Key points
- ESRS E1-4 requires the entity to state whether its GHG reduction targets are science-based and compatible with limiting warming to 1.5 degrees Celsius.
- The SBTi reached 10,000 companies with validated targets in January 2026, covering over 40% of global market capitalisation.
- Targets must be gross reductions. Carbon credits and avoided emissions cannot count toward reaching them.
- An unvalidated target labelled "science-based" in the sustainability statement exposes the entity to assurance challenge and reputational risk.
What are science-based targets?
In our experience, the most common question on a first-time CSRD engagement isn't whether the client has set a GHG target. It's whether the target the client already claims is "science-based" actually holds up under ESRS E1-4. We've seen this on about half the engagements where the sustainability statement references Paris alignment. The answer is usually no.
A science-based target starts with measuring the entity's Scope 1, Scope 2, and Scope 3 emissions using the GHG Protocol. The entity then selects a decarbonisation pathway (sector-specific where available, cross-sector otherwise) consistent with keeping warming to 1.5 degrees. The SBTi validates the target against its criteria, confirming the baseline year, the reduction percentage, the time horizon, and coverage of each scope.
ESRS E1-4 paragraph 34(d) requires the entity to disclose whether its targets are science-based, which framework was used, and whether they've been externally validated. Paragraph 34(d) also requires disclosure of the underlying climate scenario. The targets must be expressed as absolute values or intensity values (or both) and disclosed separately for each scope. Paragraph 34(e) adds that the entity must present its targets against a 1.5-degree-aligned reference pathway so the reader can assess ambition. The CSRD doesn't mandate SBTi validation specifically, but SBTi has become the dominant framework that auditors and investors accept as evidence of Paris alignment.
The SBTi Corporate Net-Zero Standard (currently version 1.3) requires companies to set both near-term targets (five to ten years) and long-term targets (by 2050 at the latest). Version 2.0, released as a second consultation draft in November 2025, introduces mandatory baseline verification for larger companies and separates Scope 1 and Scope 2 into distinct targets. It also replaces "beyond value chain mitigation" with "ongoing emission responsibility." Companies may continue setting targets under version 1.3 until 31 December 2027. Version 2.0 becomes mandatory for new validations from 1 January 2028.
Worked example: Henriksen Shipping A/S
Client: Danish maritime logistics company, FY2025, revenue EUR 140M, IFRS reporter, first-time CSRD reporter. Henriksen has committed to a science-based near-term target validated by the SBTi in 2024.
Step 1: confirm baseline emissions and target parameters
Henriksen's validated target uses FY2022 as the base year. Scope 1 emissions (vessel fuel) were 48,600 tonnes CO2e. Scope 2 emissions (purchased electricity at port facilities) were 1,200 tonnes CO2e. The near-term target commits to a 42% absolute reduction in combined Scope 1 and Scope 2 by 2030.
Step 2: assess progress against the 1.5-degree pathway
Henriksen's FY2025 Scope 1 emissions are 39,700 tonnes CO2e (an 18.3% reduction from FY2022). The team plots this against the sector-specific IMO decarbonisation pathway referenced in the SBTi's maritime guidance. The reduction trajectory requires approximately 16% by FY2025 to stay on track for 42% by 2030. Henriksen is ahead of the linear pathway.
Step 3: prepare the ESRS E1-4 disclosure
The sustainability statement discloses the target in absolute terms (Scope 1 and Scope 2 separately), names the SBTi as the validating body, and references the cross-sector 1.5-degree pathway. The disclosure states the target is gross (excluding carbon credits). Henriksen also discloses that it hasn't yet set a validated Scope 3 target and explains the timeline for doing so.
Step 4: assurance provider evaluation
The limited assurance practitioner verifies the base-year emissions against source data (bunker fuel delivery notes and electricity invoices), confirms the SBTi validation letter is current, and evaluates whether the ESRS E1-4 disclosure is consistent with the validated target parameters. The practitioner flags that the Scope 3 gap must be disclosed transparently under ESRS E1-4 paragraph 34.
Henriksen's ESRS E1-4 disclosure is defensible. The near-term target traces to a current SBTi validation, progress is plotted against a 1.5-degree reference pathway, the Scope 3 gap is disclosed rather than concealed, and the base-year data ties to source documents.
Why it matters in practice
Entities frequently label their GHG reduction targets as "science-based" in the sustainability statement without obtaining SBTi validation or documenting the methodology that supports the claim. It's a tick box exercise for many: the marketing team adds the label, nobody verifies it against the SBTi criteria, and the assurance provider is left with an assertion and no evidence. ESRS E1-4 paragraph 34(d) requires disclosure of the framework used and whether the targets have been externally validated. An unsupported label gives the assurance provider no basis for verification and risks a qualified conclusion.
Teams also report net targets (after deducting purchased carbon credits) rather than gross targets. The SBTi Corporate Net-Zero Standard requires targets to reflect actual emission reductions. Carbon credits and avoided emissions are excluded from the calculation. Reporting net figures overstates progress and creates an inconsistency between the SBTi validation letter and the ESRS disclosure. This is genuinely frustrating to deal with mid-engagement because unwinding a net target into gross figures requires going back to the client's emissions inventory and recomputing from source data.
Science-based targets vs. self-declared climate targets
| Dimension | Science-based target (SBTi-validated) | Self-declared climate target |
|---|---|---|
| Methodology | Aligned with a 1.5-degree pathway using SBTi-approved scenarios | Chosen by the entity without external methodology constraints |
| External validation | Validated by the SBTi against published criteria | No independent validation required |
| Scope coverage | Must cover Scope 1 and 2; Scope 3 required if it exceeds 40% of total emissions | Entity decides which scopes to include |
| Carbon credits | Excluded from the target calculation; treated separately as ongoing emission responsibility | Often netted against the target, inflating reported progress |
| ESRS E1-4 disclosure | Disclosed as science-based with the framework named and the pathway referenced | Disclosed as a GHG reduction target without the science-based designation |
The distinction matters on assurance engagements because a self-declared target that is presented alongside the phrase "aligned with the Paris Agreement" without documented methodology creates an unsupported assertion. The assurance provider must evaluate whether the entity's disclosure accurately reflects the nature of the target per ESRS E1-4 paragraph 34(d).
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Frequently asked questions
Does the CSRD require a company to set science-based targets?
No. The CSRD and ESRS E1-4 require disclosure of GHG reduction targets and whether those targets are compatible with limiting warming to 1.5 degrees, but they do not mandate SBTi validation or any specific target-setting framework. If the entity has no science-based target, it must disclose that fact. ESRS E1-4 paragraph 34 applies to all entities that have identified climate change as a material topic under ESRS.
How often must a science-based target be reviewed?
The SBTi requires companies to revalidate targets at least every five years. The revalidation checks whether the target still aligns with the latest climate science and the most current SBTi criteria. Version 2.0 (expected mid-2026) will require mandatory baseline verification for larger companies at the point of initial validation, adding a layer of scrutiny that version 1.3 did not impose.
What happens if a company misses its science-based target trajectory?
The SBTi introduced expanded status categories in 2025, including a "targets at risk" designation for companies that fall materially behind their reduction pathway. Falling behind does not automatically remove validation, but it triggers a review. Under ESRS E1-4, the entity must disclose progress against targets at each reporting date, so a significant shortfall becomes visible to investors and regulators in the sustainability statement.