How to Set and Validate Net Zero Targets Through the SBTi: Requirements, Process and Timeline

Companies announcing esg net zero commitments face a credibility gap: without third-party validation, a net zero pledge is a marketing statement, not a climate strategy. The Science Based Targets initiative (SBTi) exists to close that gap. It provides the most widely recognized framework for setting greenhouse gas reduction targets aligned with limiting warming to 1.5 °C. This guide explains who needs SBTi validation, what the requirements are, how the submission process works and what the Corporate Net-Zero Standard v2.0 changed.

What Is the SBTi and Why It Matters for ESG Net Zero Commitments

The SBTi is a partnership between CDP, the United Nations Global Compact, World Resources Institute (WRI) and the World Wide Fund for Nature (WWF). It defines methodologies for companies to set emission reduction targets consistent with climate science. Targets validated by the SBTi are considered the gold standard by investors, regulators and ESG rating agencies.

The SBTi distinguishes between two layers of targets:

• Near-term targets: reductions to be achieved within five to ten years from the date of submission, covering Scope 1, Scope 2 and, where material, Scope 3 emissions.
• Long-term (net zero) targets: deep decarbonization of at least 90% of baseline emissions by no later than 2050, with residual emissions addressed through permanent carbon removal.

A company can submit near-term targets alone or pair them with a net zero commitment. However, a net zero target cannot be validated without an accompanying near-term target.

Who Needs SBTi Validation

Any company in any sector can submit targets, but the SBTi is most relevant for:

• Companies with annual Scope 1 and 2 emissions above 10,000 tonnes CO2e, which are classified under the standard validation route.
• Small and medium enterprises (SMEs), defined by the SBTi as companies with fewer than 500 employees, which follow a streamlined route with simplified requirements.
• Financial institutions, which follow a separate framework (the SBTi Financial Institutions Net-Zero Standard) covering financed and facilitated emissions.

There is no legal obligation to seek SBTi validation. However, regulatory frameworks like the EU Corporate Sustainability Reporting Directive (CSRD) and the SEC climate disclosure rule reference science-based targets as a benchmark for transition plan credibility. Investors increasingly treat SBTi validation as a minimum threshold when evaluating climate risk.

Criteria for Near-Term Targets

Near-term targets must meet the following requirements under the SBTi Criteria and Recommendations (the official criteria document should be consulted for the latest version number):

• Cover a minimum of 95% of Scope 1 and Scope 2 emissions.
• Reduce Scope 1 and 2 emissions at a linear annual rate consistent with 1.5 °C pathways. For most sectors, this translates to at least 4.2% year-over-year reduction.
• If Scope 3 emissions represent 40% or more of total emissions (Scope 1 + 2 + 3), the company must also set a Scope 3 target covering at least 67% of those emissions.
• The target year must be no more than 10 years and no fewer than 5 years from the date of submission.

Criteria for Net Zero Targets

The SBTi Corporate Net-Zero Standard requires:

• A long-term target to reduce Scope 1, 2 and 3 emissions by at least 90% from the base year, to be achieved no later than 2050.
• Neutralization of residual emissions (the remaining 10% or less) through permanent carbon dioxide removal (CDR). The SBTi does not accept avoidance-based offsets or short-lived removals for this purpose.
• A valid near-term target as a prerequisite.

The net zero target pathway must be consistent with sector-specific decarbonization scenarios where available. The SBTi publishes sector guidance for high-impact sectors including power generation, cement, steel, transport and forest, land and agriculture (FLAG).

Step-by-Step: The SBTi Validation Process

1. Commitment letter: The company submits a commitment letter through the SBTi website, signaling its intention to set targets. This places the company on the SBTi’s public list of committed companies. From this point, the company has 24 months to submit targets for validation.
2. Inventory preparation: The company prepares a greenhouse gas inventory following the GHG Protocol Corporate Standard (Scope 1 and 2) and GHG Protocol Corporate Value Chain Standard (Scope 3). The base year should reflect the most recent complete data available.
3. Target development: Using the SBTi target-setting tools and sector-specific guidance, the company defines near-term and, optionally, net zero targets. The SBTi provides a Target Submission Form that structures the required data.
4. Submission and fee: The company submits the completed Target Submission Form along with supporting documentation. Validation fees vary by company size. As of the latest published fee schedule, fees for large companies start at approximately USD 9,500 for near-term targets. SMEs follow a streamlined route with reduced fees. The official SBTi website should be consulted for current pricing.
5. Validation review: The SBTi’s validation team reviews the submission against its criteria. This includes checking the emissions inventory, the target boundary, the ambition level and sector alignment. The team may request clarifications or revisions.
6. Approval and publication: Once approved, the targets are published on the SBTi website and the company can publicly communicate its validated targets. The typical timeline from submission to approval is 6 to 12 months, depending on the complexity of the submission and the volume of submissions in the queue.
7. Monitoring and recalculation: Companies must publicly report their progress annually. Targets must be recalculated if significant changes occur, such as mergers, acquisitions or changes in methodology.

What Changed with the SBTi Corporate Net-Zero Standard v2.0

The SBTi released updates to its Corporate Net-Zero Standard (v2.0) that introduced several material changes:

• Environmental Attribute Certificates (EACs) for Scope 3: The updated standard allows limited use of Environmental Attribute Certificates, including carbon credits, to count toward Scope 3 interim milestones under defined conditions. This was a significant shift from the original v1.0 position, which excluded all forms of offsetting from target achievement.
• Boundaries on credit use: Credits used must meet quality criteria aligned with the Integrity Council for the Voluntary Carbon Market (ICVCM) Core Carbon Principles. They may only supplement, not replace, direct value chain reductions. The exact percentage cap and eligibility rules should be verified against the final published standard.
• Beyond Value Chain Mitigation (BVCM): The SBTi continues to recommend that companies invest in climate mitigation beyond their value chains, but this remains outside the boundary of target achievement. BVCM is encouraged as an additional action, not as a substitute for internal reductions.
• FLAG sector requirements: Companies with significant land-related emissions must set FLAG targets using the FLAG guidance. The v2.0 update tightened requirements around deforestation-free commitments and land use change accounting.

The v2.0 standard generated debate among stakeholders. Some climate organizations argued that allowing any credit use weakens target integrity. Others viewed it as a pragmatic step to accelerate Scope 3 action in hard-to-abate value chains. Companies should review the final published standard and its annexes directly, as interpretation details continue to be clarified through SBTi guidance updates.

Common Mistakes in the SBTi Process

• Submitting before the inventory is complete: An incomplete or inconsistent GHG inventory is the most frequent cause of delays. The SBTi validation team will flag gaps in Scope 3 screening or unexplained exclusions.
• Choosing the wrong base year: The base year must be representative and recent. Using an anomalous year (such as 2020, which was affected by pandemic-related shutdowns) can distort the baseline and trigger questions during review.
• Confusing carbon neutrality with net zero: Carbon neutrality claims based on purchasing offsets are not equivalent to SBTi net zero. The SBTi requires deep decarbonization first, with removals only for residual emissions.
• Ignoring the 24-month commitment window: Companies that sign a commitment letter but fail to submit targets within 24 months are removed from the committed companies list. This is a reputational risk.
• Underestimating Scope 3 materiality: Many companies initially exclude Scope 3, only to discover during screening that it exceeds the 40% threshold and triggers mandatory target-setting.

What to Do Now

If your company is considering SBTi validation, start with three actions. First, complete a Scope 1, 2 and 3 emissions inventory using the GHG Protocol standards. Second, run the SBTi’s target-setting tools to understand what reduction rates your sector requires. Third, review the Corporate Net-Zero Standard v2.0 and its annexes on the SBTi website to understand current rules on credit use and sector-specific requirements. The process takes time and the validation queue can be long, so beginning inventory work now gives your team the lead time to submit within the 24-month commitment window.