Cast your minds back to 2019, when the concept of 'Net Zero' hit the mainstream. More than 1,000 firms, eager to demonstrate sustainable ambitions, signed up to the 'Business Ambition for 1.5°C', a private-sector-focused initiative supporting the UN's 'Race To Zero'. The newly formed Science Based Targets initiative (SBTi) helped coordinate the project.
As part of the scheme, 600 signatories promised to set net zero targets. When the scheme expired this January, firms that did not meet this deadline to publish full net zero targets – or did not use the SBTi standard to do so – were removed from the SBTi dashboard.
In total, some 200 organizations have had their targets removed, including industry heavy-hitters Amazon, Diageo, Proctor & Gamble and Unilever. In an SBTi survey, signatories noted the key barriers to setting net zero targets included Scope 3, technological unknowns and lack of certainty that achieving such a target was viable.
While perhaps disappointing, this development should not come as a surprise: firms promised to make a net zero target, without considering how this would actually be achieved, or if it was even possible.
The issues highlighted here, however, aren’t confined to the signatory organizations – this turning point has revealed significant problems facing the SBTi:
- How can a body both set standards and charge firms to enforce them? Is this not a clear conflict of interest? The SBTi is incentivized to approve targets.
- Should the SBTi not disclose how it analyses and approves climate targets, and highlight why targets are rejected? This would boost credibility by showing the market that SBTi certification is actually linked to credible decarbonization plans.
One key question is just how much weight the SBTi still holds. It is a voluntary scheme, so its value is essentially communications-focused. And it is but one arrow in the quiver for decarbonization planning; Intel, for example, has announced that its climate targets are science-based, but not associated with the SBTi. Firms are free to have multiple net zero targets and claims – there is nothing stopping an organization claiming carbon neutrality through offsetting, while still maintaining an SBTi target.
The biggest issue for firms is Scope 3. To qualify for an SBTi target, firms must set a Scope 3 target if these emissions are greater than 40% of total emissions. Realistically, this will be the case for most firms outside of high-emitting sectors such as oil and gas.
But Scope 3 decarbonization is only partially in a firm's locus of control. And the GHG Protocol doesn't exactly support Scope 3 decarbonization – this requires regulatory support, of the kind detailed by the upcoming CBAM.
So how should firms react to the SBTi in 2024? Here are some questions executives must ask:
- Does an SBTi target have significantly more communications benefit than setting a bespoke target, with third-party assurance support?
- Would stakeholders prefer a strategy centred on complete 'net zero', or on incremental short-term decarbonization?
It is crucial for decision-makers to remember: as the market shifts from a focus on pledges to action, communications must follow suit.
