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The Science Based Targets initiative is an international movement launched following the 2015 Paris Agreement on climate change. Its goal is to mobilize companies in the face of the climate emergency, support them in their decarbonization projects, and ensure these projects are compatible with the goal of limiting global temperature rise to 1.5°C and the objective of carbon neutrality by 2050.
To do this, the SBTi relies on a scientific method that ensures the targets set by companies are aligned with those established at COP21.
How does the SBTi work in practice? Is it considered a reliable approach? How can a company commit to a Science-Based Targets (SBT) process? What are the benefits it can gain?
The Science Based Targets initiative (SBTi): a tool for the ecological transition
The SBTi project was launched in 2015 at the initiative of four international organizations:
- the United Nations Global Compact (UNGC)
- the World Wildlife Fund (WWF)
- the Carbon Disclosure Project (CDP)
- the World Resources Institute (WRI)
The main objective of this initiative is tosupport companies in their decarbonization projects and ensure they set greenhouse gas (GHG) emission reduction targets that are aligned with the goals of the Paris Agreement and are scientifically viable.
To determine whether a company's emission reduction targets are aligned with a 1.5°C trajectory, the SBTi relies on science-based targets.
These targets must align with what the latest climate science deems necessary to meet the goals of the Paris Agreement: limiting global warming to well below 2°C above pre-industrial levels and pursuing efforts to limit warming to 1.5°C.
To achieve this, the SBTi has established a highly precise methodology that takes several factors into account:
- a carbon budget set to meet the 1.5°C warming limit goal
- GHG emission scenarios from the IPCC or the IEA (International Energy Agency)
- an emission allocation method: contraction of emissions in intensity or absolute terms, or convergence of intensity-based emissions toward a sector-specific benchmark
This methodology enables companies to set clear, science-based greenhouse gas emission reduction targets and contribute fully to global emission reductions, in proportion to their respective impact.
Strong synergies with international organizations
The SBTi has forged close ties with the GHG Protocol and the CDP, two widely recognized international organizations in the field of corporate decarbonization.
To validate SBT targets, using the methodology developed by the GHG Protocol is strongly recommended, if not mandatory. These synergies include accounting for all greenhouse gases and, most importantly, the GHG Protocol's method for calculating emissions by scope, particularly regarding Scope 3, which measures emission levels throughout a company's value chain.
Synergies with the methodology promoted by CDP questionnaires are also clear, which is especially justified given that the Carbon Disclosure Project is a founding member of the SBTi. Consequently, setting science-based targets is an integral part of CDP questionnaires. The absence of SBT targets can weigh heavily on a final score, potentially leading to the loss of an A or even an A+ rating.
Furthermore, the Science Based Targets initiative maintains numerous partnerships with other international movements, such as We Mean Business, Business Ambition for 1.5°C, and the ACT Initiative.
This complementarity between various international reporting frameworks and their mutual recognition provides companies with a global framework for initiating their decarbonization policies.
The SBTi Net-Zero Standard
In October 2021, the SBTi unveiled its "Net-Zero" standard for companies. This new framework encourages committed companies to set long-term reduction targets leading to carbon neutrality.
The "Net-Zero" target is built around four key points that go beyond the initial SBT approach:
- Set near-term targets: To meet the 1.5°C target, companies must set total emission reduction goals (scopes 1, 2, and 3) aligned with the Paris Agreement over a timeframe of 5 to 10 years maximum.
- Define long-term goals: In addition to short-term goals, the Net-Zero Standard requires committed companies to define long-term objectives that are compatible with scenarios aimed at limiting global warming to 1.5°C, to be achieved by 2050 (or 2040 for the energy sector).
- Contribute in the short term through carbon finance: Companies are encouraged to invest in carbon sequestration or avoidance projects outside their value chain. These actions are based on the purchase of carbon credits, a lever that remains complementary to GHG reduction efforts. However, the SBTi places greater emphasis on sequestered emissions than on avoided ones, considering carbon credits from avoidance projects to be less reliable.
- Neutralization: Finally, the last stage to reach carbon neutrality consists of reducing residual emissions as much as possible and then absorbing them through carbon sequestration actions.
Note that the SBTi has chosen not to account for avoided emissions within a company's value chain, which is not the case for the Net Zero Initiative promoted by Carbone 4. This therefore excludes the recognition of products and services marketed by the company that help reduce carbon emissions globally (e.g., bicycles compared to cars).
Why embark on a Science Based Targets initiative approach?
The SBTi is a movement that has quickly gained international recognition due to its rigor, reliability, and the credibility of the organizations behind it. Thousands of companies of all sizes have rapidly adopted the scientific approach it promotes to define their carbon trajectory.
To date, nearly 6,800 companies worldwide have committed to the SBTi , including more than 4,000 with ambitious science-based targets and over 2,600 with commitments to reach Net Zero by 2050.
This growth illustrates the increasing popularity of this initiative, the awareness of climate issues among companies, and the urgent need for them to adapt as quickly as possible, both for their brand image and for their long-term viability.
The SBTi has thus become one of the essential voluntary standards in the landscape of carbon accounting and corporate climate commitment.
The benefits for companies are as diverse as they are varied:
- Improve their employer brand and corporate image through climate action by showcasing concrete commitments that consumers and young talent are increasingly sensitive to.
- Strengthen investor confidence, as they increasingly value climate risk management, from reducing environmental impact to the company's ability to adapt to climate change, which is also closely scrutinized by financial institutions.
- Achieve substantial savings, particularly in energy, and improve operational efficiency through a comprehensive and clear understanding of their carbon footprint.
- Contribute to sustainable economic growth for future generations by committing to a 1.5°C SBT trajectory and deploying a tangible CO2 reduction strategy.
- Increase resilience to environmental regulations that are constantly evolving.
- Boost innovation and competitiveness by becoming a leader in innovation and sustainable development.
Understanding the mechanisms behind the SBTi
Committing to an SBT approach requires a concrete commitment to a decarbonization process, as well as transparency. Each year, companies must report on their progress toward the goals they have set and adjust them as needed to ensure they reach their long-term objectives.
They must also comply with four essential criteria set out by the SBTi:
- Cover a broad scope of emissions, including scope 3:
At least 95% of direct and energy-related emissions, from scopes 1 and 2, must be included in the company's SBT target.
Regarding scope 3, accounting is mandatory if it represents more than 40% of the company's carbon footprint. In this case, the reduction target must cover at least 67% of scope 3 emissions.
- No carbon offsetting : carbon offsetting is only permitted for companies wishing to finance additional CO2 emission reductions beyond their SBT reduction targets.
- Avoided emissions are not taken into account by the SBT
- Renewable energy certificates must be used solely to reduce scope 2 greenhouse gas emissions.
How to set SBT targets
The first step when looking to set SBT targets is toestablish a base year. The carbon footprint calculated for this base year will serve as the foundation for setting the company's decarbonization targets throughout its SBT journey.
To set its targets, the company must then create an emissions scenario to compare against its “carbon budget”, which is the maximum amount of GHG emissions it can produce by 2050 while still meeting the goals of limiting global warming to 1.5°C.
Finally, based on this analysis, the last step for the company is to set emission reduction targets that are compatible with limiting global warming to 1.5°C, in accordance with the Paris Agreement. To ensure these targets are scientifically sound, the SBTi provides companies committed to this process with a methodological framework to help them identify the best levers for improving their carbon footprint. The company should set medium-term targets (5 to 10 years) and long-term targets (by 2050), accompanied by interim milestones.
These targets can be formalized in different ways:
- absolute reduction targets
- relative or carbon intensity reduction targets
- supplier or customer engagement targets (Scope 3)
- renewable energy procurement targets: for Scope 2, these must account for 80% renewable energy by 2025 and 100% by 2030.
Companies may also submit combined targets, which address multiple scopes simultaneously. In this case, it must be ensured that the portion covering Scopes 1 and 2 is aligned with a 1.5°C global warming scenario, and the portion covering Scope 3 with a "well-below 2°C" scenario.
Companies must track their results against their established targets annually and, if necessary, reassess these targets in light of these results or any exceptional events that occurred during the period and may have impacted the company's GHG emissions.
The Science Based Targets initiative also develops accounting methodologies and sector-specific carbon pathways encouraging companies to set increasingly ambitious and relevant science-based climate targets. Of the 17 identified sectors, 8 sector-specific methodologies—such as cement, energy, financial institutions, and the SBTi FLAG (Forest, Land and Agriculture)—have already been finalized, with the others currently under development.
How do you join the Science Based Targets initiative?
Setting a science-based emissions reduction target is a long process that can take up to two and a half years. Understanding this journey and its guidelines is essential for your company to obtain SBT validation and play a major role in the fight against global warming and in sustainable development.
You must go through 5 steps to obtain SBT certification.
- Commit.
The first step is an administrative formality: the company must submit a commitment letter to the SBTi declaring its intention to set a science-based target. Various commitment letter templates, depending on the size of your organization, are available on the SBTi website.
- Develop
The company has two years to build its roadmap, which must be aligned with the goals of the Paris Agreement. To develop these science-based targets, the company must use the methodologies provided by the SBTi and, where applicable, the relevant sector-specific methodological framework.
- Submit
The company officially presents its decarbonization plan to the SBTi.
- Communicate
The company is encouraged to communicate extensively about its goals and to inform its stakeholders of its commitments.
- Disclose
The company must track its GHG emission levels at the group level and report on the progress made each year toward achieving its SBT goals.
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Sources:
- Science Based Targets official website
- “SBTi criteria and recommendations for near-term targets”, SBTi, April 2023
- “The SBTi launches its ‘Net Zero’ standard for companies: analysis and comparison with the Net Zero Initiative”, Julie Daunay, César Dugast, Arthur Pivin, Carbone 4, 10/29/2021
- “Reducing GHG emissions: towards an international standard?”, Jean-Baptiste Cottenceau, Crowe, 09/30/2020
- “What is a carbon budget?”, Climate Science 2030