Science-based targets are the key to sustainable business

Reports from the Intergovernmental Panel on Climate Change (IPCC) have been increasingly urgent: Humans aren’t reducing CO2 emissions sufficiently to keep global warming below 1.5°C. If we don’t ramp up our efforts to reduce emissions exponentially, entire regions could become deserts, coastal cities could plunge below water and famine and epidemics could occur in the future – the predictions are terrifying. Many political leaders either won’t or can’t shift public policy sufficiently to protect the planet. But thousands of corporations and small-to-medium businesses are stepping up and volunteering to reduce their emissions to meet science-based targets set by climate experts. And that might be the most powerful shift we can make.

In 2017, over 300 companies committed to working with the Science Based Targets initiative (SBTi), a global organisation that helps businesses achieve ambitious emissions reduction targets in line with the latest climate science. By 2020, more than 1,000 companies had joined. And in 2022, roughly 4,000 companies signed on – including Zendesk, which delivered on carbon neutrality to customers and employees. That’s rapid progress, but with tens of thousands or millions of companies in the world, there’s still a long way to go.

The activities that companies commit to in partnership with SBTi include:

• Reducing energy consumption

• Increasing the use of green energy

• Engaging suppliers to reduce upstream emissions

• Rewarding employees for using public transit or walking or cycling to work instead of driving

SBTi also has initiatives for different sectors – such as targets for the finance sector to reduce investment in fossil fuels.

Making sure companies keep their promises

Setting science-based targets combats greenwashing, a practice where companies pretend to be environmentally friendly but actually do nothing to improve their sustainability efforts. With SBTi, companies commit to specific actions and track and report on those actions. But some climate scientists want to see SBTi require independent verification of the data submitted to them rather than trusting the companies to report accurately.

In the past, some businesses would benefit from the positive PR of publicly setting a goal, but then they’d fail to follow through in the time allotted. Historically, SBTi would just drop those companies from their list of members. Just before COP27, however, SBTi changed its policy so that if a company fails to meet its commitment in the requisite 24 months, its goals are marked as “Removed”, but the fact that the company committed to the goal remains on the site.

Cutting Scope 1, 2 and 3 emissions

So, what kinds of commitments are companies making? The commitments are to reduce Scope 1, 2 and 3 emissions. Here is how the Greenhouse Gas Protocol defines them:

• Scope 1 emissions are “direct” emissions caused by the operation of a business, such as heating and cooling buildings and running computers and servers.
• Scope 2 emissions are “indirect” emissions created by the energy production purchased by a company. If you buy electricity from solar plants, your Scope 2 emissions will be lower than if you buy it from coal plants.
• Scope 3 emissions are indirect emissions that occur in a company’s value chain. These are the big ones, accounting for more than 70% of emissions. If you are a clothing manufacturer, for example, it includes the emissions from producing the materials you use in your clothing. It covers the emissions from shipping those materials to the manufacturing site and storing them. It also covers the emissions from shipping the final product to warehouses and stores. It even entails the emissions from selling the clothes or from dumping them in landfills.

Fortunately, companies aren’t on their own in determining how to reduce their Scope 3 emissions. SBTi and the Greenhouse Gas Protocol both provide guidance on how to evaluate and manage Scope 3 emissions. Greenhouse Gas Protocol even has a Scope 3 evaluator tool. Companies that want to reduce Scope 3 emissions must identify where the majority of their Scope 3 emissions occur and target those areas. They also need to evaluate how well their vendors, suppliers and partners manage their own emissions and possibly choose new ones who manage their Scope 3 emissions more effectively.

Many companies are becoming very creative and proactive about managing their Scope 3 emissions. For example, Adobe’s commitments on the SBTi site include reducing absolute Scope 1 and 2 greenhouse gas emissions by 35% from 2018 to 2025; reducing Scope 3 emissions from business travel by 30% over the same time frame; and ensuring that, by 2025, 55% of its suppliers for goods and service and capital goods will have science-based targets.

Apple recently announced its intention to achieve net-zero emissions by 2030 and decarbonise its supply chain through measures like working with suppliers who use 100% renewable energy. The company has also invested in its own renewable energy plants.

French multinational electric company Schneider Electric has not only chosen to work with companies committed to emissions cuts, but it has also trained 1,300 companies in its value chain to help them reduce emissions.

Volvo, concluding that most of its emissions came after the cars were manufactured, committed to reducing Scope 3 emissions in its various vehicles. By 2030, it will reduce Scope 3 emissions per vehicle in trucks and buses by 40% and absolute emissions in construction equipment by 30%. And by 2034, the company will cut absolute emissions in the Volvo Penta by 37.5%.

Organisations like SBTi and Greenhouse Gas Protocol help companies determine where the bulk of their emissions come from and identify the best strategies for reducing them.

The challenge of remote work

For companies with a lot of remote employees, there is another challenge: measuring and reducing emissions produced by people working at home. This process is in its nascence, but some companies are plunging in, with one expert suggesting that emissions tracking for work-from-home employees could be categorised as Scope 4.

Companies must think creatively to address the massive shift required to combat climate change. Otherwise, there could be consequences.

Arcadia, a green energy company, is working with employers to provide green energy as a remote work benefit. Their clients include Goldman Sachs and biotechnology company Biogen. Companies could also invest in things like weatherisation and insulation for employees’ homes, energy-efficient appliances, countertop composters and so forth.

While this would be a desirable perk for many employees, it would present some challenges because an employee could, presumably, procure the energy-efficient appliances or weatherisation and then leave the company.

Still, companies must think creatively to address the massive shift required to combat climate change. Otherwise, there could be consequences – as many companies saw during COVID-19, when those that had been postponing digital transformation had to scramble to find new ways to operate in a digital-only world.

Taking action

With climate change, we can predict what’s coming. The IPCC report spells out what we can expect and what actions we need to take to prevent the worst. Companies are also getting the memo that employees, customers, partners and markets prefer sustainable companies. Now, it’s just a matter of making sustainability a priority. Science-based targets are a good place to start – work on setting your own SBT, then get it validated by the SBTi.