SBTi Guide for SMEs: Science-Based Target Setting Explained

To date, large corporations have been leading the way in sustainability, however, small and medium enterprises (SMEs) are increasingly being called upon to join the global climate action movement. One of the most effective ways for companies to commit to sustainability is through SBTi, or the Science-Based Targets initiative.

This guide will walk you through the essentials of SBTi, why it’s important for SMEs, and how to set and achieve your targets effectively.

What Is SBTi?

SBTi stands for the Science-Based Targets initiative, a collaborative project between global organizations such as:

• CDP (formerly Carbon Disclosure Project)
• United Nations Global Compact
• World Resources Institute (WRI)
• World Wide Fund for Nature (WWF)

The initiative’s primary goal is to help businesses establish clear, measurable, and science-backed targets to reduce greenhouse gas (GHG) emissions in line with climate science. Specifically, these targets aim to align with the Paris Agreement’s objectives:

• Limit global warming to well below 2°C
• Preferably aim for 1.5°C

By setting science-based targets, companies commit to making a tangible impact on reducing climate change.

Why Should SMEs Participate in SBTi?

You might be wondering, “Isn’t sustainability something for large corporations?” The answer is a resounding no. SMEs play a crucial role in climate action, and here’s why:

1. Innovation and Agility

SMEs are often more flexible and able to quickly adopt innovative technologies and sustainable practices compared to larger, slower-moving corporations.

2. Community Influence

SMEs have deep ties to their communities. By leading the way on sustainability, they can influence local stakeholders, inspire customers, and train employees to prioritize environmental responsibility.

3. Operational Efficiency

Setting science-based targets can lead to greater efficiency, such as reducing energy consumption and cutting costs. This not only helps the planet but can also boost profitability.

According to data from the U.S. Small Business Administration (SBA), small businesses, defined as firms with fewer than 500 employees, employ approximately 46.8% of the U.S. private-sector workforce. By mobilizing these businesses, we can drive large-scale climate action.

Steps to Set Science-Based Targets with SBTi

SBTi provides a clear, step-by-step process for companies to set and validate their emissions reduction goals. SMEs even have simplified procedures to encourage participation. Let’s dive into the key steps.

Step 1: Register

Begin by visiting the SBTi website. Use their target-setting portal to register your company. You’ll need to provide details such as:

• Company name, industry, and size
• Founding date and annual revenue
• Your calculated Scope 1 and Scope 2 emissions (explained below)

Registration typically takes about 20 minutes, especially if you have relevant data on hand.

Step 2: Commit (SMEs May Skip This)

Larger corporations are required to go through a commitment phase where they publicly announce their intent to set science-based targets. However, SMEs with fewer than 250 employees, under €50 million in turnover, and under 25 million euros in total assets can bypass this step.

Step 3: Develop Your Targets

This is where you calculate your emissions inventory to create actionable targets. You’ll focus primarily on:

Scope 1 and Scope 2 Emissions

• Scope 1: Direct emissions from your company’s operations, such as fuel combustion on-site.
• Scope 2: Indirect emissions from purchased energy, like electricity.

For SMEs, SBTi doesn’t require Scope 3 targets (emissions from the value chain), which can be more challenging to calculate.

SBTi offers three target-setting options:

1. Near-Term Targets – Typically to be achieved by 2030, using a baseline year (e.g., 2024). This is the most common starting point for SMEs.
2. Maintenance Targets – For companies that have already achieved net-zero emissions but want to maintain progress and continuously improve.
3. Net-Zero Targets – Requires the company to first meet near-term targets aligned with a 1.5°C pathway.

Step 4: Submit

SMEs can submit their targets through a streamlined process in the SBTi validation portal. Once your submission is complete, you’ll receive feedback and validation on your targets.

Step 5: Communicate

Once approved, your targets will be published on the SBTi website. This visibility strengthens your company’s reputation and demonstrates your commitment to sustainability to clients, investors, and other stakeholders. Additionally, SBTi provides a welcome pack to guide you on effectively communicating your sustainability goals.

Step 6: Disclose

Your work doesn’t stop after target approval. Companies are expected to report emissions annually and monitor progress toward their goals. By tracking and disclosing this data, you ensure accountability and transparency in your climate commitments.

Eligibility Criteria for SMEs

To qualify for the SME-specific target-setting pathway, your company must meet the following conditions:

• Fewer than 250 employees
• Turnover under €50 million
• Total assets under €25 million
• Emissions under 10,000 metric tons of CO2e (Scopes 1 and 2)

These simplified criteria help SMEs streamline their target-setting journey without excessive bureaucracy.

The Benefits of Setting Science-Based Targets

Setting and achieving science-based targets yields both environmental and business advantages. Here are some key benefits:

• Enhanced operational efficiency: Reducing energy consumption lowers costs.
• Stronger stakeholder trust: Clients, investors, and consumers increasingly prioritize sustainability when making business decisions.
• Competitive differentiation: SMEs with validated sustainability targets stand out in their industries.

Conclusions

Joining the Science-Based Targets initiative is a powerful way for SMEs to demonstrate leadership on climate change. While the process of calculating emissions and setting targets may seem complex, the benefits, enhanced efficiency, stronger stakeholder trust, and business growth, are well worth the effort.

At This Rock, we specialize in guiding SMEs through their sustainability journeys, including SBTi registration, target-setting, and emissions tracking. Our team provides expert support every step of the way, ensuring your business achieves its climate goals efficiently.

Ready to take action? Contact This Rock today to get started on setting science-based targets and boosting your company’s sustainability!

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FAQ on SBTi and Target Setting