On October 28th 2021, the Science-Based Targets initiative (SBTi) launched the world’s first science-based framework for organisations to set net-zero targets – the Net Zero Standard.
The Standard redefines what a credible net zero target looks like and clarifies the key role of decarbonisation in corporate net-zero strategies. In response we hosted a special briefing live from COP26 in Glasgow to help you navigate the changes and understand what this will mean for your organisation going forward. Watch the full on-demand webinar here.
Read on for a summary of the webinar and the deep dives into our audiences most commonly asked questions about the new standard.
In summary, science-based corporate net-zero targets that align with the SBTi Standard will require:
- Emissions reductions in line with a global temperature increase of 1.5°C by 2050 across Scopes 1, 2 and 3.
— Near-Term SBTs driving rapid action to reduce emissions in the next 5-10 years to keep warming to only 1.5C for Scope 1 and 2 (within operations), and aligned to a 1.5C trajectory or Well-below 2C for Scope 3 (supply chain emissions).
— Long-term SBTs to reduce emissions by 2050 in line with 1.5°C across Scopes 1, 2 & 3.
- Deep decarbonisation of 90-95% across all Scopes by 2050.
- A limited dependence on carbon removals to neutralize emissions that cannot yet be eliminated (residual emissions are expected to be only 5-10% of your baseline emissions).
- External validation of corporate SBTi aligned net-zero targets and annual progress reporting.
- Alignment to the Net Zero Standard can be claimed, however a company cannot be ‘Net Zero’ until completion of their long-term SBT and neutralisation of their residual emissions.
- Assess the benefits of aligning to the New SBTi Net Zero Standard
– Reduce risk of greenwashing
– Demonstrate leadership
– Confidence that your strategy is aligned to 1.5C
- Consider the applicability of the SBTi Net Zero Standard for your organisation and understand the similarities and differences with other standards and initiatives
- Build the business case and engage your leadership team
- Get to work building and implementing your Net Zero Strategy
Most popular Q&A questions answered:
1. What is the science-based targets process for SMEs?
So essentially SMEs should go through the same process as larger companies. They need to understand what net zero means for them, how they can achieve it and build that roadmap up. They also have to set a baseline and report on this annually. However, the SBTi does offer a streamlined route for SMEs to set Near-Term SBTs, with SMEs defined as a non subsidiary independent company and fewer than 500 employees, just for those who may be considering where they fall.
Essentially this pathway enables SMEs to bypass the initial stages of committing to setting a science-based target and the more standard target validation process. They can immediately set an SBT for Scope 1 and Scope 2 emissions by choosing one of the predefined target options, however unlike larger companies, the SBTi does not require SMEs to set targets for their Scope 3, just a commitment to measure and reduce their emissions. Of course we would always encourage companies of any size to set targets across all their scopes and build that into their strategy from the start. The SBTi has not yet released its guidance for SMEs to set targets aligned with the Net-Zero Standard.
2. What is a credible offset? What should we do about our removal strategy?
So when it comes to net zero, it’s really important we distinguish between carbon offsets that avoid emissions happening elsewhere and carbon offsets that remove carbon dioxide from the atmosphere. The new standard defines these two types of offsetting activity.
The first one is compensation, also known as beyond value chain mitigation where you avoid emissions happening elsewhere. That’s typically where your conservation projects come in. So for example purchasing high quality jurisdictional, red credits to invest in forestry conservation or peatland restoration projects.This is investing in activities happening outside of your value chain and you are paying someone else to reduce, avoid or remove carbon dioxide from the atmosphere on your behalf.
The second type is neutralisation of residual emissions. This is the point at which you’ve hit your net zero timeline and achieved a long-term target of 90% reduction. What do you do for those unavoidable emissions that we cannot yet abate or we might not be able to in the future? Now you will need to think about counterbalancing those emissions for the permanent removal and storage of carbon from the atmosphere. This is typically engineered solutions and things like direct air carbon capture or bioenergy with carbon capture and storage.
So what does that mean in the short term? What are your priorities? If you’re willing to make that commitment to be carbon neutral, then you should really be looking at compensation, things like nature-based solutions short term and enhancing carbon sinks that could be terrestrial, coastal or marine to avoid emissions that arise from that degradation.
Finally, collectively we need to be mobilising capital into these nascent, greenhouse gas removal technologies. It’s going to take a lot of investment to allow us to scale up the tech needed to deliver the carbon sequestration we need in the future to deal with the 10% of residual emissions left over once we achieve maximum decarbonisation.
Form partnerships and build collaborations to mobilise capital and lean on existing high quality carbon offset providers to develop a credible strategy. However, it’s important that your offsetting strategy doesn’t come at the expense of decarbonisation efforts. If financing is limited we recommend prioritising activities that reduce your footprint first.
3. How do you effectively engage your Board?
COP26 has been positive in that there’s a clear improvement in the understanding and the language used by board members. It’s clear they’ve taken stock that they can no longer get away with not understanding climate change or not understanding the actions that their company is taking (or not taking). It’s the board’s duty to be engaging with practitioners within their companies and 3rd party advisors to help their understanding no matter what sector they’re in. We recommend specific board training about carbon and climate literacy and introducing frameworks such as the Task Force for Climate related Disclosures (TCFD) to start looking at climate risk and speaking in that language.
You will be successful if you take the time to truly understand your board’s drivers.
- Where is the demand coming from?
- Investors, customers, employees, competitive advantage?
- Will your company be able to serve the needs of its clients if they don’t adapt and take action?
Understand the push and pull factors – is the climate transition for them about risk mitigation or value creation? Are they driven by reducing risk exposure or generating new revenue streams to new customers?
4. How do you communicate technical information to people who are new?
Always try and translate it into the area your stakeholder is focused on. So if you’re talking to someone who’s in procurement, talk their language, if you’re talking to someone who’s working in a manufacturing site, use specific examples they can relate to so the conversation about decarbonising doesn’t become intangible and alienating. Everybody needs to live and breathe in the hearts and minds of the people that we’re working with. Otherwise the change won’t happen.
We can create the best strategy with the most sophisticated modelling done on different climate scenarios and different carbon reduction pathways, but until we’ve made it relevant for people that are new to this, then that change isn’t going to happen. What changes are needed to decarbonise and what are the changes your stakeholders are expected to make in order to align with your strategy. How does the current status quo support or conflict with the transition to net zero? Get those conflicts on the table and talk about them openly to find solutions.
5. What is the process of submitting targets to the SBTi and how do you report on your targets?
The SBTi now has a new online booking form and process, previously all correspondence was done over email. Now you can complete the submission online and select a date for validation. It’s worth noting that although the process has changed you will still need to have calculated your baseline emissions, got all necessary data and gone through the rigor of boundary setting before submitting as this detail is required in the submission form.
After submission you will be offered the next available date for validation to begin. Validation will take place on receipt of paid signed contracts and typically takes 30 days to complete. It’s worth building this time into your project plan and not promising internal teams news about your target overnight.The SBTi will send queries to you and third party consultants during the validation process, it’s expected that you reply within 48 hours in order to stay on track for the 30 day validation process timeline. In terms of cost; near-term targets cost $4,950 plus VAT and the new long-term targets cost $9,000 plus VAT. Build the cost into business plans when gaining buy-in so the costs aren’t a surprise down the line.
It’s a requirement to report publicly on your emissions and progress against your target on an annual basis. This encourages companies to focus on measuring the impact of their actions and assess whether enough is being done to achieve the targets. There’s a number of different ways to report this, for example on your website, annual CSR or annual report and CDP submissions. This requirement is a great driver for getting into the habit of consistently reporting on emissions.
The SBTi is looking to release more guidance to standardise the way that companies report their annual progress against targets so we can understand in 2030/40/50 where a company stands against the pledge they made. We would recommend reporting on a quarterly or more frequent basis. This will allow you to more accurately track which projects, as you’re implementing them, are having the desired impact in driving down your emissions or not and make adjustments to your strategy to stay on track.
To watch the briefing in full – click here
The SBTi Net-Zero Standard provides an important tool to help corporates adopt the deep-decarbonisation route that not only tackles climate change but also reaps the commercial benefits of more resilient supply chains, better risk management, increased customer loyalty, and talent attraction.
If you have any questions about the new Net-Zero Standard and would like to speak to a member of our team contact us firstname.lastname@example.org