On target: 6 business benefits of setting science-based targets
Science-based targets are undeniably good for the planet.
By assisting companies — some of the world’s largest emitters — to align their strategies with the goals of the Paris Agreement, science-based targets help accelerate the transition to a low carbon economy and avoid the worst effects of climate change.
But a new YouGov survey of 185 company executives from SBTi committed businesses confirms that science-based targets are good for business, too.
Here are six benefits a company can expect to see from setting science-based targets.
1. Brand reputation
As consumers become increasingly aware of the effects their choices have on the environment, and ethical consumption continues to grow as a hot topic, a brand’s reputation for sustainability is of paramount importance.
Indeed, 79 percent of corporate executives surveyed found a strengthened brand reputation to be one of the most significant business benefits for their company from committing to the Science Based Targets initiative.
Companies with science-based targets attest to that. For multinational technology company Dell, setting a science-based target offers a way to deliver the level of corporate responsibility its customers expect of it. Electricity operator EDP, meanwhile, said setting a science-based target shows "robustness, confidence and credibility."
2. Investor confidence
It’s not only customers that use sustainability as a benchmark of business credibility. Investors are increasingly taking interest in businesses’ environmental policies as they look to shore up their investments for the future. Indeed, some 52 percent of execs say their science-based target commitment has boosted investor confidence in their business.
For multinational retailer Tesco (PDF), setting a science-based target allowed it to "demonstrate their seriousness in tackling climate change both to investors and other stakeholders," proving itself to be a forward-thinking, sustainably minded company to a new generation of ethical investors.
3. Resilience against regulation
As national governments continue to work to implement the Paris agreement — and to ratchet up the ambition of their country-level pledges — companies can expect to see more regulation to curb emissions intensive activities.
Over a third (35 percent) of executives we surveyed report that setting science-based targets offered them increased resilience against upcoming regulation as more businesses see the benefits of future-proofing their business models and aligning themselves with the Paris Agreement early.
4. Increased innovation
With the transition to a low-carbon economy underway and growing in momentum, companies aligning their strategies with this step-change are opening themselves up to a world of opportunity. Almost two-thirds (63 percent) of respondents say setting a science-based target is already driving innovation within their company, while over 50 percent say they expect at least half of their products and services to be low-carbon by 2030.
Take multi-nation technology company Sony. Its science-based target helped it drive the development of new products for use in its manufacturing process, including a new plastic, SORPLAS, made up of 99 percent recycled material, which helps to reduce CO2 emissions by nearly 80 percent during manufacture.
5. Bottom line savings
While a frequently heard argument is that greening business models comes at too high a cost, those companies looking to set science-based targets are proving this wrong. Almost a third (29 percent) already see bottom-line savings thanks to their ambitious commitment.
By setting such a target, companies are ensuring their operations remain lean and efficient, and are building resilience against a future where resources — particularly those derived from fossil fuels — will become increasingly scarce and expensive.
The rising prices of raw materials can mean the difference between profit and loss, and SBT companies are showing they are on the right side of this equation.
6. Competitive edge
As the trail-blazers of the low-carbon transition, it is of little surprise that over half (55 percent) of those surveyed said committing to the Science Based Targets initiative gave them a competitive advantage.
With increased innovation, reduced uncertainty, strengthened investor confidence and improved profitability, those companies getting ahead of the curve will succeed in the low carbon economy.