Learn how to drive climate action and sustainability within your organisation with the Science-Based Targets initiative (SBTi).
Getting Started: The Science-Based Targets initiative (SBTi)
The SBTi is one of the most relevant carbon reduction entities in the world. More and more companies are engaging with the organisation to align their carbon emission reduction targets with the most up-to-date climate science research. In addition, companies recognise the benefits of having SBTi validate their targets as this could reflect their commitment towards a low-carbon economy which could mitigate business risks associated with climate change and gain long-term resilience, a competitive advantage, and full trust by their stakeholders.
In this article, we’ll explore who the SBTi is, how it works, its key objectives and criteria in setting science-based targets, then dive into the specific steps of setting the targets, and how companies of all sizes can benefit from it.
About the SBTi
The Science-Based Targets initiative (SBTi) is an organisation that focuses on corporate climate action, it enables companies and financial institutions to act upon their responsibilities in combatting the climate crisis. The initiative was launched in 2015 as a joint partnership between CDP, UN Global Compact, World Resources Institute, and WWF. Its primary goal is to mobilise companies to take transformative action in line with the goals of the Paris Agreement.
The SBTi has developed standards, tools, and guidance for entities in setting greenhouse gas (GHG) emissions reduction targets by what is needed to keep global heating below catastrophic levels and attain a net-zero economy by 2050.
Defining a ‘Science-based Target’
‘Science-based targets’ refer to the actual reductions from your carbon footprint. It does not account for the emissions you avoided or the carbon offsets you purchased. A science-based target only recognises your carbon reductions without any adjustments or compensations. These targets are based on the level of decarbonisation required to keep global warming well below 2ºC compared to pre-industrial levels.
The SBTi provides guidance for companies to set emissions reduction targets through the following criteria:
- Alignment with the Paris Agreement: Targets must be aligned with the goals of the Paris Agreement. Ensuring that global warming temperatures remain well below 2°C above pre-industrial levels, but limiting it to 1.5°C.
- Sector-specific requirements: The SBTi has ambitious but feasible targets that cater to many different industries, considering variations in emissions intensity, technology availability, and other factors.
- Scopes of Emissions: Utilising the GHG Protocol’s framework, SBTs should cover 95% of Scope 1 and 2 emissions, and if Scope 3 emissions constitute 40% or more of the total, they must be included as well. (While specific Scope 3 SBTs are not currently mandatory, it is still crucial even for businesses below the 40% threshold to measure, report, and manage their Scope 3 emissions.)
- Timeframe: Targets should specify a timeframe within which emissions reductions will be achieved. It could be short, medium, or long-term, depending on the company’s capabilities and sectoral considerations.
- Ambition: Targets must be ambitious by setting emission reduction goals that go beyond a business-as-usual setup and contribute overall to limiting global warming.
- Measurability and transparency: Targets must be SMART: Specific, Measurable, Achievable, Relevant, and time-bound.
- Validation and approval: Targets need to be submitted to the SBTi for validation. The SBTi assesses whether or not the targets meet these criteria and gives approval if they are deemed science-based.
By meeting these criteria, companies can ensure that their emissions reduction targets are consistently met with the most recent climate science and contribute to global efforts in addressing climate change.
Key Objectives and Initiatives of the SBTi
The SBTi has several key objectives that guide its initiatives and activities. Firstly, it aims to mobilise the business sector to take ambitious and immediate action in line with the goals of the Paris Agreement. By providing a clear framework and a comprehensive methodology for setting science-based targets, the SBTi enables companies to contribute effectively to global climate efforts.
Secondly, the SBTi seeks to drive innovation and collaboration among companies, encouraging the sharing of best practices and lessons learned. By showcasing successful case studies and highlighting the business benefits of adopting science-based targets, which you can find on their website, the SBTi inspires companies to take bold action and become leaders in the transition to a low-carbon economy.
Another key objective of the SBTi is to engage financial institutions in promoting sustainable investment. By encouraging companies to set science-based targets, financial institutions can ensure that their investments align with climate science and contribute to a more sustainable future. This collaboration between the business and finance sectors is essential to achieve the scale of change needed to address climate change effectively.
Who Is It For
The SBTi is designed for companies of all sizes and sectors that are committed to taking climate action. Whether you are a multinational corporation, a small or medium-sized enterprise, or a financial institution, the SBTi provides the guidance and support necessary to set science-based targets and drive meaningful change.
Large corporations can leverage their resources and influence to make a significant impact on global emissions. By setting science-based targets, these companies demonstrate their commitment to sustainability and can inspire their peers and competitors to follow suit. The SBTi has numerous case studies of large corporations successfully implementing science-based targets, showcasing the benefits and positive outcomes of such initiatives.
Small and medium-sized enterprises (SMEs) also play a crucial role in the transition to a low-carbon economy. The SBTi recognises the unique challenges faced by SMEs and provides tailored guidance to help them navigate the target-setting process. By setting science-based targets, SMEs can enhance their competitiveness, reduce costs, and attract environmentally conscious customers and investors.
Financial institutions have a dual role in driving climate action. They can set science-based targets for their own operations, aligning their investments with climate science. Additionally, they can support and finance companies that set science-based targets, ensuring that their investments contribute to a sustainable future.
Setting Science-Based Targets with SBTi
Setting science-based targets may seem overwhelming, but the SBTi provides a comprehensive and user-friendly guide to help companies navigate the process. On the other hand, NetNada is keen on helping you with your decarbonisation journey, which means you have our full support as you learn your way through your decarbonisation journey.
The SBTi guide can be found on their website, it breaks down the steps into manageable sections, ensuring that companies can make informed decisions and set ambitious yet achievable targets. From determining baseline emissions to setting reduction targets, the guide covers every aspect of the target-setting process.
The SBTi outline specific steps in working with them in setting targets:
Step 0: Getting Started
The first step is always the most challenging part. Working with our clients, we have learned that the hardest part of their decarbonisation journey is gathering all the data and information needed. These pieces of information can come in many different forms, and it is usually the most difficult when the information is not available online or in a digital database. But it’s not impossible. With an engaged employee and team dynamic, tracking down this information is very attainable.
The information you need to gather is company activities that emit GHG. This includes Scope 1, Scope 2, and Scope 3 emissions, as well as any other relevant data such as energy consumption and water usage. Once the data is collected, it is ready to be analysed. Various tools can be used in analysing carbon emissions data. NetNada offers award-winning tools and platforms that make everything easier in calculating emissions. Leveraging technology and utilising these tools will cut your preparation time for setting targets by a whole lot. Through this, companies can identify their baseline emissions and determine the appropriate reduction targets.
Once you have covered this step, you are now ready to proceed to Step 1: Commit.
Step 1: Commit
The SBTi requires you to register online and submit a commitment letter containing your business’ intent to start setting science-based targets. Or, should your company already have established targets, you can write a letter to request to have it independently verified. Once your company is committed, you have 24 months to submit your targets to the SBTi.
Step 2: Develop
Next, companies need to establish a target boundary, which defines the emissions sources and activities that will be covered by the science-based targets. This ensures that the targets are relevant and meaningful for the company's operations. Once the target boundary is defined, companies can proceed to set the actual targets, taking into account various factors such as sector-specific decarbonisation pathways, regional considerations, and the company's capacity for emissions reduction. The SBTi provides ample guidance and resources to assist companies in this crucial step.
After setting the targets, companies need to develop an implementation plan to guide their actions. This may involve identifying specific mitigation measures, investing in renewable energy sources, improving operational efficiency, and engaging with suppliers and customers to promote sustainability throughout the value chain.
Step 3: Submit
To submit your targets for validation, you must complete relevant forms for your company and target type. It is good to note that the whole process slightly differs depending on your company’s type of entity. For instance, SMEs have separate guides to follow and links to submit their data. It also differs on the target type such as Near-term targets, Net-Zero targets, or a Target update.
Once you have submitted your targets, you will be asked to sign and agreement, submit payment for validation services, and communicate with your assigned technical expert during the process. With about a 30-day period, you will then receive a validation decision with in-depth feedback. Instances where the companies have to resubmit would usually mean the company was not able to disclose all 3 scope emissions.
Step 4: Communicate
After setting the targets, your company needs to develop an implementation plan to guide its actions. This may involve identifying specific mitigation measures, investing in renewable energy sources, improving operational efficiency, and engaging with suppliers and customers to promote sustainability throughout the value chain. Moreover, the SBTi emphasises the importance of transparency and accountability, encouraging companies to publicly communicate their targets, progress, and achievements. The SBTi will also publish your approved targets on their website and offer a welcome pack with advice on how to communicate your new target to your stakeholders.
Step 5: Disclose
Following approval, your company will be required to disclose emissions annually and monitor progress. They provide recommendations for reporting, including disclosure through CDP, annual reports, sustainability reports and your company’s website. It is highly encouraged that you disclose your report publicly as it doesn’t only uphold transparency, but it also empowers your stakeholders to trust in your brand.
Setting Targets as a Company or Financial Institution
Setting science-based targets as a company or financial institution requires a comprehensive understanding of the target-setting process and the necessary resources to implement mitigation measures. These targets should be ambitious yet achievable, requiring companies to identify areas of emissions reduction and develop strategies to address them.
Companies can start by assessing their current emissions and identifying the most significant sources and sectors within their value chain. By focusing on these areas, companies can maximise their impact on emissions reduction. It is crucial for companies to engage with stakeholders and gather input from relevant experts to ensure that their targets are robust and aligned with the latest climate science.
Financial institutions can set science-based targets by committing to reducing their own emissions and investing in projects and companies that align with climate science. By implementing sustainable investment strategies and incorporating climate risk assessments, financial institutions can play a crucial role in financing the transition to a low-carbon economy.
Setting Targets as a Small or Medium-sized Enterprise
Small and medium-sized enterprises (SMEs) face unique challenges when setting science-based targets. Limited resources and capacity for emissions reduction can make the process seem overwhelming. However, the SBTi recognises the importance of SMEs in driving climate action and provides tailored guidance to assist them.
For SMEs, it is crucial to prioritise emissions reduction opportunities that are cost-effective and feasible. This may include energy efficiency measures, waste reduction strategies, and supply chain optimisation. By focusing on small and actionable steps, SMEs can gradually improve their sustainability performance and contribute to the achievement of science-based targets.
The SBTi provides numerous resources and case studies specific to SMEs, demonstrating the practical steps that can be taken to set and achieve science-based targets. By leveraging available tools and guidance, SMEs can enhance their competitiveness, attract environmentally conscious customers, and demonstrate their commitment to sustainability.
Why Businesses Should Adopt SBTi
Adopting the Science Based Targets initiative (SBTi) offers numerous benefits for businesses. Firstly, it demonstrates a commitment to sustainability and taking action on climate change. By setting science-based targets, companies signal their willingness to align their operations with climate science and contribute to the global effort to mitigate greenhouse gas emissions.
Furthermore, adopting science-based targets can enhance a company's reputation and brand value. Consumers, investors, and other stakeholders increasingly prioritise sustainability and expect businesses to demonstrate their environmental credentials. By setting science-based targets, companies can differentiate themselves and attract environmentally conscious customers and investors.
Implementing science-based targets also drives innovation and helps companies stay ahead of the competition. The transition to a low-carbon economy presents numerous opportunities for new products, services, and business models. By embracing this transition early on, companies can position themselves as leaders and innovators in their respective industries.
Overcoming Challenges in Implementing SBTi
Implementing science-based targets may pose challenges for companies, but with the right approach and resources, these challenges can be overcome. Lack of data and knowledge about the target-setting process can be a barrier, especially for smaller companies.
However, the SBTi provides comprehensive guidance and resources to support companies in gathering necessary data and understanding the methodology behind science-based targets.
Another challenge is the need for collaboration and engagement with stakeholders. Implementing science-based targets often requires working closely with suppliers, customers, and other partners to drive change throughout the value chain. By fostering collaboration, companies can identify shared goals, leverage collective expertise, and accelerate progress towards science-based targets.
Financial considerations can also be a challenge for companies, especially those operating in resource-constrained environments. However, the SBTi emphasises the importance of finding cost-effective solutions and highlights the potential financial benefits of implementing science-based targets, such as reduced energy costs and increased competitiveness.
Ultimately, overcoming these challenges requires commitment, collaboration, and a proactive approach to sustainability. By embracing the Science-Based Targets initiative, companies can become leaders in the transition to a low-carbon economy and contribute meaningfully to global climate efforts.
