Category Archives: 2026

SBTi’s v1.3.1 update: what’s new for companies setting 2030 targets

2026, Carbon, Net zero, , , , ,

The Science Based Targets initiative, or SBTi, recently updated its Corporate Net-Zero Standard. Officially, version 1.3.1, released on 14 April 2026, is described as a non-substantive revision. In practice, however, one change could materially affect how some companies calculate their near-term emissions reduction targets.

It is important to note that this update does not change the Sectoral Decarbonisation Approach, or SDA. Companies using sector-specific pathways should continue to follow the relevant sector guidance. The key change in V1.3.1 relates to the Absolute Contraction Approach, or ACA – the cross-sector method many companies use to set absolute emissions reduction targets.

The ACA applies to organisations that do not need, or do not choose, a specific sector pathway. It focuses on reducing total greenhouse gas emissions in tonnes of CO₂-e, rather than reducing emissions intensity.

Previously, for 1.5°C-aligned Scope 1 and 2 targets, the method was broadly based on a minimum annual reduction rate of 4.2% per year from 2020 to 2030. That equates to a 42% reduction by 2030.

This worked clearly for companies using 2020 as a base year. But for companies using more recent base years, the calculation became much steeper. A company using 2025 as its base year still had to fit the full 42% reduction into the five years to 2030, resulting in an annual reduction rate of 8.4%. A company using 2026 had only four years, pushing the rate to 10.5%.

SBTi recognised that these rates could exceed levels consistent with reaching net zero by 2050 or with practical technical feasibility.

What changes under V1.3.1?

Under V1.3.1, the calculation shifts from:

“How do we squeeze a 42% reduction into the years left before 2030?”

to:

“How fast must emissions fall each year from the company’s base year toward the relevant net-zero year?”

The revised method uses a dynamic annual reduction rate:

Dynamic annual reduction rate = Net-zero reduction required ÷ (Net-zero year − most recent year)

Minimum annual reduction floors still apply, so ambition does not fall too low.

For example, for Scope 1, SBTi generally uses a 90% reduction by 2050. With a 2025 base year, the raw calculation is:

90% ÷ 25 years = 3.6% per year

But because SBTi applies a 4.2% minimum floor, the final Scope 1 rate is 4.2% per year. Over 2025–2030, that means a 21% reduction, not 42%.

For Scope 2, SBTi assumes electricity-related emissions reach zero by 2040. So with a 2025 base year:

100% ÷ 15 years = 6.67% per year

Over 2025–2030, that means around a 33.3% Scope 2 reduction.

For combined Scope 1 and Scope 2 targets, the rate is weighted according to the company’s emissions mix. For example, if emissions are split 40% Scope 1 and 60% Scope 2, the combined annual rate would be:

40% × 4.2% + 60% × 6.67% = 5.68% per year

Over 2025–2030, that gives a combined reduction of about 28.4%, rather than the previous 42%.

Base year Previous V1.3 logic New V1.3.1 example, 40:60 Scope 1:2
2025 8.4% per year (42% total) 5.68% per year (28.4% total)
2026 10.5% per year (42% total) about 6.0% per year (24.0% total)

Why it matters

There is a strong case for this update. For companies with recent base years, the old method could create near-term targets that were extremely steep, not because the company was less ambitious, but because of how the formula compressed reductions into fewer years.

V1.3.1 makes the method more realistic while still keeping companies on a net-zero-aligned trajectory.

But it also creates a practical dilemma.

Many companies have already modelled targets, built decarbonisation plans, prepared submissions, secured leadership approval and engaged operational teams based on the previous methodology. For them, this update raises a difficult question:

Should they revise their targets under the new method, or keep the more ambitious pathway they have already built plans around?

There is no simple answer. Some companies may keep the steeper target because it is already embedded in strategy and stakeholder commitments. Others may reasonably update their calculations if the previous target was driven more by a technical feature of the old formula than by a feasible delivery plan.

The practical takeaway

SBTi’s V1.3.1 update may be labelled non-substantive, but its implications are meaningful for companies using recent base years under the Absolute Contraction Approach.

The key action is simple:

  • Check whether your near-term Scope 1 and 2 targets were calculated using the previous ACA logic.
  • If so, reassess how V1.3.1 changes the required reduction rate, and decide whether to update your pathway or retain the more ambitious trajectory.

Navigating SBTi target-setting can be complex, especially when methodology updates affect emissions pathways, capital planning and internal decision-making. We, at 100% Renewables, can help companies understand the implications of the latest SBTi requirements, set credible science-based targets, and develop practical net-zero pathways and decarbonisation strategies aligned with SBTi.

References

If you are looking to set, review or validate science-based targets, or model emissions reduction pathways aligned with SBTi requirements, please reach out to  Barbara or Patrick for more information.

Feel free to use an excerpt of this blog on your own site, newsletter, blog, etc. Just send us a copy or link and include the following text at the end of the excerpt: “This content is reprinted from 100% Renewables Pty Ltd’s blog.