Climate Targets Under SBTi

Science-based climate targets are now among the most credible signals a company can send to the outside world. Investors, customers, and procurement teams specifically look at whether climate targets have been externally validated. The Science Based Targets initiative – SBTi for short – has established itself as the international reference standard. But what’s behind it, when is the effort worthwhile, how does validation work, and what does SBTi V2 mean for companies planning right now?

Climate Targets: Why the Framework Matters

Many companies set climate targets. Not all of them hold up. Internally developed targets without external review often come across as arbitrary and are increasingly viewed with skepticism by stakeholders. Anyone aiming to communicate credibly needs more than a self-set CO₂ benchmark.

We’ve summarized how to set up climate targets and what really counts in a separate article.

What are SBTi Climate Targets?

The Science Based Targets initiative (SBTi) is an international standard that supports companies in setting science-based climate targets. Specifically: companies define emissions reduction targets compatible with the 1.5°C goal set out in the Paris Climate Agreement. SBTi then independently reviews and validates these targets, ensuring they are externally credible and comparable.

In short: SBTi makes sure that climate targets aren’t set arbitrarily but are genuinely sufficient to curb climate change. The initiative is also currently working on a new version of its Net-Zero Standard – SBTi V2 – which is expected to be finalized later this year. We’ll explain what that means for companies further down.

Are SBTi Climate Targets Worth It for Your Company?

SBTi-validated climate targets offer real benefits – but getting there takes effort. Rather than listing pros and cons in the abstract, let’s get specific: when is the step worthwhile, and when is it not yet?

SBTi climate targets are worthwhile if …

• you need external credibility with investors, customers, or in tender processes. SBTi serves as independent proof that climate targets have been set using sound methodology.
• you already have a solid data foundation. Scope 1 and 2 should be cleanly recorded, with an initial approximation for Scope 3 in place. Without this, the process quickly becomes frustrating.
• sustainability is strategically anchored and not treated solely as a reporting topic.
• you are part of the supply chain serving large companies – many now actively require SBTi targets.
• you deliberately want to put pressure on yourselves: SBTi forces real reductions, not symbolic measures or offsetting.

SBTi climate targets are not yet worthwhile if …

• you completely lack a data foundation: no recorded emissions, no defined responsibilities, no established process. In that case, it’s worth building internal structure first – SBTi assumes the basics are in place.
• you need quick external impact. SBTi takes time and isn’t a fast communication lever.
• the resources for the process simply aren’t there. Beyond fees, there’s internal effort and often external support involved. If you’d like assistance here, feel free to reach out.
• you need maximum flexibility. The methodology is strict and leaves little room for individualized approaches.

Step by Step to SBTi Validation

You’ve made the decision? Then the formal part begins – and it’s more detailed than many initially expect.

Step 1: Submit Climate Targets (Submission)

All relevant documentation must be complete and properly prepared: the Target Submission Form, emissions data (CCF, PCF), methodological derivations, and company information. Internal alignment and reviews are part of this stage, before the formal submission to SBTi takes place.

Step 2: Have Climate Targets Validated by SBTi

The initiative reviews whether the targets are genuinely 1.5°C-compatible. So-called Clarification Requests often come up – follow-up questions where data, assumptions, or boundaries need to be refined. This phase is about responding with technical accuracy, supplying additional data and target pathways where needed, and coordinating alignment between internal departments and SBTi.

Step 3: Implement Climate Targets

Target validated – now it’s about actually walking the reduction pathway.

SBTi validation is achievable. But it’s detail work. With good preparation, it runs significantly faster and more smoothly.

Climate Targets under SBTi V2: What Companies Need to Know Now

SBTi continuously develops its Net-Zero Standard. The current version, on which targets are submitted and validated today, is to be replaced by SBTi V2 – a fundamentally revised standard that brings, among other things, stricter requirements for Scope 3, transition planning, and the handling of residual emissions.

Following two consultation drafts in 2025, the final standard is expected later this year. A transition phase is likely for companies: new targets can presumably still be submitted under the current version until the end of 2027 before V2 applies to new targets starting in 2028. Already validated targets will generally remain in place until the end of their respective target period.

In other words: no one needs to switch over immediately. But anyone planning now should know where things are heading.

What you can already do today:

Rethink Scope 3

Don’t just calculate it, but properly classify it: which categories truly drive emissions? Where is reliable data missing? Where are assumptions still being used today that are more rough than solid?

Move from target setting to steering

Going forward, how progress is measured will count for more. Are there clear KPIs along the reduction pathways? Are measures reviewed regularly, or were they planned once and then left aside?

Set up the transition plan early

Not as a reporting document, but as a steering instrument. Anyone who cleanly defines measures, timelines, and responsibilities now will be much better positioned later.

Actively involve the supply chain

For Scope 3, it’s no longer enough to request data from suppliers just once. The point is to identify which suppliers and product groups truly carry weight – and to work with them in a targeted way on better data quality and concrete reduction measures.

Clarify how to handle residual emissions

Carbon removals are becoming more important, but not as a substitute for reduction. Even today, a realistic assessment should be made of which emissions might remain in the long term.

Think about evidence early

V2 is clearly moving toward robust evidence. Data should be traceable, consistent, and connectable – progress must be demonstrable, not just roughly plausible.

Anyone who tackles these points now won’t have to start from scratch with SBTi V2 but can build on what’s already in place at the company.

* This information is summarized editorial content and should not be construed as legal advice. VERSO accepts no liability.

The carbon footprint is complete. For many companies, the next step seems obvious: setting climate targets.

In practice, however, this step is often more challenging than expected. Because between a completed carbon footprint and robust climate targets lies a key question: what is actually realistic, effective, and strategically meaningful for our company?

Many companies define CO₂ reduction targets before they fully understand their potential. This leads to targets that are either too cautious or unrealistic. Neither is helpful.

In this article, you will learn how companies can set well-founded climate targets, why the base year of the carbon footprint is crucial, and how to develop a reliable emissions reduction pathway.

Common mistakes when setting climate targets

When setting climate targets, many people initially think in terms of a target year and a percentage. This is exactly where the first mistake often begins. A target such as “40 percent fewer emissions by 2030” may sound concrete, but it is only robust if it is clear what it refers to and how it will be achieved.

In practice, three typical mistakes occur when defining targets:

1. Reducing climate targets to a single number1. Klimaziele auf eine Zahl reduzieren

Strong climate targets for companies consist of more than a target year and a reduction value. They also answer key questions:

• What is the company’s starting point?
• Which emissions are included?
• How ambitious yet realistic is the target?
• How can progress be measured later?

Only then does a target become a manageable foundation for climate management.

2. Defining reduction targets before understanding the potential

A carbon footprint is the foundation for any target setting. Without reliable emissions data, no well-founded climate targets can be developed.

However, the footprint alone is not sufficient. It shows where emissions occur, but not automatically where real reduction potential exists.

The biggest lever is not in the same place for every company. Depending on the business model, it may lie in energy supply, vehicle fleets, production processes, logistics, or the supply chain.

This is why it is important to clarify before defining targets which emission sources are most relevant, what potential arises from them, and what is realistically feasible from an operational perspective.

3. Focusing only on the target year instead of the reduction pathway

Many companies focus heavily on the target year. However, a target for 2030 or 2040 alone says little about how emissions will decrease along the way.

This is why a robust emissions reduction pathway is essential.

A reduction pathway describes how emissions should evolve over several years. It helps define interim targets, measure progress, and avoid pushing achievement to a distant endpoint.

A meaningful reduction pathway helps to

• make development over time transparent
• assess interim results more effectively
• identify deviations earlier
• manage climate targets more strategically

This turns a climate target from a future promise into a manageable development pathway.

What makes strong climate targets

Robust climate targets consist of more than a number and a target year. They are formulated in a way that provides guidance, is understandable internally, and can be managed reliably over time.

This requires more than ambition. Strong climate targets are primarily defined by clarity and measurability. Key elements include:

• a clear base year
• a defined target year
• a specific reduction value
• a clearly defined scope
• a transparent data foundation
• a realistic reduction pathway

Especially for CO₂ reduction targets, it is important not only to define the target itself, but also to make the underlying logic understandable. Only then can targets be communicated internally, embedded strategically, and monitored reliably.

The base year of the carbon footprint: what companies should consider

To set climate targets, companies need a clear reference point. This is where the base year of the carbon footprint becomes critical.

The base year is the year against which future reductions are measured. If a company aims to reduce emissions by 50 percent by 2030, it must be clear which year serves as the reference.

A suitable base year should:

• be based on reliable data
• be methodologically sound
• be representative of the company
• not be heavily distorted by one-off effects

This is more important than it may seem at first glance. An unsuitable base year can make target achievement appear artificially easier or unnecessarily difficult. For robust climate targets, this foundation is essential.

CO₂ reduction targets for companies: ambitious but realistic

In practice, companies often face a tension: climate targets should be ambitious but must remain grounded in reality.

A target that is too cautious fails to leverage existing potential. A target that is too ambitious quickly loses credibility if it is not viable internally. Strong target setting lies somewhere in between.

Key questions include:

• What level of reduction is plausible based on emissions data?
• Where are the biggest levers?
• Which conditions limit implementation?
• What developments are realistic in the short, medium, and long term?

For sustainability managers, striking this balance is critical. Climate targets should not only sound good, but also provide real guidance within the company.

Science-based climate targets for robustness and credibility

In principle, companies are free to choose how they define their climate targets. However, more and more companies are aligning with science-based standards. Science-based climate targets, such as those defined by the SBTi, are characterized by the following:

• alignment with the 1.5°C pathway
• clear and measurable structure (base year, target year, reduction percentage, clearly defined scope (1, 2, 3))
• use of real emissions data
• inclusion of Scope 3 (if relevant)
• immediate implementation of measures
• limited reliance on offsetting

Not every company needs to adopt science-based targets. However, it is often worthwhile to align with the core principles of such frameworks. For companies seeking particularly robust and credible targets, this can provide valuable guidance. Those interested in exploring this further should take a closer look at SBTi requirements.

Setting climate targets in companies: a five-step process to an effective reduction pathway

A practical process for defining targets typically looks like this:

Understand the carbon footprint

The carbon footprint shows where emissions occur and which areas are most relevant.

2. Assess hotspots and potential

Before defining targets, it is essential to understand where realistic reduction potential exists.

3. Define the base year and target framework

Determine which year serves as the reference and which emissions are included in the target.

4. Evaluate target options

Only at this stage should decisions be made about target ambition and time horizon.

5. Align targets internally

Climate targets should not be developed in isolation, but in alignment with strategy, data, and operational realities.

Conclusion: setting climate targets means making reduction manageable

Companies that want to set climate targets should not start with an isolated percentage. The key starting point is a robust carbon footprint, combined with a realistic understanding of internal potential.

A strong target system requires a well-defined base year, a transparent emissions reduction pathway, and a target definition that is ambitious yet achievable.

This turns CO₂ reduction targets into more than a communication statement. They become the foundation for effective, strategically managed climate action.

If you want to develop well-founded climate targets and take the next steps in a structured way, feel free to reach out. We support you with practical and expert guidance.

* This information is summarized editorial content and should not be construed as legal advice. VERSO accepts no liability.

The Corporate Carbon Footprint (CCF) refers to the total greenhouse gas emissions a company causes, both directly and indirectly—from office heating to global supply chains. It is calculated based on Scopes 1, 2, and 3 as defined by the Greenhouse Gas Protocol. Scope 3 is particularly critical, as it often accounts for more than 70% of total emissions. Calculating the CCF is a prerequisite for setting effective climate targets, implementing reduction measures, and communicating sustainability efforts credibly. For many companies, it is increasingly becoming a requirement—whether driven by legislation, market expectations, or customer demands.

Content:

• Why the Corporate Carbon Footprint matters now
• What is the Corporate Carbon Footprint?
• How is the Corporate Carbon Footprint calculated?
• What happens after the carbon footprint has been calculated?
• We support you: with software and expertise
• Questions and answers about the CCF

Why the Corporate Carbon Footprint matters now

The pressure on companies to understand and reduce their emissions is increasing. Not only due to legal requirements such as the EU Climate Law, CBAM, or the CSRD: More and more companies are being asked to provide climate-related data – whether in tenders, across supply chains, or as part of voluntary sustainability reporting.

Especially for mid-sized businesses, the Corporate Carbon Footprint is becoming a key competitive factor. Those who know their carbon footprint can take targeted action, reduce risks, and position themselves sustainably in the market.

What is the Corporate Carbon Footprint?

The Corporate Carbon Footprint (CCF) refers to the total greenhouse gas emissions a company causes – both directly and indirectly – from office energy use to the entire supply chain.

The CCF illustrates how much CO₂ and other greenhouse gases a company emits through its business operations. It typically follows internationally recognized standards such as the GHG Protocol, which categorizes emissions into three scopes: Scope 1 (direct emissions), Scope 2 (indirect emissions from purchased energy), and Scope 3 (other indirect emissions).

What is the difference between the CCF and the PCF?

While the CCF looks at a company’s overall carbon footprint, the Product Carbon Footprint (PCF) focuses on a single product. It analyzes the emissions generated throughout the product’s entire life cycle, from raw material extraction and production to transportation, use, and disposal. Both concepts complement each other and are essential building blocks for credible climate action within companies.

Why is Scope 3 so important?

Many companies start with Scope 1 and 2 – and that often makes sense. These data points are usually easier to access: energy consumption, vehicle fleets, or heating systems can typically be tracked internally without much effort.

Scope 3, on the other hand, is more complex but also critical. Why? Because it covers everything that happens outside a company’s direct operations. And that’s usually where the majority of emissions occur: for many companies, Scope 3 accounts for over 70% of total CO₂ emissions and in some industries, it can be as high as 95%.

Despite the challenges, it’s essential to include all three scopes to gain an accurate picture. Ignoring Scope 3 often leads to a serious underestimation of a company’s climate impact and means missing out on valuable opportunities.

Why? Because Scope 3 often holds surprisingly straightforward levers for reduction, such as switching suppliers, optimizing logistics, or improving product design. These opportunities only become visible when Scope 3 is systematically included in the assessment.

Our tip: Even if you don’t have precise data yet, rough estimates can still provide valuable insights. And they’re far better than doing nothing at all.

Which companies is Scope 3 especially relevant for?

Scope 3 is relevant for all companies including mid-sized businesses. Why?

Many mid-sized companies have:

• complex or global supply chains,
• components and materials they don’t produce in-house,
• transport and logistics structures over which they have limited direct control.

All these emissions fall under Scope 3. For these companies, this means: even if their own operations are energy-efficient, the majority of emissions may occur in upstream or downstream processes – precisely where gaining insight and influence becomes particularly important.

How is the Corporate Carbon Footprint calculated?

Calculating the Corporate Carbon Footprint (CCF) involves several clearly structured steps. The goal is to create a reliable and plausible CO₂ balance for the company that serves as a foundation for management decisions, reduction measures, and external reporting.

1. Scope screening: Defining system boundaries

• Determining the systematic, organizational, and operational boundaries in line with the GHG Protocol.
• Deciding which emission categories (Scopes 1, 2, 3) and subcategories will be included.
• Defining the consolidation scope: Which sites, entities, and company sizes are covered?

2. Responsibilities and project organization

• Defining who is internally responsible for data collection and preparation.
• Aligning on the approach, responsibilities, and timeline
• Holding a joint kickoff meeting with all relevant departments.

3. Data collection within departments

• Gathering relevant activity data from the departments involved.
• Closing data gaps through extrapolations and well-founded assumptions.
• Reviewing whether reliable emission factors are already available or need to be added.
• Collecting specific data, such as employee commuting patterns, and sending targeted supplier requests to capture upstream emissions.

4. Data validation

• Reviewing and verifying the collected data, ideally with support from external experts to ensure data quality.

5. Evaluation and interpretation of results

• Joint analysis of the results with the company.
• Identification of emission hotspots and priority areas.
• Discussion on whether additional data needs to be gathered in more detail (e.g., follow-up supplier requests).
• Discussion on whether additional data needs to be gathered in more detail (e.g., follow-up supplier requests).

What happens after the carbon footprint has been calculated?

The carbon footprint is a key part of any decarbonization strategy – but it’s only the beginning. Calculation alone is not enough. It’s the foundation for taking the next targeted steps:

• Define measurable climate targets and actions
• Effectively reduce greenhouse gas (GHG) emissions
• Responsibly offset unavoidable emissions
• Responsibly offset unavoidable emissions
  Communicate progress and potential transparently

We support you: with software and expertise

Whether you’re working on a Corporate or Product Carbon Footprint or developing a decarbonization strategy: We support you wherever you need it.

Our climate software is built for both climate professionals and beginners. It lets you structure your data in the way that works best for you, whether for reporting, internal management, or external requirements related to communication or compliance.

And if you’re looking for additional sparring or targeted guidance, our Climate Experts are here to help. Because one thing is clear: only those who truly understand their emissions can take effective action.

Questions and answers about the Corporate Carbon Footprint (CCF)

Everything you need to know about calculating, scoping, and reporting your company’s greenhouse gas emissions.

* This information is summarized editorial content and should not be construed as legal advice. VERSO accepts no liability.