording only if the scope 1 and 2 base
year is different from the scope 3 base year.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 42
year emissions (e.g., discovery of significant errors or a number of cumulative errors
that are collectively significant).
● Other significant changes to projections/assumptions used in setting the
science-based targets.
44
Companies shall apply a significance threshold of 5% or less. For base year emissions, a
change of 5% in an organization's total base year emissions would trigger a base year
emissions recalculation. A change of 5% or more in the base year emissions covered within
a target boundary would trigger a target recalculation.
45
If a significant change occurs and the company’s target(s) no longer meet SBTi criteria, then
the target(s) shall be recalculated and revalidated. Companies shall follow the most recent
applicable criteria at the time of resubmission.
C34 – Target validity: Companies with approved targets must announce their target publicly
on the SBTi website within 6 months of the approval date. Targets unannounced after 6
months must go through the approval process again unless a different publication time frame
has been agreed in writing with the SBTi.
R12 – Validity of target projections: The SBTi recommends companies check the validity of
their target-related projections on an annual basis. The company should notify the SBTi of
any significant changes and report these major changes publicly, as relevant.
5.5 Sector-specific guidance
*C35 – Requirements from sector-specific guidance: Companies must follow requirements
for target setting and minimum ambition levels as indicated in relevant sector-specific
methods and guidance – at the latest, 6 months after sector guidance publication. A list of
the sector-specific guidance and requirements is available below (Table 4 of the Corporate
Net-Zero Standard).
46
5.5.1 Fossil fuel sales, distribution, and other business
*C36 – Companies in the fossil fuel production business, or with significant revenue from
fossil fuel business lines: The SBTi will not currently validate targets for:
● Companies with any level of direct involvement in exploration, extraction, mining
and/or production of oil, natural gas, coal or other fossil fuels, irrespective of
percentage revenue generated by these activities.
● Companies that derive 50% or more of their revenue from the sale, transmission
and distribution of fossil fuels, or by providing equipment or services to fossil fuel
companies.
46
* The Corporate Net-Zero Standard should be complemented with SBTi sector-specific guidance whenever the
sector and/or activity covered by the sector guidance is relevant to the company seeking SBTi validation, e.g. a
company with aviation, maritime, and financial services activities is encouraged to set separate sector-specific
targets for each of the activities relevant to them based on SBTi sector guidance. Please note that the target
boundary coverage is to be met at the company wide-level, not at target level, unless otherwise stated.
45
* Please note that the significance threshold for target recalculation is relative to the scopes covered by the
target. For example, if a company has a validated scope 1+2 target and their scope 1+2 base year emissions
change by 5% or more, this triggers a target recalculation. Similarly, if a company has a validated scope 1+2+3
target and their scope 1+2+3 base year emissions change by 5% or more, this triggers a target recalculation.
44
* For example, for intensity targets, changes in growth projections.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 43
● Companies with more than 5% revenue from fossil fuel assets (e.g., coal mine,
lignite mine, etc.) for extraction activities with commercial purposes.
These companies must follow the applicable sector standards if available.
*C37 – Sale, transmission, distribution of oil, natural gas, coal as well as other fossil fuels:
Companies that sell, transmit, or distribute natural gas (or other fossil fuel products) shall set
separate emission reduction targets for scope 3 category 11 “use of sold products” -
covering emissions from the combustion of the sold, transmitted, or distributed fossil fuels -
that are at a minimum consistent with the level of decarbonization required to keep global
temperature increase to 1.5°C compared to pre-industrial temperatures, irrespective of the
share of these emissions compared to the total scope 1, 2, and 3 emissions of the company,
company's sector classification, or whether fossil fuel sale/distribution is the company's
primary business. In order to meet the 67% near-term and 90% long-term scope 3 coverage,
companies may need to set additional targets covering other scope 3 categories. Customer
engagement targets are not eligible for this criterion.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 44
6. SECTOR-SPECIFIC REQUIREMENTS
Sector-specific guidance and methods are currently available for many sectors. All new
sector-specific guidance that becomes available will be uploaded to the sector guidance
page on the SBTi website. The SBTi has sector-specific requirements related to the use of
target-setting methodologies and minimum ambition levels (please see table below).
47
Table 4. Eligible pathways, methods, and tools for all sectors and activities
Sector/activity
Eligible pathways, methods, tools
Guidance and further notes
Companies not
covered by any SBTi
sector guidance
● Cross-sector pathway with absolute
reduction method for near-, and
long-term targets. See Corporate
Near-term Tool and Corporate
Net-Zero Tool.
Please note that companies in certain
sectors (e.g., oil & gas) cannot currently
set targets with the SBTi.
Aluminum
● Cross-sector pathway with absolute
reduction method for near-, and
long-term targets. See Corporate
Near-term Tool and Corporate
Net-Zero Tool.
Apparel
● Cross-sector pathway with absolute
reduction method for near-, and
long-term targets. See Corporate
Near-term Tool and Corporate
Net-Zero Tool.
Optional guidance is available for
companies in the apparel and footwear
sector.
Air transport
Options:
● Aviation pathway with intensity
convergence method (i.e., SDA) for
near-, and long-term targets on
well-to-wake (WTW) emissions,
recommended for all companies
providing air transport services. See
the Aviation tool.
● Cross-sector pathway with absolute
reduction method for near-, and
long-term targets on WTW. See
Corporate Near-term Tool and
Corporate Net-Zero Tool.
Please note that whichever pathway is
chosen, the target boundary must cover
WTW, as specified in the SBTi Aviation
Guidance.
For all transport-related emissions
across all sectors, companies shall set
targets over these emissions on a
well-to-wheel (WTW) basis in their GHG
inventory (well-to-wake for aviation and
maritime transport).
Aviation target formulation and
communication must explicitly state that
targets are exclusive of non-CO₂
factors. Targets must include a footnote
stating that non-CO₂ factors which may
also contribute to aviation-induced
warming are not included in this target
and whether the company has publicly
reported or commits to publicly report its
non-CO
2
impacts.
All companies using the Aviation tool
must not choose 2020, 2021 or 2022 as
the base year. The years 2020-2022 are
anomalous for the industry due to the
COVID-19 pandemic.
47
Please note that in case of inconsistencies between Table 4 and sector-specific guidance, the latest published
information applies.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 45
Buildings
Options:
● Residential buildings or service
building pathway with intensity
convergence method (i.e., SDA) for
near-, and long-term targets. See
Corporate Near-term Tool and
Corporate Net-Zero Tool.
● Please note that these pathways
address only emissions from energy
use of the buildings.
● Sector-specific absolute reduction
method for long-term targets. See
Corporate Net-Zero Tool.
● Cross-sector pathway with absolute
reduction method for near-, and
long-term targets. See Corporate
Near-term Tool and Corporate
Net-Zero Tool.
Once the Buildings guidance becomes
effective, companies in the Built
Environment will be required to use the
sector-specific intensity convergence
method (i.e., SDA) for in-use operational
emissions using the new SBTi-CRREM
(carbon risk real estate monitor)
pathways. See the Buildings
Target-Setting Tool.
To model upfront embodied emissions,
companies will be able to either use the
SBTi cross-sector methods, or the
intensity convergence method (i.e.,
SDA) or the sector-specific absolute
reduction method. See the SBTi
Buildings Target-Setting Tool for
sector-specific methods.
Real estate investment trusts (REITs)
wishing to set targets must specify if
they are a mortgage-based or
equity-based REIT. Equity REITs must
pursue the regular target validation
route for companies. Mortgage REITs
must instead utilize the Financial
Institutions guidance for setting
science-based targets.
The SBTi is developing guidance for
companies operating in the built
environment. Once the final resources
are published, they will become
mandatory for intended user types with
a usual six month grace period. The
upcoming sector-specific resources will
include:
● Guidance for GHG accounting and
target-setting for both in-use
operational and upfront embodied
emissions.
● Standalone buildings target-setting
tool with two sets of pathways:
granular in-use operational
emissions and upfront embodied
emissions pathways.
Cement
Options:
● Sector-specific intensity
convergence method (i.e., SDA) for
near-, and long-term targets. See
Corporate Near-term Tool and
Corporate Net-Zero Tool.
● Sector-specific absolute reduction
method for long-term targets. See
Corporate Net-Zero Tool.
● Cross-sector pathway with absolute
reduction method for near-, and
long-term targets. See Corporate
Near-term Tool and Corporate
Net-Zero Tool.
The SBTi has released guidance to aid
companies in the cement industry in
setting science-based targets.
Regardless of the pathway chosen,
near-term science-based targets for
cement activities shall include a scope 3
target which includes the emissions
from purchased cement and clinker
(under scope 3 category 1 “purchased
goods and services”), irrespective of the
share of these emissions compared to
the total scope 1, 2 and 3 emissions of
the company.
Chemicals
See “all other sectors”.
The SBTi is developing guidance for
companies in the chemicals sector.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 46
Financial institutions
Options:
● Absolute reduction method or
sector-specific intensity convergence
(i.e., SDA) for near-term targets on
scope 1 and 2 emissions. See
Corporate Near-term Tool.
● Sector-specific intensity
convergence method (i.e., SDA) for
near-term targets on scope 3
category 15 “investments’ emissions.
See Corporate Near-term Tool and
other sector-specific tools. Based on
this method, only financing within the
same sector is aggregated to
produce a portfolio level intensity.
● Portfolio Coverage method for
near-term targets on scope 3
category 15 “investments” emissions.
See SBTi Finance Portfolio
Coverage tool. Based on this
method, financial institutions
increase the percentage of portfolio
companies that have validated
science-based targets until all
portfolio companies have validated
science-based targets by 2040.
● Temperature Rating method for
near-term targets on scope 3
category 15 “investments” emissions.
See SBTi Finance Temperature
Scoring tool. Based on this method,
financial institutions increase the
percentage of portfolio companies
that have ambitious targets that meet
certain ambition levels (but not
necessarily validated by the SBTi).
The SBTi is developing a Net-Zero
Standard for financial institutions and
cannot validate net-zero targets for this
sector before its release.
The SBTi defines a financial institution
as an entity that generates 5% or more
of its revenue from investment, lending,
or insurance activities. This includes but
is not limited to banks, asset managers
and private equity firms, asset owners
and insurance companies, and
mortgage real estate investment trusts
(REITs). Real economy companies that
have more than 5% of revenue from
financial activities are encouraged to
use SBTi to set targets on those
activities in addition to their corporate
targets. Currently, public financial
institutions are not covered within the
SBTi framework.
Please see the Finance sector guidance
for further details.
Forest, land and
agriculture (FLAG)
Companies with significant FLAG
emissions are required to set FLAG
targets (see criteria in the column to the
right). FLAG targets are complementary
and separate from science-based
targets that cover energy/industry
(non-FLAG) emissions.
Options:
● Sector-specific absolute reduction
method for near-term targets. See
FLAG tool.
● Sector-specific absolute reduction
method for long-term targets
covering agriculture only. See
The following companies are required to
set FLAG targets:
1. Companies with FLAG emissions
that total 20% or more of overall
emissions across scopes; and
2. Companies in the following sectors:
● Forest and Paper Products -
Forestry, Timber, Pulp and Paper,
Rubber
● Food Production - Agricultural
Production
● Food Production - Animal Source
● Food and Beverage Processing
● Food and Staples Retailing
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 47
Corporate Net-Zero Tool.
● Commodity pathways for near-term
intensity targets. See FLAG tool.
Commodity pathways are available
for 10 agricultural commodities:
beef, chicken, dairy, leather, maize,
palm oil, pork, rice, soy, wheat.
Companies with emissions
associated with one or more of the
available agricultural commodity
pathways that account for 10% or
more of a company's total (gross)
FLAG emissions for each of those
commodities may use the commodity
pathway for that commodity (but are
not required to do so).
Companies in the forest products
sector or with emissions related to
timber & wood fiber accounting for
10% or more of their FLAG emissions
are required to use the commodity
pathway for timber and wood fiber.
● Tobacco
Please note that FLAG near-term
targets must cover at least 95% of
FLAG-related scope 1 and 2 emissions
and at least 67% of FLAG-related scope
3 emissions.
Please see the FLAG Guidance for
further details.
Please note that there is currently no
long-term pathway available for timber
and wood fiber. Targets from companies
operating in the forest and paper
products sector shall include a footnote
stating that timber and wood fiber
emissions are not included in the
long-term target. These companies must
(re)submit their long-term FLAG target
covering these emissions within six
months of the release of the long-term
pathway for timber and wood fiber.
Fossil fuel sale/
transmission/
distribution
Companies that sell, transmit, and/or
distribute fossil fuels (and that derive
less than 50% of revenue from these
activities) are required to set targets for
scope 3 category 11 “use of sold
products” emissions, irrespective of the
share of these emissions compared to
the total scope 1, 2 and 3 emissions of
the company. Separate and additional
scope 3 targets may need to be set.
This requirement is applicable to
companies that derive less than 50% of
revenue from the sale, transmission and
distribution of fossil fuels.
For companies receiving 50% or more
of their revenue from these activities,
please refer to the Oil and Gas section.
Information and
communication
technology (ICT)
providers
● Cross-sector absolute reduction
method for near-, and long-term
targets. See Corporate Near-term
Tool and Corporate Net-Zero Tool.
Optional guidance is available for ICT
companies including mobile networks
operators, fixed networks operators, and
data centers operators.
Iron and steel
Options:
● Sector-specific intensity
convergence method (i.e., SDA) for
near-, and long-term targets. See
Steel SDA tool and Corporate
Net-Zero Tool respectively.
● Sector-specific absolute reduction
method for long-term targets. See
Corporate Net-Zero Tool.
● Cross-sector absolute reduction
method for near-, and long-term
targets. See Corporate Near-term
Tool and Corporate Net-Zero Tool.
Please note that regardless of the
pathway chosen, the iron & steel core
boundary must be applied to all
near-term targets.
The SBTi has released guidance to aid
companies in the steel industry in
setting science-based targets.
Near-term iron and steelmakers
science-based targets shall include a
scope 3 target that covers all scope 3
category 3 “Fuel- and energy-related
emissions not included in scope 1 or
scope 2” emissions according to the
GHG Protocol.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 48
Maritime Transport
Options:
● Maritime pathway with intensity
convergence method (i.e., SDA) for
near-, and long-term targets on
well-to-wake (WTW) is available for
all companies providing applicable
maritime transport services. See
Maritime Tool. When using the
maritime pathway, near-term targets
can be no earlier than 2030 and
long-term targets must be no later
than 2040.
● Cross-sector pathway with absolute
reduction method for near-, and
long-term targets on WTW. See
Corporate Near-term Tool and
Corporate Net-Zero Tool. When
using the cross-sector pathway,
near-term targets must follow the
5-10 year timeframe, and long-term
targets must be no later than 2050.
Companies using the maritime pathway
to set near-term targets science-based
targets covering emissions from own
operations (e.g., vessel owners or
operators) are required to also submit
long-term science-based targets
modeled with the maritime pathway
along with their near-term target
submission. Please note that in this
case, the long-term target year is 2040.
Companies using the maritime guidance
to set near-term science-based targets
covering scope 3 emissions from
subcontracted maritime transport
operations (e.g., cargo owners or
shippers) are not required to submit
long-term science-based targets.
For all transport-related emissions
across all sectors, companies shall set
targets over these emissions on a
well-to-wheel (WTW) basis in their GHG
inventory (well-to-wake for aviation and
maritime transport).
Please see the transport sector page for
the Maritime Transport Guidance and
the Maritime Transport Target Setting
Tool.
Oil & gas
The SBTi is developing a new standard
for companies in the oil and gas sector
to set science-based targets. Currently,
the SBTi is unable to accept
commitments or validate targets for
companies in the oil and gas or fossil
fuels sectors.
Companies that have dormant or active
fossil fuel assets (e.g., coal mine, lignite
mine, etc.) for extraction activities with
commercial purposes (meaning sales),
cannot validate targets at this stage,
until further specific methods and
guidance are developed.
Please see our policy for further
information.
The SBTi will assess companies on a
case-by-case basis to determine sector
classification and reserves the right to
not move forward with a company’s
validation, until methods/guidance have
been developed/completed.
Companies in this sector include – but
are not limited to - integrated oil and gas
companies, integrated gas companies,
exploration and production pure players,
refining and marketing pure players, oil
products distributors, and traditional oil
and gas service companies. Please see
the Oil and Gas sector page on our
website for more information.
Fossil fuel service companies need to
account for the indirect emissions
related to the fossil fuels directly or
indirectly managed by the company.
The SBTi defines fossil fuel service
companies as businesses that support
exploration, extraction, mining or
production of fossil fuels, and other
significant activities along the fossil fuels
value chain, not covered by sale,
transportation or distribution category.
The SBTi recommends companies to
decommission fossil fuel assets, instead
of divesting, as this approach better
reflects the need to phase-out fossil
fuels in our global economy, as science
indicates is necessary. If a company
completely decommissions/divests from
fossil fuel assets, they will no longer be
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 49
considered under these rules, and can
submit targets as per standard route.
The SBTi recommends companies to
follow the GHG Protocol for base year
recalculations.
Electric Utilities &
power generation
Companies in the power sector are
required to set targets using the power
sector pathway for near-, and long-term
targets (intensity convergence method
only (i.e., SDA) within the Corporate
Near-term Tool and Corporate Net-Zero
Tool).
Please note that the long-term target
shall be no later than 2040.
Companies in the power sector with
scope 3 emissions representing 40% or
more of overall emissions must set at
least two targets:
● An intensity target covering all sold
electricity (including purchased and
resold electricity in scope 3 category
3 “fuel- and energy-related emissions
not included in scope 1 or scope 2”
emissions)
● An intensity target covering all
electricity generation in scope 1
expressed in terms of MWh
(megawatt hour) energy generated.
For power generation companies that
distribute and sell fossil fuels, a third
target shall be set covering 100% of
emissions from downstream use of fossil
fuels. This should be an absolute target
that aligns with a 1.5°C mitigation
pathway. In order to meet the 67%
scope 3 coverage threshold, power
companies may need to set a target
over other scope 3 categories as well.
Please see the Electric utilities/Power
Guidance for further details.
Land Transport:
Road and rail
Options:
● Cross-sector pathway with absolute
reduction method for near-, and
long-term targets. See Corporate
Near-term Tool and Corporate
Net-Zero Tool.
● Companies that subcontract
transport services can use the
cross-sector pathway or use the
legacy Transport Tool with the WB2C
(well-below 2°C) pathway. No 1.5ºC
sector intensity pathway is currently
available.
For all transport-related emissions
across all sectors, companies shall set
targets over these emissions on a
well-to-wheel (WTW) basis in their GHG
inventory (well-to-wake for aviation and
maritime transport).
Land Transport:
Transport
OEMs/Automakers
● Cross-sector pathway with absolute
reduction method for near-, and
long-term targets over use of sold
products emissions. See Corporate
Near-term Tool and Corporate
Net-Zero Tool. This is applicable
once the interim 1.5ºC target setting
approach for automakers is
published.
The SBTi will review and update the
passenger, freight and OEM (original
equipment manufacturer) sector
target-setting guidance through a formal
sector development process. The SBTi
Interim 1.5°C Approach for Automakers
will be reviewed and superseded upon
the completion of this sector guidance
update process. Until the Interim 1.5°C
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 50
7. ACKNOWLEDGEMENTS
Primary authors
● Emma Watson
● Martina Massei
● Alice Farrelly
● Emily Castro
● Hugo Ernest-Jones
● Andres Chang, CDP
● Alberto Carrillo Pineda
● Christa Anderson, WWF
● Cynthia Cummis, WRI
● Martha Stevenson, WWF
Editorial contributions and review
● Brad Schallert, WWF
● Heidi Huusko, UN Global Compact
● Lucas Bartol-Bibb
● Lucine Courthaudon
● Maxine Meixner
● Méabh Byrne, CDP
● Paola Delgado, WWF
● Paulina Tarrant
● Rebekah Hughes, Earthbound Consulting
● Reed Grumann
● Rosie Williams
● Sarah Savage, CDP
● Tereza Bicalho
Net-Zero Working Group
● Alexander Farsan
● Brad Schallert, WWF
● Chris Weber
● Daniela Castellanos, WWF
● Fernando Rangel Villasana, WWF
● McKenna Smith, WWF
● Miranda (Burnham) Nayyar, CDP
● Nate Aden, WRI
● Paulina Tarrant, CDP
● Pedro Faria, CDP
● Rebecca Wynn
● Tatiana Boldyreva, CDP
● Tom Dowdall, CDP
● Zola Berger-Schmitz, WRI
● Zniko Nhlapho, WWF
Expert Advisory Group
The following individuals provided expert feedback
and direction on guidance development. They did
so in a personal capacity, and their views did not
necessarily represent the views of their employers.
● Alexia Kelly, Netflix
● Ankita Kumari, Survival International
● Anthony Hobley, WEF
● Candace Vinke, Verra
● Carsten Warnecke, New Climate Institute
● Chris Bayliss, Aluminum Stewardship
Initiative
● Cynthia McHale, Climate Action 100+
● Daniel Salter, Amazon
● Dean Cambridge
● Derik Broekhoff, Stockholm Environment
Institute
● Doreen Stabinsky, College of the Atlantic
● Emily Hickson, The B Team
● Erwan Saouter
● Eveline Speelman, Energy Transitions
Commission
● Faustine Delasalle, Energy Transitions
Commission
● Frances Seymour, WRI
● Gary Cook, Stand.Earth
● Gilles Dufrasne, Carbon Market Watch
● Giulio Berruti, BSR
● Helen Wiggs Marshall, ShareAction
● Jen Austin, UN High-Level Champions
● Jessica Andrews, Net Zero Asset Owners
Alliance
● John Revess, WBCSD
● Karol Gobczynski, IKEA
● Luca de Giovanetti, WBCSD
● Michael Hugman, Children’s Investment
Fund Foundation (CIFF)
● Mischa Reppman, Swiss Re
● Nafkote Dabi, Oxfam
● Owen Hewlett, Gold Standard
● Pedro Martins Barata, Environmental
Defense Fund
● Ramiro Fernández, High-Level
Champions/ Fundación Avina
● Rasmus Valanko, We Mean Business
● Richard Batten, JLL
● Robert Höglund
● Roy Vissers, DSM
● Salla Sulasuo, DSM
● Sam Van den plas, Carbon Market Watch
● Stephan Singer, Climate Action Network
● Thomas Lingard, Unilever
● Tom Hale, Oxford University
● Valentina Lira, Viña Concha y Toro
External support
● Emilie Wesseling, SYSTEMIQ
● Scarlett Benson, SYSTEMIQ
The SBTi would also like to thank BCG for support
during the road testing phase of the project.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 52
Company road testers
The following organizations provided valuable
feedback on the robustness and practicality of the
draft Net-Zero Standard through the road test
during July and August 2021.
● AB InBev
● A.P. Moller-Mærsk
● ABOUT YOU AG & Co. KG
● ACCIONA Energía
● ACCIONA S.A.
● AstraZeneca
● Baluarte Cultura
● Bayer AG
● Bloomberg LP
● BMW Group
● Bonava
● Boston Consulting Group
● Capgemini SE
● CBRE
● Colgate-Palmolive Company
● Companhia Brasileira de Aluminio
● Co-op
● CVS Health
● Danone
● Dentsu International
● Deutsche Telekom AG
● DSM
● easyJet
● EDF Group
● EDP Energias de Portugal
● Elopak
● Emira Property Fund
● Enel S.p.A.
● Ferrovial
● FLSmidth A/S
● Givaudan
● Globant
● Guidehouse
● HEINEKEN Company
● Holcim Ltd.
● Informa
● International Consolidated Airlines Group
S.A. (IAG)
● Jacobs
● JLL
● Kesko Corporation
● Lenovo
● Magyar Telekom Plc.
● Mahindra Lifespace Developers Ltd.
● Mars, Incorporated
● McCain Foods
● Moody's
● Multiplex Construction Europe
● Ørsted
● Outokumpu Oy
● PepsiCo
● Pfizer Inc.
● Pilgrim's UK
● Ralph Lauren Corporation
● Rolls-Royce plc
● Slaughter and May
● Sodexo
● Sopra Steria Group
● Starbucks
● Swire Properties Limited
● Swiss Re
● Telenor ASA
● Transurban
● Tubacex
● Unilever
● Veritas Technologies
● Volkswagen
● WayCarbon
● Wipro Ltd
● Worley
● WSP Global Inc.
SBTi funders
The SBTi is grateful to the organizations and
companies who provide funding to support our
mission.
Core funding for the Science Based Targets
initiative is provided by IKEA Foundation, Bezos
Earth Fund, We Mean Business, The Rockefeller
Brothers Fund, The UPS Foundation and Amazon.
Public consultation participants
We would also like to thank everyone who
participated in the two public consultations surveys
which helped strengthen this Standard.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 53
ANNEX A: SUPPLEMENTARY GUIDANCE ON GHG
ACCOUNTING
This annex details nuances in GHG accounting that SBTi requires and recommends as best
practice for certain sectors and/or activities.
Downstream emissions from intermediate products for which end use is unknown
may be excluded if reasonable justification is provided: In certain cases, the eventual
end use of sold intermediate products may be unknown. For example, a company may
produce an intermediate product (e.g., a chemical) with innumerable potential downstream
applications, each of which has a different GHG emissions profile, and be unable to
reasonably estimate the downstream emissions associated with the various end uses of the
intermediate product. In such cases, companies must provide a robust justification for
exclusion of downstream emissions from categories 10, 11, and 12 (but should not
selectively exclude a subset of those categories) through the target validation process.
Include downstream emissions from intermediate products with specific applications:
Downstream emissions from intermediate products that have specific applications, such as
computer microchips, automotive parts, etc., must be accounted for within the GHG
inventory.
Emission allocation from ports: Companies must define the geographical boundary of the
relevant ports in which they operate and disclose their chosen boundary. Ships sitting in port
must account for the emissions related to port usage. If a shipping company is a customer of
a port i.e., they pay the port for use of facilities, these emissions are deemed to be direct
use-phase emissions (scope 3 category 11 “use of sold products”).
Retiring versus selling assets within a company: If a company sells a company asset,
this is classified as a structural change according to the GHG Protocol Corporate Standard
and shall trigger a recalculation of a company’s base year emissions. Alternatively, if a
company retires a company asset (removes an asset or part of an asset from the asset
portfolio without revenue generation), a company can consider this to be an emissions
reduction within their organizational boundary.
Insetting: There are multiple definitions for the term “insetting” (also referred to as supply
chain interventions) and no standardization of the term, which makes it difficult to give a
clear determination of what may and may not be included within scope 3 inventory
reductions. Insetting is used to describe climate mitigation projects or programs wholly
contained within the scope 3 value chain boundary of a company or projects partially within
its scope 3 supply chain boundary (spanning their supply chain and other companies’ supply
chains). Accounting approaches for insetting also vary with the use of both intervention
(project) accounting and corporate inventory accounting.
As this issue has not been settled to date in the GHG Protocol process, the SBTi
recommends a conservative approach at this time. Companies should only include emission
reductions or removals (removals only in the case of FLAG targets) from “insetting” projects
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 54
that use a corporate accounting approach and are wholly contained within their supply
chains or the portion of a “partially-included” project that is within their supply chain and
linked directly to sourcing. For further information, please see this resource.
Further work is ongoing to standardize the definition of insetting/supply chain interventions
and clear accounting methodologies. For these reasons, the SBTi will assess insetting on a
case-by-case basis during the validation process and may not approve their use.
Green gas/biogas: The SBTi currently recommends that companies follow the guidance
within the GHG Protocol Corporate Standard on the use of green gas. Currently, the GHG
Protocol does not allow the use of green gas certificates to reduce scope 1 emissions.
However, this topic is being discussed as part of the current GHG Protocol Land Sector and
Removals Guidance development process. The GHG Protocol has released an Interim
update on accounting for Biomethane Certificates that provides an overview of the treatment
of biomethane under the GHG Protocol. The SBTi cannot guarantee that these certificates
would be a valid approach to meeting science-based targets.
Accounting for emissions from non-rechargeable batteries: Emissions from the
production and waste of non-rechargeable batteries must be accounted i.e., production
emissions accounted for in scope 3 category 1 “purchased goods and services”, waste in
operations accounted for in scope 3 category 5 “waste” and emissions from the end use of
batteries accounted for in scope 3 category 12 “end-of-life treatment of sold products”.
Renewable energy certificates (RECs): Companies may use RECs as a measure to
reduce scope 2 market-based emissions. However, the RECs need to be purchased and
used within the same market, and cannot be used as a reduction mechanism for markets
that the certificates were not purchased from. For more information please consult the
RE100 Technical Criteria and the Scope 2 Quality Criteria in the GHG Protocol's Scope 2
Guidance.
Market-based scope 3 accounting: The SBTi continues to follow Greenhouse Gas
Protocol guidance, which does not consider market-based scope 3 accounting. Therefore,
the SBTi does not permit market-based accounting in scope 3, including the purchase of
market-based renewable electricity instruments on behalf of the reporting company's
suppliers, customers, lessors, lessees, franchisees, or investments.
Accounting for emissions from transport-related fuels, general fuel use and
purchased electricity: For any transport-related emissions from fuel use, emissions must
be reported on a well-to-wheel (WTW) basis (well-to-wake for aviation and maritime
transport) that reflects direct use emissions from fuel combustion (tank-to-wheel, TTW) and
upstream emissions related to fuel production and distribution (well-to-tank, WTT). For
purchased fuels, fuel related emissions must be accounted for on a WTW basis i.e., TTW
emissions which are equivalent to scope 1 emissions and WTT emissions reported in scope
3 category 3 “fuel-and-energy-related activities”. Furthermore, the upstream emissions of
purchased electricity (WTT emissions) must be accounted for in scope 3 category 3 “fuel-
and energy-related activities” if not accounted for in scope 1 and/or 2. For more information,
consult Table 5.4 (page 34) of the Corporate Value Chain (Scope 3) Accounting and
Reporting Standard.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 55
Mandatory versus optional scope 3 targets: Companies may request to include targets to
reduce optional scope 3 emissions in the target language. Companies that wish to include a
supplemental/optional target on optional scope 3 emissions should refer to the Procedure for
Validation of SBTi Targets for details.
Direct use-phase emissions: The direct use-phase emissions of final products shall be
calculated based upon the lifetime consumption of the product(s). The allocation
methodology shall be disclosed through the target validation process for the direct
use-phase of components, except for engines wherein 100% of the direct use-phase
emissions of the vehicle shall be reported.
Indirect use-phase emissions: Indirect use-phase emissions are generated by products
that only consume energy indirectly during use over their expected lifetime. These emissions
are classified as optional and are therefore not within the “minimum boundary” for scope 3
category 11 “use of sold products”. Examples include the washing and drying of apparel for
apparel manufacturers and the cooking and refrigeration of food products for food retailers.
Indirect use-phase emissions are “optional”, but their calculation methodology shall be
disclosed through the validation process.
The table below provides a non-exhaustive list of examples of direct and indirect use-phase
emission sources accounted for under scope 3 category 11 “use of sold products”.
Table 5. Direct and indirect use-phase emissions accounted for under scope 3 category 11.
Sector
Direct use-phase emissions
Indirect use-phase
emissions
Notes
Automobiles
and
components
● Engines
● Headlights
● Air conditioning system
● Heaters
● Tyres
● Bumpers
● Seatbelts
Apparel
● Washing and drying
of clothes
Architecture,
engineering
and design
companies
● Architecture, engineering and
design companies must allocate the
emissions from the use of building
projects that have been constructed
as direct use-phase emissions.
Energy and
Electric Utilities
● Fuels and feedstocks
● Rechargeable batteries (energy
loss)
● Chargers
● Electricity transmission and
distribution equipment (transmission
loss and no-load consumption)
● Rechargeable
batteries (energy
stored and transmitted)
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 56
Sector
Direct use-phase emissions
Indirect use-phase
emissions
Notes
● Rechargeable batteries (energy
stored and transmitted)
● First charge of the rechargeable
battery before sale must be allocated
to scope 2 of the producers
● Sold piping systems (lost heat and
cooling)
● Power step-up and- down
transformers
● Other power system equipment
(lost electricity, heat and cooling)
Electronics
● Displays
● Microchips
● Memory drives
● Cameras
● Computer housing
● Camera lenses
Food and
beverage
● CO₂ release from beverages
● Cooling of ice for
beverages.
●Frying/microwaving/c
ooking of frozen meals
or any other food item
● Use of household
food waste disposer
(for food producers)
● Direct cooling or
heating of products in
homes of consumers
● The cooling
or heating of
products in
retail, hotels,
restaurants,
pharmacies or
hospitals must
be allocated to
scope 3
category 9
“downstream
transportation
and
distribution”
Household
appliances
● Large and small household
appliances, from washing machines
to electric toothbrushes
● Lightbulbs
● Smart-home products
● Charcoal and lighter fluid for
barbecues
● Smart-home
software use i.e., the
use of computers,
smartphone, and/or
router energy
consumption due to
the use of the software
Software and
telecommunicat
ion services
● Software i.e., the
energy consumption of
computers or other
electronic devices due
to the use of software)
● Telecommunication
contracts i.e., the
energy consumption of
cell phones due to the
use of the network
● The energy
consumption of
the servers that
run
cloud-based
software must
be allocated to
scope 3
category 1
“purchased
goods and
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 57
Sector
Direct use-phase emissions
Indirect use-phase
emissions
Notes
services” of the
software
provider.
Transport and
logistics
● If a shipping company is a
customer of a port i.e., they pay the
port for use of facilities, these
emissions are deemed to be direct
use-phase emissions of a port.
● Maintenance of
transport infrastructure
e.g., roads, bridges,
airports etc.
On-premises
services
● Emissions from the use of client
facilities for the provision of services
(e.g., catering firm cooking in client
kitchens; cleaning firm with
equipment that uses client electricity).
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 58
ANNEX B: SUPPLEMENTARY GUIDANCE ON
TARGET-SETTING METHODS
This annex provides further details on the science-based target setting methods that are
available to companies that wish to set targets in line with SBTi requirements.
B.1 Cross-sector absolute reduction (all scopes)
With this method (also known as “absolute contraction”), companies reduce absolute
emissions by an amount that is, at minimum, consistent with the cross-sector pathway. This
method is applicable to near-term and long-term targets, across all scopes.
For near-term SBTs the minimum reduction for targets with a base year earlier than 2020 is
calculated as a linear reduction rate of 4.2% per year for scope 1 and scope 2, and 2.5% per
year for scope 3. For near-term cross-sector absolute targets with a base year later than
2020, an adjustment applies. With this adjustment, targets with a base year later than 2020
must reduce emissions by at least the same amount overall as targets with a 2020 base
year. Targets at this ambition level are consistent with limiting warming to 1.5C. For
long-term SBTs the minimum reduction is calculated as an overall amount of minimum 90%
for all scopes.
Advantages
● More transparent
● Less dependent on variables. e.g., projections of production
● Widely accepted as best practice
Disadvantages
● Does not allow comparisons of GHG intensity amongst peers.
● Does not necessarily track efficiency improvements, as reported reductions can
result from declines in production output, rather than improvements in performance.
● May be more challenging to achieve if the company grows and growth is linked to
GHG emissions.
B.2 Sector-specific absolute reduction (all scopes)
Using the sector-specific absolute reduction method, absolute emissions are reduced by an
amount that is, at minimum, consistent with a sector-specific pathway. This method is
applicable to near-term and long-term targets across all scopes, unless otherwise stated
within sector-specific guidance.
This method is available for agriculture, power, cement, steel, and residential and service
buildings. For agriculture, the minimum reduction is 72% for long-term targets. For the
power, cement, steel and buildings sectors the minimum reduction is at least 90% for
long-term targets.
Advantages
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 59
● Provides sector-specificity
● More transparent
● Less dependent on variables, e.g. projections of production
● Widely accepted as best practice
Disadvantages
● Does not allow comparisons of GHG intensity amongst peers
● Does not necessarily track with efficiency improvements, as reported reductions can
result from declines in production output, rather than improvements in performance
● May be more challenging to achieve if the company grows and growth is linked to
GHG emissions.
B.3 Sector-specific intensity convergence (i.e., SDA, all scopes)
Using this method, all companies in a heavy emitting sector converge to a sector-specific
emissions intensity in 2050 (2040 for the power and maritime transport sectors), for
example, tonnes GHG per tonne product or MWh generated. Also referred to as “physical
intensity convergence” or “Sectoral Decarbonization Approach (SDA)”. This method is
applicable to near-term and long-term targets across all scopes, unless otherwise stated in
sector-specific guidance.
For near-term targets, the minimum ambition is calculated using the SDA formula, which
adjusts a company’s target based on their starting point, target year, and projected output
growth. For long-term targets, the target year emissions intensity is equal to the sector’s
emissions intensity in 2050 (2040 for the power and maritime transport sectors).
Advantages
● Best suited for use within sectors that create a homogenous product (e.g., steel or
cement sectors)
● Reflect GHG performance and efficiency improvements independent of business
growth or decline
● May increase the comparability of GHG performance among companies (assuming
that inventory consolidation approaches used are the same and product mixes are
highly similar).
●
Disadvantages
● Does not necessarily lead to reductions in absolute emissions. This is because
increases in business output can cause absolute emissions to rise even if efficiency
improves on a per unit basis (please see Figure 8 below for an illustration of this
point)
● May be less credible to stakeholders because absolute emissions may rise even if
intensity decreases (e.g., because output increases more than GHG intensity
decreases).
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 60
Figure 8. Intensity reduction targets can lead to absolute emissions increases when
production levels increase.
B.4 Renewable electricity (scope 2)
The renewable electricity (RE) method is an acceptable alternative to scope 2 emission
reduction targets. Using this method, companies set targets to actively procure at least 80%
renewable electricity by 2025 and 100% renewable electricity by 2030 using renewable
energy certificates (RECs) or virtual power purchase agreements (vPPAs). Companies can
use this method to set near-term targets and then set a maintenance target to ensure the
level of renewable electricity achieved is maintained over time. Please see Table 6 below for
the minimum acceptable thresholds for renewable electricity procurement between 2025 and
2030 consistent with limiting warming to 1.5°C.
Table 6. Minimum acceptable thresholds for renewable electricity procurement between
2025 and 2030. Targets at this ambition level are consistent with limiting warming to 1.5°C.
Metric
measured
2025
2026
2027
2028
2029
2030
Renewable
electricity
procurement
share (% of
total scope 2
electricity that
is renewable)
80%
84%
88%
92%
96%
100%
Advantages
● Easy to track progress
● Once achieved, RE targets can be adapted to maintenance targets to ensure RE
procurement remains high.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 61
Disadvantages
● Depends on the regions of a company's operations and may not be accessible to
companies that do not have the capacity to demonstrate active sourcing of
renewable electricity through market instruments
● Certain market instruments used by companies to procure RE may be lower-quality.
Renewable energy certificates (RECs) in particular, have been criticized for being
non-additional due to low and uncertain prices.
48, 49
Power purchase agreements
(PPAs) on the other hand, do not face the same criticism as they represent a
long-term commitment by a company to purchase power from a particular renewable
energy project.
12
B.5 Physical intensity reduction (scope 3)
Using this method, companies define their own physical intensity metric and set targets to
reduce physical emissions intensity by an amount that is, at minimum, consistent with
limiting global warming to well-below 2˚C for near-term targets and 1.5°C for long-term
targets. This method is only applicable to scope 3.
For near-term targets, the minimum intensity reduction is calculated as a 7% year-on-year
reduction, plus an adjustment for targets with a base year later than 2020. For long-term
targets, the minimum reduction is calculated as an overall 97% reduction.
Eligible denominators for using the scope 3 physical intensity method must be a
representative measure of a company activity intrinsically related to the emissions boundary
of the target. Eligible activity types for applying this method include:
● Company size (e.g., employee headcount, FTE, office/retail area, etc.)
● Production input (e.g., amount procured of raw materials)
● Production output (e.g., volume of production, sales, built area)
● Level of service (e.g., payload or passenger distance, number of users/subscriptions,
service output per unit)
Non-physical denominators such as profit, value added, revenue, sales, etc., cannot be used
for calculating targets using the scope 3 physical intensity method.
Advantages
● Physical intensity metrics reflect GHG performance and efficiency improvements
independent of business growth or decline
49
Bjørn, A., Lloyd, S. M., Brander, M., & Matthews, H. D. (2022). Renewable energy certificates threaten the
integrity of corporate science-based targets. Nature Climate Change, 12(6), 539-546.
.https://doi.org/10.1038/s41558-022-01379-5
48
Hamburger, Á., & Harangozó, G. (2018). Factors affecting the evolution of renewable electricity generating
capacities: A panel data analysis of European countries. International Journal of Energy Economics and Policy,
8(5), 161.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 62
● May increase the comparability of GHG performance among companies (assuming
that inventory consolidation approaches used are the same and product mixes are
highly similar).
Disadvantages
● May be less suitable for companies that generate a diverse product mix due to the
difficulty in defining a single physical intensity business metric
● High data requirements given that physical activity data may not be readily available
● May be less credible to stakeholders because absolute emissions may rise even if
intensity decreases (e.g., because output increases more than GHG intensity
decreases).
B.6 Economic intensity reduction (scope 3)
Using this method, companies reduce economic emissions intensity (e.g., tCO2 per unit of
value added) by an amount that is, at minimum, consistent with limiting warming to
well-below 2°C for near-term targets and 1.5˚C for long-term targets. This method is only
applicable to scope 3.
For near-term targets, the minimum intensity reduction is calculated as a 7% year-on-year
reduction, plus an adjustment for targets with a base year later than 2020. For long-term
targets, the minimum reduction is calculated as an overall 97% reduction.
Advantages
● May be used to normalize emissions for sectors with varying products that are
difficult to directly compare against one another (e.g., retail or chemical sectors)
● May provide more flexibility for companies that are prioritizing growth.
Disadvantages
● May only be appropriate for sectors with limited fluctuations in product prices over
time, where growth in emissions is often tied to economic growth of the company. In
other words, if a company sells more products, more emissions are produced to
make those products
● May be difficult to track emissions reduction progress using economic intensity
indicators, especially if a company experiences financial losses in certain years
● Subject to a number of variables that can lead to apparent changes in a company’s
carbon intensity that are not linked to its environmental performance, but rather with
extrinsic factors. Examples include the fluctuation of commodity prices, inflation, or
changes in the relative contribution of different business activities to a company’s
bottom line
50
● May not be useful for tracking emissions performance
50
Volatile pricing may happen for a variety of reasons. For example, a pharmaceutical company’s prices for
certain drugs may fluctuate based on demand, patents or regulatory factors; the value added (or gross profit) of a
luxury brand company can be related to marketing and consumer willingness to pay for a premium product,
introducing variability into pricing; the price of many commodities (e.g., metals and agricultural commodities) is
set by trades placed on commodity exchanges.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 63
● Growth projections must be accurate for economic intensity targets to lead to
sufficient absolute emissions reductions.
B.7 Supplier and/or customer engagement targets (scope 3)
Using this method, companies set a target for suppliers or customers representing a certain
percentage of emissions to set their own science-based targets in line with the latest version
of the SBTi Corporate Near-Term Criteria. This method only applies to scope 3, near-term
targets.
Engagement targets may be set around any credible relevant upstream or downstream
scope 3 category where engagement efforts could lead to reduction in emissions. Using this
method, companies can set engagement targets based on spend and/or emissions data.
51
Engagement targets may alternately focus on “critical suppliers” or “strategic suppliers” that
the company has already identified based on a variety of factors, such as operational risk.
Spend data and critical supplier lists are advantageous when they can reliably serve as a
proxy for leverage over suppliers.
When using a spend-based method, it is important to note that the biggest suppliers by
spend are not always the biggest GHG emitters and as a result, the amount of emissions
reduction associated with a spend-based engagement target is less clear than
emissions-based targets. Therefore, it is important for companies to ensure that the
engagement target and any additional scope 3 targets cover at least 67% of total scope 3
emissions.
Advantages
● May be valuable if a company has yet to identify levers for more specific reduction
opportunities amongst its value chain partners and/or if it does not spend enough on
individual suppliers to support collaborative reduction efforts.
● May enable early actions from companies with limited data or information on what
reduction levers are most suitable.
● May drive reduction behaviors that benefit other customers of the same supplier.
● May encourage collaborative ownership and responsibility for emission reductions.
● Easy to track.
Disadvantages
● The emissions reduction associated with a spend-based engagement target is less
clear than emissions-based targets.
● Companies may focus on suppliers’ or customers’ scope 1 and 2 emissions as a
starting point, so the scope of such targets may be limited.
51
If measuring coverage by spend, the company must provide an estimate of the emissions coverage associated
with that spend for validation purposes to demonstrate that the criterion for scope 3 target boundary coverage
has been met, by the supplier or customer target alone or together with other scope 3 target(s).
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 64
ANNEX C: CLASSIFICATION OF TARGET
TEMPERATURE ALIGNMENT
Temperature alignment indicates the degree of global temperature increase (compared to
preindustrial levels) companies’ targets are aligned with pursuant to the goals of the Paris
Agreement. Companies must set near-term targets with a minimum ambition of 1.5°C for
scopes 1 and 2 and a minimum ambition of well-below 2°C for scope 3.
52
Long-term targets
must have a minimum ambition of 1.5°C across scopes.
The SBTi publicly discloses temperature alignment based on the ambition of a company’s
scope 1 and 2 targets.
53
Temperature alignment is identified in the Target Dashboard on the
SBTi website with one of the following values: 1.5°C, well-below 2°C, and 2°C. Methods
used to set scope 3 targets are also evaluated during the target validation process to ensure
they meet the minimum ambition corresponding to the temperature alignment or supplier /
customer engagement requirements, however, an assessment of temperature alignment for
most scope 3 targets is not disclosed.
C.1 Target classification rules
Target classification describes the alignment of a company’s scope 1 and 2 emissions
reduction targets as a whole, relative to a long-term temperature goal. All long-term
target-setting methods are in alignment with scope 3, therefore, the target classification rules
described below apply to near-term science-based targets.
It is important to note that this classification, however, does not imply that a company’s
overall ambition and business strategy are aligned with a temperature goal, as the current
classification does not extend to scope 3 for most companies, i.e., does not cover the full
GHG inventory, and the SBTi validation body does not conduct comprehensive assessments
of companies’ business models or strategies.
Near-term science-based targets are classified based on the target type and scope
coverage. Target classifications only consider the ambition over the target timeframe (i.e.,
ambition from the base year to the target year) to best reflect a company’s target trajectory.
This means forward looking ambition (i.e., ambition from the most recent year of data to
2050) is not used to determine target classifications.
Classification rules for a range of target formulations and scope combinations are as follows:
● Absolute scope 1 and 2 combined targets modeled using the cross-sector
absolute reduction approach: These targets are classified using the cross-sector
absolute reduction thresholds.
● Scope 1 and 2 combined intensity targets modeled using the sector-specific
intensity convergence approach (i.e., SDA): Scope 1 and 2 intensity targets
53
Temperature alignment is only provided for most companies' scope 1 and 2 targets. The exception is auto
manufacturers, which also have scope 3 category 11 temperature alignment.
52
These scenarios imply a >50% chance of limiting warming in 2100 to 1.5˚ C; and a >67% chance of limiting
peak warming between now and 2100 to below 2˚ C, respectively. The SBTi strongly encourages companies to
go beyond the minimum ambition requirements.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 65
modeled using the sector-specific intensity convergence approach (i.e., SDA) are
compared and classified against the 1.5°C Scenario in the Corporate Near-Term Tool
and/or the sector-specific tools.
● Renewable electricity targets: Renewable electricity targets that meet SBTi
requirements are 1.5°C aligned. Heating, steam and cooling-related emissions are
not covered by renewable electricity targets, therefore if renewable electricity targets
are additional to absolute/intensity scope 1 and 2 targets, the classification is based
on the other scope 1 and 2 targets and not the renewable electricity target.
● Combined scope targets (scopes 1+2+3): Companies must provide the breakdown
in ambition for combined scope targets (scopes 1, 2, and 3), i.e., the ambition of the
scope 1 and 2 portion and the ambition of the scope 3 portion of the target. The
classification of the company is then based only on the scope 1+2 ambition.
Table 7. Ambition ranges for target classifications of near-term science-based targets
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 66
Method
Minimum annual linear reduction rate over target period
Cross-sector absolute reduction
method with 1.5˚C long-term
temperature goal for scopes 1 and 2
Cross-sector absolute reduction
method with well-below 2˚C
long-term temperature goal for
scope 3
Economic intensity reduction
method with well-below 2˚C
long-term temperature goal for
scope 3
Physical intensity reduction method
with well-below 2˚C long-term
temperature goal for scope 3
ANNEX D: REPORTING GUIDANCE
According to SBTi criteria, companies must publicly disclose GHG emissions and progress
against targets annually. This annex sets out recommendations on how businesses,
including SMEs, should publicly report their GHG emissions inventory and annual progress
against their published science-based targets.
54
D.1 Where to disclose
Disclosure is critical in positioning companies to respond to climate-related frameworks
issued by both government and non-governmental entities. For instance, companies could
be subject to sustainability disclosure regulations, such as the Exchange Act reporting
requirements from the US Securities and Exchange Commission (SEC), or the Corporate
Sustainability Reporting Directive (CSRD) from the European Financial Reporting Advisory
Group (EFRAG). Companies may also want to align their sustainability disclosures to meet
the Task Force on Climate-related Financial Disclosures (TCFD) recommendations or adopt
the climate reporting standard set by the International Sustainability Standards Board
(ISSB). All of these frameworks or standards require that organizations disclose their GHG
emissions, targets used to manage climate-related issues, and the performance against
these targets. Therefore, in addition to fulfilling SBTi's annual reporting requirements, it is in
a company's best interest to focus on transparent disclosure of GHG emissions and target
progress. The list below outlines some of the avenues through which companies may
publicly disclose this information.
● CDP’s climate change questionnaire: CDP provides a platform to disclose
climate-related indicators to investors, purchasers and governments through its
climate change questionnaire. This is a well-known public resource for reaching large
external audiences that continuously evolves to align with the most relevant
climate-related disclosure standards. CDP recognizes science-based targets as best
practice and incentivizes their adoption and progress through its scoring
methodologies. CDP aligns the climate change questionnaire on a yearly basis to
reflect the latest criteria and recommendations adopted by the SBTi and issues a
dedicated technical note on science-based targets accompanying its climate change
questionnaire. CDP also communicates SBTs to the Global Climate Action portal,
which tracks significant commitments made by “non-state actors”, including
companies, as part of the UNFCCC’s Action Agenda.
● Corporate public reports: Corporates may use public reports such as sustainability
reports, corporate social responsibility reports, annual reports and strategic plans to
periodically disclose GHG-related information and to integrate emissions
performance data into their non-financial disclosures. Target information can also be
presented in the company's webpage, linking it to related sustainability resources.
Integrating this information in public reports and websites facilitates access to any
stakeholder and can be used to provide further detail and context.
54
Companies that have approved targets through the streamlined validation route for SMEs should follow this
reporting guidance, where applicable. SMEs using the streamlined validation route for SMEs are committed to
measure and reduce scope 3 emissions as part of their targets, and therefore should disclose their scope 3
emissions in the company’s annual GHG inventory. The SBTi recommends that SMEs report using best practice
while acknowledging the unique constraints and barriers that they may face in reaching the detailed level of
disclosure required of larger companies.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 67
● The Global Reporting Initiative (GRI): Companies may publicly report on targets
set and their performance in their GRI-aligned reports by registering them in the GRI
Standards Report Registration System. GRI is an initiative that provides a widely
used framework for reporting environmental, social, and governance indicators.
Disclosure in any of these resources should follow the reporting principles and
recommendations presented in this annex to ensure adequate performance tracking of
science-based targets.
D.2 Reporting guiding principles
Annual target reporting is important as it enables companies to communicate year-on-year
progress against targets to stakeholders. By disclosing all pertinent aspects of the target
outlined in this section, companies can enable their audiences to fully understand the
context, implications, and nuances of their target(s).
The GHG Protocol Corporate Standard defines five overarching principles to guide the
development of corporate GHG inventories. These principles should also be applied to target
disclosure and progress reporting.
1. Relevance: Ensure the target appropriately reflects the GHG emissions of the
company and serves the decision-making needs of the users – both internal and
external to the company.
2. Completeness: Account for and report on all GHG emission sources and activities
within the chosen target boundary. Disclose and justify any specific exclusions.
3. Consistency: Use consistent methodologies to allow for meaningful comparisons of
emissions over time. Transparently document any changes to the data, inventory
boundary, methods or any other relevant factors in the time series.
4. Transparency: Address all relevant issues in a factual and coherent manner, based
on a clear audit trail. Disclose any relevant assumptions and make appropriate
references to the accounting, calculation methodologies and data sources used.
5. Accuracy: Ensure the quantification of GHG emissions is systematically not
overreported nor underreported, and that uncertainties are reduced as far as
practicable. Achieve sufficient accuracy to enable users to make decisions with
reasonable assurance as to the integrity of the reported information.
In line with best practice, companies should cover the following aspects in their disclosure of
progress against science-based targets:
1. GHG emissions inventory
2. Target description
3. Target progress
4. Substantial emission variations and changes in targets
5. Actions towards meeting SBTs
The sections below provide further recommendations for each of these disclosure items.
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 68
D.3 GHG emissions inventory
D.3.1 Full GHG inventory
As stated previously, companies must report a full GHG emissions inventory on an annual
basis. Further detail is described below:
● Companies must report all emissions scopes (1, 2 and 3) and all scope 3 categories,
including those that do not fall within a target boundary.
● Companies must disclose what the reporting period is and should clarify what the
choice of year type is (i.e., calendar year or financial year).
● Any exclusions from the inventory (scope 1, 2 or 3) must be described, estimated
and disclosed.
● For scope 3 categories that are considered negligible, companies should report an
estimate (either in tonnes of CO
2
equivalent or percentage of total scope 3
emissions).
● Companies should report the type of data used, data sources, methodologies and
assumptions used to determine the GHG emissions data. For example, for scope 3
emissions, companies should disclose which portions of the reported emissions data
come from primary data (i.e., data obtained from suppliers or value chain partners)
versus other data sources, such as average emission factors.
● Companies should describe their plans for improving the accuracy of their GHG
inventory data over time e.g., including a greater percentage of primary data in their
scope 3 inventories.
● If relevant, the FLAG inventory and non-FLAG inventory must be reported separately.
● Companies must disclose their GHG inventory for the base year and current
reporting year. They may also disclose GHG inventories for the intervening years
between the base year and reporting year to show the trend in emissions over time.
D.3.2 Data limitations
Companies should report on how they plan to bridge data gaps, exclusions and improve
data quality. Companies should quantify and provide the level of uncertainty that has been
introduced by use of estimates or averages, where possible.
D.3.3 Verification of GHG inventory
Verification is a process performed by an independent third-party accredited to perform the
verification of GHG emissions data. Third-party verification is considered best practice as it
supports the quality of underlying data and calculation methods.
If a company has their GHG emissions inventory verified, the following information should be
disclosed:
● Status of third-party verification (third-party verification underway or third-party
verification process in place).
● Specification on the scope(s): information should be disclosed for each scope
separately. For scope 2, it should be stated whether the location-based and/or the
market-based figure has been verified. For scope 3, the scope 3 categories that the
verification/assurance covers should be disclosed.
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● Proportion of reported emissions verified as a percentage, e.g., 100% of scope 2
emissions have been verified.
● Frequency of verification cycle, e.g., biannual, annual or biennial.
● Type of assurance: limited assurance, moderate assurance, reasonable assurance or
high assurance.
● If the GHG inventory has been verified or assured for previous years, this information
should be available for these years, including the base year.
● The opinion issued by the provider(s).
● Link/attachment of verification or assurance statement.
● Standard used for the verification or assurance.
● The name of the provider(s).
D.3.4 Worked example: GHG emissions inventory
This section provides a worked example that summarizes the reporting guidance for GHG
emissions inventory set out in the section above.
Full GHG inventory
Example Corp. performs a full GHG inventory of its scope 1, 2 and 3 GHG emissions on an
annual basis. The reporting period of the inventory (scopes 1, 2 and 3) covers a financial
year running from 1 April to 31 March.
Table 8. Example Corp.’s GHG inventory
Scope or scope 3 category
Base year
emissions,
FY2018 (tCO
2
e)
FY2019
(tCO
2
e)
FY2020
(tCO
2
e)
FY2021
(tCO
2
e)
FY2022
(tCO
2
e)
Scope 1
1,000
1,100
350
300
880
Scope 2 (location-based)
10,000
9,800
2,200
5,000
12,000
Scope 2 (market-based)
8,000
6,800
1,200
2,500
6,320
Scope 3, category 1: Purchased
goods and services
202,000
203,000
180,500
170,500
175,500
Scope 3, category 2: Capital goods
30,000
29,000
3,000
18,000
16,000
Scope 3, category 3: Fuel- and
energy-related activities
3,000
2,940
660
1,500
3,600
Scope 3, category 4: Upstream
transportation and distribution
70,000
70,000
55,000
62,000
68,000
Scope 3, category 5: Waste
generated in operations
10,000
9,500
9,500
8,000
9,000
Scope 3, category 6: Business
travel
5,000
6,000
5,500
200
2,500
Scope 3, category 7: Employee
2,500
2,500
2,400
100
1,000
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Scope or scope 3 category
Base year
emissions,
FY2018 (tCO
2
e)
FY2019
(tCO
2
e)
FY2020
(tCO
2
e)
FY2021
(tCO
2
e)
FY2022
(tCO
2
e)
commuting
Scope 3, category 8: Upstream
leased assets
0
0
0
0
0
Scope 3, category 9: Downstream
transportation and distribution
0
0
0
0
0
Scope 3, category 10: Processing of
sold products
0
0
0
0
0
Scope 3, category 11: Use of sold
products
0
0
0
0
0
Scope 3, category 12: End-of-life
treatment of sold products
15,000
15,150
12,000
12,300
15,600
Scope 3, category 13: Downstream
leased assets
0
0
0
0
0
Scope 3, category 14: Franchises
0
0
0
0
0
Scope 3, category 15: Investments
0
0
0
0
0
Total: scope 1, scope 2
market-based, scope 3 (all
categories)
346,500
345,990
268,910
272,900
291,200
Exclusions
Emissions from small offices with fewer than 5 employees are excluded from the inventory
and consist of 0.1% of scope 1 and 2 emissions in the target base year of FY2018.
Data limitations
For our emissions from scope 3, category 1 “purchased goods and services”, manufacturers
are invited to present their own estimates based on fuel consumption and specific activity
data. We expect to improve the methodology to calculate these emissions for next year’s
GHG inventory by increasing the proportion of data from primary sources in this category
from 50% to 80%. If current values or assumptions are adjusted in any material way,
Example Corp. will communicate these changes and perform the corresponding adjustments
to the baseline, following our base year emissions recalculation policy.
Verification of GHG emissions
Example Corp. engaged with “Name of third-party verification body” to conduct a verification
of our corporate GHG emissions inventory over the period April 1, 2021 to March, 31 2022.
The verification was performed in accordance with the “Name of verification standard used”.
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The verified metrics included scope 1, scope 2, scope 3 category 1 “purchased goods and
services”, category 2 “capital goods”, category 3 “fuel- and energy-related activities”,
category 4 “upstream transportation and distribution”, category 5 “waste generated in
operations, category 6 “business travel, category 7 “employee commuting” and category 12
“end-of-life treatment of sold products”. The verification body found no evidence that the
above metrics reported are not materially correct, and no evidence that the assertion is not
consistent with Example Corp. actual corporate GHG emissions position, with a moderate
(i.e., limited) level of assurance. The results of the assessment can be found in the following
link to the “Independent Assurance Statement”.
D.4 Target description
D.4.1 Description of the target
Companies must publicly disclose all approved targets (scope 1, 2 and/or 3) annually.
Targets should be described with the exact SBTi-approved wording, details should be
consistent with the information presented in the SBTi target dashboard and should cover the
below elements:
● Target type (e.g., absolute, intensity, renewable electricity, supplier/customer
engagement) and target sub-type (e.g. maintenance target) when applicable.
● Target IDs as provided by the SBTi (when applicable) of near term and long-term
targets (e.g., “ABS1” illustrating the first absolute target set by a company).
● The year the target was set (i.e., the year the target was validated).
● Names of emission scope(s) and scope 3 category/categories covered by the target,
including percentage of base year emissions covered and activities covered.
● Target base year.
● Target coverage of base year emissions in tonnes of CO
2
equivalent and represented
as a percentage, disaggregated by scope and scope 3 category.
● Percentage of exclusions from GHG inventory and/or target boundary (see section
1.7 of the reporting guidance).
● Target year.
● Target value, i.e., targeted percentage reduction from base year. (see section D.4.2
of the reporting guidance).
● Companies may specify the target’s absolute emissions reductions (in tonnes CO
2
e)
in addition to the targeted percentage reduction from base year.
● For intensity targets, an explanation of the metric or activity value used. Please note
that intensity targets should be expressed on both an absolute and an intensity basis.
● For scope 2 targets, whether a location-based or market-based approach was used
to calculate emissions in the base year and to track performance.
● Method(s) used for target-setting, including whether a cross-sector, commodity
pathway (FLAG targets), a sector pathway or a combination of pathways was used.
● References to the version of the SBTi criteria and target-setting tool used.
● Any other information used to calculate targets (assuming that the data is not
commercially sensitive).
● Emissions to be neutralized per scope 1, 2 and 3 at the target year and any planned
neutralization milestones (in tonnes CO
2
e and percentage).
● Nature and scale of planned actions to mitigate emissions beyond the company’s
value chain (see section D.7.5).
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D.4.2 Different levels of ambition by scope and/or activity
In cases where ambition is differentiated across scopes or scope 3 categories included
within a single target, this should be clarified in the description of the target. For example, if a
company has a target to reduce absolute scope 1 and 2 GHG emissions by 50% but plans to
reduce scope 1 by 40% and scope 2 by 75%, this should be made clear in the description of
the target.
D.4.3 Exclusions from emissions inventory and/or target boundary
Companies should describe the exclusions from the emissions inventory and/or target
boundary and communicate future plans to bring any currently excluded emissions into their
emissions inventory and/or target boundary.
D.4.4 Worked example: Target description
This section sets out a reporting example of Example Corp. that summarizes the reporting
guidance for the target description as set out in the section above. Details about the target
base year emissions and target coverage disaggregated per scope, exclusions from
emissions inventory and/or target boundary, and scope 2 methodological approach, are
presented in the worked example of the “Target progress” section below (see section D.5.3).
Table 9. Example Corp.’s approved science-based targets
Example Corp.’s near-term emission reduction targets were approved by the Science Based
Targets initiative in 2019. Our long-term and net-zero targets were approved in 2022. Our
approved science-based targets are as follows:
Target ID
Target type
Target wording
Scopes
covered
NZ
Net-zero
Example Corp. commits to reach net-zero
greenhouse gas emissions across the value
chain by FY2050 from a FY2018 base year.
1+2+3
ABS1
Absolute
(near-term)
Example Corp. commits to reduce scope 1 and
2 emissions 50% by FY2030 from a FY2018
base year.
1+2
O1
Renewable
electricity
Example Corp. also commits to increase annual
sourcing of renewable electricity from 20% in
FY2018 to 100% by FY2025
2
INT1
Physical
intensity
Example Corp. also commits to reduce scope 3
purchased goods and services and upstream
transportation and distribution emissions 69%
per product sold by FY2030 from a FY2018
base year.
3
O2
Supplier
engagement
Example Corp. also commits that 80% of
suppliers by emissions covering purchased
goods and services will have science-based
targets by FY2025.
3
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LTABS1
Absolute
(long-term)
Example Corp. commits to reduce absolute
scope 1, 2 and 3 GHG emissions 90% by
FY2050 from a FY2018 base year.
1+2+3
Reference to SBTi criteria and target setting tools used to set targets:
● Net-zero and long-term targets were set according to the SBTi Corporate Net-Zero
Standard Version 1.0 and Net-Zero Tool Version 1.0.2, consistent with the Pathways
to Net-Zero: SBTi Technical Summary Version 1.0.
● Near-term targets were set using the cross-sector absolute reduction and scope 3
physical intensity reduction methods, according to the SBTi Criteria and
Recommendations Version 4.0 and the Science-Based Target Setting Tool Version
1.1.
D.5 Target progress
D.5.1 Progress in the reporting year
Companies must report on progress toward their targets on an annual basis, and should
cover the elements described below:
● Target progress from the base year to the reporting year in terms of emissions
reductions, share of renewable electricity or supplier/customer engagement (annual
breakdowns are preferable).
● An analysis of trends or changes over multiple years; variability of progress against
targets between years is expected.
● The base period of reported data from which progress is measured (i.e., for fiscal
years, they should indicate the starting month of the fiscal year).
● Any adjustments or recalculations to baseline emissions should be made before target
progress is calculated and reported. See section D.6 in this reporting guidance for
further information.
● Percentage of target completion: Completed targets are indicated with a value of
100%. For absolute or intensity emission reduction targets, percentage of target
completion relative to base year is calculated as follows:
Target completion (%) = (base year emissions value - reporting year emissions value) /
(base year emissions value x targeted reduction from base year (%) / 100) x 100
For example, a company with a 60% absolute reduction target that has a base year
value of 1,000 tCO
2
e, a reporting year value of 700 tCO
2
e, and a target year value of
400 tCO
2
e would have a target completion percentage of (1,000 - 700) / (1,000 x (60%
/ 100) x 100 = 50%.
For renewable energy or supplier engagement targets, target completion is based on
the share of renewable energy or supplier engagement as of the reporting year,
calculated as follows:
Target completion (%) = (% share in reporting year - % share in base year) / (% share
in target year - % share in base year) x 100
For example, a company with a target of 100% sourcing of renewable electricity that
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 74
has a base year share of 40%, and a reporting year share of 64%, would have a target
completion percentage of (64 - 40) / (100 - 40) x 100 = 40%.
Absolute emissions reduction targets
● Companies should report absolute emission values (within the target boundary) for
near and long-term targets in the reporting year by scope and by scope 3 category.
Emissions intensity targets
● Companies should report emissions in tCO
2
e per unit of activity based on the activity
metric chosen in the reporting year e.g., tonnes of CO
2
e per unit of production, tonnes
of CO
2
e per passenger kilometer, tonnes CO
2
e per FTE employee, etc.
● Companies with emissions intensity targets should also report their equivalent
absolute emission values in tCO
2
e.
Renewable electricity targets
Companies setting renewable electricity targets should report:
● The level of renewable electricity procurement at the base year and the reporting year
in terms of the percentage of renewable electricity procured out of total electricity
consumed. For example, a company with a 100% renewable electricity target and a
reporting year value of 80% has a progress of 80% of a 100% share of renewable
electricity.
● The absolute quantity of electricity procurement (in kWh or a comparable unit) and the
quantity of electricity procurement that comes from renewable sources, in accordance
with the recommendations of the RE100 Technical Criteria.
Supplier/customer engagement targets
● Companies should report the percentage of suppliers or customers, as defined by the
relevant metric (e.g., by emissions or by spend), with science-based targets at the
base year and the reporting year.
● Supplier or customer bases are expected to change over time, and companies should
account for corresponding changes in their scope 3 inventory. Even though suppliers
or customers change and their emissions fluctuate, the target value continues to apply
until the target date is reached.
● If a company sets a goal for a certain percentage of its suppliers / customers by
emissions to have science-based targets, then it will recalculate the portion of scope 3
emissions each supplier / customer with science-based targets represents and
aggregate the emissions covered by suppliers annually to find the reporting year value.
D.5.2 Level of disaggregation
Companies shall report their progress toward each of their target(s) at the level of
disaggregation as set out in the approved target language on the SBTi target dashboard and
as described below:
Multiple targets:
● Companies should not combine or aggregate approved SBTs into a single target
unless they have also reported at the level of disaggregation that is communicated in
their approved target language. For example, a company has set a physical intensity
target on scope 3 category 1 “purchased goods and services” and an absolute target
on scope 3 category 11 “use of sold products” and category 12 “end-of-life treatment
SBTi Corporate Net-Zero Standard V1.2 March 2024 | 75
of sold products.” This company shall report on the physical intensity scope 3 target
and the absolute scope 3 target for categories 11 and 12 separately.
Combined scope targets:
● Combined scope targets (e.g., scope 1+2+3) should be reported with the same level
of aggregation as the approved target at a minimum.
● In addition, progress against scope 1 and 2 targets and scope 3 targets should be
reported separately.
● Progress against a more detailed level of disaggregation, for example separating
scope 1 and 2, or scope 3 categories, may optionally be reported.
D.5.3 Worked example: Target progress
This section provides a worked example that summarizes the reporting guidance for target
progress set out in the section above.
Table 10. Example Corp.’s progress on their approved scope science-based targets.
Reporting item
[target]
Base
year
value
FY2018*
Base year
emissions
covered by
targets,
(tCO
2
e)
(%)
FY2019
value
FY2020
value
FY2021
value
FY2022
value
FY2022
% change
(from
FY2018)
Target
completion
(%)
Scope 1 (tCO
2
e)
1,000
1,000
(100%)
1,100
350
300
880
-12%
N/A
Scope 2
(market-based)
(tCO
2
e)
8,000
8,000
(100%)
6,800
1,200
2,500
6,320
-21%
N/A
Total scope 1+2
(market-based)
(tCO
2
e)
[ABS1]
9,000
9,000
(100%)
7,900
1,550
2,800
7,200
-20%
40%
Total electricity
use (MWh)
22,000
N/A
21,500
5,000
11,000
28,000
+27%
N/A
Electricity
procurement from
renewable
sources (MWh)
4,400
N/A
6,450
1,500
3,300
14,000
+218%
N/A
% of electricity
from renewable
sources
[O1]
20%
N/A
30%
30%
30%
50%
+150%
37.5%
Scope 3, cat.1:
Purchased goods
and services
(tCO
2
e)
202,000
200,000 /
99%
(INT1)**
201,00
0
180,00
0
170,00
0
175,00
0
-12.5%
N/A
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Reporting item
[target]
Base
year
value
FY2018*
Base year
emissions
covered by
targets,
(tCO
2
e)
(%)
FY2019
value
FY2020
value
FY2021
value
FY2022
value
FY2022
% change
(from
FY2018)
Target
completion
(%)
Scope 3, cat. 4:
Upstream
transportation
and distribution
(tCO
2
e)
70,000
70,000 /
100%
(INT1)
70,000
55,000
62,000
68,000
-2.9%
N/A
Total scope 3,
cat. 1 and 4
(tCO
2
e)
272,000
270,000
271,00
0
235,00
0
232,00
0
243,00
0
-10.7%
N/A
Activity level:
number of
products sold
10,000
10,000
10,100
8,000
8,200
10,410
+4.1%
N/A
Overall emissions
intensity
(tCO
2
e/product)
[INT1]
N/A
27.00
26.83
29.38
28.29
23.34
-13.6%
19.6%
Suppliers of
purchased goods
and services with
science-based
targets (%
coverage of
scope 3, cat. 1)
[O2]
0%
N/A
0%
5%
10%
20%
20%
25%
Scope 1, scope 2
market-based,
scope 3 (all
categories)
(tCO
2
e)
[LTABS1]
346,500
346,500
345,99
0
268,91
0
272,90
0
291,20
0
-16.0%
17.7%
*Example Corp. performs a full inventory of its scope 1, 2 and 3 emissions on an annual
basis. Emissions from small offices with fewer than 5 employees are excluded from the
inventory and consist of 0.1% of scope 1 and 2 emissions in the target base year.
**This target does not cover purchased office supplies and cleaning services emissions
within scope 3 category 1 “purchased goods and services”.
D.6 Substantial emission variations and changes in targets
D.6.1 Base year recalculation policy and threshold
According to the GHG Protocol Corporate Standard, “companies shall develop a base year
emissions recalculation policy, and clearly articulate the basis and context for any
recalculations. If applicable, the policy shall state any ‘significance threshold’ applied for
deciding on historic emissions recalculation”. The SBTi requires companies’ base year
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emissions recalculation policies to include a significance threshold of 5% or less according to
Criterion C27 and C33 of the Corporate Near-Term Criteria and the Corporate Net-Zero
Standard criteria respectively.
Companies should disclose whether they have a base year recalculation policy and what
significance threshold is used in their annual reporting. The base year emissions
recalculation policy should be indicated in annual reports, either in the reporting itself or as a
reference to the policy published elsewhere.
For detailed guidelines related to emissions inventory rebaselining, please review Chapter 5
“Tracking Emissions Over Time” of the GHG Protocol Corporate Standard.
D.6.2 Reasons for variation in emissions
Companies should annually disclose and justify significant increases or decreases in scope
1, 2 and 3 emissions between the current reporting year and previous reporting years.
55
Companies should contextualize the reasons for variation by including an analysis of the
changes in emissions and impact on the GHG inventory.
Company emissions may vary for the many reasons, including:
● Changes in renewable energy consumption
● Emission reduction activities
● Divestments, acquisitions, and mergers
● Change in business output (product and/or service), e.g., organic growth, purchase
of new facilities due to business expansion or release of a new product
● Change in methodology used to calculate the emissions inventory, e.g., changes in
emission factors
● Change in organizational boundary or operational boundary used in emissions
inventory calculation, e.g., changing from equity share approach to operational
control approach
● Change in physical operating conditions, e.g., increased rainfall heightened the
production of hydroelectricity
In some cases, significant changes in company emissions or circumstances can trigger a
target recalculation. In this case, companies should provide background and justification for
the changes in emissions). For example, in the case of methodological improvements or
changes to the base year emissions methodology, the company should include a description
of the following:
● The previous methodology and the new methodology
● Any changes in sources of data and/or emission factors
● Details on how changes were implemented
● Corrective actions adopted
● Description of the extent of their impact on the GHG inventory (e.g., % impact on
base year emissions)
If the baseline data has changed due to merger, acquisition or divestment, the company
should provide the type of structural change, date of completion and percentage impact on
base year emissions.
55
The SBTi defines significance as 5% or more.
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D.6.3 Worked example: substantial emission variations and changes in targets
This section provides a worked example that summarizes the reporting guidance for
substantial emission variations, base year emissions recalculations, and changes in target,
set out in the section above.
Example Corp. has recalculated and restated its base year emissions (financial year 2018)
across scope 3 category 4, “upstream transportation and distribution”, to reflect an improved
data collection methodology and ensure consistent estimation methods for each reporting
year.
Our company’s base years emissions recalculation policy defines a significant change as a
cumulative change of 5% or more in our total base year emissions. We have assessed the
implications of this restatement on our science-based targets and have not identified a need
to update the target as the change represents an impact of less than 5%. To access our
recalculation policy follow “this link”.
D.6.3 Recalculated and revalidated targets
If a target has been updated due to new target submissions or a triggered target
recalculation, companies must report progress on their currently active target(s) as
presented in the SBTi target dashboard. Companies with revalidated targets should report
on the details on the revisions to the target, including an explanation of the reason for
revision. Companies should also include the target language of the target that was replaced
by the updated target.
When disclosing progress against a target that has replaced a previous target due to a base
year recalculation of the GHG emissions inventory, the company must ensure that they are
disclosing the rebaselined emissions inventory. For consistency, the company may restate
the GHG emissions data between the base year and the reporting year.
If a company is in the process of updating its targets whilst a SBTi validation is still in
progress, the company should report progress on the target that is valid at the time of
reporting. The company may state that an updated target is under review and report
progress against the future updated target, highlighting that it has not yet been formally
validated.
D.7 Actions towards meeting SBTs
D.7.1 Information on emission reduction projects
Companies should report information on emission reduction initiatives contributing to the
achievement of their targets, and include the following information:
● Description of the emission reduction initiatives within the reporting year and the total
estimated annual CO
2
e savings. The stage of development of each emissions
reduction initiative should be clear i.e., to be implemented, implementation
commenced or implemented, as well as the scope(s) and/or scope 3 category(ies)
the GHG emissions impacts are expected or have already occurred.
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● Novel or innovative efforts or partnerships that have been put into place to reduce
emissions.
● Investments or changes that have been made that may not yet have delivered
significant results but that are expected to do so in the coming years or that enable
the necessary transformation towards a long-term goal.
● Companies should disclose their climate transition plans (including their financial
plans) to outline how they will deliver on their strategy to reach their targets. See
section D.7.7 for further information.
D.7.2 Information on contractual instruments (for scope 2 targets)
Companies should provide details on the types of contractual instruments (e.g., unbundled
renewable energy certificates, power purchase agreements) that are used to reduce their
scope 2 market-based emissions and/or make progress towards a renewable electricity
target. Companies should align with the RE100 Technical Criteria.
Companies should illustrate how the market-based instruments being used conform with the
GHG Protocol Scope 2 Guidance, specifically the scope 2 quality criteria.
D.7.3 Decarbonization pathway
If possible, companies should specify the anticipated and/or observed progress curve
against their targets, e.g., linear or variable, that describes the expected pace of reduction.
When applied to renewable electricity and engagement targets, the progress curve is not a
function of emission reductions but instead progress of the relevant metric for those targets
e.g., percentage of suppliers engaged for a scope 3 supplier engagement target over time.
If progress of targets and planned emission reductions are currently not on track or deviates
away from the target pathway, companies should provide an explanation and describe the
strategy for addressing these deficits in the future.
D.7.4 Planned milestones and/or near-term investments for neutralization
Companies should disclose the following elements:
● The magnitude of emissions planned to be neutralized in the net-zero target year.
This quantity of emissions should include not only unabated emissions within the
target boundary, but also emissions excluded from the target boundary and/or
inventory.
● Description of any planned milestones and/or near-term investments that
demonstrate the integrity of its commitment to neutralize unabated emissions in the
target year. For example, a company should disclose if it is investing or planning to
invest into carbon dioxide removal and storage technologies (e.g., direct air capture)
in the near-term.
D.7.5 Planned actions or investments to mitigate climate change beyond your value chain
The SBTi Corporate Net-Zero Standard strongly recommends that companies take
immediate action above and beyond their science-based targets to contribute to reaching
global net-zero through beyond value chain mitigation (BVCM). Companies should refer to
the BVCM Report section ‘Step 4: Report BVCM Activities and Outcomes’, and, at a
minimum, report the following elements:
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● Description of any actions taken, or investments deployed in the reporting year, as
well as plans for beyond value chain mitigation activities or investments in future
years to accelerate the net-zero transition beyond the company’s value chain.
Companies should report annually on the nature and scale of those actions and/or
investments.
● If no beyond value chain mitigation activities are taken or considered, companies
should provide an explanation.
D.7.6 Use of carbon offset credits and avoided (product-level) emissions
Companies should publicly disclose carbon credits which are sourced from outside the
company’s value chain (i.e., often referred to as "offset credits") separately from their
reported GHG inventory and ensure that they are not counted towards the progress of their
science-based targets.
Companies should publicly disclose emission reductions that occur outside of a product's life
cycle or value chain but as a result of the use of that product (often described as "avoided
emissions") separately from their reported GHG inventory and ensure that they are not
counted towards the progress of their science-based targets.
This information should be publicly available and easily accessible. Companies should
refrain from using any misleading wording and it should be very clear that target progress
does not include carbon offset credits and/or avoided (product-level) emissions.
D.7.7 Climate transition plan
According to CDP, a climate transition plan is a time-bound action plan that outlines how an
organization will pivot its existing assets, operations and entire business model towards a
trajectory aligned with the latest and most ambitious climate science recommendations.
Climate transition plans should be ambitious, have integrity and transparency, be credible
and fair. Companies should develop comprehensive and actionable transition plans which
indicate detailed target descriptions and the actions that will be undertaken to meet their
targets. They should be updated every 5 years and progress (including any changes to the
plan) should be reported annually. Specifically, companies should publicly disclose:
● Governance structure to oversee the development, implementation and verification of
climate transition plans and the review frequency of these plans.
● Incentive structure related to climate change including any executive compensation
linked to near and long-term targets.
● Description of alignment with credible sector pathways consistent with limiting
warming to 1.5°C and explanation of any material difference between the company’s
transition plan and sector pathways. Please refer to Pathways to Net-Zero: SBTi
Technical Summary and sector guidance for more information (e.g., FLAG guidance).
● Financial indicators (e.g., capital expenditure (CAPEX), operating expenditure
(OPEX), revenue and research and development expenditure) and how these are
used to plan and implement a business model aligned with a 1.5°C world. Capital
expenditure plans, research and development plans and investments should be split
between new and legacy/stranded assets.
● Specific actions across all parts of the company’s value chain that will help meet its
science-based targets, including through supplier and customer engagement.
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● Specific actions to address any data limitations (e.g., on emissions).
● Skills and human resource development related to climate change.
● Specific policies and regulations, including carbon pricing, needed to facilitate
transition plans.
● Clear disclosures on public advocacy, lobbying and policy engagement expenditures
and effort on policies that could limit or worsen climate change. Specifically,
companies should describe how current and future lobbying and policy engagement
activities are consistent or inconsistent with a 1.5°C world.
● Actions planned or implemented that contribute to a just transition (e.g., partnerships
with workers, trade unions, communities, and suppliers and the integration of free,
prior and informed consent of Indigenous Peoples). Specifically, the climate transition
plan should explain how it considers and addresses social consequences and
impacts of mitigation actions, including on race, gender, and intergenerational equity.
● Actions planned or implemented to avoid the conversion of remaining natural
ecosystems – eliminating deforestation, wetland and peatland loss by 2025 at the
latest, and the conversion of other remaining natural ecosystems by 2030.
● Results of any third-party assessment and/or verification of the company’s climate
transition plan or “readiness for net-zero” by other initiatives, such as ACT
(Assessing Low Carbon Transition).
Companies should refer to further guidance on transition plans, for example, the CSRD
reporting requirements; report from the United Nations’ High‑Level Expert Group on the Net
Zero Emissions Commitments of Non-State Entities “Integrity Matters: Net Zero
Commitments by Businesses, Financial Institutions, Cities and Regions”; CDP resources on
transition plans; the Transition Plan Taskforce Disclosure Framework and the Glasgow
Financial Alliance for Net Zero (“GFANZ”) “Expectations for Real-economy Transition Plans”
report.
Companies without a formal transition plan should disclose information related to their
climate transition as described above to provide a robust context and increase transparency
in their decarbonization journey.
D.7.8 Worked example: actions towards meeting SBTs
This section sets out a reporting example of Example Corp. that summarizes the reporting
guidance for actions towards meeting SBTs set out in the section above.
Table 11. Example Corp.’s actions taken to meet their science-based targets
Target
Actions towards meeting SBTs
Reduce absolute scope 1 and
2 emissions 50% by FY2030
from a FY2018 base year
(ABS1).
In 2022, we decreased our scope 1 and 2 emissions by 20% compared to
2018 levels. This was achieved through a 12% reduction in scope 1 and
21% reduction in scope 2 market-based emissions.In scope 1, we reduced
direct emissions by continuing to convert our fleet of internal combustion
engine vehicles and propane forklifts to electric vehicles and machines. In
scope 2, we have increased our manufacturing facility energy efficiency by
an average of 9% since 2018 resulting in a decrease in electricity demand,
which has been partially offset by the electricity used for our new fleet.
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Increase annual sourcing of
renewable electricity from
20% in 2018 to 100% by
2025 (O1).
We have entered into renewable electricity purchase agreements that have
reduced scope 2 market-based emissions further and helped us make
progress towards our goal of 100% renewable electricity by 2025.
Reduce scope 3 purchased
goods and services and
upstream transportation and
distribution emissions 69%
per product sold by 2030
from a 2018 base year
(INT1).
Significant progress has been made to make our products with less raw
materials per item. Additionally, we are working to engage our suppliers and
provide resources for them to decarbonize their own operations. We may
need to recalculate our baseline in a few years as we switch from using
average emission factors to supplier-specific factors, at which time we will
assess whether our target needs to be revised and updated with the SBTi.
Overall, covered emissions in categories 1 and 4 have decreased by 10%
while the number of products sold has increased by 4%, from 10,000 in
2018 to 10,410 in 2022. Emissions intensity has thus decreased by 13.6%
from the base year.
Key suppliers representing
80% of emissions from our
purchased goods will set a
science-based emission
reduction target by FY2025
(O2).
Key suppliers representing 20% of emissions from our purchased goods
and services have set a science-based emissions reduction target as of the
end of FY2022. We have undertaken workshops with these subcontractors
to improve their scope 1, 2 and 3 reporting, modeled science-based targets
together and developed carbon reduction plans. We have also worked with
them to support their supply chains to set science-based targets.
Reduce absolute scope 1, 2
and 3 GHG emissions 90%
by FY2050 from a FY2018
base year (LTABS1).
Our long-term target includes all scopes and scope 3 categories at 100%
coverage. Progress towards this target is displayed in Table 10. As of
FY2022, we have reduced our total scope 1, 2 and 3 emissions by 16%,
which is almost 18% of the way to achieving our target. To accomplish this
goal, we have finalized our transition plan, which describes key actions and
investment strategies, including the review of procurement practices,
engagement with business partners, lower carbon intensity products and the
improvement in the accuracy of our GHG accounting to identify additional
reduction opportunities.
Reach net-zero greenhouse
gas emissions across the
value chain by FY2050 from
a FY2018 base year (NZ)
Target completion: N/A
Reaching net-zero greenhouse gas emissions across the value chain is
linked to achieving the long-term target (LTABS1) and neutralizing all
unabated emissions with permanent removals. In 2050, Example Corp.
commits to neutralizing 34,668 tonnes of CO
2
-equivalent equivalent to 9% of
total actual emissions. This target is also linked to the aforementioned
near-term targets, which are interim steps on the path to net-zero: ABS1,
O1, INT1, and O2. Example Corp. is exploring opportunities for investment
in direct air capture in the near future.
Use of carbon credits
Example Corp. buys carbon credits that relate to mitigation outside of the
value chain boundary from XYZ but does not count them as progress
towards science-based targets and instead reports them as a BVCM activity.
We purchase 350 tCO
2
e of emission reduction carbon credits at an average
price of 80 USD/tCO
2
e from “Name of activity type”, verified to “Name of
standard”. These carbon credits are used as part of the delivery of Example
Corp’s BVCM pledge and the company makes a claim that it has contributed
to global mitigation efforts, over and above its 1.5°C science-based target .
Avoided emissions
Example Corp. develops products which enable its customers to reduce
emissions, but these emissions reductions are not accounted for in Example
Corp’s GHG inventory. These avoided (product-level) emissions are not
counted towards the company’s science-based target and are reportedly
separately from the GHG inventory.
Climate transition plan
information and progress
Governance:
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The Board of Directors of Example Corp. approves the company’s
decarbonization strategy and oversees climate performance metrics,
emissions reduction targets, low-carbon technological developments and
investment plans to ensure that they are on track and compliant with the
approved transition plan. The Board of Directors reviews the climate
transition plan once a year.
Incentive structure:
Example Corp. has set an internal carbon price to help guide investment
decisions on new projects and assess whether an investment is in line with
the decarbonization path. Part of the CEO’s and Executive Leadership
team’s annual bonus is dependent on the achievement of the climate
performance indicators set out in the climate transition plan. Further
bonus-based incentives on the climate transition have been rolled out for
upper management and middle management across the company. In
relation to climate change, 2% of the annual bonus for the CEO and
management team is dependent on being on track with achieving our
science-based targets.
Financial indicators:
Example Corp. will allocate a total of 20 million Euros for FY2023-FY2025 to
low-carbon investments, representing 25% of total planned investment for
the period. The company has also established a goal to dedicate 10% for
FY2023-FY2030 for the investment in R&D projects to be in line with the
climate transition plan.
Overall, by 2030 Example Corp plans to spend 50% of its CAPEX and
OPEX in activities aligned with a 1.5°C future and it is planning to generate
60% of its revenues from low-carbon products by 2030. In the reporting
year, the company was on track to achieve these goals (please see the
transition plan footnotes on our financial statements for details).
Just transition:
Example Corp is investing in a new factory in Tanzania fully powered by
renewable energy generated on-site. Any surplus energy will be sold at a
rebated price to the local community to reduce the usage of fossil
fuel-powered generators. The factory is planned to be completed by 2025.
There is also a plan to create a training program for the local community on
solar panel maintenance which aims at ensuring business continuity whilst
reducing unemployment and increasing income per capita in the area.
Public advocacy:
Example Corp. has joined relevant pledges (e.g., the Business Ambition
1.5°C declaration) and has advocated for an ambitious approach to fully
decarbonize the sector by 2050. Example Corp has not supported any
policy that advocates for fossil fuel expansion in the past year.
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ANNEX E: GUIDANCE FOR COMPANIES IN
LAND-INTENSIVE SECTORS
Companies with land-intensive activities in their value chain are expected to set a forest,
land and agriculture (FLAG) target – that includes both emission reductions and removals -
in addition to science-based targets that cover energy and industrial processes. The FLAG
target indicates how much and how quickly a company needs to reduce its land-based
emissions to limit global warming to 1.5°C. Companies should refer to the FLAG guidance
and the forthcoming GHG Protocol Land Sector and Removals Guidance (draft guidance
released September 2022) to account for agriculture, forestry, and other land use (AFOLU)
emissions or removals in their targets or disclosures.
E.1 Background on FLAG emissions
The FLAG sector, also known in the scientific community as the AFOLU sector, represents
about 22% of global anthropogenic GHG emissions (~13 GtCO
2
e per year), around half
coming from agriculture and the other half from land use, land-use change, and forestry
(LULUCF) (IPCC, 2022). Even though GHG emissions from FLAG sectors have been
historically difficult to evaluate through GHG accounting and target-setting approaches, they
must be significantly reduced by 2050 while agricultural production is expected to increase
50% to meet increased food demand.
56
The AFOLU sector has the potential to deliver up to 37% of the emissions reductions and
removals needed through 2030, and 20% through 2050 (Griscom et al., 2017). Aligning the
AFOLU sector with 1.5°C pathways through reductions is feasible by stopping deforestation
and land conversion, reducing peat burning and forest degradation, lowering agricultural
emissions and reducing emissions via demand shifts (e.g., addressing diet shift, food loss
and waste).
Mitigation in the land sector also requires accounting for biogenic CO
2
removals (enhancing
sinks) due to the potential for forests and soils to store carbon. Biogenic CO
2
removals
include restoring natural ecosystems, deploying silvopasture, improving forest management
practices and enhancing soil carbon sequestration (Roe et al., 2019).
E.2 SBTi FLAG Guidance
The FLAG guidance is aimed at companies in land-intensive sectors, including food,
agriculture, and forestry. FLAG pathways include not only emissions reductions, but also
removals within the land sector. It includes an overall FLAG sector mitigation pathway as
well as 11 specific FLAG mitigation pathways for major commodities: beef, chicken, dairy,
leather, maize, palm oil, pork, rice, soy, wheat, and timber and wood fiber. All FLAG
pathways include CO
2
and non-CO
2
emissions related to agriculture and forestry ‘to farm
gate’.
56
WRI, Creating a Sustainable Food Future.
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It is important to consider that companies are required to report emission reductions and
removals separately, and removals are included only in FLAG targets. Crucially, FLAG
science-based targets are separate from SBTs that cover emissions from energy and
industrial processes – therefore, FLAG mitigation cannot be used to meet
energy/industry (non-FLAG) targets (e.g., a company cannot bring forests into its value
chain to meet another SBT; removals included in FLAG targets cannot be used to meet
energy/industrial SBTs).
E.3 Greenhouse Gas Protocol Land Sector and Removals Guidance
The two FLAG approaches available in the FLAG Guidance (FLAG sector approach and
FLAG commodity approach) seek to align with the GHG Protocol Land Sector and Removals
Guidance (final version expected in 2024). The guidance will explain how companies should
account for emissions and removals from land management, LUC, biogenic products,
technological CO
2
removals and related activities in GHG inventories.
FLAG guidance and tools will be updated as needed to align with the GHG Protocol Land
Sector and Removals Guidance, once finalized, and as new and improved data become
available. From April 30, 2023, companies with land-intensive operations shall prepare for
and set FLAG targets using the draft version.
E.4 Which companies are required to set FLAG targets?
Companies with land intensive activities in their value chain from the following sectors are
required to set a FLAG science-based target:
● Forest and paper products such as timber, pulp and paper, and rubber.
● Agricultural production.
● Food production from animal sources.
● Food and beverage processing.
● Food and staples retailing.
● Tobacco.
Companies in any other sector that have land-related emissions that total 20% or more of
overall emissions across scopes 1, 2 and 3 are also required to set a FLAG target.
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