Category: Climate insurance · Reviewed by Amy Price, Account Executive · Last reviewed 2026-06-10
The Science Based Targets initiative (SBTi) is a global body that defines and validates corporate greenhouse gas emissions reduction targets aligned with climate science. Launched in 2015 by the CDP, the UN Global Compact, the World Resources Institute (WRI) and WWF, it published the Corporate Net-Zero Standard in October 2021 and has become the dominant global standard for credible corporate climate targets.
Category: Climate insurance Also known as: SBTi; Science-Based Targets initiative; SBTi Net-Zero Standard Established / Date: Launched 2015; Net-Zero Standard October 2021 Related concepts: SBTi, CDP, TCFD
The SBTi develops sector-specific methodologies for setting emissions reduction targets aligned with the temperature goals of the Paris Agreement — well below 2°C and pursuing 1.5°C. It then validates corporate targets through a structured technical review against those methodologies. Validated targets are published on the SBTi website and used by investors, customers, regulators and insurers as evidence of credible climate ambition.
SBTi distinguishes between near-term targets (typically 5-10 years), long-term targets (out to 2050 or earlier), and net-zero targets requiring deep decarbonisation across scope 1, 2 and scope 3 emissions before neutralising residual emissions. The Net-Zero Standard, published in October 2021, sets out the requirements for credible net-zero target-setting at the corporate level.[1]
As at 2024, over 5,500 companies globally had committed to or had targets validated by the SBTi, including more than 600 UK-headquartered organisations across financial services, industrials, consumer goods, technology and energy.
SBTi target-setting is voluntary; SBTi is not a regulator. However, validated SBTi targets are widely referenced in regulatory disclosure. The TCFD 2021 Guidance on Metrics, Targets and Transition Plans cites SBTi as a credible target-setting framework.[2] IFRS S2 paragraph 36 requires disclosure of targets and their alignment to the latest international agreements; SBTi validation is a common way to evidence this.
In the UK, large companies and LLPs subject to s.414CB Companies Act 2006 (per SI 2022/31) commonly reference SBTi-validated targets in their strategic report.[3] Pension trustees regulated under SI 2021/839 reference SBTi commitments by portfolio companies as part of climate-related metrics, in particular the Implied Temperature Rise (ITR) metric.
The SBTi is governed by a Board of Trustees and a separately constituted Technical Council. It is incorporated in the UK as a private company limited by guarantee (Companies House 14960097) and operates under the legal entity “Science Based Targets Initiative Ltd”.
UK insurers use SBTi data in three ways. First, in their own corporate climate strategy: many UK insurer groups have validated SBTi near-term and net-zero targets. Second, in underwriting: SBTi validation is a credibility signal for D&O, EIL and credit insurers, and is increasingly requested in submissions for hard-to-place sectors. Third, in investment portfolios: portfolio-weighted SBTi coverage is a recognised climate metric for asset owners and asset managers.
Lloyd’s, the Association of British Insurers and the International Underwriting Association reference SBTi commitments in their ESG and climate guidance. The PRA does not mandate SBTi alignment but treats credible target-setting and verified delivery as supportive evidence under SS 3/19 governance and strategy expectations.
In April 2024 SBTi paused new validations of financial sector net-zero targets pending revisions to the Financial Institutions Net-Zero Standard (FINZ); a revised standard is under consultation. UK insurers participating in the consultation include several major life and general insurer groups.
UK companies considering SBTi commitment should plan for a 12-24 month process from commitment letter to validated target. The process requires a verified scope 1, 2 and scope 3 baseline (often using CDP data), board-approved targets and submission to the SBTi technical review. For SMEs, the SBTi offers a streamlined “SMEs target setting” route with reduced administrative burden.
For insurance buying, SBTi validation is an asset in D&O, EIL, professional indemnity and credit insurance submissions, particularly for carbon-intensive sectors. It also helps satisfy customer ESG questionnaires cascading down supply chains.
A UK mid-market chemicals business commits to SBTi near-term and net-zero targets in 2024. Following 18 months of inventory work and target-setting, the SBTi validates a 50% reduction in scope 1 and 2 emissions by 2030 and a net-zero target for 2050. The validation is referenced in the strategic report under s.414CB Companies Act 2006, the D&O renewal submission, and customer ESG questionnaires. The broker secures flat pricing at renewal in a hardening industrial chemicals D&O market.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-10. Next review: 2026-12-10.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
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