In 2015, 195 countries came together to develop the landmark Paris Climate Agreement, which commits its signatories to take action that will prevent average global temperatures from increasing by more than 2°C above pre-industrial levels. This is a considerable challenge. Since the inception of the Intergovernmental Panel on Climate Change (IPCC) in 1988, more greenhouse gas (GHG) emissions have been released than in the previous 237 years. If this trend were to continue, most scientific models predict an average global temperature rise of more than 4°C by 2100.

Reducing GHG emissions by the middle of the century, to the point that human activity results in a net reduction of GHGs in the atmosphere rather than a net gain, has been identified as the most efficient and effective solution to this problem. Government commitments to reduce emissions are crucial to meet this goal. To meet the targets set in Paris, cities and companies must also make drastic reductions to their emissions.

The Science-Based Targets (SBTs) initiative was set up to provide companies and institutions with a clear path to achieve their required emissions reduction, through setting targets that are independently verified as being in line with up-to-date climate science. To date, more than 300 companies have committed to set SBTs.

What are Science-Based Targets?
The SBT initiative, a joint initiative by the Carbon Disclosure Project (CDP), the UN Global Compact, the World Resources Institute and the World Wide Fund for Nature (WWF), defines SBTs as follows:

“Targets adopted by companies to reduce GHG emissions are considered ‘science-based’ if they are in line with the level of decarbonization required to keep global temperature increase below 2°C compared to pre-industrial temperatures, as described in the Fifth Assessment Report of the IPCC.”

In most cases, an SBT will stipulate that an institution reduce its GHG emissions to 49-95% below 2010 levels by 2050.

Different types of institutions, from the national level to local government and businesses, adopt SBTs in different ways and for different, though often parallel, reasons.

  • Cities: Over half of the world’s population live in cities. Urban areas, with their dense population and the associated local environmental challenges, face great risks as a result of climate change. Ensuring urban infrastructure is resilient to increasingly common extreme weather events, such as floods, can be challenging and expensive. Cities have significant interest in mitigating climate change impacts before its effects initiate such catastrophes.

    As a result, many cities are adopting Climate Action Plans (CAPs), detailing how their communities can contribute to reducing emissions and prepare for what the Richmond CA CAP calls "the impacts of climate change on public health, infrastructure, ecosystems, and public spaces in our community”.
  • Countries: The 195 governments that signed the Paris Climate Agreement in 2015 are facing the challenges associated with following through on the Agreement’s goals. In addition to this agreement, they face many of the same practical challenges as cities, on a larger scale. Extreme weather events, the collapse of key ecological systems and large scale movements of the population brought about by climate change can all have damaging effects on a nation’s economy and infrastructure.

    The Paris signatories used SBTs to state commitments that will, if met, accomplish the goal of minimizing global GHG emissions, bringing them down to a flat level by mid-century.
  • Companies: A majority of GHG emissions are generated by the activities of businesses. If we are to meet the <2°C goal agreed upon in Paris, and prevent the effects of climate change, the private sector must also contribute to reducing emissions.

    As well as having a direct role in mitigating climate impacts, there are a number of co-benefits for companies’ setting SBTs. The transition to a low-carbon economy will catalyze the development of new technologies, from affordable offshore wind energy capacity to unique carbon capture and storage (CCS) methods. Setting SBTs puts your company at the forefront of this new wave of innovation. It also reduces regulatory uncertainty, helping you stay ahead of future government policies on GHG emissions that will regulate company behavior. SBTs are also an important tool for strengthening stakeholder confidence, reassuring employees, customers and investors that your company is taking a responsible approach to the issues of the modern world.

Setting Science-Based Targets
The first step in setting an SBT for your organization is to sign the SBT initiative Commitment Letter, which confirms your recognition of the crucial role your organization has to play in global emissions reduction. If your organization has an existing emissions reduction target, signing the letter registers your interest in having your existing target independently tested against the SBT initiative’s eligibility criteria. In other words, it is the first step in setting a new, verifiable science-based target for your organization.

There are three approaches to setting SBTs, each of which may be more or less appropriate to your organization based upon your specific priorities, operational models and current situations.

  1. The Absolute-based approach. This approach looks at the total emission reductions required globally to meet the Paris Climate Agreement targets and assigns a percentage of those reductions to individual companies. Targets created through this approach always commit companies to reducing their emissions to 49-95% below 2010 levels by the target year. This is the simplest approach, and the most environmentally robust. However, it can be inflexible, making it difficult to take into account for the changes a business may undergo during the target’s time span.
  2. The Sector-based approach. This approach divides the global carbon budget - the total amount of carbon emissions that can be produced before a >2°C rise is inevitable - by sector. The required emissions reduction of each company using this approach is allocated based on its share of the sector budget, calculated from the company’s initial carbon intensity and its projected growth. This approach is more tailored to each individual company and the industry/sector’s total GHG contribution.
  3. The Economic-based approach. This approach lines up the global carbon budget with global Gross Domestic Product (GDP). An organization’s share of emissions is determined by its gross profit, just as the sum of all institutions’ profits equates to the global GDP. The SBT initiative stipulates that all SBTs set using the Economic-based approach must, at minimum, commit companies to reducing emissions to 49% below 2010 levels, to ensure that those targets remain in line with climate science despite this more relativistic approach.

The SBT initiative offers various toolsmethods and resources that provide further detail on how to set your SBT. After signing the Commitment Letter, a company has two years to complete the process of setting its SBT. The SBT team will then verify the target against the eligibility criteria and decide to either formally approve the target or to highlight areas of improvement.

In order to meet the challenges of climate change, global organizations must take a leadership role in emissions reduction efforts. Setting Science Based Targets is an effective way for your organization to play an active part in mitigating climate change, catalyzing new technological innovation and communicating a responsible, future-focused message to customers and investors.

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