Charting the path to net-zero: A guide to science-based target setting

The Paris Agreement, established during COP21 in 2015, seeks to limit the global temperature rise to well below 2°C and pursue efforts to limit the temperature increase to a maximum of 1.5°C above pre-industrial levels.

The SBTi established a global framework for companies to set carbon reduction targets that align with the Paris Agreement.

As a partnership between the Carbon Disclosure Project (“CDP”), the United Nations Global Compact, the World Resources Institute (“WRI”), and the World Wide Fund for Nature (“WWF”), the SBTi guides companies in their alignment.

It helps them align with scientific evidence, holds them accountable, fosters sustainability integration, and enhances the credibility of their carbon reduction targets.

As global temperatures rise, the imperative for companies to establish a credible emission reduction strategy is heightened. The SBTi enables adopters of the framework to achieve this, while helping them to attract stakeholders and investors, address regulatory pressures, and prepare for a low-carbon economy.

Setting a science-based target involves a five-step process, including understanding a company's carbon footprint, developing a target based on SBTi criteria, committing to and submitting the target, reporting annual progress, and reassessing if significant changes to the base-year carbon footprint occur.

After five years, there’s an evaluation of progress against the target.

A robust carbon footprint assessment is essential for crafting an effective carbon emission reduction strategy.

Before establishing a reduction target, a company must align with the Greenhouse Gas (“GHG”) Protocol, delineate emission coverage for all relevant scopes, ensure data quality using supplier-specific and activity-based information, and explicitly exclude offsets and avoided emissions from its target.

The SBTi provides a range of target-setting methods tailored to address the distinct challenges faced by companies, varying by their size and sector of operation.

Therefore, developing a science-based target involves three key aspects: determining the company’s sector of operation, choosing the target timeline, and selecting the target-setting method.

The SBTi has developed different methods for setting carbon reduction targets, varying from absolute reduction targets, intensity targets, and stakeholder engagement targets.

Once a company formulates its target, it commits and submits this through the specified form for SBTi validation. A successful validation leads to an announcement on the SBTi website. To ensure transparency and accountability, the company should disclose its annual carbon emissions and reduction progress through methods like sustainability reports, CDP reporting, or engagement with the PRI.

Every five years, the SBTi reviews the company's emission reduction progress. If the progress deviates from the targeted 4.2% annual reduction rate, the SBTi may invalidate the target.

If significant operational changes occur, such as a rise of 5% or more in base-year emissions, a company must recalculate the base-year emissions and their target.

In summary, the SBTi offers a robust framework for establishing carbon reduction targets and tailoring its criteria to fit a company's specific operations and sector.

With a solid carbon footprint assessment, companies can align their targets with current climate science. This alignment not only acts as a powerful marketing asset for engaging stakeholders and attracting investors but also prepares the company for upcoming regulations and the transition to a low-carbon economy.

How can we help?

Apex ESG has extensive experience in providing guidance for establishing targets and creating strategies to reduce carbon emissions. If you are interested in learning more about how we can help, please reach out to our Carbon and Climate team for additional information.