The conversation around corporate climate action has changed dramatically. Companies can no longer make vague "net zero by 2050" promises without a clear path to achieve them. Regulators, investors, and customers are now asking tougher questions: What are your plans for the next 5 or 10 years? How does this connect to capital investments? What proof do you have that your pathway aligns with science?
The answer lies in Science-Based Targets (SBTs). Developed by the Science Based Targets initiative (SBTi), SBTs offer companies a solid, externally validated framework to align their greenhouse gas (GHG) reduction efforts with the Paris Agreement and a 1.5°C world. For boards, the strategic opportunity goes beyond just compliance. When properly implemented, SBTs serve as a governance tool for continuity, helping companies weather market shocks, leadership changes, and shifts in policy.
This article explains why boards should view SBTs as a foundation for resilience and continuity, not just as a reporting exercise.
Traditional board oversight is often reactive, focusing on monitoring risks, reviewing policies, and approving disclosures. Climate change demands a more proactive approach. It is systemic, interconnected, and long-term. Oversight alone is not enough; boards need a continuity mindset.
Continuity involves integrating climate commitments into governance structures and decision-making processes, ensuring they persist beyond individual leaders. It helps the company build institutional knowledge around carbon targets, transition plans, and capital strategies. For instance:
This continuity-focused governance approach prevents climate action from becoming a "pet project" and repositions it as a lasting corporate capability.
SBTi’s criteria have changed significantly in recent years. Since mid-2022, all new near-term targets for Scope 1 and Scope 2 emissions must align with a 1.5°C pathway. The previous "well-below-2°C" option is no longer accepted. For most companies, this means deeper cuts, up to 42% by 2030 in many cases.
Regarding Scope 3, companies must set targets if value chain emissions account for more than 40% of total emissions. This applies to most sectors, including consumer goods, retail, technology, automotive, and finance. Boards that overlook Scope 3 risk losing validation, facing investor backlash, and damaging their reputation.
The message is clear: small efficiency gains are inadequate. Boards must prepare for significant changes in supply chains, product design, and energy sourcing.
SBTi distinguishes between near-term targets and long-term/net-zero targets. Both are essential.
This dual structure is important. Too often, companies rely on far-off net-zero pledges without showing near-term progress, which undermines trust. In contrast, near-term SBTs provide stakeholders with tangible proof of advancement and build momentum for larger systemic changes.
Investors increasingly expect to see both layers presented together: near-term credibility combined with a long-term vision.
SBTs are essential but not enough on their own. Investors, auditors, and regulators now expect companies to incorporate them into transition plans. Under IFRS S2, companies must disclose:
This last point is critical. IFRS S2 requires boards to reveal how emissions pathways affect financial outcomes, including capital expenses, operating costs, revenues, and asset valuations. This shifts climate action from being merely a "sustainability report" topic to a vital financial disclosure.
A validated SBT without a transition plan risks being viewed as incomplete. Therefore, boards must integrate SBTs into the company’s strategic narrative and financial planning.
Even well-defined targets can fail if they remain isolated within sustainability teams. Boards must ensure that climate targets are operationalized through structured reviews and decision rights:
This governance framework establishes institutional habits that embed SBTs into daily decision-making, ensuring that climate goals persist through leadership changes.
To ensure continuity, boards must directly link SBTs to capital allocation. This includes:
Investors increasingly favor companies that present clear, science-based capital expenditure plans. Those that fail to connect targets with investment decisions risk being labelled as "green-washers."
SBT validation hinges on reliable GHG data. More importantly, metrics that are ready for auditing are becoming regulatory requirements. Boards should advocate for:
The ability to monitor emissions with the same precision as revenue is quickly becoming essential for conducting business.
Scope 3 emissions often make up 70–90% of a company’s carbon footprint. Boards cannot treat them lightly. Key questions include:
Overdependence on offset credits or bookkeeping claims risks damaging credibility. Boards must demand real engagement throughout the value chain and measurable reductions.
Common pitfalls based on current practices include:
Each of these undermines investor confidence and risks legal issues or reputational damage.
To translate climate ambition into continuity, boards should consider:
These questions encourage management to focus on resilience rather than just compliance.
Consultancies play a critical role in aligning ambition with execution. Corporate boards can rely on advisory partners for:
In summary, consultants help convert scientific guidance into corporate continuity.
Science-Based Targets are no longer optional. They are becoming essential to corporate governance, investor trust, and regulatory compliance. Boards that take them seriously as tools for continuity not just as oversight measures, but to enhance resilience, secure capital, and remain competitive in a decarbonizing environment.
The message is clear: set science-based targets, integrate them into transition plans, and make climate governance a lasting foundation for continuity.
Sujay Sarkar is a climate and energy specialist advising on decarbonisation, ESG metrics, and low-carbon fuels. He supports clients navigating ESG regulation and climate risk. Recently recognised as Canada first SBTi Certified Expert, Sujay brings advanced knowledge in designing and validating near-term and net-zero targets and addressing Scope 1, 2, and 3 emissions challenges.
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