Prepare for Science-Based Targets

Learning Objectives

After completing this unit, you’ll be able to:

• Explain the elements of a science-based target.
• List the target setting methods.

What’s Been Done So Far?

In the previous units, Sam Rajan learned the importance of science-based targets (SBTs). He created a commitment and an emissions inventory for Northern Trail Outfitters (NTO). Now it’s time to get to the heart of the matter. 

In this unit, Sam prepares for setting the right targets. 

First Things First

If a commitment is a company’s vision toward climate action, SBTs are the company’s goals toward that vision. They guide you on your path to achieving the vision.

Sam knows the clock is ticking, and that he has 24 months from the commitment approval date to submit NTO’s targets to the Science Based Targets initiative (SBTi) for validation. 

Sam starts by studying the key elements of a target. He needs to consider these elements when he creates his targets in Net Zero Cloud.

Latest SBTi criteria and recommendations: The SBTi maintains the latest criteria and best practices in their Science-Based Target Setting Manual. A target must meet all the SBTi criteria to be approved. Here are some key points.

• Ambition level: Ensure that the level of decarbonization is aligned with the 1.5°C trajectory.
• Scope 3: Set ambitious scope 3 targets when the scope 3 emissions are greater than 40% of your total emissions.
• Inventory: Choose the most recent inventory with complete carbon footprinting as the annual emissions inventory record for the target.
• Boundary: Ensure that an SBT covers at least 95% of your total scope 1 and 2 GHG emissions.
• Time frame: Ensure that an SBT covers a period of a minimum of 5 or a maximum of 10 years from the date the target is publicly announced. While this near-term target helps in early identification of gaps and opportunities for emissions reductions, a long-term target (20–25 years in the future) encourages planning to manage long-run challenges associated with climate change. The SBTi encourages long-term targets.
• Sectors: Ensure that an SBT is aligned with the requirements of the sector the company belongs to. The SBTi provides sector-specific guidance and framework.

Target types: Depending on what you want to achieve with the SBT, you can categorize it into one of these SBTi-approved target types.

• Emissions reduction: Indicates targets to reduce the amount of GHGs emitted to the atmosphere.
• Renewable energy: Indicates targets to increase the amount of renewable energy production or consumption. For example, switching from fossil fuel-based onsite generation to renewables can significantly reduce a company’s direct operational emissions.
• Supplier engagement: Indicates targets to increase the adoption of SBTs among the company’s suppliers or customers. For example, getting the energy-intensive suppliers to set SBTs, and, in effect, reduce the company’s scope 3 emissions.
• Net zero emissions: Indicates targets to achieve a balance between the GHGs put into the atmosphere and the GHGs taken out.

Along with these target types, Net Zero Cloud provides a custom target type. You can use this option to specify a type associated with a climate program other than the SBTi, or to create a type as per your requirement.

SBT-setting methods: Multiple SBT-setting methods are available, which differ based on how they calculate targets. 

• Absolute contraction: A one-size-fits-all approach that helps achieve a linear absolute reduction in the GHG emissions in the target year, relative to the base year. Using this method, a company reduces emissions at the same rate year-on-year, irrespective of the company’s performance, size, sector, or base year emissions. As per SBTi, the minimum annual linear reduction for targets in line with the 1.5°C climate commitment is 4.2%. To align a target to a well below 2°C commitment, the required annual linear reduction is 2.5%. Absolute targets are straightforward to measure and communicate, and are therefore most popular.
  
  Example target: To reduce absolute scope 1 and scope 2 GHG emissions by 35% by 2030, from 2020 levels.
  
  
• Sectoral decarbonization: A sector-specific method in which the global carbon budget is divided by sector. Then the total emissions reductions are allocated to companies based on their sector’s budget. The target is calculated relative to a specific business metric, such as production output of the company (tCO₂e per tonne product produced).
  
  Example target for a power company: To reduce GHG emissions 30% per kWh by 2031, from a 2021 base year.
  
  
• Physical Intensity: An approach in which the intensity target is defined by a reduction in emissions relative to a specific business metric. For example, production output of the company (tCO₂e per tonne product produced). A physical intensity target is best suited for use within sectors that create a uniform product, such as in steel or cement sectors.
  
  Example target for a steel company: To reduce scope 1 and scope 2 GHG emissions per tonne of steel produced 35% by 2030, from a 2017 base year.
  
  
• Economic Intensity: An approach that sets a company’s emissions targets using contraction of economic intensity. The target is formulated by considering intensity reduction of a company's emissions relative to the company's economic output (tCO₂e per value added). This method is best suited for use within sectors whose products vary a lot and are difficult to directly compare against each other, such as retail or chemical sectors.
  
  Example target for an apparel company like NTO: To reduce scope 3 GHG emissions from purchased goods and services and use of sold products 40% per unit of value added by 2035 from a 2021 base year.

Net Zero Cloud enables you to select a method while setting a target. If you want to use a method other than the ones mentioned, you can choose the Custom option. Out-of-the-box target calculations in Net Zero Cloud use the Absolute Contraction method. For other methods, you must compute the targets outside of Net Zero Cloud, and then capture the calculated target in your target record. For more information, see Set Emissions Reduction Targets.

Here’s some quick reference information.

Well, that was quite something! Sam thinks he has the knowledge to define NTO’s targets. 

Develop Your Targets

After a series of meetings, Sam and his team decide on a few near-term targets (5 to 10 years) for NTO. They include emissions reduction targets for scope 1, 2, and 3, and other targets, such as renewable energy consumption and supplier engagement. NTO also commits to a net zero target.

• NTO commits to reduce absolute scope 1, 2, and 3 GHG emissions 45% by 2031 from a 2021 base year.
• NTO commits to reduce scope 3 GHG emissions from business travel and employee commuting 40% per unit of value added within the same time frame.
• NTO commits to increase annual sourcing of renewable electricity from 5% in 2021 to 100% by 2031.
• NTO further commits that 65% of its supplier spend, by covering purchased goods and services and capital goods, has science-based targets by 2026.
• NTO commits to reach net zero GHG across the value chain by 2050.

Sam is a happy man. Now that Sam has the targets defined, he’s all set to create target records in Net Zero Cloud. 

Resources

• Salesforce Help: Set Emissions Reduction Targets
• External Site: Science-Based Target Setting Manual
• External Site: SBTi Criteria and Recommendations
• External Site: SBTI Corporate Net-Zero Standard