This piece was highlighted by Climate Earth on July 31, 2018.
The Paris Agreement of 2015, forged during that year’s United Nations Framework Convention on Climate Change, provides cautious hope in the form of nearly 200 governments’ commitment to address climate change in verifiable ways. However, it alone is not enough.
A new paradigm, the low carbon economy, must be successfully built and it’s clear the world’s corporations have a lead role to play in that effort. Carbon emissions associated with the realities of conducting global business on a massive scale simply must be curtailed to achieve realization of the defining goal established in Paris – to limit this century’s temperature increase to well below 2° Celsius above pre-industrial levels.
Is it possible that the Science-Based Targets initiative has set in motion the necessary impetus for the critically needed transition to that low carbon economy?
The numbers involved are stark. The Intergovernmental Panel on Climate Change (IPCC) states in its Fifth (and most current) Assessment Report that “CO2 emissions from fossil fuel combustion and industrial processes contributed about 78 % of the total GHG emission increase from 1970 to 2010, with a similar percentage contribution for the period 2000–2010 (high confidence).”
But consider how difficult a proposal this is in today’s global economy. From the construction and operation of physical offices and factories, to the often distant acquisition of raw materials and labor, to distribution of services and merchandise – each aspect of the process requires that carbon emissions be quantified and a rational plan adopted to limit them.
This is where science-based targets are making a transformative difference. In late 2015, around the time the Paris Agreement was reached, a group of collaborators — including CDP (formerly the Carbon Disclosure Project), World Resources Institute, the World Wide Fund for Nature, and the United Nations Global Compact — organized to reflect the urgency of the challenge and form the Science-Based Target initiative (SBTi). The initiative advises corporations on, and approves the setting of, ambitious targets for emissions reduction and publishes accepted targets on its own and partner websites.
And how to identify meaningful targets?
Within the SBTi structure, corporations have three main options around the setting of targets. One is a sector-based approach, wherein major industries are assigned a specific portion of the global carbon budget and companies within them must set reduction requirements based thereon. Another is an absolute-based approach, in which a percentage of total global GHG emissions is assigned to individual companies for reduction. And, finally, an economic-based approach is possible. It involves assigning a company’s share of emissions based on its gross profit, since the global carbon budget can be equated to the global GDP.
Regardless of which approach is taken, SBTi evaluates proposed targets strictly on their ability to support the less than 2°C temperature change threshold. (It’s noteworthy that the practice of purchasing carbon offsets is not considered by the initiative to be an acceptable science-based target.)
SBTi works with companies to categorize defined science-based targets at three levels, encompassing direct and indirect GHG emissions:
- Scope 1: GHG’s directly emitted from sources owned or controlled by the company;
- Scope 2: Indirect GHG emissions from purchased, consumed energy;
- Scope 3: A broad category covering other indirect GHG emissions that occur in the value chain of a reporting company – some examples are fuel extraction, transportation methods not owned/controlled by the company, and waste disposal. Participation in SBTi requires that any company with Scope 3 emissions accounting for more than 40% of their total emissions set a specific Scope 3 target.
Scope 3 presents the biggest challenge for any company assessing its emissions. It’s much simpler to track only GHG’s resulting from direct operations (Scopes 1 and 2) than it is to study the upstream and downstream effects of the entire value chain. Companies that limit their efforts to direct operations may be well-intentioned, but they’re also leaving a lot on the table. This is because it’s been demonstrated that a company’s value chain emissions often represent the largest fraction of its total GHG emissions, thus if left unaddressed powerful opportunities for improvement can be missed.
Once a company is acting on SBTi-approved targets, it’s required to annually disclose its total GHG emissions publicly via such avenues as its website, annual report, and/or CDP questionnaire. SBTi doesn’t currently track a company’s progress against its targets, but annual reporting provides transparency and the ability to ensure any progress can be tracked. And while SBTi can’t require that company targets be evaluated periodically for continued relevance as science-based, it urges a proactive approach to ensuring a target’s efficacy hasn’t been compromised over time by climate change realities. Ongoing communication and, as needed, collaboration between the company and SBTi is crucial for success.
It’s important to underscore that it makes good business sense for corporations to successfully adopt science-based targets. In fact, it’s fast becoming more accurate to say that the greater risk exists for business in not embracing these changes. Exhibiting such leadership confers multiple benefits including early technological innovation; increased credibility among customers, investors and policy makers; and improved profitability resulting from a lean, adaptive business model – in other words, return on investment is strong.
Companies that have adopted ambitious environmental practices will also be more nimble in staying ahead of future global regulatory changes on GHG emissions. There’s a growing realization that business leaders can actually drive regulation by demonstrating to global policy-makers what’s achievable, resulting in gained influence around climate change negotiations and policy.
How is SBTI doing? Since its 2015 inception, a total of 440 companies around the world are committed to taking science-based climate action, 122 of which have SBTi-approved targets. As for U.S. participants, there are a total of 84 companies committed, 30 of them with approved targets. It’s important to note that these numbers are specific to the publication date of this piece, because the good news is that they increase regularly. This bodes well for the realization of one of SBTI’s overall goals, which is that by 2020 it will be standard global business practice to set science-based targets.
If the number of participating corporations continues to grow at its current pace, and there’s no reason to think it won’t, science-based target adoption will help thrust them into the role of big-time players in achieving the decline of greenhouse gas emissions so necessary to the future well-being of the planet.
The 19th-century French scientist Louis Pasteur observed that “Science knows no country, because knowledge belongs to humanity, and is the torch which illuminates the world.” Science-based targets have the potential to shine that light on one of the greatest challenges imaginable – preserving the planet for future generations.
To learn more about the Science-Based Targets initiative, visit its website.