SBTi 2026: Targets, Validation, Scope 3 & CSRD Integration — The Complete EU Guide

What is the Science Based Targets initiative?

The Science Based Targets initiative — SBTi — is the de-facto global standard for validating corporate climate ambition. It was founded in 2015 by CDP, the UN Global Compact, the World Resources Institute (WRI) and the World Wide Fund for Nature (WWF), together with the We Mean Business Coalition, as the private sector's answer to the Paris Agreement's 1.5°C goal. Today it operates as a UK-registered charity with a commercial subsidiary, SBTi Services Limited, which handles target validation. Around 200 staff work across governance, methodology and validation; funders include the IKEA Foundation, the Bezos Earth Fund, and Rockefeller Brothers Fund. David Kennedy took over as CEO in January 2025 (SBTi, 2025).

The scale is no longer marginal. The SBTi Trend Tracker 2025, published April 2026, documents 9,764 companies with validated near-term targets and 2,325 with validated net-zero targets — together covering more than 40% of global market capitalisation across 93 territories (SBTi, 2026). Europe leads with 4,769 validated companies (49%), followed by Asia with 3,513 (36%). Germany ranks fifth globally with 531 validated companies; 68% of DAX 40 constituents hold targets or commitments, against 70% of the CAC 40.

What makes the initiative strategically relevant for EU companies is that its methodologies translate the IPCC's global carbon budget into company-level reduction pathways. When your board approves "a 1.5°C-aligned target", the SBTi is what makes that statement verifiable.

Corporate Net-Zero Standard: V1.2 vs V2.0

The current operational standard is V1.2, published October 2021. Its successor, V2.0, has been through two public consultations — the second draft was released 6 November 2025 with feedback closing 12 December 2025. Finalisation is expected by end of 2026, with V2.0 becoming operational for new submissions in 2027. V1.2 remains valid up to 2030, giving companies a clear transition window (SBTi, 2025).

The direction of travel is unambiguous: more granularity, stronger governance, and explicit transition-plan requirements. Key changes in the V2.0 draft include:

• Category A vs Category B: V2.0 introduces a two-track system. Large and mid-sized companies in high-income countries (Category A) face the full requirement set; SMEs in low- and lower-middle-income countries (Category B) receive additional flexibility.
• Dedicated Scope 1 targets: For the first time, Scope 1 gets its own target, separate from Scope 2. Coverage must reach 100% of Scope 1 emissions, up from the 95% combined threshold under V1.2.
• Scope 2: location-based plus market-based or zero-carbon electricity. Unbundled Renewable Energy Certificates (RECs) lose eligibility unless they meet strict time- and location-matching criteria.
• Transition plans within 12 months of target approval: A credible plan must be published, with formal board- or executive-level governance responsibility.
• Residual emissions responsibility from 2035: Category A companies must neutralise at least 1% of ongoing Scope 1–3 emissions through carbon removals, rising to 100% by the net-zero date.

A separate V2.1 is not in formal consultation as of April 2026 — the SBTi roadmap positions V2.0 as the next major standard, with sector additions layered on top. The most prominent expected addition is the Automotive Net-Zero Standard, which completed its second consultation in February–March 2026 and is expected no earlier than Q3 2026.

Setting SBTi targets: Scope 1, 2, 3 requirements

Every SBTi-aligned pathway operates on two horizons: a near-term target covering 5–10 years, and a long-term net-zero target reaching no later than 2050. Under V1.2, Scope 1 and Scope 2 must reduce on a 1.5°C pathway — a 4.2% linear absolute reduction per year, equivalent to a 42% cut over ten years. Well-below 2°C pathways allow 2.5% per year but are increasingly seen as sub-standard by investors and customers.

The harder question is Scope 3. A Scope 3 target is mandatory when Scope 3 emissions represent 40% or more of total Scope 1–3 emissions (values ≥39.9% round up). In practice, this applies to the overwhelming majority of manufacturing, retail, services and financial companies — 96% of all validated targets now contain a Scope 3 component. The target must cover at least 67% of mandatory Scope 3 emissions, and no more than 5% of Scope 3 can be excluded in total.

Companies have three Scope 3 target types to choose from:

The long-term net-zero target requires a reduction of at least 90% across Scope 1–3 by 2050 at the latest, with the remaining 10% neutralised through permanent carbon removals. Companies in land-intensive sectors — forestry, pulp and paper, agriculture, food manufacturing — additionally face the FLAG (Forest, Land, Agriculture) requirement: a separate FLAG target on top of the energy/industry pathway, a mandatory "no deforestation" commitment for primary deforestation commodities, and a 72% long-term reduction benchmark for FLAG emissions.

If you are early in the process, the bottleneck is almost always the Scope 3 inventory: 6% of companies currently use supplier-specific emission factors, the rest rely on spend-based or activity-based averages. Auditors and CDP are increasingly critical of spend-based approaches, so plan for a progressive improvement pathway rather than a single push to "validation-ready".

Sector-specific guidance (2026 status)

Six sectors now have dedicated guidance with material implications for target setting:

• Chemicals: Finalised December 2025, in force from 2 June 2026. Mandatory N₂O pathway for nitric acid production where it exceeds 5% of Scope 1. Optional pathways for ammonia, methanol, high-value chemicals and alternative feedstocks.
• Financial Institutions (FINZ): Finalised July 2025, mandatory from January 2027. Requires portfolio segmentation, alignment targets, and an immediate halt to financing of new coal capacity and new oil-and-gas project finance. Private equity and venture capital with <25% ownership or no board seat fall under a lighter "Segment D".
• Steel: Finalised, with differentiated pathways depending on scrap input share; upstream fuel emissions require a Scope 3 target.
• Buildings: V1.1 finalised August 2024, mandatory from February 2025. Uses CRREM-aligned 1.5°C pathways for operational and embodied emissions.
• Land transport: Guidance active since March 2024. Covers passenger and freight.
• Automotive: Standard under development; do not expect finalisation before Q3 2026. Until then, land transport guidance and the corporate standard V1.2 apply.

FLAG is covered separately as part of the submission process for land-intensive sectors. ICT, apparel, cement and pulp/paper retain their existing sector guidance and will be updated through the V2.0 process.

The Scope 3 carbon credits debate

On 9 April 2024 the SBTi board issued a statement signalling that high-quality carbon credits — more formally, Environmental Attribute Certificates — could play a role in abating Scope 3 emissions. The reaction was swift and internal. Staff from multiple SBTi departments signed an open letter demanding the statement be withdrawn, arguing it had no basis in the initiative's methodology and lacked guardrails. Outgoing CEO Luiz Fernando do Amaral resigned in July 2024; Susan Jenny Ehr served as interim CEO until David Kennedy took over in January 2025. Carbon Market Watch, Carbone 4 and members of the Technical Advisory Group publicly questioned the initiative's governance (Carbon Market Watch, 2024).

The V2.0 second consultation draft (November 2025) effectively reverses the April 2024 position. Carbon credits cannot be applied to near-term or long-term Scope 1–3 reduction targets. They are permitted only against residual emissions at the net-zero date, and against the new voluntary Ongoing Emissions Responsibility framework, which introduces two recognition tiers:

• Recognized: Neutralise at least 1% of ongoing Scope 1–3 emissions through ex-post verified carbon credits, or apply an internal carbon price of at least $20/tCO₂e.
• Leadership: Apply a $80/tCO₂e internal carbon price to 100% of emissions, with at least 40% of the resulting revenue deployed to verified ex-post credits.

The practical implication for most EU companies is simple: credits remain useful for beyond-value-chain mitigation and eventual residual neutralisation, but real reductions in the value chain remain the only route to SBTi alignment on near-term and long-term targets.

Validation process, cost and timeline

The validation journey has seven distinct steps:

1. Commitment (optional for corporates, skipped by SMEs). A public pledge that appears on the target dashboard.
2. GHG inventory. A complete Scope 1–3 inventory built on the GHG Protocol Corporate Standard.
3. Target setting. Apply SBTi methodologies and sector guidance where relevant; calculate pathway-aligned targets.
4. Submission. Upload to the validation portal with supporting financials for tier classification; pass the technical screening.
5. Formal review. A lead reviewer plus second opinion, typically within 40 working days for corporates, 60 for financial institutions.
6. Decision. Approval, revision request (10 working days to respond) or rejection.
7. Publication. Mandatory within six months of approval.

Fees as of the September 2025 pricing schedule are set by annual revenue. Key reference points for EU companies:

These are the validation fees — not the full project cost. Our experience with EU mid-caps and corporates suggests total near-term target projects run €80,000–€300,000 when you include first-time Scope 3 inventory work (€30,000–€150,000), supplier engagement programme setup (€20,000–€200,000), emission factor database licences ($20,000–$80,000 per year) and 12–18 months of internal time. SMEs with clean Scope 1–2 data can complete validation for well below €20,000 total.

Typical rejection and revision reasons: incomplete Scope 3 inventory, Scope 1+2 coverage below 95%, a base year before 2015, missing Scope 3 target despite the 40% threshold being breached, or methodology incompatibility (wrong tool, outdated emission factors). A greenwashing flag is raised when ambition is Scope 2–heavy with no credible Scope 1 plan.

SBTi for SMEs: the simplified route

Since January 2024, a company qualifies as an SME — eligible for the streamlined SME route — when it meets at least three of these criteria: fewer than 250 employees, revenue under €50 million, balance sheet under €25 million, and no mandatory FLAG exposure. Subsidiaries of corporate submitters do not qualify.

The SME route is deliberately light:

• No Scope 3 target is required; only a Scope 1+2 near-term target is mandatory
• No preliminary commitment is needed — SMEs go straight to submission
• A commitment to reduce emissions by 50% by 2030 and reach net-zero by 2050 is mandatory
• Validation fees are $1,250 for near-term (or $625 with the low-income-country discount)

By early 2026, more than 6,000 SMEs have set or committed to SBTi targets; the initiative's stated goal is 30,000 SMEs by 2030. The main driver of SME adoption is not voluntary leadership — it is corporate procurement. Larger companies use Supplier Engagement Targets to push validation down the supply chain. For SMEs looking for a lighter-touch sustainability framework alongside SBTi, the EFRAG VSME standard handles broader reporting while SBTi focuses on climate targets.

SBTi and CSRD / ESRS E1

For EU companies, the most frequently asked strategic question is: does an SBTi-validated target discharge my CSRD obligations? The short answer is no — but they work together very well.

ESRS E1 references the SBTi implicitly rather than explicitly. Disclosure requirement E1-4 asks whether your climate targets are aligned with 1.5°C scenarios; a validated SBTi target is the strongest available signal. Both frameworks rest on the GHG Protocol Corporate Standard and Scope 3 Standard as their inventory basis, so the data work is largely shared. The EFRAG-CDP correspondence mapping published March 2025 confirms substantial overlap between CDP reporting — SBTi's preferred reporting channel — and ESRS E1.

Where they diverge: CSRD requires an auditable transition plan with capex alignment, governance disclosure and investor-oriented risk framing. SBTi validates the ambition of the targets themselves but does not prescribe capex or governance design. The EFRAG ESRS E1 draft (July 2025) expressly recommends transition plans drawn in alignment with Transition Plan Taskforce (TPT) guidance.

The regulatory context changed materially with the Omnibus I political agreement of December 2025: CSRD now applies to companies with more than 1,000 employees and more than €450 million in revenue, removing roughly 90% of originally in-scope companies. For the remainder, ESRS E1 remains mandatory — and the SBTi stays relevant as a voluntary validator of credibility, particularly in procurement and financing conversations. For companies now outside CSRD scope, SBTi becomes an even sharper differentiator, because regulatory disclosure no longer does the signalling job.

SBTi vs. SBTN

A common confusion: the Science Based Targets initiative (SBTi) addresses climate; the Science Based Targets Network (SBTN) addresses nature — biodiversity, freshwater, land and ocean. They share founding partners but operate separately, with separate methodologies. SBTN published its first target types for freshwater and land in May 2023; ocean methodology remains in development. For climate-intensive industries, SBTi is the primary tool; land-intensive supply chains (agriculture, forestry, food processing) should set SBTi FLAG and SBTN targets in parallel to avoid duplicated data collection and supplier engagement.

FAQ

What is the SBTi in one sentence?

The Science Based Targets initiative is a non-profit body that validates whether a company's climate targets are aligned with limiting global warming to 1.5°C, using methodologies derived from IPCC pathways.

Is SBTi mandatory?

No. The SBTi is a voluntary standard. However, it is increasingly treated as a market prerequisite in procurement, banking due diligence and CSRD reporting — particularly for large corporates and their suppliers.

How much does SBTi validation cost?

Official validation fees range from $1,250 for the SME near-term service to $49,800 for Tier 4 financial institutions. For EU mid-caps, the combined near-term and net-zero bundle at Tier 1 is $16,750. Total project cost including inventory work, supplier engagement and internal time typically reaches €80,000–€300,000 for a first-time corporate near-term submission.

Which SBTi companies are currently validated?

By early 2026, 9,764 companies hold validated near-term targets and 2,325 hold validated net-zero targets. The full list is public on the SBTi target dashboard. In Europe, 68% of DAX 40 and 70% of CAC 40 constituents carry targets or commitments.

Can carbon credits count toward SBTi Scope 3 targets?

No. The V2.0 draft (November 2025) explicitly disallows carbon credits against near-term or long-term reduction targets. Credits are permitted only for residual emissions at the net-zero date and for the voluntary Ongoing Emissions Responsibility framework.

How long does SBTi validation take?

From initial commitment to published validated target, plan for 12–18 months for prepared companies. The formal review itself takes 30–60 working days after service start. Complex Scope 3 situations or revision requests can extend the process beyond 24 months.

Do I need SBTi if my company is CSRD-compliant?

Not strictly — CSRD and SBTi serve different functions. CSRD demands disclosure; SBTi validates ambition. In practice, a CSRD-reporting company with a validated SBTi target sends a stronger signal to investors, customers and suppliers than one without, and most of the data work is shared.

Sources and further reading

• Science Based Targets initiative. (2025). Corporate Net-Zero Standard V2.0 — Second Public Consultation Draft. sciencebasedtargets.org.
• Science Based Targets initiative. (2025). Target Validation Service Offerings V6.
• Science Based Targets initiative. (2026). SBTi Trend Tracker 2025.
• EFRAG and CDP. (2025). Correspondence mapping: CDP climate questionnaire and ESRS E1.
• Carbon Market Watch. (2024). SBTi board statement on carbon credits: governance and scientific concerns.
• NewClimate Institute. (2024). Corporate Climate Responsibility Monitor 2024.
• European Commission. (2025). Omnibus I political agreement on CSRD scope.

If you are preparing an SBTi submission and want a sparring partner on the Scope 3 architecture, the sector guidance fit, or the CSRD transition plan integration, reach out for an initial conversation. A short call is usually enough to see whether your current approach holds up under validator scrutiny — and where the structural risks are.