The Paris Agreement of 2015 provided a goal for the world’s nations as they attempt to address climate change—limit global temperature increase to 2° Celsius above pre-industrial levels and, ideally, pursue an even more ambitious objective and keep the temperature rise to 1.5° or less. The consensus among climate scientists and the Intergovernmental Panel on Climate Change is that these targets must be met to minimize the destructive impacts of climate change.
While the Paris Agreement lays out targets for countries, achieving them requires the participation of private companies—whether compelled by mandatory guidelines or through voluntary reductions and the purchase of offsets in carbon marketplaces. Private companies are, in the end, responsible for much if not most greenhouse gas (GHG) emissions.
Science-based targets—independent calculations of the reductions that must be pursued by individual companies to achieve the 2°C maximum—are thus key to meeting national and international carbon reduction goals. As they promote innovation and establish consistent, sustainable goals, they help reduce GHG emissions and minimize global warming.
What is the Science Based Targets initiative (SBTi)?
The term “science-based targets” refers both generally to goals set with the objective of keeping global warming to under 2° Celsius and to the targets created by a specific organization, the Science-Based Targets Initiative (SBTi) that was established in 2015, the same year as the Paris Agreement. SBTi is a joint collaboration of CDP (formerly the Carbon Disclosure Project), United Nations Global Compact, the World Resources Institute, and the World Wildlife Fund (WWF). Together, these organizations have created guidelines for setting ambitious yet achievable targets, a standard procedure by which companies may announce their intention to adopt science-based targets and communicate targets to stakeholders, and resources to assist in reaching the targets.
How do businesses adopt science-based targets?
Under the SBTi’s program, businesses follow a standard process for adopting science based targets:
- Announce that their intention to set science-based targets via a commitment letter.
- Calculate their targets and to submit them to the technical experts at SBTi. (Businesses are allowed two years to set their targets.)
- SBTi will either accept the targets or suggest revisions.
- Once SBTi and the company have agreed on an appropriate target, the company communicates it to relevant stakeholders and to the public.
- Business monitor and report annually on their progress.
How are science-based targets set?
The three principal methods used to set targets are:
- Absolute contraction. Under this model, all companies in a sector reduce their emissions at a standard rate that will result in a sufficient reduction of overall emissions.
- Sectoral decarbonization approach. Under this model, targets are set with the goal of bringing all companies in a sector to similar emissions levels by 2060. Unlike the absolute contraction model, this approach recognizes the different starting points of, for example, steel manufacturers in Brazil, China, and the United States.
- Economic intensity contraction. Under these formulas, companies’ targets are set on the basis of greenhouse gas emissions per value added (GEVA). In other words, rather than working with an absolute target, the number is a moving one. If a company’s production doubles, so will its acceptable level of GHG emissions.
There are variations on these models that may be appropriate for certain companies in certain economic sectors.
A company’s emissions fall into three “scopes”:
- Scope 1: Emissions from manufacturing
- Scope 2: Indirect emissions owned by the company, including energy purchased from a utility
- Scope 3: Emissions by third parties not owned by the company; including, for example, emissions generated by employee travel and those produced by franchise owners.
Plans will typically address all of a company’s scope 1 and scope 2 emissions, while scope 3 emissions are often covered only in part.
Of the various formulas that exist for calculating science-based targets, companies are encouraged not to take the easy path and instead opt for the one that is most likely to result in emissions reductions.
What other types of sustainability targets exist?
While science-based targets are specifically concerned with GHG emissions and keeping global warming to under 2° Celsius, sustainability targets can cover a variety of environmental and social concerns. The United Nations, for example, adopted 17 Sustainable Development Goals in 2015. While some of them address GHG emissions and climate change, others (sometimes called traditional or context targets) are focused on areas like assuring access to clean drinking water and reducing inequality.
Many companies adopt their own sustainability targets in a variety of areas. They may commit to increasing the percentage of recycled content used in their products or to eliminating toxic materials from manufacturing processes. These steps may not principally be driven by a concern with reducing the company’s carbon footprint—the focus of science-based targets.
Even in the area of GHG emissions, companies can adopt targets without following the procedures established by the SBTi. For example, a company may unilaterally decide to reduce its carbon emissions by 50 percent over a certain period—a goal that may either fall short of or exceed what would be allowed under a target approved by the SBTi.
How do businesses benefit from adopting science-based targets?
There are many notable benefits to companies who adopt science-based targets:
- Credibility. Because science-based targets are adopted following review by outside experts, they have a credibility and transparency that isn’t always true of targets that companies adopt on their own.
- Insulated from leadership or regulatory changes. Science-based targets can also better survive changes in corporate leadership and companies’ impulses to respond to short-term market conditions. They provide lasting, durable goals. Science-based emissions reduction targets can also lessen companies’ vulnerability to upheaval due to regulatory changes. As they are specifically set to help assure that countries meet the targets set by the Paris Agreement, they reflect the common focus of policy makers concerned with GHG emissions.
Global leadership. Those companies that step forward now to adopt science-based targets will benefit by being perceived as industry leaders. In a world where consumers are increasingly calling on companies to address climate change, including by adopting ambitious emissions reduction targets, the green choice is often a profitable one.
What companies have adopted science-based targets?
More than 1,000 companies have already collaborated with the SBTi to set targets and commit to a plan to adopt them. Among the 520 companies to set science-based targets (as of December 2020) are industry leaders like AT&T, Coca-Cola, and Hilton.
More than 300 companies have exceeded the Paris Agreement goal of limiting warming to 2° Celsius and have adopted the more ambitious goal of keeping warming to 1.5° Celsius or less. These companies include Colgate Palmolive, Gap Inc., and Johnson & Johnson.
Approximately another 500 companies, including Facebook and Gilead Sciences, have committed to adopting science-based targets and are in the 24-month period of determining appropriate targets and having them approved.
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