Understanding the Impact and Reach of the Science-Based Targets Initiative

There are main emission reduction milestones on the horizon, firstly halving greenhouse gas (GHG) emissions by 2030, followed by achieving net zero by 2050.

The Intergovernmental Panel on Climate Change (IPCC) has stated that drastic cuts in carbon emissions are now urgently required to help prevent an environmental disaster. There are main emission reduction milestones on the horizon, firstly halving greenhouse gas (GHG) emissions by 2030, followed by achieving net zero by 2050. To date, more than 3,000 companies have pledged to set science-based targets or have had their targets approved by SBTi. But what are the requirements, and how do these targets influence the wider value chain?

Emission Scopes
Emission scopes categorise the carbon emissions a company creates in both its own operations and the wider value chain. Scope 1 covers direct GHG emissions from sources that are owned or controlled by the company, for example emissions from boilers, furnaces, vehicles, field emissions or leaks of refrigerant gases. Scope 2 refers to the indirect GHG emissions from energy that is purchased from a network, such as heat, steam, and electricity. Scope 3 covers everything else in the company’s value chain – suppliers and the production of raw material, the products a company purchases, travel, business commutes, waste disposal and the distribution, use and end-of-life of sold products.

SBTi targets cover at least emission scopes 1 and 2, and when more than 40% of a company’s emissions are within scope 3, then SBTi targets need to be set for all emission scopes. Scope 3 is often the biggest part of company scopes – this means that the science-based targets trickle down from large companies to SMEs in their supply chain, increasing the urgency for suppliers to understand science-based targets and pro-actively develop their carbon emission reduction roadmap, too.

Measure to Manage
Quantitative measurements are central to SBTi, enabling businesses to measure where they are and the improvement scenarios they should aim to achieve. It is not possible to implement a climate strategy without an accurate baseline to start the journey, whereas if you can measure, then you can see the progress, track changes, and continually improve. It is important to recognise that climate action is a continuous journey and that year-on-year there are ambitious targets that need to be achieved depending on the sector, company, and capabilities. dss⁺ supports businesses throughout the SBTi process which requires companies to calculate baseline emissions according to international best practices, set science-based targets aligned to SBTi criteria and, if applicable, sector-specific guidance. Once validated independently by SBTi, businesses can measure and track their progress, and will soon be able to use the new guidance to Measure, Report and Verify (MRV) in 2023.

Corporate Reputation
Driving climate change is a race against time. It is also a race to the top, with innovative and forward-thinking companies gaining a competitive advantage. The pressure from investors and stakeholders will only increase, asking pertinent lifecycle questions and expecting answers that are backed by science-based data, as well as visible and impactful actions. Similarly, businesses need to be asking themselves fundamental questions about the sustainability of their practices: Are we credible? Are we challenging the status quo enough? A clear benefit of the SBTi approach is that it demonstrates credibility and transparency. In that respect, carbon accounting and lifecycle assessment provide complementary standardised frameworks that are widely recognised for their reliability to quantify the impacts of companies, products and services throughout their supply chain. In order to adhere to the best practice standards, these studies require a review by one or several independent third parties before external communication, the same way that a company’s targets are reviewed by the SBTi. This transparency is the first necessary step to comparing and improving practices; if companies are truly committed, then they need to be credible. Being backed by science and data is a powerful enabler for businesses to ensure full transparency with their customers, consumers, investors, and regulators.

Companies need to adopt a risk-based approach and accept that varying levels of organisational transformation will be part of the process not only across sustainability, but operations, and even safety.

Company Transformation
Tackling the climate crisis requires input and action from all individuals and organisations to achieve economy-wide net-zero emissions. To do this, companies need to adopt a risk-based approach and accept that varying levels of organisational transformation will be part of the process not only across sustainability, but operations, and even safety.

In practice, this transformation can be divided into two parts: technological innovation and company capabilities and culture. Technological advances will inevitably play a key role in shaping reductions in the energy that is consumed and produced. By gaining a better understanding of CO₂ impacts and where key emissions are generated, opportunities for new business models and product improvements can be explored. Working in parallel, organisational capability transformation should be coordinated, including leadership commitment, process alignment, and training.

The dss⁺ Bradley Curve™ is a proven framework to help clients understand how to achieve a shift from a reactive to a pro-active resilient organisational culture. Resilience is a key word when considering the benefits of integrating SBTi, as it prepares for regulations relating to transitioning to a low-carbon economy.

Finding alternative energy sources and opportunities is also an important means to reduce exposure to geopolitical turbulence and price instability, which are predicted to cause major risks for the economy in the coming years. Increasing this resiliency requires leadership buy-in from the top, which is then filtered down to middle management and beyond. dss⁺ works with leadership at all levels to secure mindset change within a company, whereby an organisation that needs to learn, can become a leader and drive momentum.

Key learnings: the 3 C's

At dss⁺, we help organisations unlock the maximum value from an ESG or Sustainability strategy through a risk-based integrated approach, leveraging operational excellence and risk management to protect, transform and sustain business impact.

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