The Science Based Targets initiative (SBTi) has today (28 October) unveiled the world’s first standard for corporate net-zero emissions aligned to climate science.
The SBTi’s new Net-Zero Standard is the world’s first science-based certification of companies’ net-zero targets. The certification is given to businesses if their decarbonisation strategies are in alignment with the Paris Agreement’s goal of keeping planetary warming to 1.5C.
The Standard was developed in consultation with an independent Expert Advisory Group, made up of experts from academia, civil society, science and business. More than 80 companies took part in a road test of the Standard in August 2021.
The validation process will officially launch next year. However, the SBTi has named the first seven firms to have their net-zero targets certified as part of a pilot scheme. AstraZeneca, CVS Health, Dentsu International, JLL, Holcim, Wipro and Ørsted have all had their targets validated.
Companies will be required to set both near and long-term science-based targets across all scopes. These included near-term targets covering the next 5-10 years, with longer-form targets capped at 2050.
The SBTi has clarified that science-based net-zero targets will require companies to achieve deep decarbonisation of 90-95% before 2050. From that point companies should neutralise unavoidable emissions through offsets and removals. Crucially, the SBTi states that carbon offsetting and removals cannot exceed 5-10% of a company’s emissions, although this is sector dependent.
The SBTi’s managing director Alberto Carrillo Pineda said: “Companies are currently self-defining net-zero targets without credible and independent assessment of their ambition and integrity. “For the first time, the SBTi Net-Zero Standard offers companies robust certification to demonstrate to consumers, investors and regulators that their net-zero targets are reducing emissions at the pace and scale required to keep global warming to 1.5C.
“We’re now inviting all companies with net-zero targets and ambitions to show stakeholders that their decarbonization pathway is aligned with science. And the rest of the business sector – we call on you to join the Race to Zero.”
In September 2020, the SBTi confirmed that it had kickstarted the development of guidance on what will ultimately lead to the development of a new global standard to ensure that corporate net-zero carbon targets are aligned with climate science.
The Foundations for Science-Based Net-Zero Target Setting in the Corporate Sector paper was released by the SBTi, which consists of representatives from CDP, UN Global Compact, the World Resources Institute (WRI) and WWF. The paper was created following consultation with businesses, financial organisations, conservation organisations and the scientific community.
The paper was the first step in an effort to ensure that corporate net-zero targets are aligned to climate science and efforts to deliver a net-zero world by no later than 2050.
To date, more than 300 companies have made a commitment to reach science-based net-zero before 2050 through the SBTi’s Business Ambition for 1.5C campaign.
The SBTi has also confirmed that it is working to develop metrics around net-zero for financial institutions and is launching its Net-Zero Foundations for Financial Institutions: Draft for Public Consultation on 10 November 2021.
Ahead of the G20 Summit in Rome this weekend, the UN Environment Programme Finance Initiative (UNEP FI) published a set of recommendations for financial institutions to reach net-zero, while a net-zero transition plan has also been published for pension providers.
The UNEP FI is calling on financial institutions to align with science-based targets and the 1.5C transition pathway while also establishing near-term decarbonisation targets. On the financing front, the paper calls for a cease of new fossil fuel developments and for institutions to transparently report on emissions and their allocation to real economy inventories. The paper also suggests that Scope 3 emissions should be accounted for and that organisations should highlight which emerging technologies can help accelerate the low-carbon transition.
Commenting on the SBTi’s announcement, Andy Haigh Director, climate positive solutions, at Grosvenor said: “This bold development of the Science-Based Targets initiative signifies a new gold standard net-zero definition. Creating a goal that requires a minimum 90% reduction is a stretching, long-term target and for some businesses thinking that far into the future is going to be a challenge.
“But, Science Based Targets are developed by some of the world’s leading climate scientists and looking at the latest science they are saying a 50% reduction of emissions by 2030 goal isn’t enough. We need to drive transformative action and this new standard will be a crucial part of this. At Grosvenor, we see this transformative announcement as positive, but are aware it is tough and will challenge a lot of businesses. It could involve some having to re-evaluate their baselines to incorporate their whole value chain. We’re hoping to be one of the first to align our Net Zero goals to this new framework and are continuing engagement work with our whole value chain as we know bringing people on the journey with us is key to driving change.”