Sustainability Ratings Analyst
In a week of big climate news, one announcement made in the run-up to COP26 has continued to drive more conversations around sustainability for corporates than any other; the release of a new standard from the Science-based Target Initiative (SBTi) for companies looking to verify their long-term climate ambitions.
The release of the new Net-Zero Standard follows the news last month that the SBTi had met their quota for new applications for science-based targets early this year. This will have caught the attention of anyone still unaware of the initiative, and certainly spurred on those businesses who are already in the process of setting their own targets.
The new standard is important because it not only shifts the goalposts for anyone looking to set their own science-based targets (commitments to reduce emissions which are in line with the Paris Agreement), but also because it outlines for the first time a common standard for reaching net-zero emissions by 2050.
Despite the best efforts of many state and non-state actors, current internationally agreed policies put humanity on track for an average of between +2.7 and +3.1°C of warming by 2100. The sad reality is that this is just not enough to avoid serious environmental decline.
Because the impacts of global warming are non-linear, the implications of such steep increases cannot be overstated. At +1.5°C of warming scientists predict that roughly 14% of the global population would be exposed to extreme temperatures on an annual basis. At +2°C this more than doubles to 37%.
It is because of this urgency that hugely successful schemes (such as the UNFCCC’s Race To Zero campaign) have championed the uptake of bold commitments among NGOs, business, and other non-state actors. If these are taken into account, alongside global policies, analysis suggests that we may be closing in on limiting warming to +2°C. This is the first major milestone needed if we are to have any chance of averting catastrophic climate change.
However, valid criticisms have been levelled at organisations perceived to have set unachievable or unambitious targets under the banner of ‘net-zero’.
For the first time, the new Net-Zero Standard provides a framework for setting long-term science-based emissions targets.
The new standard is built on four key elements, some familiar and some less so. They are:
The most striking change is the introduction of a mechanism for setting long-term science-based targets according to a standard methodology. This epitomises the heightened ambition found throughout the standard.
Companies looking to have targets approved in 2022 will need to seriously consider what the post-carbon transition will mean for their business. In practice, this ‘deep decarbonisation’ will mean that 80 to 100% of all direct and indirect emissions will have to be reduced to zero by 2050 at the latest. Other changes include the introduction of new concepts such as the value chain mitigation hierarchy.
The SBTi hopes that this is enough to address the criticisms that have been directed at the net-zero concept. Specifically, by insisting that targets are comprehensive in scope, that they do not allow for action to be put off until a more convenient future time, and that the focus will be taken away from offsetting for all but the final residual emissions, the new standard draws a line under everything that has come before.
Most importantly, the new standard provides accountability, as companies will now need to have actually achieved their commitments before they can claim to be ‘net-zero’.
The standard has been released and companies can now review their ambitions in line with the guidance. Further guidance will be forthcoming from the SBTi on key concepts (such as value chain mitigation, Scope 3 target setting approaches), as well as a brand-new Measurement, Reporting, and Verification standard for charting progress and achievement.
In the meantime, seven companies have now been approved as having net-zero targets as part of the SBTi pilot – will you be next?
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