How to Set Science-Based Targets for an Australian Business

Here's a stat that should bother more people than it does. KPMG's 2024 sustainability reporting survey found that only 37% of ASX100 companies have targets aligned with the Science Based Targets initiative. These are the hundred biggest listed companies in the country — the ones with dedicated sustainability teams, board committees, and Big Four advisors on speed dial. If they're not getting it done, what hope does a mid-market company with 200 employees and a sustainability manager who's also half the compliance department have?

More than you'd think. But only if you understand what SBTi actually requires, what it costs, and — this is the part most guides skip — why your emissions data needs to be solid before you even start the process.

We've spent years building carbon accounting technology because we watched companies try to set targets on top of data that wasn't trustworthy. It doesn't work. You can't promise to reduce something you haven't properly measured. And the SBTi validators will find the gaps.

What SBTi is (and isn't)

The Science Based Targets initiative is a partnership between CDP, the UN Global Compact, World Resources Institute, and WWF. It's not a regulator. It can't fine you. But it's become the global standard for corporate emissions reduction targets, with over 10,000 companies validated worldwide as of January 2026.

The "science-based" part means your targets must align with what climate science says is necessary to limit warming to 1.5°C above pre-industrial levels. Not what your marketing team thinks sounds good. Not what's convenient for your five-year business plan. What the carbon budget actually requires.

For most companies, that translates to roughly 4.2% absolute emissions reduction per year across Scope 1 and Scope 2. Every year. Compounding. That's the minimum pace to stay on a 1.5°C trajectory using the Absolute Contraction Approach, which is the method about two-thirds of validated companies use.

There are two types of targets: near-term (5 to 10 years out) and long-term net-zero (by 2050 at the latest). You can set near-term targets alone, or go the full distance and commit to both. Woolworths, for instance, committed to reducing Scope 1 and 2 emissions 63% by 2030 and set a separate FLAG target for agricultural supply chain emissions. SBS became the first Australian broadcaster to get both near-term and long-term targets validated in early 2025. These aren't just feel-good commitments. They're technically rigorous, and the validation process will reject targets that don't meet the criteria.

The actual process from start to validated target

The SBTi lays this out as a five-step process, but the way it plays out in practice — especially for Australian companies — looks more like this.

Step one: get your baseline emissions right. This isn't officially part of the SBTi process, but it should be. Your GHG inventory is the foundation for everything. The base year can't be earlier than 2015, and for targets submitted in 2026, your most recent inventory data needs to be from 2024 or later. If you're pulling emissions numbers from a spreadsheet that hasn't been reconciled against your utility bills, you've got work to do before you even think about commitment letters.

We're biased here — we build carbon accounting software — but the bias comes from watching companies get stuck. A property manager with 40 sites and 400 electricity bills per quarter can't produce a defensible baseline from a spreadsheet. The error rate is too high, and SBTi validators will check your methodology.

Step two: submit a commitment letter. This is a standardised document — you download it from SBTi's website, get a senior executive to sign it, and submit it through the Validation Portal. It's public. Your company name goes on the SBTi website, the UN Global Compact website, and the CDP website. You're now "committed," and you've got 24 months to develop and submit your targets for validation.

Twenty-four months sounds generous. It isn't.

Step three: develop your targets. This is where it gets technical. You need to decide on your target type (absolute vs. intensity), your method (Absolute Contraction or Sectoral Decarbonisation), your target year (5-10 years out for near-term), and which scopes and categories to cover. Your Scope 1 and 2 target must cover at least 95% of emissions. If Scope 3 makes up more than 40% of your total footprint — and for most companies, it does — you need a Scope 3 target covering at least 67% of those emissions.

Step four: submit for validation. Since mid-2025, SBTi Services runs a fully digital Validation Portal. No more spreadsheet-based submissions. You upload your data, your methodology, your target documentation. The validation itself takes about 30 days once your submission passes the initial entry check.

Step five: disclose and report annually. Validated targets come with an ongoing obligation to report progress every year through CDP. You also face a mandatory five-year review to revalidate.

Total timeline from "we should do this" to validated target? Six to twenty-four months is realistic. Companies with clean baseline data and internal capacity to do the analysis can move faster. Companies starting from scratch on their GHG inventory — which is most mid-market Australian businesses — should plan for closer to 18 months.

Where Australian companies get stuck

Australia's economy is structurally different from Europe's or Japan's, and those differences matter for SBTi target-setting in ways that aren't immediately obvious.

Mining and resources exposure. No large, diversified mining and metals company has successfully validated SBTi targets. Full stop. The reason is Scope 3. For an iron ore producer like Rio Tinto, customer emissions — mostly Asian steel mills — run roughly 100 times higher than operational Scope 1 and 2 emissions. Asking a mining company to set a target that requires their customers to cut emissions 40-50% by the early 2030s is asking them to commit to something outside their operational control. Rio Tinto, BHP, Fortescue, and South32 have all engaged with SBTi's Scope 3 discussion paper, but none have validated targets yet.

This matters even if you're not a miner. If you're a services company or contractor with mining clients in your supply chain, your Scope 3 category 1 (purchased goods and services) numbers will reflect that exposure. And if you're an investor or super fund with mining holdings, the portfolio emissions math gets complicated fast.

Grid emission factors vary wildly by state. Setting a Scope 2 reduction target in Tasmania (0.20 kg CO2-e/kWh) is a completely different proposition than in Victoria (0.78 kg CO2-e/kWh). A company with sites across multiple states needs to model different decarbonisation pathways for different locations. Switching to 100% renewable electricity in South Australia is already commercially viable. Doing the same at a remote site in WA's NWIS grid (0.56 kg CO2-e/kWh) might require PPAs that don't exist yet.

The ASRS interaction. This is the bit that's increasingly driving SBTi adoption. ASRS mandatory climate disclosures require companies to describe their climate-related strategy, including any transition plans and emissions reduction targets. AASB S2 doesn't require SBTi-validated targets specifically, but having them gives you a defensible answer to the question "are your targets consistent with a 1.5°C pathway?" Without SBTi validation, you're making that claim yourself — and your assurance provider is going to test it.

We're not sure yet how strictly auditors will interrogate non-SBTi targets in ASRS disclosures. It's early days. But the safest position — especially given the ACCC's active enforcement against greenwashing — is to have targets backed by an independent, science-based methodology.

How much it actually costs

Nobody publishes clean, all-in numbers for this, so here's our best estimate for an Australian mid-market company based on what we've seen.

Cost component	Estimated range (AUD)
SBTi validation fee (near-term)	$7,500 - $14,000 USD (~$11,500 - $21,500 AUD)
SBTi validation fee (near-term + net-zero package)	~~$14,500 USD (~~$22,000 AUD)
Consultant advisory (target development, modelling)	$30,000 - $120,000 AUD
GHG inventory baseline (if starting from scratch)	$20,000 - $80,000 AUD
Annual CDP disclosure costs	$5,000 - $15,000 AUD

The validation fee is the smallest line item. The consultant cost — if you use one — is where the real spend happens. Some mid-market companies spend $30,000 on a focused engagement with a boutique sustainability consultancy. Others get pulled into $100K+ projects with Big Four firms who build elaborate scenario models that nobody internal can maintain afterwards. Same trap the Group 1 ASRS reporters fell into.

Our honest advice: spend the money on getting your data right first. Automate the emissions measurement. Then do the target modelling yourself using SBTi's free tools (the Target Setting Tool and the Sector Guidance documents are surprisingly usable). Bring in a consultant for a targeted review, not a full build.

The baseline problem nobody talks about

You can't set a target if you don't know your starting point. And we keep seeing companies that want to commit to SBTi but don't have a GHG inventory that would survive validation.

The SBTi criteria are specific. Your inventory must follow GHG Protocol Corporate Standard methodology. Base year emissions need to be recalculated if structural changes (acquisitions, divestments) shift your footprint by more than a threshold you define. Your Scope 3 screening needs to identify all relevant categories, and you need to justify any exclusions.

For an Australian business with 50 sites, that means reconciling electricity, gas, water, and waste bills across every location. It means knowing whether your Queensland sites use grid factors (0.67 kg CO2-e/kWh) or have onsite generation. It means tracking fuel consumption for company vehicles, refrigerant leakage from HVAC systems, and — if Scope 3 is in play — collecting data from your suppliers.

None of this is impossible. But doing it manually, in spreadsheets, for 200+ bills per quarter? That's where companies stall. They commit to SBTi, spend six months trying to build a baseline, realise the data is a mess, and blow past the 24-month deadline.

We built Carbonly specifically for this problem. Pull in utility bills, extract the consumption data automatically, apply the correct NGA emission factors by state, and produce an auditable GHG inventory. It won't set your SBTi targets for you — that requires strategic decisions about your decarbonisation pathway. But it gives you the numbers you need to start.

SBTi V2 is coming — and it changes things

The SBTi released the second consultation draft of its Corporate Net Zero Standard V2 in November 2025, with the final version expected sometime in 2026. Companies can continue using the current standard through December 31, 2027, but from January 1, 2028, all new targets must align with V2.

The big changes worth watching:

Scope-specific targets. V2 requires separate targets for Scope 1 and Scope 2, rather than lumping them together. This is actually helpful for Australian companies, because Scope 2 is often more tractable (switch to renewables) while Scope 1 might require operational changes that take longer.

Tiered company categories. Companies get classified as Category A or Category B based on size and country. Category A must set both near-term and long-term targets and publish transition plans within 12 months. Category B companies get more flexibility.

New Scope 3 approaches. Instead of one-size-fits-all absolute reduction, V2 introduces three paths: emissions intensity, activity alignment (benchmarking against sector pathways like IEA NZE), and counterparty alignment (requiring suppliers to have their own net zero targets). This is a direct response to the mining sector problem — and it could finally make SBTi workable for resource-heavy Australian companies.

If you're thinking about committing to SBTi in the next 12 months, you've got a decision: set targets under the current standard (which you can do through 2027) or wait for V2. Our take — don't wait. Set near-term targets now under the current criteria. You can update them when V2 is finalised, and having validated targets in hand gives you a concrete answer for your ASRS disclosures.

What to do this quarter

If you're a sustainability manager or CFO at an Australian company considering SBTi, here are three things to do before committing.

First, check your GHG inventory. Is it complete? Does it cover all material sites? Does it use current NGA emission factors? Would it hold up if someone audited it? If the answer to any of those is no, fix that first.

Second, run a Scope 3 screening. Use the GHG Protocol's screening tool to identify which categories are relevant and estimate their magnitude. If Scope 3 is over 40% of your total — and it probably is — you'll need a target for it.

Third, talk to companies that have already been through it. Woolworths, Origin Energy, Transurban, and SBS have all had targets validated. Their public disclosures describe their methodology and what it took. Learn from what they built.

The SBTi process is demanding but it's not mysterious. The companies that get through it fastest are the ones that spent the time upfront getting their emissions data right. Everything else — the commitment letter, the target modelling, the validation portal — is just process. The data is the hard part.

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