Don't have enough time to read ? Please find below our key takeaways ✍️
1. Set short term targets as steps to hit your long term goal
In the new Net-Zero Standard launched by the SBT in 2022, the first step is simple: Setting a short term target.
The SBT requires to commit to a first milestone with a 5 to 10 year reach that must be aligned with a 1.5°C world. When the due date of this “near-term” target comes, the company then has to assess its emissions and set a new short term target, still aligned with its long term objective. By setting new goals whenever a due date is reached, companies can reach their long term mitigation objective step by step and review their decarbonization strategy over time.
If your company assesses its net zero pathway, for example, it might come out that a 90% decrease of your emissions is needed by 2040. Then, you would need to set a “near-term” target, which might be a 40% decrease by 2030. In 2030, you assess again your carbon footprint, and the decarbonization needed for the next short term objective, taking into account your actual progress so far. This new “near term” target might be a 70% decrease by 2035.
As a comparison, for the absolute contraction method, the minimum reduction is calculated as a linear reduction rate corresponding to a 4.2% decrease per year.
How to take action ?👇
How to set your short term target?
Defining your short term ambition follows the same process as usual SBT, your company needs to calculate its present emissions, decide on the scope of its target (scope 1&2 or all scopes, which segments of your companies are included, what part of scope 3 can be dismissed…), decide on the target year and calculate the target with the SBTi tool.
Should you aim at having shorter term targets, even though you’re pursuing a 1.5°C, a WB2C or a 2°C goal?
Yes, as having those milestones helps transitioning from your present activity to low carbon, working on your decarbonization journey step by step. They enable your company to adapt to all kinds of changes or unexpected advances along the way. Your short term targets will inform you of the rate of emissions reductions or emissions intensity reductions that are needed to stay on track during a short period of time.
Key takeaways ✍️
- Having short term objectives aligned with your long term target allow you a step-by-step approach to achieve your ambitious targets.
- If you are willing to commit to Net-Zero, the “near-term” targets are required by the SBTi.
2. Capitalize on precise operational data
A successful low carbon strategy heavily relies on precise and actionable data. A reliable carbon footprint is necessary, first, to accurately understand what is your starting point, but also to be able to take the most effective decisions to reduce your carbon footprint and achieve your Science-Based Targets.
You can precisely assess the impact of your potential actions only if you used reliable data in the first place, to measure your carbon footprint, and to measure the different emission factors of your activity. Detailed information on the specific emission items are key to understanding precisely what are the causes for heavy emissions in your activity, and which can be reduced.
Using tools to clarify the availability of emission reductions and develop your carbon reduction pathway can be a good way of approaching a carbon strategy. They can provide you with a clear representation of what are the biggest sources of GHG emissions in your carbon footprint.
Example below👇
A steel retailer for which 90% of its carbon footprint is due to its purchase of steel. Let’s imagine that the company only uses a uniform measurement to assess the carbon footprint of all its steel purchases. That is to say, as an approximation, the company considers that every kind of steel purchased is emitting the same amount of CO2. Then, the company is unable to reduce its GHG emissions, if not by reducing its activity, buying and selling less steel.
The best practice here would be to have more precise data, e.g. different measurements according to the type of steel that is produced, to understand which steel is the most emissive, and then balance the share of different steels in the purchases to reduce emissions.
Here, the share of Steel 1 and Steel 2 in the purchases of the company decreased, which led to a decrease in their related CO2 emissions. The company bought more of the Steel 3, which is far less emissive, so the emissions due to Steel 3 raised.
The company still buys the same amount of steel, but the global Carbon Footprint of the company decreased.
Key takeaways ✍️
- Accurate and precise data with relevant metrics are the cornerstone of a reliable carbon footprint, hence a strong mitigation strategy to achieve SBTs.
- The appropriate degree of accuracy enables you to identify the right impact levers.
3. Disaggregate your global decarbonization target in specific goals and actions
Once the first step of deciding on a Science-Based goal is done, designing how to achieve it is essential. A lot of companies use tools, or external consultants to help translate their strategic decisions into concrete and specific actions that will effectively reduce the carbon emissions of the company. It would be advised to develop a tailored approach, depending on the sectors, regional peculiarities, or different activities that the company may entail. Workshops, and discussions with experts may accompany your company in the definition of specific sub-objectives adapted to the different segments. Those sub-objectives need to correspond to realistic actions that can be implemented.
Example below👇
If your overall SBT goal is to decrease your carbon footprint from scope 1 & 2 by 5% this year, and your USA segment has already implemented BMS and sources most of its electricity from renewable sources, but your Mexico segment didn’t implement any actions yet to tackle energy consumption. In this case, you can define tailored targets for both.
You would decide to achieve a 20% reduction in Mexico by using BMS and switching to renewables, and to continue efforts in the other countries by raising the share of renewable electricity in the total consumption.
Key takeaways ✍️
- Detailed objectives enable you to specify how your Science-Based target will impact your different activities and segments.
- Defining actionable measures to achieve those sub-objectives is a first step in translating your target into reality.
4. Take action on the value chain
The SBT acknowledges that for most companies, the biggest share of emissions comes from the Scope 3 and the value chain. The CDP has estimated that on average, the company’s supply chain emissions are 5.5 times higher than its Scope 1 & 2 emissions (CDP, 2019). Understanding the importance of this scope, in 2020, 94% of the companies that had committed to a Science Based Target had also set goals for their Scope 3 emissions (SBTI, 2021-a).
This sheds light on the need to engage with your supply chain in order to act on your scope 3 emissions. If you choose for a “physical intensity contraction” or “economic intensity” method to assess your reduction, there are a few things you can do to manage reducing your scope 3: First, you can ask your suppliers and clients to provide you with data on their own emissions, as a starting point for discussion. Encouraging best practice amongst suppliers and clients, building knowledge with them on how they can reduce their emissions are levers of change you can use. Some companies choose to accompany their suppliers or clients by providing them with SaaS solutions to simplify their data collection. A strong incentive you can create for your suppliers to decarbonize consists in including carbon assessment, or even a GHG emissions threshold in your bids.
For the new Net Zero Standard, SBT offers a possibility for companies to decrease their scope 3 emissions even though they might have low direct levers on the upstream and downstream value chain: the new engagement targets method.
What are engagement targets for Scope 3? As the SBT presents it, you can commit to influencing some of your suppliers or customers, representative of minimum 67% of your scope 3 emissions, to themselves commit to GHG reduction targets in line with a 1.5°C ambition for scope 1 and 2, and a well-below 2°C for scope 3. The SBTi Progress Report revealed that in 2020, 69 companies had opted for this approach (Science Based Targets, 2021-a).
Key takeaways ✍️
- Scope 3 emissions should have your attention, as they likely represent the most of your carbon footprint, and they are the ones over which you have the least control.
- Engaging with you supply chain is a powerful way to decarbonize the emissions coming from your suppliers and clients.
- You can now use the “engagement targets” method for your scope 3 emissions if you are committing to Net Zero, which means having a relevant share of your supply chain that commits to SBT.
5. Involve your stakeholders to reach your Science-Based Targets
A key step in smoothly implementing your newly designed carbon strategy is to engage with your internal stakeholders. To gain their support, they need to have a clear understanding of what their objectives are, so that they can take responsibility for their own SBT target.
Your teams will be truly empowered if they can adapt the implementation of actions to their reality. A way to do so is to provide an overview of possible actions they can carry out. Once your sectoral teams can access the list of actions proposed in your mitigation strategy, you can take the stand to empower them in the management of the actions on their business unit, and let them choose how they will deploy the different actions depending on their business reality.
To explain this, if a 5% yearly decrease is expected for each segment, some of them might prefer to first tackle emissions coming from the energy consumption, while others would have stronger levers on the suppliers’ side. By letting your teams know all their available options, you nurture your company-wide strategy with the real constraints and opportunity on the field. You can introduce a new financial incentive for managers, depending on the achievement of their own target, to encourage them to take the carbon parameter into account in their decision making.
Example below👇
For example, in a food company, if Business Unit A and B both need to reach a 25% decrease by 2025, they can adopt different changes: Business Unit A can switch 40% of its meat and products by vegetarian and vegan options, while Business Unit B, which can’t change the menu of its meals will tackle energy consumption and switch to biogas and renewable electricity.
Key takeaways ✍️
- Providing clear goals to your teams is key for them to actually translate the goals into real changes in your activity.
- Giving some leeway to the stakeholders in the implementation of actions helps them adapt the objectives to their business reality.
6. Check your plan against your target
Once you have decided on actions you want to implement, how can you assess that the actions you are planning to implement will ensure the absolute reductions aligned with your Science Based Target?
You need to measure the reduction emissions from the different actions in the different business units, and consolidate them to project the overall company reduction, in order to ensure that your actions fit your global objective. Consultants can help you design the plan and accompany you in the development of an overall set of actions that fit your target.
Some tools like Traace can also allow you to simulate how much reduction can be expected from the different operational actions planned in your strategy, for each segment or part of the company. The combination of consultant expertise and smart computation of large data sets in a tool is valuable in helping you design the most relevant strategy, one that meets both your business objectives and your ambitious carbon reduction target.
Key takeaway ✍️
- Expert support from consultants and smart tools are useful in designing a plan that will effectively lead you to reach your target.
7. Keep track of your progress
When a company engages in the SBT process and commits to a Science Based Target, it is then required to publicly report its company-wide GHG emissions on an annual basis, so that companies are incentivized to continuously reduce their emissions as planned. If you commit to a Science Based Target, your stakeholders will expect you to publish your annual progress, and to compare it with your commitment.
If this external requirement is a necessary constraint, it is actually a very sound way for your company to evaluate if your carbon reduction strategy is being implemented properly over time. Indeed, this yearly check on your carbon emissions enables you to assess and react rapidly if needed, and to keep control over the transitionyou're leading.
This yearly report is easier said than done, as the 2021 SBTi report unveiled that only 45% of companies who had science-based targets for over a year fully reported their progress as required, and 13% of companies didn’t report any information on target progress at all (SBTi, 2021-a). Here’s another reason for your company to develop strong and reliable data, as you will need to report on your emissions annually and consistently with your previous carbon assessments.
You can also opt for tools or SaaS that enable easy follow up on your emissions. They allow your teams to gain autonomy on carbon, to easily deploy your climate strategy at each organizational level and to facilitate the monitoring of emissions over time thanks to the automatic update of data and emission factors.
If you want to know more about How Traace helps companies achieve their climate goals, 👉 click here 👈
8. Have a detailed follow up on your actions to manage your SBT strategy over time
A very helpful feature is to complete this general carbon reporting by internally keeping track of the effectiveness of each operational action that was implemented in your company as part of the mitigation strategy. Having a detailed view on the sub-objectives that were decided amongst the different business units and sectors is a powerful way to precisely manage your transition to low carbon emissions.
If you can follow precisely which actions in which business units, or even in which teams, outperformed, and which were actually more difficult to implement than planned, or which actions were less efficient in actually reducing your emissions, you will be empowered to take the right decision to adapt your mitigation strategy over the years.
So, having an accurate and detailed yearly track of your progress on every action implemented all over your company will help you adapt, and efficiently achieve your long term goals by checking over time precise indicators.
Conclusion
Corporate involvement in the low carbon transition is growing, but there’s a pressing need to transform targets and commitments into reality, and achieve the decarbonization of businesses. Steering your company in the low carbon way isn’t easy nor simple, but can be achieved if you approach this process step by step, relying on precise data. Your ability to define detailed actions both on your activities and on your supply chain, and to empower your teams so that they can implement them will be decisive in translating your target into reality. Monitoring your carbon emissions and their reduction enable you to maintain your keep the right track in the long run.
Being able to achieve your Science Based Target over the years will showcase to your stakeholders that you are actually committed to reducing your emissions to help avoid the most catastrophic impacts of climate change. As a recent article from Corporate Climate Responsibility Monitor demonstrated, most big companies have trouble in deciding upon and implementing strong emission reduction measures. In this context, efficiently driving forward the transition to low-carbon will make your company a climate leader and inspire other companies to act similarly.
Astrid Serre, Carbon Consultant at Traace, February 2022
Sources :
CDP, 2019. CDP Supply chain: changing the chain, Making environmental action in procurement the new normal. Retrieved from https://cdn.cdp.net/cdp-production/cms/reports/documents/000/004/811/original/CDP_Supply_Chain_Report_Changing_the_Chain.pdf?1575882630
SBTi, 2021-a. From ambition to impact: How companies are reducing emissions at scale with science-based targets. Retrieved from https://sciencebasedtargets.org/resources/files/SBTiProgressReport2020.pdf
SBTi, 2021-b. SBTi corporate Net-zero Standard. Retrieved from https://sciencebasedtargets.org/resources/files/Net-Zero-Standard.pdf
