The Science Based Targets initiative (SBTi) is a global body enabling businesses to set ambitious emissions reduction targets in line with the latest climate science. It provides companies with a credible and standardized framework to align their decarbonization strategy with the goals of the Paris Agreement.
Science Based Targets Initiative (SBTi)
The Science Based Targets initiative (SBTi) is a critical framework in corporate climate action. It is a partnership between CDP, the United Nations Global Compact, World Resources Institute (WRI), and the World Wide Fund for Nature (WWF). Its primary purpose is to provide companies with a clearly defined path to reduce their greenhouse gas (GHG) emissions, ensuring their goals are ambitious enough to help prevent the worst impacts of climate change and limit global warming to 1.5 °C. For investors and stakeholders, SBTi-approved targets are a key indicator of a company’s serious commitment to a sustainable transition, moving beyond vague pledges to actionable, verified plans.
The initiative is crucial for building a transparent and accountable low-carbon economy. By setting a “science-based target,” a company effectively maps out its contribution to global climate goals.
How the SBTi Process Works
- Commit: The company signs a commitment letter, officially stating its intent to set a science-based target within 24 months.
- Develop: The company develops an emissions reduction target in line with the SBTi’s strict criteria. This involves a detailed analysis of its Scope 1, 2, and 3 emissions and modelling a decarbonization pathway.
- Submit: The company submits its target to the SBTi for an independent validation and assessment by the initiative’s team of experts.
- Communicate: Once the target is approved, the company announces it to its stakeholders, enhancing transparency and corporate accountability.
- Disclose: The company reports on its progress annually, disclosing its company-wide emissions and tracking performance against its targets.
Concrete Use Case
Consider a large European industrial company that commits to the SBTi. It sets a validated target to reduce its absolute Scope 1 and 2 emissions by 42% by 2030. To meet this goal, it invests heavily in energy efficiency and renewable energy sources.
However, as part of its operations, it is also covered by the EU Emissions Trading System (EU ETS). While working to reduce its emissions internally, the company must still surrender a carbon allowance, such as an EUA (European Union Allowance), for every tonne of CO₂ it emits. Its ambitious SBTi target incentivizes the company to reduce its reliance on purchasing these allowances over time, directly linking corporate climate strategy with the supply and demand dynamics of the regulated carbon market. This illustrates how corporate commitments drive the value and impact of assets like those accessible through Homaio. Learn more about the EU Emissions Trading System (EU ETS).
For more detailed criteria and company lists, consult the Science Based Targets initiative official website.