What's Been Going on at the SBTi?

This week an in-depth look at the recent events at the SBTi.

A Brief History

The Science Based Targets Initiative (SBTi), established in 2015, is a collaboration between CDP, the United Nations Global Compact, the World Resources Institute, and the World Wide Fund for Nature. The core focus of SBTi is to help companies set greenhouse gas (GHG) emissions reduction targets in line with climate science to limit global warming to 1.5°C. SBTi provides guidance, tools, and validation to ensure targets are science-based, promoting ambitious climate action in the private sector. Since 2015, over 5,500 companies have set science-based SBTi targets, showing intent to drive towards a low-carbon economy.

The SBTi has become the corporate benchmark for how to execute emissions reductions in the fight against climate change, with organisations consolidating around their definition of net zero in recent years. In the private sector, having an SBTi 1.5°C-aligned target is a clear indicator of serious sustainability efforts.

To set an SBTi-aligned target, organisations must follow a structured process to ensure their GHG emissions reduction targets align with the latest climate science. Full details on this process can be found here .

Recent Developments

In March 2024, the SBTi removed over 200 companies ' public commitments from the ‘Business Ambition for 1.5°C’ project, which aimed to spearhead corporate efforts to set and achieve their net-zero targets and kickstart a corporate movement towards sustainability. This list included prominent companies like Microsoft and Diageo. The SBTi released a report highlighting survey data on these companies' climate commitments and the challenges they faced in meeting the deadlines.

Current Challenges

The SBTi required companies to submit science-based targets for validation within 24 months of committing. Companies that missed the 2024 January deadline either chose not to continue with SBTi or couldn't support their commitments with credible targets. It's still unclear whether their departure was voluntary or due to an inability to meet the criteria.

Over 1,000 companies participated in the Business Ambition for 1.5°C (BA1.5°C) campaign, launched in 2019 to mobilise the private sector to set 1.5°C near-term and net-zero targets. The SBTi's final evaluation report on the campaign included survey results from 971 companies and identified several barriers to setting credible net-zero targets: challenges with Scope 3 emissions due to insufficient carbon accounting and data sharing by suppliers, lack of available emissions data, uncertainty about achieving net zero without accurate data or technological means, and concerns about litigation risks if they failed to meet their commitments.

The survey also revealed that 79% of the companies joined the campaign to showcase leadership in sustainability, highlighting the importance of public perception in their decision to participate.

Among companies that missed SBTi deadlines, nearly a quarter (24.2%) doubted their ability to meet targets, and over a fifth (21%) found tackling Scope 3 emissions too challenging. It's also worth noting that the SBTi is not blameless here, as one-third (32.3%) cited delays in the SBTi publishing the Net-Zero Standard as a factor in missing the deadline.

In a broader survey of all participants, the majority (54%) identified Scope 3 emissions as the biggest barrier to setting net-zero targets, followed by uncertainties about future technologies (53%) and over one-third (35%) still had doubts about achieving the targets.

Source: SBTI's Business Ambition for 1.5°C Campaign, page 18

Controversial Decisions and Backlash

A few weeks after the removal of these organisations, the board of the SBTi announced they were considering the use of carbon credits in companies' Scope 3 emissions, as opposed to their own definition of a “90% reduction of baseline year emissions”. This faced an instant and predictable backlash from the organisation’s staff. This announcement has led to concerns that companies might buy credits rather than reduce their emissions.

Staff at the time called for the resignation of SBTi’s leadership, claiming the move undermines ‘genuine’ climate action. This puts the SBTi in a difficult situation: either continue to implement hard-to-achieve targets or face criticism for potentially diluting their standards. It is also worth saying the VCM does need more money and invest

It's worth remembering that signing up for the SBTi is voluntary and only as influential as the companies it works with. If they are too harsh, or overly lenient, they could lose credibility and face a walkout. Additionally, this decision raises important questions about the role that philanthropies and other donor organisations play in funding climate action bodies - with the potential influence they can have over policy. Critics argue that carbon credits, like those from tree planting, while beneficial, are potentially unreliable and may not ensure long-term CO? removal. While the technological roadmap to net-zero is unclear, SBTi’s targets were intended to steer organisations to invest in reduction efforts, think outside the box, and collaborate to hit their targets. Necessity is the mother of invention, after all.

Some private firms, like H&M, have come out against the measure. H&M Group's Head of Sustainability, Leyla Ertur, stated that initiatives such as collaborative finance, factory electrification, and renewable electricity development in challenging markets would be more expensive and complex than voluntary carbon market credits and could risk leading to inaction from companies on these crucial topics.

Conclusion

It's clear from the SBTi’s own survey that businesses are struggling with net-zero targets and that their support is welcome. However, businesses need clear guidance and pragmatic partners to move the agenda forward. In response, the SBTi has created a Validation Council to oversee the governance of target validation as it scales its services.

These recent developments highlight the complexities and challenges in creating a voluntary framework that puts pressure on, but also collaborates with, the private sector in setting and achieving credible net-zero targets. There is a risk of organisations walking away from commitments.

As the organisation navigates these turbulent waters, the need for robust, science-based approaches to climate action remains paramount. There needs to be a renewed focus on initiatives to tackle core reductions for Scope 3 emissions (as per my Medium article here ). The path forward will require balancing ambitious targets with practical, achievable steps to ensure meaningful progress in the fight against climate change.