Building an Effective Scope 3 Emissions Strategy Under SBTi’s New Requirements

As regulations and stakeholder expectations drive more advanced climate goals, many organizations find Scope 3 emissions present one of the greatest challenges. These emissions are often the largest part of a company’s total emissions and can be the most complex to calculate, manage and reduce. When working toward Science Based Targets initiative (SBTi) goals, reducing Scope 3 emissions requires coordination across teams and suppliers and plays a significant role in meeting those goals and tracking progress.

This level of coordination is important because these emissions extend beyond a company’s direct operations and include activities across the broader value chain. That adds complexity early in the process making It important to address Scope 3 emissions upfront to avoid delays in target approval and support long‑term progress.

In June 2026, SBTi released the second version of its Corporate Net-Zero Standard, introducing updated requirements for companies setting science-based climate targets. Target validation under the updated standard opens in February 2027. Companies may continue submitting targets under the current standard through January 31, 2028, however, after that date, new target submissions must follow the updated requirements.

Understanding SBTi Scope 3 Emissions Requirements

Scope 3 emissions are outlined in the GHG Protocol, which includes 15 categories of indirect emissions. While not all categories apply to every organization, companies must determine which are relevant, requiring careful assessment of business activities and how a company works with its suppliers and customers.

Under Corporate Net-Zero Standard Version 1.0, larger companies need to calculate a complete GHG inventory to determine if total Scope 3 emissions account for at least 40% of overall emissions. If that threshold is met, they are required to set a Scope 3 target. Small-to-medium sized enterprises have a specific pathway in which they only need to conduct a materiality assessment to understand their Scope 3 emissions.

Under Corporate Net-Zero Standard Version 2.0, companies are classified as either Category A or Category B based on size and geography, with different target-setting requirements for each scope of emissions. Both Category A and Category B companies typically need to calculate Scope 1 and Scope 2 emissions. For Scope 3, Category A companies, including large companies from all countries and medium-sized companies from high-income countries, are generally expected to calculate a complete GHG inventory that includes Scope 3 emissions, consistent with the GHG Protocol. Category B companies, including small companies from all countries and medium-sized companies from lower-income countries, must calculate Scope 3 emissions if they plan to set net-zero targets for 2050. For all other companies in this category, calculating these emissions is optional.

Collecting Data and Calculating Scope 3 Emissions to Support SBTi Commitments

Collecting data for Scope 3 emissions can require more coordination than Scopes 1 and 2 because a large portion of the information comes from suppliers, distributors and customers. This can limit a company’s direct visibility and control over data quality and availability, often requiring a mix of primary data and secondary data, such as estimates or industry averages when direct data isn’t available.

While primary data reflects actual activities and improves accuracy, it’s often difficult to obtain from external parties. The GHG Protocol allows organizations to use both primary and secondary data to overcome this challenge, with many organizations relying on average emissions factors as a starting point.

Secondary data can support initial calculations but can also make year-over-year comparisons harder, making it more difficult to see how reduction efforts are impacting emissions. As a result, many companies take a phased approach to improving data quality.

After data is collected, the GHG Protocol provides guidance on calculation methodologies that can be followed. These methods include spend‑based methods, average-data approaches or supplier‑specific calculations. It’s important to choose a consistent method to help keep inventories reliable as reporting expectations evolve and to use accurate, high‑quality and up‑to‑date emissions factors since outdated or inconsistent factors can change results and make future reporting harder to track.

Setting Scope 3 Targets to Align with Business Goals

In Version 1.0 of the SBTi Net-Zero Standard, companies are not required to set targets for every Scope 3 category. Instead, if 40% of their GHG emissions are from Scope 3, targets must collectively cover at least 67% of total Scope 3 emissions for near-term targets and 90% for long-term/net-zero targets. Companies may still use this approach until the new standards take effect in 2028. However, Version 2.0 allows for more flexibility in setting Scope 3 targets.

Under SBTi’s Corporate Net-Zero Standard Version 2.0, the approach shifts from meeting specific overall Scope 3 coverage thresholds to focusing on targets for material Scope 3 categories, major suppliers and emissions-intensive activities. Under this new standard, there are near-term targets, long-term targets and net-zero targets. Each of these temporal target types has different requirements depending on a company’s Category A or Category B classification. Previously, long-term targets and net-zero targets were synonymous, but under the new standard they represent distinct target types. Additionally, Version 1.0 allowed for physical and economic intensity targets under Scope 3, but those are no longer viable target-setting methods under Version 2.0.

Some organizations such as those in the forest, land and agriculture (FLAG), buildings and real estate, and financial industries must navigate specialized criteria rather than general target options, making it important to understand which approaches will work. This is often a common challenge at this stage, particularly for those with complex or global value chains.

Planning Scope 3 Reduction Strategies

After Scope 3 targets are approved, businesses must plan how to achieve reductions across the organization and report annually on progress toward these targets. This requires coordination across teams prioritizing the highest-impact reduction opportunities and establishing a clear implementation plan.

To manage these emissions effectively, companies often focus on a few key practices, including:

• Embedding accountability by assigning ownership of reduction progress and integrating Scope 3 considerations into core business decisions across functions.
• Engaging stakeholders to support reduction efforts in the value chain through training, incentives and/or purchasing criteria.
• Driving reductions by aligning financial and commercial incentives, such as supplier scorecards, longer contracts and internal bonuses tied to Scope 3 progress.

For many organizations, Purchased Goods and Services represent the largest Scope 3 category, making supplier engagement a key part of reduction planning. These efforts may include establishing supplier policies, encouraging data sharing, redesigning products, working with suppliers to improve data quality, reducing emissions across the supply chain and sourcing materials with lower emissions impacts.

Tracking Progress Toward Scope 3 Targets

Organizations typically prioritize reduction opportunities based on estimated emissions impact, cost and how those efforts align with business priorities. Some actions can be implemented quickly, while others take more time to put in place and scale.

Tracking progress and making adjustments is key to staying aligned with science‑based targets. This requires reliable data, consistent monitoring and the ability to adapt as conditions and priorities change. Maintaining that level of alignment long-term is one of the most common challenges.

Simplifying Scope 3 Requirements for SBTi Targets      

While Scope 3 emissions are complex, they are also where many organizations have the greatest opportunity to drive impact. The real challenge is maintaining accurate reporting and consistent execution as requirements evolve.

Understanding the GHG Protocol requirements and staying aligned with SBTi validation expectations can help simplify the process. Working with experienced advisors can help organizations navigate these requirements more effectively, including evaluating reduction strategies, identifying cost and emissions impacts and aligning processes across the business.

Constellation Navigator Advisors are ISO 14064 certified, as well as SBTi Certified Experts recognized for advanced proficiency in SBTi target setting. Our Advisors have experience helping businesses work through each stage of the process, from initial calculations to target setting and reduction planning. Contact our team today to learn how we can support your Scope 3 planning and help you stay on track as you work toward your SBTi targets.