What are Science Based Targets?
Greenhouse gas (GHG) emissions reduction targets are considered science-based if they are in line with the latest climate science to limit global warming to well-below 2°C above pre-industrial levels and pursue efforts to limit warming to 1.5°C.
The Science Based Targets initiative (SBTi)’s framework enables companies and financial institutions to set such emissions reductions targets that it considers necessary to meet the goals of the Paris Agreement.
Eligibility
The SBTi does not currently assess targets for cities, local governments, public sector institutions (over 500 employees), educational institutions or non-profit organizations. They also do not currently validate targets for oil and gas companies and fossil fuel extraction & production businesses.
Financial Institutions have special frameworks that they need to follow to submit their science based targets (SBTs).
Small and medium-size enterprises (SMEs) are given a concession in view of their limited resources and are only required to set Scope 1 & 2 targets by selecting from one of two predefined target options. Their targets can also bypass the validation stage (see Step 3 below). Even though they are not required to set Scope 3 targets, SMEs still have to commit to measuring and reducing their Scope 3 emissions.
Steps
There are five steps in the SBTi target setting process:
- Commit
- Develop
- Submit
- Communicate
- Disclose
Step 1 / Commit
Companies fill out and sign a standard commitment letter to SBTi saying that they will publish near-term and longer-term science based targets within 24 months, if they haven’t already set those targets. Commitment lets companies be listed on SBTi and affiliated websites and also advertise their validated effort on their own company communications, websites, etc.
Step 2 / Develop
Companies have 24 months after signing the commitment letter to develop SBTs, submit to SBTi for validation, and, upon approval, have SBTi publish the targets publicly.
Prerequisite to setting targets: Business should have conducted scope 1, 2, 3 GHG inventories in accordance with GHG Protocol.
Base Year Selection: The meaningful and consistent tracking of emissions performance over the target period requires companies to establish a base year. Three considerations are important for selecting a base year.
- Verifiable data on scope 1, 2, and 3 emissions should exist for the base year.
- The base year should be representative of a company’s typical GHG profile.
- The base year should be chosen such that the target has sufficient forward-looking ambition.
If value chain data is difficult to obtain, scope 1 and 2 targets can use a different base year from scope 3 targets.
Target Year Selection: Companies must set a target that covers a minimum of five years and a maximum of 10 years from the date the target is submitted for assessment.
Companies must also ensure that the SBT and corporate inventory cover all relevant emissions of the seven different GHGs or classes of GHGs covered by the UNFCCC/Kyoto Protocol: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), perfluorocarbons (PFCs), hydrofluorocarbons (HFCs), sulfur hexafluoride (SF6) and nitrogen trifluoride (NF3).
Exclusions: Offsets and avoided emissions are not permissible to attain targets and are grounds for ineligibility. Avoided emissions must be reported separately from scope 1, 2 and 3 emissions, and must not be counted toward SBTs, including any scope 3 target.
Step 3 / Submission
When a company is ready to submit their targets for validation, they fill out a form and pay the appropriate fee to engage the target validation team at SBTi.
Step 4 / Announcing the Target
Upon approval, targets are published by SBTi on their website within 6 months. To facilitate this process, the company coordinates with SBTi’s Communication Team. Publication is a necessary part of the process and if a company opts out of it, their targets will not be considered valid.
Step 5 / Disclosing Progress
Progress can be reported in company sustainability reports, annual reports or similar, as well as via CDP’s questionnaire.
Progress should be reported on an annual basis and include the following:
- Description of target
- Emission comparisons against base year, preferably as a yearly breakup
- Reasons for substantial emissions changes
- Explanations for any significant deficits
- Any target revisions
- Information on successful projects
Step 6 / Recalculation
Companies are required to review targets every 5 years, and submit for revalidation if necessary. Recalculation may also be triggered by other events such as: Scope 3 exceeding 40% of overall emissions, acquisitions & mergers, etc.
In this article, we have summarized the broad steps required to certify science based targets by SBTi. In the followup article, we will cover in more detail the different types of targets and the various methods to calculate them.