The commitment of the private sector in the fight against climate change is critical to comply with the Paris Agreements. To this end, it is important for companies to set clear and measurable targets for moving towards a low-carbon economy. There are different ways to set targets, from purely random to the most rigorous. Setting science-based targets falls into the second category, as it involves setting goals based on climate science, which currently proposes limiting global warming to below 2 degrees Celsius above pre-industrial temperatures.
And I say today, because the recent Special Report on Global Warming of 1.5 °C, published by the Intergovernmental Panel on Climate Change (IPCC) and which will be a fundamental scientific input for the review of progress by governments at COP 24, urges consideration of the scenario of limiting global temperature increase to 1.5 °C. Its main contribution is that rapid, far-reaching and unprecedented changes are needed if irreversible consequences of climate change are to be prevented[1]; many of which would be avoided by limiting to 1.5 °C instead of 2 °C[2].
But until the international community says otherwise, the figure that those of us who work on climate change have most in mind is 2 °C. So setting a science-based target can be a definitive signal to the market and to stakeholders about our climate commitment. In this way we will be going further than even most governments whose Nationally Determined Commitments (NDCs) are not yet ambitious enough and leave us with a projected temperature increase of 3.2°C by 2100.
The Science-Based Targets initiatives (SBTi) - which counts CDP, Global Compact, World Resource Institute and WWF as partner organizations - proposes that organizations set such targets, i.e., draw up a clear roadmap for the future that details how much and how fast they will reduce greenhouse gas emissions.
Of the 498 companies[3] in 40 countries committed to setting a science-based target, 36% have already published their target. After signing the commitment and submitting it to SBTi, the first step is to know the baseline situation (base year and volume of emissions produced in that year). In addition, one of the six methodologies determined by SBTi must be chosen, which are divided into three categories: economic terms, absolute terms and sectoral terms. SBTi itself recommends the latter two, although the most widely used so far is the sectoral one, which has specific guidelines for the following types of activity: financial institutions, oil and gas, chemicals, textiles and footwear, and transportation.
Next, a roadmap will be defined including the reduction targets for each scope[4], a scenario proposal will be made - identifying the variables that will determine the evolution of emissions - and several GHG emissions projection exercises will be developed with the introduction of the selected measures in each corresponding scenario. Once the initial measures have been evaluated, their prioritization and the calculation of additional reduction needs, if any, the Monitoring, Reporting and Verification (MRV) indicators will be confirmed.
Finally, the company must register with the SBTi initiative and complete the "Science Based Target Form" which allows the SBTi team to review the organization's approved target against the eligibility criteria. After verification that the defined targets are indeed aligned with science and meet the requirements set by SBTi, the company will be included and showcased on the website.
Some may wonder about the benefits of benefitsApart from the good perception by society and other stakeholders, what are the benefits of putting effort and resources into setting a science-based goal? These include increased innovation, reduced regulatory uncertainty, increased credibility with investors and improved profitability and competitiveness, according to the companies that have already taken the plunge.
So far, almost 500 companies have already taken the initiative by committing to the proposal, including 18 Spanish companies, eight of which belong to the Climate Change Cluster (Correos, Enagás, Ferrovial, Gestamp, Meliá International Hotels, Naturgy, OHL and Red Eléctrica), and four have already published their objectives, including Ferrovial and Red Eléctrica.
Forética supports any tool that facilitates the transition to a more resilient low-carbon economy for companies and organizations and that, hopefully, will allow us to reach the 1.5 °C target. And science-based targets are proving to be a good solution for a growing number of companies, inspiring climate action.
For more information, the Carbon Trust is organizing a series of webinars to share the challenges and benefits of implementing science-based targets.
[1] In this Forética post you can access more detailed conclusions.
[2] Given the importance of the findings of this report, SBTi will take them into account in its annual review process to assess possible changes in its methodology. More information here.
[3] As of November 12, 2018.
[4] Scope 1 and 2 mandatory, Scope 3 only if more than 40 % of total sector emissions
