SBTi building guidelines: What do they mean?

The Science-Based Targets Initiative (SBTi) has completed the process of drafting target-setting guidelines for the building sector and released complete criteria for stakeholders in said sector. The process began in 2021, with a draft released to the public in May 2023. In August 2024, after stakeholder feedback, the guidelines were officially released. Some minor updates came in early 2025. 

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SBTi creates science-based target-setting guidelines tailored to specific industries and has previously published detailed drafts for key sectors, including apparel, aviation, Information and Communication Technology, and finance. This is the first time the initiative has devised a guide for the building industry, which is said to be responsible for 39% of global carbon emissions.

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Notably, the new building sector-specific guidelines are increasingly comprehensive and align with the Paris Agreement’s goal of a 1.5 °C temperature rise from pre-industrial levels. If you’re worried about complying with the SBTi building guidelines, fret not, comundo has your back! In this article, we’ll explain who the SBTi guidance is aimed at, what the criteria look like, and the next steps. 

Who is the SBTi building guidance for? 

The new SBTi target guidelines for the building sector target not just construction or real estate companies but stakeholders in the entire value chain of a building. These guidelines may apply to parties such as developers, owners, building managers, and tenants. 

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The guidelines also feature a separate section for financial institutions, as they play a pivotal role in the construction and management of buildings. Even though the SBTi has issued guidelines for financial institutions separately, this guide also addresses critical aspects of the building industry, such as financed emissions. The tools provided for setting targets pertain to both embodied and operating emissions of a building. 

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Although not required, companies in the building sector may choose to get SBTi certification by developing and submitting their targets directly to SBTi and reporting on their progress. This can help ensure that targets are relevant and impactful. 

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Quick side note: Embodied emissions are the emissions emitted during the making of a building, whereas operational emissions refer to the greenhouse gases (GHG) produced due to the building’s energy consumption. This particular draft does not address entities that produce manufacturing material. However, other sector-specific drafts exist for the cement, aluminium, and steel industries.

Highlights of the SBTi building guidelines 

The new guidelines for science-based targets (SBTs) for building emissions focus on near- and long-term targets. However, these new guidelines make the rules and conditions for near-term targeting more stringent. Moreover, there’s more clarity about embodied emissions for new buildings. 

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Let’s break down some noteworthy highlights of the SBTi building sector guidelines:

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Threshold criteria 

The threshold for buildings that must follow the criteria for setting targets (should they choose to) is set as C1(emissions) and C2 (users), which are classifications based on certain percentages of scope 1, 2, and 3 emissions. Thresholds are also based on real-estate portfolio size and specifics, such as floor area and embodied emissions levels. 

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For instance, the C1 criterion pertains to the emissions and is applicable if any of the following conditions apply: 

• At least 20% of the total scope 1, 2, and 3 (category 1-14) emissions are building-related emissions as per the chosen base year
• At least 25,000 tCO₂e across the scope 1, 2, and 3 (category 1-14) are building-related emissions 2 as per the chosen base year 
• The company’s real estate portfolio exceeded 100,000 m2 in total floor area at the time of the chosen base year. The total floor area figure is an aggregated value across owned, leased, managed, and developed buildings

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Whole building approach

Entities must include all energy use emissions across landlord- and tenant-controlled spaces, using both scope-based GHG accounting and SBTi buildings criteria. Financial institutions must similarly include all relevant building emissions in modelling. That means the whole building emissions concept will apply to their scope 3 emissions, whereas for developers, owners, or managers, the emissions may be categorised as scope 1, 2, or 3. 

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Companies must use sector-specific pathways for buildings. However, construction companies can use cross-sector pathways for scope 1 and 2 emissions. The scope 3 targets are now aligned with the 1.5 °C goal, similar to the scope 1 and 2 targets. The guidelines take a more ambitious approach to setting targets for reducing scope 3 emissions. 

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Target-setting methods

The SBTi building sector guidelines provide target-setting methods based on different criteria and the user (stakeholder) in question. It provides a flowchart based on the stakeholder that walks through the target setting methods for all applicable scopes of emissions. You can see these flowcharts in this document.

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Here are some examples: 

• Operational (in-use) emissions must use the Sectoral Decarbonisation Approach (SDA) via the SBTi Buildings Target‑Setting Tool, aligned with 1.5°C pathways
  
  
• Upfront embodied emissions must only use allowable methods (e.g. absolute or intensity-based) via the Target‑Setting Tool, with specific typology inputs
  
  
• Mixed‑use buildings must report separately for each typology (residential, office, retail, or “Other” if needed)

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In total, there are seven different target-setting methods: 

• In-use operational SDA
• Upfront embodied SDA
• Sector-specific absolute reduction
• Absolute reduction 1.5°C
• Absolute reduction WB2°C
• Physical intensity (scope 3)
• Economic intensity (scope 3)

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The last four of these are also present in the general corporate guidelines. 

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Tools and pathways

Targets must be modelled using the latest SBTi Buildings Target‑Setting Tool, including embedded 1.5°C-aligned in-use and embodied pathways. This is also important if you plan to get your targets vetted and certified by the SBTi. 

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Scope 1–3 coverage

If building-related emissions dominate a company’s overall scope 1 and 2 emissions, they may use the Buildings Criteria alone. Otherwise, they must set additional targets under cross-sector or corporate net‑zero standards to cover the remaining emissions (ensuring at least 95% coverage of 1 and 2).

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For scope 3: If buildings-related categories (1–14) are insufficient for coverage, or if buildings comprise less than 40% of total emissions, additional scope 3 targets may be recommended or required.

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Special cases and inapplicability

• High-turnover portfolios: Entities can use fixed intensity targets (e.g., tCO₂e/m²) aligned with sector pathways and avoid recalculation during interim periods
  
  
• Infrastructure and data centres are not covered: Infrastructure, such as roads, bridges, parking, and even data centres, is not covered by the building sector guidelines. These emissions should be addressed using other SBTi standards, like the cross-sector SBTi Corporate Net-Zero Standard. That means that buildings that are eligible to use the building sector criteria must not include assets such as bridges, roads, and parking lots that may be part of their property

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Financial institutions (FI) specifics

FIs must apply building-related SDA targets to financed emissions and include all related emissions within the SDA boundary, using the same whole-building approach. The guidelines provide very clear instructions for FI (as per the Building C2 and C3 criteria) as to what they need to cover for both new buildings and those in operation. 

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The Buildings Criteria also applies to FIs' own operational and embodied real estate emissions if thresholds are met. Keep in mind that this guideline is separate from the sector-specific criteria made especially for FIs. These guidelines may be followed along with those for FIs that are heavily invested in the real estate sector, along with other sectors. 

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Integration with other initiatives

The SDA tool in the building target-setting guidelines uses CRREM-SBTi 1.5 °C pathways. Although results may differ visually, the ultimate ambition aligns with CRREM depth by 2050. As for green building certifications, the SBTi says those are complementary asset-level tools, as they focus on buildings at an individual level. However, SBTi targets are portfolio-level commitments and should supersede any green certifications in ambition scope.

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Here’s the complete explanatory document of the SBTi Building Sector Science-Based Targets. 

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When do the guidelines go into effect? 

‍The SBTi building sector guidelines went into effect in August 2024, with a grace period of six months for companies that are already setting or have set targets according to other criteria. At this moment, any entities that meet the threshold for the building sector are required to follow this particular criterion for their science-based emissions targets, should they choose to embrace the SBTi’s guidelines and have their targets certified. 

The guidelines are currently in version 1.1, as of August 2025, with the new version fixing some of the errors and inaccuracies in version 1.0. 

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Taking the next steps 

The inclusion of financial institutions in the new sector-specific guidance for SBTs indicates the importance that banks and other financial companies play in the carbon footprint of buildings. To set ambitious yet achievable targets based on these guidelines, it's important first to measure the current emissions of your portfolio. 

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comundo can help measure accurate emissions across the portfolio of properties, which can be categorised based on asset classes provided in the Science Based Targets Initiative (SBTi) building guidelines draft. Empowered with the data, responsible companies can set both near- and long-term targets.

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FAQ

What is the Science Based Targets Initiative (SBTi)?

Science-Based Targets Initiative (SBTi) is an organisation that creates science-backed guidelines for setting climate targets. It is a collaboration of several non-profit organisations, including the World Resources Institute (WRI), the World Wildlife Fund (WWF), the Carbon Disclosure Project (CDP), and the United Nations Global Compact. It’s run by employees and researchers from collaborative organisations.

What are science-based targets?

Science-based targets are backed by research that helps identify measures to reduce GHG emissions. These targets align with the Paris Agreement, which necessitates a net-zero carbon footprint by 2050 to limit temperature rise by 1.5 °C. 

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How can a company set science-based targets?

Companies can follow sector-specific guidelines published by SBTi. They can also work directly with SBTi to set and validate their targets. The latter approach is a five-step process:

1. Commit: The company submits a letter to establish intent
2. Develop: Sets target according to SBTi’s guidelines
3. Submit: Presents the targets for validation
4. Communicate: Announce the validated targets to stakeholders
5. Disclose: Report emissions and target progress of initiatives

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The above process is for large corporations. Small and medium-sized enterprises can follow a more streamlined process. 

Is it mandatory for real estate companies and financial institutions to follow SBTi guidelines?

It’s not mandatory for any company to follow SBTi guidelines for setting science-based targets. Companies can choose to set their targets independently. However, SBTi provides detailed criteria for target-setting based on scientific research and data. So, using their guidelines can help companies set accurate and impactful targets. Following the guidelines is mandatory if you want your targets to be validated and recognised by the initiative.