Science based targets initiative (SBTi)

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By including this profile, the Initiative, its Supporting Institutions and the Secretariat do not endorse the activities described below nor the guidance and information provided in this profile.

Last udpated: July 2018

Website: sciencebasedtargets.org/

Contact: info@sciencebasedtargets.org

Summary: The Science Based Targets initiative (SBTi) is a “joint initiative by CDP, the UN Global Compact (UNGC), the World Resources Institute (WRI) and WWF intended to increase corporate ambition on climate action by mobilising companies to set greenhouse gas emission reduction targets consistent with the level of decarbonisation required by science to limit warming to less than 1.5ºC / 2°C compared to preindustrial temperatures”[1]. The initiative, launched in 2015, “defines and promotes best practice in science-based target setting, offers resources and guidance to reduce barriers to adoption, and independently assesses and approves companies’ targets”[2]. SBT is developing sector-specific methods and is currently working on developing a framework and guidance for the financial sector, concentrating notably on scope 3 emissions.

What are the objectives of the initiative?

The SBTi pursues four main objectives:

  1. “By 2020, at least 300 high-impact companies, representing at least 2 GT of emissions, will have science-based emission reduction targets in place.
  2. By 2018, at least 300 high-impact companies, representing at least 2 GT of emissions, will have committed to adopt science-based GHG emission reduction targets and more than 100 of these companies will have approved science-based targets.
  3. Science-based target setting will be embedded in key mechanisms and platforms that lead to the widespread and sustained adoption of GHG emission reduction targets in line with science as a standard business practice in priority regions and sectors.
  4. In support of the Paris Agreement, science-based targets from leading companies demonstrate to policy-makers the scale of emission reductions that are achievable to positively influence international climate negotiations and domestic climate policy.”[3]

Who launched it? Who is participating?

The SBT “is a collaboration between CDP, the World Resources Institute (WRI), the World Wide Fund for Nature (WWF), and the United Nations Global Compact (UNGC) and one of the We Mean Business Coalition commitments.” [4]

As of July 2018, “426 companies are taking science-based climate action and 114 companies have approved science-based targets.”[5]

Companies can join the SBT initiative by following four steps:

  1. Signing the Commitment letter;
  2. Developing a target;
  3. Submitting the target for validation;
  4. Announcing the target.

It should be noted that STBi pushes participating actors to take action once participation is announced: “The SBTi will remove all reference to committed companies that have not set approved targets within 24 months of committing. However, in instances where a company has demonstrated a good-faith effort to develop science-based targets and maintains its commitment to set them within a reasonable timeframe, the 24 month requirement may be waived. The 24 month requirement will also be relaxed in instances where the SBTi has specifically confirmed in written communication that science-based sector methodologies for a company’s sector do not yet exist.”[6]

“Once a company has committed to setting a science-based target, they are encouraged to also further pledge to phase out all greenhouse gas emissions by January 1, 2050 and join the Net-Zero by 2050 team.”[7] 

Why has this been put into place?

SBTi was put in place in the wake of COP21. “Many companies, recognizing the risk climate change poses to their business and the opportunity it creates for leadership and innovation, have already committed to change by setting emission reduction targets. Yet, to date, most companies’ targets have been incremental and do not match the ambition and timelines consistent with a 2°C future. SBTs represent a more robust approach for companies to manage their emissions over the long haul. SBTs are grounded on an objective, scientific evaluation of what is needed, rather than what is achievable by any one company.”[8]

What are the main work streams/areas of work?

The SBTi has four different areas of work. “The initiative:

  1. Showcases companies that set science-based targets through case studies, events and media to highlight the increased innovation, reduced regulatory uncertainty, strengthened investor confidence and improved profitability and competitiveness generated by science-based target setting.
  2. Defines and promotes best practice in science-based target setting with the support of a Technical Advisory Group;
  3. Offers resources, workshops and guidance to reduce barriers to adoption;
  4. Independently assesses and approves companies’ targets.”

Regarding financial institutions, SBTi together with 2 Degree Investing Initiative and Ecofys, is currently developping methods frameworks and implementation guidelines to set targets.

The deliverables of this project will be:

1) “An overarching report consisted of two parts:

Part A: Description of the framework including detailed description of the methods for maximum 5 asset classes to align the climate target of any financial institution with the Paris Agreement.

Part B: Guidance for FIs to use this framework with practical examples of FIs that have applied the associated methods on real case studies.

2) A Separate executive summary describing this methodology.”[9]

[10]

Have intermediate or final reports / guidance been issued?

  • Science-based Target Setting Manuel (draft – version 3.0) (2017) – “This manual represents a snapshot of existing best practices in setting SBTs. Over time, the expectation of what constitutes an SBT may change to reflect advances in economic modelling, climate science, and global emissions reduction efforts, and to reflect further lessons learned from setting SBTs. […] This manual does not provide guidance on implementing GHG reduction measures.”Commitment Letter for Financial Institutions (2017) – commitment letter designed for financial institutions, who’s SBT will differ from the ones put in place by companies.
  • Call to Action Guidelines (2018) – gives an overview of the different steps of the SBTi process.
  • SBTi Criteria (2017) – “All of the criteria listed below must be met in order for target(s) to be recognized as science-based by the Science Based Targets initiative’s (SBTi). In addition, companies should follow the GHG Protocol Corporate Standard, Scope 2 Guidance, and Corporate Value Chain (Scope 3) Accounting and Reporting Standard. The recommendations provided are also important to ensure transparency and best practices.”
  • Case studies on companies having implemented a science-based target – “[The SBTi] spoke to some of the companies who have set science-based targets about why they have chosen to do so. They explain how they got buy-in to the targets, the benefits and some of the innovations that are helping them achieve their goals.”
  • Quick guide to the Sectoral Decarbonization Approach (2015) – This document is an “introduction to science based greenhouse gas reduction targets”.
  • Sector Development Framework (2017) – “The Sectoral Decarbonization Approach (SDA) is a method for companies to set GHG reduction targets in line with the International Energy Agency’s detailed CO2 sector scenario for keeping warming to 2°C above preindustrial levels. This paper explains how companies can become involved in its further development.”

What are outcomes of the Initiative linked with the 5 Principles?

As of July 2018, “426 companies are taking science-based climate action and 114 companies have approved science-based targets”[11] and the initiative is really focusing on its objective “that by 2020, science-based target setting will become standard business practice and corporations will play a major role in driving down global greenhouse gas emissions.”[12]

Calendar and milestones

* http://sciencebasedtargets.org/wp-content/uploads/2018/03/SBT-finance-webinar-2.8.18-2.pdf

Associated Supporting institutions of the Climate Action in Financial Institutions Initiative. As of May 2018 the following institutions signed the commitment letter* to the SBTi:

[1] https://sciencebasedtargets.org/wp-content/uploads/2017/09/SBTs-Common-pitfalls-and-lessons-learned-in-target-setting_092017.pdf

[2] https://sciencebasedtargets.org/about-the-science-based-targets-initiative/

[3] https://sciencebasedtargets.org/wp-content/uploads/2017/09/SBTs-Common-pitfalls-and-lessons-learned-in-target-setting_092017.pdf

[4] https://sciencebasedtargets.org/wp-content/uploads/2017/09/SBTs-Common-pitfalls-and-lessons-learned-in-target-setting_092017.pdf

[5] https://sciencebasedtargets.org/companies-taking-action/

[6] https://sciencebasedtargets.org/faq/

[7] https://sciencebasedtargets.org/step-by-step-guide/

[8] https://sciencebasedtargets.org/wp-content/uploads/2017/04/SBT-Manual-Draft.pdf

[9] https://sciencebasedtargets.org/financial-institutions/

[10] http://sciencebasedtargets.org/wp-content/uploads/2018/03/SBT-finance-webinar-2.8.18-2.pdf

[11] https://sciencebasedtargets.org/companies-taking-action/

[12] https://sciencebasedtargets.org/about-the-science-based-targets-initiative/

Links with the 5 Voluntary Principles for Mainstreaming Climate Action

The SBTi is currently working on a dedicated framework and guidelines for financial institutions. First draft methods should be released by the end of 2018 and potential recommendations made could be highly related to the five Principles for Mainstreaming Climate Action.

This section aims to support discussions on the implementation of the 5 voluntary Principles for Mainstreaming Climate Action. Information provided in this section is for reference only; the Climate Action in Financial Institutions Initiative, its Supporting Institutions and the Secretariat do not endorse the activities nor the guidance and information provided in this section.

The Commitment Letter for Financial Institutions, 2017, recommends financial institutions to engage with their corporate clients:

“We are calling on companies to demonstrate their leadership on climate action by publicly committing to adopt science-based emissions reduction targets, accelerating take-up of these targets as a business norm. Those companies willing to lead the way will be recognized through events and media opportunities, as well as through sciencebasedtargets.org, the We Mean Business website, and partner websites. Due to the unique nature of the financial sector the Call to Action Campaign has established a separate process for this sector.”

Concerning the method to be used when setting a science based target, SBTi states in the draft Science-based Target Setting Manual that: “Companies should use either a sector-based method (SDA or 3% Solution) or Absolute Emissions Contraction. […] Companies should not default to the target that is easiest to meet. The SBTi recommends that companies use the most ambitious decarbonization scenarios and methods that lead to the earliest reductions and the least cumulative emissions.”

As stated in the Commitment Letter for Financial Institutions, 2017, a methodology for financial institutions to improve their climate performance by using science based targets is still being developed:

“The financial sector’s largest impact comes from its investment and lending activities (known as scope 3 emissions) and therefore it is imperative that targets for this sector encompass such activities. However, the method for assessing financial institutions’ scope 3 impacts against a well below-2°C emissions trajectory is still being developed. Therefore we cannot yet review or approve any targets submitted by financial institutions. In the interim, we invite such institutions to publicly commit to setting science-based scope 1, 2 and 3 targets when a methodology is available by signing the commitment letter below.”

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