Skip to content

How Companies Can Use SBTi to Reach Net Zero Pledges


Overview of landscape of rocky, gray mountainside threaded with green trees and an aqua-colored river branching out in many directions.

The mood is shifting around corporate initiatives to help curb climate change. When the Paris Agreement was adopted in 2015, trying to stem rising temperatures to a global increase of 1.5°C seemed like an attainable goal. 

But time is running out and everyone from business owners to world leaders are feeling the pinch from our carbon emissions inertia. Island countries are mulling futures as digital nations, and an agreement was reached at COP27 this year to create a “Loss and Damage” fund for vulnerable nations.

But digital countries and damage funds are reactive. Real action is needed if governments and businesses are going to meet their carbon emission commitments. Vague greenwashed claims of sustainability aren’t enough anymore. 

To reach Net Zero by 2050, companies need decisive and data-driven strategies that reach to every corner of their operation.

What Are Net Zero Pledges?

The scientific community agrees that it’s already too late to stop global warming entirely. The goal now is strictly to mitigate temperature increases by reducing emissions. Net Zero pledges aim to reduce GHG emissions within a defined timeframe such that global temperature increases will not exceed 1.5°C. 

It may never be entirely feasible to cut GHG emissions to absolute zero, but Net Zero is the basis of setting goals to remove more carbon than is emitted. In order to cap temperature increases at 1.5°C, emissions would need to peak by 2030, and Net Zero has to be achieved by 2050.

Who Has Made Net Zero Pledges?

The commitment to Net Zero is growing. More than 70 countries have made Net Zero pledges. If their targets are achieved, this will account for more than 76% of global emissions. 

In addition, more than 3,000 businesses and financial institutions are committed to Net Zero. Private sector pledges are documented and updated on the Science Based Targets initiatives (SBTi) website. 

The potential impact of reaching Net Zero pledges for these countries and organizations is critical to the success of slowing global warming and preventing disaster for the most vulnerable nations as well as limiting damage through extreme weather events around the world.

What Is the SBTi?

The SBTi is a partnership between CDP, the United Nations Global Compact, World Resources Institute (WRI), and the World Wide Fund for Nature (WWF). It is the organization that publishes the Net Zero standard and validates targets set by companies intending to use the Science Based Targets framework to reach their Net Zero pledges.

Immediate and direct action is needed if the business community is to curb carbon emissions by 2030 and achieve true Net Zero by 2050. 

In order to make sure emission reduction activities will be successful, the SBTi provides:

  • Best practices for implementing technology and changes to business activities
  • Technical assistance and expert resources
  • Independent assessment and quantitative validation on targets and progress

The SBTi has guidance and resources for all companies looking to make a Net Zero pledge, and in particular has sector-specific guidance for businesses in the following industries:

  • Aluminum
  • Apparel & footwear
  • Aviation
  • Buildings
  • Cement
  • Chemical
  • Financial institutions
  • Forest, land, & agriculture (FLAG)
  • Information & communication technology (ICT)
  • Oil & gas
  • Power
  • Steel
  • Transport

What Will It Take to Reach Net Zero?

A pledge is only words on a page until real action is taken and the steps required by the SBTi are well-defined. They include:

  • Deep and rapid carbon emissions cuts. Emissions need to peak by 2030 which, at the time of this writing, is barely seven years away. The time for gradual and incremental change is over. The SBTi expects most companies will need to reduce emissions by 90-95%
  • Set near- and long-term targets. It’s not enough to assume the changes made by 2030 will be enough to reach true carbon neutral status by 2050. Companies should be prepared to continue to find reduction opportunities within their portfolio and supply chain over the long term.
  • No Net Zero claims until long-term targets are met. Organizations with targets published by the SBTi will need to fully meet these targets before they can claim to be truly Net Zero.
  • Go beyond emission cuts, without sacrificing a commitment to action. The Net Zero standard calls for deep emission cuts, but the work doesn’t stop there. Companies who achieve their Net Zero goals can then go beyond their own impact, supporting community initiatives and industry players to achieve broader carbon neutrality.

How Do Companies Set Science Based Targets?

The SBTi has a 5-step process companies following the Net Zero standard can follow in order to document and register their Science Based Targets.

  1. Commit

Companies must register their commitment with the SBTi. This should be done at the parent company level. There are separate requirements for financial institutions and for large (i.e., more than 500 employees) versus small- or medium-sized (less than 500 employees) businesses, also called SMEs. Once the initial registration is complete, businesses will submit a standard commitment letter to be posted on the SBTi website.

  1. Develop Targets

Once the commitment letter has been signed, companies have 24 months to set their science based targets. If they haven’t already, this will require them to do a comprehensive emissions inventory at the Scopes 1, 2, and 3 levels.

Targets will be set for the near- and long-term. As discussed above, it’s not enough to assume ongoing linear decreases from near-term targets will be enough to meet 2050 Net Zero targets.

While all companies will need to assess their Scopes 1, 2, and 3 emissions, only those who can attribute at least 40% of their releases to Scope 3 emissions will need to set Scope 3 targets, unless they are involved in the sale and distribution of natural gas or other fossil fuels, in which case Scope 3 targets are mandatory.

Because all targets are to be set using approved methodologies and models set by the SBTi so they can be properly validated, it’s important that a company’s GHG or ESG team stay current in the most up to date SBTi standards.

  1. Submit

Once targets have been set, they need to be submitted to SBTi for validation. There are standard near-term target forms to be completed and submitted based on your business sector and company size. 

The SBTi recommends the submission include:

  • Facts. Provide accurate descriptions of company operations and business areas. The goal is to provide context, not market products and services.
  • Details. Emissions estimates need to be contextualized. It’s not enough to provide calculations. A written description (50-100 words) of each emissions category is expected as well.
  • Justification. Estimates need to include justification for the methodologies used. This can include an assessment of data quality, or rationale for the secondary methods used when primary information isn’t available, such as when estimating Scope 3 emissions.
  • Defined exclusions. Companies are allowed to exclude 5% of Scope 1 and 2 emissions and 10% of Scope 3 emissions if they can’t be quantified and their reduction won’t add value to the exercise. This is different from target exclusions, where quantified emissions are excluded from science based targets due to well-defined target boundaries.
  • Omitted emissions. There is some confusion between omitted emissions and emissions that aren’t relevant to a business’s operations. GHGs include a number of different gasses and while some, like carbon dioxide, are emitted nearly everywhere, others, like fluorinated gasses are only emitted from specific sources. The absence of these gasses from a particular business are not an omission.
  • Allowance for growth. The goal of carbon accounting is not to limit business growth, but that doesn’t mean business growth means increased emissions are inevitable. Businesses must accurately estimate projected growth and show how emissions and targets are affected by this growth.
  • Financed emissions. Calculating these goes beyond financial institutions. Any company that wholly or partly owns another company but does not have direct control over it would include the emissions from this company as financed emissions.
  • Proper Scope 3 target coverage. Where Scope 3 targets are required, at least 67% of Scope 3 emissions must be covered by near-term targets, and 90% must be covered by Net Zero targets. But SBTi recommends near-term targets to cover as many of Scope 3 emissions as possible, so the step down to 90% is not too onerous after 2030.
  • Separated transportation emissions. Another frequent area of confusion is upstream and downstream transportation emissions. Upstream emissions are those from suppliers, while downstream is the transportation of products to distributors, customers, and for disposal.
  • Appropriate base year. Different from growth, targets should be set based on an accurate base year that reflects future activities. For example, 2020 would not have been an appropriate base year for many businesses as the beginning of the covid pandemic greatly affected operations, sales, and—ultimately—emissions.
  1. Communicate

All companies with SBTi-validated targets are published on the SBTi website.  In addition, participating companies are to communicate their targets to stakeholders, including leadership, investors, suppliers, and vendors. 

The SBTi’s recommendations for communicating include:

  • Focusing on the urgency of the situation. Change especially in the value chain can be slow and the time to reach near-term targets is limited.
  • Explain the importance of deep cuts to reduce carbon emissions. It will take collaboration and accountability to reach both near and Net Zero targets.
  • Encourage stakeholders to align with the science-based target of limiting temperature increase to 1.5°C. 

Once companies have their targets validated and they are fully registered, the SBTi is available to provide support and help companies communicate their targets.

  1. Disclose

Setting targets is only the first step. Once targets are set and communicated, next comes the ongoing work of updating emissions data and providing reports annually on changes and progress toward achieving carbon emissions targets. 

This includes getting updated data from the supply chain and financed companies, but can also involve onboarding new organizations as suppliers change, new companies are acquired, or as operations change.

Keeping on top of reporting can be labor intensive, and benefits from platforms like FigBytes, which is CDP-compliant and ensures your organization is using the most up-to-date methodologies. 

It also makes data entry and consolidation simpler, using a cloud based tool that can be accessed by suppliers and others around the world. 

Start Taking Real Action

Reversing climate change is going to require real action. The days of making claims to sustainability thanks to a few energy-efficient light bulbs in the office are done. Today—and going forward—stakeholders, investors, and the community will expect to see real quantifiable efforts to reduce carbon emissions.

But even big efforts start with first steps. Companies looking to set Science Based Targets need to begin by doing a complete emissions inventory for Scopes 1, 2, and 3 of their business, subsidiaries, and value chain.

If you’re not sure where to start, or if you have started but are realizing this is a bigger undertaking than you expected, it’s time to enlist a partner who can support your data collection efforts, and provide you with verifiable high-quality data that can be used as the basis of your Science Based Targets. 

FigBytes helps automate and manage your entire sustainability program, including carbon accounting. It uses CDP-compliant methodologies that can be used to quantify baseline emissions and track your progress toward near-term and Net Zero targets. 
The time for real action is now, and the first step is contacting a FigBytes expert.

Explore the latest insights to help you on
your ESG journey

Connect with us.

Build your ESG strategy, align your data, tell the world!