What Are Science-Based Targets?

Science-based targets are greenhouse gas emissions reduction targets aligned to what climate science determines is necessary to meet the goals of the Paris Agreement—specifically, limiting global warming to well below 2°C above pre-industrial levels, and preferably to 1.5°C.

The Science Behind SBTs

The Intergovernmental Panel on Climate Change (IPCC) determines global carbon budgets: the amount of CO₂ the world can emit while staying within climate targets. This budget is then allocated to countries and sectors based on development status, historical emissions, and equity principles.

For a 1.5°C pathway (the more stringent goal):

• Global emissions must fall by ~43% by 2030 (vs. 2010 levels)
• Reach net zero by 2050
• Allow limited, high-quality offsets for residual emissions

For developed economies like Australia, this translates to even steeper cuts (often 45–50% by 2030) to account for historical emissions and support developing nations.

SBTi Validation

The Science Based Targets initiative (a partnership of CDP, UN Global Compact, World Resources Institute and World Wildlife Fund) independently validates corporate targets against these climate pathways. Validation adds credibility: it signals to investors and stakeholders that your targets are grounded in science, not marketing.

Why SBTi Matters for Australian Businesses

Investor and Stakeholder Credibility

Investors—particularly large superannuation funds and ESG-focused allocators—increasingly expect science-based targets. In Australia, the Australian Council of Superannuation Investors (ACSI) explicitly encourages its member funds to prioritise companies with SBTi-validated targets. SBTi validation differentiates your organisation from competitors making arbitrary climate claims.

Regulatory Alignment

Australia’s legislated 2030 (43% reduction) and 2050 net-zero targets are themselves science-based (aligned to 1.5°C pathways). Aligning your targets to SBTi methodologies ensures consistency with regulatory direction and reduces risk of future policy misalignment.

AASB S2 Compliance

AASB S2 climate disclosure standards require disclosure of targets and progress. While SBTi validation isn’t mandatory, it strengthens the credibility of disclosed targets and demonstrates rigour in target-setting methodology—exactly what investors and auditors look for.

Risk Management

Science-based targets identify realistic decarbonisation trajectories. This helps avoid the trap of setting targets that are either too aggressive (unrealistic and damaging to credibility) or too modest (missing the scale of change needed). SBTi’s sector-specific guidance reflects what’s technically and economically achievable in your industry.

SBTi Target-Setting Approaches

SBTi offers several methodologies for setting targets, depending on your circumstances:

Sectoral Decarbonisation Approach (SDA)

Used when company-level data isn’t sufficient. SDA applies sector-wide decarbonisation pathways to your business. For example, if electricity utilities need to decarbonise at 5.2% per year to meet 1.5°C, your utility target would align to this rate.

SDA is simpler but less customised; it works well for organisations in homogeneous sectors (utilities, real estate) where sector benchmarks are robust.

Absolute Contraction Approach (ACA)

Sets targets based on your organisation’s current emissions and the global carbon budget remaining for your sector. ACA requires annual reduction rates that reflect your sector’s share of the global decarbonisation burden.

For most Australian organisations, ACA translates to 40–50% absolute emissions reduction by 2030 (Scope 1 and 2) and 90%+ by 2050, with limited offsets.

Intensity-Based Targets

If your business is growing, you can set intensity targets (emissions per unit of output, revenue or employee) rather than absolute reductions. However, SBTi increasingly prefers absolute targets for greater impact. If using intensity, you must also set an absolute floor to prevent growth from offsetting efficiency gains.

Scope 3 Pathways

For organisations where Scope 3 is material (often 70%+ of total), SBTi requires Scope 3 reduction targets. Methodologies include:

• Supplier engagement: % of suppliers by spend required to adopt SBTi (e.g., 75% of Scope 3 suppliers with science-based targets by 2030)
• Product lifecycle: Reduction in emissions per unit of product sold (manufacturing, retail)
• Customer-related: Emissions from use of your products (e.g., car manufacturers target 55% reduction in tailpipe emissions per vehicle)

Scope 3 targets are often harder to achieve than Scope 1 and 2 because they depend on supply chain collaboration. However, they’re often material to net-zero credibility and investor expectations.

The SBTi Validation Process: Step-by-Step

Step 1: Establish Baseline Emissions (1–2 months)

Calculate your Scope 1, 2 and material Scope 3 emissions for a base year (typically the most recent year with complete data). Use NGER methodology and Clean Energy Regulator emission factors for Australian context; this ensures alignment with regulatory reporting.

Step 2: Develop Science-Based Targets (2–3 months)

Using SBTi methodologies (SDA, ACA, or sector-specific guidance), set reduction targets for 2030 and 2050. Targets must:

• Cover Scopes 1, 2 and material Scope 3
• Target 1.5°C pathway (preferred) or 2°C
• Include interim targets (e.g., 2030) and long-term targets (e.g., 2050)
• Be absolute reductions where possible (not intensity)
• Limit offsets to <10% of baseline emissions for net zero

SBTi publishes sector-specific guidance (for mining, financial services, manufacturing, etc.); use this to inform your target-setting and ensure alignment with sector peers.

Step 3: Develop Decarbonisation Roadmap (2–3 months)

Outline how you’ll achieve targets. This roadmap should identify:

• Scope 1 actions: fuel switching, electrification, process changes
• Scope 2 actions: renewable energy procurement, efficiency, grid transitions
• Scope 3 actions: supplier engagement targets, product design changes, logistics optimisation
• Timeline: key milestones between baseline and 2030/2050
• Capital and human resource requirements

The roadmap doesn’t need to be perfect—it needs to be credible. You’ll update it as technology and costs evolve.

Step 4: Submit to SBTi (1–2 weeks)

Complete SBTi’s submission form, attaching:

• Baseline emissions calculation
• Target statement (% reduction, target years)
• Decarbonisation roadmap
• Scope 3 methodology (if applicable)
• Governance and accountability statement

SBTi charges a fee (typically AUD $3,000–$10,000 depending on organisation size); the submission is then reviewed by SBTi’s technical team.

Step 5: Technical Review and Feedback (4–12 weeks)

SBTi’s technical team assesses your submission against climate science and methodological standards. Common feedback includes:

• Targets too weak (don’t align to 1.5°C): may request deeper reduction or accelerated timeline
• Scope 3 incomplete: may request additional supplier or product data
• Roadmap insufficient: may request more detail on decarbonisation actions or financing
• Governance unclear: may request board-level accountability statement

You’ll typically revise and resubmit once; complex submissions may require multiple iterations.

Step 6: Validation (if approved)

Once your targets meet SBTi criteria, you’re “SBTi-validated.” SBTi publicly lists your organisation on their website; you can use “Science-Based Target” branding in investor communications and marketing.

Timeline: baseline to validation typically 6–12 months for experienced organisations; 12–18 months for first-time submitters with complex supply chains.

Key Challenges and How to Address Them

Scope 3 Data Complexity

For many organisations, Scope 3 is 70%+ of total emissions but hardest to measure. Solutions: start with spend-based estimates, then progressively collect supplier data; prioritise high-impact categories; document assumptions transparently.

SBTi accepts phased approaches: submit with available Scope 3 data, then refine targets as supplier data improves. This is better than delaying validation until perfect Scope 3 data exists.

Technology Maturity and Cost Uncertainty

Some decarbonisation levers (hydrogen, green chemicals) aren’t mature in Australia. If your targets depend on immature technology, clearly acknowledge this risk in your roadmap and outline contingency actions. SBTi values honesty about risks more than overstated certainty.

Supplier Engagement for Scope 3

If your targets include Scope 3 reductions via supplier engagement (common for manufacturers, retailers), ensure your procurement team has mechanisms to request and validate supplier targets. This often requires contractual changes to supplier agreements.

Intensity vs. Absolute Targets for Growing Businesses

If your business is growing, intensity targets may seem easier. However, SBTi increasingly requires absolute reductions or absolute floors. Best practice: set absolute targets aligned to growth assumptions (e.g., 40% absolute reduction assumes 10% revenue growth); if growth exceeds assumptions, targets adjust proportionally.

Ongoing Management: Reporting and Updating

SBTi validation isn’t a one-time exercise:

• Annual progress reporting: Disclose emissions, progress toward targets, and changes to decarbonisation roadmap in your sustainability/ESG report
• Five-year reassessment: Validate that targets remain aligned to latest climate science (IPCC updates, SBTi methodology changes)
• Roadmap updates: As technology matures, costs decline, and supply chain evolves, update your decarbonisation actions
• Scope boundary changes: M&A, divestitures, or restructuring may change emissions; update scope boundaries clearly and explain impacts on targets

SBTi’s Corporate Net-Zero Standard (launched 2021) provides ongoing criteria for maintaining validated targets; adherence strengthens stakeholder confidence.

SBTi vs. Other Target-Setting Frameworks

Other frameworks exist (RE100 for renewable energy, EV100 for fleet electrification, Climate Active for carbon neutrality). SBTi is comprehensive and science-backed; others are sector or action-specific. Best practice: use SBTi as your primary target framework, with sector-specific commitments (RE100, Science-Based Targets for Nature) complementing it.

Frequently Asked Questions