How do we move towards a net-zero economy? Each year we draw closer to global targets and the need to take initiative towards our carbon footprint is becoming more and more critical to global sustainable development. The private sector plays a heavy role in this path to a sustainable future. One way of getting closer is through mitigating carbon emissions. The Paris Agreement aims to keep global temperatures under 2°C, limiting it to 1.5°C. Yet to do this requires great commitments backed up by climate science.
Understanding initiatives towards net-zero can be challenging. The term “net-zero” has sparked confusion amongst organizations with the lack of a clear definition and proper approach in solving climate change. Effective solutions must be made and to come up with a good decarbonization strategy, setting clear, concrete, and time-bound targets is key.
Science-based targets (SBT) provide private companies and financial institutions with the knowledge on how much greenhouse gas emissions they should reduce and how fast this goal should be achieved to deescalate the negative impacts of climate change. To facilitate its development, progress, and standardization, the Science-Based Targets Initiative (SBTi) was developed by the CDP, the World Resources Institute (WRI), the United Nations Global Compact (UNGC), and the World Wide Fund for Nature (WWF). This partnership aims to support the private sector in setting emission reduction targets in line climate science by defining what net-zero is and promoting the best practices in achieving this.
Through assisting companies and providing them with resources they can use in crafting their emissions reduction plans, the SBTi leads a global movement in response to the climate goals set in the Paris Agreement. These tailored science-based solutions transform the private sector into leaders responsive towards urgent climate action. Not only do these direct businesses towards a net-zero economy, but it encourages innovative solutions that also ensures the business continues to thrive and remain competitive in this evolving landscape.
By adopting a science-based approach, businesses are able to make a positive impact towards the environment through innovation. This then leads to an increase in trust and confidence from investors and consumers. Utilizing climate science in coming up with a roadmap towards net-zero also helps businesses better understand environmental and sustainability regulations.
In addition to empowering the private sector in taking the lead towards climate action, the SBTI developed the Corporate Net-Zero Standard. The framework contains guidance, criteria, and recommendations for companies to refer to when setting their science-based targets.
According to the Corporate Net-Zero Standard, businesses are to set near-term targets that halve emissions before 2030 and long-term targets that cut more than 90% of their emissions by 2050. For remaining emissions, companies are to establish carbon removal and storage initiatives that neutralize the residuals. Lastly, businesses are to invest in Beyond the Value Chain Mitigation measures which reduce emissions. With the Corporate Net-Zero Standard, businesses can create solutions that follow global targets and drive change across and beyond the value chain.
What is needed from a company to set their science-based targets? Setting a science-based target can be simplified into a five-step process.
Companies interested in science-based targets should first register online and commit to the initiative by submitting a letter with the intention to set a science-based target or have existing targets independently verified. After submitting the commitment letter, the company will be recognized on the website as a committed company and will now have two years to develop their targets.
Companies are given two years to develop their science-based targets. This should be aligned with the current criteria set by the SBTi. To further aid companies in planning, the SBTi has developed guides, criteria, tools, and recommendations. Sector-specific guidelines have also been provided for businesses to tackle different areas across their business. When developing a science-based target, companies should review and refer to the Corporate Net-Zero Standard and SBTi Criteria and Recommendations to ensure smooth validation.
Science-based targets are to be submitted for validation. These targets consist of near-term, long-term, and other updates and edits to past approved targets. For financial institutions and companies under the forest, land, and agriculture (FLAG) sector, sector-specific science-based targets and forms are also to be submitted.
During this stage, the company will be working with a technical expert that will validate their targets and provide them with feedback alongside a decision on whether these targets are approved or not.
Now that the targets have been approved by the SBTi, the target must be announced to the public within six months. If the targets are not made public, these will have to go through revalidation to ensure it is still aligned with the current criteria. The SBTi will also publicly disclose the targets in their respective dashboard in their website.
Monitoring and reporting progress is essential in implementing sustainability. Companies who have science-based targets are to disclose their current progress annually through sustainability reports, annual reports, or through the CDP.
Small to medium enterprises (SMEs) also get to set their science-based targets through a streamlined process that skips the first two steps and directs them straight to submitting their targets. For an SME to be eligible for the streamlined route, they must meet the following criteria:
How do we move towards a net-zero economy? The SBTi is crucial to this transition. Currently, more than 7000 companies have taken action, over 4000 have set science-based targets, and almost 3000 have net-zero commitments.
Ambitious global net-zero targets require ambitious action that steers the world further away from the impacts of climate change. Through setting targets and initiating action backed by climate science, the private sector can take the lead in global sustainable development. The path to net-zero can be paved by governing bodies and large enterprises, leading the way for the rest to follow and join them in sustainability.
At Keslio, we are deeply passionate about sustainability, equipping us with the expertise and extensive network needed to guide clients through their sustainability journey effectively and efficiently. Our expertise is particularly valuable for companies looking to embed sustainability practices into their businesses and investors looking to integrate ESG and impact into investment portfolios. To learn more about how Keslio can assist your organization on its sustainability journey, please don't hesitate to get in touch with us.
