A Practical Guide to Science Based Targets Initiative (SBTi) for EU Companies

The Science Based Targets initiative (SBTi) helps companies plan and implement their climate goals based on scientific evidence. This guide shows you how to successfully navigate the SBTi process—from registration to transparent reporting. It pays off: for the climate, compliance, and your competitive edge.

In 5 clear steps, German companies can reduce emissions, save costs, and meet legal requirements. To start, companies submit a so-called Commitment Letter, declaring their intent to develop science-based climate targets. This commitment marks the official starting point of the SBTi process and establishes accountability for the following steps:

1. Registration and Planning: Define the project scope and create a timeline.
2. Emissions Measurement: Record and analyze your CO₂ footprint.
3. Target Calculation: Develop reduction targets using scientific methods.
4. Submission: Submit your targets to SBTi for validation.
5. Monitoring and Reporting: Track progress and communicate transparently.

This method helps companies align with the 1.5 °C target and meet the requirements of the EU Green Deal as well as German climate laws. Integrating SBTi into your corporate strategy and considering reporting standards such as CSRD and ESRS are crucial for success.

Basics of the SBTi Framework

Alignment with the 1.5 °C Target

The SBTi framework helps companies scientifically reduce their emissions and align with the 1.5 °C pathway. It defines clear requirements for reducing greenhouse gas emissions and supports the implementation of measures. This methodology plays a central role in Step 3 (Target Calculation). According to SBTi, over 4,000 companies globally have committed to science-based targets, with more than 2,000 having their targets validated, demonstrating the growing momentum and credibility of this approach (source).

Timeframes for Targets

There are two main categories of targets: Short-term targets, which focus on rapid and measurable reductions, and long-term targets, which pave the way to net zero. Both categories are addressed in Step 3 (Target Calculation). SBTi recommends that near-term targets cover 5-10 years, while long-term targets should align with achieving net zero by 2050 or sooner (source).

Requirements in Germany and the EU

In addition to the global requirements of the 1.5 °C pathway, German companies must also comply with specific EU and national standards:

• EU Requirements
  Companies in Germany are required to align their SBTi targets with the ESRS and CSRD standards.
• National Legislation
  German climate laws set cross-sectoral emission targets that must also be taken into account.

Why SBTi Targets Are Especially Crucial for German Companies Right Now

• Legal Requirements: The Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS) make the disclosure of emission targets mandatory.
• Regulatory Tailwind: The EU Taxonomy rewards companies with credible decarbonization pathways.
• Financial Incentives: Banks and investors prefer climate-compatible companies—science-based targets strengthen your ESG rating. For example, a 2022 CDP report found that companies with approved science-based targets saw a 12% higher return on investment compared to peers without such targets (source).
• Competitive Advantage: Early SBTi certification boosts credibility in tenders, funding programs, and customer negotiations.

5 Steps to Developing SBTi Targets

Step 1: Registration and Planning

Companies should first:

• Set climate targets and plan concrete measures to reduce CO₂ emissions.
• Analyze climate risks, both regulatory and physical, that could impact the business model.

This plan serves as the foundation for the emissions analysis in the next step. According to SBTi guidance, early stakeholder engagement and cross-departmental collaboration are key to successful planning (source).

Step 2: Measure Emissions

Accurately recording greenhouse gas emissions is essential. It is especially important to understand, quantify, and transparently report financed emissions (“financed emissions”). Note that SBTi targets must at least cover Scope 1 (direct emissions) and Scope 2 (indirect emissions from energy consumption). If Scope 3 emissions account for more than 40% of your company’s footprint, these must also be included in your targets to ensure a comprehensive reduction strategy. This is particularly relevant for sectors like manufacturing and finance, where Scope 3 can represent over 80% of total emissions (source).

The collected data forms the basis for target calculation in the following step.

Step 3: Calculate Targets

With the marginal abatement cost curves of the SBTi calculator, companies can identify the most cost-effective measures for emission reduction and incorporate them into their target planning. Various scientific methods are used here, such as Absolute Emissions Reduction or the Sectoral Decarbonization Approach (SDA), which take industry-specific reduction pathways into account and enable realistic target setting. For example, the SDA is particularly useful for sectors like power generation, cement, and steel, where decarbonization pathways are well-defined (source).

It is important to note that external compensation measures outside your own value chain (Beyond Value Chain Mitigation, BVCM) are not recognized by SBTi as direct reduction measures. They can be used as a supplement but do not replace the obligation to actually reduce emissions within your own operations and supply chain (source).

Tips for EU Companies

After setting your targets, these practical tips can help German companies implement them successfully:

Integrate Targets into Your Corporate Strategy

Embed your SBTi targets within your corporate strategy. This includes developing clear net zero plans, integrating SBTi targets into existing ESG frameworks, and using life cycle assessments to improve your products. According to a 2023 McKinsey report, companies that embed climate targets into their core strategy are 2.5 times more likely to achieve their sustainability goals (source).

Consider German Market Requirements

Take into account the CSRD and ESRS reporting requirements and integrate the EU Taxonomy into your climate risk assessments. These steps help you meet regulatory requirements and strengthen your climate strategy. For example, the German Supply Chain Act (Lieferkettensorgfaltspflichtengesetz) requires companies to assess and report environmental risks throughout their supply chain (source).

Get Expert Support

Fiegenbaum Solutions offers support with life cycle assessments, developing actionable net zero strategies, integrating SBTi targets into your business processes, and preparing reports that comply with CSRD requirements.

Conclusion: The Path to Climate Fitness Starts Now

Those who develop SBTi targets today lay the foundation for long-term resilience and sustainable growth. Companies that act early not only reduce emissions but also increase regulatory security and market appeal. Notably, a 2023 SBTi progress report found that companies with validated targets cut emissions by an average of 8.8% per year—well above the global average (source).

✅ Reduce emissions measurably
✅ Integrate climate targets into your business strategy
✅ Report credibly and in compliance with CSRD

Start developing your targets now—Fiegenbaum Solutions is here to support you.

Three Key Steps to Get Started

The steps described lead to these three essential activities:

1. Develop a Net Zero Strategy: Set clear targets and a long-term direction.
2. Plan Cost-Effective Climate Action: Implement measures that make sense both economically and ecologically.
3. Adapt Your Business Model: Make climate protection and resource conservation integral parts of your company.

Frequently Asked Questions About SBTi Targets—Concise Answers

Here you’ll find answers to the most important questions companies have when introducing Science Based Targets.

FAQ

After completing the five steps, we answer frequently asked questions about SBTi here.

What is SBTi?

The Science Based Targets initiative (SBTi) is a global initiative launched by the UN Global Compact, CDP, and other partners. It provides companies with scientifically grounded guidelines for the reduction of CO₂ emissions. More information and official guidance can be found at the SBTi website.

How long does it take to develop SBTi targets?

The duration of the entire process—from initial data collection to final target submission—varies depending on company size and complexity, typically between 4 and 12 months. Smaller companies can expect a shorter timeframe, while larger, more complex organizations will need more time. SBTi also offers a streamlined route for SMEs to accelerate the process (source).

Are there special options for small businesses?

Yes, small and medium-sized enterprises (SMEs) can use simplified industry benchmarks for emissions measurement. They can also seek external support for Steps 2 and 3. Fiegenbaum Solutions offers consulting services tailored specifically to SMEs to make target setting efficient. The SBTi SME route is designed to be less resource-intensive and more accessible (source).