In this article, we describe SBTi, its background and purpose, as well as its processes and methods.
SBTi, short for Science Based Targets initiative, is a pioneering alliance between CDP (formerly known as the Carbon Disclosure Project), the UN Global Compact, the World Resources Institute (WRI ) and the World Wide Fund for Nature (WWF). Its purpose is to support companies in setting and meeting science-based climate targets to combat climate change and reduce greenhouse gas emissions.
Background and purpose
SBTi was established with the aim of creating a standardized approach to setting greenhouse gas emission reduction targets. By integrating scientific methods and data into the process of setting these targets, SBTi ensures that companies act in accordance with the Paris Agreement goal of limiting global warming to below 2 degrees Celsius compared to pre-industrial levels.
The process behind SBTi
To participate in SBTi, companies must complete a carefully monitored process. First and foremost, they must set targets that are in line with the recommendations of the scientific community. This involves a thorough assessment of the company's current emissions and a plan for how they can reduce them in the future.
SBTi then evaluates and approves these targets to ensure they are sufficient to contribute to global climate goals. This often involves a combination of reductions in direct emissions (Scope 1), indirect emissions from purchased energy (Scope 2), and indirect emissions from the supply chain and products (Scope 3).
How does SBTi work?
The SBTi guide provides a framework for companies to set targets that are in line with the latest climate science projections. The process includes four steps:
- Scope of the target: Companies define the scope of their target, including direct and indirect emissions from their operations, suppliers and customers.
- Target setting: Baseline data is collected and targets are set based on different scenarios and scopes to reduce emissions over a specific timeframe.
- Approval: Company targets are assessed by SBTi experts to ensure compliance with the criteria of scientificity and ambition before they are approved.
- Reporting and follow-up: After approval, the company regularly reports on their progress and implements strategies to meet the set goals.
Click here to access the complete guide to SBTi.
Accounting for a company's Scope 1, 2 and 3 emissions is an essential part of SBTi. If you need help calculating your company's carbon emissions through carbon accounting, we're here to help.
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The benefits of SBTi
- Climate Responsibility: By following a science-based approach to goal setting, companies take a step towards reducing their environmental impact and minimizing climate risks.
- Investor interest: Investors are attracted to companies that commit to sustainability and reduce their carbon emissions, which can help secure investment and capital.
- Consumer trust: More and more consumers are prioritizing companies that actively work to reduce their environmental footprint, which can strengthen brand loyalty and reputation.
- Regulatory compliance: By committing to SBTi targets, companies prepare for likely future climate and sustainability regulations and legislation, including CSRD.
Danish companies joining SBTi
There has been a significant increase in the number of companies connected to SBTi in Denmark in recent years. From 7 companies in 2019 and 17 in 2020, the number has increased significantly to 48 in 2021. The increase has continued, and as of August 8, 2022, 98 companies were connected to SBTi according to a survey by PwC.
A particularly notable development in Denmark is the increased participation of small and medium-sized enterprises (SMEs) within the SBTi initiative. In 2021, SMEs accounted for only 10% of connected companies, but this figure has increased significantly to 30% during 2022. In comparison, SMEs only account for 17% globally and in Europe respectively.
Criticism and challenges
While SBTi has proven to be an effective model for setting ambitious climate targets, it still faces certain challenges. One of the biggest challenges is ensuring that companies not only set ambitious targets, but also implement appropriate strategies to meet those targets.
Conclusion
SBTi plays a key role in pushing businesses towards a more sustainable future by encouraging actions that reduce climate impact. Through the use of scientific methods and standards, SBTi creates a framework that enables companies to take targeted steps towards a low-carbon economy and plays a key role in the fight against climate change.
