Understanding the Science Based Targets initiative (SBTi): Why it is becoming business-crucial

As pressure builds on businesses to demonstrate credible climate action, the Science Based Targets initiative (SBTi) has emerged as the leading global framework for setting emissions reduction targets aligned with climate science.

With the release of Version 2.0 of the Corporate Net-Zero Standard, the SBTi has introduced its biggest update since 2021, placing greater emphasis on implementation, transparency, and continuous improvement.

But what exactly is SBTi, how does the process work, and what does it mean in practice for your business? This guide covers what you need to know about getting started and the latest V 2.0 updates.

What is the Science-Based Targets initiative (SBTi)?

The SBTi provides a framework for businesses to set science-based emissions reduction targets aligned with limiting global warming to 1.5 °C, in line with the Paris Agreement.

In simple terms, it answers a critical question for business:
“By how much does a company need to reduce its emissions, and by when, to align with the latest climate science?”

Under Version 2.0, companies can set two types of science-based targets that cover different emissions sources and implementation strategies:

• Near-term emissionsreductions that must be achieved in the next 5 years
• Net zero targetsthat require immediate action while implementing long-term strategies that will be achieved by 2050 or earlier.

Targets cover:

• Scope 1 emissions:Direct emissions (e.g. fuel use)
• Scope 2 emissions:Indirect emissions from purchased energy
• Scope 3 emissions:Value chain emissions (often the largest and most complex)

In addition to emissions reduction targets, companies may also set actionable targets that promote reductions across their supply chain, such as renewable energy purchasing contracts and supplier engagement targets. While low-carbon purchasing strategies are still permitted within Version 2.0, it’s highly encouraged that they’re only used as a supplement where needed, rather than a key reduction strategy.

Many companies set multiple targets to cover different scope emissions and goal timelines. For large businesses with complex supply chains, Scope 3 emissions represent the biggest challenge, and the biggest opportunity for reducing climate impact.

What’s new in Version 2.0 of the Corporate Net-Zero Standard?

The release of Version 2.0 marks the most significant update to the Corporate Net-Zero Standard since it was first introduced. While the science underpinning the framework remains unchanged, the revised standard is designed to make implementation more practical while strengthening accountability, particularly within reporting and planning.

Key changes include:

Greater emphasis on implementation

Version 2.0 places greater weight on demonstrating progress. Businesses are expected to show how targets are being delivered through governance, investment decisions, transition planning, and ongoing reporting. Rather than achieving SBTi validation once, organisations will in accordance with the new framework be expected to meet ongoing assessment and reporting requirements under the SBTi validation system:

• Revalidate under a new SBTi Assurance model
• Keep up with progress checks from SBTi-recognised validation bodies
• Report progress annually

Target setting tailored to business capability

The updated standard recognises that organisations face different challenges depending on their sector, geography, and value chain. With the introduction of Category A and Category B organisations, businesses targets will be determined by factors such as turnover, number of employees, and whether they are based in a high-income country. (More detail and company classification can be found in the SBTi’s V 2.0 Guide for Companies).

Ultimately, the introduction of these classifications will allow companies to set context-specific targets that are better in line with their capabilities and available resources.

A new approach to Scope 3 emissions

Scope 3 emissions remain one of the biggest challenges for businesses, but Version 2.0 introduces greater flexibility in how they are addressed. Alongside emissions reduction targets, companies are encouraged to use wider value chain levers such as supplier engagement, sustainable procurement, and low-carbon purchasing to drive meaningful reductions.

That said, companies are still expected to reduce Scope 3 emissions in line with long-term SBTi net-zero pathways, with only a small proportion of residual emissions remaining at the net-zero target year.

Stronger focus on transparency

The revised framework introduces greater expectations around annual reporting, disclosure, and continuous improvement. Businesses are expected to report openly on progress and implementation barriers, and companies must now have board sign off on climate transition plans and science-based targets.

To strengthen the credibility and reliability of the target base year GHG emissions inventory and related calculations through independent third-party assurance. Assurance is required for Category A companies and strongly encouraged for Category B companies as a key mechanism to enhance transparency and confidence in reported emissions.

The Ongoing Emissions Responsibility (OER) recognition program has also been introduced in the update. It aims to provide a structured approach that helps organisations take into account their unabated emissions. It will remain a voluntary framework until 2034, after which mandatory implementation will begin for Category A companies.

Carbon credits remain supplementary

Version 2.0 recognises that high-integrity carbon credits and other climate contributions have a role to play, but makes it clear that they should only serve as a compliment to direct emissions reductions, not a replacement.

When will V 2.0 become mandatory?

For companies still working towards or currently validated under V 1.3.1, there is a grace period for transition. For companies submitting in the future, aligning to V 2.0 will be mandatory from 2027.

Why SBTi matters for businesses

SBTi is increasingly seen as the gold standard for credible climate action. This is being driven by a shift in expectations across multiple stakeholders:

• Investors are using SBTi validation as a proxy for robust climate risk management
• Customers and supply chains are requiring science-based targets as part of procurement criteria
• Regulation and reporting frameworks are aligning more closely with science-based approaches

As a result, SBTi is no longer just a “nice to have”. For many large organisations, it is becoming a baseline expectation.

Adoption of SBTi has accelerated significantly in recent years. At the start of 2026, over 10,000 organisations had validated science-based targets, a nearly 40% increase from the 7,200 validated companies at the start of 2025.

How the SBTi process works

While the framework is robust, the process can be broken down into clear stages:

Once a company’s targets are validated, they are required to report their full GHG inventory and progress against targets on an annual basis. While the SBTi doesn’t typically audit every company’s target every year, progress updates are publicly disclosed, adding a layer of accountability.

Are there different rules for different industries?

Yes. While the SBTi framework is consistent, SBTi provide specific guidance for energy-intensive industries like Cement, Aviation, and Steel. These have their own dedicated pathways for emissions reduction targets that focus on reducing emissions from the most intensive areas of the sector, as well as the standard near- and long-term target requirements. Additionally, sector-specific guidance is under consultation for future implementation, such as the Automotive and Power Sector Standards.

The SBTi organisation also offers an automated, streamlined target-setting process for businesses that qualify as an SME.

As mentioned above, the new categorisation also aims to better support businesses based on their available resources and capabilities.

What does SBTi validation involve?

Validation ensures that targets are credible, consistent, and aligned with climate science. SBTi assesses whether:

• Targets align with a 1.5C pathway
• Scope coverage is sufficient (particularly Scope 3 where relevant)
• Methodologies and assumptions are robust

Once approved, businesses can publicly state that their targets are SBTi-validated.

How long does the SBTi process take?

Timelines vary depending on organisational complexity, but a typical journey may include:

Common challenges businesses face

While the SBTi framework is clear, the application can be resource intensive. Common challenges include:

1. Data complexity

Collecting accurate emissions data, particularly for Scope 3, can be time-consuming and technically demanding.

2. Internal alignment

Setting targets often requires coordination across multiple departments, from procurement to finance and operations.

3. Resource and expertise gaps

Many organisations lack the in-house expertise required to develop compliant targets with confidence.

4. Ongoing tracking and reporting

SBTi is not a one-off exercise – it requires commitment, continuous monitoring and transparent reporting.

The business case for science-based targets

Despite these challenges, the SBTi’s own research shows that the business benefits can be far-reaching, including better access to capital, increased competitive advantage, and a stronger ability to manage risk in an increasingly carbon-constrained world.

Particularly for energy-intensive industries, SBTi provides a structured pathway to reduce exposure to both carbon and cost risk over time.

Are you ready to start your SBTi journey?

Navigating the SBTi process alongside a framework update can be complex, and it is common for businesses to engage external expertise to manage the technical and resource-intensive elements.

Sustainable Energy First supports clients across the full SBTi journey – from interpreting requirements and developing targets, to managing submission for SBTi validation, SBTi query management and ongoing emissions tracking and reporting.

To speak to one of our experts about how we can support your business, get in touch with Sustainable Energy First.