SBTi Buildings Sector Guidance: all you need to know

The Science Based Targets initiative (SBTi) on 27th August 2024, launched their Buildings Sector Science-Based Target-Setting Criteria version 1.0, also referred to as the ‘Buildings Criteria’. This article provides a summary of the new guidance and provides commentary on how it affects those who have set or are planning to set science-based targets.

SBTi’s Buildings Sector Guidance

The SBTi’s Buildings Sector Science-Based Target-Setting Criteria version 1.0, provides a framework to accelerate the building sector’s alignment with net-zero targets.  The framework sets 1.5°C-aligned emissions reduction targets for the building industry to overcome current climate challenges. It is accompanied by the SBTi’s Buildings Sector Target Setting Tool for in-use operational carbon and upfront embodied carbon targets, as well as the aggregated net zero carbon pathways for multiple geographies and asset classes.

The document contains 14 mandatory criteria that all companies must follow to set science-based targets aligned with the building sector guidance. These are accompanied by 10 recommendations, which are important for transparency and best practice but not mandatory.

Key date – 28th February 2025

Companies that meet the first three criteria (C1-C3) in the Key Criteria section below, must align with the Buildings Criteria, at the latest, six months after publication of the Buildings Sector Guidance, for both new target submissions and re-submissions. Existing 1.5⁰ C building pathways, in other SBTi publications, will be withdrawn by this date and users of SBTi will no longer be permitted to set targets using the existing 1.5⁰ C pathways after this date.

Key criteria for target setting

The guidance sets out the following criteria for target setting which are mandatory for those wishing to set SBTi targets aligned with the buildings sector guidance. The first three criteria (C1-C3) relate to the applicability of the guidance and the subsequent criteria (C4-C14) pertain to the target-setting methodology, GHG accounting, target boundaries and target validation.

The guidance is intended for companies that own, develop, manage or finance real estate. It is mandatory for all real estate companies that meet the conditions in either Criteria 1 and/or 2 and classify as one of the intended users mentioned under Criteria 3.

Criteria 1: Thresholds for in-use operational emissions

Companies where operational emissions from owned and/or managed buildings are at least 20% of their total scope 1, 2 and 3 in their chosen base year and meet any of the intended user categories specified in C3 must set an in-use operational emissions target.

Criteria 2: Thresholds for upfront embodied emissions of new constructed buildings

Companies that meet the intended user categories in C3 and where upfront embodied emissions from new developments or acquisitions of a building as a first owner exceeded 20% of total scope 1, 2 and 3 in any one year in the previous three years must set a target on upfront embodied emissions.

Criteria 3: Intended user categorisation

Companies that classify as at least one of the intended user categories outlined below must use the Buildings Criteria for target setting.

1. Developer
2. Owner-occupier
3. Owner-lessor
4. Property manager
5. Financial institutions (Fl)

Companies must also explain their choice of user categorisation, as this determines the targets they must set and the methodology they are permitted to use.

Small or medium-sized enterprises (SMEs) that meet the above criteria can use either the target validation route for SMEs or the SBTi Buildings Criteria.

Criteria 4: Permitted target-setting methods

This criterion sets out the target-setting methods that a company can use for their building-related emissions, depending on the user category.

Owner-occupiers and owner-lessors must use the Target Setting Tool for setting in-use operational targets, irrespective of whether these are scope 1, 2 or 3. Property managers and developers can use the cross-sector methodology for setting in-use operational targets for managed and sold assets, respectively.

The target for the direct emissions from non-building related sources, such as the company fleet, must be set using the cross-sector methodology.

Companies and financial institutions can choose to set embodied carbon targets using the Buildings Criteria via the Target-Setting Tool or the SBTi’s cross-sector methods with 1.5⁰C ambition. The in-use and end-of-life embodied emissions targets must be set using the cross-sector methodology.

Criteria 5: Choosing pathways

This criterion pertains to the selection of the most appropriate location and building typology when setting targets using the SBTi Buildings Target-Setting Tool. Buildings that are not covered by the building typologies and/or geographies within the tool must use the ‘Other’ pathway provided.

Criteria 6: Whole building approach

Operational emissions targets must be set for the whole building level including both tenant and landlord emissions, regardless of the chosen greenhouse gas (GHG) emissions boundary.

Criteria 7: Fugitive emissions

All companies must include all fugitive emissions, from all building types, in the in-use operational emissions for the GHG inventory as well as the target boundaries.

Criteria 8: Required Scope 3 categories

Companies must report all emissions applicable to their user type and if the Buildings Criteria applies to a company and less than 40% of its emissions sit within scope 3, they must cover all required emissions within their target boundary as per their user type.

These emissions shall be included in either the target boundary of a company’s buildings sector targets if required, or in their cross-sector target when applicable.

The mandatory Scope 3 categories for each user type are indicated in the table below.

Table 1 Required targets for scope 3 categories.

Criteria 9: Base year for upfront embodied emissions targets

This criterion stipulates that the base year for upfront embodied emissions targets must not be earlier than three years before the year of target submission.

The users who are setting upfront embodied emissions targets are also recommended to disclose the upfront embodied emissions from the completed developments. Additionally, franchisors who are using the guidance are recommended to include an optional scope 3 target on the upfront embodied emissions of new buildings constructed as franchises.

Criteria 10: Denominator for intensity-based targets

The intensity pathway for the building must be expressed in terms of tCO₂e/m². The floor area definition should be consistently applied across the company’s GHG accounting and its base and target years.

It is recommended that companies be aligned to relevant international standards when calculating the floor area, such as the International Property Measurement Standard (IPMS).

Criteria 11: Building lifetime assumptions

This pertains to developers accounting for the lifetime operational emissions of a building under scope 3 category 11 use of sold products. They must provide the building lifetime assumptions used for calculating the emissions.

It is recommended that a minimum building lifetime figure of 60 years in their calculations. Moreover, future emissions should take into account the projections for grid decarbonisation. These should be referenced with justification for the selection of the grid decarbonisation pathway.

Criteria 12: Target aggregation

This pertains to companies that have assets across multiple geographies and/or typologies. They must aggregate their targets to obtain overall targets. The targets for operational and embodied emissions must remain segregated.

Criteria 13: Disclosing buildings-related emissions with the location-based approach

The location-based approach reflects the average intensity of the grid for a region or country. Market-based emissions reflect the emissions from the chosen electricity supplier.

As before, companies and financial institutions are permitted to use either location or market-based approaches depending on what is most appropriate, however, it is mandatory to disclose their building-related emissions through both approaches.

The pilot guidance previously mandated the use of location-based emissions for target setting to emphasize the focus on energy efficiency, rather than achieving emissions reductions by switching to suppliers with lower emissions. The consultation highlighted concerns regarding the use of location-based emissions as it does not align with other SBTi guidance, which permits the use of market-based emissions for setting targets.

The guidance emphasises the need to improve the energy efficiency of buildings in Recommendation 8 and 9.  It clarifies that the divestment of assets should not be misinterpreted as emissions reduction to avoid shifting emissions from one company’s boundary to another. Therefore, it is recommended that users disclose the emissions reductions from the decarbonisation of assets using the like-for-like approach as well as the absolute emissions of the assets divested in the reporting period.

Criteria 14: No new fossil fuel equipment

Any company that sets targets using the Buildings Criteria must publicly commit to installing no new fossil fuel equipment in their portfolio within 5 years of target submissions or by 2030, whichever is sooner. This was originally intended to be in 2025; however, it has been pushed back due to the public responses concerning the challenges in implementation.