Setting a Scope 3 reduction target gives strategic direction to the entire process of inventory development and data collection. A target transforms Scope 3 from a measurement exercise into an active management programme. This lesson covers how to establish a credible target, track progress, and handle recalculations when the inventory changes.
Types of Scope 3 Reduction Targets
Absolute Reduction Targets
Commit to reducing total Scope 3 emissions by a fixed amount (tonnes CO₂e) or percentage over a defined period.
Example: "Reduce total Scope 3 emissions by 30% by 2030 vs. 2020 base year."
Absolute targets are the most credible form of commitment because they reflect actual tonnes of GHGs avoided, regardless of business growth. They are required by the Science Based Targets initiative (SBTi) for companies whose Scope 3 exceeds 40% of total emissions.
Intensity Reduction Targets
Commit to reducing Scope 3 emissions per unit of economic or physical output — per unit of revenue, per product unit, per tonne of material processed.
Example: "Reduce Scope 3 Category 1 emissions intensity by 25% per tonne of product manufactured by 2030 vs. 2020."
Intensity targets allow for business growth while still demonstrating improvement in emissions efficiency. However, a company can meet an intensity target while absolute emissions increase if the business grows faster than the intensity improves.
Supplier Engagement Targets
Commit to ensuring that a specified percentage of direct suppliers have their own GHG reduction targets or science-based targets.
Example: "Ensure that 70% of suppliers by spend have science-based targets by 2025."
Supplier engagement targets are particularly effective for Category 1, where the company's direct influence on emissions is through its procurement relationships.
The SBTi Corporate Net-Zero Standard (2021) requires companies to set near-term Scope 3 targets covering categories representing more than 40% of total GHG emissions, and long-term net-zero targets across all material Scope 3 categories. The standard strongly recommends absolute targets for Scope 3 and accepts intensity targets only where absolute targets are not feasible.
Choosing a Base Year
A base year is the reference year against which reductions are measured. The standard recommends:
- Selecting a base year that is representative of typical operations (not an anomalous year)
- Using the same base year as for Scope 1 and 2 targets, where possible, for simplicity
- Avoiding years with structural anomalies: The COVID-19 pandemic year (2020) significantly distorted many Scope 3 categories (business travel near zero; reduced production in Categories 1 and 4). Many companies use 2019 as their base year to avoid pandemic-period distortions.
Tracking Progress
Progress toward Scope 3 targets is tracked by comparing the current year's inventory against the base year, using consistent methodologies. The standard identifies several reporting metrics for target tracking:
- Absolute change: Difference in total tCO₂e between current and base year
- Percentage change: (Current − Base) / Base × 100%
- Intensity change: Change in tCO₂e per unit of output
- Supplier engagement: % of suppliers with targets (compared to target threshold)
Setting a Scope 3 reduction target is like setting a weight-loss goal. The scale (inventory) tells you where you are. The target gives you a destination. Monthly weigh-ins (annual inventory updates) track progress. But if your diet changes (business model changes) or your scale gets recalibrated (methodology improves), you need to reconcile new readings with earlier ones — the equivalent of base year recalculation.
Base Year Recalculation
The standard requires a base year recalculation when significant changes occur that would make the current inventory no longer comparable to the base year. Triggers for recalculation include:
- Structural changes: Mergers, acquisitions, divestitures, outsourcing, insourcing that materially change the boundary
- Methodology changes: Switching from spend-based to average-data or supplier-specific methods for a major category
- Data improvements: Discovery of significant errors or improved data that retrospectively changes base year emissions by more than a defined significance threshold
- Boundary changes: Adding previously excluded significant categories
The significance threshold for triggering recalculation is typically defined by the company — commonly 5% of total Scope 3 emissions. Changes below the threshold may be noted but do not require recalculation.
Without base year recalculation, apparent "reductions" may simply reflect methodological improvements rather than actual emissions reductions. Conversely, ignoring structural changes (e.g., divesting a high-emission business unit) without recalculating the base year would make the remaining company's performance appear better than it actually is.
The Scope 3 Reduction Roadmap
A Scope 3 reduction roadmap typically maps interventions against categories:
- Short-term (1–3 years): Improve data quality for top categories; set supplier engagement requirements; begin procuring from lower-emission suppliers.
- Medium-term (3–7 years): Redesign products to reduce Category 11 emissions; negotiate long-term green logistics contracts (Category 4/9); build supply chain capacity for Category 1 decarbonisation.
- Long-term (7–10+ years): Deep structural changes — product electrification, circular economy integration, financed portfolio realignment (Category 15).
Some companies seek to achieve net-zero Scope 3 by combining reductions with carbon credits or removals. The SBTi Corporate Net-Zero Standard restricts the use of carbon credits: they can only be used to neutralise residual emissions after maximum feasible reductions have been made — they cannot substitute for near-term abatement. For Scope 3 specifically, the focus should be on decarbonisation within the value chain, not offsetting. Companies claiming "carbon neutral" supply chains through offsets alone face increasing scrutiny from regulators, investors, and the public.
Key Takeaways
- 1Three target types exist for Scope 3: absolute reduction (total tonnes), intensity reduction (per unit of output), and supplier engagement (percentage of suppliers with targets)
- 2SBTi requires near-term Scope 3 targets covering categories representing more than 40% of total emissions, and strongly recommends absolute targets
- 3Choose a representative base year - avoid anomalous years like 2020 (COVID) and use 2019 or earlier as a stable reference
- 4Base year recalculation is required when structural changes, methodology upgrades, or significant data corrections make the current inventory no longer comparable
- 5A practical reduction roadmap spans short-term (data quality improvement), medium-term (product redesign, green logistics), and long-term (electrification, circular economy, portfolio realignment)