Why we lack credible transition roadmaps & how not to approach science-based target setting?

Earlier this week, the release of a CDP report raised some uproar on LinkedIn with its finding that only 0.4% of the approximately 19,000 companies responding to the rating provider had credible transition roadmaps in place.?

But we should not be surprised at all, for two reasons:?

• One, most companies that publish CDP disclosures do not do so with the objective of attaining a sustainable future.?
• Two, there is still a dearth of meaningful guidance for how to make the switch from incrementalism to science-aligned sustainability, and an abundance of not-so-helpful guidance, in mainstream resources, including by the SBTi, a go-to authority for most.

In this article, I briefly dig deeper into each of these.

Most do not "do" CDP in order to save the world

From where I stand, most companies respond to the CDP questionnaire for one or more of the following reasons (in no specific order):

1. To improve their ESG ratings (i.e. the ratings that tell investors how good a company is at protecting and maximising shareholder value, not about the company’s impacts on the planet, people and economy).
2. Because their B2B clients have requested that they do so. Either these corporate buyers require the data for their own Scope 3 inventories (and hence also better CDP scores), or because the overall CDP rating is part of actual procurement considerations, or since a supplier policy is in place that makes it a requirement.
3. Because competitors do it and hence the company concluded they should do it too, not to appear a laggard. (This may be the most frequent reason, in fact. You can read about my opinion about the limited merit of competitive benchmarking in sustainability here)

We can see these motivations have little to do with transitioning to thriving within planetary boundaries and while respecting social foundations. Hence the findings of the CDP report should be no surprise at all.?

But the challenge with lack of credible roadmaps goes deeper.

The SBTi downplays the need for transcending incrementalism in its guidance

In theory, we see global sustainability leaders embark on science-aligned sustainability by adopting the SBTi Corporate Net Zero Standard. (Let us for a moment disregard the paradox of using the term “science-aligned” while arbitrarily deciding to address one’s impacts on 1 planetary boundary of 6 that have been breached to date, and it not being the one breached most severely…).?

In practice, most approach the SBTi as though it were another incrementalist reporting instrument, which it is not (in spite of its methodological shortcomings, repeatedly pointed out Bill Baue). The SBTi standard does apply the science-based, context-based principle of back-casting targets from a global budget, via a system of allocations. As such, even with the SBTi, one’s ambition level has to be dictated by external factors, not internal appetite.?

And this is where our hitherto incrementalist approach to sustainability fails us.

Mind-bogglingly, the SBTi itself does little to inform its adopters of the necessary shift in mindset and practices. It widely recommends companies follow the below process:

1. Make a public pledge
2. Take 2 years to set targets
3. Get targets verified
4. Publicly declare targets

Consultants around the world often uncritically reiterate this sequence of steps.

This recommended process is obviously tailored to benefit the SBTi: counting public pledges (which have next to no barrier to entry) give the Net Zero Standard an appealing aura of the next-big-thing, with a near sky-rocketing adoption rate, a must-do for companies. (That perception is indeed convenient, if not necessary, when one’s business model relies on charging companies for target validations. This may remind you a point in my critique of the GRI, which I published a few days ago)

What this process is not tailored to is the benefit of companies in switching from incrementalism to science-aligned sustainability levels, it seems to me:

Making a public commitment to do something without having mapped out what doing that something means in practice, what it is going to cost, and whether it is at all attainable without breaking down one’s current business model, reinventing the value chain and possibly moving to completely different value propositions - and if that’s what it takes, without checking what the chances are of building internal and shareholder buy-in for it… That is not a sane approach to me.?

And the above is exactly the homework that companies ought to do before making any public pledge. In more specific terms, it consists of, among other things:

• having done one’s emissions inventory for all 3 scopes as a necessary input;
• identifying and assessing the broad range of abatement options for each type of emissions, their approximate costs, efficacy and availability/feasibility within the required volume, etc - so that one gets an idea of the ballpark investment required, as well as the limits of how far the company can go on a science-aligned journey by nudging business-as-usual;?
• Modeling future scenarios, for a) quantification of risks and opportunities in order to build a business case for change, which is likely required internally, and b) getting a rough idea of how much longer the current business model can be viable at all, vis-a-vis environmental and social tipping points;
• and finally indeed, generating internal buy-in, which may require substantial cognitive recalibrations, almost certainly requiring external assistance.?

These logical steps indeed represent a far greater barrier to entry than making a public pledge (in terms of expertise, capacity, costs), and hence push out the making of pledges by months.

I argue all of these are the steps a company should take before it makes a public net zero pledge, in order to avoid being called out for lack of a credible roadmap, lack of progress towards targets and/or general greenwashing later. Making a pledge first and doing the homework later, as implicitly suggested by the SBTi, can easily result in the same big trap of high maturity incremental sustainability: A pledge was made, but there is no appetite to walk the talk, what do we do next?

Also earlier this week, Antonio Gutteres urged the UN General Assembly to understand that this was a time for a transformation, not a transition. It is sad that the same level of clarity is not offered by the SBTi manual. Nor by some among us sustainability consultants.

Could the two sets of headlines have been more juxtaposed?