Ambition, growth and evolution: Six key takeaways from the SBTi’s new strategy
19th Jul 2022
1. Ambitious new goals to ramp up climate action
The window of opportunity to avoid the most catastrophic effects of climate change is closing. We’re seeing this now, as large parts of the world struggle under record high temperatures. Radical and immediate action to cut emissions is imperative. The importance cannot be stressed enough: We are at code-red for humanity.
The SBTi’s theory of change for achieving the corporate emissions reductions we need is based on the ‘diffusion of innovations’ theory. This posits that 10 to 25% of a system’s members must adopt an innovation to trigger rapid adoption by the other members. At the SBTi, we work with the assumption that 20% – one fifth – of businesses in a particular territory or sector equals critical mass. That’s the tipping point at which it becomes increasingly difficult for other businesses to do nothing, and more and more join the race to the top.
That’s why we have set new goals for 2025:
- $20 trillion of the global economy with approved 1.5°C targets: To stop the clock on climate change we must reach this tipping point, fast. This means ensuring the businesses that can reshape the economy join the SBTi by 2025. Assuming a global market cap of about $90-100 trillion, 1 in 5 dollars means $20tri.
- 5GT of corporate emissions: We also need to get to the tipping point in terms of emissions covered by a validated target. This means about 5GT global corporate emissions.
- 10,000 companies: Finally, we need 1 in 5 of the world’s most important companies to have a validated target or a commitment to set one. Assuming that there are about 40-45k listed companies, that means 10k companies.
2. Enabling greater scrutiny
Feedback and challenge are essential for evolution and growth. There will always be differences of opinion and we as an initiative aren’t always going to get everything right. But we never shy away from healthy debate - in fact, we embrace it.
That’s why we are currently hiring a Director of Compliance. They will be responsible for ensuring compliance with policies and procedures within the initiative, implementing a formal complaints mechanism, and other governance enhancements that are explained below.
3. Addressing the challenge of rapidly increasing demand
In 2021, the SBTi validated more targets from businesses than in all the previous six years combined. During COP26, hundreds of businesses were making commitments or clamoring to get their targets validated. In January 2022, demand rose so much that it looked like some companies would have to wait up to a year to get their targets validated.
That was not acceptable, so within three months, we’d halved that waiting time. Three months later we’d halved it again. We have delivered a 70% reduction compared to peak.
This is a big improvement, but not enough. We want to go further. Our goal is that businesses should wait no longer than one month to start their target validation process, and we are significantly increasing capacity to make this happen.
4. Moving from ambition to impact
The SBTi goal is to move corporate climate ambition from doing something to tackle climate change into doing enough, aligned with what science tells us is needed.
In May, we published our 2021 Progress Report. It shows that businesses with science-based targets are cutting emissions faster than those without, and at a faster rate than is needed to limit global heating to 1.5°C.
This is a fantastic first indicator. But as an academic, I know correlation is not causation. We must also consider how we measure impact. And our progress report also found that only half of companies with validated targets actually disclosed their emissions to CDP.
That is why we are developing a new measurement, reporting and validation (MRV) framework to advance this agenda. This will standardize how the SBTi assesses progress against targets and bring greater clarity and accountability to corporate climate action.
5. Strengthening the institution of the SBTi
I firmly believe that strong institutions and robust processes are key for success. My appointment as the SBTi’s first CEO was the first step in that direction, but there are three more important developments to come:
- Incorporation: We are incorporating the SBTi, linked but separate from our founding partners: CDP, World Resources Institute, World Wide Fund for Nature (WWF) and the United Nations Global Compact. We won’t look any different to the outside world, and we will absolutely not be cutting our close ties to our founding partners. But we will be able to work more efficiently and effectively. We’ll be able to get more done in less time, and be better able to respond to the growth challenges mentioned above.
- Expanding our Executive Board: We already have a fantastic board, and I am personally very grateful for all their support, skills and expertise. But as a growing organization we need to grow our governance, too. We’re seeking exceptional individuals to bring wider expertise from different backgrounds, such as business, academia, climate justice, investors, regulators and standard-setters. High level leaders and changemakers, we want you. Additional information will be shared in due course.
- Creating a Technical Council: The SBTi has a proven, sophisticated and well-established process for creating its standards and guidance. At the end of this process, we need a body that can recommend approval of this work, and make the difficult calls based on the scientific and real-world evidence. Our new Technical Council will establish strong technical governance and guide the rules and processes we need to maintain scientific credibility.
6. Leveraging our place in the climate action ecosystem
When the SBTi was created in 2014, we had to do a little bit of everything: awareness raising, creating movements and campaigns, advocacy on ambition, and support for disclosure. Today there are many other players in the ecosystem that are expert in specific areas. This is a good thing – it enables us to double down on what we do best:
- Standardization of concepts, guidelines and ambition level aligned with what science tells us is needed, to guarantee transparency.
- Assess and verify that ambition actually is aligned with these. We aim to become the third-party market based mechanism that shows what corporate ambitions are aligned with this science-based guidance.
For all of us working for climate action – NGOs, companies and governments alike – there is still much work to do to ensure a habitable planet for future generations. But I can assure you, we at the SBTi will continue to strive for ever increasing ambition – and look forward to working with our colleagues across sectors to prevent the worst impacts of climate change.
To find out more, watch the recording of our 'Ambition, growth and evolution event'.