The Science Based Targets initiative (SBTi) has become the leading global framework for companies seeking to set credible climate goals. By aligning your carbon accounting practices with SBTi standards, you ensure that you are consistent with the scientific consensus signed through the Paris Agreement to limit global temperatures to 1.5° C.

In this article, you’ll learn how your business can align its carbon accounting with SBTi requirements—and how tools like Position Green’s Carbon Accounting solution can support that journey.

Understanding SBTi alignment: The basics

The SBTi provides a framework for companies to set greenhouse gas (GHG) emissions reduction targets in line with the goal of limiting global warming to 1.5°C above pre-industrial levels. It focuses on two key target types:

• Near-term targets: Typically 5–10 years into the future, covering Scope 1, 2, and 3 emissions if Scope 3 constitutes more than 40% of a company’s total footprint.
• Net-zero targets: Long-term goals aiming for a 90% or more reduction in absolute emissions* emissions by 2050, with any residual emissions neutralized through carbon removals.
  *Absolute emissions are the total volume of your emissions, not adjusted for business growth, revenue, or output. It reflects actual climate impact more directly than intensity metrics. Used in absolute reduction targets, which commit to cutting total GHGs by a specific percentage (e.g., “reduce absolute emissions by 50% by 2030”).

SBTi-aligned targets must be rooted in a comprehensive, up-to-date carbon footprint, with transparent methodologies and a science-based pathway toward emissions reduction.

Five steps to align your carbon accounting to SBTi

1. Build a comprehensive GHG inventory

A credible carbon accounting system starts with a full Scope 1, 2, and 3 emissions inventory.

• Scope 1: Direct emissions from owned or controlled sources.
• Scope 2: Indirect emissions from purchased electricity, steam, heating, and cooling.
• Scope 3: All other indirect emissions, often covering the bulk of a company’s footprint (up to 80–90%).

Important: It is required that your inventory follows the GHG Protocol and covers all seven Kyoto Protocol gases.

Best practice tip: Use primary data wherever possible, especially for Scope 1 and 2, and build supplier engagement programs to refine Scope 3 estimations over time.

2. Set science-based targets

Once you have your baseline emissions data, define your targets:

• Near-term target: Achieve significant emissions reductions within 5-10 years.
• Long-term net-zero target: Achieve deep decarbonization–90% or more–by 2050 or earlier.

SBTi provides sector-specific guidance and criteria to ensure your targets are ambitious and aligned with the 1.5°C trajectory and the Paris Agreement goals.

Common pitfalls to avoid:

• Setting ambitious targets without understanding what it takes to reduce emissions.
• Failing to have a complete inventory that includes all emission sources which is a requirement to get through the SBTi validation process.

3. Map out your decarbonization scenarios

To meet your targets, you need a clear, actionable plan that maps your GHG reduction opportunities across operations, energy sourcing, supply chains, and product design.

This is where Position Green’s Carbon Accounting solution comes in. The platform allows you to:

• Model decarbonization pathways based on different scenarios and SBTi requirements.
• Align GHG tasks (e.g., energy efficiency projects, renewable energy transitions, supplier engagement) to specific SBTi-aligned milestones.
• Track progress dynamically against multiple pathways to optimize investments and actions over time.

Strategic advantage: Scenario mapping ensures you not only set science-based targets but also demonstrate a credible, data-driven strategy to achieve them.

4. Monitor, disclose, and refine

SBTi expects companies to publicly disclose progress annually and review targets every five years. While this is not mandatory like other forms of compliance, our recommendations would be to:

• Implement systems for continuous monitoring of emissions.
• Regularly review your progress against interim milestones.
• Update targets and pathways if your business model or external factors change.

Position Green’s Carbon Accounting features built-in reporting functionalities to simplify disclosures to SBTi, CDP, and CSRD frameworks—ensuring you meet multiple stakeholder requirements at once.

5. Engage stakeholders and build accountability

Successful decarbonization depends on internal and external buy-in. Here are some examples of what that might look like in practice:

• Board and executive engagement is critical to prioritize resources for emission reductions.
• Supplier collaboration is essential for Scope 3 decarbonization.
• Transparent communication with investors, customers, and regulators builds trust.

Many leading companies now integrate their SBTi targets into their annual financial reports and sustainability statements—a trend likely to accelerate as CSRD and ESRS reporting become the gold standard framework across Europe.In fact, ESRS require companies to set science based climate targets as part of their compliance mandates, and VSME strongly recommends it.

Why early action on SBTi matters

Waiting to align your carbon accounting to SBTi is risky. Early movers benefit from:

• Regulatory readiness: Anticipating CSRD, ISSB, and national climate disclosure requirements.
• Investor attractiveness: Many investors now filter portfolios based on science-based targets.
• Competitive advantage: Companies that can prove climate action credibility will be preferred by customers, partners, and employees alike.

With upcoming regulatory changes in Europe—including the EU’s Omnibus proposals reinforcing non-financial disclosures—SBTi alignment offers a clear way to demonstrate strategic resilience.

How Position Green prepares you for every net-zero scenario

Position Green’s Carbon Accounting solution empowers you to move beyond compliance and start driving measurable results. From emissions mapped to science-based targets, to scenario modelling and audit-ready reports, we give you the tools to decarbonize with confidence.

No guesswork — just impact.

✔ Map your SBTi-aligned net-zero pathway
✔ Identify high-impact reduction levers across all scopes
✔ Track and adapt in real time with investor-grade clarity

Join us for an exclusive discussion on best-practice sustainability reports from Novo Nordisk, Novartis and Bavarian Nordic, three leading pharma companies. We’ll dive into the reports with their ESG reporting leaders and discuss key insights and lessons learned.

What you’ll gain:

• Key insights from best practice pharmaceutical sustainability reports–Understand what worked well and how to incorporate it into your own reports.
• Lessons on reporting pharmaceutical-specific topics–Such as access to medicines, patient health and safety, ethical marketing and falsified medicines.
• Best practices for structuring and presenting your report–From materiality assessments to governance disclosures.
• Practical guidance for improving your 2025 sustainability report which you can apply immediately.

Date & time:

• 8 May
• 15:00–16:00 CEST / 14:00–15:00 BST / 09:00–10:00 EDT

Our panelists

Christoffer Falkman

ESG Director

Bavarian Nordic

Helle Bjerring Becker

Manager, ESG Reporting

Novo Nordisk

Dr. Adrian Kyburz

Director of ESG Disclosures and Ratings

Novartis

Simon Taylor

Senior Director

Position Green

The growing emphasis on ESG data by financial institutions

Banks and investors are actively using ESG metrics to assess credit risk and make lending decisions. This shift stems from a recognition that companies with strong ESG propositions are better equipped to navigate environmental and social challenges, thereby presenting lower credit risks. Numerous studies support this link: firms with higher ESG ratings benefit from reduced costs of capital and narrower bond spreads. For instance, a 2024 study published in the Journal of Corporate Finance found that companies with superior ESG performance tend to enjoy lower yield spreads on their bonds—translating into more affordable financing.

“Being on top of your ESG data is important to identify risks, exploit opportunities, and live up to requirements from stakeholders, including the financial sector.”

Jacob Westerberg, Senior Advisor, Position Green

In parallel with academic findings, central banks are sounding the alarm. The European Central Bank (ECB) has observed that companies with higher carbon emissions are subjected to higher interest rates compared to greener counterparts. This emerging “climate risk premium” underscores the financial sector’s intent to align lending practices with sustainability and emissions-reduction goals.

ESG data as a predictor of financial performance

It’s now widely accepted that ESG performance is not just a reputational asset but a financial one. Companies that proactively manage ESG risks tend to exhibit enhanced operational efficiency, resilience, and long-term profitability.

Years of research, including work by McKinsey & Company and The ESG Premium report, reinforces this correlation—showing that ESG-oriented companies may experience cost savings, stronger employee engagement, and even reduced insurance premiums. These advantages contribute to a stronger financial case for embedding ESG, particularly decarbonization, into core business strategies.

Voluntary ESG data tracking: A strategic advantage in securing favorable financing

With the emergence of the Voluntary Sustainability Reporting Standard for SMEs (VSME), small and medium-sized enterprises have a unique opportunity to stand out—at low effort and low cost. Companies that proactively track and report their ESG data are better positioned to differentiate themselves with lenders and investors who are looking for reliable, comparable data.

By voluntarily adopting ESG reporting practices, companies can:

• Enhance transparency: Providing clear, consistent ESG data fosters trust with financial stakeholders.
• Showcase leadership: Strong ESG propositions send a signal of competitiveness, strategic foresight, and maturity.
• Demonstrate risk management: Proactive ESG risk disclosure supports more favorable lender assessments.
• Gain access to capital: Companies may benefit not only from slightly lower interest rates, but—perhaps more importantly—from better access to financing in a crowded capital market.

Decarbonization: Central to financial risk assessment and cost of capital

Within the broader ESG framework, decarbonization stands out as a critical driver of financial competitiveness. As the financial sector intensifies its scrutiny of climate-related risks, carbon-intensive companies face higher borrowing costs, stranded asset risks, and exposure to tightening carbon regulation—particularly under mechanisms such as the EU ETS (European Union Emissions Trading System) and CBAM (Carbon Border Adjustment Mechanism).

Conversely, companies that proactively decarbonize benefit from improved creditworthiness, reduced exposure to carbon pricing, and stronger investor confidence. Proactive decarbonization lowers both the direct and indirect risks associated with future regulatory tightening, customer attrition, and reputational damage.

Key takeaways for your finance teams

For Chief Financial Officers (CFOs) and financial leaders, the integration of ESG considerations into financial strategy is no longer optional—it’s a competitive imperative. To navigate this evolving landscape:

• Prioritize ESG data collection and reporting: Implement systems to accurately track and disclose ESG metrics, aligning with frameworks like the VSME.
• Embed decarbonization into financial planning: Recognize its role in influencing risk, valuation, and access to capital.
• Engage with lenders and investors on ESG expectations: Understand how financial partners assess sustainability performance and tailor your reporting accordingly.

Want to learn how your company can leverage ESG data for financial gain?

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