Understanding SBTi and Setting Climate Targets for Your Business 

Businesses worldwide are setting climate targets to reduce their greenhouse gas emissions and contribute to global climate goals. These targets provide a clear framework for action, helping businesses drive innovation, manage risks, and meet evolving regulations. Whether through absolute reductions or intensity-based goals, the right approach depends on a company’s growth and industry. Understanding these options – and frameworks like the Science Based Targets initiative (SBTi) – is key to setting science-aligned commitments. 

What Are Climate Targets? 

Climate targets are specific, measurable goals set by businesses to reduce their greenhouse gas (GHG) emissions over a defined period. These targets represent a company’s commitment to mitigating its impact on climate change and transitioning towards a more sustainable business model. 

Climate targets are essential for several reasons: 

1. Clear direction: They provide a concrete roadmap for sustainability efforts within a business, helping to focus resources and attention on specific emission reduction targets. 
2. Global contribution: By setting and achieving climate targets, companies actively contribute to global climate goals, such as those outlined in the Paris Agreement. 
3. Innovation driver: Ambitious targets can prompt innovation within companies, leading to the development of new technologies, processes, and business models that are more environmentally friendly.
4. Stakeholder commitment: Climate targets demonstrate a company’s commitment to sustainability to various stakeholders, including customers, investors, employees, and regulators. 
5. Risk management: By proactively addressing emissions, companies can better manage climate-related risks and potential future regulations. 

What are the different types of climate targets?

When it comes to setting climate targets, companies typically choose between two main types:

Absolute Targets: These aim to reduce the total volume of GHG emissions over time, regardless of other factors like company growth or output. For example, “Reduce total GHG emissions by 50% by 2030 compared to 2020 levels.” 

Pros:

• Guarantee an overall reduction in emissions  
• Easier to communicate and understand
• Directly contribute to global emission reduction targets

Cons:

•  Can be challenging for rapidly growing companies 
•  May disincentivise growth if not carefully managed 

Intensity Targets: These focus on reducing emissions relative to a unit of output, such as emissions per product or per revenue. For example, “Reduce GHG emissions per product unit by 25% by 2030 compared to 2020 levels.” 

Pros:

• Allow for business growth while still improving efficiency 
• Can be more feasible for companies in growth phases 
• Encourage operational efficiency improvements 

Cons:

• Don’t guarantee an absolute reduction in emissions 
• Can be more complex to communicate and understand 

While both types of targets are recognised and can contribute to important change, absolute targets are generally preferred from a climate perspective, as they ensure an overall reduction in emissions, which is ultimately necessary to combat climate change effectively.

What is the Science Based Targets initiative (SBTi)?

The Science Based Targets initiative (SBTi) is a globally recognised framework that helps companies set greenhouse gas (GHG) emission reduction targets in line with climate science. This initiative is driven by a partnership of five leading climate organisations:

• Carbon Disclosure Project (CDP)
• The United Nations Global Compact (UNGC)
• World Resources Institute (WRI)
• World Wide Fund for Nature (WWF)
• The We Mean Business Coalition.

Its primary objective is to ensure that businesses’ emission reduction targets align with the Paris Agreement’s goal of limiting global warming to 1.5ºC or well below 2ºC. It provides standards, tools, and guidance that help businesses translate abstract climate science into concrete action plans. 

Why Setting Climate Targets and SBTi Matter

Adopting SBTi-aligned targets is important for several reasons:

• Scientific alignment: It ensures that corporate targets are in line with the latest climate science, making them impactful in the fight against climate change. 
• Enhanced credibility: The independent validation process adds credibility to corporate climate commitments, helping to prevent greenwashing.
• Standardisation: SBTi provides a common framework for target-setting, allowing for consistency and comparability across companies and sectors.  
• Investor confidence: Many investors now look for science-based targets as an indicator of a company’s long-term sustainability and risk management.
• Future-proofing: Companies with robust climate strategies are better prepared for regulatory changes and evolving market demands. 

Setting clear climate targets helps businesses future-proof their operations and demonstrates leadership in the transition to a low-carbon economy. 

How SBTi Works for Businesses

The SBTi process typically involves the following steps:

1. Commit: Sign the SBTi Commitment Letter, pledging to set targets within 24 months. 
2. Develop: Calculate Scope 1, 2, and 3 emissions, select a target-setting method, and develop science-based targets aligned with 1.5ºC pathways.
3. Submit: Send targets to SBTi for validation against SBTi Criteria. 
4. Communicate: Announce publicly once validated, engaging stakeholders to build transparency and strengthen accountability.  
5. Disclose and track progress: Report annually, recalibrate targets if needed, and ensure long-term accountability.   

This process ensures that companies are setting purposeful targets and are held accountable for their commitments. 

Growing Companies and SBTi

While the SBTi framework is beneficial for driving corporate climate action, it can present challenges, particularly for mid-sized and growing companies: 

• Resource intensity: The process of developing and implementing science-based targets can be resource-intensive, requiring significant time, expertise, and potentially financial investment. 
• Long-term commitments: Rapidly growing companies may find it challenging to commit to long-term absolute targets when their future growth plans are uncertain. 
• Data complexity: Calculating emissions, especially Scope 3 emissions, can be complex and data-intensive, which can be overwhelming for companies new to emissions tracking. 
• Standardised approach limitations: The standardised SBTi approach may not perfectly fit all business models or growth trajectories, potentially disadvantageous to some companies. 

For growing companies, particularly mid-sized businesses, setting science-based targets may seem daunting. While SBTi’s stringent criteria can be challenging, these companies can leverage its validation frameworks and sector-specific guidance to set realistic yet ambitious targets. However, SBTi’s rigid requirements - especially the high bar for net zero - may not always be the best fit for rapidly expanding businesses. Companies may find it difficult to meet absolute reduction targets as they scale up, making intensity targets a more flexible option. 

For mid-sized companies, setting appropriate climate targets requires balancing ambition with practicality. Here are some target-setting approaches that may work well for mid-sized companies:

1. Absolute targets with flexibility: Mid-sized companies can set absolute targets, but with some built-in flexibility to account for growth. For example, a company might aim to reduce absolute emissions by 30% by 2030, with provisions to adjust the target if significant growth occurs. 
2. Intensity targets: These can be particularly suitable for growing mid-sized companies. An intensity target allows for business growth while still driving emissions reductions. 
3. Staged approach: Mid-sized companies can start with near-term science-based targets focusing on Scope 1 and 2.

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Getting Started

For companies new to this space, here are some initial steps to begin the journey:

1. Assess current emissions: Start by calculating your company’s carbon footprint across all scopes (1, 2, and 3). This baseline is crucial for setting meaningful targets. 
2. Set preliminary targets: Even if you’re not ready for SBTi validation, setting internal targets can be a great way to start. These can be absolute or intensity-based depending on what makes sense for your business. 
3. Explore carbon management platforms: Various software solutions, like Zevero, can help track emissions, set targets, and monitor progress. These can be invaluable tools, especially for companies without in-house sustainability expertise. 
4. Stay informed: The field of corporate sustainability is rapidly evolving. Regularly update your knowledge about best practices, new methodologies, and regulatory changes. 
5. Engage stakeholders: Involve different departments in your target-setting process. Finance, operations, and supply chain teams can provide good insights and will be vital for achieving your targets. 

How Zevero Can Help

Zevero simplifies the process of setting and tracking climate targets by providing businesses with accurate emissions data, tailored reduction strategies, and guidance on aligning with frameworks like SBTi. We help companies navigate complex sustainability requirements through expert support and data-driven insights, ensuring credible and impactful climate action. 

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