SBTi Buildings Criteria Becomes Mandatory for Real Estate Companies

The Science Based Targets initiative's Buildings Sector Target-Setting Criteria became compulsory from 28 February 2025 for companies that own, develop, manage or finance real estate with significant buildings-related emissions. The buildings sector is responsible for more than one third of all energy-related emissions worldwide.

The Buildings Criteria were initially published in August 2024 following a multi-stakeholder development process, with a six-month grace period allowing companies time to adapt. From the end of February 2025, required users, as defined under Criteria 1, 2 and 3, must apply the criteria when setting science-based targets. The criteria cover operational emissions from existing buildings and upfront embodied emissions from new constructions. Financial institutions are also required to apply the criteria to their real estate lending and investing activities, covering scope 3 category 15 financed emissions.

Companies with mixed buildings and non-buildings emissions are required to set separate targets for each, following both the Buildings Criteria and the Corporate Net-Zero Standard as applicable. The threshold for applying different criteria depends on whether scope 3 emissions from buildings-related activities exceed 40 percent of total emissions. This layered approach reflects the complexity of real estate value chains and the need for different methodologies to address operational versus embodied carbon, an area of growing regulatory interest in India's built environment sector.

To support adoption, the SBTi released a detailed FAQ document and a Buildings Criteria in Brief alongside the full criteria in August 2024. For companies lacking energy consumption data for new constructions, the SBTi recommends using industry averages, modelling tools or emission factors as proxy estimates, with full methodological disclosure required in reporting. The SBTi notes that weather-related construction delays already cost the industry billions of dollars annually, reinforcing the business case for aligning with science-based targets to manage climate-related risks.

Key figure — Buildings sector responsible for more than one third of all energy-related global emissions