The Paris Agreement was a landmark international treaty in the global fight against climate change. It urged governments and the private sector to take decisive action to limit global warming to well below 2°C above pre-industrial levels.
While the Paris Agreement set the course, it lacked a clear, standardized framework that outlines how to achieve net-zero emissions. Moreover, there was neither a uniform definition for net-zero nor a shared understanding of its requirements.
To address this gap, several prominent environmental organizations—specifically, CDP (formerly known as the Carbon Disclosure Project), the United Nations Global Compact, World Resources Institute (WRI), and the World Wide Fund for Nature (WWF)—established the Science Based Targets initiative (SBTi). Their goal: define net-zero and create science-based targets aligned with the SBTi charter, and provide a clear path for businesses to pursue its global climate reduction goals.
This guide will show you how to set a science-based target in accordance with the SBTi, thus empowering your business to take meaningful action.
What is a science-based target?
Understanding net-zero vs. science-based targets is critical to successfully reducing GHG emissions. The SBTi created a framework for companies in specific sectors to leverage to set realistic science-based targets.
The foundation of science-based target setting is that targets must be actionable, clearly defined, and aligned with the level of decarbonization required to limit global warming, ideally below 1.5°C above pre-industrial levels, as agreed upon in the Paris Agreement.
Today, for a business to have its targets approved by the SBTi, it must undergo a rigorous sustainability and GHG audit, which includes:
- Review of emissions inventory, including scope category coverage, organizational boundaries, and consolidation report
- Evaluation of GHG emissions reduction targets
- Assessment of their progress against targets
- Guidance and resources to help companies set achievable targets
Why is it important to set science-based targets?
The IPCC reports posit that the clock is ticking. Immediate action is urgent. Every passing year without adequate mitigation measures increases the risk of the worst-case scenarios outlined in the reports. According to PBS:
“This 2 degree warmer world still represents what scientists characterize as a profoundly disrupted climate with fiercer storms, higher seas, animal and plant extinctions, disappearing coral, melting ice and more people dying from heat, smog and infectious disease.”
This global temperature rise could cause worldwide upheaval that threatens both natural and human-made ecosystems.
Why are businesses being urged to act?
The need to reduce emissions is now widely recognized as a business imperative. This is because the private sector is the largest contributor to climate change, with just 100 companies accounting for more than 70% of the world’s greenhouse gas (GHG) emissions since 1988, as reported in the Carbon Majors Report.
However, the responsibility to act goes beyond the Fortune 100. There’s mounting pressure for businesses of all sizes to implement science-based targets. These factors include:
- Regulatory requirements – Governments’ dedication to emissions reductions is leading to the establishment of mandates that demand action from businesses, such as the European Climate Law targeting climate neutrality by 2050 or the U.S. Federal Supplier Climate Risks and Resilience Rule. Companies can avoid being unprepared for future regulatory changes by taking proactive steps.
- Investor, consumer, and employee pressure – Companies face both internal and external scrutiny from climate-conscious individuals to demonstrate their commitment to sustainability and reducing their environmental impact. Businesses that fail to align their practices with science-based targets risk losing market share to more environmentally responsible competitors.
- Supply chain forces – Businesses are increasingly urged by stakeholders within their supply chains to adopt standardized emissions reduction targets and strategies to enhance sustainability, minimize environmental footprint, and ensure long-term resilience and competitiveness along the entire value chain.
Although the hard-to-abate industrial sectors like oil and gas, cement, steel, and chemical processing may have the largest direct carbon impact, achieving net-zero requires that all businesses reduce their carbon emissions across their operations and value chain.
Who can set science-based targets?
Since its establishment, the SBTi family has boomed, with thousands of corporations enlisting to combat climate change.
Per the SBTi, by 2021, they had “doubled the number of new companies setting and committing to set targets, and tripled the rate at which new targets were validated. At the end of 2022, more than 4,000 companies covering over a third of the global economy’s market capitalization were setting targets or committing to do so via the SBTi.”
While major companies are the most significant emissions contributors, the SBTi is open to businesses of every shape and size, including small-to-medium-sized enterprises (SMEs). In fact, the Science Based Targets initiative has specific guidance tailored to SMEs.
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How to set science-based targets: The five-step process
The SBTi has established a five-step framework companies large and small can follow to achieve both their short- and long-term GHG emission reduction targets. This includes the following actions:
Step 1: Commit to the cause
For large companies, the first step of science-based target setting involves committing to the cause. An interested business must either submit a commitment letter stating their pledge to dedicate themselves to science-based targets or have their pre-existing targets independently verified.
To that end, eligible companies must register online via the SBTi Commitment Application System and submit a standard commitment letter.
Those companies that take up the pledge will be recognized as “committed” on the SBTi website.
Once the commitment is accepted, the company will have a two-year window to submit its targets to the SBTi.
Step 2: Develop emissions reduction targets
Naturally, this is the most challenging and complicated aspect of the SBTi criteria and will account for most of an organization’s attention and energy when it comes to target setting. The SBTi provides a wealth of resources that businesses can leverage to take on this process, including:
- How-To Guide for Setting Near-Term Targets
- Net-Zero Standard Criteria
- Sector-Specific Guidance
- SME Guidance
These resources are a helpful nudge in the right direction, but the brunt of this carbon accounting work is on the company. To simplify the process and ensure accuracy, businesses can leverage emissions management software to interpret these standards and guidelines, saving them from the time-consuming process of reading hundreds of pages of standards.
The right carbon accounting software can help companies tailor the perfect plan for their unique circumstances, allowing them to focus their attention and energy on achieving their emissions reduction targets.
Assessing your company’s emissions—tracking and reporting progress
Assessing and tracking carbon emissions can be a complex endeavor, as this process will vary depending on the unique characteristics of each business and its diverse direct and indirect emissions throughout its value chain. Two similar entities in the same sector can have substantially different emissions outputs or hotspots, depending on the materials and processes within their value chain.
To set science-based targets, a business must undergo a rigorous carbon accounting audit. As such, you must carefully review the entire business’ emissions, including:
- Scope 1 – Direct emissions from sources owned or controlled by a company.
- Scope 2 – Indirect emissions from purchased energy, such as steam, electricity, heat, and cooling.
- Scope 3 – All other upstream and downstream emissions associated with the company’s business activities.
While measuring scope 1 and scope 2 emissions can still present operational challenges, they generally tend to be easier to track for a number of reasons. For example, companies typically own and control these emissions directly, established reporting protocols already exist, and their scope is often more limited compared to scope 3 emissions.
Scope 3, on the other hand, is more difficult to account for due to data availability, supply chain complexity, and opaque calculation methodologies. Despite the challenges, companies must account for their scope 3 emissions because they typically account for 80–90% of a business’s total emissions output.
A company can measure all of its emissions scopes with the help of carbon accounting software. With the right sustainability management software, a business can automate and streamline the process of tracking and analyzing its direct, purchased, and indirect GHG emissions, thus enabling it to assess its progress toward its science-based targets.
Step 3: Submit
After identifying its science-based targets, a business must submit them to the SBTi, using the appropriate form for the organization, sector, and target type.
From there, the internal team will review the submission and validate it against the SBTi’s framework. Once that process is concluded, the review committee will provide in-depth feedback.
Validation services include:
- Near-term science-based target validation
- Minimum ambition level target updates
- Near-term science-based target for SMEs
- Net-zero target submissions
- Net-zero target submission for SMEs
- Near-term science-based target update and net-zero target submission
- Near-term science-based target submission and net-zero target submission
- Financial institution target submission
Step 4: Communicate
After a company’s targets have been approved by the Science Based Targets initiative, that information will be published on the website as well as relevant partner websites.
At this point, a business has six months to disclose its targets to stakeholders publicly. Failure to communicate this information will require the business to undergo revalidation so that the science-based targets align with the newest criteria.
Step 5: Disclose
From this point, a business is expected to regularly disclose both its annual GHG emissions and the progress toward its stated goals via sustainability and carbon accounting reports. Providing these insights ensures that the business, its stakeholders, and the general public have transparent information about the company’s environmental impact and sustainability efforts.
Setting and reaching science-based targets with Sustain.Life
Setting a sustainability goal is easy—achieving it is much harder.
To that end, a business must invest the necessary time and resources to assess its emissions, set actionable targets, and then continuously track and disclose its efforts. On your own, that’s nearly an impossible task. But with ESG-compliance solutions like Sustain.Life, that goal becomes much more feasible. Equipped with our platform, businesses, large and small, have the tech tools they need to properly measure, manage, and report their progress.
How does it work? Get a free demo to start taking carbon accountability.
PBS, “Study finds nations can keep global warming to 2 degrees if pledges are met,” https://www.pbs.org/newshour/world/study-finds-nations-can-keep-global-warming-to-2-degrees-if-pledges-are-met Accessed April 11, 2023
CDP, “CDP Carbon Majors Report 2017,” https://cdn.cdp.net/cdp-production/cms/reports/documents/000/002/327/original/Carbon-Majors-Report-2017.pdf?1501833772 Accessed April 11, 2023
SBTi, “About Us,” https://sciencebasedtargets.org/about-us Accessed April 11, 2023