SBTi targets: The future isn't static

Most transition risk models project current emissions forward unchanged. Thousands of companies have published decarbonization targets validated by the Science Based Targets initiative (SBTi), yet most investment datasets give those commitments no weight in future risk. For portfolios with exposure to SBTi-committed companies, that can overstate transition risk.

Targets turned into emissions paths

This research matches 4,053 absolute SBTi targets to 1,775 listed companies. Those companies make up 3.5% of listed companies but 19.7% of global public equity emissions. Each target becomes a linear path from observed baseline emissions to the target year, with Scope 1, 2 and 3 treated separately. Where a company has no target for a scope, emissions are held at current levels.

Business as usual against targets met

The paths feed into Emmi’s scenario-based transition risk framework. Transition Value at Risk (TVaR), emissions reduction requirements and temperature alignment are recalculated and compared with a constant-emissions baseline. TVaR generally falls once targets are included. If A.P. Moller-Maersk meets its targets, its TVaR falls to near zero in every scenario except the IPCC’s Net Zero 2050.

Where delivery matters most

The gap between the two pathways shows which holdings depend most on corporate delivery, making them natural engagement priorities. The same projections support stress testing across full, partial and missed targets. They also show where further cuts are still needed under stricter IPCC and NGFS scenarios.

Built on stated assumptions

The method assumes targets are met exactly and on a straight line. Around 62% of absolute targets can’t yet be matched to emissions data. Targets whose dates have passed are dropped, and companies already below their path keep their current emissions.

Download the full white paper for the methodology and the Maersk case study.