SBTi CORPORATE NET-

ZERO STANDARD
Version 1.1
April 2023

SBTi Corporate Net-Zero Standard Version 1.1 | April 2023 | 1

DOCUMENT HISTORY
Version Release date Effective dates Updates on earlier version

28 October
1.0 SBTi Corporate
28 October 2021 2021 to 10 April
Net-Zero Standard
2023
• Edits to improve
document’s readability.
• Minor updates to provide
further clarification and
context to existing
criteria,
recommendations and
use of terminology.
• Clarifications on
exclusions, significance
thresholds and
emissions coverage for
scope 1, 2 and 3 targets
(criteria 5 and 6).
• Clarification that the
target year criterion is
only relevant for absolute
and intensity-based
emission reduction near-
term targets (criterion
17).
1.1 SBTi Corporate From 11 April • Revision of allowable
11 April 2023 years for assessing
Net-Zero Standard 2023
progress to date: for
submissions in 2023, a
recent year inventory
must be provided that is
no earlier than 2021 i.e.
allowable most recent
years are 2021 and 2022
(criterion 18).
• Clarification that the
neutralization of
unabated emissions
applies to both the
emissions reduction
targets boundary and to
any unabated emissions
that have been excluded.
from the GHG inventory
(criterion 28).
• Further guidance for
mandatory target
recalculations (criterion
32).

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 • Revision of previous
recommendation to
criterion for triggered
recalculations (criterion
33).
• Alignment of criteria 36
and 37 to the revised
version of SBTi’s policy
on fossil fuel companies.
• Inclusion of most up to
date information on
sector developments and
sector-specific criteria.
• Update on Table 2 “A
summary of how the
cross-sector pathway
and sector-specific
pathways can be
applied”; changes Figure
3 “SBTi perspective on
prioritization of mitigation
actions” in SBTi
Corporate Net-Zero
Standard.
• Addition of a table with
recommended target
language templates and
examples (Table 7) in
SBTi Corporate Net-Zero
Standard.

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TABLE OF CONTENTS
TABLE OF CONTENTS .................................................................................................................... 4
ACRONYMS ..................................................................................................................................... 7
GLOSSARY ...................................................................................................................................... 9
1. BACKGROUND TO THE CORPORATE NET-ZERO STANDARD .......................................... 14
1.1 The Science Based Targets initiative..................................................................................... 14
1.2 Purpose of the Net-Zero Standard ......................................................................................... 15
1.3 Who should use the Net-Zero Standard? .............................................................................. 15
1.4 The Net-Zero Standard Development process ...................................................................... 15
1.5 How the Standard relates to other key SBTi documents ........................................................ 16
2. THE NET-ZERO STANDARD FRAMEWORK ......................................................................... 18
2.1 Near-term science-based targets .......................................................................................... 19
2.2 Long-term science-based targets .......................................................................................... 20
2.3 Neutralization ........................................................................................................................ 20
2.4 Beyond value chain mitigation ............................................................................................... 20
2.4.1 Further work on beyond value chain mitigation ............................................................... 20
3. MITIGATION PATHWAYS IN THE NET-ZERO STANDARD ................................................... 22
3.1 The science behind science-based net-zero targets .............................................................. 22
3.2 How mitigation pathways are used to inform science-based targets ...................................... 23
3.3 Overview of pathways and which companies should use them.............................................. 24
4. SETTING NEAR-TERM AND LONG-TERM SCIENCE-BASED TARGETS ............................. 30
4.1 Select a base year................................................................................................................. 30
4.2 Calculate your company’s emissions ..................................................................................... 30
4.2.1 Develop a full GHG emissions inventory ......................................................................... 30
4.2.2 Calculate emissions reported separately from the GHG inventory .................................. 32
4.3 Set target boundaries ....................................................................................................... 33
4.3.1 Near-term science-based target boundary (scopes 1, 2, and 3) ...................................... 33
4.3.2 Long-term science-based target boundary (scopes 1, 2, and 3) ...................................... 33
4.3.3 Additional requirements for science-based target coverage ............................................ 34
4.3.4 Meeting SBTi boundary criteria with several targets........................................................ 36
4.4 Choose a target year ............................................................................................................. 36
4.5 Calculating science-based targets ......................................................................................... 36
4.5.1 Eligible methods for all scopes (both near-term and long-term science-based targets) ... 37
4.5.2 Eligible methods for scope 2 (both near-term and long-term targets) .............................. 37

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 4.5.3 Eligible methods for scope 3 (both near-term and long-term targets) .............................. 37
4.5.4 Eligible methods for near-term scope 3 targets only........................................................ 38
4.6 Calculating near and long-term SBTs .................................................................................... 40
4.7 Target wording ...................................................................................................................... 41
4.7.1 Overarching net-zero target ............................................................................................ 41
4.7.2 Near-term science-based target wording ........................................................................ 41
4.7.3 Long-term science-based target wording ........................................................................ 41
5. GUIDANCE FOR COMPANIES IN LAND-INTENSIVE SECTORS .......................................... 43
5.1 Background on FLAG emissions ........................................................................................... 43
5.2 SBTi FLAG Guidance ............................................................................................................ 43
5.3 Greenhouse Gas Protocol Land Sector and Removals Guidance ......................................... 44
5.4 Which companies are required to set FLAG targets? ............................................................ 44
6. UPDATING AND COMMUNICATING TARGETS .................................................................... 45
6.1 How can companies ensure near-term targets align with the Net-Zero Standard?................. 45
6.2 How can companies ensure long-term targets align with the Net-Zero Standard? ................. 46
6.3 How to communicate with stakeholders when targets do not meet the Net-Zero Standard
requirements ............................................................................................................................... 47
7. THE NET-ZERO STANDARD CRITERIA ................................................................................ 48
7.1 Background to the Net-Zero Standard Criteria....................................................................... 48
7.2 Disclaimer ............................................................................................................................. 48
7.3 Terminology .......................................................................................................................... 49
7.2 General criteria ...................................................................................................................... 49
7.4.1 Target boundary ............................................................................................................. 49
7.4.2 Method validity (near and long-term targets) ................................................................... 50
7.4.3 Emissions accounting requirements ................................................................................ 51
7.5 Net-zero target formulation .................................................................................................... 52
7.5.1 Net-zero definition ........................................................................................................... 52
7.5.2 Structure ......................................................................................................................... 52
7.5.3 Timeframe....................................................................................................................... 52
7.5.4 Ambition.......................................................................................................................... 53
7.5.5 Beyond value chain mitigation ........................................................................................ 55
7.5.6 Neutralization .................................................................................................................. 55
7.5.7 Target formulation ........................................................................................................... 55
7.6 Reporting, recalculation and target validity ............................................................................ 55
7.6.1 Reporting ........................................................................................................................ 55

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 7.6.2 Recalculation and target validity...................................................................................... 56
7.7 Sector-specific guidance ....................................................................................................... 56
7.7.1 Fossil fuel sales, distribution, and other business ........................................................... 57
8. SECTOR GUIDANCE FOR LONG-TERM SCIENCE-BASED TARGETS ................................ 58
9. ACKNOWLEDGEMENTS ........................................................................................................ 62

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 ACRONYMS
AFOLU Agriculture, Forestry and Other Land Use

BECCS Bioenergy with carbon capture and storage

BVCM Beyond value chain mitigation

CDR Carbon Dioxide Removal

COP Conference of the Parties

CO2 Carbon dioxide

DAC Direct Air Capture

EAG SBTi Net-Zero Expert Advisory Group

FLAG Forest, Land and Agriculture

GHG Greenhouse Gas

ICT Information and Communications Technology

IPCC Intergovernmental Panel on Climate Change

LUC Land-use change

LULUCF Land-use, Land-use change and Forestry

NBS Nature-based solutions

NZE IEA’s Net Zero Emissions by 2050 Scenario

REC Renewable energy certificate

REDD Reducing Emissions from Deforestation and Forest Degradation

REIT Real Estate Investment Trust

SAG SBTi Scientific Advisory Group

SBT Science-based target

SBTi Science Based Targets initiative

SDA Sectoral Decarbonization Approach

SME Small and medium-sized enterprise

SR15 IPCC Special Report on 1.5˚C

TAG SBTi Technical Advisory Group

TTW Tank-to-wheel

UNEP The United Nations Environment Program

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 UNFCCC United Nations Framework Convention on Climate Change

vPPA Virtual power purchase agreement

WRI World Resources Institute

WTT Well-to-tank

WTW Well-to-wheel

WWF World Wide Fund for Nature

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GLOSSARY
Term Definition Further comments

Abatement Measures that companies take to prevent, reduce, or eliminate Also see:
sources of GHG emissions within their value chain. Examples • Decarbonization
include reducing energy use, switching to renewable energy, and • Mitigation
reducing chemical fertilizer use.

Absolute reduction Method used to calculate absolute emissions reduction targets that Also see:
requires organizations to reduce annual emissions by an amount • Sector-specific intensity
consistent with underlying mitigation pathways. Also known as convergence
“absolute contraction”. • Science-based target
methods

Beyond value chain Mitigation action or investments that fall outside a company’s value Examples of BVCM include:
mitigation (BVCM) chain, including activities that avoid or reduce GHG emissions, or • Forestry, e.g.,
remove and store GHGs from the atmosphere. Jurisdictional (Reducing
Emissions from
Deforestation and Forest
Degradation) REDD+
• Conservation projects,
e.g., peatland or
mangrove
• Energy efficiency, e.g.,
cookstove projects
• Methane destruction,
e.g., landfill gas projects
• Renewable energy, e.g.,
solar/wind/biogas
• Industrial gases, e.g.,
N2O destruction at nitric
acid facilities
• Scale-up of Carbon
Dioxide Removal (CDR)
technologies, e.g., Direct
Air Capture (DAC) and
Storage.

Bioenergy Energy generated from the combustion of biomass. In certain

cases, bioenergy is considered ‘carbon neutral’ because
combustion-related CO2 emissions are balanced by CO2
sequestered during bioenergy feedstock growth.

Biomass emissions Organic material available aboveground and belowground, living

and dead, e.g., trees, crops, grasses, tree litter, roots etc.

Carbon Dioxide According to the Intergovernmental Panel on Climate Change

Removal (CDR) (IPCC), “anthropogenic activities removing CO2 from the
atmosphere and durably storing it in geological, terrestrial, or ocean
reservoirs, or in products”. Removals are either nature-based,
geological or a hybrid.

Climate change According to the IPCC, “a human intervention to reduce emissions Also see:
mitigation or enhance the sinks of GHGs.” • Mitigation strategy

Compensation (legacy Actions companies take to help society avoid or reduce emissions SBTi is eliminating the term from
terminology used in outside of their value chain. use within its documentation.
earlier versions of the
SBTi Net-Zero Also see:
Standard) • Greenhouse gases
• Value chain emissions

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Corporate climate Goals set by a corporation to reduce its impact on the climate. Also see:
targets Targets may include a variety of GHG emissions across different • Abatement
corporate activities (i.e., operations, value chain, or products) and • Compensation
may use emissions abatement, compensation, or neutralization. • Neutralization

Cross-sector pathway One-size-fits-all pathway for companies to calculate near-term and Also see:
long-term absolute reduction science-based targets (SBTs), eligible • Sector-specific pathways
for all companies except those in the power, maritime transport or
(Forest, Land and Agriculture) FLAG sectors.

Decarbonization The process by which CO2 emissions associated with electricity, Also see:
industry, and transport are reduced or eliminated. • Abatement

Emissions (or GHG) According to the GHG Protocol, a “quantified list of an Also see:
inventories organization’s GHG emissions and sources.” Emissions inventories • Scope 1 inventory
typically include emissions in scopes 1, 2, and 3. • Scope 2 inventory
• Scope 3 inventory

Forest, land and FLAG designates the SBTi Forest, Land and Agriculture project, Other similar related terms are
agriculture (FLAG) sectors, methodologies and targets. The terms FLAG-related AFOLU and Land-use, Land-use
emissions emissions and Agriculture, Forestry and Other Land Use (AFOLU) change and Forestry (LULUCF;
emissions are used interchangeably in the SBTi FLAG Guidance. AFOLU and agriculture GHGs)

Global emissions A cumulative emissions threshold that must not be exceeded to limit Also see:
budget global temperature rise by a specified amount and probability. • Greenhouse gases
Emissions budgets can be determined for CO2 only or all GHGs. • Paris Agreement

Greenhouse gases Gases which absorb and re-emit infrared radiation, thereby trapping
(GHGs) it in Earth’s atmosphere. Includes carbon dioxide (CO2), methane
(CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs),
perfluorocarbons (PFCs), sulfur hexafluoride (SF6), and nitrogen
trifluoride (NF3).

Greenhouse Gas (GHG) Goals set by an organization to reduce direct or indirect emissions Also see:
emission reduction by a specified amount. • Greenhouse gases
targets • Science-based targets

Insetting Used to describe projects wholly contained within a Scope 3 supply There are multiple definitions for
chain boundary of a company, a project partially within their Scope the term “insetting” in use and no
3 supply chain boundary (spanning their supply chain and other standardization of the term.
companies’ supply chains) and a project adjacent to a supply chain
boundary.

Intergovernmental Panel United Nations body for assessing the science related to climate Also see:
on Climate Change change. ● IPCC Special Report on
(IPCC) 1.5°C (SR15)
● Paris Agreement

IPCC Special Report on A Special Report requested by the United Nations on the impacts of Also see:
1.5˚C (SR15) global warming of 1.5°C above pre-industrial levels and related • Paris Agreement
global GHG emission pathways. Issued in the context of
strengthening the global response to the threat of climate change,
sustainable development, and efforts to eradicate poverty. The
report includes over 6,000 scientific references and was prepared
by 91 authors from 40 countries.

Long-term science- GHG reduction targets in line with what the latest climate science Also see:
based target deems is necessary to reach net-zero at the global or sector level in • Near-term science-based
1.5°C pathways before 2050. target

Mitigation According to the IPCC, “a human intervention to reduce emissions Also see:
or enhance the sinks of GHGs.” • Mitigation strategy

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Mitigation strategy A set of measures planned by a company to mitigate GHG Also see:
emissions that may include abatement, insetting, compensation and • Mitigation
neutralization. • Abatement
• Insetting
• Compensation
• Neutralization

Nature-based Solutions The WWF defines NBS as “Ecosystem conservation, management Also see:
(NBS) and/or restoration interventions intentionally planned to deliver • Beyond value chain
measurable positive climate adaptation and/or mitigation benefits mitigation
that have human development and biodiversity co-benefits • Carbon Dioxide Removal
managing anticipated climate risks to nature that can undermine (CDR)
their long-term effectiveness.” • Compensation
• Neutralization
• Insetting

Near-term science- GHG reduction targets in line with what the latest climate science Also see:
based target deems necessary to limit warming to 1.5°C above pre-industrial • Long-term science-based
levels and are achieved within a 5-10 year timeframe from the date target
of submission to the SBTi.

Net-zero Setting corporate net-zero targets aligned with meeting societal Also see:
climate goals means: (a) reducing scope 1, 2 and 3 emissions to • Near-term science-based
zero or a residual level consistent with reaching net-zero emissions target
at the global or sector level in eligible 1.5°C scenarios or sector • Long-term science-based
pathways and (b) neutralizing any residual emissions at the net- target
zero target date – and any GHG emissions released into the • Residual emissions
atmosphere thereafter.

Neutralization Measures that companies take to remove carbon from the Also see:
atmosphere and permanently store it to counterbalance the impact • Nature-based Solutions
of emissions that remain unabated. • Carbon credits
• Carbon Dioxide Removal
(CDR)

Physical emissions A metric describing the emissions per physical unit of an activity Also see:
intensity (e.g., cement production). The sector-specific intensity convergence • Decarbonization
method is based on the principle that all companies in a sector will • Paris Agreement
converge to the same physical emissions intensity in a future year
of mitigation pathways.

Removals Measures that companies take to remove carbon from the Also see:
atmosphere and permanently store it within or beyond the value • Carbon Dioxide Removal
chain. (CDR)
• Neutralization
Examples include, but are not limited to:
• DAC and storage
• Bioenergy with carbon capture and storage (BECCS)
• Improved soil management
• Improved forest management
• Land restoration, e.g., of peatland, terrestrial forests or
mangroves

Within the value chain, companies in the FLAG sectors are

expected to deliver biogenic carbon removals as well as abatement
as part of their science-based targets.

Residual emissions Emissions sources that remain unabated in a specific year of a Also see:
mitigation scenario. Long-term SBTs define the company’s • Paris Agreement
maximum level of residual emissions in line with global or sector
net-zero in 1.5°C-aligned mitigation pathways with low or no
overshoot.

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SBTi Net-Zero Expert Advisory body to the SBTi consisting of representatives from civil
Advisory Group (EAG) society organizations, corporate climate action initiatives, research
agencies, and other stakeholders contributing specifically to the
development of the Net-Zero Standard.

SBTi Scientific Advisory Advisory body to the SBTi consisting of recognized experts in
Group (SAG) climate change mitigation, integrated assessment modelling, energy
system and land-use dynamics, and other topics contributing to
developing the SBTi’s scientific foundations.

SBTi Technical Advisory Advisory body to the SBTi consisting of practitioners and experts in
Group (TAG) topics such as corporate sustainability, greenhouse gas accounting,
and target-setting, providing feedback on SBTi methods, criteria
changes, and guidance.

Science-based targets Targets that are in line with what the latest climate science says is Also see:
(SBTs) necessary to meet the goals of the Paris Agreement – to pursue • Near-term science-based
efforts to limit warming to 1.5°C. targets
• Paris Agreement
• Pre-industrial levels

Science-based target Methods used to calculate science-based targets from a mitigation Also see:
methods pathway, company input variables, and an allocation formula. • Absolute reduction
• Sector-specific intensity
convergence

Sector-specific intensity Method used to calculate emissions intensity targets based on the Also see:
convergence principle of converging to a sector-wide physical emissions intensity • Absolute reduction
in a future year of a mitigation pathway. • Science-based target
methods

Sector-specific Absolute emissions or emissions intensity pathways for a specific Also see:
pathways sector that may be used for calculating near-term and long-term • Cross-sector pathway
intensity targets – as well as long-term absolute targets, in most
cases.

Scope 1 emissions Defined by the GHG Protocol accounting standard as: “A reporting Also see:
organization’s direct GHG emissions.” • Greenhouse gases

Scope 2 emissions Defined by the GHG Protocol accounting standard as: “A reporting Also see:
organization’s (indirect) emissions associated with the generation of • Greenhouse gases
electricity, heating/cooling, or steam purchased for own
consumption.”

Scope 3 emissions Defined by the GHG Protocol accounting standard as: “A reporting Also see:
organization’s indirect emissions other than those covered in scope • Greenhouse gases
2.”

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The Paris Agreement Stated by the United Nations Framework Convention on Climate
Change (UNFCCC), the Paris agreement is a “legally binding
international treaty on climate change. It was adopted by 196 Parties
at the Conference of the Parties (COP) 21 in Paris, on 12 December
2015 and entered into force on 4 November 2016. Its goal is to limit
global warming to well-below 2, preferably to 1.5 degrees Celsius,
compared to pre-industrial levels.”

United Nations Climate The annual COP brings together the 197 countries that have ratified Also see:
Change Conference the UNFCCC. As the twenty-sixth such gathering, it is known as • Paris Agreement
(2021: COP26) COP26 and took place in Glasgow in November 2021.

The United Nations Environment Program (UNEP) states that:

“Under the Convention, nations have reached two key agreements
on reducing greenhouse gas emissions: the Kyoto Protocol adopted
in 1997, and the Paris Agreement adopted in 2015. The Paris accord
is built around so-called “nationally determined contributions” as a
means of achieving the goal of limiting the global temperature
increase, and to step up those contributions over time”.”

Value chain emissions A company’s scope 1, 2, and 3 emissions as defined by the GHG Also see:
Protocol Corporate Accounting and Reporting Standard. • Scope 1 inventory
• Scope 2 inventory
• Scope 3 inventory

Well-to-wheel (WTW) Tank-to-wheel (TTW) emissions cover all the energy used once
transformed. This is emissions occurring during the combustion of
the fuels.

Well-to-tank (WTT) emissions are based on attributional life-cycle

assessment studies of fossil-derived fuels (e.g., gasoline, diesel,
compressed and liquefied natural gas), biofuels and electricity (based
on time and scenario-specific estimated average grid carbon
intensity).

Together, TTW and WTT make up WTW GHG emissions. This does
not include emissions from vehicle or battery manufacturing, or those
offset by material recycling, among others.

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1. BACKGROUND TO THE CORPORATE NET-ZERO
STANDARD
The Intergovernmental Panel on Climate Change (IPCC)’s Special Report on Global Warming of
1.5°C (SR15, 2018), was widely accepted as a warning that we must limit global temperature rise to
1.5°C above pre-industrial levels and reach net-zero CO2 emissions by 2050 for the best chance of
avoiding catastrophic climate breakdown. More recently, the IPCC’s Sixth Assessment Report (2021)
has confirmed that climate change is already affecting every region on Earth, its impacts increasingly
visible in the form of extreme weather, worsened droughts and heightened risk of forest fires.

Against this backdrop, companies are increasingly adopting net-zero targets. The number of
businesses committing to reach net-zero emissions has grown rapidly, but not all net-zero targets are
equal. Without adhering to a common definition, net-zero targets can be inconsistent, and their
collective impact is strongly limited.

While the growing interest in net-zero targets represents an unparalleled opportunity to drive
corporate climate action, it has also created a pressing need for a common understanding of ‘net-
zero’ in a corporate context. Business leaders need a robust, science-based framework for setting
net-zero targets. Otherwise, they risk continuing to invest in business models that are inconsistent
with the goals of the Paris Agreement.

Through a transparent multi-stakeholder process, the Science Based Targets initiative (SBTi) has
developed the first global science-based standard for companies to set net-zero targets. The Net-
Zero Standard gives business leaders confidence that their targets are aligned with what is needed
for a habitable planet, and it provides clarity on business climate action to a wide range of
stakeholders.

1.1 The Science Based Targets initiative

The SBTi is a global body enabling businesses and financial institutions to set ambitious emissions
reductions targets in line with climate science. It is focused on accelerating companies across the
world to halve emissions before 2030 and achieve net-zero emissions before 2050.

The initiative is a collaboration between four of the world’s most respected environmental
organizations: CDP, the United Nations Global Compact, World Resources Institute (WRI) and the
World Wide Fund for Nature (WWF), and is one of the We Mean Business coalition commitments.

The SBTi defines and promotes best practice in science-based target setting, offers resources and
guidance to reduce barriers to adoption, and independently assesses and approves companies’
targets.

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1.2 Purpose of the Net-Zero Standard

The SBTi’s Corporate Net-Zero Standard (also referred to as the ‘Net-Zero Standard’) contains
guidance, criteria, and recommendations to support corporates in setting net-zero targets to be
validated by the SBTi. The main objective of this standard is to provide a standardized and robust
approach for corporates to set net-zero targets aligned with climate science.

It is important to note that while the SBTi does provide some supplementary guidance on greenhouse
gas (GHG) accounting, companies should refer to the suite of corporate Greenhouse Gas Protocol
standards on this topic.

1.3 Who should use the Net-Zero Standard?

The intended audience for this document is corporates with more than 500 employees that wish to
commit to setting and submitting science-based net-zero targets through the SBTi.

Although not directly intended for small and medium-sized enterprises (SMEs), these organizations
should use this document to understand the key elements of a science-based net-zero target and the
SBTi’s recommended target-setting process. The SBTi offers a simplified route for SMEs to set net-
zero targets, meaning that some of the detail contained within this document will not be applicable.
SMEs should refer to the SME FAQ for more information.

This document does not cover net-zero targets for financial institutions. The SBTi is developing a
separate Net-Zero Standard for Financial Institutions.

1.4 The Net-Zero Standard Development process

The SBTi initiated a scoping phase of work in 2019 to develop a framework enabling companies to
set robust and credible net-zero targets in line with a 1.5°C future. The standard development process
formally began after the SBTi’s publication of Foundations for net-zero target setting in the corporate
sector in September 2020. After publication, the SBTi convened a dedicated Net-Zero Expert Advisory
Group (EAG), which was to be the main consensus building body for the project.

The SBTi then developed detailed criteria and guidance in regular consultation with the EAG, as well
as the SBTi’s Scientific and Technical Advisory Groups. The SBTi requested feedback from
stakeholders to improve the standard through two public consultations and a company road test. The
standard was launched on 28 October 2021.

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Figure 1 An outline of key milestones in Net-Zero Standard development process.

1.5 How the Standard relates to other key SBTi documents

The table below describes some of the key SBTi resources companies may find useful when going
through the target setting process. All resources, including translations, can be found on the
Resources and Net-Zero sections of the SBTi website.

Table 1 A mapping of key SBTi resources that companies should refer to when setting science-
based net-zero targets.

Topic Document Description

Target Commitment Letter Companies wishing to set targets through the SBTi – both for near-term
commitments and net-zero commitments – should complete and submit the commitment
letter.

SBTi Target Validation SMEs use a streamlined process to set targets in line with climate science
Application for Small for both near-term and net-zero targets. This route enables SMEs to bypass
and Medium-Sized the initial step of committing to set a science-based target and the regular
Enterprises (SMEs) target validation process and to immediately set near-term science-based
targets for scope 1 and 2 emissions, and, optionally, net-zero targets, by
choosing from one of several predefined target options.

Background and Foundations for net- This paper lays out the conceptual foundations for credible, science-based
technical zero target-setting in the net-zero targets for the corporate sector.
resources corporate sector
Pathways to Net-Zero: Produced in collaboration with more than a dozen pioneering academics,
SBTi Technical IPCC lead authors and mitigation experts, this technical summary provides
Summary an overview of how the SBTi selects mitigation pathways to steer action.

Beyond value chain The SBTi is continuing its work on beyond value chain mitigation. This FAQ
mitigation FAQ will be used to provide information and updates during this process.

Setting targets Getting Started Guide A simple, step-by-step flow chart helping companies understand how to set
for Science-based science-based targets in their specific situation.
Target Setting
Net-Zero Standard This document, providing guidance, criteria, and recommendations to
support corporates in setting net-zero targets through the SBTi. The Net-
Zero Standard criteria are set out in Chapter 7 of this document.

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 Net-Zero Standard The criteria companies' net-zero targets must meet to be approved as
Criteria science-based by the SBTi. This is a standalone version of chapter 7 of this
document.

Net-Zero tool Target-setting tool to calculate long-term science-based targets in line with
the Net-Zero Standard.

SBTi Target Validation See above.

Application for SMEs
SBTi Corporate Manual Detailed step-by-step guide on the process of setting a near-term science-
based target through the SBTi.

SBTi Near-term Criteria The criteria companies' near-term targets must meet to be approved as
science-based by the SBTi. These criteria are also included within this
document.

Target Validation Guide to the target validation process. To be used in conjunction with other
Protocol for Near-term key resources, the Target Validation Protocol explains the target setting
Targets process, how targets are assessed and sector-specific requirements.

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2. THE NET-ZERO STANDARD FRAMEWORK
As described in more detail in Foundations for net-zero target setting in the corporate sector, there
are many different transition pathways to help achieve global net-zero emissions, each with different
implications for our climate, nature and society.

Considering these implications, the Net-Zero Standard was developed with the intention of guiding
corporates towards a state of net-zero in a way that is consistent with societal climate and
sustainability goals and within the biophysical limits of the planet.

To reach a state of net-zero at the corporate level, companies must deeply reduce emissions and
counterbalance the impact of any emissions that remain. The SBTi Net-Zero Standard defines
corporate net-zero as:

• Reducing scope 1, 2, and 3 emissions to zero or a residual level consistent with reaching
global net-zero emissions or at a sector level in eligible 1.5°C-aligned pathways; and
• Permanently neutralizing any residual emissions at the net-zero target year and any GHG
emissions released into the atmosphere thereafter.

To contribute to societal net-zero goals, companies are strongly encouraged to go further than their
science-based abatement targets to mitigate emissions beyond their value chains.

The Net-Zero Standard sets out four key elements that make up a corporate net-zero target as
depicted in Figure 1:

• Near-term science-based target

• Long-term science-based target
• Neutralization of any residual emissions
• Beyond value chain mitigation (BVCM)

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Figure 1 Key elements of the Net-Zero Standard

2.1 Near-term science-based targets

What: Previously known as “science-based targets”, these are 5-10 year GHG mitigation targets in
line with 1.5°C pathways. When companies reach their near-term target date, they must calculate
new near-term science-based targets to serve as milestones on the path towards reaching their long-
term science-based target.

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Why: Near-term targets galvanize the action required for significant emissions reductions to be
achieved by around 2030. Near-term emissions reductions are critical to not exceeding the global
emissions budget and are not interchangeable with long-term targets.1

2.2 Long-term science-based targets

What: These targets show companies how much they must reduce value chain emissions to align
with reaching net-zero at the global or sector level in eligible 1.5°C pathways by 2050 or sooner.

Why: Long-term targets drive economy-wide alignment and long-term business planning to reach the
level of global emissions reductions needed to meet climate goals based on science.

2.3 Neutralization

What: Measures companies take to remove carbon from the atmosphere and permanently store it,
counterbalancing the impact of emissions that remain unabated.

Why: Although most companies will reduce emissions by at least 90% through their long-term
science-based targets, some residual emissions may remain. These emissions must be neutralized
to reach net-zero emissions and a state of no impact on the climate from GHG emissions.

A company cannot claim to have reached net-zero until the long-term science-based target for
all scopes is achieved and the company has neutralized residual emissions.

2.4 Beyond value chain mitigation

What: Mitigation action or investments that fall outside of a company’s value chain. This includes
activities that avoid or reduce GHG emissions, and those that remove and store GHGs from the
atmosphere.

Why: The climate and ecological crises require bold and decisive action from companies.
Decarbonizing a company’s value chain in line with science and reaching net-zero emissions by 2050
is increasingly becoming the minimum societal expectation for companies. Businesses can play a
critical role in accelerating the net-zero transition and addressing the ecological crisis by investing in
mitigation action beyond their value chains. Additional investments like these could help increase the
likelihood the global community stays within a 1.5˚C carbon budget but are not a substitute for the
rapid and deep reduction of a company’s own value chain emissions.

2.4.1 Further work on beyond value chain mitigation

The principle at the heart of the SBTi Net-Zero Standard is the ‘mitigation hierarchy’. Under the
mitigation hierarchy, companies should set near- and long-term science-based targets to address

1Despite this, if a company sets a long-term science-based target to reach the level of decarbonization required to reach
net-zero at a global or sectoral level in 1.5°C pathways within a 10-year timeframe, the near-term science-based target is
not required.

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value chain emissions and implement strategies to achieve these targets as a first order priority ahead
of mitigating emissions outside their value chains (see Figure 3).

Setting and achieving science-based targets must take precedence – however, companies should go
further and invest in mitigation outside their value chains to contribute towards reaching societal net-
zero. The SBTi recommends that companies prioritize securing and enhancing carbon sinks
(terrestrial, coastal and marine, etc.) to avoid the emissions that arise from their degradation.
Examples include purchasing high quality, jurisdictional Reduced Emissions from Deforestation and
Forest Degradation (REDD+) carbon credits that support countries to raise their ambition on, and in
the long-term, achieving their nationally determined contributions. There is also a critical need for
companies to invest in nascent GHG removal technologies (e.g., direct air capture (DAC) and storage)
so that the technology is available to neutralize residual emissions at the long-term science-based
target date.

Please see the Beyond Value Chain Mitigation FAQ on our website for more information.

EMISSION REDUCTIONS WITHIN THE VALUE BEYOND VALUE CHAIN MITIGATION CAN
CHAIN TO TRANSITION TO NET-ZERO ACCELERATE THE GLOBAL TRANSITION
• Companies must prioritize making real • In the near-term, prioritize securing and
emissions reductions within their value enhancing carbon sinks (terrestrial, coastal
chains that align with 1.5°C pathways. and marine etc.) to avoid emissions that
• To do this they must complete emissions arise from their degradation. There is also a
inventories following the GHG Protocol and critical need to invest in nascent GHG
set near and long-term science-based removal technologies (e.g., direct air
targets. capture and storage). These actions do not
• Implement strategies to achieve these count towards achieving science-based
targets. targets.
• Disclose progress annually.2 • In the long-term, when the net-zero target
• This is the minimum ambition and where date is reached, companies must neutralize
possible, decarbonization should be any residual emissions that cannot be
achieved ahead of target years. abated through permanent emission
removals. Companies must continue to
neutralize any remaining emissions.

2 For further information on how the SBTi recommends companies should publicly report on their GHG emissions
inventory and annual progress against their published science-based targets, please visit the section entitled “Disclose
your progress” in the Corporate Manual.

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Figure 2 SBTi perspective on prioritization of mitigation actions.

3. MITIGATION PATHWAYS IN THE NET-ZERO

STANDARD
Through the Paris Agreement, parties and signatories committed to “holding the increase in global
average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the
temperature increase to 1.5°C above pre-industrial levels.”

In the years since the Paris Agreement was signed, the need to limit warming to 1.5°C has become
even stronger. Against the backdrop of increasingly frequent and destructive climate-related
disasters, the IPCC’s SR15 report delivered a harrowing scientific consensus: while impacts to human
health, society, and nature associated with 1.5°C of warming are worse than previously
acknowledged, the risks associated with exceeding 1.5°C are far higher. To mitigate these risks, SR15
highlighted pathways that limit warming to 1.5°C with no or limited overshoot (overshoot <0.1°C).

3.1 The science behind science-based net-zero targets

As described in SR15, scenarios that limit warming to 1.5°C with no or limited overshoot reach net-
zero CO2 emissions around 2050, accompanied by rapid reductions in non-CO2 GHG emissions.
These scenarios entail profound transitions in the global energy, industry, urban and land systems
that involve:

• Full or near-full decarbonization for energy and industrial CO2 emissions achieving a zero-
emissions energy supply system by mid-century.
• Eliminating CO2 emissions associated with agriculture, forestry, and land-use.
• Deep reductions in non-CO2 emissions from all sectors.
• Removing CO2 from the atmosphere to neutralize residual emissions and, potentially,
sustain net negative emissions that reduce cumulative CO2 in the atmosphere over time.

The different system transformations in 1.5°C mitigation scenarios occur simultaneously and all of
them are needed for society to reach net-zero emissions and limit warming to 1.5°C. An understanding
of the synergies and trade-offs between different climate change mitigation scenarios and sustainable
development should also guide climate action.

Pathways used by the SBTi aim to steer voluntary climate action and contribute to achieving the 1.5°C
objective of the Paris Agreement and the Sustainable Development Goals (SDGs), reaching net-zero
CO2 emissions at the global level by 2050 and net-zero GHG emissions in 2050 or later.3 In aggregate,

3 Energy efficiency improvements, infrastructural innovation, and phasing-out fossil fuels—characteristic of IPCC “low
energy demand” scenarios—can help meet the 1.5°C goal with the fewest adverse impacts. The IPCC states with high
confidence that low energy demand scenarios have the most pronounced synergies with sustainable development and the
SDGs (IPCC SR15, Summary for Policymakers D.4.2). They also reduce dependence on CO 2 removal, which can pose
risks to biodiversity, food security, water resources and human rights.

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1.5ºC-aligned pathways used by the SBTi stay within a 500 gigaton carbon budget under the
assumption of about 20-40 gigatons of cumulative CO2 removal by 2050.

For a detailed overview of how the SBTi determines 1.5°C-aligned pathways for calculating SBTs,
please see “Pathways to Net-Zero: SBTi Technical Summary”.

3.2 How mitigation pathways are used to inform science-based targets

Mitigation pathways play a key role in setting science-based targets. For near-term science-based
targets, mitigation pathways inform the rate of emissions reductions or emissions intensity reductions
that are needed. For long-term science-based targets, they inform the overall emissions reduction or
convergence intensity that must be reached to be aligned with net-zero at the global or sector level.

Because of this, near-term science-based targets are target year-dependent, while long-term science-
based targets are target year-independent. This means that a company’s reduction target will differ
depending on the target year for its near-term targets, but the reduction target will not differ depending
on the target year for its long-term targets. This is illustrated in Figure 4 below. Because of this,
companies will model long-term targets, and then set their net-zero and long-term target date
depending on when the emission reductions can be achieved.

Figure 3 Graph showing target year dependency of near-term science-based targets in comparison
to the target year independency of long-term science-based targets. Companies can select a target
year of 2050 or earlier for long-term targets, which depends on how quickly it can reduce its
emissions.

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 Box 1. How are residual emissions determined for different sectors of the economy?

Residual emissions levels are grounded in what’s needed to achieve net-zero CO2 emissions at the global
level by 2050, limit warming to 1.5°C, and contribute to achieving the SDGs. In pathways used by the SBTi,
residual emissions at the cross-sector level reflect the 2020-2050 emissions reduction needed. At the sector
level, residual emissions reflect a sector-specific 2020-2050 emissions reduction or a 2050 convergence
emissions intensity (except for the power and maritime transport sectors which use 2040 instead of 2050 due
to an earlier net-zero year). The same pathways are used to calculate near-term SBTs and residual emissions
levels for long-term SBTs and together they:

1. Stay within the remaining carbon budget for a 50% likelihood of limiting warming to 1.5°C.
2. Reduce energy and industrial process CO2 and CH4 emissions by an amount roughly consistent with
the International Energy Agency (IEA)’s Net-Zero Emissions (NZE) scenario.
3. Mitigate forest, land and agriculture (FLAG) sector GHG emissions by an amount consistent with the
detailed land-sector roadmap ‘Contribution of the land sector to a 1.5°C world’ (Roe et al., 2019).
4. Reach global net-zero CO2 emissions by 2050, assuming at least low/medium CO 2 removal (1-4
gigaton CO2/year), and net-zero GHG emissions in 2050 or later, depending on CO 2 removal levels
and different mitigation choices across pathways.

To meet these conditions, an economy-wide emissions reduction of at least 90% by 2050 informs the level
of residual emissions for most companies, as shown by the cross-sector pathway. The IEA’s NZE scenario,
which reduces energy and industrial process CO2 emissions 95% between 2020 and 2050, has been an
important reference for this calculation; but ultimately, SBTi’s approach to developing the cross-sector
pathway was holistic, building from an expansive body of literature and iterative development with the SBTi’s
Scientific Advisory Group. For more information on the cross-sector pathway and sector-specific pathways
used by the SBTi, please see the SBTi’s Technical Summary “Pathways to Net-Zero”.

3.3 Overview of pathways and which companies should use them

The SBTi offers a cross-sector pathway and sector-specific pathways for setting science-based
targets. Companies in the power generation sector, maritime transport sector and the FLAG sectors
are required to set SBTs using sector-specific pathways. For all other companies, the cross-sector
pathway is eligible for setting absolute reduction targets.

Using the cross-sector pathway, companies can set near-term targets that reduce emissions at a
linear annual rate that is base year dependent. For scope 1 and 2 targets, if the base year is on or
before 2020, companies need to at a minimum reduce absolute emissions at an annual linear
reduction rate of 4.2% over the target period. If the base year is after 2020, companies will need to
reduce at a higher rate that is consistent with limiting warming to 1.5°C. For example, if a company is
setting an absolute scope 1 and 2 target with a base year of 2021 and a target year of 2030, the
minimum linear reduction over the target period is 42%. Please refer to the Near-term Target Setting
Tool. However, some sector-specific pathways vary significantly from the cross-sector pathway in the
near-term. For near-term SBTs, sector-specific pathways may only be used to calculate targets using
the sector-specific intensity convergence (also referred to as the Sectoral Decarbonization Approach)
or the sector-specific absolute reduction for the ICT sector.

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In the long-term, emissions in the cross-sector pathway are reduced by at least 90% and most sector-
specific pathways also reduce CO2 emissions by 90% or more from 2020 levels. Consequently, long-
term science-based targets will be equivalent to at least a 90% absolute reduction across scopes for
many companies, regardless of whether the cross-sector pathway or sector-specific pathways are
used. For long-term science-based targets, sector-specific pathways can be used to calculate either
intensity or absolute targets, in addition to the option of calculating absolute targets using the cross-
sector pathway.

There are various sector-specific pathways that are available or in development. Please refer to the
SBTi website or Getting Started Guide for Science-based Target Setting for the most up to date
information.

Except for power generation, maritime transport and FLAG, all sectors may use the cross-sector
pathway to set 1.5˚C-aligned near-term and long-term science-based targets. In the absence of
sector-specific pathways, companies are strongly recommended to use the cross-sector pathway.

Companies in heavy-emitting sectors often use sector-specific pathways to calculate both near-term
and long-term intensity targets. Other companies with scope 3 emissions from heavy-emitting sector
activities often use a mix of approaches to calculate targets. For example, a real estate development
company may have significant scope 3 emissions attributed to both the steel and cement sectors.
When setting targets that cover upstream scope 3 emissions, these companies may use a sector-
specific pathway to set intensity targets as long as the pathway reflects both supply-side and demand-
side mitigation where relevant (see sector-specific guidance for more information).

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Table 2 A summary of how the cross-sector pathway and sector-specific pathways can be applied

Which companies can use these What types of targets can be

pathways? modelled?

Near-term Long-term Near-term Long-term

All companies, except those in the

Cross-sector
power generation sector, maritime Absolute Absolute
pathway
transport sector and FLAG sectors

For the FLAG

For scope 1: typically, companies in
sectors: absolute
heavy-emitting sectors or a FLAG
or intensity
sector
Sector-specific For the ICT Absolute or
pathways For scope 3: companies with scope 3 intensity4
sector: absolute
emissions dominated by one or more
heavy-emitting sectors or FLAG
For all other
sectors
sectors: intensity

3.4 Transformative mitigation is required from all sectors

45
Cross-sector pathway
40
35
30
GT CO2e

25
20
15
10
5
0
2020 2030 2040 2050

4 Companies setting targets on upstream scope 3 emissions that arise from high-emitting sectors should review relevant
sector guidance to understand when it is appropriate to set absolute or intensity targets using sector-specific pathways (i.e.,
a professional services firm setting intensity targets on air travel emissions should review aviation sector guidance).

SBTi Corporate Net-Zero Standard Version 1.1 | April 2023 | 26

 Sector-specific long-term SBTs Sector-specific
intensity pathways
100%
0.41 gCO2e/tnm
Maritime 96% reduction
90%
Agriculture
80%
72% reduction
70%
0.009 kgCO2/kWh
Power 60%
97% reduction
50%
0.03 tCO2/t cement
Cement
94% reduction 40%
0.11 tCO2/t steel
30%
Iron & steel
91% reduction
20%
Service buildings
0.18 kgCO2/m2
10%
98% reduction
0%
Residential buildings
0.31 kgCO2/m2
2020 2040
95% reduction

0% 50% 100% Cement

Iron & steel
% intensity reduction (sector average, 2020- Power
2050) *2040 for maritime and power
% absolute reduction (2020-2050) *2040 for Residential buildings
maritime and power
Service buildings

a, 5b and 5c show the ambition of the cross-sector pathway and sector-specific pathways used to
calculate near-term and long-term SBTs. Some sectors reduce emissions more than the cross-sector
pathway in 2050, while other sectors reduce emissions less, but all pathways reflect transformative
mitigation efforts. All companies – except those in the power generation, maritime transport or FLAG
sectors – may set SBTs using the cross-sector pathway. Companies in the power generation,
maritime transport and FLAG sectors must use the sector-specific pathway to calculate SBTs. Some
other sectors where emissions are reduced more in the sector-specific pathway can still use the cross-
sector pathway for two main reasons: (1) the difference is small (<10% of base year emissions) and
(2) companies are required to neutralize unabated emissions regardless, which aims to counteract
the impact of any residual emissions and incentivize continued abatement once net-zero is reached.

Figure 5b shows sector-specific long-term SBTs for sectors included the Net-Zero Standard. At the
company level, absolute targets are based on the sector’s 2020-2050 absolute emissions reduction
(red bars and data labels), except for power and maritime transport sectors. Intensity targets are
based on the 2050 convergence intensity (data labels only), except for power and maritime transport
sectors. For the power sector and maritime transport sector, long-term SBTs are calculated based on
2040 instead of 2050 due to an earlier net-zero year. Orange bars show the 2020-2050 sector average
intensity reduction, which may differ from company targets.

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Figure 5c shows sector-specific intensity pathways (2020-2050) for scope 1 only. After the completion
of the steel and built environment sector projects, scope 2 emissions will be added, iron and steel will
be disaggregated, and other adjustments may be incorporated. For these reasons, iron and steel
sector pathways are currently eligible to calculate long-term SBTs – but not near-term SBTs.

45
Cross-sector pathway
40
35
30
GT CO2e

25
20
15
10
5
0
2020 2030 2040 2050

Sector-specific long-term SBTs Sector-specific

intensity pathways
100%
0.41 gCO2e/tnm
Maritime 96% reduction
90%
Agriculture
80%
72% reduction
70%
0.009 kgCO2/kWh
Power 60%
97% reduction
50%
0.03 tCO2/t cement
Cement
94% reduction 40%
0.11 tCO2/t steel 30%
Iron & steel
91% reduction
20%
Service buildings
0.18 kgCO2/m2
10%
98% reduction
0%
Residential buildings
0.31 kgCO2/m2
2020 2040
95% reduction

0% 50% 100% Cement

Iron & steel
% intensity reduction (sector average, 2020- Power
2050) *2040 for maritime and power
% absolute reduction (2020-2050) *2040 for Residential buildings
maritime and power
Service buildings

Figure 5a. GHG emissions in the cross-sector emissions pathway, which covers CO2, CH4, and N2O
from energy supply, transport, industry, and buildings. b. Sector-specific long-term SBTs for sectors
included in V1.1 of the Net-Zero Standard. For the maritime and power sector, long-term SBTs are
calculated based on 2040 instead of 2050 due to an earlier net-zero year. c. Sector-specific
intensity pathways (2020-2050) for scope 1 only.

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SBTi Corporate Net-Zero Standard Version 1.1 | April 2023 | 29
4. SETTING NEAR-TERM AND LONG-TERM SCIENCE-
BASED TARGETS
Companies can take a variety of approaches to developing near-term and long-term science-based
targets; however, the SBTi recommends following the five steps described in this section.

Figure 4 The SBTi recommends a five-step approach to setting science-based targets

4.1 Select a base year

Companies need to establish a base year to track emissions performance consistently and
meaningfully over the target period. The following considerations are important for selecting a base
year:

1. Scope 1, 2, and 3 emissions data should be accurate and verifiable.

2. Base year emissions should be representative of a company’s typical GHG profile.5
3. The base year should be chosen so that targets [Link] sufficient forward-looking ambition.
4. The base year must be no earlier than 2015.

Companies that have already set near-term science-based targets must use the same base year for
their long-term science-based target. For more information on setting the base year, please see the
section entitled “Choose a base year” in the SBTi Corporate Manual.

4.2 Calculate your company’s emissions

4.2.1 Develop a full GHG emissions inventory

Companies are required to have a comprehensive emissions inventory that covers at least 95% of
company-wide scope 1 and 2 GHG emissions and includes a complete scope 3 inventory. The
following points are important for aligning with the GHG Protocol and SBTi Criteria.

Ensure the target boundary is aligned with the GHG Inventory boundary: A company must select
a single GHG Protocol consolidation approach (operational control, financial control or equity share)

5
Companies must provide all the relevant GHG inventory data including a most recent year GHG inventory even if business activities were impacted
by the COVID-19 pandemic. For submissions in 2023, a recent year inventory must be provided that is no earlier than 2021 i.e., allowable most recent
years are 2021 and 2022.

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to determine its organizational boundary. The same method should be used to calculate its GHG
emissions inventory and to define its science-based target boundaries. Both the emissions inventory
and target boundary should cover all seven GHGs or classes of GHGs covered by the United Nations
Framework Convention on Climate Change (UNFCCC) and Kyoto Protocol: carbon dioxide (CO 2),
methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur
hexafluoride (SF6), and nitrogen trifluoride (NF3).

For more information on organizational boundary-setting, please see the section entitled “Ensure the
target boundary is aligned with the GHG inventory boundary” in the SBTi Corporate Manual and the
GHG Protocol Corporate Standard (WRI & WBCSD 2004).

Determine how to treat subsidiaries: Parent companies should set science-based targets that
include subsidiaries according to the selected consolidation approach. When required by the
consolidation approach, parent companies must include emissions from subsidiary operations in their
GHG inventory.

The SBTi does allow subsidiaries to submit targets. Regardless of whether the subsidiary has
approved science-based targets, parent companies must include subsidiaries in their target boundary,
as required by the selected consolidation approach used to determine its organizational boundary.

For more information on subsidiaries, please see the section entitled “Determine how to treat
subsidiaries” in the SBTi Corporate Manual and page 19 of the GHG Protocol Corporate Standard.

Exclude the use of carbon credits: Carbon credits do not count as reductions toward meeting
science-based targets. Companies should only account for reductions that occur within their
operations and value chain.

Exclude avoided emissions: Companies are often interested in understanding the GHG impacts of
their products, relative to the situation where those products do not exist. Positive impacts are
commonly referred to as “avoided emissions”. Avoided emissions occur outside of the product’s life
cycle and therefore do not count as a reduction of a company’s scope 1, 2 and 3 inventory.

For more information on avoided emissions, please see the section entitled “Exclude avoided
emissions” in the SBTi Corporate Manual and the World Resources Institute’s paper on avoided
emissions.

Include all mandatory scope 3 emissions: Companies must develop a complete scope 3 inventory,
which is critical for identifying emissions hotspots, reduction opportunities, and areas of risk up and
down the value chain. The GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting
Standard (WRI & WBCSD, 2011), together with the Scope 3 Calculation Guidance, provide detailed
guidance on how to complete a scope 3 inventory. The Scope 3 Standard defines 15 distinct
categories of upstream and downstream emissions sources and requires companies to include all
relevant categories in an inventory, based on criteria such as the magnitude of emissions or the level
of influence exerted over the categories. See Chapter 7 of the Scope 3 Standard for further details.
To ensure a complete GHG inventory for science-based targets submission, companies must include

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all emission sources for their company as categorized as the minimum boundary in Table 5.4 in the
Scope 3 Standard (p. 34).

A useful approach to calculating scope 3 emissions is to first calculate a high-level screening inventory
that is typically based on secondary financial data. Many companies use the Scope 3 Evaluator tool
to conduct their scope 3 inventory. A scope 3 inventory can be used to directly set a target on these
emissions or to identify high-impact categories where more accurate data is needed. Over time,
companies should strive to develop complete inventories and improve data quality for high-impact
categories (e.g., collect primary data) to better track progress against targets.

For more information on calculating a scope 3 emissions inventory, please see the section entitled
“Conduct a scope 3 inventory” in the Corporate Manual and the GHG Protocol’s Corporate Value
Chain (Scope 3) Accounting and Reporting standard.

Determine how to treat optional scope 3 emissions: Optional scope 3 emissions are not counted
towards the required target boundary for science-based targets.6 If companies have significant
optional scope 3 emissions and have levers to address them, they are encouraged to calculate these
emissions and set optional targets.

More information on optional scope 3 emissions can be found in “Table 5.4 Description and
boundaries of scope 3 categories” in the GHG Protocol’s Corporate Value Chain (Scope 3)
Accounting and Reporting standard.

Indirect use-phase emissions are classified as optional and can sometimes contribute significantly to
a company’s impacts. Indirect use-phase emissions are generated by products that only consume
energy indirectly during use over their expected lifetime. Examples of such emissions include the
washing and drying of apparel for apparel manufacturers and the cooking and refrigeration of food
products for food retailers. Indirect use-phase emissions are not within the “minimum boundary” for
category 11 (use of sold products) and are listed as “optional”.

Review any sector-specific guidance: The SBTi publishes a wide range of resources to support
businesses in their target-setting journey. For some sectors, sector-specific guidance developed with
industry experts lays out best practice for inventory and target boundary-setting, emissions
accounting, and target calculation, in line with the GHG Protocol. For more information on sector-
specific guidance, visit the sector guidance webpage.

4.2.2 Calculate emissions reported separately from the GHG inventory

To meet SBTi criteria, companies that use bioenergy must report direct CO2 emissions from biomass
combustion, processing, and distribution, as well as the land-use emissions and removals associated
with bioenergy feedstock. These emissions are reported separately from the company’s GHG
inventory, in line with Greenhouse Gas Protocol guidance.

6 For near-term science-based targets, companies must include two-thirds of mandatory scope 3 emissions, and for long-
term science-based targets companies include 90% of scope 3 emissions.

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Companies that sell or distribute fossil fuels are required to report the use-phase emissions
associated with those fossil fuels in scope 3 category 11 (use of sold products) and cover these
emissions with a target. For companies that transport or distribute, but do not sell, fossil fuels, these
emissions must be calculated and covered by a target but are typically reported outside a company’s
GHG inventory.

4.3 Set target boundaries

4.3.1 Near-term science-based target boundary (scopes 1, 2, and 3)

Near-term science-based targets must cover at least 95% of company-wide scope 1 and 2 emissions.
When scope 3 emissions make up 40% or more of total emissions (scope 1, 2, and 3 emissions),
companies must set one or more emission reduction targets and/or supplier or customer engagement
targets that collectively cover(s) at least two-thirds (67%) of total scope 3, considering the minimum
boundary of each category in conformance with the GHG Protocol Corporate Value Chain (Scope 3)
Accounting and Reporting Standard. Companies in certain heavy-emitting sectors are required to
include specific emissions sources or scope 3 categories in their science-based target boundary,
please see Table 9 for a detailed list of sector-specific requirements.

4.3.2 Long-term science-based target boundary (scopes 1, 2, and 3)

Long-term SBTs must cover at least 95% of company-wide scope 1 and 2 emissions and 90% of
scope 3 emissions. See Box 2 for more information.

Box 2. The ‘expansive boundary’ approach for scope 3

A comprehensive target boundary is necessary for companies to make credible net-zero claims. However,
acknowledging the challenges that companies encounter with scope 3, the SBTi Net-Zero Standard is
following an expansive boundary approach and a gradual increase in ambition.

In the near-term (5 to 10 years), a scope 3 target is required when a company's scope 3 emissions represent
more than 40% of their total emissions. Near-term scope 3 targets need to cover two-thirds of scope
emissions and align with well-below 2°C ambition at a minimum. In the long-term – by 2050 at the latest –
the boundary of the target will increase to cover all material sources of emissions in the value chain
(materiality threshold of 90%), decarbonizing in line with 1.5°C scenarios.

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 Figure 5 A visual explanation of the ‘expansive boundary’ approach the Net-Zero Standard takes
to scope 3 target boundaries.

Increasing the scope 3 boundary requirements from 67% for near-term SBTs to 90% for long-term SBTs will
be challenging, but it will also drive major opportunities to collaborate across the value chain to support
suppliers and customers to decarbonize. Through the expansive boundary scope 3 approach from the near
to long-term, companies have time to work through the complexity of scope 3 and long-term scope 3
reductions, focusing on their most material emissions sources in the near-term.

4.3.3 Additional requirements for science-based target coverage

Companies using bioenergy must include direct CO2 emissions from biomass combustion,
processing, and distribution, as well as the land-use emissions and removals associated with
bioenergy feedstock, in their target boundary, even though these emissions are reported outside a
company’s GHG inventory. Similarly, companies transporting or distributing fossil fuels must include
use-phase emissions in their target boundary, even though these emissions may not typically be
reported in a company's GHG inventory.

The SBTi requires companies that meet either of the following two conditions to set a FLAG specific
target separate from their target(s) for other emissions:

SBTi Corporate Net-Zero Standard Version 1.1 | April 2023 | 34

 • Companies from the following SBTi-designated sectors are required to set a FLAG target:
forest and paper products (forestry, timber, pulp and paper); food production (agricultural
production); food production (animal source); food and beverage processing; food and staples
retailing; and tobacco.
• Companies in any other sector with FLAG-related emissions that total more than 20% of
overall emissions across scopes. The 20% threshold should be accounted for as gross
emissions, not net (gross minus removals).

Companies meeting either of the above conditions must include emissions from LUC using either
direct LUC or statistical LUC, as aligned with the Greenhouse Gas Protocol’s Land Sector and
Removals Guidance.

A summary of near-term and long-term science-based targets required coverage is shown in 3.

Table 3 Minimum boundary coverage for near-term targets and long-term targets

MINIMUM % BOUNDARY COVERAGE BY SCOPE

Near-term targets Long-term targets

GHG inventory scope

Scopes 1 and 2 95% minimum coverage

67% minimum coverage (if

scope 3 emissions are at least 90% minimum coverage (all
Scope 3
40% of total scope 1, 2 and 3 companies)
emissions)

SPECIAL BOUNDARY COVERAGE REQUIREMENTS BY EMISSIONS SOURCE

Near-term targets Long-term targets

Emissions source `

Use-phase emissions from sold

Must be covered by an absolute reduction target
or distributed fossil fuels

Direct CO2 emissions from

biomass combustion,
processing and distribution, as
Must be included in target boundary
well as land-use emissions and
carbon removals from
bioenergy feedstock

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 Sector-specific target boundary
See Table 9 for a detailed list of sector-specific requirements
requirements

FLAG companies are required to account for land-related

emissions (gross biogenic land CO2 emissions and removals).
This includes all emissions from direct land use change (LUC)
and land management (biogenic CO2, N2O and CH4) related to
on-farm activities.
Companies with land emissions below the 20% FLAG threshold
(as per FLAG-C1) that choose not to set a separate FLAG target
Biogenic emissions and
must account for gross biogenic land emissions separately in the
removals
traditional (non-FLAG) target. Removals shall not be used in this
case.
Companies with bioenergy emissions in scopes 1, 2 and 3 are
required to account for the biogenic emissions as per the SBTi
C10 criteria (non-FLAG) criteria. This includes all emissions from
direct land use change (LUC) and land management (biogenic
CO2, N2O and CH4) related to on-farm activities.

4.3.4 Meeting SBTi boundary criteria with several targets

Companies often set several targets that collectively meet the boundary requirements described
above. This is a valid approach to meeting the SBTi Criteria and Net-Zero Standard. Companies may
consider setting targets covering emissions from various sectors or different scope 3 categories.

4.4 Choose a target year

Near-term targets must have a target year 5-10 years from the date of submission to the SBTi,7 while
long-term targets must have a target year of 2050 or sooner (2040 for companies in the power sector
and maritime transport sector).

Because the ambition of long-term science-based targets is target year-independent, companies

should begin by choosing any eligible target year. Based on the results of their target calculation, the
company may adjust their chosen target year to be sooner or later depending on its ability to achieve
its long-term target.

4.5 Calculating science-based targets

Target methods are used to calculate near-term and long-term targets based on a mitigation pathway
and company inputs. Companies may choose from the science-based target methods described in
this section.

7 The maritime transport sector cannot have a target year for near-term targets before 2030.

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 4.5.1 Eligible methods for all scopes (both near-term and long-term science-based targets)

• Cross-sector absolute reduction: Using this method, companies reduce absolute emissions
by an amount that is, at minimum, consistent with the cross-sector pathway. Also referred to
as “absolute contraction”. For near-term SBTs, the minimum reduction is calculated as a linear
reduction rate (e.g., 4.2% p.a. dependent on a company’s base year), whereas for long-term
SBTs the minimum reduction is calculated as an overall amount (e.g., 90% overall).
• Sector-specific absolute reduction: absolute emissions are reduced by an amount that is,
at minimum, consistent with a sector-specific pathway.
• Sector-specific intensity convergence: Using this method, all companies in a sector
converge to a sector-specific emissions intensity in 2050 (2040 for the power and maritime
transport sectors). Also referred to as “physical intensity convergence” or “Sectoral
Decarbonization Approach (SDA)”. For near-term targets, the SDA formula is used, which
adjusts a company’s target based on their starting point, target year, and projected output
growth. For long-term targets, the target year emissions intensity is equal to the sector’s
emissions intensity in 2050 (2040 for the power and maritime transport sectors).

4.5.2 Eligible methods for scope 2 (both near-term and long-term targets)

• Renewable electricity (scope 2 only): Using this method, companies set targets to actively
procure at least 80% renewable electricity by 2025 and 100% renewable electricity by 2030.
Renewable electricity targets are accepted as a substitute for targets that cover scope 2
emissions.

4.5.3 Eligible methods for scope 3 (both near-term and long-term targets)

• Scope 3 physical intensity reduction: Using this method, companies define their own
physical intensity metric and set targets to reduce physical emissions intensity by an amount
that is, at minimum, consistent with limiting warming to well-below 2˚C for near-term targets
and 1.5°C for long-term targets. For near-term targets, the minimum reduction is calculated
as a 7% year-on-year reduction; whereas for long-term targets, the minimum reduction is
calculated as an overall 97% reduction.8
• Scope 3 economic intensity reduction: Using this method, companies reduce economic
emissions intensity (e.g., tCO2 per unit of value added) by an amount that is, at minimum,
consistent with limiting warming to well-below 2°C for near-term targets and 1.5˚C for long-
term targets. For near-term targets, the minimum reduction is calculated as a 7% year-on-
year reduction while for long-term targets, the minimum reduction is calculated as an overall
97% reduction.

8 In previous versions of the SBTi Near-term Criteria, the minimum ambition for scope 3 physical intensity targets was a 2%
linear annual reduction with no increase in absolute emissions. It has been updated to a 7% compound reduction, to align
with well-below 2˚C scenarios.

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 4.5.4 Eligible methods for near-term scope 3 targets only

• Engagement targets (scope 3 near-term targets only): Using this method, companies set
a target for suppliers or customers representing a certain percentage of emissions to set their
own science-based targets.

Using the methods listed above, companies must set near-term targets with a minimum ambition of
1.5°C for scopes 1 and 2 and a minimum ambition of well-below 2°C for scope 3. Long-term targets
must have a minimum ambition of 1.5°C across scopes.

Table 4 Ambition ranges for target classification of near-term science-based targets

Long-term
temperature Minimum annual linear reduction rate over target period
goal

Well-below
2˚C (scope 3)

~66% chance
of limiting peak
warming
between now
and 2100 to
below 2˚C.

1.5˚C (scopes
1 and 2)
~50% chance
of limiting
warming in
2100 to 1.5˚C.

A summary of eligible methods as described in this section is shown in Table 5 below.

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Table 5 A summary of eligible methods for near-term and long-term targets.

Near-term targets Long-term targets

Eligibility

Cross-sector pathway:
90% reduction

Cross-sector pathway:
Sector-specific pathways:
• Scopes 1 and 2:
• Agriculture: 72%
Minimum 4.2% p.a.
reduction • Scopes 1-3
Absolute dependent on choice of
• Cement, iron and • Default
reduction base year
steel, residential option
• Scope 3: minimum
buildings, and service
2.5% p.a. dependent
buildings: >90%
on choice of base year
• Other sector-specific
pathways to be added

• Scopes 1-3
• Most
Sector- commonly
Requirements vary dependent Requirements vary dependent
specific used by
on sector-specific and on sector-specific and
intensity heavy-
commodity-specific pathways. commodity-specific pathways
convergence emitting
and FLAG
sectors
Use of renewable energy
certificates (RECs) or virtual
power purchase agreements
Renewable (vPPAs): Use of RECs or vPPAs:
• Scope 2
electricity • 80% minimum by 100% by 2030
2025
• 100% minimum by
2030
Suppliers or customers to set
• Scope 3
Engagement SBTs at a minimum ambition of N/A
near-term
well-below 2°C.
Scope 3
At least 7% year-on-year
economic
reduction of emissions per unit 97% • Scope 3
intensity
value added.
reduction
Scope 3 At least 7% year-on-year
physical reduction for a company-
97% • Scope 3
intensity defined physical emissions
reduction intensity metric

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 4.6 Calculating near and long-term SBTs

There are important differences when setting near-term and long-term science-based targets, as
summarized in the table below. For in-depth guidance on calculating near-term targets, please see
the SBTi Corporate Manual.

Calculating long-term targets is relatively simple because target ambition does not depend on the
chosen target year and targets are less dependent on company input data. Companies must use the
SBTi Net-Zero Tool to calculate long-term science-based targets.

Table 6 A comparison of boundary, ambition, timeframe, and methods between near and long-term
targets

Boundary Ambition Timeframe Methods

What percentage What is the What is the timeframe What are the eligible methods to set targets?
emissions ambition level of to meet targets?
inventory limiting
coverage is temperature rise?
required?
Cross-sector absolute reduction
Scope 1
and 2

Sector-specific absolute reduction

95% 1.5°C
Sector-specific intensity convergence
Near-term SBTs

Renewable electricity
Cross-sector absolute reduction
5-10 years9
Sector-specific absolute reduction
Scope 3

If >40% of total
Sector-specific intensity convergence
emissions, 67% Well-below 2°C
Supplier/customer engagement
coverage
Scope 3 economic intensity reduction
Scope 3 physical intensity reduction
Cross-sector absolute reduction
Scope 1
and 2

Sector-specific absolute reduction

Long-term SBTS

95%
Sector-specific intensity convergence
2050 latest (2040 for
Renewable electricity
the power and
1.5°C Cross-sector absolute reduction
maritime transport
Scope 3

sectors) Sector-specific absolute reduction

90% Sector-specific intensity convergence
Scope 3 economic intensity reduction
Scope 3 physical intensity reduction

9
The maritime transport sector cannot have a target year for near-term targets before 2030.

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4.7 Target wording

Finally, it is important to consider how the net-zero target and underlying target(s) can be expressed
clearly and succinctly. There are three components that make up net-zero target wording:

● Overarching net-zero target

● Near-term science-based target
● Long-term science-based target

Figure 6 Net-zero target wording structure.

4.7.1 Overarching net-zero target

The company net-zero date is determined by the latest long-term SBT target date. Companies can
express their overarching net-zero targets as:

Company X commits to reach net-zero GHG emissions across the value chain by [insert
latest long-term SBT target date] from a [insert base year] base year.

4.7.2 Near-term science-based target wording

Companies must include the near-term science-based target wording within their overall net-zero
target. More details can be found in the Target Validation Protocol for Near-term Targets.

4.7.3 Long-term science-based target wording

The SBTi has specific guidance for target wording to increase comparability and transparency among
approved targets. Companies are required to follow specific guidelines for target wording and the
SBTi reserves the right to not approve targets that deviate from this guidance. What may appear to
be minor nuances may significantly alter the target’s intention. Table 7 provides recommended target
template wording for each type of target. Please see the SBTi’s Target Submission Form to see the
latest recommendations for the target language. Please note that Table 7 contains examples of overall
target language, but companies should refer to their sector specific guidance for further information
on all targets required.

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Table 7 Recommended long-term SBT language templates and examples

Target type Recommended target language

Absolute reduction target using the cross- [Company name] commits to reduce absolute [enter
sector pathway scopes] GHG emissions [percent reduction]% by
[target year] from a [base year] base year. 10
Absolute reduction target using the FLAG [Company name] commits to reduce [enter scopes]
pathway FLAG GHG emissions [72% or more] by [target year]
from a [base year] base year.
*Note: a mandatory footnote must be included
detailing that this target includes FLAG emissions
and removals.
Steel intensity target [Company name] commits to reduce [enter scopes]
GHG emissions [91% or more] per ton of steel by
[target year] from a [base year] base year.
Cement intensity target [Company name] commits to reduce [enter scopes]
GHG emissions [percentage reduction]% per ton of
cementitious materials by [target year] from a [base
year] base year.
Power sector target [Company name] commits to reduce [enter scopes]
emissions from [source: e.g., power generation/all
sold electricity] [percentage] per MWh by [target
year: 2040 or earlier] from a [base year] base year.
Buildings sector target [Company name] commits to reduce [enter scopes]
GHG emissions [percentage reduction]% per square
meter by [target year] from a [base year] base year.
Maritime sector target [Company name] commits to reduce well-to-wake
GHG emissions [percentage] per [tonne nautical
mile or GT nautical mile] from [vessel type]
operations by [target year: 2040 or sooner] from a
[base year] base year
Combined absolute target that covers the [Company name] also commits to reduce scope 3
same emissions scope(s) or scope 3 emissions from upstream transport and waste
category(s). generated in operations [percent reduction]% by
[target year] from a [base year] base year.
For example, a company setting an
absolute target that covers upstream
transport and waste generated in
operations, may combine them into a single
target.11
Intensity target covering a subset of scope [Company name] commits to reduce scope 1 and 2
1 and 2 emissions and an absolute target emissions [percent reduction]% per [unit]% by [target
covering the remaining emissions year] from a [base year] base year. [Company name]
commits to reduce all other scope 1 and 2 emissions
90% by [target year] from a [base year] base year.

10 If covering less than 100% of scope 3 emissions, companies should also list the GHG Protocol category names in their
target language.
11 Despite this, the SBTi will need to review each sector-specific target to validate long-term targets.

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5. GUIDANCE FOR COMPANIES IN LAND-INTENSIVE
SECTORS
Few companies have comprehensively accounted for agriculture, forestry, and other land use
(AFOLU) emissions or removals in their targets or disclosures. A key challenge has been the lack of
available standards, guidance and methods, but this challenge is solved with the Forest, Land and
Agriculture (FLAG) Guidance and the forthcoming GHG Protocol Land Sector and Removals
Guidance (draft guidance released September 2022).

Companies with land-intensive activities in their value chain are expected to set a FLAG target – that
includes both emission reductions and removals. The FLAG target indicates how much and how
quickly a company needs to reduce its land-based emissions to limit global warming to 1.5°C.

5.1 Background on FLAG emissions

The FLAG sectors, also known in the scientific community as the AFOLU sector, have been
historically difficult to evaluate through GHG accounting and target setting approaches. However,
AFOLU represents about 22% of global anthropogenic GHG emissions (~13 GtCO 2e per year),
around half coming from agriculture and the other half from land use, land-use change, and forestry
(LULUCF) (IPCC, 2022). GHG emissions from FLAG sectors need to be halved by 2050, and at the
same time agricultural production is expected to increase 50%.12

The AFOLU sector has the potential to deliver up to 37% of the emissions reductions and removals
needed through 2030, and 20% through 2050 (Griscom et al., 2017). Because of this, mitigation in
the land sector also requires accounting for GHG removals (enhancing sinks) due to the potential for
forests and soils to store carbon. GHG removals include restoring natural ecosystems, improving
forest management practices, and enhancing soil carbon sequestration (Roe et al., 2019).

Aligning the AFOLU sector with 1.5°C pathways through both reductions and removals is feasible by
stopping deforestation and land conversion, reducing peat burning and forest degradation, lowering
agricultural emissions, and reducing emissions via demand shifts (e.g., addressing diet shift, food loss
and waste); GHG removal can be achieved by restoring natural ecosystems, deploying silvopasture,
improving forest management practices, and enhancing soil carbon sequestration on pasture and
farmland.

5.2 SBTi FLAG Guidance

The FLAG guidance is aimed at companies in land-intensive sectors, including food, agriculture, and
forestry. FLAG pathways include not only emissions reduction, but also removals within the land
sector. It includes an overall FLAG sector mitigation pathway as well as 11 specific FLAG mitigation
pathways for major commodities: beef, chicken, dairy, leather, maize, palm oil, pork, rice, soy, wheat,
and timber and wood fiber. All FLAG pathways include CO2 and non-CO2 gases, as well as emissions

12 WRI, Creating a Sustainable Food Future.

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related to agriculture and forestry ‘to farm gate’ – excluding energy-related emissions from processing
of biomass – which are covered under other SBTi pathways.

It is important to consider that companies are required to report emission reductions and removals
separately, and removals are only included in FLAG targets. Crucially, FLAG science-based targets
are separate from SBTs that cover emissions from energy and industrial processes – therefore, FLAG
mitigation cannot be used to meet non-FLAG targets (e.g., a company cannot bring forests into
its value chain to meet another SBT).

5.3 Greenhouse Gas Protocol Land Sector and Removals Guidance

The two FLAG approaches available in the FLAG Guidance (FLAG sector approach and FLAG
commodity approach) seek to align with the upcoming GHG Protocol Land Sector and Removals
Guidance (final version expected early 2023). The guidance will explain how companies should
account for emissions and removals from land management, LUC, biogenic products, technological
CO2 removals and related activities in GHG inventories. FLAG guidance and tools will be updated as
needed to align with the GHG Protocol Land Sector and Removals Guidance, once finalized, and as
new and improved data become available.

Starting from April 30, 2023, companies that fall under the relevant sector classifications and emission
threshold will be required to account for FLAG-related emissions and appropriate removals/storage
in alignment with the forthcoming GHG Protocol Land Sector and Removals Guidance and to include
these emissions in their target boundary (FLAG-C3). While the GHG Protocol guidance is still under
development, companies with land-intensive operations can still prepare for and set FLAG targets.
Companies setting targets before the release of the final version may proceed with target setting using
the draft version.

5.4 Which companies are required to set FLAG targets?

Companies with land intensive activities in their value chain from the following sectors are required to
set a FLAG science-based target:

• Forest and paper products such as timber, pulp and paper, and rubber.
• Agricultural production.
• Food production from animal sources.
• Food and beverage processing.
• Food and staples retailing.
• Tobacco.

Companies in any other sector that have land-related emissions that total more than 20% of overall
emissions across scopes 1, 2 and 3 are also required to set a FLAG target.

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6. UPDATING AND COMMUNICATING TARGETS
The number of businesses committing to reach net-zero emissions has grown rapidly over the last
few years, and many companies have already made net-zero commitments in advance of the Net-
Zero Standard’s launch.13 The guidance below is designed to help align existing commitments with
the Net-Zero Standard and provides recommendations for communicating these changes with
stakeholders.

More information can be found on the Communications Guidance for Companies and Financial
Institutions page on the SBTi website.

6.1 How can companies ensure near-term targets align with the Net-Zero Standard?

In response to the urgency and scale of the climate emergency and the success of science-based
targets to date, the SBTi ratcheted its expectations for businesses by ensuring all targets align with a
1.5°C future. Since 15 July 2022, the SBTi only validates targets aligned with a minimum level of
ambition of 1.5°C for scope 1 and 2 and well-below 2°C for scope 3. The SBTi has also reduced the
maximum timeframe for near-term targets from 15 to 10 years.

These updated requirements for near-term science-based targets are summarized in Table 8 below.
If your company is setting new near-term science-based targets, they must meet these criteria to be
eligible for net-zero validation. If your company already has a validated SBT that does not fulfil the
ambition criteria for scope 1 and 2 or scope 3, it must be updated. Companies will not be required to
update targets to meet the new timeframe requirement.14

Companies with emissions reduction targets that do not already align with the changes to
near-term SBTi criteria are invited to update their science-based targets, if interested in net-
zero target submission. More information can be found on our website and in the Target Validation
Protocol for Near-term Targets.

13 Analysis by Climate Action Tracker tells us that 73% of global emissions are covered by net-zero targets, and the ECIU
and Oxford’s March 2021 report showed that of the 2,000 publicly-traded companies included in the Forbes Global 2000
list, 21% of these companies had net-zero targets.
14 Companies that committed to the Business Ambition for 1.5˚C via Option 2 may still gain validation for their net-zero

targets if their Scope 1 and 2 targets are aligned to well-below 2˚C. However, these targets must be eventually upgraded.
Please see the Business Ambition for 1.5˚C campaign FAQ for more details.

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Table 8 Summary of changes to near-term SBTi criteria

Updates to criteria

Under the previous versions of the SBTi criteria, near-term science-based

targets could have a target year 5-15 years from the date of submission.
Timeframe
Under SBTi criteria V5.0 and V5.1, target years must be 5-10 years from the
date of submission.

Scope 1 & The minimum scope 1 and 2 ambition of near-term science-based targets has
2 ambition increased from well-below 2°C to 1.5°C.

The minimum scope 3 ambition of near-term science-based targets has

Scope 3
increased from 2°C to well-below 2°C. Supplier/customer engagement targets
ambition
will remain eligible.

6.2 How can companies ensure long-term targets align with the Net-Zero Standard?

An essential component of a corporate net-zero strategy is a long-term science-based target. While

companies may reach a balance between emissions and removals before they reach the depth of
decarbonization required to limit warming to 1.5°C, this is a transient state on the journey to net-zero
emissions. Companies must reduce emissions to this level before claiming to have reached net-zero.
In other words, a company’s net-zero target date may not come before its long-term science-based
target date.

For companies that have not set long-term emission reduction targets, we encourage you to
model long-term science-based targets and validate them through the SBTi to demonstrate
commitment to aligning with science as part of your net-zero ambition.

For companies that have set long-term emission reduction targets to reach net-zero that are
not as ambitious as long-term science-based targets, we recommend modeling long-term
science-based targets, revisiting your implementation strategy and consider increasing the ambition
of current long-term targets to align with science.

For companies that have set net-zero target dates but feel they will be unable to reach the level
of emission reductions required by their long-term science-based target in that timeframe, we
advise reviewing your implementation strategies to explore additional opportunities to reduce
emissions as a first step. If you expect you will not be able to meet the required level of emission
reductions by that date, the next option is to consider moving the net-zero target date further into the
future.

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6.3 How to communicate with stakeholders when targets do not meet the Net-Zero
Standard requirements

When companies have already set net-zero targets, we understand that navigating communication
with stakeholders can be challenging if current targets do not comply with the Net-Zero Standard. In
this section, we provide advice and guidance on how to communicate with stakeholders in this
situation by developing messages to support companies with this process. Please note that these are
only suggestions and companies may adapt these points to suit their needs.

• To ensure our actions are in line with climate science and avoid following a pathway that may
not be consistent with addressing the climate crisis, we have reviewed our net-zero targets
against the SBTi’s Net-Zero Standard.
• Responding to the urgency and scale of the climate emergency, the SBTi is ratcheting up its
expectations for businesses. To support this, we must listen to the science and enhance the
ambition of our net-zero commitment.
• As part of this process, we have identified clear next steps to adjust our current commitment
and/or target(s) to align with this first global science-based Net-Zero Standard. We believe
this will help ensure the robustness and impact of our targets.
• We are committed to following a science-based net-zero pathway, which is why we are
reviewing our climate mitigation strategy to better understand opportunities and enhance our
ambition.

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7. THE NET-ZERO STANDARD CRITERIA
7.1 Background to the Net-Zero Standard Criteria

The Net-Zero Standard Criteria was developed through extensive stakeholder consultation, in
collaboration with the Net-Zero Expert Advisory Group. It includes all criteria that must be met for net-
zero target(s) to be validated by the SBTi as well as recommendations which are important for
transparency and best practice. It is important to note that criteria and recommendations are subject
to change and may be updated.

Although this document contains all criteria for setting near-term science-based targets, companies
should refer to the SBTi Near-term Criteria, which outlines additional recommendations for near-term
targets not included in this document.

These criteria apply only to companies not classified as financial institutions or SMEs. Financial
institutions can set targets using the Financial Sector Science-based Targets Guidance. SMEs must
use the streamlined process to set targets in line with climate science.

Companies must also follow the GHG Protocol Corporate Standard, Scope 2 Guidance, and
Corporate Value Chain (Scope 3) Accounting and Reporting Standard.

The Target Validation Protocol for Near-term Targets describes the underlying principles, process,
and criteria followed to assess targets and to determine conformance with criteria.15 The SBTi strongly
recommends companies to review Table 1 in the Target Validation Protocol that further details SBTi
criteria compliance and non-compliance before developing targets.

7.2 Disclaimer

While every effort is made to keep companies informed of the latest criteria and
recommendations, the SBTi reserves the right to make adjustments as needed to reflect the
most recent emissions scenarios, partner organization policies, and GHG accounting
practices.

The initiative also reserves the right to withdraw validation if it becomes apparent that incorrect
information was communicated during the target validation process which leads to criteria not being
met during the assessment – or if requirements following the approval of the target are not respected
(i.e., target progress reporting and recalculations).

Unless otherwise noted (including specific sections), all criteria apply to scopes 1, 2, and 3.

15 The Target Validation Protocol currently only applies to near-term SBT criteria but will be updated to include net-zero
targets.

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7.3 Terminology

This document explains the criteria, which are requirements that companies must follow, and
recommendations, which companies should follow, to align with the Net-Zero Standard. This
document uses precise language to indicate requirements, recommendations, and allowable options
that companies may choose to follow.
• The terms “shall” or “must” are used throughout this document to indicate what is required
for targets to be in conformance with the Net-Zero Standard.
• The term “should” is used to indicate a recommendation, but not a requirement.
• The term “may” is used to indicate an option that is permissible or allowable.

The terms “required” or “must” are used in the guidance to refer to requirements. “Can” and “is
encouraged” may be used to provide recommendations on implementing a requirement or “cannot”
may be used to indicate when an action is not possible. The letter “C” preceding a number indicates
a criterion and the letter “R” preceding a number indicates a recommendation.

7.2 General criteria

7.4.1 Target boundary

[Link] Organizational boundary

C1 – Organizational boundary: Companies should submit targets only at the parent- or group level,
not the subsidiary level. Parent companies must include the emissions of all subsidiaries in their target
submission, in accordance with the boundary criteria outlined below. In cases where both parent
companies and subsidiaries submit targets, the parent company’s target must also include the
emissions of the subsidiary if it falls within the parent company’s emissions boundary given the chosen
inventory consolidation approach.16

R1 – Setting organizational boundaries: The SBTi strongly recommends that a company's

organizational boundary, as defined by the GHG Protocol Corporate Standard, is consistent with the
organizational boundary used in the company’s financial accounting and reporting procedures.

[Link] GHG coverage

C2 – Greenhouse gases: The targets must cover all relevant GHGs as required by the GHG Protocol
Corporate Standard.

[Link] Scope coverage

C3 – Scope 1 and scope 2: The targets must cover company-wide scope 1 and scope 2 emissions,
as defined by the GHG Protocol Corporate Standard.

16This criterion applies only to subsidiaries. Brands, licensees, and/or specific regions or business divisions of a company
will not be accepted as separate targets, unless they fall outside of a parent company’s chosen consolidation approach.

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C4 – Scope 3: If a company’s relevant scope 3 emissions are 40% or more of total scope 1, 2, and 3
emissions, they must be included in near-term science-based targets. All companies involved in the
sale or distribution of natural gas and/or other fossil fuels shall set scope 3 targets for the use of sold
products, irrespective of the share of these emissions compared to total scope 1, 2, and 3 company
emissions. All companies shall include emissions from all relevant scope 3 categories in long-term
science-based targets.

[Link] Emissions coverage

C5 – Scope 1, 2, and 3 allowable exclusions: Companies may exclude up to 5% of scope 1 and scope
2 emissions combined in the boundary of the inventory and target.17 Companies may exclude a
maximum of 5% of emissions from their total scope 3 inventory.18

C6 – Scope 3 emissions coverage for near-term targets: Companies must set one or more emission
reduction near-term targets and/or supplier or customer engagement targets that collectively cover(s)
at least two-thirds (67%) of total reported and excluded scope 3 emissions considering the minimum
boundary of each category in conformance with the GHG Protocol Corporate Value Chain (Scope 3)
Accounting and Reporting Standard.

C7 – Scope 3 emissions coverage for long-term targets: The boundary of long-term science-based
targets shall cover at least 90% of total scope 3 emissions. Exclusions in the GHG inventory and
target boundary must not exceed 10% of total scope 3 emissions.

R2 – Targets covering optional scope 3 emissions: Targets to reduce scope 3 emissions that fall
outside the minimum boundary of scope 3 categories are not required but are nevertheless
encouraged when these emissions are significant. Companies may cover these emissions with a
scope 3 target, but such targets cannot count towards the thresholds defined in C6 and C7 for scope
3 emissions (i.e., these targets are above and beyond the company’s scope 3 targets). For a definition
of optional emissions for each scope 3 category, please see Table 5.4 (page 34) of the Corporate
Value Chain (Scope 3) Accounting and Reporting Standard.

7.4.2 Method validity (near and long-term targets)

C8 – Method validity: Targets must be modeled using the latest version of methods and tools
approved by the initiative. Targets modeled using previous versions of the tools or methods may only
be submitted to the SBTi for validation within 6 months of the publication of the revised method or
sector-specific tools.

17 Where a company’s scope 1 or 2 emissions are deemed immaterial (i.e., under 5% of total combined scope 1 and 2
emissions), companies may set their SBT solely on the scope (either scope 1 or scope 2) that covers more than 95% of
the total scope 1 and 2 emissions. The company must continue to report on both scopes and adjust their targets as
needed, according to the GHG Protocol’s principle of completeness, and as per C32 and C33.
18 The SBTi does not recognize emissions perceived to be “negligible” as a rationale for not reporting them. Even if

emissions from certain activities or operations are perceived to be negligible, these emissions still must be quantified and
reported in the reporting company’s GHG inventory. This is regardless of whether the reporting company chooses to
exclude them or not, as exclusions must also be quantified and reported.

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 7.4.3 Emissions accounting requirements

C9 – Scope 2 accounting approach: Companies shall disclose whether they are using a location- or
market-based accounting approach as per the GHG Protocol Scope 2 Guidance to calculate base
year emissions and to track performance against a science-based target. The GHG Protocol requires
measuring and reporting scope 2 emissions using both approaches. However, a single and consistent
approach must be used for setting and tracking progress toward a SBT (e.g., using location-based
approach for both target setting and progress tracking).

C10 – Scope 3 inventory: Companies must complete a scope 3 inventory covering gross scope 3
emissions for all its emissions sources according to the minimum boundary of each scope 3 category
set out by the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard.19

C11 – Bioenergy accounting: CO2 emissions from the combustion, processing and distribution phase
of bioenergy – as well as the land use emissions and removals20 associated with bioenergy feedstocks
– shall be reported alongside a company’s GHG inventory. Furthermore, these emissions shall be
included in the target boundary when setting a science-based target (in scopes 1, 2 and/or 3, as
required) and when reporting progress against that target.

Land-related emissions accounting shall include CO2 emissions from direct land use change (LUC)
and non-LUC emissions, inclusive of N2O and CH4 emissions from land use management. Including
emissions associated with indirect LUC is optional.

Companies are expected to adhere to any additional GHG Protocol Guidance on bioenergy
accounting when released to maintain compliance with C11.

C12 – Carbon credits: The use of carbon credits must not be counted as emission reductions toward
the progress of companies’ near-term or long-term science-based targets. Carbon credits may only
be considered as an option for neutralizing residual emissions (see C28) or to finance additional
climate mitigation beyond their science-based emission reduction targets (see R9).

C13 – Avoided emissions: Avoided emissions fall under a separate accounting system from corporate
inventories and do not count toward near-term or long-term science-based emission reduction targets.

R3 – Biofuel certification: The SBTi recommends that companies using or producing biofuels for
transport should support their bioenergy GHG accounting with recognized biofuels certification(s) to
disclose that the data on land-related emissions and removals represents the relevant biofuel
feedstock production.

19 For a definition of the minimum boundaries of scope 3 categories and emissions sources that fall outside the minimum
boundaries, see Table 5.4 (page 34) of the Corporate Value Chain (Scope 3) Accounting and Reporting Standard.
20 The positive impact of exceeding zero emissions due to biogenic removals shall not be accounted for in a company’s

target formulation or as progress towards SBTs. In addition, removals that are not directly associated with bioenergy
feedstock production are not accepted to count as progress towards SBTs or to net emissions in a company’s GHG
inventory.

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R4 – Bioenergy data reporting: The SBTi recommends that companies report direct biogenic CO2
emissions and removals from bioenergy separately. Emissions and CO2 removals associated with
bioenergy shall be reported as net emissions, according to C11, as a minimum. However, companies
are encouraged to report gross emissions and gross removals from bioenergy feedstocks.

7.5 Net-zero target formulation

7.5.1 Net-zero definition

C14 – State of net-zero emissions: Companies shall set one or more targets to reach a state of net-
zero emissions, which involves: (a) reducing scope 1, 2 and 3 emissions to zero or a residual level
consistent with reaching net-zero emissions at the global or sector level in eligible 1.5°C scenarios or
sector pathways and (b) neutralizing any residual emissions at the net-zero target date – and any
GHG emissions released into the atmosphere thereafter.

7.5.2 Structure

C15 – Net-zero target structure: Companies aiming to reach a state of net-zero emissions in a
timeframe exceeding 10 years shall set both near-term and long-term science-based emission
reduction targets according to the requirements and recommendations outlined in this standard. If a
company's near-term target meets the ambition requirements of a long-term target, then the latter is
not required.

7.5.3 Timeframe

C16 – Base year: The base year must be no earlier than 2015. The company shall use the same base
year for its long-term science-based targets as its near-term SBTs.

C17 – Target year(s): Absolute and intensity-based emission reduction near-term targets must cover
a minimum of 5 years and a maximum of 10 years from the date the target is submitted to the SBTi
for validation.21 Long-term targets shall have a target year no later than 2050. For companies in
sectors that reach net-zero before 2050 (e.g., power generation), long-term SBTs covering relevant
activities must have a target year no later than the sector's year of net-zero in eligible 1.5˚C pathways.

C18 – Progress to date: The minimum forward-looking ambition of near-term targets is consistent with
reaching net-zero by 2050 at the latest, assuming a linear absolute reduction, linear intensity
reduction, or intensity convergence between the most recent year and 2050 (not increasing absolute
emissions or intensity).22

21 For targets submitted for validation in the first half of 2023, valid target years are 2027-2032 inclusive. For targets
submitted in the second half of 2023 (from 1 July), valid target years are between 2028 and 2033 inclusive.
22 Companies must provide all the relevant GHG inventory data including a most recent year GHG inventory even if

business activities were impacted by the COVID-19 pandemic. For submissions in 2023, a recent year inventory must be
provided that is no earlier than 2021 i.e., allowable most recent years are 2021 and 2022.

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R5 – Consistency: It is recommended that companies use the same base years for all near-term
targets.

7.5.4 Ambition

[Link] Scope 1 and 2 near- and long-term targets

C19 – Level of ambition for scope 1 and 2 targets: At a minimum, scope 1 and scope 2 targets must
be consistent with the level of decarbonization required to keep global temperature increase to 1.5°C
compared to pre-industrial temperatures. This applies to both near-term and long-term targets.

C20 – Absolute targets: Absolute reduction targets for scope 1 and scope 2 are eligible when they
are at least as ambitious as the minimum of the approved range of emissions scenarios consistent
with the 1.5°C goal or aligned with the relevant 1.5°C sector-specific absolute pathway (long-term
targets only).

C21 – Intensity targets: Intensity targets for scope 1 and scope 2 emissions are eligible when they
are modeled using an approved 1.5°C sector pathway applicable to companies’ business activities.

[Link] Scope 3 near- and long-term targets

C22 – Level of ambition for scope 3 emissions reductions targets: At a minimum, near-term scope 3
targets (covering the entire value chain or individual scope 3 categories) must be aligned with
methods consistent with the level of decarbonization required to keep global temperature increase
well-below 2°C compared to pre-industrial temperatures. For long-term scope 3 targets, this minimum
ambition is increased to 1.5°C.

C23 – Supplier or customer engagement targets: Near-term targets to drive the adoption of science-
based emission reduction targets by their suppliers and/or customers are acceptable when the
following conditions are met:

• Boundary: Companies may set engagement targets around relevant and credible upstream
or downstream categories.
• Formulation: Companies shall provide information in the target language on what
percentage of emissions from relevant upstream and/or downstream categories is covered
by the engagement target or, if that information is not available, what percentage of annual
procurement spend is covered by the target.23
• Timeframe: Companies’ engagement targets must be fulfilled within a maximum of 5 years
from the date the company’s target is submitted to the SBTi for validation.24
• Ambition level: The company’s suppliers/customers shall have science-based emission
reduction targets in line with the latest version of the SBTi Criteria for Near-term Targets.

23 If measuring coverage by spend, the company shall provide an estimate of the emissions coverage associated with that
spend for validation purposes to demonstrate that criterion C23 has been met, by the supplier or customer target alone, or
together with other scope 3 target(s).
24 For targets submitted for validation in the first half of 2023, valid target years are up to 2027 inclusive. For those

submitted in the second half (from 1 July) of 2023, valid target years are up to 2028 inclusive.

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C24 – Absolute targets (scope 3): Absolute targets for scope 3 are eligible when they are at least as
ambitious as the minimum of the approved range of emissions scenarios consistent with the well-
below 2°C goal (near-term targets), the 1.5°C goal (long-term targets), or aligned with the relevant
1.5°C sector-specific absolute pathway (long-term targets only).

C25 – Intensity targets (scope 3): Intensity targets for scope 3 are eligible when they are modeled
using an approved sector-specific physical intensity pathway where applicable to companies’
business activities or using eligible physical intensity or economic intensity approaches. This applies
to both near-term and long-term targets. Intensity targets on upstream scope 3 categories must reflect
both supply-side and demand-side mitigation levers, where specified by sector-specific guidance.

R6 – Supplier engagement: Companies should recommend that their suppliers use the SBTi guidance
and tools available to set science-based targets. SBTi validation of supplier science-based targets is
recommended but not required. It is recommended that suppliers classified as SMEs, submit targets
through the SME streamlined route.

[Link] Combined targets (near and long-term targets)

C26 – Combined scope targets: Targets combining scopes (e.g., 1 and 2, or 1, 2 and 3) are permitted
if the SBTi can review the ambition of the individual target components and confirm each meets the
relevant ambition criteria.

[Link] Renewable electricity targets (near and long-term targets)

C27 – Renewable electricity (scope 2 only): Targets to actively source renewable electricity at a rate
consistent with 1.5°C scenarios are an acceptable alternative to scope 2 emission reduction targets.
The SBTi has identified 80% renewable electricity procurement by 2025 and 100% by 2030 as
thresholds (portion of renewable electricity over total electricity use) for this approach, in line with the
recommendations of RE100.25 Companies that already source electricity at or above these thresholds
shall maintain or increase their use of renewable electricity to qualify.

R7 – Purchased heat and steam: When modeling targets using the SDA, it companies should model
purchased heat and steam related emissions as if they were part of their direct emissions, i.e., scope
1.

R8 – Efficiency considerations for target modeling: If companies are using a method that does not
already embed efficiency gains for the specific sector, market – and the decarbonization projected for
the power sector is based on a 1.5°C scenario – these factors should be considered when modeling
electricity-related scope 2 targets.

25RE100 guidance states that setting a 100% renewable electricity target by 2030 at the latest shows a strong level of
leadership.

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 7.5.5 Beyond value chain mitigation

R9 – Beyond value chain climate mitigation: Companies should take action or make investments
outside their own value chains to mitigate GHG emissions in addition to their near-term and long-term
science-based targets. For example, a company could provide annual support to projects, programs
and solutions providing quantifiable benefits to climate, especially those that generate additional co-
benefits for people and nature. Companies should report annually on the nature and scale of those
actions, pending further guidance.

7.5.6 Neutralization

C28 – Neutralization of unabated emissions to reach net-zero: Companies shall remove carbon from
the atmosphere and permanently store it to counterbalance the impact of any unabated emissions
that remain once companies have achieved their long-term science-based target, and for subsequent
years thereafter. The neutralization of unabated emissions applies to both the emissions reduction
target(s) boundary and to any unabated emissions that have been excluded from the GHG inventory.

R10 – Neutralization milestones: Companies should disclose information such as planned milestones
and near-term investments that demonstrate the integrity of commitments to neutralize unabated
emissions at net-zero.

7.5.7 Target formulation

C29 – Target formulation: Companies shall publicly set a net-zero target that clearly and transparently
communicates each of the target’s relevant components including (a) net-zero target year, (b)
magnitude of emissions reductions that will be achieved for near-term and long-term SBTs, and (c) a
base year.

7.6 Reporting, recalculation and target validity

7.6.1 Reporting

C30 – Frequency: The company shall publicly report its company-wide GHG emissions inventory and
progress against published targets on an annual basis.

C31 – Reporting completeness: Companies shall publicly report information pertaining to progress
against validated targets, including separately reporting emissions and removals in the annual GHG
inventory.

R11 – Where to disclose: There are no specific requirements regarding where the inventory and
progress against published targets should be disclosed, as long as it is publicly available. The SBTi
recommends disclosure through standardized, comparable data platforms such as CDP’s climate
change annual questionnaire. Annual reports, sustainability reports and the company’s website are
also acceptable platforms.

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 7.6.2 Recalculation and target validity

C32 – Mandatory target recalculation: To ensure consistency with the most recent climate science
and best practices, targets must be reviewed, and if necessary, recalculated and revalidated, at a
minimum every 5 years. For companies with targets approved in 2020 or earlier, targets must be
reviewed and revalidated by 2025, if necessary. Companies with an approved target that requires
recalculation must follow the most recent applicable criteria at the time of resubmission. A company’s
base year emissions recalculation policy must include a significance threshold of 5% or less that is
applied to emission recalculations or in the absence of a base year emissions recalculation policy, a
company must agree to apply a 5% significance threshold for emission recalculations.

C33 – Triggered target recalculation: Targets shall be recalculated, as needed, to reflect significant
changes that could compromise relevance and consistency of the existing target. The following
changes shall trigger a target recalculation:

• Scope 3 emissions become 40% or more of aggregated scope 1, 2 and 3 emissions (applies
only to near-term SBTs).
• Emissions of exclusions in the inventory or target boundary change significantly.
• Significant changes in company structure and activities (e.g., acquisition, divestiture, merger,
insourcing or outsourcing, shifts in goods or service offerings).
• Significant adjustments to the base year inventory, data sources or calculation
methodologies, or changes in data to set targets such as growth projections (e.g., discovery
of significant errors or a number of cumulative errors that are collectively significant).
• Other significant changes to projections/assumptions used in setting the science-based
targets.

C34 – Target validity: Companies with approved targets must announce their target publicly on the
SBTi website within 6 months of the approval date. Targets unannounced after 6 months must go
through the approval process again unless a different publication time frame has been agreed in
writing with the SBTi.

R12 – Validity of target projections: The SBTi recommends companies check the validity of their
target-related projections on an annual basis. The company should notify the SBTi of any significant
changes and report these major changes publicly, as relevant.

7.7 Sector-specific guidance

C35 – Requirements from sector-specific guidance: Companies must follow requirements for target
setting and minimum ambition levels as indicated in relevant sector-specific methods and guidance –
at the latest, 6 months after sector guidance publication. A list of the sector-specific guidance and
requirements is available below in Table 9 and in the Target Validation Protocol for Near-term Targets.

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 7.7.1 Fossil fuel sales, distribution, and other business

C36 – Companies in the fossil fuel production business, or with significant revenue from fossil fuel
business lines: The SBTi will not currently validate targets for:

• Companies with any level of direct involvement in exploration, extraction, mining and/or
production of oil, natural gas, coal or other fossil fuels, irrespective of percentage revenue
generated by these activities.
• Companies that derive 50% or more of their revenue from the sale, transmission and
distribution of fossil fuels, or by providing equipment or services to fossil fuel companies.
• Companies with more than 5% revenue from fossil fuel assets (e.g., coal mine, lignite mine,
etc.) for extraction activities with commercial purposes.
These companies must follow the respective sector methodology, once published.

C37 – Sale, transmission, distribution of oil, natural gas, coal as well as other fossil fuels: Companies
that sell, transmit, or distribute natural gas – or other fossil fuel products – shall set emission reduction
scope 3 targets for the “use of sold products” category, that are at a minimum consistent with the level
of decarbonization required to keep global temperature increase to 1.5°C compared to pre-industrial
temperatures, irrespective of the share of these emissions compared to the total scope 1, 2, and 3
emissions of the company, company's sector classification, or whether fossil fuel sale/distribution is
the company's primary business. Customer engagement targets are not eligible for this criterion.

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8. SECTOR GUIDANCE FOR LONG-TERM SCIENCE-
BASED TARGETS
Sector-specific guidance and methods are currently available for many sectors. All new sector-specific
guidance that becomes available will be uploaded to the sector development page on the SBTi
website. The SBTi has sector-specific requirements related to the use of target-setting methodologies
and minimum ambition levels.

Table 9 Sector-specific guidance for long-term SBTs.

Sector Eligible methods Guidance and further notes

Aluminium When setting long-term SBTs, Guidance is being developed for the
companies can set targets using the aluminium sector and is currently in the
cross-sector pathway (absolute scoping phase.
reduction targets only).

Apparel and footwear When setting long-term SBTs, Optional guidance is available for
companies in these sectors must use companies in the apparel and footwear
the cross-sector pathway (absolute sector.
reduction targets only).

Aviation When setting long-term SBTs, For all transport-related emissions

companies providing air transport across all sectors, companies shall
services are recommended to set report these emissions on a well-to-
physical intensity targets using the wheel (WTW) basis in their GHG
aviation pathway or cross-sector inventory (well-to-wake for aviation and
pathway (absolute targets only). The maritime transport).
target boundary must cover well-to-
wake emissions (WTW), as specified in Aviation target formulation and
the SBTi Aviation Guidance. communication must explicitly state that
targets are exclusive of non-CO₂ factors.
Targets must include a footnote stating
that non-CO₂ factors which may also
contribute to aviation-induced warming
are not included in this target and
whether the company has publicly
reported or commits to publicly report its
non-CO2 impacts.

Buildings When setting long-term SBTs, Real Estate Investment Trusts (REITs)
companies in these sectors are wishing to set targets must specify if
recommended to set absolute reduction they are a mortgage-based or equity-
targets or intensity targets using the based REIT. Equity REITs must pursue
residential buildings pathway, service the regular target validation route for
buildings pathway, or cross-sector companies. Mortgage REITs must
pathway (absolute targets only). instead utilize the Financial Institutions
guidance for setting SBTs.

The SBTi is developing guidance for

companies operating in the built
environment.

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Cement When setting long-term SBTs, The SBTi has released guidance to aid
companies are recommended to set companies in the cement industry in
absolute targets or intensity targets setting science-based targets.
using the cement pathway, or cross-
sector pathway (absolute targets only).

Chemicals See “all other sectors”. The SBTi is developing guidance for
companies in the chemicals sector.

Financial institutions The SBTi is developing a Net-Zero The initiative defines a financial
Standard for financial institutions and institution as one engaging in investment
cannot validate net-zero targets for this activities as part of its core functions.
sector before the guidance is These include the following:
completed.
• Asset management/asset
Please note that financial institutions owners;
can still set near-term science-based • Retail and commercial banking
targets. activities;
• Insurance companies (when
functioning asset managers);
and
• Mortgage REITs.

Additionally, if at least 5% of a
company’s revenue comes from
activities such as those described
above, they would be considered a
financial institution.

Companies with significant FLAG The following companies are required to

emissions are required to set targets set FLAG targets:
(see criteria in the next table column). 1.) Companies with FLAG emissions
These are separate from their SBTs that that total 20% or more of overall
cover all non-FLAG emissions. FLAG emissions across scopes; and
targets must use the FLAG-sector 2.) Companies in the following sectors:
pathway (absolute targets) or a • Forest and Paper Products–
commodity pathway (intensity targets). Forestry, Timber, Pulp and
Paper, Rubber.
Commodity pathways are available for • Food Production– Agricultural
pathways are available for 11 Production.
Forest, land-use & commodities: beef, chicken, dairy, • Food Production– Animal
agriculture (FLAG) leather, maize, palm oil, pork, rice, soy, Source.
wheat, and timber and wood fiber. • Food and Beverage Processing.
Companies in the forest products sector • Food and Staples Retailing.
are required to use the commodity • Tobacco.
pathway for timber and wood fiber.

The FLAG target must cover at least Please see the FLAG Guidance.
95% of FLAG-related scope 1 and 2
emissions. The FLAG target must cover
at least 67% of FLAG-related scope 3
emissions. Please see the FLAG
Guidance for further guidance and
criteria.

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 Fossil fuel sale/ In addition to the guidance for the This is applicable to companies that
transmission/ primary sector, companies must set derive less than 50% of revenue from
distribution26 targets for scope 3 category 11, the sale, transmission and distribution of
irrespective of the share of these fossil fuels.
emissions compared to the total scope
1, 2 and 3 emissions of the company.
Separate scope 3 targets may need to
be set in this case.

Information and When setting long-term SBTs, The optional guidance for ICT
communication companies in these sectors must use companies including mobile networks
technology providers the cross-sector pathway (absolute operators, fixed networks operators, and
reduction targets only). data centers operators outlines in detail
the target setting requirements for
setting near-term science-based targets.

Iron and steel When setting long-term SBTs, The SBTi is developing guidance for
companies in these sectors can set companies in the steel sector.
targets using the cross-sector pathway
(absolute reduction targets) or using the
long-term sector intensity pathway
(intensity targets).

Maritime Transport Companies in Maritime Transport must On the transport sector page, you will
use the sector-specific pathway. find the Maritime Transport
Guidance and the Maritime
Near-term targets can be no earlier than Transport Target Setting Tool.
2030.
Please note that companies using this
All companies setting near-term guidance to set near-term science-
science-based targets covering based targets covering scope 3
emissions from own operations (e.g., emissions from subcontracted maritime
vessel owners or operators) shall also transport operations (e.g., cargo owners
submit long-term science-based targets or shippers) are not required to submit
along with their near-term target long-term science-based targets.
submission. For maritime transport
emissions, a long-term science-based For all transport-related emissions
target means reducing emissions to a across all sectors, companies shall
residual level in line with 1.5°C report these emissions on a well-to-
scenarios by no later than 2040. Wheel (WTW) basis in their GHG
inventory (well-to-wake for aviation and
maritime transport).

Oil and gas The SBTi is developing a new Companies in this sector include – but
methodology for companies in the oil are not limited to – integrated oil and gas
and gas sector to set science-based companies, integrated gas companies,
targets. Currently, the SBTi is unable to exploration and production pure players,
accept commitments or validate targets refining and marketing pure players, oil
for companies in the oil and gas or fossil products distributors, gas distributors
fuels sectors. Please see our policy for and retailers and traditional oil and gas
further information. service companies. Please see the Oil

26 This information is only applicable to companies that receive less than 50% of their revenue from fossil fuel sale,
transmission, or distribution. For companies receiving 50% or more of their revenue from these activities, please refer to
the Oil and Gas section above.

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 and Gas sector page on our website for
more information.

Power generation The intensity convergence method must Please see the Power/Electric utilities
be used by power generation Guidance. Companies in the power
companies, as specified in the Guidance sector with scope 3 emissions
for Electric Utilities. For power sector representing 40% or more of overall
companies, long-term science-based emissions must set an intensity target
targets must reduce emissions to a covering all sold electricity (including
residual level in line with 1.5°C purchased and resold electricity in scope
scenarios by no later than 2040 using 3, category 3), as well as a target
the Sectoral Decarbonization Approach. covering power generation in scope 1.

Companies in this sector must set

targets to reach net-zero no later than
2040.

Pulp and paper When setting long-term SBTs, Guidance is being developed for the
companies can set targets using the pulp and paper sector and is currently in
cross-sector pathway (absolute the scoping phase.
reduction targets only).

Road and rail Road and rail transport can follow the Target setting guidance will be updated
cross-sector pathway (absolute along with sector trajectory but you can
reduction targets), no sector intensity view the transport sector guidance here.
pathway is available.
For all transport-related emissions
across all sectors, companies shall
report these emissions on a well-to-
wheel (WTW) basis in their GHG
inventory (well-to-wake for aviation and
maritime transport).

Transport The SBTi is temporarily pausing near- This applies to automakers.

OEMs/Automakers and long-term target validations and
target updates for automakers until Auto part manufacturers can still set
1.5°C scope 3 targets for use-phase targets using the cross-sector absolute
emissions from new road vehicles are reduction.
developed and approved. Please see
our policy for further information.

All other sectors When setting long-term SBTs, Companies should allocate emissions to
companies in all other sectors are relevant activities as per the
recommended to set absolute reduction Greenhouse Gas Protocol, where
targets using the cross-sector pathway. guidance is available. Emissions in
Sector-specific absolute or intensity scopes 1, 2, or 3 allocated to activities
targets may be used instead for with a sector-specific pathway may be
emissions allocated to a relevant sector. covered by a sector-specific absolute or
intensity target, except for upstream
scope 3 categories where supply-side
mitigation is important and not reflected
by the pathway.

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9. ACKNOWLEDGEMENTS
Primary authors • Candace Vinke, Verra
• Emma Watson, CDP • Carsten Warnecke, New Climate Institute
• Andres Chang, CDP • Chris Bayliss, Aluminum Stewardship
• Alberto Carrillo Pineda, CDP Initiative
• Christa Anderson, WWF • Cynthia McHale, Climate Action 100+
• Cynthia Cummis, WRI • Daniel Salter, Amazon
• Martha Stevenson, WWF • Dean Cambridge
• Derik Broekhoff, Stockholm Environment
Institute
Editorial contributions and review • Doreen Stabinsky, College of the Atlantic
• Brad Schallert, WWF • Emily Hickson, The B Team
• Heidi Huusko, UN Global Compact • Erwan Saouter
• Maxine Meixner, CDP • Eveline Speelman, Energy Transitions
• Méabh Byrne, CDP Commission
• Paola Delgado, WWF • Faustine Delasalle, Energy Transitions
• Paulina Tarrant, CDP Commission
• Rebekah Hughes, Earthbound Consulting • Frances Seymour, WRI
• Rosie Williams, CDP • Gary Cook, [Link]
• Sarah Savage, CDP • Gilles Dufrasne, Carbon Market Watch
• Tereza Bicalho, WWF • Giulio Berruti, BSR
• Helen Wiggs Marshall, ShareAction
Net-Zero Working Group • Jen Austin, UN High-Level Champions
• Alberto Carrillo Pineda, CDP • Jessica Andrews, Net Zero Asset Owners
Alliance
• Alexander Farsan
• John Revess, WBCSD
• Andres Chang, CDP
• Karol Gobczynski, IKEA
• Brad Schallert, WWF
• Luca de Giovanetti, WBCSD
• Chris Weber
• Michael Hugman, Children’s Investment Fund
• Christa Anderson, WWF
Foundation (CIFF)
• Cynthia Cummis, WRI
• Mischa Reppman, Swiss Re
• Daniela Castellanos, WWF
• Nafkote Dabi, Oxfam
• Emma Watson, CDP
• Owen Hewlett, Gold Standard
• Fernando Rangel Villasana, WWF
• Pedro Martins Barata, Environmental Defense
• Martha Stevenson, WWF
Fund
• McKenna Smith, WWF
• Ramiro Fernández, High-Level Champions/
• Miranda (Burnham) Nayyar, CDP Fundación Avina
• Nate Aden, WRI • Rasmus Valanko, We Mean Business
• Paola Delgado, WWF • Richard Batten, JLL
• Paulina Tarrant, CDP • Robert Höglund
• Pedro Faria, CDP • Roy Vissers, DSM
• Rebecca Wynn • Salla Sulasuo, DSM
• Rosie Williams, CDP • Sam Van den plas, Carbon Market Watch
• Tatiana Boldyreva, CDP • Stephan Singer, Climate Action Network
• Tom Dowdall, CDP • Thomas Lingard, Unilever
• Zola Berger-Schmitz, WRI • Tom Hale, Oxford University
• Zniko Nhlapho, WWF • Valentina Lira, Viña Concha y Toro

Expert Advisory Group

The following individuals provided expert feedback and External support
direction on guidance development. They did so in a • Emilie Wesseling, SYSTEMIQ
personal capacity, and their views did not necessarily • Scarlett Benson, SYSTEMIQ
represent the views of their employers.
The SBTi would also like to thank BCG for support
• Alexia Kelly, Netflix during the road testing phase of the project.
• Ankita Kumari, Survival International
• Anthony Hobley, WEF

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Company road testers • Kesko Corporation
The following organizations provided valuable feedback • Lenovo
on the robustness and practicality of the draft Net-Zero • Magyar Telekom Plc.
Standard through the road test during July and August • Mahindra Lifespace Developers Ltd.
2021. • Mars, Incorporated
• McCain Foods
• Moody's
• AB InBev
• Multiplex Construction Europe
• A.P. Moller-Mærsk
• Ørsted
• ABOUT YOU AG & Co. KG
• Outokumpu Oy
• ACCIONA Energía
• PepsiCo
• ACCIONA S.A.
• Pfizer Inc.
• AstraZeneca
• Pilgrim's UK
• Baluarte Cultura
• Ralph Lauren Corporation
• Bayer AG
• Rolls-Royce plc
• Bloomberg LP
• Slaughter and May
• BMW Group
• Sodexo
• Bonava
• Sopra Steria Group
• Boston Consulting Group
• Starbucks
• Capgemini SE
• Swire Properties Limited
• CBRE
• Swiss Re
• Colgate-Palmolive Company
• Telenor ASA
• Companhia Brasileira de Aluminio
• Transurban
• Co-op
• Tubacex
• CVS Health
• Unilever
• Danone
• Veritas Technologies
• Dentsu International
• Volkswagen
• Deutsche Telekom AG
• WayCarbon
• DSM
• Wipro Ltd
• easyJet
• Worley
• EDF Group
• WSP Global Inc.
• EDP Energias de Portugal
• Elopak
• Emira Property Fund SBTi funders
• Enel S.p.A. The SBTi is grateful to the organizations and companies
• Ferrovial who provide funding to support our mission.
• FLSmidth A/S
• Givaudan Core funding for the Science Based Targets initiative is
• Globant provided by IKEA Foundation, Bezos Earth Fund, We
• Guidehouse Mean Business, The Rockefeller Brothers Fund, The
• HEINEKEN Company UPS Foundation and Amazon.
• Holcim Ltd.
• Informa Public consultation participants
• International Consolidated Airlines Group S.A.
We would also like to thank everyone who participated
(IAG)
in the two public consultations survey which helped
• Jacobs
• JLL strengthen this Standard.

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