Formed in 2015, The Science Based Targets initiative (SBTi) has quickly become one of the most commanding NGO-led efforts in climate change, gaining support from large corporations like Apple, Microsoft, and Johnson & Johnson. It encourages companies to set targets in line with the Paris Agreement pathways, namely 2°C, “well below” 2°C and 1.5°C trajectories.

However, SBTi is shifting corporate climate action into a higher gear. It has announced that it is increasing its minimum target-setting requirements for companies to closer align with the science of the Paris Agreement. Under the new condition, SBTi will phase out “well below” 2°C targets from the validation framework favoring carbon emissions targets that comply with a 1.5°C pathway.

SBTi has been gaining significant momentum. The organization says that more than 1,400 companies representing over 20% of global market capitalization (more than $20.5tn) have committed to participate. So far, SBTi has approved targets for more than 717 companies across all economic sectors, including the highest-emitting ones such as cement, power, and steel.

SBTi has no room for greenwashing

Signing up to SBTi gives companies a reputational boost – a recent survey by SBTi found that almost 80% of participants said SBTi participation strengthened their brand reputation after joining. More than 50%said their SBTi membership boosted investor confidence.

With this in mind, SBTi is keen to eliminate greenwashing and is cracking down on inactive companies. Since its inception in 2015, 119 companies have been kicked off the initiative for failing to set targets in the two-year timeframe. These include major corporations like Japanese carmaker Honda. This, however, exposes a major shortfall of the SBTi program – the lack of consequences for companies that fail to set targets. While SBTi does not have the power to fine companies, more could be done to call out companies that have failed to set a target in the allocated time.

The climate action feedback loop

By increasing their target requirements, SBTi reinforces and fuels the emerging market mechanism for climate action identified by GlobalData: the climate action feedback loop. Briefly stated, companies take action on climate and win stakeholder support (e.g. from customers, partners, employees, and investors) that drives reputational and competitive advantage, which incentivizes further action and draws more participation.

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By GlobalData

All companies have the opportunity to make sustainability their competitive advantage and become tomorrow’s leaders in their sectors. Companies that act quickly and decisively to develop timely and actionable emissions reduction targets, offer sustainable products and services, adapt more quickly to the upcoming climate regulations, and gain the greatest market rewards.

If you’re interested in finding out more about how your business can prepare for the climate disruption that lies ahead, join analysts Warren WilsonAlice Cordo Gallucci, and Luke Gowland for an important climate change webinar where they will discuss:

  • How companies can address climate change and provide a selection of examples, from our analysis of over 100 climate action leaders
  • GlobalData’s Climate Action Feedback Loop: A market-based mechanism is starting to drive down
  • Key strategies for climate action: emissions reductions, carbon offsets, carbon capture & storage (CCS).
  • Beyond Paris: How the Science-Based Targets Initiative (SBTi) and The Climate Pledge are catalyzing corporate response on climate.


Register below to join us on July 28th:

EU/US East coast: 3 pm BST/10 am EST:
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