The Science-Based Targets initiative (SBTI) has unveiled plans to develop the world's first global standard for corporate net zero target setting, laying the groundwork for a new standardized approach to corporate decarbonization strategies in a new paper published this week.
"Foundations for Science-Based Net-Zero Target Setting in the Corporate Sector" seeks to develop methodologies capable of ensuring that companies' net zero targets translate into tangible action consistent with reaching a net zero world by 2050.
The move from the influential NGO-backed body comes as the number of businesses announcing net-zero and carbon neutral goals continues to accelerate, bolstering global decarbonization efforts but also fueling fears that some corporate targets are more credible than others.
Developed during extensive consultation with stakeholders from the scientific, business, conservation and financial communities, the paper's authors identify two conditions for determining whether a corporate net zero target is "science-based." Firstly, it must lead to a depth of decarbonization consistent with the global emissions reductions needed to limit temperature rises to 1.5 degrees Celsius this century, as set out in the Paris Agreement. Secondly, it must neutralize the impact of any sources of residual emissions that cannot be eliminated by permanently removing an equivalent amount of atmospheric carbon dioxide.
Alongside establishing these basic conditions, the SBTI experts assess a variety of existing net-zero target setting practices and strategies consistent with achieving a net-zero economy, including carbon offsetting, a practice whose massive expansion has been criticized in some quarters.
Net-zero by 2050 is our north star but every second that passes between now and then will determine whether we get there.
The paper concludes that offsetting emissions can work as companies transition towards achieving net-zero emissions, pointing out that the approach can help direct finance from companies to activities that can avoid emissions or bring down atmospheric carbon concentration levels. However, it also emphasizes that offsetting emissions does not eliminate the need to reduce emissions in line with science, which it says must remain the "overarching priority" for companies and the "central focus of any credible net zero strategy."
"Net-zero by 2050 is our north star but every second that passes between now and then will determine whether we get there," said CDP's Alberto Carrillo Pineda, who helped write the report. "Alongside long-term ambition, we need to see aggressive emissions reductions in line with climate science, now, and across all sectors of the global economy. Hundreds of companies around the world are already showing that this is possible and putting their trust in science to build the zero-carbon economy of the future."
Currently, the SBTI validates companies' greenhouse gas emissions reduction targets if they are consistent with the Paris Agreement goals of keeping warming to well below 2 degrees Celsius or 1.5C above pre-industrial temperatures. Over 970 companies have committed to set science-based targets and 460 have targets validated by the initiative.
The new paper comes just days after five leading investor and NGO-backed bodies focused on enhancing and standardizing the disclosure of corporate sustainability performance issued a joint statement asserting their intention to work together to deliver a "comprehensive solution" for corporate reporting.
CDP, the Climate Disclosure Standards Board, the Global Reporting Initiative, the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board all signed the statement, which sets out a "shared vision of the elements necessary for more comprehensive corporate reporting."
"This year we have witnessed businesses around the world having to pivot their business models overnight, to prioritize the health and safety of their employees and customers above the immediate financial success of the business," said Charles Tilley, CEO of the IIRC. "The connectivity between sustainability-related factors and immediate financial-viability is clearer than ever before. It is why we are committed to working with our partners to drive a holistic system for reporting across the value chain. We know that businesses globally are already using a mixture of our frameworks and standards to provide stakeholders with robust, effective information to drive better decision-making and capital allocation via their integrated report. This document provides further clarity on how to do this effectively."
