Four key takeaways: launch of the Science Based Targets Net Zero Standard

Green transition 11 November 2021 Shane Hughes Samantha Deacon

The long awaited Science Based Targets Net Zero Standard were launched at the end of October. While COP26 focused on governments, SBTs focus on corporations - which is pretty important given that 85% of all emissions are emitted by corporations.

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The Science Based Targets initiative (SBTi), is a global body enabling businesses to set emissions-reduction targets in line with science. 

Below are four key strategic takeaways from the new SBTi standard. 

1. Net zero isn't the point at which you offset and remove all your emissions no matter how good the quality of the offsets. 

Under the new SBT Net Zero standard you have to have reached a deep decarbonisation point of +/-90% carbon reductions before reaching net zero. This is a massive leap forward in terms of interpreting net zero as the approach used by many today leaves the door open for net zero to be a term simply linked to offsetting, which has led to greenwashing, which in turn has led to a reduction of the credibility of the term net zero itself.

2. Net zero isn’t done alone and in your operations. 

With SBT near term targets you only had to include 67% of scope 3 emissions but for net zero targets you have to include 90% of your scope 3 emissions. This puts an onus onto scope 3 where often the majority of a company's emissions are found.

On the upside this means that to reduce emissions in your supply and value chain, companies will likely need to engage in partnerships within their value chain, which can also lead to a rich vein of opportunities.

One option for near term targets is the target approach called "supplier engagement targets", where the company pledges to engage a percentage of their suppliers to get them to set science based targets.

However, the company will only have 5 years to achieve these targets and they should as early as possible set up partnerships and procurement policies that are driving suppliers to actually reduce their emissions not just committing to reduce.

3. Net zero, as defined by SBT, is extremely unlikely to be achieved by 2025 or 2030.

Many companies have entered a race targets to reach net zero by ever sooner dates. While this is a great ambition companies really have to look at this as a longer term process. That said we still need companies to pioneer and push the boundaries and achieve net zero before 2050 and to go as fast as possible to balance out the laggards and blaze the trail.

That means there's clearly a need for some way of recognising and even celebrating the companies that go faster than 2050 1.5°C aligned. Informal conversations indicate that this is something on the cards in the future.

4. The launch of Net Zero Standard is a giant leap forward but there's still lots left to be understood.

The whole concept of Neutralisation of residual emissions is a fascinating growth area that we're only just starting to learn the science behind it and how to include in our corporate reporting structures.

These questions will likely be answered in part in the up and coming Forestry Land use and Agriculture (FLAG) guidance documents both from WRI (calculation guidance) and SBT (target setting guidance) which will have a massive impact on strategies employed by companies that have land use activities in their value chain.

So the Net Zero standard isn't the final word on what it means to go net zero but it is a giant leap forward.

The net zero standard

You’re not net zero until you’ve achieved ‘deep decarbonisation’

Let’s just unpack a little this idea of deep decarbonisation and the way in which the SBTi definition of net zero is fundamentally different from the mainstream view.  

The definition of global net zero is essentially that  we reduce emissions year-on-year whilst increasing emissions removals until we hit a point, such as 2050, where the amount of emissions emitted are matched by the amount of emissions removed. This isn’t challenged by the new SBTi definition. See an example in Graph 1.  

 

That’s fine on a global scale but many organisations and cities that have targets to reach net zero before 2050 (ahead of global agreements) tend to have decarbonisation plans that interpret net zero as simply bringing forward the date that their organisation’s total emissions are offset. See an example in Graph 2.

However, SBTi's definition is quite different. It doesn't just bring forward the offset date, it also brings forward the 2050 carbon reduction levels, refocusing organisational efforts heavily on avoiding emission in the first place before engaging in “neutralisation” activities. See Graph 3 for a visual representation.  

There won’t be enough removal offsets available

It is reasonable to say that SBTi don't own the definition of net zero and the commonly used definition may remain dominant as it’s clearly got a lot of support. However, SBTi holds a lot of influence in this arena and perhaps more importantly the commonly used definition has a flaw when extrapolated to a global scale.

For example, if every entity on the globe wanted to go net zero by 2035 even if they all reduced emissions using the 1.5°C trajectory and an SBT of 4.2% annual CO2 reductions there wouldn't be enough removal offsets in the world in 2035 to net off everyone's emissions. See Graph 4 below. The commonly used net zero definition doesn't work on a global scale, and let's face it climate change is a challenge that can only be met on a global scale.

 

 

That said...don’t forget the role of nature in emissions removal

Keeping in mind the importance of World Environment Day in June and the themes of recreate, reimagine, restore, it’s clear that to create a net zero world we are forced to recreate and reimagine. However, it’s entirely possible that we solve the carbon conundrum, invest trillions in the energy transition, but don't restore nature, habitats, and ecosystem and don't reverse the current species extinction, or even make it worse. For us to get the best out of the herculean efforts to reach net zero, we have to be smart, we have to think broader than just carbon. 

Arguably, there is a greater role for nature to be part of the climate solution under the SBT Initiative, in fact, guidance for the development of Science Based Targets for Nature are in development. As organisations strive for net zero emissions targets, they should strive for solutions that avoid net nature loss and contribute to the net nature positive global target (Graph 5 below). High quality Nature-based Solutions (NbS), such as tree planting and peatland restoration, offer opportunities for organisations and governments to neutralise or compensate for their emissions whilst also providing wider environmental, economic and social benefits. Nature should therefore be a key consideration in net zero strategies, something we will explore further in a forthcoming article. 

 

Related content: 

> Register for our webinar recording: Net zero: changing definitions with serious implications

Climate Clarity: Understanding the difference between Net-Zero, Carbon Neutrality, and Science-based Targets

> COP26 insights and impacts

 

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