Stockholm (NordSIP) – The battle against greenwashing rages on. Many governments, municipalities, and corporations have been setting ambitious targets in the face of the climate crisis. In 2015, the CDP, the United Nations Global Compact, World Resources Institute (WRI) and the Worldwide Fund for Nature (WWF) set up the Science Based Targets Initiative (SBTi) to help ensure that such targets were set up and tracked based on solid climate science rather than politics or good intentions.
The organisation’s recently published progress report 2021 reveals an explosion in the number of companies signing up to the SBTi standards. By the end of last year, this amounted to more than 2,200 companies from 70 countries representing over a third of global market capitalisation. More companies are signing up at a rate of roughly 110 a month. Once they have made a commitment, companies are expected to set an emissions reduction target in line with SBTi net-zero criteria. In October 2021, the SBTi published their Net Zero Standard Framework, which sets out in detail the actions to take from a near-term period of the next 5-10 years through to the long-term 1.5°-aligned goals. Most of these companies have expressed the intention of reducing emissions faster than is strictly required. The vast majority are also working scope 3 emissions into their calculations.
Mixed in with the good news are some areas of concern, for instance the geographical bias of SBTi companies to Europe, North America, and Japan. There is still much work to be done with Africa, South America, and the rest of Asia, and the SBTi have set up Country Activation and Incubator Projects to increase engagement in these regions. Many companies from high-emitting sectors are also still absent from the initiative. For the companies that have committed to approved SBTi targets, the reported statistics are quite impressive, with “excess” reductions during 2020, even allowing for the effect of the COVID-19 pandemic on the economy. They are demonstrating that effective action can be taken, but the world desperately needs the remaining “business as usual” companies and sectors to step up. The SBTi believes that an adoption rate of roughly 20% is the critical mass level where the wider peer group will rapidly join in. While this level has been exceeded on a global basis, it remains a target in certain sectors and geographies.
The headline figures provided by the SBTi will relate to the underlying portfolio companies held by institutional investors. The pension funds, insurance companies, endowments and financial institutions that form NordSIP’s readership are catered for with SBTi’s dedicated financial institutions net-zero framework and resources that include a portfolio temperature alignment tool.
This SBTi progress does offer up some encouragement in a bad-news-heavy environment. There is a group of mainly G20-based companies with credible, approved targets, which in many cases they are exceeding. One must hope that the SBTi’s “tipping point” theory will soon kick in to bring the remaining laggards on board. With a view to increasing overall transparency and accountability, the SBTi is developing a Measurement, Reporting and Verification (MRV) framework. This will provide a standard mechanism for companies to follow and should put additional pressure on those signatories whose targets have not yet been evaluated and approved by the SBTi to take the necessary action. The MRV framework is expected to be ready by the 28th session of the Conference of the Parties (COP 28) to the UNFCCC scheduled for November 2023.
