Setting Science-Based Targets: A Practical Guide for Indian Companies

What Are Science-Based Targets?

Science-Based Targets (SBTs) are greenhouse gas (GHG) emission reduction targets aligned with the level of decarbonisation required to keep global temperature rise within 1.5°C above pre-industrial levels, as defined by the Paris Agreement. The Science Based Targets initiative (SBTi) is the international body that validates and approves these targets.

For Indian companies, SBTi validation is increasingly being demanded by global buyers, ESG-linked lenders, and sustainability-indexed investors — making it a commercial necessity as much as an environmental commitment.

Two Pathways: Corporate vs. SME

Corporate Standard (Large Companies)

• Covers Scope 1, 2, and material Scope 3 emissions
• Requires a near-term target (5–10 years) and a long-term net-zero target
• Validation fee: USD 9,500 (standard) or USD 4,750 (small company, revenue < USD 50M)
• Full GHG inventory required for base year (minimum 2 years of data)

SME Pathway (Simplified)

• For companies with revenue < EUR 500M and < 500 employees
• Uses a simplified target-setting tool (SBTi SME tool) — no third-party validation required
• No fee — companies self-declare targets on the SBTi website
• Covers Scope 1 and 2; Scope 3 assessment recommended but not mandatory

Step-by-Step: From Carbon Footprint to SBTi Validation

• Step 1 — GHG Inventory: Calculate your base-year Scope 1 (direct), Scope 2 (purchased energy), and Scope 3 (value chain) emissions using the GHG Protocol Corporate Standard
• Step 2 — Baseline Year: Select a base year (typically the most recent year with complete data; minimum 2019 for new submissions)
• Step 3 — Target Setting: Use SBTi's target-setting tool to determine reduction % required by 2030 (near-term) and 2050 (net-zero)
• Step 4 — Commitment Letter: Submit a commitment letter to SBTi (free); your company is listed as "committed" on the SBTi website within 2–4 weeks
• Step 5 — Target Validation: Submit your targets using the SBTi submission form; SBTi review typically takes 6–9 months
• Step 6 — Annual Progress Disclosure: Publish progress against targets annually in your sustainability report or CDP disclosure

Why Indian Companies Should Act Now

• SEBI's BRSR Core requires GHG intensity disclosure — SBTi targets make this more credible
• European buyers (particularly under CBAM and CSDD requirements) are increasingly screening Indian suppliers by climate targets
• SBTi validation unlocks access to sustainability-linked loans (SLLs) at preferential rates from banks like SBI, HDFC, and IFC
• Early movers gain competitive advantage — only ~80 Indian companies are currently SBTi-validated