Setting Science-based GHG Targets

2017 was a big year for greenhouse gas (GHG) emissions reduction target setting.

But the goals established by a specific group of companies, including the likes of Dell, Carlsberg, BT and Mars, have not been plucked out of thin air, purely at random. Mars, for example, has set a target to reduce GHGs by 87% by 2030. And that is a goal established to align with the overarching objective of the Paris Agreement and the wider global effort to deal with climate change. It is a ‘science based target’. And by meeting such a target, companies are able to confidently state that their own impacts will have been curtailed so much that they are doing their bit to help the world stay within a global warming of 2 degrees Celsius.

Today, the efforts of the Science Based Targets Initiative (SBTI) have resulted in more than 300 companies now committed to set GHG reduction targets using the best available science to set their climate change impact course.

It is an interestingly development in corporate sustainability circles and is beginning to excite investors and other non-sustainability experts who perceive strategies to cut carbon as being more credible when based on science. A science-based target is proving to be a simple and objective way for companies to demonstrate that they are transitioning towards a low-carbon economy, reducing risks and boosting their resilience to this transition.

The SBTI has established three target-setting methods. Two of these are related to the ‘carbon budget,’ the remaining amount of carbon that can be emitted into the atmosphere to limit global temperature rises to well below 2 degrees Celsius.

  1. Sector-based approach, divides the carbon budget by sector and then allocates it to companies in that sector;
  2. Absolute-based approach, assigns to companies the same percentage of absolute emission reductions as is required globally, for example, 49% by 2050 from 2010 levels.
  3. Economic-based approach, where the carbon budget is equated to global GDP and a company’s share is determined by its gross profit.

To get involved, companies are encouraged to first sign a SBTI commitment letter indicating that they are willing to set a science-based emission reduction target. Should a company already have a target in place already, the letter confirms the business will have its existing target independently verified against a set of criteria developed by SBTI?

Once the letter is signed, companies have two years to establish a new target, and there are some tools and resources available to help arrive at the number. The next step is to have that target validated to ensure it is, indeed, in line with science.

Lastly, it is about shouting from the rooftops about the process and new position taken. Because, let’s face it, companies have really struggled to communicate their position on climate change. By setting KPIs that are in line with the global position on climate change mitigation and adaptation, underpinned by the Paris Agreement, companies are given much more confidence to argue that they are doing all they can to play their role.

Internally, science based targets are proving useful in securing healthier R&D budgets that might be used to unlock innovations that could take energy efficiency to another level, or develop new products and services that might take companies in a new low-carbon direction.

There is also a strong argument that such an approach can reduce regulatory uncertainty. By taking the most ambitious action now means companies are less likely to be tripped up by future policies and legislation that might be introduced, at home and abroad, to curb GHGs further.