In defence of SBTi and its Net Zero roadmap…
2024 has been a busy year for the Science Based Targets Initiative (SBTi). As has been widely reported, the organisation came under scrutiny last month for its announcement that it may allow the use of carbon credits in achieving Scope 3 targets, impacting the overall SBTi net zero roadmap and climate action plan. However, despite the backlash that ensued and the short-term reputational damage, there are many reasons to be optimistic about the role that SBTi will play in the coming decades to help companies set emissions reduction targets, both near and long-term.
SBTi's Role and Recent Challenges
Given that the organisation is synonymous with credible Net Zero target setting, it can sometimes be surprising to remember that SBTi was only formed less than a decade ago in 2015. Indeed, the first iteration of its Corporate Net Zero Standard, which plays a key role in the SBTi companies taking action, was only published in 2021.. It is incredible that such a young organisation is playing such a prominent role in corporate target setting, and it is therefore unsurprising that they are still finding their feet in this space.
Controversial Announcements and Community Response
In April of this year, SBTi announced their intention to allow “Environmental Attribute Certificates” to be used by SBTi companies to reach Scope 3 targets in some capacity, with this proposal to be further detailed in July. The response of both STBi employees and the broader climate community was largely one of outrage, leading to a statement later that week from SBTi clarifying that a formal consultation process would be undertaken before instigating any changes to Net Zero requirements. Despite this clarification, it would be fair to say that this has placed SBTi’s credibility in question in a way that it has not faced thus far.
SBTi Maintains Leadership in Corporate Climate Action
Despite this recent turmoil, there are many reasons to believe that SBTi will remain the leader in the often-murky space of corporate target setting. It has so often been the case that a plethora of climate reporting regulations, including the SBTi reporting standards, are developed in parallel across different sectors and reporting jurisdictions, leading to an alphabet soup of acronyms. Fortunately, with the introduction of the International Sustainability Standards Board (ISSB), there has been a move towards consolidation and alignment of standards. However, SBTi has so far been able to leapfrog this whole process by leading in the space of target setting and setting out a process that is becoming ever more widely applicable with the ongoing publication of sector-specific requirements where necessary. Furthermore, as outlined below, there have been several other announcements from SBTi this year that reinforce their credibility.
SBTi Recent Publications and Improvements
Already this year there have been a dozen publications made available on the SBTi Resource Library page, including both a glossary of terms and guidance on setting targets for the Land Transport sector. However, the most significant publications include a third iteration of the SBTi Corporate Net-Zero Standard (v1.2), as well as a new consolidated set of tools for SBTi companies to submit both near-term and Net Zero targets for SBTi approval. Previously, submitting an SBTi target involved completing several forms that were often overlapping in scope. These have now all been merged into one clear Excel document with an associated criteria document available for reference. As a company that has experience completing these SBTi submissions, this has made the submission process much clearer, more streamlined, and less open to interpretation. Additionally, the Excel format allows for automatic target wording generation and certain automated data validation checks prior to SBTi submission, minimising the risk of error. Beyond the updated format, there are now additional requirements associated with company structure and further checks on a company’s emissions inventory, highlighting SBTi’s thoroughness in its review process. This set of publications shows a clear push towards clarity regarding what is required to achieve SBTi-approved targets. Additionally, earlier this month, SBTi announced its first major revision to its Corporate Net Zero Standard since it was first published in 2021. Version 2.0 (V2.0) is set to focus on clarifying requirements around Scope 3, as well as ensuring alignment with the most recent set of climate regulations. A discussion paper focused on Scope 3 is set to be published in July this year, and a draft V2.0 standard is expected in Q4 of this year.
SBTi's Commitment to Credibility
A final point to note on SBTi’s retained credibility comes from their announcement in early March of this year to remove the commitments of 239 companies that had committed to setting net zero targets. This relates to their policy since 2023, which states that companies have 24 months to submit their targets after they have made a commitment, ensuring compliance with the net zero roadmap. It is promising to see decisive action from SBTi in following through on its requirements, ensuring that companies do face consequences for non-compliance. SBTi did note that, of these 239 companies, 60% still did set near-term targets, and that it was the challenges around plans to reduce scope 3 supply chain emissions that were the underlying reason for difficulties faced by these companies in setting long-term targets.
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