SBTi — Science Based Targets initiative

Definition

SBTi (“Science Based Targets initiative”) is a joint partnership of CDP, the UN Global Compact, the World Resources Institute (WRI), and WWF. It defines + promotes best practice in emissions reduction + net-zero targets aligned with climate science, and operates a validation service that companies can use to certify their targets as “science-based.”

A target is “science-based” if it is consistent with the level of decarbonisation required to keep global temperature increase well below 2°C above pre-industrial levels, and pursuing efforts to limit warming to 1.5°C — as defined in the Paris Agreement.

SBTi was launched in 2015 at COP21. As of 2025, over 6,500 companies globally have committed to or had validated science-based targets, including ~150 Indian companies (Mahindra Group, Wipro, ITC, Infosys, Dalmia Bharat, Tata Steel, Reliance Industries, JSW Steel, and several SME exporters).

The two standards

Near-term Science-Based Targets

Targets covering 5-10 years from the date of target submission. Required minimum coverage:

Scope 1 + 2: at least 95% of the entity’s combined Scope 1 + 2 emissions
Scope 3: required if Scope 3 represents > 40% of total Scope 1 + 2 + 3 emissions; minimum 67% coverage of the entity’s Scope 3 inventory

Ambition level: 1.5°C-aligned for Scope 1 + 2 (mandatory for new commitments from October 2022); Scope 3 can be aligned with well-below-2°C or 1.5°C depending on sector.

Corporate Net-Zero Standard

The long-term framework, requiring entities to reach net-zero emissions across the full value chain (Scope 1 + 2 + 3) by 2050 or sooner. Released October 2021; current version V1.3 (Corporate Net-Zero Standard) + Near-Term Criteria V5.3 remain valid for new target validation until 31 December 2027.

V2 transition timeline (web-verified May 2026):

6 November 2025: SBTi released the second draft of Corporate Net-Zero Standard V2 for public consultation
12 December 2025: second consultation closed
2026: V2 to be published in final form
1 January 2028: V2 becomes mandatory for all SBTi target validations. From this date, companies setting new targets must use V2.

Three material changes in V2 (vs V1.3):

Individual Scope 1, Scope 2, and per-category Scope 3 target-setting approaches — replacing the V1.3 consolidated framework. Entities set separate near-term + net-zero targets per scope, and (for Scope 3) per material category.
Third-party assurance on target progress — V2 introduces an assurance requirement to verify companies are tracking against their validated targets.
Mandatory Climate Transition Plan — every V2-validated company must publish and maintain a climate transition plan as part of the validation submission. This is the single biggest content change.

Transition pathway from V1-era targets: SBTi has committed to providing a pathway for companies with targets validated in 2025-2026 to align their Scope 3 targets with V2 — preventing duplication of previously completed work. Indian listed entities with existing SBTi-validated targets (Reliance, Tata Steel, JSW Steel, Mahindra Group, Infosys, Wipro, ICICI Bank, Dalmia Bharat, etc.) should plan for the V2 alignment ahead of 1 Jan 2028.

Key requirements of the Net-Zero Standard:

Near-term science-based target must be set first (typically 5-10 years out)
Long-term science-based target for ≥ 90% reduction in absolute Scope 1 + 2 + 3 emissions vs base year by 2050
Residual emissions (the ≤ 10% remaining) must be neutralised through permanent CO₂ removal — not avoidance offsets
Beyond Value Chain Mitigation (BVCM): companies are encouraged (not required) to invest in additional climate action beyond their target boundary
Climate transition plan (V2+): mandatory from 1 January 2028 for new validations

Sector-specific pathways

For sectors with distinct technical or economic constraints, SBTi has published sector-specific guidance + pathways instead of generic cross-sector decarbonisation rates:

Cement — Sectoral Decarbonization Approach (SDA) — joint with GCCA
Steel — sector-specific SDA pathway
Power generation — separate pathway for utilities
Oil + Gas — guidance updated 2024 (controversial; SBTi paused new validations in this sector pending revised methodology)
Financial Institutions — separate Net-Zero Standard with sub-sector pathways for portfolio emissions (lending, investment, insurance underwriting, capital markets)
Aviation, Shipping — under development
Forest, Land + Agriculture (FLAG) — separate Land-Sector Standard for entities with > 20% land-related emissions

The validation process

The end-to-end SBTi journey for a company:

Commit — sign a commitment letter; the company appears on SBTi’s “Companies Taking Action” dashboard as “Committed.” 24 months to submit targets.
Develop targets — calculate baseline GHG inventory per GHG Protocol; choose target type (absolute / intensity-based); set near-term + (optionally) net-zero target
Submit — use SBTi’s online portal + pay validation fee (USD ~$5-25k depending on company size + target complexity)
Validate — SBTi’s Target Validation Team reviews against current criteria; iterates with the company; ~6-12 months
Announce + disclose — after validation, company publishes targets + appears as “Targets Set” on dashboard
Annual progress disclosure — required via CDP Climate Change response, the company’s annual report, BRSR, or sustainability disclosure

SBTi removed ~239 companies from its dashboard in March 2024 for failing to submit targets within the 24-month commitment window. This is a credibility-protection mechanism — the dashboard reflects active progress, not historical declarations.

SBTi + Indian Filers

India has no statutory requirement for SBTi alignment, but SBTi-validated targets are increasingly common among SEBI BRSR Top 1,000 entities — particularly:

Export-dependent companies facing CBAM exposure or downstream OEM Scope 3 pressure (Tata Steel, JSW Steel, Reliance Industries)
IT services + tech with international client base demanding science-based supplier commitments (Infosys, Wipro, TCS, HCLTech)
Consumer products competing on ESG credentials (ITC, Mahindra, Dabur)
Financial institutions with international investor base (HDFC Bank, Kotak Mahindra, Axis Bank)

SBTi disclosure interplays with the BRSR Format under Principle 6 (Environment) Leadership Indicators — entities can voluntarily report SBTi commitment / validation status under P6 LI-3 (carbon neutrality + climate change commitments) and LI-4 (reporting frameworks adopted).

For Indian companies with EU CBAM exposure (steel, cement, aluminium exporters), an SBTi-validated decarbonisation trajectory supports:

The CBAM importer’s disclosure to EU regulators
TCFD / IFRS S2 transition-plan narrative for global investors
BRSR Principle 6 Leadership Indicator disclosure

See CBAM for the EU regulation context and IFRS S2 for how SBTi targets feed climate-related financial disclosure.

Relationship to other frameworks

Framework	SBTi’s role
GHG Protocol Corporate Standard	Foundation — SBTi uses GHG Protocol methodology + Scope 1 / 2 / 3 boundary definitions for all targets
TCFD	SBTi targets fulfil the “metrics + targets” pillar of TCFD disclosure
IFRS S2	SBTi targets feed the “metrics + targets” + “transition plan” disclosures required under IFRS S2
ESRS E1-1 (CSRD)	An SBTi-validated 1.5°C-aligned target is one of the most commonly disclosed anchors for the mandatory transition-plan disclosure under ESRS E1-1
SEBI BRSR	SBTi voluntary disclosure under Principle 6 Leadership Indicators; not required for BRSR Core attribute reporting
GRI 305 (Emissions)	SBTi targets reported under GRI 305-5 (reduction of GHG emissions)
CDP Climate Change	SBTi commitment + validation status is a scoring factor in CDP’s annual disclosure
TPT Disclosure Framework	TPT is one of the inputs to V2’s mandatory climate transition plan requirement

Common SBTi questions

Are offsets allowed for the near-term target? No. Near-term + long-term science-based targets must be met through value-chain emission reductions (Scope 1 + 2 + 3 reductions). Offsets / removals can only be used to neutralise the ≤ 10% residual emissions in the long-term net-zero target, and SBTi specifies they must be permanent CO₂ removals, not avoidance offsets.

What is the difference between “Committed” and “Targets Set”? “Committed” = the company has signed a commitment letter but has not yet had targets validated. “Targets Set” = targets have been formally validated by SBTi and published on the dashboard.

What is the SBTi controversy from April 2024? SBTi’s Board issued an unauthorised statement in April 2024 suggesting environmental attribute certificates (carbon offsets) could be used for Scope 3 abatement. The Technical Team + Standards Working Group did not endorse this. The statement was walked back; the standards remain strict on offsets-vs-abatement distinction.

Is SBTi the same as the Paris Agreement? No. SBTi is a private initiative that operationalises the Paris Agreement temperature goal (well-below-2°C / 1.5°C) at the company level. The Paris Agreement is a treaty between national governments; SBTi translates those national-level commitments into corporate-level decarbonisation targets.

Can SMEs use SBTi? Yes. SBTi has a dedicated SMEs route with simplified target-setting (set ambition level by choosing a percentage reduction in absolute Scope 1 + 2 emissions) and a lower validation fee (currently ~$1,250 vs $5-25k for the standard corporate route). The SME criteria were materially overhauled effective 1 January 2024 (and refined via the SBTi SME FAQ v6.1, June 2025). To qualify, an entity must meet all four of the following:

Less than 10,000 tCO₂e across Scope 1 + location-based Scope 2 emissions
Not classified in the Financial Institution (FI) sector or the Oil & Gas (O&G) sector
Not required to set targets using sector-specific criteria (e.g. Sectoral Decarbonization Approaches, FLAG mandatory sectors)
Meet at least 2 of the following 3 size tests: under 250 employees, turnover under €40 million, total assets under €20 million.

Does SBTi cover financed emissions (Scope 3 Category 15)? Yes — for financial institutions specifically. The SBTi Financial Institutions Net-Zero Standard requires asset-class-specific targets (corporate lending, real estate, project finance, sovereign bonds, listed equity, private equity).

How is SBTi different from net-zero claims under ISO 14068? ISO 14068 is a separate ISO standard for certifying carbon-neutrality claims. SBTi sets targets; ISO 14068 verifies claims. The two can be used together but address different stages of the climate strategy.