Science Based Targets (SBTi) Explained for SMEs

What Are Science Based Targets?

Science Based Targets are greenhouse gas reduction targets aligned with climate science — specifically the level of decarbonisation required to limit global warming to 1.5°C above pre-industrial levels as defined by the Paris Agreement. They are validated by the Science Based Targets initiative (SBTi), a partnership of CDP, UNGC, WRI, and WWF.

A company with a validated SBTi target has committed to reducing emissions in line with what the IPCC says is necessary — not just what is convenient. This is the credibility difference between an SBTi target and a self-declared "net zero" commitment.

Why SME Suppliers Are Being Asked About SBTi

CSRD requires large companies to assess and report their Scope 3 Category 1 emissions — the emissions embedded in their supply chain. As part of their own SBTi commitments, many large corporations have pledged that a defined percentage of their suppliers by emissions coverage will have science-based targets by a given year.

This creates direct pressure on SME suppliers: - Automotive: BMW, Mercedes, Volkswagen require key suppliers to commit to SBTi targets - Retail: H&M, IKEA, Tesco request SBTi commitment from strategic suppliers - Tech: Apple, Microsoft, Google include SBTi alignment in supplier codes of conduct - FMCG: Unilever, Nestlé, P&G require Tier 1 supplier emissions targets

The SBTi SME Pathway

SBTi has a dedicated validation pathway for SMEs (typically companies with fewer than 500 employees or equivalent simplified criteria). It is significantly simpler than the full corporate standard:

1. What it requires:
2. Near-term target: Commit to reducing absolute Scope 1 and 2 emissions by 42% by 2030 (from a base year no earlier than 2015)
3. Near-term Scope 3 target: If Scope 3 represents more than 40% of total emissions (it usually does), commit to engaging suppliers representing 67% of Scope 3 Category 1 spend to set their own SBTi targets by 2025
4. Long-term commitment: Net zero no later than 2050

What it does NOT require for SMEs: - Full Scope 3 inventory (simplified engagement suffices) - Third-party assurance of base year emissions - Public disclosure of all 15 Scope 3 categories

Step-by-Step: How to Set an SBTi Target

Step 1 — Establish your base year Choose the most recent year with reliable data. 2023 or 2024 are appropriate base years for companies starting now. Calculate Scope 1, 2, and material Scope 3 using GHG Protocol methodology.

Step 2 — Calculate your near-term reduction requirement For a 1.5°C-aligned near-term target: reduce absolute Scope 1 + 2 by 42% by 2030 from base year. If your 2023 Scope 1+2 is 45 tCO2e, your 2030 target is 26 tCO2e.

Step 3 — Submit your commitment letter Submit at sbtischeckIn.org — a simple online form committing to set a validated target within 24 months. This gives you 2 years to develop and submit your target for validation. During this period you can claim "we have committed to setting science-based targets."

Step 4 — Submit your target for validation Submit your Scope 1+2 near-term target, your data, and base year methodology to SBTi via the online portal. Validation takes 2–4 months and is free for SMEs (full companies pay a fee; SMEs qualify for subsidised rates via the SME Climate Hub).

Step 5 — Publish your target Validated targets are published on the SBTi website, giving buyers a public reference URL to confirm your commitment — the equivalent of a Carbon Passport for target credibility.

Common SME SBTi Questions

"We don't know our Scope 3 — can we still commit?" Yes. You can commit to a near-term Scope 1+2 target immediately and develop your Scope 3 target within the 24-month window. The SBTi SME pathway explicitly accommodates this sequence.

"Is an SBTi commitment legally binding?" No. SBTi validation is a voluntary commitment. However, withdrawing a commitment generates reputational risk, and buyers actively monitor the SBTi company list for target progress.

"What happens if we miss our target?" SBTi does not penalise missed targets directly, but companies that fail to progress receive a "commitment removed" flag on the SBTi website — which is publicly visible and reputationally damaging with enterprise buyers.

"Can we use offsets to meet our SBTi target?" No. SBTi near-term targets require absolute emissions reductions, not offsets. Carbon credits can only be used to claim neutralisation of residual emissions after the reduction target period, and only with permanent removal credits (not avoidance offsets).

What to Tell Buyers Before You Have Validation

If you are asked about SBTi but have not yet submitted, the right answer is:

> "We have committed to setting science-based targets under the SBTi SME pathway. Our base year is [YYYY] with total emissions of [X] tCO2e (Scope 1+2+3). We are on track to submit our target for validation by [date]. Our current emissions and methodology are verified at [Carbon Passport URL]."

This response is credible, accurate, and demonstrates active progress rather than a vague future intention.