GHG Protocol Target Setting
Setting credible GHG reduction targets requires a methodological foundation — how much do you need to reduce, by when, from what baseline, and covering which scopes? The GHG Protocol and SBTi provide the framework. Here is how to set targets that are scientifically grounded and CSRD-compliant.
Setting credible GHG reduction targets requires a methodological foundation — how much do you need to reduce, by when, from what baseline, and covering which scopes? The GHG Protocol and SBTi provide the framework. The IPCC Special Report on 1.
The science behind 1.5°C-aligned targets
The IPCC Special Report on 1.5°C (SR15, 2018) defines the global emission reductions required to limit warming to 1.5°C above pre-industrial levels. Global CO2 emissions must reach net zero by around 2050, with emissions in 2030 approximately 45% below 2010 levels.
The challenge for corporate target-setting is translating this global pathway into company-level targets. Several methodological approaches exist:
Absolute Contraction Approach (ACA): Every company reduces absolute emissions by the same percentage rate as the global pathway — currently 4.2% per year for Scope 1 and 2 to align with 1.5°C. Simple to apply, does not differentiate by sector.
Sectoral Decarbonisation Approach (SDA): Each sector decarbonises according to a sector-specific pathway based on the IEA Energy Technology Perspectives. More complex but more appropriate for capital-intensive sectors with long asset lives.
Economy-wide Science-based Target (EWSBT): Uses a single absolute reduction rate applied economy-wide. Similar to ACA but with a different underlying model.
Base year selection and restatement
The base year is the reference point from which emission reductions are measured. Base year selection is more consequential than it appears — a high-emission base year makes targets easier to achieve; a low-emission base year makes them harder.
GHG Protocol guidance recommends using the most recent year with complete and reliable data as the base year — typically 2–3 years before target announcement. For targets announced in 2026, a 2023 or 2024 base year is appropriate.
Base year restatement: If significant structural changes occur (acquisition, divestiture, outsourcing) that change your emission profile by more than 5% relative to the base year, the GHG Protocol requires base year restatement — recalculating base year emissions as if the current structure had always existed.
For ESRS E1-4: disclose the base year, base year emissions for each scope, and any restatements made with their rationale. Assurers will check base year consistency across reporting years.
Scope 3 targets — the methodological frontier
Setting credible Scope 3 reduction targets is more complex than Scope 1 and 2 targets because:
Category selection: You cannot set a meaningful absolute Scope 3 target without knowing which categories are material and how emissions are distributed across them. Scope 3 screening must precede target-setting.
Data quality: Spend-based Scope 3 estimates have ±50–100% uncertainty. Setting a 30% reduction target against an estimate with 50% uncertainty means the target band is so wide as to be meaningless. Improving data quality is a prerequisite for credible Scope 3 targets.
Influence vs control: You can directly control Scope 1 and 2 through capital investment. Scope 3 reduction requires influencing supplier and customer behaviour — setting targets requires confidence that you can actually achieve them through engagement, procurement requirements, and product design.
SBTi Scope 3 requirements: SBTi requires Scope 3 targets where Scope 3 > 40% of total emissions. The target must cover at least two-thirds of Scope 3 emissions and use a 1.5°C-aligned reduction rate. Supplier engagement targets (percentage of suppliers with their own SBTi targets) are an accepted supplementary approach for Category 1.
Frequently asked questions
What is the minimum annual reduction rate for a 1.5°C-aligned target?
Under the SBTi Absolute Contraction Approach, companies must reduce Scope 1 and 2 absolute emissions by at least 4.2% per year from the base year to achieve 1.5°C alignment over a 5–10 year near-term target period. For a 2025 base year, this implies at least a 42% reduction by 2035.
Can we use a revenue-adjusted intensity target instead of an absolute target?
Intensity targets (emissions per unit of revenue or production) are allowed under ESRS E1-4 and SBTi for sectors with high growth expectations. However, SBTi requires intensity targets to be supplemented by absolute targets, and investors generally prefer absolute targets as they directly correspond to real-world emission reductions. Pure intensity targets that allow absolute emissions to grow will face increasing scrutiny.
What happens to our targets if we make a major acquisition?
Major acquisitions that significantly change your emission profile require base year restatement under GHG Protocol rules. After restatement, assess whether your targets remain achievable — if the acquired entity has much higher emission intensity than your existing business, targets may need to be revised. Disclose the acquisition, its emission impact, and any target revisions transparently.