Set target

A net zero target commits your organization to reducing emissions as much as possible no later than 2050 across all scopes, and ensuring that any remaining emissions are removed. As there is a perception that some organizations pledge net zero without specific plans or adhering to a standardized framework, poorly defined ambitions can be seen as green-washing and discredited.

*Note on net zero target vs. net zero targets

The ultimate goal for a net zero target is to reduce GHG emissions as much as possible no later than 2050 across all scopes, and address the remaining emissions with removals. Organizations, by choice or adhering to a framework, often choose to set multiple supporting targets that add more detail to the overall target. These sub-targets may include short-term targets, or targets for specific scopes of emissions. The combination of these sub-targets and the overall net zero target culminates in net zero targets.

To define credible net zero targets, you need to address the following dimensions:

Alignment with a recognized framework

• The consideration: Aligning your target with a framework, and following its processes, allows your target to take on the credibility of that third-party group. As more companies commit to climate action, an increasing assortment of these frameworks have emerged, though only the robust ones will help build your target’s credibility. In Step three, we review the most common frameworks for setting net zero targets

• Best practice: The SBTi’s Net Zero Standard is well recognized as the most credible third-party group for validating targets. SBTi is a joint initiative led by respected climate organizations (CDP, the UN Global Compact, WRI and WWF). It defines and promotes best practice in emission reduction and net zero targets for business, in line with climate science. The targets align with the UN’s urgent call to realize a 1.5°C future that will prevent the most harmful impacts of climate change. Setting a target through SBTi is the best way to ensure your target is credible. Learn more about SBTi

Articulate GHGs and net zero meanings accordingly

• The consideration: Clearly understand what your organization means by net zero. The net zero pledge landscape can be confusing, as many similar terms have emerged (e.g. carbon neutral, climate positive, carbon negative, GHG neutral) within corporate communications, which can have different meanings. The types of GHGs included (e.g. just carbon, or all seven types of GHGs covered by the UNFCCC) is a common differentiator among these pledges. We have compiled a summary of the most common climate pledges here. Net zero is a higher standard than carbon neutral, although carbon neutrality may be a milestone on the journey. It is common guidance now across standards and pledge initiatives for net zero to include all GHGs and all emission scopes

• Best practice: Set an SBTi net zero target, as this implies all GHG emissions will be reduced by the maximum amount possible and the rest addressed through removals by or before 2050. The SBTi does not currently approve targets set by companies in the oil and gas sectors. As guidance for these industries emerges, they should still refer to independent 1.5°C science-based pathways as much as possible in setting their targets and trajectories

Include short-term targets that map to long-term net zero targets

• The consideration: net zero by no later than 2050 implies a long-term target, but credible targets will also address short-term actions that are significant enough to make long-term ambitions realistic. Short-term targets are also important, as GHGs continue to cause warming after they are emitted. Targets that postpone abatement will contribute more to warming than those that promote prompt action. As short-term targets often refer to percentage reductions of emissions, your short-term ambition should define a baseline year

• Best practice: Setting both near (5-10 years) and long-term (by 2050) targets is considered best practice in order to capture the benefits of both approaches, in line with SBTi. To meet short-term SBTi ambition pathways of (e.g. 1.5°C or well below 2°C), targets will have to be aligned with the global emission decline of 50% by 2030

Specification of scopes to be covered (i.e. Scope 1, 2 and 3 emissions)

• The consideration: Targets must define which emission scopes will be tracked, and within them – for Scope 3 in particular - what portion will be measured. Due to the complexities of calculating Scope 3 emissions, they are often only partially measured. Specificity around what will be covered in the target increases clarity, resulting in higher credibility. Over two thirds of climate pledges and voluntary initiatives now require at least some Scope 3 coverage to be included in net zero target setting

• Best practice: Including Scope 1, 2 and 3 emissions in your target is best practice as Scope 3 emissions are often significant despite being difficult to track. SBTi net zero requires Scope 1, 2 and 3 emissions for long-term targets. SBTi does not currently require Scope 3 emissions for near-term targets if Scope 3 accounts for less than 40% of total emissions. Small to medium-sized businesses are also not required to set Scope 3 short-term targets. More guidance for SMEs can be found here

Clarification on absolute or intensity targets

• The consideration: Emission reductions in absolute or intensity terms are common across organizational net zero ambitions, but it is important that one or the other is specified. Absolute emissions fix reductions to a set volume, regardless of changes in your company’s economic or physical output. Intensity targets relate emission reductions proportionately to a future organizational output. The highest level is to set both absolute emissions targets and intensity targets, with more than seven convening initiatives (such as Race to Zero and the ISO net zero Guidelines) specify a need for absolute targets in addition to intensity targets on the path to net zero (Oxford net zero Standards Summary Report, 2022)

• Best practice: SBTi outlines numerous target-setting methods applicable across scope 1, 2 and 3 emissions and for both short-term and long-term net zero commitments. These methods focus on two overarching approaches to emissions reductions: absolute emissions or the application of carbon-intensity metrics and targets. Both of these aligned with and derived from global decarbonization pathways.. The Sectoral Decarbonization Approach (SDA) is an important example of a SBTi method where companies set targets based on their respective sector’s intensity pathway. The benefit of activity-specific metrics is that they can reflect the pace at which different sectors are able to decarbonize in alignment with global decarbonization pathways. If your company is within Power generation, Financial institutions, Iron and Steel, Buildings, Cement, Forest Land and Agriculture (FLAG), Pulp and paper, Information and Communication Technology (ICT), Land Transport, Maritime, or Apparel and footwear sectors or other sectors for which guidance is in development, you should consider revising the sector-specific guidance and the applicable approach to setting a target through the SDA method. Learn more about SBTi target methods here, or in more detail through SBTi’s resources

Estimation of likely residual emissions at net zero and plan to employ carbon removals

• The consideration: Removals will play a role in many companies' net zero journey and a more significant role in hard-to-abate sectors, but over reliance on removals may damage your target’s credibility. Removals involve employing technologies or nature-based solutions to capture and store carbon to balance emissions your business is unable to abate. In setting your target, you will need to estimate likely residual emissions at the net zero target date and plan to address these with removals accordingly. Learn more about removals

• Best practice: Companies prioritize the abatement of the maximum amount possible before turning to removals. Under SBTi’s net zero standard, most companies are required to reduce emissions by at least 90% to reach net zero, and only once that threshold is reached can a company use removals to address the remaining unabated emissions

Making your net zero target public

• Consideration: Announcing your net zero targets publicly creates public accountability and demonstrates to the market that your company is taking action to address climate change. Business stakeholders (e.g. investors, customers, employees) need to review your targets to fully understand how your company is addressing this critical global issue. Registering your target on a public platform that provides third party validation is another way to share your target publicly

• Best practice: Announce your targets with a coordinated communications strategy led by senior leadership, and supported by accompanying information available through different channels (e.g. website, social media channels, investor reporting) to share more details with stakeholders. Completing the target-setting process with SBTi is best practice in order for your target to be published on a public registry