The reduction of Greenhouse gas (GHG) emissions is key to limiting global temperature increases. In the Paris Agreement, the globally supported objective is to limit the temperature increase to 1.5 °C in order to prevent irreversible changes to the environment. The Science Based Targets initiative (SBTi) is an international collaboration that supports companies in setting emission reduction targets in line with the Paris Agreement, following the latest climate science. This results in science-based targets (SBTs) which aim to reduce GHG emissions by 50% in 2030 and achieve net zero by 2050. At the core of this objective is the reduction of CO2 emissions, as they are a major contributor to temperature increases.
For whom?
Governments, NGOs, and businesses are collaborating on a global scale to limit temperature increases. The SBTi focuses on pushing corporate climate action and drives companies from a broad variety of sectors to reduce emissions, including SMEs. The SBTi invites frontrunners to publicly commit to the SBTs, with the ambition to make the SBTi approach the global standard in setting and reducing emissions.
Public organisations (> 500 employees), educational institutions, and non-profit organisations do not have the option to commit to the SBTs. Public organisations with less than 500 employees can commit to the SBTs via the SME route.
The science-based criteria
The science-based criteria explain which impacts should be taken into account and how these impacts should be calculated. The emissions are calculated following standards set out in the GHG Protocol, including Scope 1 (direct emissions), Scope 2 (indirect emissions), and Scope 3 (indirect emissions in the value chain).
Tracking emission reduction starts with establishing a base year. An appropriate base year has verifiable Scope 1, 2, and 3 data, represents a typical company’s year, leaves sufficient forward-looking ambition, and allows for recalculations of the base year.
At a minimum, 95% of the Scope 1 and Scope 2 emissions must be included in the SBTs. To calculate Scope 1 and 2 emissions, the SBTi has two accepted approaches: 1) the Absolute Contraction Approach (ACA), and 2) the Sectoral Decarbonization Approach (SDA). The ACA sets absolute emission reduction targets, whereas the SDA sets physical intensity targets relative to a specific business metric and is only available for a limited number of sectors. One of the sectors the SDA is available for is the chemical industry. You can find further information about the chemical industry and the SBTs in this article on our website.
Scope 3 emissions must be included if they account for more than 40% of the total Scope 1, 2, and 3 emissions. Since Scope 3 emissions are outside of the direct influence of the company, it can be challenging to include these emissions. Scope 3 emissions targets can be included as absolute targets, emission intensity targets, or as supplier or customer engagement targets. The latter focuses more on behavior and supplier engagement with the SBTi in order to reduce emissions.
Timeline and process
Setting science-based targets with the SBTi demands corporate dedication in terms of involvement, effort, and budget. For example, it can take up to 24 months from public commitment for the SBTs to be accepted. Additionally, annual progress reports are mandatory once the SBTs are accepted.
- The process starts with the Commitment Letter. Once the SBTi has received and confirmed the application they will publish the company on their website as ‘Committed’.
- After the commitment, companies can start the development of their targets. The targets should be in accordance with the science-based criteria. The SBTi provide elaborate guidance on their website. Additionally, for many sectors, there are sector-specific guidance and requirements available. Once a company has signed the Commitment Letter, it has 24 months to develop, validate and publish its science-based targets.
- Once the targets are set, a company submits its targets to the SBTi. This can be no later than 16 months after the Commitment Letter. The SBTi will review the submission, validate the methodology against the science-based criteria, and will provide elaborate feedback within 30 days. Companies should take into account that their submission can be subject to adjustment needs in order to meet the SBTi’s criteria.
- After approval, the initiative will send a welcome package including support on how to communicate their SBTs. Additionally, the SBTi will publish the SBTs on their website and the company will be classified as a ‘Company taking action’. It is important that a company publish their targets within six months after approval in order to prevent restatements as a result of new developments in the science-based criteria.
- Each calendar year the company should disclose its emissions in order to monitor progress in reaching the set targets. The SBTi recommends including emissions in annual reports, sustainability reports, or similar official communications.
Setting your targets
As a quantitative sustainability consultancy, Ecomatters is experienced in GHG emissions accounting, calculation, and reporting on Scope 1, 2, and 3 emissions. We can support your company with setting SBTs or on different stages in aligning with the SBTi process. Our support can cover data collection and GHG calculations, selecting the correct methodology, or validating your approach. We are also keen to work together and support you from submitting your Commitment Letter to creating your annual progress report.
