A Roadmap to Achieving Science-Based Targets
Read this guide to navigate the journey to net-zero using Science-Based Targets.
In the quest for a sustainable future and to ensure continued access to capital, organizations worldwide are are now aligning their strategies with measurable climate impact that can be disclosed with confidence. The Science-Based Targets initiative (SBTi) has emerged as a leading framework that helps companies set and achieve ambitious greenhouse gas reduction targets in line with scientific recommendations.
“SBTi covers over 70 countries and 15 industries currently, and SBTi companies cover over a third, or 35% of the global market economy - close to $38 trillion.”
This article provides a step-by-step guide on how to set and achieve SBTi targets, enabling businesses to contribute meaningfully to global climate goals while securing their own long-term viability.
Before diving into the process, it's crucial to grasp the fundamentals of SBTi. SBTi is a collaborative effort between CDP, the United Nations Global Compact, the World Resources Institute, and the World Wide Fund for Nature. It assists companies in setting emissions reduction goals that are consistent with preventing global warming above 1.5°C compared to pre-industrial levels, in accordance with the Paris Agreement.
SBTi 7-Step Process Map from SBTs for Private Equity Sector (Part 2) published by SBTi in 2022
The first thing to know as you consider setting science-based targets (SBTs) with SBTi is that this program is currently limited to companies in the private sector only. While SBTi encourages companies of all sizes to set SBTs, the highest focus is on the most emitting sectors. SBTi does not assess targets for cities, local governments, public sector institutions, educational institutions or non-profits.
“More than 68% companies with approved targets are aligned with 1.5 C, as of 2021. This number increased significantly from 41% in 2020. A geographic breakdown of SBTi companies with approved targets is:
Asia (449) - 20%, Europe (1244) - 55%, North America (401) - 18%, Latin America (79) - 3%, Africa (19) - 1% & Oceania (61) - 3%.”
The first thing to know as you consider setting science-based targets (SBTs) with SBTi is that this program is currently limited to companies in the private sector only. While SBTi encourages companies of all sizes to set SBTs, the highest focus is on the most emitting sectors of course and sector-specific pathways are being developed. SBTi does not currently assess targets for cities, local governments, public sector institutions, educational institutions or non-profit organizations.
SBTi 7-Step Process Map from SBTi Progress Report 2021
Collecting and analysing data for Scope 1 and 2 emissions (at the very least) is a great starting point as you start exploring SBTi target setting and ensuing actions to drive sustainability in your organisation. Scope 3 targets also need to be set if the scope 3 emissions of the company exceed 40% of overall footprint. It is interesting to note that while SBTi's science-based net zero targets “require long-term deep decarbonization targets of 90-95% across all scopes before 2050.”, companies can only use a very limited amount of high-quality carbon removals as offsets, likely no more than 5-10% of the total emissions reductions. In general, SBTi promotes investments in operational emissions reduction by ensuring that for companies using SBTs, carbon offsets cannot be used to reach a predefined or agreed-upon target in entirety.
To begin, organizations must assess their current greenhouse gas emissions, including direct and indirect sources (Scope 1, 2, and 3 emissions). This baseline assessment provides a clear starting point and helps identify areas with the highest emissions intensity. Companies with approved targets are attempting to reduce emissions across their value chain. Around 96% of all SBTi companies with approved targets have set targets for Scope 3 Emission reductions. Around 16% of these companies have also incentivized supplier engagement targets to encourage suppliers in setting their own targets.
The SBTi framework offers three target-setting approaches:
As of July 2022, SBTi is accepting new target submissions aligned with 1.5ºC. SBTi also provides sector specific guidelines.
“Science-based targets should cover 95% set for Scope 1 & 2 Emissions. But for accounting Scope 3 emissions, SBTi emphasizes on setting Scope 3 emissions targets if a company’s scope 3 emissions account for at least 40% of total scope 1, 2 and 3 emissions.”
SBTi encourages setting targets that are both ambitious and achievable. The targets must ensure significant emissions reduction while considering the organization's industry, size, and historical emissions. Companies must demonstrate their commitment to sustainability by pursuing targets that push boundaries without compromising feasibility.
Scope 1&2: Emission reductions originating from scope 1 and 2 sources must, at the very least, be in harmony with decarbonization pathways aiming to limit global warming to well below 2°C. Endeavors to achieve scope 1 and 2 targets aligned with a 1.5°C scenario are strongly encouraged.
Scope 3: An annual reduction in emissions intensity of no less than 2% (in linear terms) throughout the target period should be the aim while setting SBTs.
The success of SBTi targets hinges on the support and involvement of stakeholders, from top management to employees and investors. Clear communication about the rationale, benefits, and potential challenges of the targets helps secure buy-in and fosters a sense of collective responsibility.
Supplier engagement is essential as supply chain emissions often make up a company’s total carbon footprint for the most part. On an average, supply chain emissions are 11.4 times more than emissions from direct operations.
“Supplier engagement is essential as supply chain emissions often make up a company’s total carbon footprint for the most part. On an average, supply chain emissions are 11.4 times more than emissions from direct operations.”
Achieving SBTi targets requires a strategic roadmap. Along with operational efficiency initiatives and carbon capture technology, collaborating with suppliers and partners is crucial for tackling Scope 3 emissions.
Example Net-Zero Journey (from Capgemini)
Companies need to identify key actions, such as improving energy efficiency, transitioning to renewable energy, optimizing supply chains, and adopting carbon capture and other best practices for sustainability throughout operations.
Despite impressive strides on adopting science-based targets, there remains a persistent gap in climate reporting within SBTi-approved companies, both in terms of the transparency of their disclosures and the comprehensiveness of their reports in relation to their stated goals. A mere 46% of companies with science-based targets (excluding SMEs) managed to provide full progress reports for all of their targets, as of SBTi’s 2021 progress report.
A quarter of these companies (26%) reported on at least one target, but the information pertaining to their other target(s) either lacked comparability or was deficient in information and contextual data, or was simply not publicly accessible. 28% of all SBTi companies had no public information available regarding their progress toward their science-based targets, or the available information was presented in a manner that hindered comparability and lacked necessary information and contextual data. It's worth noting that in 2020, 87% of companies with science-based targets managed to publicly report progress against their targets in some capacity, demonstrating a notable decrease to 72% in 2021.
Regular monitoring and reporting of emissions reduction progress are essential. Utilize robust data collection and management systems to track performance against targets. Transparent reporting not only holds companies accountable but also builds credibility with stakeholders.
Flexibility is key. Companies might encounter unforeseen challenges or opportunities during their sustainability journey. Regularly reassess the targets and strategies, adapting to changing circumstances while maintaining alignment with the SBTi framework.
Net-Zero Trend Assessment by PwC
As targets are met and surpassed, celebrate achievements both internally and externally. Sharing success stories can inspire others and showcase the tangible benefits of committing to SBTi.
As of 2022, 1,097 companies had their targets validated, a number greater than the total of the previous seven years combined! Committed annual emissions reductions was noted to be 53 million tonnes CO2e, across all approved science-based targets in 2021, which is way more than a 29% reduction (or 419 million tonnes CO2e) over a period of 5 years from 2015-20!
Embracing the Science-Based Targets initiative isn't just about reducing emissions—it's a strategic move that aligns businesses with a sustainable future. By understanding the framework, setting ambitious yet realistic targets, engaging stakeholders, and consistently implementing effective strategies, organizations can not only contribute to global climate goals but also bolster their resilience and competitiveness in an increasingly eco-conscious world.
