But there is another major shift weakening the momentum towards net zero, this time from the corporate world. The Science Based Targets Initiative (SBTi) has become one of the largest and most influential organisations providing guidance and validition for over 10,000 companies setting net zero targets, including some of the biggest companies in the world. Backed by the UN and WWF, and creator of the world’s first corporate net zero standard in 2021, it has the reputation as one of the most credible voices on net zero.
Watering down the scope
Partly due to its rapid expansion, the SBTi recently released an updated draft net zero standard open for consultation, with the aim of providing more detail and guidance for businesses setting targets. But among numerous helpful suggestions, including tailored guide for different emissions and company sizes, the 133-page document fundamentally weakens the standards businesses must meet in order to validate their net zero claims, compared to the original 2021 document.
The most serious is the change in policy with respect to scope 3 emissions. Accounting for 70-90% of corporate emissions, these are the emissions which come from a companyʼs supply chain, as opposed to their direct emissions. While the original guidance required large companies to reduce scope 3 emissions by 90% by 2050, the new standard omits this requirement entirely, merely stating that reductions should be “in line with pathways consistent with limiting warming to 1.5°C.ˮ Instead, to have their targets validated, companies only have to address ‘the most relevantʼ emissions, including ‘significantʼ emissions sources representing 5% or more of the total, and ‘emission-intensive activitiesʼ, those representing 1% of the total or more than 10,000 tCO2e/year. Worse still, large companies are “not requiredˮ to set long-term scope 3 targets at all.
This watering down appears to be the result of pressure from businesses to allow them to tick the net zero box while taking less action to decarbonise. Scope 3 emissions in particular are notoriously difficult – and costly – to measure, track and reduce, due to the complexity of global supply chains. After internal pressure, in April 2024, the SBTi was forced to backtrack on a plan which would have allowed its members to address Scope 3 emissions by buying carbon offsets, instead of decarbonising, something its corporate clients were calling for.
To maintain its credibility for bet practise, the SBTi should strengthen its requirements for scope 3 emissions targets, and reassert the 90% overall reduction in emissions across the board, as in the original guidance. The science clearly calls for this level of cuts: the latest UNEP Emissions Gap report, for example, said that to be on track for 1.5°C, global cuts of “42 per cent are needed by 2030 and 57 per cent by 2035ˮ. Business must play a substantial role in making this happen.
Secondly, although highly ambitious, this is the level of decarbonisation companies need to achieve in order to be ‘in line with 1.5°Cʼ, as the guidance still claims its members should be, so SBTi should make this explicit and remove any loopholes that obscure that end.
Lastly, it is difficult to overestimate the indirect damage incurred by letting companies off the hook for long-term scope 3 action, as this undermines the integrity of net-zero claims more broadly. SBTi should use their significant influence to avoid this and maintain high standards, lest they risk further damaging the shaky reputation of corporate green claims.
Taking Responsbility: Ongoing vs Residual Emissions
To its credit, the guidance does propose more detail and greater recognition as to how companies can neutralise residual emissions by funding high quality carbon removal projects, after their decarbonisation target has been met, as well as funding climate and nature projects ‘beyond the value chainʼ from day one, in order to take responsibility for ongoing emissions as they decarbonise.
Regarding the first – addressing companiesʼ residual emissions (about 10% of the total) – the guidance proposes three options. Firstly, mandating funding for carbon removal project as the company decarbonises, secondly, recognising (but not mandating) such funding, or thirdly, a combined approach where companies have the option to decarbonise further, reducing residuals to 5% or even 0%, instead of just funding removals.
The flexibility these options provide is welcome, but the guidance should mandate that targets are made and set to address residuals by funding high quality carbon projects, rather than merely providing ‘recognitionʼ, which will result in low uptake. They should further set out guidance for what carbon removal projects counts as high quality, such as Edenʼs Carbon Credit Integrity Standards.
The language and emphasis on addressing ongoing emissions by funding climate and nature projects ‘beyond the value chainʼ is also welcome, but the SBTi should mandate, not just recognise, bold targets that are relative to the companyʼs overall emissions.
It is right to say that companies should ‘take responsibilityʼ for their ongoing emissions as they decarbonise – if the average decarbonisation rate is c.4% per year, that leaves 96% of emissions in year one (92% in year two, 88% in year three…) which are currently not required to be addressed. In Edenʼs view, companies should allocate funding for high quality climate and nature projects to address their ongoing environmental impact that exceeds one third of their budget for addressing residuals, and using the SBTiʼs carbon pricing guidance in their Above and Beyond document.
Currently, terrestrial ecosystems are responsible for absorbing a quarter of anthropogenic carbon emissions…The maintenance of the existing land carbon sink and its enhancement represent a substantial contribution to mitigation pledges and scenarios. UNEP Emissions Gap Report 2023
Funding beyond value chain is not a mere ‘nice-to-haveʼ. As discussed in previous articles, climate modelling by the UNEP and IPCC clearly shows that achieving net zero by 2050 is only possible assuming the simultaneous, rapid restoration of natureʼs carbon sinks, such as rainforests, wetlands, corals, oceans, as these naturally remove huge amounts of CO2 from the atmosphere, alongside decarbonisation. The new guidance only offers ‘recognitionʼ to voluntary action to address ongoing emissions, once again leaving the door open to inaction. As with residuals and scope 3, SBTi should instead mandate targets for beyond value mitigation, recognising that it is an essential part of net zero.
Keeping the bar high
Corporate Net Zero Standards may not win prizes for literature, but their impact on climate, climate politics and public trust in companies are huge. Just as it is the responsibility of businesses to take action on their emissions, it is the responsibility of the target setting organisations to keep the bar high on net zero. To maintain both, the SBTi should use this consultation as an opportunity to reaffirm the strict requirements set out in their original standard, remove loopholes around scope 3 emissions, and create mandatory beyond value chain targets. While corporate actions and attitudes may ebb and flow; global carbon emissions will only rise further and further.
Bibliography
https://www.bbc.co.uk/news/articles/cly3pnjyzp4o
https://sciencebasedtargets.org/consultations/cnzs-v2-initialdraft
https://www.theguardian.com/environment/2024/apr/11/climate-target-organisation-faces-staff-revolt-over-carbon- offsetting-plan-sbti
https://www.ipcc.ch/assessment-
report/ar6/#:~:text=The%20Synthesis%20Report%20was%20released%20on%2020%20March%202023.&text=The% https://www.unep.org/resources/emissions-gap-report-2024
https://www.unep.org/resources/emissions-gap-report-2023
See Also
https://edengreenspace.co.uk/articles/carbon-credit-integrity -standards https://edengreenspace.co.uk/our-projects
https://edengreenspace.co.uk/articles/nature-based-solutions-fight-climate-crisis