Science Based Decarbonisation Targets

With consumers, stakeholder, supply chain tenders and investors now looking at decarbonisation strategies for businesses, how can your organisations gain credibility with its commitments?

How to set Science Based Targets?

2021 saw a huge upsurge in the use of sustainability in the marketing of businesses and products with a wave of commitments and pledges from companies to reduce their carbon footprint, many to net-zero.

Committing to and taking action to achieve a commitment are very different and being able to demonstrate your action is now becoming a requirement from stakeholders.

What is a science-based target?

Targets provide a public demonstration of a company’s climate action. Targets are considered ‘science based’ if they are in-line with what the latest climate science deems necessary to meet the goals of the Paris Agreement – limiting global temperature increases to well below 2°C. From July 2022, this expectation is for companies to go further and keep temperatures below 1.5°C aligned to the latest climate science and IPCC’s updated report. Currently, no carbon targets are more public or binding than those set with the Science Based Target Initiate (SBTi) .

The SBTi is a partnership between CDP, the United Nations Global Compact, World Resources Institute (WRI) and the World Wide Fund for Nature (WWF). The SBTi call to action is one of the We Mean Business Coalition commitments.

Typically taking between six months and two years to set and verify, SBTs are rigorously scrutinised by the SBTi. The data used to develop and report on them is examined in detail, and the accuracy of assumptions made to achieve the proposed target is modelled and tested.

The process follows a five-step journey

  • Commit – submit your intent to set a science-based target

  • Develop – calculate your emissions and work on a reduction target in line with SBT criteria

  • Submit – a target for validation

  • Communicate – announce your targets to all stakeholders

  • Disclose – report your company wide emissions and progress annually

Why do companies set Science-based targets?

As the requirement to demonstrate climate action from stakeholders and our environment become more acute, the need to provide credible claims that can enhance a product, service and or supply chain. Science based targets provide both a credible pathway.

These companies have been encouraged to do so for many of reasons:

Stakeholder’s - From investors, customers and employees to take measurable climate action.

Future-proofing – SBTs can help identify hotspots in supply chains and enable more considered collaboration.

Preparing for regulation and legislation - Legislative changes have started through (TCFD) Task Force on Climate Related Financial Disclosures for premium companies, that will be mandatory for all companies.

Reputation - Increasing customer interest in ethical and environmentally conscientious purchasing. According to SBT, 79% of corporate executives surveyed found a strengthened brand reputation to be one of the most significant business benefits for their company.

Financial benefit - There are opportunities for cost savings, through energy savings and increased efficiencies. 29% of companies surveyed by the SBTi reported bottom-line savings due to operational efficiencies and fossil fuel reductions.

Competition - Many large and public sector tenders include social value and the weighting is increasing (20-40%), demonstrating your commitments can stand you apart from your competition.

The climate crisis itself - Mitigating climate change may sound obvious, but it shouldn’t be undervalued as a driver. Many companies recognise the inherent risk of impact to their own business if global warming exceeds manageable levels.

What are the different types of SBTs?

There are sector specific SBT’s with pathways for developing sector specific targets recognising the different pathways required within different industries.

We are focussing on the private sector.

There are two methods of target calculation for scope 1& 2 emissions Either:

Absolute-based approach - This method requires companies to reduce absolute GHG emissions by a given percentage. This approach applies to any organisation within any sector.

Sector-based approach - Appropriate for some industrial sectors, the SDA divides a global carbon budget based on the projected level of sectoral economic activity and potential for emissions reductions. The resulting target is an intensity target defined relative to a specific business metric.

For Scope 3, there are four methods of setting:

Absolute-based Approach– applies to Scope 3 too.

Physical Intensity Approach - Applicable companies who make tangible products such as manufacturers. This approach sets an emissions reduction target based on output carbon efficiency (e.g. per tonne of sold product).

Economic Based Approach - Applicable for all but only really encouraged for high growth companies, such as Big Tech providers. Companies get an emissions reduction target per unit of value-added (e.g. gross profit).

Supplier Approach - Exploring rapid network effects isn’t for companies with extensive and convoluted supply chains. This target must be achieved within five years, while suppliers must set targets aligned with the latest SBTi criteria.

How to monitor and achieve the commitments?

Companies must undertake an analysis of their footprints at least annually. Typically, more frequent updates are recommended, SBS provide monthly or quarterly service packages to enable a clear understanding and the ability to act and pivot as required.

That’s why one of our tips is to consider when implementing carbon accounting software the following:

  • Does it accurately and efficiently account for scope 1, 2 and 3 emissions?

  • Can I review our emissions continuously?

  • Is the calculation of GHG emissions SBTi aligned?

  • Can multiple teams within the company use this tool to deliver company-wide change?

  • Does the software help me easily communicate progress to stakeholders?

If your carbon management software can’t do all get in touch with Sustainable Business Services and we’ll scientifically align your climate action through our digital dashboard and 360° management service.

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