Impacts, Risks, and Opportunities (IRO) for CSRD Reporting
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In this article, we’ll break down what IROs are, how to identify and assess them, and what CSRD requires in terms of disclosure.
What is the Science-Based Targets Initiative (SBTi)?
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By Stephanie Safdie, US Copywriter, on 10/02/2026
Updated by Agnès Potier-Murphy
The Science Based Targets initiative (SBTi) publishes the rules for corporate climate targets that lead to net zero by 2050 at the latest, and its subsidiary, SBTi Services, checks companies' targets against them. More than 12,000 companies now hold validated targets, and as of January 2026 only Japan and the UK had more validated companies than the United States.
The SBTi published version 2.0 of its Corporate Net-Zero Standard in June 2026, and it takes effect on January 31, 2027. Submissions under the current version remain open until January 31, 2028, so most targets set in the coming year will still follow the existing rules.
In this article, we'll explore:
What the SBTi standard is
What qualifies a target as science-based, and how near-term and net-zero targets differ
What the Corporate Net-Zero Standard asks of companies today, and what version 2.0 changes
How the SBTi validation process works step by step, and how long the review takes
What validation costs, from SMEs to large corporations
What is the SBTi?
The Science Based Targets initiative (SBTi) is the charity that determines what counts as a science-based corporate climate target. A target qualifies when it shows how much, and how fast, a company must reduce its greenhouse gas emissions to do its share toward limiting global warming to 1.5°C, the tighter of the two temperature limits in the Paris Agreement. Companies and financial institutions apply the SBTi's standards to set two kinds of SBTi targets, near-term and long-term net-zero, and validated targets appear on the SBTi's public Target Dashboard.
The SBTi began in 2015 as a joint effort of CDP, the UN Global Compact, the We Mean Business Coalition, the World Resources Institute (WRI), and WWF. It is registered in England and Wales and based in London, and participation is voluntary. Anyone can use its standards, tools, and guidance for free. Validation is a paid service delivered by a separate legal entity, so the body that writes the criteria is separate from the one that applies them:
The SBTi Charity
Develops the scientific standards, tools, and industry-specific guidance.
SBTi Services
Provides independent validation of corporate targets to ensure they meet strict criteria.
What are the key features of the SBTi?
Four features define how target setting through the SBTi works in practice:
Evidence-Based 1.5°C Alignment
Since July 15 2022, Scope 1 and 2 targets submitted for validation must be aligned with a 1.5°C pathway, phasing out the less ambitious well-below-2°C option the SBTi accepted before.
Sector-Specific Guidance
Tailored frameworks are provided for high-impact sectors such as Power, Automotive, Buildings, and Forest, Land, and Agriculture (FLAG).
Annual Progress Reporting
Companies with validated targets have to report their greenhouse gas emissions and their progress against those targets every year.
The Mitigation Hierarchy
Companies are expected to cut emissions within their own operations and value chain first. Action beyond the value chain, such as funding climate projects, can then be added on top of those reductions. Under V2.0, this becomes a voluntary program called Ongoing Emissions Responsibility.
How has the SBTi evolved since 2015?
The SBTi's original aim was to get 100 companies to commit to setting greenhouse gas reduction targets. Demand has far outgrown that goal: companies with SBTi-validated targets now span nearly 100 countries and 52 sectors, and by January 2026 they accounted for more than 40% of global market capitalization.
🛠️ Evolution of the Framework
2015
The SBTi launches and validates the first corporate science-based targets.
2021
Launch of the first Corporate Net-Zero Standard, providing a blueprint for long-term decarbonization.
2024
Institutional split creates SBTi Services, a dedicated arm for independent target validation.
2025
More than 3,000 companies have targets validated in a single year, over 40% of them in Asia.
January 2026
The number of companies with SBTi-validated targets passes 10,000.
June 2026
June 2026: Version 2.0 of the Corporate Net-Zero Standard is published.
What is the SBTi Corporate Net-Zero Standard?
The Corporate Net-Zero Standard is the SBTi's framework for companies setting targets that lead to net-zero emissions no later than 2050. It defines net zero as reducing Scope 1, 2, and 3 emissions to zero or to a small residual level and permanently neutralizing what is left. For most companies that means cutting emissions by at least 90%, and a company can claim net zero only after it has met its long-term target and neutralized its residual emissions. Version 1.3.1 is the version in use today. Self-declared net-zero pledges and SBTi-validated targets differ in three ways:
| Feature | Self-declared pledge | SBTi-Validated Target |
|---|---|---|
| Definition of net zero | Each company defines its own. | Follows the SBTi's common, science-based definition. |
| Role of carbon credits | The company decides how credits are used. | Credits cannot count as emission reductions. They can only neutralize residual emissions or finance mitigationbeyond the company's own targets. |
| Accountability | Self-reported and unverified. | Independent validation by SBTi Services. |
Near-term vs net-zero targets: what's the difference?
Near-term targets fix the pace of emission cuts for the years ahead, and net-zero targets, also called long-term targets, fix the total reduction needed to reach a residual level. A company setting a net-zero target must set both, with the near-term target serving as a milestone toward the long-term one. Under version 1.3.1, the two differ as follows:
| Near-term target | Net-zero (long-term) target | |
|---|---|---|
| Timeframe | 5 to 10 years from submission | 2050 or sooner |
| Scope 1 and 2 ambition | Aligned with 1.5°C | Aligned with 1.5°C |
| Scope 3 ambition | Well-below 2°C at a minimum | 1.5°C |
| Scope 3 coverage | At least 67%, where a Scope 3 target is required | At least 90%, for all companies |
Solving the Scope 3 mystery
For most companies, Scope 3 holds the bulk of emissions: CDP found that supply chain emissions were, on average, 26 times higher than operational emissions. A near-term Scope 3 target is required when Scope 3 is 40% or more of a company's total emissions, and there are three main ways to set one:
Supplier Engagement
Set a target for suppliers covering a share of Scope 3 emissions, or of procurement spend when emissions data is not available, to adopt science-based targets within five years.
The Absolute Reduction
Commit to cutting absolute Scope 3 emissions by a set percentage, either across all Scope 3 categories or for individual categories such as purchased goods or business travel.
Intensity Targets
Reduce emissions per unit of output, measured either physically or economically, using approaches the SBTi has approved.
What changes with version 2.0?
Version 2.0 holds on to the standard's scientific ambition while changing how companies structure their targets. The main differences from version 1.3.1 are:
| Version 1.3.1 | Version 2.0 | |
|---|---|---|
| Company categories | The same requirements for all corporates, with a streamlined route for SMEs | Category A and Category B, based on company size and region |
| Scope 3 targets | Required once Scope 3 passes a set share of total emissions, with fixed coverage percentages | Required for Category A and optional for Category B, covering every Scope 3 category worth 5% or more of the total |
| Scope 1 and 2 targets | Can be combined in one target, covering at least 95% | Separate targets, each covering 100% of the relevant emissions |
| Long-term targets | Always required alongside near-term targets | Long-term Scope 3 targets are optional for all companies |
| Action beyond the value chain | Recommended, with neutralization of residual emissions at the net-zero year | Replaced by Ongoing Emissions Responsibility, a voluntary program. From 2035, Category A companies must address part of their ongoing emissions with removals, a share that rises until residual emissions are fully neutralized at the net-zero year |
What are the strategic benefits of SBTi validation?
While the primary goal of the SBTi is environmental, the business benefits of scientific validation have become a key driver for adoption. By aligning with a 1.5°C pathway, organizations unlock long-term value across three key areas:
📊 Market Competitiveness & Capital Access
Investor Confidence
SBTi validation is increasingly used by investors to de-risk portfolios, often unlocking better financing terms and capital access.
Brand Authority
Third-party validation strengthens credibility and protects against greenwashing, appealing to both consumers and B2B partners.
Talent Magnet
Purpose-driven organizations attract and retain top talent who prioritize sustainability in their careers.
⚙️ Operational Efficiency & Resilience
Cost Optimisation
Decarbonization efforts reveal inefficiencies, leading to long-term savings in energy and resource use.
Innovation Catalyst
Climate challenges drive innovation, enabling new low-carbon products, services, and business models.
Supply Chain Stability
Engaging suppliers improves visibility and helps mitigate climate-related risks across the value chain.
🛡️ Future-Proofing & Regulatory Readiness
Regulatory Shield
SBTi targets position companies ahead of evolving regulations and disclosure frameworks.
Standardized Benchmarking
Provides a universal framework for climate progress, simplifying reporting and target-setting processes.
The Bottom Line: An SBTi-validated target signals that your business is prepared for a low-carbon future, turning climate responsibility into a competitive advantage.
How can your company apply for SBTi validation?
In 2026, applications run through the SBTi Services Validation Portal, which digitizes registration for companies that want to commit to or set targets. The process from registration to disclosure has six stages, and committing is optional:
📊 The 2026 Application Roadmap
| Step | Action | Key Deadline |
|---|---|---|
|
1
Register
|
Set up portal account and verify eligibility. | Start of journey |
|
2
Commit (optional)
|
Announce your intention to submit science-based targets. | 24 months to submit, if you commit |
|
3
Develop
|
Build your GHG inventory and develop targets using the SBTi's standards and criteria. | Before you submit |
|
4
Submit
|
Finalize and submit targets via SBTi Services. | Corporate results within 40 business days of the service start date |
|
5
Communicate
|
Publicly announce approved targets. | Within 6 months of approval |
|
6
Disclose
|
Report progress and conduct periodic reviews. | Annual reporting, plus a 5-year review cycle under version 1.3.1 |
How does the SBTi fit with other climate frameworks?
The SBTi builds on climate accounting and disclosure frameworks that companies already rely on.
The bridge to global standards
Two of these connect directly to target setting:
🌍 A Connected Climate Ecosystem
GHG Protocol
Companies build their emissions inventory and track progress following the GHG Protocol Corporate Standard, Scope 2 Guidance and Scope 3 Standard.
CDP
The SBTi recommends disclosing emissions and target progress through standardized platforms such as CDP's annual climate change questionnaire.
Has the SBTi been successful?
In just over a decade, the SBTi has gone from a niche experiment to the global benchmark for corporate accountability. The initiative has reached a major turning point: over 12,000 companies now hold validated science-based targets.
Real-world impact
The SBTi's survey of 171 companies with validated targets found that:
Accelerated Action
86% reported a positive impact on their pace of decarbonization.
Better Business
91% reported an overall positive impact on their organisation.
What do SBTi-validated targets look like in practice?
Science-based targets are not identical for every company. The SBTi uses tailored pathways that account for the unique challenges of different industries. For example, a heavy manufacturer and a digital tech firm follow different rules because their fair share of global decarbonization looks different.
Arsenal FC
Pairing absolute cuts in direct emissions with revenue-based targets for the value chain.
Direct Reductions
42% reduction in Scopes 1 and 2 by 2030, and 90% by 2040, from a 2021 baseline.
Value Chain Intensity
52% reduction in Scope 3 emissions per £1m of revenue (excluding player trading) by 2030, and 97% by 2040.
McLaren Racing
Applying climate targets to high-performance logistics.
Near-term Target
50% emissions reduction by 2030, from a 2019 baseline.
Net-Zero Alignment
90% absolute reduction across the value chain by 2040.
SBTi FAQs
How much does it cost to join the SBTi?
Using the SBTi's own standards and tools costs nothing, so the expense comes from validation. Fees depend on company type, size, and the service chosen, and SBTi Services invoices companies outside the UK in US dollars. Under its current fee schedule, small and medium-sized enterprises (SMEs) pay $1,250 to $2,000 for near-term validation. Corporations pay $13,000 to $26,000, depending on annual revenue, or $17,000 to $34,000 for a near-term and net-zero package, and financial institutions pay up to $49,800 for near-term validation.
What is the "Business Ambition for 1.5°C"?
Business Ambition for 1.5°C was an SBTi campaign that asked companies to commit to science-based net-zero targets. The campaign closed in November 2021, and companies now set net-zero targets under the Corporate Net-Zero Standard.
How long does the validation process take?
Once you submit your targets through the Validation Portal, corporate results are due within 40 business days of the service start date in SBTi Services' validation schedule. Financial institutions get results within 60 days, and SMEs have no fixed timeframe. Overall duration also depends on data quality and how quickly your team responds to the validators' technical questions.
What happens if the 24-month deadline isn't reached?
A company that formally commits has 24 months to submit its targets for validation. If it misses the deadline, its status on the public Target Dashboard changes to "Commitment Removed." Once its targets are validated, the status becomes "Targets set."
Can companies use carbon offsets to meet their targets?
No. A core rule of the SBTi is that carbon offsets cannot be used to reach your emission reduction goals. You must achieve actual, physical reductions in your footprint. Carbon removals are only permitted to neutralize the final residual emissions (usually the last 10%) once a company has reached its long-term Net-Zero state.
Are there specific rules for different industries?
Yes. While the general framework is the same, the SBTi has developed Sector-Specific Guidance for high-impact industries such as Cement, Steel, and Aviation. These guidelines ensure that the decarbonization math is fair and reflects the specific technological challenges of each sector.
How can I check a company's SBTi commitment status on the Target Dashboard?
Use the SBTi's public Target Dashboard, which lists every company with a commitment or validated targets. A company's status reads "Committed," "Targets set" once its targets are validated, or "Commitment Removed" if it missed the 24-month deadline.
Can a company get SBTi certified?
SBTi Services validates company targets, and that validation is what most people mean by certification. Approved targets are then listed as validated on the Target Dashboard. The certification the SBTi does offer is the SBTi Academy credential for individual sustainability practitioners.
Do financial institutions follow different SBTi rules?
Yes. Financial institutions follow their own standard, the SBTi's Net-Zero Standard for Financial Institutions, and the Corporate Net-Zero Standard does not apply to them. SBTi Services validates their targets through a dedicated route with separate fees and review times.
What About Greenly?
Greenly's SBTi module supports companies through every stage of target setting. It begins with an audit-grade GHG assessment across Scopes 1, 2, and 3, converts the results into a quantified action plan, and models your decarbonization pathway against SBTi targets, while supplier engagement is tracked in the same workspace.
A dedicated climate expert guides your submission and final review, and the platform continues to track your targets and recalculate your baseline after validation.
Ready to set science-based targets for your company? Explore our SBTi solution or book a demo.
SBTi, Introducing the SBTi Corporate Net-Zero Standard Version 2.0
SBTi, Corporate Net-Zero Standard V2.0 Main Changes Document
SBTi, Corporate climate action momentum builds as SBTi reaches 10,000 companies with validated targets
SBTi, About us
SBTi, The impact of setting science-based targets on businesses
SBTi, Business Ambition for 1.5°C
SBTi, Climate ambition: SBTi raises the bar to 1.5°C
SBTi, What's in a commitment?
SBTi Services, Target Validation Service Offerings
SBTi Services, Set a science-based target today
CDP, Corporates' supply chain scope 3 emissions are 26 times higher than their operational emissions
Arsenal FC, Arsenal's 2040 net zero target approved
McLaren Racing, Net Zero: the race to enter
WWF, Science Based Targets initiative
SBTi, 10,000 companies in 10 years: Companies leading the net-zero transformation
SBTi, Corporate Net-Zero Standard Version 1.3.1
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