The Science Based Targets initiative (SBTi), one of the key organizations focused on aligning corporate environmental sustainability action with the global goals of limiting climate change, announced today the launch of its Net Zero Standard, which the organization will use to assess and certify company’s commitments to achieve net zero emissions.
While companies are increasingly responding to investor, customer and regulatory pressure to reduce their climate impacts by setting ambitious emissions reduction goals, resent research indicates that many of the targets are not science-aligned, or company actions are insufficient to reach those goals. In September, SBTi released study results that found that of the more than 4,200 companies in the G20 that have set climate targets, only 20% are science-based. Similarly, a report from professional services firm Accenture found that the vast majority of companies are not on track to hit their net zero climate goals.
Alberto Carrillo Pineda, Co-Founder and Managing Director of the SBTi, said:
“Companies are currently self-defining net-zero targets without credible and independent assessment of their ambition and integrity.”
Founded in 2015, SBTi was formed as a collaboration between CDP, World Resources Institute (WRI), the World Wide Fund for Nature (WWF), and the United Nations Global Compact (UNGC), with the goal to establish science-based environmental target setting as a standard corporate practice. Following the release of the Intergovernmental Panel on Climate Change’s (IPCC) Special Report on 1.5°C in 2018, highlighting the impacts of 1.5°C warming and calling for a strengthened global response, SBTi raised the minimum ambition of its approval framework from 2°C to well-below 2°C, and launched the Business Ambition for 1.5°C, a campaign aimed at accelerating 1.5°C target setting.
Earlier this year, SBTi tightened its criteria for approved climate targets, announcing that it will soon only accept targets aligned with its 1.5°C warming ambition, as required to avoid the worst impacts of climate change.
The new SBTi standard sets stringent criteria for approval of companies’ net zero plans. According to the organization, science-based net zero requires decarbonization of 90-95% by 2050, with neutralization of residual emissions that are not yet possible to cut. Residual emissions neutralization actions could include technological emissions removal, such as Direct Air Capture, or Nature Based Solutions, such as reforestation.
SBTi announced that seven firms have had their targets certified under the new standard, including AstraZeneca, CVS Health, Dentsu International, Holcim, JLL, Ørsted, and Wipro.
“For the first time, the SBTi Net-Zero Standard offers companies robust certification to demonstrate to consumers, investors and regulators that their net-zero targets are reducing emissions at the pace and scale required to keep global warming to 1.5°C. We’re now inviting all companies with net-zero targets and ambitions to show stakeholders that their decarbonization pathway is aligned with science. And the rest of the business sector – we call on you to join the Race to Zero.”
In an effort to help scale up the capital flows and financing necessary to help meet global climate goals, and address other environmental sustainability issues, SBTi also stated that it is aiming to launch “Net-Zero Foundations for Financial Institutions: Draft for Public Consultation” next month, aiming to help define and develop metrics around what net-zero looks like for financial institutions.