Onwards and upwards: SBTi’s climate strategy requirements ramp up, and what this means for companies

Post Date
02 March 2023
Read Time
5 minutes

This article was written by Chloe Parkin for Corporate Citizenship - part of SLR. Corporate Citizenship provides ESG strategy, reporting, social and environmental impact and other sustainability consulting services to multi-national companies.

On 15 July 2022 the Science Based Targets Initiative (SBTi)’s climate strategy criteria were updated to a new level of ambition, meaning that companies must now commit to greater emission reductions in the near-term, to remain “science-based” within its leading framework.

The SBTi, a multi-stakeholder initiative co-ordinated between partners including the World Wildlife Fund, CDP, World Resources Institute (WRI), and UN Global Compact, develops guidance for companies to align their climate strategies with science, with a focus on providing a standardised language and framework for corporate commitments to be comparable between companies.

The updated ambition of the SBTi’s latest criteria reflect the changing needs for businesses to respond to the growing urgency of climate science, which increasingly emphasises the need to aim not to exceed 1.5°C of global warming. Recent reports including the IEA’s Net Zero by 2050 highlight the importance of this goal, while global discussions at COP26 also featured a renewed urgency to strive for this outcome. Our understanding of the possible differences to planetary life between a 1.5°C to a 2°C warmer world is growing, with striking potential impacts.

In this context, the SBTi’s update is welcome to ensure that business commitments remain relevant in striving to avert the worst outcomes of climate change. Here we outline what the key changes are, and what these mean for companies.

What are the key changes to the SBTi’s submission criteria?

There are two key changes to the SBTi criteria, which affect the level of ambition and timescales required for companies’ near-term SBTs:

  1. Stronger requirements for companies to align within 1.5°C pathways.

While the SBTi’s previous criteria accepted near-term scope 1 and 2 emission reduction targets that aligned with “well-below 2°C” (WB2C) pathways, and scope 3 targets which aligned with 2°C of warming, the near-term target requirements have now increased in ambition, to align with 1.5°C for scope 1 & 2, and WB2C for scope 3.

For context, as of today, 73% of the 1546 companies who have had their near-term targets validated by the SBTi, are aligned with a 1.5°C pathway, making this the most popular choice to date[1].

  1. Accelerating near-term science-based target time frame.

The minimum timeframe for setting a near-term emission reduction target, has accelerated from the previous 10-15 years, to 5-10 years. This reflects the drive to ensure that, in addition to companies potentially setting longer term Net Zero targets further in the future, that companies are also held to account for taking immediate actions to reduce their emitting activities, without delay.

What does this mean for businesses?

For companies with a validated science-based target:

Today marks the start of a process to gradually phase out “well below 2°C” scope 1 and 2 targets from the SBTi’s target validation framework.

If your company has already set and validated a near-term target in line with 1.5°C with the SBTi, then this change will not affect your strategy. Companies who set near-term SBTs aligned with WB2C in 2020 or earlier, will have until 2025 to update their targets and align with the more recent and ambitious requirements. All companies whose targets have been approved after that date, will be required to review and update their targets to the latest criteria every 5 years.

For companies without a science-based target:

The SBTi has quickly become the authoritative standard for companies to align their climate strategies with, in order to demonstrate ambition, credibility and be comparable against peer commitments. We strongly recommend for any company developing their climate strategy to align with the SBTi, for three key reasons:

  • Adopt a clearly defined standard for climate ambition, which can be easily communicated to customers and stakeholders without risk of greenwashing accusations
  • Align your decarbonisation strategy with the urgency demanded by climate science
  • Meet growing stakeholder expectation for credible and accountable climate commitments

While undoubtedly aligned with the emissions reductions that we need globally to have a chance of remaining within 1.5°C, it is yet to be seen whether these more ambitious requirements may cause hesitation among companies from higher emitting sectors, looking to align with the SBTi. However, the exponential growth in uptake among companies adopting the SBTi’s guidelines suggests no signs of slowing, with the initiative recently announcing that they have achieved a strategic “critical mass” of engaging 27% of high-impact companies. This trend suggests that companies aligning their climate strategies with science could in near future become the new “business as usual”; a necessary and positive step towards keeping 1.5°C within reach.

Corporate Citizenship, part of SLR, is an accredited climate change consultancy and Science Based Targets solutions provider, in partnership with CDP. SLR is a leader in specialised environmental services, with colleagues across 125 countries. Our expert teams have extensive experience helping companies to develop climate strategies that are both practical and science-based. Please get in touch at mail@corporate-citizenship.com if you would like to learn more about aligning your climate strategy with science, no matter what stage of your sustainability journey you are at.

[1] According to data exported from the SBTi’s website on 15 July 2022. This count does not include the additional 1800+ companies who have committed to set or have their near-term targets validated by the SBTi, some of which may have already aligned with the previous criteria and are in the process of undergoing validation.

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