What it is
The Science Based Targets initiative provides a framework for companies to set greenhouse gas reduction targets consistent with limiting warming to 1.5C. Over 4,000 companies across 90+ countries have committed, with validated targets covering roughly 40% of global market capitalization. SBTi validates targets against climate science, requiring near-term (5-10 year) and increasingly long-term (net-zero) commitments.
Why we picked this
SBTi has become the dominant standard for corporate climate commitments. Its April 2024 policy statement on Scope 3 carbon credits reshaped how companies can use offsets alongside reduction targets. For investors screening portfolios, an SBTi-validated target is the clearest signal that a company has a credible decarbonization pathway rather than vague net-zero promises.
Key takeaways
- 1,722 companies now use internal carbon pricing (median around $25/tCO2e), with 3,070 more planning to adopt it, showing the financial integration SBTi targets drive.
- The April 2024 Scope 3 policy allows environmental attribute certificates for limited emissions categories, marking a significant shift in offset permissibility.
- Companies with validated SBTi targets outperformed the global average on emissions reduction by 2.3x between 2020 and 2024, according to CDP data.