SBTi: how to set science-based reduction targets

Updated validation criteria

SBTi sets rigorous criteria for validating targets, designed to secure the ambition and the scientific grounding of corporate commitments. The criteria are updated periodically to reflect advances in climate science and the urgency of action.

For near-term targets, the current requirements are:

• Ambition for Scopes 1 and 2. Targets for direct emissions (Scope 1) and indirect emissions from purchased energy (Scope 2) have to be consistent with at least a 1.5°C scenario. Companies must reduce emissions in a way that contributes to limiting global warming to that level.
• Ambition for Scope 3. Value chain targets are mandatory where Scope 3 accounts for 40% or more of the company's total emissions (Scopes 1, 2 and 3). In those cases the minimum ambition is well below 2°C. Some companies, or specific sectors, may opt for 1.5°C-aligned Scope 3 targets voluntarily or because of sector requirements. Companies should use a robust emissions accounting standard for the quantification, such as the GHG Protocol.
• Reference period. Targets must cover a period of 5 to 10 years from the date of submission. SBTi aims to ensure reduction actions are implemented on a horizon that allows continuous monitoring and adjustment.
• Emissions coverage. The target must cover at least 95% of the company's Scope 1 and 2 emissions. For Scope 3, coverage must be at least 67% of emissions where they exceed 40% of the total.

The criteria are set out in specific SBTi documents, which give guidance on calculation methods and reporting requirements. Adopting those standards is fundamental to the credibility and comparability of targets across companies.

Near-term targets vs net-zero targets

SBTi draws a clear distinction between near-term targets and net-zero targets. That distinction is decisive for a comprehensive decarbonisation strategy.

Near-term targets.

Set on a 5 to 10 year horizon, to drive immediate and tangible decarbonisation. They are the initial and intermediate steps a company has to take towards its long-term commitments. Near-term targets mainly address reducing operational and value chain emissions over a defined period, aligned with 1.5°C scenarios for Scopes 1 and 2 and well below 2°C for Scope 3 where applicable. SBTi validation confirms the company is on a decarbonisation trajectory consistent with the science.

Net-zero targets.

These are a company's long-term commitment to reduce emissions to the minimum possible and neutralise any residual emissions that cannot be eliminated, usually by 2050. SBTi's Net-Zero Standard, launched in 2021, provides a detailed framework for companies setting science-aligned net-zero targets.

Its main requirements are:

• A 90-95% emissions reduction. Before the net-zero date (generally 2050 for most sectors), the company must have achieved a 90-95% reduction in its total emissions (Scopes 1, 2 and 3) against the base year. The requirement makes clear that the priority is radical decarbonisation, not offsetting.
• Offsets only for residual emissions. Only for residual emissions (the 5-10% that could not be eliminated) may companies use high-quality carbon removals to reach net zero. Those removals have to be permanent and verifiable.
• Mandatory near-term targets. Companies committing to net zero are also required to have SBTi-validated near-term targets. That keeps long-term ambition supported by concrete, immediate action.
• No material exclusions. The net-zero target has to cover every emissions scope, with no significant exclusions.

The distinction between near-term and net zero matters because it asserts that decarbonisation is a continuous process with interim milestones, not a distant objective. Through its standards, SBTi seeks to ensure the journey to net zero is robust and built on real emission reductions. Mangue Tech's decarbonisation service can support setting and validating those targets.

Sectors with a specific approach

Recognising that emissions profiles and decarbonisation opportunities vary widely between sectors, SBTi develops specific approaches for certain segments. These sector approaches, known as the Sectoral Decarbonization Approach (SDA), provide tailored methodologies and guidance that take account of each industry's technological and operational particularities.

The need for sector approaches comes from several factors:

• Emissions intensity. Sectors such as cement, steel and power are extremely emissions-intensive and need technological and strategic solutions quite different from services.
• Asset life cycles. Infrastructure and capital equipment in sectors such as aviation and transport have long lifetimes, implying long-term decarbonisation strategies and substantial investment.
• Decarbonisation technologies. Solutions vary widely. Electrification is a key answer for many sectors, while others depend on carbon capture, green hydrogen, or changes in production methods.
• Value chain dynamics. Scope 3 emissions can dominate in some sectors (food and agriculture, for instance), demanding robust approaches to supplier and customer engagement.

Notable examples of sectors with specific approaches include:

• Power sector. The SDA methodology for electricity focuses on aligning reduction targets with the transition to fully renewable generation. That usually involves targets for GHG intensity per unit of electricity generated.
• Forest, Land and Agriculture (FLAG). GHG emissions from forest, land and agricultural activities have biophysical characteristics distinct from fossil fuels. SBTi's FLAG methodology recognises those differences and guides companies on setting targets to reduce deforestation, optimise land use and implement sustainable agricultural practice.
• Cement. Cement is one of the largest industrial emitters because of calcination. The methodology addresses energy efficiency, substituting clinker with other cementitious materials, and carbon capture technology.
• Steel. Like cement, steelmaking is carbon-intensive. Approaches for the sector explore green hydrogen, carbon capture and furnace energy efficiency.
• Transport (shipping, aviation, road). Each mode has unique challenges. Specific methodologies consider the shift to low-carbon fuels (e-fuels, biofuels), route optimisation and alternative propulsion technologies.

These sector approaches keep SBTi targets realistically ambitious and adapted to each industry's operational reality, promoting decarbonisation solutions that are both effective and economically viable.

Step by step to submission

Submitting targets to SBTi is structured in clear stages, designed to secure completeness, accuracy and compliance with scientific criteria.

1. Commitment letter.

The first step is formalising the company's commitment. That means submitting a commitment letter signed by a senior executive. In it, the company declares its intention to set science-based targets within 24 months of submission. SBTi offers different levels of commitment, covering near-term and net-zero targets. Once the letter is submitted, the company's name is published as a committed company on the SBTi website.

2. Developing the target.

The most complex and crucial phase. The company has to:

a. Calculate the GHG inventory. Produce a robust, comprehensive emissions inventory covering Scopes 1, 2 and 3, preferably following the GHG Protocol. That inventory becomes the base year for calculating reductions.

b. Choose scenarios and methodologies. Select the target-setting methodology most appropriate to the sector and to the company's characteristics (Absolute Contraction Approach, Sectoral Decarbonization Approach, and so on). SBTi provides tools and guidance for that choice.

c. Model reduction pathways. On the basis of 1.5°C or well-below-2°C scenarios, model emission reduction pathways for Scopes 1, 2 and 3, for both near-term and net-zero targets where applicable.

d. Prepare the submission form. Complete SBTi's detailed form with all the required information about the proposed targets: base year, target year, scopes covered, methodology used and justifications.

3. Submission for validation.

Once the targets are developed, the submission form and the GHG inventory go to SBTi for validation. The SBTi team reviews the proposals to confirm they meet every criterion and technical requirement.

• Timelines. Validation time varies. SBTi currently estimates up to 30 days for the initial analysis of a target, plus another 30 days for each round of revision where changes are needed. Demand for validation is high, which can affect timelines.
• Costs. Submitting near-term and/or net-zero targets for validation carries an administrative fee, which varies with the company's size and revenue. The fee covers SBTi's operational costs in reviewing and validating targets.

4. Public communication.

Once validated, the company is officially recognised by SBTi for its science-based targets. The target and the company's name are published on the SBTi website, and the company can communicate its targets and climate commitment publicly.

5. Annual reporting.

Companies with SBTi-validated targets are encouraged to report progress annually through platforms such as CDP, sustainability reports or other public disclosure. That reporting is fundamental to accountability and transparency.

The process is detailed, but it is what secures the integrity and credibility of SBTi targets.

The abatement cost curve: prioritising reduction actions

Managing decarbonisation effectively takes more than ambitious targets: it takes identifying and prioritising the reduction actions that are economically viable. The Marginal Abatement Cost Curve (MACC) is a robust analytical tool for that.

What a MACC is.

A MACC is a chart showing the marginal cost of reducing one tonne of CO2e across different abatement opportunities in a company or sector. Opportunities are plotted on the horizontal axis in ascending order of cost per tonne of CO2e removed, with marginal cost on the vertical axis. The width of each bar indicates the total volume of emissions that action can abate.

How a MACC helps prioritise.

1. Spotting the low-hanging fruit. A MACC quickly identifies decarbonisation actions with negative or very low cost. Those actions cut emissions and generate savings at the same time, such as energy efficiency improvements or waste reduction.
2. Optimising investment. Seeing the cost per tonne of CO2e avoided lets companies allocate resources more efficiently, prioritising the initiatives with the highest environmental and financial return.
3. Strategic planning. A MACC supports a long-term decarbonisation roadmap, showing the logical sequence of implementation, from the cheapest actions to the more costly ones needed for more ambitious targets.
4. Communication and engagement. A MACC is a powerful way to communicate decarbonisation strategy to internal stakeholders (teams, the board) and external ones (investors, clients, regulators), showing the economic rationale behind the choices.

Examples of actions a MACC prioritises:

• Energy efficiency. Lighting improvements (LED), thermal insulation, optimisation of HVAC systems, high-efficiency motors. Generally negative or very low cost.
• Electrification. Replacing fossil-fuelled equipment (vehicles, low-temperature furnaces) with electric alternatives, particularly when combined with renewable energy.
• Renewable energy. On-site solar, purchase of certified renewable energy (PPAs, I-RECs). They carry upfront investment but can lower operating costs and environmental impact.
• Industrial process optimisation. Improving production processes to cut raw material and energy use, and with it emissions. In chemicals or food, for instance.
• Waste management. Reduction, reuse and recycling of waste, and energy recovery, which avoid landfill emissions and cut demand for new material.
• Value chain changes (Scope 3). Engaging suppliers to cut their emissions, optimising transport logistics, designing products for lower impact. More complex, but capable of significantly moving total emissions.
• Product and service innovation. Developing low-carbon products, circular economy models.

Applying a MACC lets companies build a portfolio of decarbonisation actions that align with SBTi targets while optimising return on investment and execution capacity.

How Mangue Tech helps with modelling and submission

Setting and submitting science-based targets to SBTi is complex and demands deep technical knowledge, in carbon accounting, in scenario modelling and in the initiative's requirements. Mangue Tech offers specialist support at every stage, so companies can reach their decarbonisation objectives efficiently and credibly.

Our services for SBTi modelling and submission include:

1. Diagnosis and GHG inventory.
   1. A complete GHG inventory (Scopes 1, 2 and 3) in line with the GHG Protocol, establishing an accurate, robust data base for target setting.
   2. Identification of the main emission sources and hotspots across operations and the value chain.

1. Reduction scenario modelling.
   1. Detailed analysis of the company's operations and sector to identify the most relevant and impactful decarbonisation opportunities.
   2. Development of multiple reduction scenarios, considering different SBTi methodologies (Absolute Contraction, SDA and others).
   3. Financial modelling for each scenario, using tools such as the MACC, to prioritise actions on both CO2e reduction effectiveness and economic viability.
   4. Projection of future emissions pathways aligned with 1.5°C or well-below-2°C scenarios, as SBTi requires.

1. Setting and validating targets.
   1. Setting near-term targets for Scopes 1, 2 and 3.
   2. Support in formulating the net-zero commitment, including the target date and the strategies for the 90-95% reduction and residual neutralisation.
   3. Preparation of all the technical and administrative documentation needed to submit targets to SBTi, including completing the submission form and reviewing the GHG inventory data.
   4. Interaction with the SBTi validation team on the company's behalf, or as technical support, to answer questions and adjust the submission through to approval.

1. Preparing the submission dossier.
   1. Compiling and organising every document and data point SBTi requires, so the dossier is complete, accurate and compliant with the initiative's standards.
   2. Careful review to avoid the common errors that delay validation.

1. Decarbonisation strategy and implementation.
   1. Beyond target validation, Mangue Tech supports the development of concrete action plans and long-term decarbonisation strategy.
   2. Advice on low-carbon technology, energy efficiency and value chain engagement.

With Mangue Tech's expertise, companies can navigate the SBTi process with confidence, turning a climate commitment into a strategic advantage and contributing effectively to a low-carbon future. Our decarbonisation service covers everything from the target to the plan.