Consultation

Five reasons why setting science-based targets makes business sense

DSC_5312   by Erin Callahan, Manager, Global Initiatives, CDP

We interviewed sustainability professionals at leading companies that have had their science-based emissions reduction targets approved. The resulting case studies of Dell, Kellogg’s, Pfizer, PostNord and Sony reveal lots of common themes, in spite of the businesses’ different activities and emission profiles.

Renewed confidence  

One notable feature of the case studies when viewed as a group is how positive all the interviewees feel about having had their science-based target approved by the initiative partners, CDP, UNGC, WRI and WWF. The official quality check, based on rigorous analysis and grounded in science, gave companies confidence in their plans, and a renewed enthusiasm to pursue the task of reducing emissions. Some also said that they felt better-placed to play a leadership role in the sector, setting an example for others.

Improved government relations

Companies said their relationships with regulators had become more collaborative. Amy Braun, senior sustainability manager at Kellogg Company said, “Having a science-based target helps us build relationships with government and changes the nature of the conversation we have with them,” while Dell’s John Pflueger observed, “The government doesn’t just set rules and culture, but is also a potential customer. It can indicate its support for low-carbon innovation by purchasing those products, so in that sense, having a science-based target should stand us in good stead.”  

Ambition begets ambition

In most cases, the decision to set a science-based target was a logical development of existing ambition. Indeed, Sony, Dell, Pfizer and PostNord all had ambitious targets, which they retrospectively put forward for approval by the Science Based Targets initiative. The existence of the initiative, and the new methodologies that enable targets to be directly aligned with the latest science, provided extra incentives and a trajectory for future years.

As Sally Fisk from Pfizer explains, “We had already successfully met previous targets and we wanted to continue to challenge ourselves. We looked at the latest Intergovernmental Panel on Climate Change Assessment Report, which laid out various scenarios and the related chances of staying below 2 degrees centigrade warming, and we said to ourselves: rather than simply setting a target we think we can meet, let’s set one that puts us on track for where we – and the world – need to be by 2050.”

For Sony, joining the initiative generated a sense of solidarity, and helped nurture internal support for the long-term vision. Keiko Shiga explains: “Having a science-based target helps keep us on track. It means we know what we need to do in the short- and medium-term to meet the longer-term vision. And it also helps convince people internally that we are doing this in a logical manner. By being part of the global initiative we know we are part of a bigger movement, and that if we all work together we can deliver the reductions necessary.”

Everyone overcame challenges

In spite of the enthusiasm and positivity all interviewees expressed, each also shared moments where things felt challenging. Getting internal buy in, setting targets that were sufficiently long term, and working with suppliers and customers to address scope 3 emissions up and down their value chains were some of the difficulties companies faced. Dell also talked about the need to keep sensitive data confidential, while communicating the scale of ambition and the plans for implementation.

Sally Fisk at Pfizer admitted, “there have been moments where I have had to remind myself that progress happens slowly, that you can’t drive dramatic change overnight. But then I look at what we’ve achieved and I think we’ve done pretty well and I am excited about the progress we can continue to make!”

PostNord’s Søren Boas was also candid about his experience: “Sometimes I hear people asking ‘can we really afford to be this ambitious?’; ‘won’t the costs be too high of such a bold target?’ and I feel sad when I hear this because to me the business case is clear. And so I say: ‘We are aiming for a 25% increase in energy efficiency – which will lead to a reduction in our annual energy bill of $2bn. How can that not be a good thing?’ Or I say: ‘We are answering customer’s demands for lower impact, lower carbon deliveries. How is that not a business benefit?’ Ultimately I know I just need to keep making the case to these few people. The Board, the management and most of the leaders are on board. You will always have a few people who want to argue.”

Everyone agreed that internal and stakeholder communications about the decision and reasons behind it had to be done thoroughly and with care and commitment. In most cases, the direct involvement of senior leaders and C-Suite members in conveying the news and its implications for operations was key.

The targets drove innovation

In all companies, setting and announcing ambitious science-based targets was a spur for innovation and discovery. Staff across the businesses responded to the challenge to do their bit to contribute to the overall reductions. At PostNord, an Environmental Fund was established, giving employees access to finance for new emissions-reducing projects. Meanwhile, at Kellogg Company, several manufacturing sites are investigating the installation of low carbon energy. A fuel cell at the waffle-making facility in San Jose already generates half of the facility’s electricity. According to Amy Braun: “People are now more willing to try new things to help drive towards the target: it has created a ‘start-up mentality’.”

 

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