Science Based Targets initiative (SBTi): Guiding Companies to Net-Zero Success

What is the Science Based Targets initiative (SBTi)?

The Science Based Targets initiative (SBTi) is a global organization that provides companies and financial institutions with a framework to set greenhouse gas (GHG) emission reduction targets that align with the latest climate science. Launched in 2015, SBTi ensures that these targets are in line with the goals of the Paris Agreement, which aims to limit global temperature rise to well below 2°C above pre-industrial levels while pursuing efforts to limit the increase to 1.5°C.

The SBTi is a collaboration between several leading climate organizations, including:

• CDP (Carbon Disclosure Project): A non-profit focused on helping companies and cities disclose their environmental impact.

• United Nations Global Compact: A UN initiative that encourages businesses worldwide to adopt sustainable and socially responsible policies.

• World Resources Institute (WRI): A global research organization that works on issues like environmental sustainability and economic opportunity.

• World Wide Fund for Nature (WWF): One of the world’s leading conservation organizations working to protect the environment.

Companies voluntarily commit to setting science-based targets that are validated by SBTi to ensure they align with the pathways needed to prevent climate change.

The initiative provides specific methodologies for different industries, recognizing that certain sectors, like energy or manufacturing, face unique challenges in reducing emissions.

In addition to short- and medium-term emissions reduction targets, SBTi has developed a framework for companies to set credible net-zero targets, ensuring they can eventually achieve near-zero emissions across their operations and value chains.

The SBTi plays a crucial role in corporate climate action, as it offers a rigorous, science-based approach to emissions reductions, providing transparency and accountability. Hundreds of major companies globally have committed to SBTi, making it a standard in corporate sustainability.

The Role of Science-Based Targets in Corporate Climate Leadership

Methodology: Setting Science-Based Targets

To help companies set targets that are in line with climate science, the SBTi has developed a comprehensive methodology. This methodology provides a clear and transparent pathway for businesses across industries to develop targets based on their specific GHG profiles.

Key components of the SBTi methodology include:

• Sector-specific guidance: Recognizing that each industry faces unique challenges in reducing emissions, SBTi provides tailored frameworks for sectors like energy, manufacturing, and transport.

• Scopes 1, 2, and 3 emissions: Companies are required to address emissions across their value chain, including direct (Scope 1), indirect from energy use (Scope 2), and those resulting from upstream and downstream activities (Scope 3).

• Tools and resources: SBTi offers tools like target-setting calculators and best practices guides to help companies plan and monitor their progress.

SBTi also provides target validation services, ensuring that the goals companies set meet the rigorous scientific standards necessary to achieve climate stabilization.

Impact and Adoption: Global Uptake by Leading Companies

Since its inception, the SBTi has seen widespread adoption across industries, becoming a hallmark of corporate climate responsibility. By the end of 2023, over 4,000 companies had set or committed to setting science-based targets, covering a diverse array of industries from tech and consumer goods to heavy industry and finance.

The broad adoption of SBTi reflects its credibility and the growing recognition that aligning business operations with climate science is both a moral responsibility and a business imperative. By 2023, companies that had set SBTi-approved targets were collectively responsible for reducing more than a billion tons of CO2.

Case studies

Microsoft

Microsoft has been a trailblazer in corporate climate leadership, becoming one of the first major tech companies to commit to ambitious climate goals. In 2020, Microsoft announced its groundbreaking commitment to become carbon-negative by 2030, meaning it will remove more carbon from the environment than it emits. By 2050, Microsoft aims to remove all of the carbon it has emitted either directly or through electricity use since it was founded in 1975.

How Microsoft Leverages SBTi:

• Operational Emissions (Scope 1 and 2): Microsoft is focusing on reducing emissions from its own operations by shifting to 100% renewable energy by 2025, improving energy efficiency in its data centres, and reducing the environmental footprint of its offices globally.

• Supply Chain and Product Emissions (Scope 3): Microsoft has gone beyond its own direct emissions by setting science-based targets for its supply chain, which accounts for the majority of its carbon footprint. The company is working with its suppliers to reduce their emissions and is using innovative technologies to measure and manage these emissions more effectively.

• Technology for Carbon Removal: Microsoft is not only working to reduce emissions but also investing in carbon removal technologies. Through its Climate Innovation Fund, it is investing $1 billion in new technologies, including carbon capture and sequestration (CCS), to support global decarbonization efforts.

• Transparent Reporting: In line with SBTi’s rigorous standards, Microsoft provides transparent annual reporting on its progress toward achieving its carbon-negative goal, further solidifying its role as a leader in climate action within the tech sector.

This level of ambition, facilitated by SBTi’s frameworks, positions Microsoft as a pioneer not only in reducing its own carbon footprint but also in driving technological innovation that could benefit other companies and sectors.

Unilever

As one of the largest consumer goods companies in the world, Unilever has a significant global footprint. The company has committed to achieving net-zero emissions across its entire value chain by 2039, a move that aligns its long-term business strategy with the global push for climate action. Unilever has been a proponent of sustainable growth for years, and its partnership with SBTi is a key element of its efforts to decouple growth from environmental degradation.

How Unilever Leverages SBTi:

• End-to-End Emissions Reductions: Unilever’s net-zero goal covers its entire value chain, from raw material sourcing to the emissions associated with the use and disposal of its products (Scope 3). This is especially important because the majority of the company’s emissions are indirect, stemming from its vast network of suppliers and product usage by consumers.

• Sustainable Product Design: As part of its climate strategy, Unilever has embedded sustainability into its product design, focusing on reducing emissions at every stage of the product lifecycle. This includes everything from choosing sustainably sourced raw materials to developing low-emission product packaging and encouraging consumers to reduce energy consumption when using Unilever products (e.g., through cold water washing detergents).

• Renewable Energy Commitment: Unilever has already achieved a milestone by sourcing 100% of the electricity used in its global operations from renewable sources. This shift has played a crucial role in reducing the company’s operational (Scope 1 and 2) emissions.

• Climate Resilience in Supply Chains: Working with its suppliers, Unilever is leveraging SBTi to ensure that climate resilience is built into its supply chains. By 2030, it aims to halve the environmental footprint of its products, which requires strong partnerships with suppliers to implement sustainable farming practices, deforestation prevention, and emissions reductions in agriculture.

Unilever’s use of science-based targets demonstrates how a consumer goods company can embed sustainability into its business model, not just as a compliance measure, but as a core element of future growth and resilience.

Iberdrola

Iberdrola, one of the world’s largest renewable energy companies, has aligned its business model with SBTi to play a pivotal role in the global transition to clean energy. The Spanish multinational has committed to reducing its greenhouse gas (GHG) emissions by 65% by 2030, compared to its 2017 baseline, and aims to be carbon neutral by 2050.

How Iberdrola Leverages SBTi:

• Renewable Energy Expansion: Iberdrola’s strategy revolves around rapidly expanding its renewable energy portfolio, particularly in wind and solar power. The company is investing heavily in green energy infrastructure, with plans to invest €150 billion by 2030 to further solidify its position as a leader in the renewable energy sector.

• Decarbonizing Electricity Generation: Iberdrola is retiring carbon-intensive fossil fuel plants and shifting entirely to renewable energy. As of 2023, the company had already shut down a number of coal-fired power plants and is rapidly scaling its clean energy capacity.

• Innovative Technology Deployment: Iberdrola is investing in innovative technologies such as green hydrogen and battery storage to complement its renewable energy efforts. The company is also exploring offshore wind farms as a way to increase its green energy output while utilizing marine resources efficiently.

• Global Leadership in Clean Energy: Iberdrola’s commitment to science-based targets positions it as a global leader in renewable energy, especially in regions where the energy transition is still in its early stages. By using SBTi to guide its emissions reductions, Iberdrola is playing a critical role in shaping the future of clean energy, not just in Spain, but globally.

Through SBTi, Iberdrola ensures that its growth aligns with international climate targets, demonstrating that it is possible for energy companies to thrive while significantly reducing their carbon footprints.

The Net-Zero Standard: SBTi’s Groundbreaking Framework for Corporate Climate Action

In October 2021, the Science Based Targets initiative (SBTi) launched the world’s first Net-Zero Standard, providing companies with a clear and comprehensive pathway to align their climate action with global scientific goals. This standard is the first of its kind, designed to offer a rigorous framework for companies to set science-based net-zero targets. The launch of the Net-Zero Standard marked a crucial step forward in corporate climate leadership, offering a unified approach to credible net-zero commitments and combating the greenwashing that has plagued corporate sustainability efforts in recent years.

The Net-Zero Standard offers a robust methodology for setting net-zero targets based on climate science. It provides a dual focus on both near-term and long-term goals, which are essential for driving meaningful progress. Companies are required to set near-term targets for emissions reductions over the next 5 to 10 years. These goals ensure that businesses take immediate action, addressing the urgency of the climate crisis by pushing for rapid decarbonization. At the same time, the framework calls for long-term targets, where companies commit to achieving net-zero emissions by 2050 or sooner.

A key feature of the Net-Zero Standard is its focus on reducing emissions within a company’s operations before turning to carbon removal to address residual emissions. This principle ensures that companies prioritize cutting their own emissions rather than relying on offsets as a primary strategy. In addition, SBTi’s target validation process ensures that all targets set by companies align with the latest climate science, providing credibility and accountability. The initiative’s rigorous review of targets prevents companies from making vague or overly optimistic net-zero claims, promoting transparency in corporate climate action.

Setting science-based net-zero targets also encourages innovation and investment. Companies working toward deep decarbonization will need to adopt new technologies, such as renewable energy systems, carbon capture and storage (CCS), and other low-carbon solutions. By doing so, they foster greater innovation within their sectors, helping to drive progress toward global climate goals. These actions also strengthen investor confidence, as businesses that commit to science-based net-zero targets demonstrate they are preparing for the future economy. Furthermore, aligning with the Net-Zero Standard enables companies to build resilience to climate risks and navigate the regulatory and market pressures that are increasingly shaping global business landscapes.