Corporates that have set science-based targets (SBTs) to tackle their contribution to climate change are on course to exceed them, cutting emissions at a pace that goes beyond the goals of the Paris Agreement.
That is the resounding conclusion of a new analysis of 338 companies that have set science-based targets, which assessed their progress against goals meant to result in emissions reductions in line with the 1.5 degrees Celsius temperature target established by the Paris Agreement in 2015.
A collaboration between the United Nations Global Compact, the World Resources Institute, CDP and WWF, the Science Based Targets Initiative (SBTI) launched in 2015 to support corporates in setting effective targets aligned with the goals of the Paris Agreement. The program invites businesses to publicly set medium and long term emissions targets covering their operations and supply chains, and then independently assesses whether they are ambitious enough to be compatible with the goals of the Paris Agreement.
According to the new annual progress report from the SBTI, companies with the scientifically validated targets in place have reduced their combined emissions by 25 percent since 2015, resulting in emissions savings of around 302 million metric tons of CO2 equivalent, which equates to the annual emissions of 78 coal-fired plants. The sharp reductions in emissions contrasts with an overall increase in global emissions from energy and industrial processes of 3.4 percent over the same period.
"Today's findings are a mark of progress at the beginning of a critical year for climate action," said Alexander Farsan, global lead on science based targets at WWF. "It shows that companies setting science-based targets are backing these commitments up with action — delivering the emissions reductions we know are vital if we want to meet the goals of the Paris Agreement."
Firms that have set targets are also ahead of schedule to meet them, the study finds. In fact, it shows that a typical company that has adopted an approved SBT has reduced their annual emissions at a rate that exceeds the pace needed to limit warming to 1.5C.
Setting science-based targets supports an ambitious decarbonization roadmap, clarifying the alignment with the Paris Agreement, and promotes a global net-zero energy system.
SBTI said the typical company with an SBT in place slashed their direct emissions — known as scope 1 and 2 emissions in the U.N. jargon — at a linear annual rate of 6.4 percent, exceeding the 4.2 percent rate required under the SBTi's criteria to meet 1.5C-aligned warming scenarios. As such, companies with SBTs are taking climate action at a pace that goes beyond that required by the Paris Agreement.
At the same time, a growing number of companies are adopting the targets — with the rate of adoption of science-based climate commitments doubling in 2020 compared with the period from 2015 to 2019.
Over a thousand companies — accounting for 20 percent global market capitalization — have set or are committed to setting a science-based target, the study found. Last year saw global behemoths such as Amazon, Facebook and Ford join the scheme, among 370 companies that signed up over the course of the year at an average rate of 31 per month.
Additionally, an increasing number of companies are setting targets aligned with limiting global warming to 1.5C rather than 2C or other less ambitious targets, the analysis shows, confirming that 41 percent of all companies with science based targets have 1.5C-aligned scope 1 and 2 targets.
The research also suggests the planned emissions savings of companies with science-based targets are set to drive $25.9 billion of new investment into climate mitigation initiatives over the next decade.
"Setting science-based targets supports an ambitious decarbonization roadmap, clarifying the alignment with the Paris Agreement, and promotes a global net-zero energy system, while reinforcing the message that climate action is an investment through which we can make a meaningful impact," said Ernesto Ciorra, chief innovability officer at Italian energy giant Enel.
Progress has been particularly marked in developed economies, the report shows. In 16 OECD countries, a critical mass of 20 percent of high-emitting companies have set science-based targets, the analysis found. 2020 saw the 20 percent threshold being reached in six new sectors, including the high-emitting and hard-to-abate cement and concrete industries.
The initiative is prioritizing bringing on board more firms from the construction and automotive sectors, the study said.
However, the global analysis also stressed that commitments are still lagging in some regions. While in Europe just over a third of all companies with the greatest climate impact have introduced or committed to setting a SBT, in North America the proportion languishes at 16 percent and in Asia just 12 percent.