SCIENCE-BASED TARGETS – ADVANCING EFFECTIVE CLIMATE PROTECTION WITH SCIENCE-BASED TARGETS

The climate crisis is in full swing and there is currently more and more press questioning the previous approach to corporate climate protection, which often had a focus on CO2 compensation and climate neutrality. Many companies are now rightly asking themselves how they should deal with the changed framework conditions and whether they can make a meaningful contribution to climate protection at all with offsetting.

HOW COMPANIES ACHIEVE THEIR CLIMATE STRATEGY

The climate crisis is now recognized by a broad majority of society and businesses as a major, perhaps even the greatest, challenge facing humanity. More and more companies, including an increasing number of small and medium-sized enterprises (SMEs), have set out to do their part to preserve the basis of life for us humans on this planet. An increasing number of companies have now started to calculate their own emissions and have, for example, calculated a so-called company-related carbon footprint. This can provide clarity on the status quo of the company with regard to the climate impact of its business activities. But how can the information obtained be used to derive a climate strategy and concrete measures and instructions for action that meet global requirements? And how do companies find out what their appropriate contribution to climate protection is? The Science Based Targets initiative, or SBTi for short, provides answers to these questions, and just recently retailers such as Lidl and Rewe informed their suppliers that they require active participation in the SBTi in order to reduce CO2 emissions in the upstream supply chains of their products.

What is the Science-Based Targets initiative?

The Science Based Targets initiative was founded in partnership by a number of NGOs, including the World Wide Fund for Nature (WWF) and the World Resources Institute (WRI). The stated goal: to drive ambitious climate action in the private sector by enabling companies to set science-based emissions reduction targets. This is based on the latest findings of climate science, according to which the global community must drastically and rapidly curb the further rise in temperature in order to avoid further catastrophic effects of climate change and still be able to meet the target set in the Paris Agreement of limiting global warming to below 1.5 degrees Celsius if possible.

Unlike potential-based climate targets, which look at how much the company can reduce its emissions, the development of a science-based target looks at the question: By how much does the company need to reduce its emissions to meet the Paris climate target?

Science Based Targets show companies how much and how fast they need to reduce company-wide greenhouse gas emissions to do their fair share to combat climate change. Unlike previously developed potential-based climate targets, which look at how much the company can reduce its emissions, developing a science-based target looks at the question: By how much does the company need to reduce its emissions to meet the Paris climate target? The number of companies engaged through SBTi has been growing strongly recently, and the transformation towards a decarbonized corporate world has begun. Thus, the SBTi is increasingly steering towards a much-needed standard for the development of climate strategies, which currently does not exist. Large companies in particular are increasingly setting science-based climate goals. But there are also opportunities for SMEs to join SBTi, and they are increasingly being required to do so by their customers.

The ScienceBased Approach for SMEs

The situation for SMEs is a special one. They often have little human and financial capacity to deal with this so urgent topic. The SBTi provides also for this group of companies a SWZ | Südtiroler Wirtschaftszeitung | December 16, 2022 Page 2 of 3 handout for setting climate targets based on scientific knowledge. The requirements are lowered compared to the requirements for large companies, and also the official submission and verification of the set targets, which are carried out by the SBTi for a participation fee, are simplified and cheaper for SMEs. To develop a science-based target, the SBTi gives five steps:

Declare intention – The first official step to join the SBTi as a company is a declaration of intention. For this purpose, the SBTi has developed the so-called commitment letter, which can be filled out directly online. This step should be preceded by an internal company process in which the status quo is highlighted.

Develop – Once the letter of intent has been submitted, the real work begins on the path to becoming a science-based target. The company is given up to 24 months to develop reduction targets for the company’s own emissions. A key limitation to note here is that initially only reduction measures can be considered and not offsets, i.e. investments in climate protection projects elsewhere or compensatory measures that take place within the company but do not represent a direct reduction.

Submission – The developed climate protection targets are finally submitted to the SBTi and validated by its expert:in. It is common for queries to be made to the company to check the feasibility of the formulated target. In the end, the validated and science-based climate target is set so that implementation planning can begin, which is no longer part of the SBTi process.

Publish – The SBTi regularly publishes the added targets of validated companies on its website. The time has come for companies to think about their own communication of the SBT set in order to make sense of the benefits of participation.

Report – Participating companies are encouraged to report regularly on the progress of their climate strategy implementation. This allows stakeholders outside the company to track the progress of the effort.

 

Advantages of a science-based target for companies

Companies that join the Science Based Targets initiative can reap several benefits:

  1. Trust and credibility: An SBTi builds trust with customers and credibility with investors and other stakeholders.
  2. Innovation: A concrete and courageous approach to climate protection generates innovative ideas for products and business models. Climate protection also stands for increased efficiency and thus reduced costs.
  3. Competitive positioning: Companies with a science-based target can set themselves apart from the competition today.
  4. Long-term planning security: A climate strategy that meets the requirements of the SBTi provides long-term planning security.
  5. Genuine climate protection: The climate strategy developed is in line with science and this provides great certainty that we are on the right path to transformation.

Suppliers in all sectors create the best conditions for their products on the market with an SBT. After all, companies that need to reduce their greenhouse gas emissions across the entire value chain will – as the first retail chains have already shown – demand SBTs from their suppliers in a timely manner. And ultimately, it is also a healthy and future-proof positioning for the company to use SBTi to set the course early on for business models and solutions that will also be in demand in a “green economy” of tomorrow.