Laura King looks at what a science-based target is, and whether the current targets go far enough.
It is an undoubtable fact that human activity is altering the earth’s climate, and that climate change poses a huge risk to people and the environment. If something is not done — and not done soon — then society as a whole is going to be facing unprecedented changes in how it can function.
In an attempt to combat this, the Paris Agreement in 2015 was a historic moment where almost 200 countries signed an international agreement to reduce the impact of climate change (see Paris Agreement — what it means for business). They pledged to limit global warming to below 2°C above pre-industrial levels, pursuing efforts to hold it at no more than 1.5°C.
The scale of change needed is large, and as businesses around the world are the biggest source of carbon emissions, it goes without saying that the impact that these organisations could have on a 2°C ambition is staggering: 1000 of the largest companies account for 20% of all emissions, and 165 firms could contribute 65% of the global emission reductions necessary to keep global warming within 2°C by 2030.
If we are to meet the targets, companies need to act. This is where science-based targets (SBTs) come in.
What is a science-based target?
At the basic level, a science-based target (SBT) is where carbon emission reductions are in line with the scale of decarbonisation that is needed to keep global temperatures below 2°C. Essentially, it means that carbon reductions made by a company go beyond good intentions and “doing better” towards a target with real meaning: in this case, that the business is doing enough to make its contribution to the 2°C goal.
SBTs were established in 2015 by the Science-Based Target initiative (SBTi). The initiative is a joint partnership between CDP (formerly the Carbon Disclosure Project), the UN Global Compact (UNGC), the World Resources Institute (WRI) and WWF. The SBTi helps companies achieve SBTs by defining best practice through their specialist Technical Advisory Group, providing resources to help remove barriers, and also independently approving targets set by companies.
How do you set a science-based target?
The SBTi provides a step-by-step process for setting targets, and this is available on their website. In the first instance, companies have to sign a commitment letter. This letter indicates that it is intending on setting a SBT within two years. Once the target has been established, it should be submitted to the SBTi for independent verification.
To meet the SBTI’s criteria, the SBT must be company-wide and include all Scope 1 and 2 emissions listed in the Greenhouse Gas Protocol Corporate Standard. Scope 1 emissions are direct emissions from controlled or owned sources, Scope 2 emissions are indirect emissions from the procurement of energy. Companies must also screen for Scope 3 emissions (upstream and downstream emissions). If these represent 40% of all emissions, then they also need to be included in the target.
There are three methodologies that a company can adopt, but the initiative is clear that companies should use the most ambitious method that leads to the earliest reduction in emissions. Furthermore, they stress that carbon offsetting cannot be counted.
Although there are a number of methods available, most companies use the Sectoral Decarbonisation Approach (SDA), or sector-based approach. This is considered to have the most detailed methodology and allows a company to set a target based on the decarbonisation trajectory of the sector in which they operate. Although this methodology has not been established for all industries, where it is available it is seen as a good way forward as it takes into account factors such as expected improvements in efficiency for different sectors and predictions for growth.
What are the main difficulties?
One of the main difficulties of setting targets is the long timeframe over which they operate. Up until now, many KPIs look up to 10 years into the future. Instead, these targets require companies to look out to 2050, or even further for some methodologies.
Although there are options to review targets, companies need to be comfortable with working with these sorts of timeframes; a difficult task given the uncertainty of the future.
Furthermore, setting a SBT requires a fundamental shift in thinking — it is no longer enough for organisations to make efficiency gains as and when a good business case can be made. In setting these targets, companies have to instead work out how to adapt their business to meet the SBT. This transformative shift can be challenging to manage, requiring input from many divisions within the company, as well as full support from management.
What about SMEs?
Currently, SBTs are very much geared towards larger, multi-national organisations. SBTs offer a range of benefits, from the reduction in exposure to increasing regulation, to improved reputation. Although small companies may also be exposed to similar risks and opportunities, much of the expertise needed to develop a target is likely to sit within a larger organisation, as well as the finance required to fund the considerable time, effort and expertise required.
Smaller businesses are nonetheless able to set SBTs if they have a solid understanding of their carbon emissions and a comprehensive greenhouse gas (GHG) inventory. This might already be required if they supply a company who needs to incorporate Scope 3 emissions into their own SBT.
Moreover, with the growth of initiatives such as the Sustainable Development Goals, more and more companies of all sizes are looking to grow sustainably (see Engaging businesses in Sustainable Development Goals). At all levels, there is an increasing need for companies to understand how big their carbon footprint is, and how this might change as they develop.
Is 2°C enough?
There is an argument that a 2°C target is not enough. The Intergovernmental Panel on Climate Change’s (IPCC’s) Special Report, Global Warming of 1.5°C, warned that we already have 1°C of warming and made it clear that current efforts are not enough to meet a 1.5°C target without drastic and immediate action (see IPCC report — final call to stop the world from overheating). Indeed, ongoing emissions reduction efforts are not enough to cap global warming at even a 2°C rise; instead, we are headed towards 3°C.
This situation is not tenable. The science shows that the climatic problems caused by a 2°C rise would be much worse than that for 1.5°C, with associated climate-related risks including a detrimental impact on human health, food security and economic growth.
This latest scientific update is a clear signal that action must be accelerated — and accelerated quickly. The momentum for SBTs is gaining, but much more does still need to be done. To reflect this, the SBTi is reviewing the resources it produces and its target validation protocols to enable companies to set targets that are in line with a 1.5°C scenario.
Corporations are responsible for a large proportion of the world’s carbon emissions.
SBTs are designed to reduce a company’s carbon emissions in line with what would be required to keep global temperatures below 2°C above pre-industrial levels.
There are a number of methodologies available; all will require a company to set targets for Scope 1 and 2 emissions, and possibly also Scope 3 emissions.
Small companies are not excluded from setting SBTs, but at present it is the domain of larger companies. Smaller companies could start by developing a GHG emissions inventory.
With the latest predictions from the IPPC, a 2°C scenario is unlikely to be ambitious enough; the SBTI is now reviewing its protocols to help companies meet a 1.5°C target.
Last reviewed 12 March 2019