The Science-Based Targets Initiative (SBTi) unveiled its new, much anticipated Corporate Net-Zero Standard, a global framework for corporate Net Zero target setting in line with climate science. Until now, organisations had no trustworthy way of knowing if their targets and decarbonisation plans align with keeping global temperature rise under 1.5°C. With COP26 around the corner and growing public demand for meaningful action, the lack of coherence and consistency over the concept of Net Zero certainly didn't help matters, but instead often led to confusion and - sometimes valid - claims of greenwashing.
The need for global standardisation was clear and the new SBTi Standard is already boasting a comprehensive cycle of development. After welcoming input from more than 800 stakeholders across most industries, it has also been piloted this past August 2021 by over 80 different organisations.
The SBTi will begin validating targets from early next year. To get you started, here are some key things to note about the new Standard criteria:
1. You must set both near-term and long-term targets: targets should halve emissions by 2030 and produce close to zero emissions by no later than 2050.
It's also important to note that the timeframe for near-term targets has reduced from 5-15 years to 5-10 years.
2. What happens if a company's near-term target meets their long-term ambition? In this instance, a long-term target is not required.
3. Guidance on Scope 1 & 2 targets: must cover >95% of emissions and align to keeping global temperature increase to 1.5°C.
4. Guidance on Scope 3 targets: must cover at least 67% of emissions in the near-term and align to keeping global temperature increase well below 2°C. In the long-term, this increases to 90% of emissions and targets must align to keeping global temperature increase to 1.5°C.
5. Scope 3 screening: companies must complete a scope 3 inventory covering all 15 scope 3 categories to understand which emissions categories are relevant. Where scope 3 emissions make up over 40% over the overall emissions portfolio, scope 3 targets must be set.
6. Renewable electricity targets: thresholds for renewable electricity procurement have been set at 80% by 2025 and 100% by 2030, consistent with the RE100 recommendations.
7. Supplier engagement targets: they will be allowed for near-term targets, but
must be fulfilled within 5 years from the date the target is submitted to the SBTi.
8. Bioenergy accounting: CO2 emissions from bioenergy should be reported alongside the company’s GHG inventory. These emissions should be included within the target boundary when setting targets.
9. No Net Zero claims until long-term targets are met: most companies will have to wait until long-term reductions of 90-95% are made before neutralising emissions and being able to claim Net Zero.
10. Targets aren't everything: it is recommended that in addition to Net Zero targets, companies should make additional investments to help mitigate climate change, especially those that generate additional co-benefit for people and nature, including investing in climate finance.
11. Base year must be set as no earlier than 2015: companies that set Science Based Targets (SBTs) early will need to review and recalculate these. It is recommended that companies use the same base year for all near-term targets.
12. Transparency in carbon removals is encouraged: companies should disclose milestones and near-term investments to back up neutralisation commitments.
13. Carbon credits: they cannot be counted as emissions reductions, but can be considered when neutralising emissions or to finance additional climate mitigation beyond science-based targets.
14. Sector-specific methodologies: the SBTi is developing 1.5°C-aligned pathways and guidance for high-emitting sectors including forests, land and agriculture (FLAG), buildings, transport and industry.
15. The mitigation hierarchy: the guidance behind the new Standard is based on the principle that the first priority of organisations should be to address and reduce the impact of their value chain. All other investments and mitigation actions undertaken will be treated as an additional bonus and not as an alternative to emissions cuts.
Companies can commit to set Net Zero targets via the SBTi commitment letter, with the SBTi validating targets from January 2022.
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