A factory manager may hear that SBTi requires a complete emissions inventory, near-term targets, long-term net-zero targets, annual reporting, and deep reductions. But what do the individual criteria actually mean?
The SBTi Corporate Net-Zero Standard Criteria Version 1.3.1 contains 37 numbered criteria (C1–C37) and 15 recommendations (R1–R15). The criteria are requirements for companies following the regular corporate route; recommendations describe practices SBTi advises companies to follow. This guide explains the framework in practical language using a fictional Bangladeshi textile factory, Shapla Textiles Ltd.
Important scope note: SMEs may be eligible for a dedicated SME validation route or may choose the regular corporate route, subject to eligibility conditions. The criteria below explain Version 1.3.1’s regular corporate framework; they should not be assumed to apply identically to every SME submission. Always check the official SBTi Corporate Net-Zero Standard page and the Version 1.3.1 criteria PDF.
First, understand “must,” “should,” and “may”
In the standard, “shall” or “must” means a requirement. “Should” signals a recommendation. “May” indicates an allowable option. A factory seeking validation needs to satisfy the requirements applicable to its route; following recommendations can strengthen transparency and implementation.
C1–C8: Set the correct boundary and target coverage
C1 Organizational boundary: Targets should be set at the parent or group level, not by selecting only a favorable subsidiary. If the group boundary includes several factories, the emissions of those facilities must be included. R1 recommends keeping the organizational boundary consistent with financial reporting and from year to year.
C2 Greenhouse gases: Targets must cover all relevant emissions from the seven gases required by the GHG Protocol, not only carbon dioxide. Relevant sources depend on the business.
C3 Scope 1 and Scope 2: The target boundary must cover company-wide direct emissions and emissions associated with purchased energy. Shapla cannot report its grid electricity while ignoring its gas-fired boilers and controlled diesel generators.
C4 Scope 3: When relevant Scope 3 emissions are at least 40% of the company’s combined Scope 1, 2, and 3 emissions, they must be included in near-term targets. Relevant Scope 3 categories must be included in long-term targets. Companies involved in selling or distributing fossil fuels face additional target requirements.
C5 Allowable exclusions: The standard limits exclusions from Scope 1 and Scope 2 inventories and target boundaries, and from the total Scope 3 inventory. The factory cannot exclude inconvenient sources simply because the data is difficult to collect.
C6 Near-term Scope 3 coverage: Under the regular corporate framework, near-term targets must collectively cover at least 67% of total Scope 3 emissions, applying the criteria’s calculation rules.
C7 Long-term Scope 3 coverage: Long-term target coverage must reach at least 90% of Scope 3 emissions under the prescribed boundary rules. This requires a broader long-term view of purchased materials, suppliers, and other relevant value chain categories.
R2 Optional Scope 3 emissions: If emissions outside the minimum category boundaries are significant, companies are encouraged to cover them in additional targets. These additional emissions do not count toward the minimum coverage thresholds.
C8 Valid methods: Targets must use the latest applicable methods and tools approved by SBTi, subject to its transition provisions. A spreadsheet using an outdated method is not enough simply because the result looks ambitious.
C9–C13: Account for emissions correctly
C9 Scope 2 accounting: The company must disclose its Scope 2 accounting approach and use a consistent approach for target setting and progress tracking. The GHG Protocol requires both location-based and market-based Scope 2 reporting, while the approach used for a specific SBTi target must be consistent.
C10 Scope 3 inventory: The company must complete an inventory of gross emissions from all relevant Scope 3 sources using the GHG Protocol Value Chain Standard. Shapla should assess purchased fabric, yarn, dyes, chemicals, outsourced processing, transportation, and other relevant categories rather than guessing which ones matter.
C11 Bioenergy and biogenic accounting: Companies using bioenergy or having relevant biogenic emissions in their operations or value chain must report emissions and removals according to the applicable GHG Protocol rules. They must include the relevant net biogenic emissions in target boundaries where required and account for upstream impacts such as land-use change, processing, and distribution. R3 recommends recognized biofuel certification for relevant transport biofuels; R4 recommends separately reporting gross biogenic CO₂ emissions and removals to improve transparency.
C12 Carbon credits: Carbon credits cannot be counted as emission reductions toward progress against near-term or long-term science-based targets. They may be used for eligible neutralization of residual emissions or additional climate action, but those purposes are distinct.
C13 Avoided emissions: Emissions avoided elsewhere—for example, because a customer chooses a product that performs better than an alternative—do not count as reductions in Shapla’s corporate inventory or progress against its targets.
C14–C18: Define net-zero and set a timeline
C14 Net-zero definition: The company must reduce Scope 1, 2, and 3 emissions to zero or a qualifying residual level consistent with eligible 1.5°C scenarios or sector pathways, then neutralize residual emissions at the target date and thereafter as required.
C15 Two-target structure: Both near-term and long-term targets are required under this framework. A distant net-zero promise without a near-term milestone does not meet the structure on its own.
C16 Base year: The base year cannot be earlier than 2015. Near-term and long-term targets use the same base year, with further consistency requirements for Scope 1 and Scope 2. Multi-year average base years are not accepted unless relevant sector guidance allows them. R6 recommends using the same base year for all near-term targets.
C17 Target years: Near-term absolute or intensity targets generally cover five to ten years from submission. Long-term net-zero targets must be no later than 2050, or earlier where an applicable sector pathway requires it. R5 clarifies that targets more than ten years from submission are long-term. R7 recommends 2030 as the near-term target year; using this recommendation provides an exception to the ordinary five-to-ten-year rule in Version 1.3.1.
C18 Progress to date: The forward-looking ambition of near-term Scope 1 and/or Scope 2 targets must remain consistent with reaching net-zero by 2050 at the latest, under the assumptions specified by the standard. The target cannot rely on a trajectory that is inconsistent with the long-term goal.
C19–C27: Check the ambition and target method
C19 Scope 1 and 2 ambition: Scope 1 and Scope 2 targets must align at least with the level of decarbonization required for a 1.5°C pathway.
C20 Scope 1 and 2 absolute targets: Absolute targets are eligible when they meet the applicable ambition thresholds or relevant sector-specific pathway requirements.
C21 Scope 1 and 2 intensity targets: Intensity targets must use an approved 1.5°C sector pathway relevant to the company’s activity. Reducing emissions per tonne of output is not automatically enough; the method must qualify.
R8 Choose an ambitious pathway: SBTi recommends approaches that deliver reductions earlier and minimize cumulative emissions.
C22 Scope 3 ambition: Near-term Scope 3 targets must meet the relevant well-below-2°C ambition requirement; long-term Scope 3 targets must meet the higher 1.5°C requirement.
C23 Supplier or customer engagement: Engagement targets must define the covered emissions or procurement spend, meet the required timeframe, and aim for relevant suppliers or customers to adopt qualifying science-based targets. R9 recommends directing suppliers to SBTi’s guidance and tools; supplier validation is recommended but not itself required by R9.
C24 Scope 3 absolute targets: Absolute Scope 3 targets must meet the appropriate near-term or long-term ambition threshold or applicable sector pathway.
C25 Scope 3 intensity targets: Intensity targets must use eligible physical or economic intensity methods or an approved sector-specific pathway, as applicable. The method must be suitable for the emissions category and business activity.
C26 Combined targets: Scopes may be combined in a target only if SBTi can assess each component and confirm it meets its own relevant ambition requirement. A strong Scope 3 component cannot compensate for a weak Scope 1 and 2 component.
C27 Renewable electricity targets: Qualifying renewable electricity procurement targets can be an alternative to Scope 2 reduction targets for emissions from procured electricity. Version 1.3.1 identifies thresholds of 80% renewable electricity by 2025 and 100% by 2030; companies already above those thresholds must maintain or increase procurement, and long-term targets require 100% beyond 2030. R10 recommends treating purchased heat and steam as direct emissions in relevant sectoral-decarbonization modeling. R11 recommends considering efficiency factors where the selected target method does not already incorporate them.
C28–C34: Neutralize, publish, report, and review
C28 Neutralize residual emissions: At the net-zero target date, the company must use carbon removals with permanent storage to neutralize applicable unabated residual emissions. Neutralization is not a substitute for deep reductions.
R12 Beyond value chain mitigation: Companies should take additional climate action or invest outside their own value chains, where appropriate. These actions are additional to the company’s own targets and do not replace reductions.
R13 Neutralization milestones: Companies should disclose planned milestones and near-term investments that support the credibility of future residual-emissions neutralization.
C29 Public target statement: The company must communicate its net-zero target year, the magnitude of near-term and long-term reductions, and the relevant base year.
C30 Annual reporting: The company must publicly report its company-wide GHG inventory and progress against targets every year.
C31 Reporting completeness: Emissions and removals must be reported separately in the annual inventory. A single net figure can hide what is happening on each side of the account. R14 recommends using a public disclosure platform; options include standardized platforms such as CDP, annual reports, sustainability reports, or the company’s website.
C32 Five-year target review: All active targets must be reviewed at least every five years against the latest applicable SBTi criteria and updated and revalidated where necessary.
C33 Triggered recalculation: Significant changes—such as acquisitions, divestments, outsourcing, changes in inventory methods, material errors, or other changes that affect the target—may require recalculation and revalidation. Version 1.3.1 uses a significance threshold of 5% or less for relevant base-year and target-boundary changes.
C34 Public announcement: Approved targets must be announced on the SBTi website within six months of approval, unless a different period has been agreed in writing. R15 recommends reviewing target-related projections annually and publicly disclosing significant changes as relevant.
C35–C37: Follow sector rules
C35 Sector-specific requirements: Companies must follow relevant sector-specific target-setting methods and minimum ambition levels, no later than six months after the applicable guidance is published.
C36 Fossil fuel business restrictions: The standard excludes specified fossil fuel businesses from target validation, including certain exploration, extraction, mining, production, and revenue-threshold activities. Companies with such activities must check the precise definitions and thresholds in the official criteria.
C37 Fossil fuel sales and distribution: Companies involved in selling or distributing fossil fuels must set separate Scope 3 Category 11 targets covering combustion of the fuels sold or distributed, consistent with the required 1.5°C pathway. This can apply even if those emissions are not the largest part of the company’s total footprint.
How should a Bangladeshi factory use this list?
Shapla Textiles should not attempt to tackle every criterion by opening a separate project. Instead, it should organize the work into a practical sequence:
1. Confirm its eligibility and applicable validation route.
2. Define the organizational boundary and prepare a complete GHG inventory.
3. Identify the relevant Scope 3 categories and quantify target coverage.
4. Choose a valid target-setting method, base year, and target years.
5. Develop a reduction plan tied to actual factory projects and supplier engagement.
6. Establish annual reporting, a public target statement, and a process for reviewing changes.
Hexa-BD provides SBTi consultancy, carbon accounting and sustainability services, and decarbonization roadmap development to support the related work. Factories should still use the official Version 1.3.1 criteria as the authoritative reference.
Check the version before planning a submission
SBTi has published Corporate Net-Zero Standard Version 2.0. As of October 2026, Version 1.3.1 remains available during the transition period, Version 2.0 validation is scheduled to open on February 1, 2027, and new submissions must use Version 2.0 from February 1, 2028. Requirements and evidence expectations change over time, so teams should verify the current rules before using this guide for a live submission.
The criteria may appear technical, but their purpose is practical: define the boundary, measure emissions consistently, set suitably ambitious targets, reduce emissions, and report progress transparently. For the factory, understanding the criteria is the first step toward a credible, evidence-based climate plan
