SBTi Revises Emissions Reduction Calculation Method for Companies Setting Targets

The Science Based Targets initiative has updated the Absolute Contraction Approach, the primary methodology companies use to calculate near-term emissions reduction targets under the Corporate Net-Zero Standard V1.3 and Near-Term Criteria V5.3. The revision addresses a technical flaw that produced increasingly prohibitive reduction rates for companies setting targets from 2026 onwards.

The updated Absolute Contraction Approach adjusts how annual emissions reduction rates are calculated by factoring in both a company's base year and its net-zero target year, rather than applying a fixed rate derived solely from the target-setting period. The minimum annual reduction rate floor of 4.2% and the requirement to reach net-zero by 2050 or earlier remain unchanged. The revised method distributes required emissions reductions consistently across the full pathway to 2050, rather than concentrating steep cuts in a compressed near-term window — a problem that emerged for companies beginning to set targets in the second half of this decade.

The previous method was originally designed for companies setting targets in the early 2020s. As time passed, companies setting their first or renewed targets faced increasingly steep near-term reduction demands due to the shrinking window between the target start date and 2050. The update also incorporates a company's past emissions performance into target calculations, meaning companies that have not sufficiently reduced emissions in prior periods face steeper future targets to compensate. Previously validated targets under the old method remain fully aligned with SBTi requirements and are unaffected.

The revision was approved by the SBTi's independent Technical Council as an urgent update, given the direct implications for companies setting targets in 2026 and 2027. It applies immediately to all companies using the Absolute Contraction Approach, including both energy and industrial targets and FLAG targets. No new data or inputs are required; updated tools within the SBTi Validation Portal automatically apply the revised calculation. The update also aligns the V1.3 methodology more closely with the approach proposed in the forthcoming Corporate Net-Zero Standard V2.0, supporting a smoother transition between standard versions.

Key figure — 4.2% minimum annual reduction rate — unchanged in revised Absolute Contraction Approach