SBTi for SMEs: Why climate targets need more than good intentions

In most cases, the reason is much more practical: A customer asks about climate targets. A corporate group expects science-based reduction targets in its supply chain. A retailer requests emissions data. A tender asks for a reduction pathway. Or management wants to know whether the company’s climate strategy is solid enough.

This changes the role of climate targets. They are no longer just a voluntary signal to the outside world. Increasingly, they are becoming part of supplier assessments, customer requirements, financing discussions and strategic business management.

The Science Based Targets initiative provides an internationally recognised framework for this. Companies can develop climate targets and submit them for validation. SBTi Services checks whether the submitted targets meet the relevant standards, criteria and methods. Validation does not mean that a company simply formulates an ambitious target. It means that the target is assessed against defined requirements.

For companies, this is the key point: an SBTi target is not just a communication statement. It is a methodically derived reduction pathway.

The Corporate Net-Zero Standard describes targets that are intended to be consistent with limiting global warming to 1.5°C and reaching net zero by 2050 at the latest.

This is not only about a long-term net-zero statement. For many companies, shorter-term targets, known as Near-Term Targets, are particularly relevant. These targets describe how emissions are to be reduced within a nearer timeframe. The basis for this is the company’s greenhouse gas inventory.

The SBTi distinguishes between Scope 1, Scope 2 and Scope 3. Scope 1 includes direct emissions, for example from a company’s own fuels or vehicle fleet. Scope 2 includes emissions from purchased energy. Scope 3 includes indirect emissions along the value chain, for example from purchased goods, transport, business travel, the use of sold products or disposal.

Scope 3 is particularly important for many companies. Under the current SBTi criteria, relevant Scope 3 emissions must be included in Near-Term Targets if they account for 40 percent or more of total Scope 1, Scope 2 and Scope 3 emissions. The corresponding Scope 3 targets must then cover a sufficient share of these emissions.

This shows that SBTi does not start with the wording of a target. It starts with the question of whether the emissions base is complete and robust enough.

Even so, the target figure is not the starting point.

The starting point is the carbon footprint.

A company needs to know which emissions occur in Scope 1 and Scope 2, which Scope 3 categories are relevant, which data sources were used, which assumptions were made and where uncertainties remain. Without this basis, no robust reduction pathway can be derived.

An incomplete footprint can quickly lead to the wrong priorities. If Scope 3 is only roughly considered, or not considered at all, even though most emissions occur there, a target may sound good but lack methodological substance. If sites are missing, data is not clearly defined or emission sources are assigned incorrectly, later validation becomes more difficult.

That is why an SBTi process should begin with a sober assessment:

• Is the greenhouse gas inventory structured in line with the GHG Protocol?
• Have Scope 1 and Scope 2 been recorded completely?
• Which Scope 3 categories are relevant?
• What share of total emissions comes from Scope 3?
• Which data is reliable, and which data is estimated?
• Which emission sources have been excluded, and why?
• What level of data quality is sufficient to derive a target?

These questions determine whether a climate target will hold up later on.

A company’s own fuels, vehicle fleet, refrigerants, electricity and heat can usually be recorded comparatively well. Not always immediately, but with clear responsibilities and proper data sources.

Scope 3 is more difficult because the emissions occur outside the company’s direct sphere of control. Purchased goods, services, materials, packaging, transport, the use of sold products or disposal depend on suppliers, customers, logistics partners and assumptions.

This is where SBTi becomes demanding. A company cannot simply say: “Scope 3 is complicated, so we will leave it out.” If Scope 3 is material, it must be taken into account appropriately. This does not mean that every piece of information has to be perfect from the start. But it does mean that relevance, data sources, assumptions and target coverage must be properly justified.

SMEs in particular often underestimate this point. They usually have a lot of data in purchasing, bills of materials, transport invoices, material lists or customer information. But this data is not automatically available in a form that can be turned into a Scope 3 inventory and an SBTi-compliant reduction pathway.

Scope 3 is therefore not just a calculation task. It is a structuring task.

Such statements may sound ambitious. What matters, however, is whether they fit the footprint, the base year, the method, the company’s growth, Scope 3 and the SBTi criteria.

SBTi validation checks whether a submitted target meets the relevant standards, methods and criteria. To do this, companies need to calculate their emissions data, apply the appropriate methodology and submit their targets to SBTi Services for review.

For companies, this means that the process should not only be checked shortly before submission. It makes more sense to consider the SBTi requirements from the outset.

This includes, among other things:

• choosing a suitable base year,
• recording relevant emission sources completely,
• checking Scope 3 relevance and target coverage,
• selecting the appropriate target-setting method,
• defining subsidiaries, sites and business units correctly,
• assessing data gaps,
• documenting assumptions,
• preparing the submission documents.

Companies that only check these points at the end risk correction loops. Companies that assess them early can save time and develop more realistic target pathways.

The answer depends on the business model, customer requirements, company size, supply chain and the company’s own climate goals.

For some companies, SBTi is an obvious next step because important customers require such targets or because the sector is already moving strongly in this direction. For others, a sound carbon footprint, a Scope 3 relevance analysis and an internal reduction roadmap may be more useful first, before preparing an SBTi submission.

The important point is this: SBTi should not be understood as a pure communication project. A validated target can be valuable externally. Internally, however, it is even more important that the company understands which reductions are actually required and which measures are needed to achieve them.

An SBTi process can therefore help make climate action within the company more concrete. It requires companies to examine emission sources, assess Scope 3, define target years, improve data quality and connect measures with a reduction pathway rather than describing them only in general terms.

This makes SBTi a matter of business management. Not every number is a management issue. But the direction, the investments and the feasibility are.

A medium-sized food supplier serves several major retail companies. So far, the company has calculated its Scope 1 and Scope 2 emissions. Gas, electricity, fleet and refrigerants have been recorded. Initial energy-efficiency measures have been implemented.

Then an important customer asks for science-based climate targets. At first, the task seems manageable: the existing footprint is available, and a target for 2030 could be formulated.

On closer inspection, however, it becomes clear that Scope 3 is material for the company. Purchased raw materials, packaging, refrigeration, logistics and possibly disposal account for a significant share of emissions. Some data is available, while other data only exists as purchasing volumes, supplier lists or rough material quantities. Product-specific emissions data from suppliers is only partially available.

The sensible next step is therefore not to immediately submit a target, but to carry out an SBTi readiness assessment. This clarifies whether the footprint is complete enough, which Scope 3 categories are relevant, which data needs to be improved and which target-setting method may be suitable.

Only then can a target pathway be developed that does not just sound good, but actually fits the company’s emissions structure.

This is not about slowing a company down unnecessarily. Quite the opposite: a good preliminary assessment prevents targets from being formulated too early and later failing to stand up methodologically.

Important questions include:

• Is the base year suitable and well documented?
• Have Scope 1 and Scope 2 been recorded completely?
• Has Scope 2 been considered using the relevant approaches?
• Have relevant Scope 3 categories been identified?
• Is the share of Scope 3 in total emissions known?
• Is the data sufficient to derive a target?
• Which emissions are covered by the target?
• Which reduction measures are realistic?
• Which internal decisions are needed for implementation?
• Which documents are required for submission?

These questions show whether a company is SBTi-ready or whether the footprint, data quality and reduction logic should first be improved.

While the SBTi validates targets rather than detailed action plans, a company still needs a clear idea of which levers are expected to work in practice.

For Scope 1 and Scope 2, these may include energy efficiency, renewable electricity, electrification, heating concepts, fleet conversion or process optimisation. For Scope 3, the focus is often on purchasing, supplier dialogue, material changes, packaging, logistics, product design, the use phase or disposal.

The link to investment cycles is especially important. Many reductions cannot be implemented overnight. Machinery is replaced at certain times, buildings are renovated according to planning cycles, supplier contracts run for fixed periods and products have development cycles.

A good SBTi target should therefore not be developed in isolation from the company. It must fit the footprint, the method and the company’s practical ability to change.

According to the SBTi, companies can continue to set new targets under the current Corporate Net-Zero Standard V1.3 and Near-Term Criteria V5.3 until 31 December 2027; from 1 January 2028, Version 2.0 is expected to become mandatory.

This matters for companies because SBTi is not a static system. Requirements, criteria and guidance may continue to evolve. Companies planning an SBTi process should therefore work with current documents and check which standards, sector pathways and deadlines apply to their own organisation.

This is another reason why the process should not be treated as a simple formality. The methodological assessment belongs at the beginning.

However, the path towards this does not start with communication. It starts with a robust carbon footprint, a clear Scope 3 assessment and the question of which reductions are actually possible.

For SMEs, the first question should therefore not be: Which target sounds good?

The better question is: Is our emissions base good enough to derive a science-based target from it?

If this foundation is in place, SBTi can help make climate targets clearer, more binding and easier to manage. Not as an additional sustainability burden, but as part of a climate strategy that brings together customer requirements, data quality and business decisions.