The Science-Based Targets initiative (SBTi) launches the Corporate Net-Zero Standard, the world’s first framework for corporate net-zero target setting in line with climate science.
The SBTi is a partnership between CDP, the United Nations Global Compact, the World Resources Institute (WRI) and the World Wild Fund for Nature (WWF). It offers a best-practice approach to reducing emissions and setting meaningful targets.
Countries agreed to reduce emissions at the 2015 COP in Paris, yet by design these reductions won’t restrict us to a 1.5ºC increase in global warming. The idea was that countries would have five years to update their plans, and then announce more aggressive reductions at COP26 in Glasgow. At the time of writing, these new agreements seem unlikely to be sufficient on their own to prevent dangerous climate change. With an estimated 40% of global greenhouse gas emissions attributable to listed companies, the corporate sector needs to be front and centre of the global transition to net zero.
In many cases ‘net zero’ has allowed companies to offset a huge chunk of their emissions while continuing to emit greenhouse gases at the same rate as before. The SBTi's Net-Zero Standard moves the emphasis from the ‘net’ onto the ‘zero’ and requires companies to decarbonise at a scientifically credible rate before neutralising their residual emissions. As there are limited opportunities to truly remove carbon, this emphasis on ‘zero’ is critical.
The process for setting a valid net-zero target can be complicated. Hence many companies, with the best of intentions, set targets that are not rigorous enough and do line up with climate science. These targets are often unambitious, have no timeframe and do not consider how the target will be met. The SBTi Corporate Net-Zero Standard helps to resolve these issues and provides companies with a framework for setting net-zero targets which consider the scope of activities, scope of climate impact, timeframe and mitigation strategy.
The SBTi's Net-Zero Standard requires companies to set near-term targets within a 5–10-year timeframe and long-term targets with a target year no later than 2050. The near-term targets ensure rapid and deep emission cuts, while the long-term targets allow companies to make more aggressive cuts to scope 3 emissions. The Standard also requires companies to neutralise their residual emissions through the permanent removal and storage of carbon from the atmosphere. These residual emissions cannot exceed 5–10% of a company’s emissions, depending on its sector.
How can your company set an SBTi Net-Zero target?
The first step is to understand your impact by measuring your company’s carbon footprint, which for many UK companies is a requirement under the Streamlined Energy and Carbon Reporting (SECR) scheme. With a baseline in hand, you can start developing your science-based target. Whether viewing decarbonisation from a financial lens or an impact lens, being at the forefront of the transition to net zero is a way to gain a first-mover advantage.
You can learn more about the new standard here: https://sciencebasedtargets.org/net-zero
If you would like to discuss your approach to setting and communicating a net-zero target, please feel free to get in touch.