Setting science-based targets: a step-by-step approach with the SBTi

A science-based target shows investors, customers and employees that a company's emissions reduction plan is consistent with what climate science says is needed. The Science Based Targets initiative (SBTi) provides the criteria and validation. This guide explains the process and the decisions you will need to make.

What makes a target science-based

A target is science-based when it is in line with the reductions needed to limit global warming in accordance with the goals of the Paris Agreement. The SBTi validates corporate targets against its published criteria, and those criteria are changing.

The SBTi published Corporate Net-Zero Standard V2.0 in June 2026. It takes effect on 31 January 2027, and target validations against it open in the first quarter of 2027. Until 31 January 2028, companies may still submit against Version 1.3.1 and the Near-Term Criteria V5.3. Companies starting now should plan for V2.0.

Under Version 1.3.1, a company sets near-term targets aligned with limiting warming to 1.5 degrees Celsius, and a long-term target to reduce emissions by around 90 percent by no later than 2050. Residual emissions must be neutralized with permanent carbon removals for the company to claim net zero.

What changes under V2.0

V2.0 is a major revision: the SBTi says 42 percent of its sections are entirely new. The main changes are:

• Company categories: Category A covers larger companies and Category B smaller ones, with differentiated requirements based on size, geography and emissions. This replaces the separate SME route.
• Five-year target cycles: all targets are set on a five-year basis, with an end-of-cycle assessment of progress.
• Separate Scope 1 and Scope 2 targets: each covers 100 percent of the scope, and Scope 2 emissions targets use the location-based inventory.
• Scope 3: fixed coverage percentages are replaced by a significance test. Targets must cover every category representing 5 percent or more of Categories 1 to 14 emissions. Near-term Scope 3 targets apply to Category A companies, and long-term Scope 3 targets are optional for all.
• Governance and assurance: board accountability and a transition plan become requirements, and Category A companies need limited assurance over their inventories and target-setting metrics.
• Implementation rules: a hierarchy prioritizes direct reductions, and new integrity criteria govern projects and market instruments.
• Removals: criteria for neutralizing residual emissions are expanded, with a forward-looking requirement to support carbon removals from 2035 onwards.

V2.0 is a long document, so check the published criteria for your company category before you begin.

Step 1: commit

A company can begin by submitting a commitment letter to the SBTi, signalling its intention to set a target within a defined period. Many companies skip this and go directly to target development. Either way, leadership buy-in is essential, because a validated target is a public, long-term commitment.

Step 2: build a robust inventory

Targets are only as good as the inventory behind them. You need a complete Scope 1 and Scope 2 inventory and a Scope 3 screening covering all relevant categories. Choose a base year with representative, reliable data and document your recalculation policy.

Under Version 1.3.1, a Scope 3 target is required if Scope 3 is 40 percent or more of total emissions. Under V2.0, the test is whether each Scope 3 category reaches 5 percent of Categories 1 to 14 emissions. V2.0 also replaces the historical base year with a target base year based on the most recent comprehensive data.

Step 3: choose a method and ambition

The SBTi offers different target-setting methods. Under Version 1.3.1, the absolute contraction approach requires a linear annual reduction of roughly 4.2 percent for Scope 1 and 2, consistent with 1.5 degrees. Under V2.0, companies take their ambition from the published criteria for each scope, including options such as asset transition targets for sectors with long-lived capital stock. Sector-specific pathways are available for some industries, such as power, cement, steel and buildings, and are often expressed as physical intensity targets, for example tonnes of CO2 per tonne of cement.

Under Version 1.3.1, Scope 3 targets can be absolute, intensity-based, or engagement targets that commit a share of suppliers to set their own science-based targets. V2.0 removes the Scope 3 intensity methods and expands engagement into alignment pathways that measure the share of suppliers or customers that are in transition or net-zero aligned.

Step 4: test feasibility

Before submitting, test whether the target is achievable. Build a marginal abatement cost curve or a decarbonization roadmap that shows which measures deliver which reductions, at what cost and when. For industrial companies, the levers usually include energy efficiency, fuel switching, renewable electricity, process changes and, later, technologies such as carbon capture.

A target without a plan is a liability. Investors increasingly look for credible transition plans that link targets to capital expenditure.

Step 5: submit, validate and communicate

Submit the target to the SBTi for validation. The validation team checks the inventory, boundaries and ambition against the criteria. Once validated, the target is published on the SBTi website and the company can communicate it.

After validation, report progress annually, for example through your sustainability report and CDP. Under V2.0, annual reporting becomes more detailed, and significant changes to the business can trigger revalidation.

Delivering the target

Setting the target is the easy part. Delivery requires emissions data that is frequent enough to manage with, clear accountability at site level, and a project pipeline that is tracked against the roadmap.

NCV develops decarbonization roadmaps and science-based targets, with engineers who understand where the real reduction potential lies in heavy industry. SustainOS tracks emissions against targets continuously, and its Twin & Optimize product finds operating improvements that deliver reductions without capital-intensive projects.