Emissions reduction targets have three important levers that determine how effective they can be as a management tool: scope, level of ambition, and time horizon. Firstly, the scope of the target determines which emissions sources are included in the commitment. Scope 1 targets cover operational emissions, Scope 2 targets cover emissions from energy and Scope 3 targets cover emissions from the value chain, both upstream and downstream. The most desirable target scope differs across the ACT sectors. ACT asks companies to act on the biggest emissions sources (hotspots) within their direct and indirect responsibility. This means that the heaviest scoring weight is placed on having targets that cover these emissions hotspots, regardless of scope. Second, the level of ambition that the targets need to have is determined by the emissions reduction that the sector has to undertake. These sector specific emissions reductions are derived from the IEA ETP carbon budgets, which are converted to company level using the SDA (Sectoral Decarbonization Approach). Third, the time horizon of the targets is important for several reasons. The low-carbon transition is a long-term process which will take several decades. Therefore, targets need to consider the long term in order to cover the majority of the reductions needed in this transition.