Setting Science-Based Targets for Net Zero

Science-based targets represent the gold standard for corporate climate commitments, providing a rigorous and transparent methodology for setting emissions reduction goals that align with the level of decarbonization required to meet the Paris Agreement objective of limiting global warming to 1.5 degrees Celsius. The Science Based Targets initiative, a partnership between CDP, the United Nations Global Compact, the World Resources Institute, and the World Wide Fund for Nature, has emerged as the definitive framework for validating corporate climate targets. For Indonesian businesses seeking to demonstrate credible climate leadership, understanding and adopting science-based targets is increasingly essential.

Understanding the SBTi Framework

The SBTi provides sector-specific methodologies for setting near-term and long-term emissions reduction targets that are consistent with climate science. Near-term targets, which cover a five to ten year horizon, require companies to reduce their Scope 1 and Scope 2 emissions at a rate consistent with 1.5-degree pathways. For most sectors, this translates to absolute reductions of approximately 4.2 percent per year from the base year. The SBTi Net-Zero Standard goes further, requiring companies to set long-term targets for deep decarbonization by no later than 2050, reducing emissions across the value chain by at least 90 percent. Only after achieving this level of deep reduction may companies use carbon removal offsets to neutralize residual emissions. This approach ensures that science-based targets drive real operational transformation rather than relying on offset purchases as a substitute for genuine decarbonization. Companies must also set Scope 3 targets if their value chain emissions represent more than 40 percent of total emissions, which is the case for most businesses when all fifteen Scope 3 categories are considered.

The Target Validation Process

Setting a science-based target involves several structured steps. First, companies must commit to the SBTi by submitting a commitment letter, which is publicly announced and starts a 24-month clock for target submission. During this period, companies develop their targets by selecting the appropriate methodology for their sector, establishing a base year emissions inventory, and modeling reduction pathways. The SBTi offers several target-setting methods including the absolute contraction approach, which applies a uniform rate of reduction across all companies, and the sectoral decarbonization approach, which allocates sector-specific carbon budgets based on activity levels. Once targets are developed, they are submitted to the SBTi for validation through a detailed technical review. The SBTi team assesses whether the targets meet minimum ambition criteria, whether the base year inventory is sufficiently comprehensive, and whether the target boundary covers the required scope and coverage thresholds. Validation typically takes several months and may involve iterative feedback and target revision before final approval.

Implementing Reduction Strategies

Validated science-based targets create clear goalposts that drive investment and operational decisions throughout the organization. Companies should develop detailed decarbonization roadmaps that identify specific reduction levers across their operations and value chain. For Scope 1 reductions, strategies may include electrification of heating and industrial processes, fuel switching from diesel to natural gas or hydrogen, and process efficiency improvements. Scope 2 reductions are typically achieved through renewable energy procurement, either through on-site generation, power purchase agreements, or renewable energy certificates. Scope 3 reductions require engagement with suppliers and customers and may involve supplier decarbonization programs, sustainable procurement policies, product redesign for lower lifecycle emissions, and logistics optimization. Each reduction lever should be evaluated for cost, technical feasibility, and emissions impact, and prioritized based on marginal abatement cost analysis to achieve the greatest reductions at the lowest cost.

Reporting Progress and Maintaining Ambition

Companies with validated science-based targets are required to report their progress annually, typically through the CDP disclosure platform. Progress reporting involves recalculating emissions using the same methodology as the base year and comparing the results against the target trajectory. If structural changes such as acquisitions, divestments, or methodology updates occur, companies may need to recalculate their base year emissions to maintain a consistent comparison basis. The SBTi periodically updates its criteria and methodologies to reflect advancing climate science, and companies are expected to revise their targets accordingly. Maintaining ambition over time requires embedding climate targets into corporate governance through board-level oversight, executive compensation linkage, and integration of carbon considerations into capital expenditure decisions and business planning processes.