The urgency of addressing climate change has never been clearer, with businesses worldwide recognizing the need for decisive action. At the forefront of corporate climate strategies are Science-Based Targets (SBTs), which provide a roadmap for companies to align their emissions reductions with the goals of the Paris Agreement. 

What are Science Based Targets (SBTs)

SBTs represent a practical framework for businesses to address their greenhouse gas emissions. They are targets that align with the climate science outlined in the 2015 Paris Climate Agreement and are meticulously assessed against strict criteria and guidelines by the SBTi (Science Based Targets Initiative). The SBTi was formed as a collaboration between the Carbon Disclosure Project (CDP), the United Nations Global Compact, the World Resources Institute (WRI), the World Wide Fund for Nature (WWF), and the We Mean Business Coalition.  Once validated, these targets confirm an organization’s commitment to reducing its carbon footprint in line with scientifically supported objectives.

Why do SBTs Matter

SBTs serve as a powerful tool for companies committed to climate action. By aligning their efforts to reduce emissions with the objectives of the Paris Agreement, businesses can transcend mere intentions and implement concrete actions to combat global warming. This proactive approach not only fosters a positive environmental footprint but also ensures a sustainable future for future generations. Moreover, businesses that set SBTs can build long-term business value and safeguard their future profitability in several different ways. Some of these benefits include:

• Future-proofing: Aligning with the goals of the Paris Agreement helps organizations prepare for increased regulation and build resilience.
• Innovations: Target-setting can help inform business strategy and may lead to the development of new, low-carbon technologies, products, or services. 
• Cost reductions: Aggressive targets propel cost reductions through enhanced operational efficacy and decreased energy usage.
• Enhanced Reputation: Demonstrating long-term strategic thinking and leadership with SBTs enhances corporate reputation with investors and customers.

The Global Momentum Behind SBTs

As of late March 2024,  around 5,000 companies and financial institutions were leading the transition to a net-zero economy by setting emissions reduction targets validated by the SBTi. The uptake of SBTs is growing exponentially, with more companies setting targets in 2022 than in the previous seven years combined. As per SBT’s 2022 monitoring report, companies with SBTs or commitments represented 34% of the global economy by market capitalization by the end of 2022.

High-level Process for Setting SBTs

Once an organization has decided to set up a SBT, it’s a five-step process:

Key steps towards developing a SBT

Different companies may decide to set different types of targets based on where they are in their sustainability journey, what they want to achieve, and a variety of other factors. Some of the key steps in setting a SBT include: 

• Measure Emissions Baseline – Begin by measuring your emissions baseline, which serves as the starting point for setting your targets. This involves collecting data on your company’s greenhouse gas emissions from all relevant sources.
• Select a Baseline Year – Companies will have to choose a recent year for which data is available as the baseline year. This will provide a reference point for tracking progress towards your targets.
• Determine Timeline – Establish the timeframe for achieving your SBT, typically between 5 to 15 years from the baseline year. 
• Define Emissions Coverage – Determine which greenhouse gas (GHG) emissions scopes will be included in your SBT. This typically includes Scope 1 (direct emissions), and Scope 2 (indirect emissions from purchased electricity), and may also include Scope 3 (indirect emissions from the supply chain) if they represent a significant portion of your total emissions.
• Identify Target Setting Approach – There are different methodologies available for calculating emissions reduction targets. Companies would have to utilize one that best fits their circumstances.
• Calculate the Target – Use the chosen methodology to calculate your SBT based on your emissions baseline, timeline, and emissions coverage. 

Target Setting Approaches

When setting SBTs, companies can employ various targeting approaches to align their emissions reduction efforts with the goals of the Paris Agreement. Some of the different target-setting approaches are absolute reduction, intensity-based, goals to increase the procurement and use of renewable energy sources, or those pertaining to the engagement with suppliers to drive emissions reductions. The specific approach may depend on the size of the company, sector, and various other factors. Some of these examples are highlighted below. 

• Absolute Emission Reduction Targets
  • ABB commits to reduce absolute scope 1 and 2 GHG emissions 80% and absolute scope 3 GHG emissions by 15% by 2030 from a 2019 base year.

• Intensity Based Targets: 
  • Digital Realty commits to reduce scope 1 and 2 GHG emissions by 68% per square foot and scope 3 GHG emissions from purchased goods and services and fuel- and energy-related activities by 24% per square foot by 2030 from a 2018 base year.

• Renewable Energy Targets:
  • Meta commits to continue annually sourcing 100% renewable electricity through 2030.

• Supplier Engagement Targets: 
  • Meta further commits that 76% of its suppliers by emissions covering purchased goods and services and capital goods, will have science-based targets by 2026.

Conclusion

SBTs offer a clear pathway for businesses to align their climate actions with scientific findings and contribute to global efforts to combat climate change. Businesses can seek support from consulting firms in aligning with the requirements of the SBTi, as well as get help with implementation strategies unique to their requirements. By setting ambitious targets, companies can enhance their credibility, competitiveness, and resilience. Embracing SBTs is not only a moral imperative but also a strategic opportunity to drive sustainable business growth and create a lasting positive impact.