As climate-related risks continue to dominate the World Economic Forum Global Risks Report, companies know they need to transform the way they operate to avoid irreversible damage to the planet. Today, more than 500 global companies have committed to align their greenhouse gas emissions targets with what science says is necessary. And more companies are following their lead.
Going bold on climate takes ambition and planning. In webinar 2/3 of our Ready > Set > Go Beyond!’ goal-setting series, Quantis, WWF, WRI and IKEA look at the process of setting science-based targets and how companies are building climate roadmaps. Let’s recap some of the highlights.
To become a truly sustainable business, a company must first understand what level of reduction goal will lead it there. Science gives that answer.
Science-driven goals = shifting gears
Science-driven goals challenge the traditional business target-setting paradigm, where it’s common to see companies set GHG reduction targets that are attainable and that sound good: “20% GHG reduction by 2020,” for example. The paradigm shift comes when a company sees that “attainable” goals will not produce a truly sustainable business model. A company must first understand what level of reduction goal will lead it to sustainability. Science gives that answer.
With a science-aligned goal in place, companies can begin building a climate roadmap. The roadmap identifies potential actions for today and then reveals the distance between those actions and the ultimate science-based target (as seen in the graph below). If incremental changes don’t get there fast enough, it’s time to shift gears. The climate roadmap shows when to move into the fast lane with disruptive innovations or even business model changes.
How to set science-based targets
There are various frameworks to set science-aligned goals. The most common is through the Science Based Targets initiative (SBTi) launched by the CDP, WRI, WWF and UN Global Compact. More than 500 companies have already committed to science-based climate goals through SBTi, and they are experiencing a range of tangible benefits, including increased innovation, brand credibility, investor confidence, and more.
Setting a science-based target is a four-step process.
- First, you COMMIT to set targets by submitting a letter signed by the CEO.
- Second, you DEVELOP targets in line with eligibility criteria. If your scope 3 emissions are great than 40% of your total emissions, your target must cover these scope 3 emissions. For guidance on how to assess your scope 3 emissions, watch the first webinar of this series, ‘READY your metrics for business resilience.’
- Then you SUBMIT your targets to the SBTi for review.
- Finally, once your targets are validated (usually within 6-8 weeks), you commit to DISCLOSE your progress annually.
There are various approaches and methods for target setting. This variety allows companies from most sectors to set targets appropriate for their situation. (For a few sectors, the SBTi approach may be less suitable; for instance, if avoided emissions [buildings] or scope 3 measurements [finance] are relevant factors.) Some companies set absolute reduction targets while others elect for intensity targets, either physical (reduce emissions per ton of material produced) or economic (reductions per unit of value added). Companies for which a detailed Sectoral Decarbonization Approach (SDA) is available will likely opt for this, as it provides information on the minimal emissions intensity that sector should aim for.
The IPCC 1.5 report fuels greater science-based targets ambition
Last year’s IPCC Special Report focused on the consequences of 1.5°C global warming and compared them with 2° of global warming. The report serves as a rallying cry for government, NGO, and businesses to accelerate GHG reduction efforts to keep global warming below 1.5 degrees. The SBTi is committed to include the latest climate science in their frameworks and tools to keep pushing companies’ ambition. They will communicate a first set of updates in the criterias and recommendations by the end of February 2019. Stay tuned!
“We know exactly what needs to be done.
The question is how to do it.”
IKEA Climate Lead
IKEA’s roadmap to Climate Positive 2030
Once you’ve set your science-based target, you need to build a solid roadmap to get you there. IKEA Group set ambitious targets through the SBTi framework. To reach those targets, the climate team at IKEA is building their roadmap on robust data, operational KPIs, and clear governance structures. Taking its 2016 corporate footprint as a baseline, the team is identifying all potential reduction actions and analyzing the reduction potential of each. It is breaking down its total climate target into sub-targets for each corporate footprint category, prioritizing areas of greatest impact. For example, the sub-target for production is an 80% reduction in GHG by 2030 from a 2016 base-year, accounting for IKEA’s growth trajectory. To reach this, IKEA identified key reduction potential areas including renewable energy, renewable heat, energy efficiency, etc.
IKEA’s use of robust metrics allows it to simulate reduction pathways and track progress toward its targets with the kind of granularity that gives confidence to its teams and builds trust with consumers. Next steps for IKEA’s climate team are to leverage the experience gained thus far to integrate climate goals into the rest of its business and support the integration through guidance, resources, policies, and trainings. Learn more about IKEA’s climate strategy journey in the webinar slides.
Ready to set your goals and build that roadmap? Quantis Senior Sustainability Consultant and Climate Strategy Lead Charlotte Bande can be your guide.
Want to go beyond climate? Grab your seat on March 21 for webinar 3/3 ‘GO BEYOND carbon toward planetary boundaries + context-based goals.’