By Pianpian Wang
One silver lining to COVID-19 is that multiple sources and news outlets are showing an increase in businesses and individuals taking action to tackle the climate crisis that we all face. One example is that more businesses have started to develop science-based targets (“SBT”) to reduce carbon emissions in line with what the best science says is needed to limit emissions to safe levels. As of early October 2020, 1,009 companies joined the Science-Based Target Initiative (“SBTi”) to set organizational emissions reduction goals that give the world a chance at keeping warming below 1.5°C and 2°C. In 2020, there has been a record rate in the number of companies joining SBTi with an average of one per day.
What is SBT?
Launched in 2015, the SBTi uses SBTs as a powerful tool to engage companies in transitioning to a low-carbon economy. Companies can adopt a target to reduce carbon emissions as long as it is in line with the goals of the Paris Agreement, which are to limit global warming to well-below 2°C above pre-industrial levels and pursue efforts to limit warming to 1.5°C.
According to the SBTi, there are primarily 4 steps to establish an SBT:
- Submit a commitment letter to the SBTi
- Develop a reduction target that meets with the SBTi’s criteria within 24 months upon submitting the commitment letter
- Submit the proposed target to the SBTi for validation
- Track total carbon emissions on an annual basis
Feeling motivated? Here are some tips for your preparation before starting the Process:
Tip 1- Engage Your Suppliers
Inform your suppliers that you plan to implement a carbon reduction goal. Your suppliers will provide the data needed to understand your supply chain’s carbon hotspots. Allow your suppliers time to gather this information. Plus, the more time and care given to proper data collection increases your potential to influence other business partners and be more organized in mitigating shared carbon impacts together.
Tip 2- Calculate Your Business’s Carbon Footprint
Companies cannot set a reduction goal unless they know how much carbon they produce. Similarly, businesses cannot know their impact or set goals around reducing it, unless they have calculated their carbon footprint from daily business practices. To make sure their goals are well-founded, the carbon footprint calculations those goals are based on must first use well-recognized industry methodologies to measure carbon emissions. Secondly, companies must set appropriate boundaries for carbon emissions measurement. Businesses can choose to calculate the emissions generated from all 3 scopes of emissions or only measure emissions from scope 1 and 2. SBTi notes that parent companies must include the emissions of all subsidiaries in their target submissions.
If you are short on time or bandwidth or don’t know where to start, you can always ask for help in developing your business’s carbon inventory.
Tip 3- Determine What Approach to be Used to Set the Goal
SBTi offers 2 different approaches to set SBTs: the absolute-based approach and the economic-based approach. The absolute approach requires businesses to reduce emissions at 2.5% per year for well-below 2°C alignment, or a 4.2% absolute reduction in emissions per year for 1.5°C alignment. The economic-based approach allows companies to set intensity targets with greater flexibility, as long as reductions are, at a minimum, consistent with the lower the range of emissions scenarios that are consistent with the goals of the Paris Agreement.
However, for small and medium-sized companies, they need only choose between two default options: 50% or 30% of absolute reduction of scope 1 and scope 2 GHG emissions by 2030 from a 2018 base year, and to measure and reduce its scope 3 emissions.
Once companies make the decision on which approach to take, they must choose which year to use as a baseline for comparison. SBTi recommends the most recent year for which data are available as the target base year.
Tip 4- Be Ambitious about the Goal
Don’t aim for easy targets but use SBT as an opportunity to improve your resilience as a company beyond a capacity to reduce carbon emissions. More importantly, SBT is a great way to show investors, employees and consumers that you and your business are on track to make some great changes in the world and are ready for the uncertainty of the future!