Ten business benefits of science-based targets

While some assume corporate climate action has slipped down the priority list in recent years, the research from the SBTi challenges that view. More companies than ever are setting science-based targets, and those targets are delivering business benefits beyond emissions reductions.

The SBTi’s latest report, The Impact of Setting Science-Based Targets on Businesses—drawing on a survey of 171 companies with targets, a review of 22 academic studies, and three case studies—shows that companies with validated targets report positive impacts across a wide range of indicators, including reputation, strategy, and financial performance.

The research found that science-based targets:

1. Deliver competitive advantage: 91% of companies reported that science-based targets have had a positive overall impact on their business, with two-thirds saying their targets have improved their competitiveness compared with peers. The case studies reinforce this message, with companies consistently highlighting how science-based targets strengthen their position in the market.
2. Improve financial performance: 92% of companies reported overall neutral or positive impacts of science-based targets on long-term financial performance. Research supports this: one study of 465 firms found that those with science-based targets outperformed their peers, while another found that companies with science-based targets increased their investment in climate initiatives resulting in annual savings of up to 33%.
3. Attract investors: Case studies reported that investors are increasingly directing capital toward those demonstrating ambitious climate action backed up with credible targets. In the survey, three in four companies said that setting science-based targets improved investor confidence, and 80% said it strengthened investor perception and relations.
4. Future-proof businesses: By embedding climate alignment into decision-making, companies gain the foresight needed to navigate a rapidly shifting economy. 71% said targets improved their resilience to future regulatory changes, and two-thirds reported being better prepared for a carbon-constrained world. Studies also found that validated targets are associated with lower stock price volatility, even when average returns don’t rise.
5. Strengthen supplier relations: Multiple case studies highlighted that, as climate considerations become more embedded in procurement processes, many companies now prioritize suppliers with science-based targets. The survey results supported this, with 69% of companies saying targets improved how they are perceived as a supplier and 74% reporting better alignment with supply chain and customer requirements as a result of targets.
6. Sharpen strategy: Companies with validated targets consistently report greater strategic clarity. 80% said target-setting improved strategic cohesion and long-term vision, with positive impacts noted on innovation and access to new business opportunities. Case studies frequently cited deeper collaboration and stronger strategic alignment across their organizations as a result of their targets.
7. Improve access to capital: Lenders and ratings agencies are looking favorably on firms with targets. Nearly half of companies reported improvements in loan terms or credit ratings after setting targets, and 44% noted better access to capital or financing. Research corroborates this: European banks are offering better loan terms to companies with climate targets, including science-based targets.
8. Enhance trust: Customers, employees, and other businesses perceive companies with targets more positively. 95% of companies reported a positive impact on overall reputation, 75% noted improved credibility within their sectors, two-thirds reported enhanced consumer perception and brand trust, and 99% saw a positive or neutral impact on employee retention.
9. Help manage risk: Companies said targets strengthened their ability to manage risk in an increasingly carbon constrained world. 62% reported improved resilience to transition risks (risks from the economic and social shift to the low-carbon economy), and 45% said targets helped them manage physical risks from the direct impacts of climate change. Academic research supports this finding: firms with validated science-based targets showed lower stock price volatility, and higher crash-period returns during the 2020 stock market crash.
10.  Accelerate climate action: Last —but perhaps most importantly—the report showed that science-based targets don’t just signal ambition, they drive it. 90% of companies said target setting boosted their climate ambition, while 86% reported a positive impact on their pace of decarbonization. Multiple academic studies supported this, showing companies with targets reduce both absolute and intensity emissions more than those without them.  All case study companies were also keen to share how they have increased their climate action across multiple areas of their business—benefitting from  the ‘north star’ of their science-based target. 

Want to take advantage of all these business benefits? Start your target-setting journey today. Use the SBTi Getting Started Navigator to find out how—it only takes 30 seconds. 

“ReNew’s adoption of science-based targets has been instrumental in streamlining our climate strategy, operationalizing decarbonization targets, and enhancing investor confidence.”

Vaishali Sinha (Co-founder – ReNew and Chairperson Sustainability)