SBTi: Advancing Climate Commitments Through a Defined Framework
Many organizations are setting ambitious climate and emissions reduction goals as part of their broader sustainability efforts. For businesses that have committed to advancing their sustainability strategies, the next step is understanding what it takes to deliver on them, respond to greater expectations from customers and investors and build credibility over time through measurable progress.
Moving From Climate Goals to SBTi Commitments
Businesses often face challenges as they set targets and make progress toward their goals. The Science Based Targets initiative (SBTi) offers a structured framework for organizations to set greenhouse gas reduction targets and requires them to calculate emissions, establish targets that meet defined criteria and submit those targets for validation.
As organizations work through commitment and execution, they often face a range of operational and planning challenges. SBTi brings structure to target setting and helps businesses focus on building a plan that delivers reductions and tracks results.
Understanding the Gap Between Commitment and Execution
Thousands of organizations have committed to the Science Based Targets initiative (SBTi), highlighting their dedication to reducing emissions and working toward their long-term greenhouse gas (GHG) emissions reduction targets.
Setting SBTi targets also brings greater visibility and clearer expectations from customers, investors and partners who want to see measurable progress and reporting. In some cases, setting SBTi targets may be required or encouraged for some stakeholders looking for transparency on decarbonization progress to support ongoing business relationships.
As businesses move from commitment through approval and into execution, new challenges often emerge around tracking performance, meeting targets and continuing to make progress.
Progressing From Commitment to Target Approval
After setting SBTi commitments, organizations follow a multi-step process, starting with signing a letter of commitment, followed by a 24-month timeframe to complete their emissions calculations and submit targets for approval.
All companies are required to calculate their Scope 1 and 2 emissions and evaluate their Scope 3 emissions prior to establishing any targets. Estimating and calculating Scope 3 emissions can be complex and may require additional time and resources. If Scope 3 emissions represent at least 40% of total emissions, those targets must be included in the targets submitted to SBTi for most larger companies. However, setting Scope 3 targets is not mandatory for small and medium- sized enterprises, even though they are still required to commit to measuring and reducing those emissions.
Developing Reduction Targets to Align with Business Goals
After calculating emissions, businesses can establish short- and long-term reduction targets. Long-term targets are tied to reaching net-zero emissions, defined as reducing Scope 1, 2 and 3 emissions by at least 90% across the value chain before 2050.
Target pathways may vary by industry and scope of emissions. Some sectors, such as Building and Construction and Forest, Land and Agriculture (FLAG), follow specific pathways that reflect how emissions are generated across their businesses and define how targets are set across Scope 1, 2 and relevant Scope 3 emissions. Other industries, such as Cement and Steel, have the flexibility to choose their approach from options like the Absolute Contraction Approach, which focuses on reducing total emissions over time, or the Sector Decarbonization Approach, which ties reductions to sector-specific pathways, based on how their emissions are measured and managed.
Scope 1 and 2 targets typically offer fewer options, with many companies following the Absolute Contraction Approach, though there may be some flexibility by industry. Companies may also choose the Renewable Energy Approach for their Scope 2 emissions, which focuses on sourcing emissions-free electricity.
Scope 3 targets allow more flexibility in setting goals, including absolute, intensity-based, sector-specific or engagement-driven approaches, depending on the industry. Choosing the right path depends on the company’s industry, business objectives and operations, and understanding how these options differ helps businesses make informed decisions as they move through the process.
Moving from Target Approval to Reporting Requirements
Once a company determines appropriate targets, they must focus on validation, communication and ongoing reporting. Submitting their emissions and determined targets to SBTi is one step, and then they must follow these requirements:
- Submitting targets: Sending emissions data and targets to SBTi for validation as part of its GHG and target review process.
- Communicating targets: Sharing validated targets with customers, investors and the public once approved.
- Creating annual disclosure: Providing annual disclosures of GHG emissions and progress toward established targets in future years.
These requirements shift the focus from target approval to planning how emissions reductions will be delivered across the business.
Planning for Decarbonization While Addressing Common Challenges
Setting an SBTi target involves disclosure and a plan for reduction delivery across the business. After the goals are validated with SBTi, the real work of decarbonization and goal progression begins. Many organizations commit to SBTi before fully preparing for how to achieve reductions. To overcome this challenge, companies need to plan accordingly to meet ambitious SBTi goals.
Companies may face additional challenges at various stages of the target development and approval process, including calculating Scope 3 emissions and setting targets that meet SBTi requirements. After targets are approved and communicated, the main challenge is figuring out how organizations will achieve SBTi goals, including how reductions will be delivered and tracked over time.
Leveraging SBTi Certified Advisors
SBTi validation can support your business’ growth, innovation, relationships and cost savings. The real challenge is ensuring your business can maintain accurate reporting and execution as requirements evolve. Wherever you are in the process, Constellation Navigator Advisors are ready to help.
With fewer than 120 SBTi Certified Experts worldwide, the certification process involves rigorous training and assessment, covering SBTi requirements and technical proficiency across the full target-setting process. Navigator Advisors are all certified SBTi professionals and also certified in ISO 14064, ensuring familiarity with the Greenhouse Gas Protocol for emissions calculations.
Leveraging this expertise across these global standards, Advisors have experience helping clients set and validate targets, calculate emissions across all three scopes and create and implement plans to meet those targets. Contact the Constellation Navigator Advisory team to learn more about how we can help you overcome the challenges and support your SBTi commitments.
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The Science Based Targets initiative (SBTi) is a corporate climate action organization that enables companies and financial institutions worldwide to play their part in combating the climate crisis. For more information on SBTi, please see: Oil and Gas - Science Based Targets Initiative.
