The Science Based Targets initiative (SBTi) has a clear and methodical approach to identifying best practices for businesses wanting to take climate action by setting emissions reduction targets. First, we set standards for what good corporate climate ambition, aligned with science, looks like. Second, we evaluate if companies’ emissions reduction targets align with those standards.
Everything is based on scientific assessment. All processes are standardised, so that all participants can analyse and measure success in the same way. And we work collaboratively. For example, to develop the Corporate Net-Zero Standard, we had an open consultation period with 800 participants from 40 markets and road-tested the results with 90 companies.
The challenges of corporate climate action
One of the key values of the SBTi is helping define what success looks like. The role of business leaders is to say: “here’s where we are, here’s where we need to go.” And that’s very important because then you can assess progress. Using science-based targets helps the whole institution to know exactly what they should be aiming for.
Every company goes through a journey when they decide to take corporate climate action. Firstly, they must measure in order to manage, so they need to account for the size of their emissions across scopes one, two and three. Then they can publicly disclose their emissions and set a reduction target in line with science.
That’s where we come in. We provide the resources that enable companies to set targets relative to their baseline emissions data - and we validate those targets in line with our criteria, to ensure they are both ambitious and achievable.
The next step, of course, is actually implementing the plans. And that’s the difficult part. But we did an evaluation last year and the companies that had their targets validated with us were reducing scope one and two emissions faster than their peers - at an average of 12% year on year. This is more than the 7.6% needed to keep global temperature rise within the Paris Agreement’s 1.5 degree goal.
Today, sustainability issues are not as well defined as, for example, a balance sheet. Everybody knows “I need to increase my profits” because everybody knows what a balance sheet looks like. All businesses record profits the same way, but it took 100 years for the financial sector to reach the point of standardised measurement processes. We’re trying to do that for corporate climate action and we don’t have 100 years - we must make immediate progress.
The business benefits of science-based targets
The upsides of science-based targets for businesses are clear. Companies that properly pursue a climate action plan are improving investor confidence, or at least reducing the risk perception of investors, which has tremendous value. They are reducing regulatory uncertainty, improving brand reputation and decreasing climate-related litigation risks.
The last IPCC report was crystal clear. We need to listen to the science community. At the SBTi we do listen and we translate that complex science into actionable insights for businesses. Understanding the science means leaders and their teams, their different departments, their investors and external stakeholders can also understand what success looks like. This is the one key thing which will help businesses make real progress when it comes to climate action and avoid just getting into a storytelling competition.
What started as a ripple is now a wave, and we can see an even bigger wave over the horizon. The number of companies and financial institutions with science-based targets has doubled every year for the past four years. More than 2600 now have a SBTi-validated science-based target, and 2400 have a commitment to do so - totalling more than 5000 businesses. And we only see this number continue to grow. Companies and financial institutions must commit to align their climate action with science today.
As told to Francesca Cassidy. Luiz Amaral is the CEO of the Science Based Targets initiative (SBTi).
