SBTI: Empowering Corporate Climate Leadership Through Validated Targets

Rising greenhouse gas emissions are fueling dangerous climate change. To address this existential threat, ambitious yet achievable corporate emissions reductions are essential. This is where the Science Based Targets initiative (SBTi) comes in.

SBTi is a joint project of leading sustainability organizations, including the CDP, United Nations Global Compact, World Resources Institute, and World Wildlife Fund.

The initiative enables businesses and financial institutions to set science-based greenhouse gas (GHG) reduction targets consistent with limiting global warming to 1.5°C. The main objective is to accelerate the emission reduction by half by 2030 and achieve net zero by 2050.

Targets meeting SBTi criteria are considered the gold standard for corporate climate ambition. Over 6,255 companies representing millions of tons of CO2 emissions have already committed to an SBT. By framing decarbonization as a clear journey rather than vague aspirations, SBTi drives strategic, measurable progress.

The initiative empowers companies to move beyond superficial efforts and apply a rigorous target-setting process and external validation to prevent unfounded greenwashing claims.

Science-Based Targets: Navigating Absolute vs. Intensity Targets.

A core focus of the SBTi is enabling companies to establish GHG emission reduction targets grounded in climate science. SBTi provides guidance for setting either absolute or intensity targets.

• Absolute targets: Companies aim to cut total emissions by a specified amount over time. For example, a company could commit to reducing absolute 50% emissions by 2030 from a 2023 baseline, thus benefiting the environment.

• Intensity targets: Involve reducing emissions relative to a business metric like production volume or revenue. A company may pursue a 30% drop in emissions per unit of product sold by 2030. While the total volume of units may rise, efficiency improves.

To develop targets, companies would first analyze historical data to calculate a baseline intensity factor for emissions per unit of energy produced. Then, applying SBTi’s sector-specific guidance, they would model the intensity reductions required through 2030 to align with 1.5°C decarbonization pathways.

Corporate Carbon Accounting: Scopes 1, 2, and 3.

Science-based targets cover all GHG emissions defined by the GHG Protocol Corporate Standard across Scopes 1, 2, and 3. This comprehensive approach aligns with the ambition of the Paris Agreement to limit global warming to 1.5°C.

• Scope 1 covers direct emissions from company operations like production, facilities, and vehicles.

• Scope 2 covers indirect emissions from purchased energy like electricity and heating.

• Scope 3 includes value chain emissions from suppliers and product use.

Robust science-based targets require addressing at minimum Scope 1 and 2. Leading companies also adopt Scope 3 goals across the supply chain and product lifecycle. Setting comprehensive targets across Scopes 1, 2, and 3 demonstrates full accountability for business emissions impacts.

Implementing Science-Based Targets: A 4-Step Process

Adopting science-based targets (SBTs) through the SBTi involves a multi-stage approach:

• Commit – Formalize engagement by submitting a commitment letter on SBTi’s website. This demonstrates your organization’s dedication to pursuing validated SBTs.

• Develop – Conduct an operational emissions inventory and forecast. Model potential reduction scenarios and pathways. Draft initial SBTs following sector-specific guidance. Refine through iterative internal and external review.

• Submit and Communicate – Finalized SBTs are officially submitted to SBTi for assessment and validation. Once approved, communicate adopted targets publicly and to key stakeholders.

• Disclose – Provide annual reporting on SBT progress through required channels like CDP and in sustainability reports. Update stakeholders on emission reduction achievements relative to targets.

This end-to-end process enables embedding SBTs into business strategy and governance. Ongoing tracking and disclosure underline progress while ensuring accountability.

Advantages and Barriers on the Path to Approved Targets.

Adopting SBTs provides strategic advantages for companies beyond emissions reductions. Setting SBTs drives strategic resource efficiency improvements across operations by revealing optimization opportunities through granular emissions data analysis and reduction target tracking.

SBTs also set companies to stay ahead of the curve and future-proofing their businesses. They equip firms for the low-carbon economic transition, providing a competitive edge in anticipation of evolving climate regulations.

Moreover, SBTs allow businesses to have reputational gains and investor appeal. Climate leadership improves public image, staff recruitment, and retention, especially among responsible consumers. With environmental criteria rising in importance, validated SBTs signal commitment, reducing perceived risks and attracting capital.

However, while delivering clear decarbonization roadmaps, SBTs also entail challenges. Adopting SBTs often requires upfront capital investments in solutions like renewable energy infrastructure, efficient equipment upgrades, and waste reduction systems. These projects enable emissions cuts but can strain budgets. Additionally, reaching targets involves behavioral changes to instill new habits, reduce energy demands, and embed sustainability through organizational culture shifts.

This takes time and consistent engagement across teams. Furthermore, the 1.5C timeline demands rapid reduction on an accelerated timeline that can be difficult to coordinate. However, initiative partners provide ongoing support, resources and guidance to help firms thoughtfully navigate financial, operational and time-related hurdles. The imperatives of climate science make overcoming these barriers an urgent priority. With determination, cross-functional collaboration, and creativity, companies can transition SBTs from aspiration into action.

The Bottom Line on Science-Based Target Setting.

As climate regulations proliferate globally, the adoption of science-based targets through SBTi will likely accelerate as companies seek to demonstrate strategic decarbonization. Regulatory mandates are beginning to reference SBTs, further expanding adoption. Additionally, linkages with prominent reporting frameworks reinforce the credibility and visibility of approved targets. Despite challenges, committed companies can utilize SBTi to manage climate risks, realize efficiencies, and unlock opportunities on the path to net zero.

An ever-growing coalition of leading businesses is embracing science-based target setting to raise ambition, future-proof operations, and accelerate the transition to sustainable economies. Backed by climate science, standardized by consistent methodologies, and multiplying through policy levers and reporting integration, SBTi provides the blueprint for managed decarbonization. It enables target-setting rigor, transparency, and urgency across the corporate world. Ultimately, the broad adoption of validated science-based targets offers hope of avoiding climate breakdown through collective action guided by environmental realities.