Ten tips for completing the Near-Term Submission Form

29th Jul 2022

If your company is committed to reducing its emissions, setting near-term science-based targets is the first step in your decarbonization journey. Defining how your company will reduce its emissions by 2030, 1.5°C-aligned near-term targets enable you to begin taking science-aligned action to slash emissions today, while paving the way for a pathway to net-zero by 2050 via the SBTi’s Net-Zero Standard.

Once your company has committed to the SBTi and developed a target, it must then be validated by the SBTi’s Target Validation Team (TVT) as aligned with climate science. The near-term submission form gives the TVT the information they need to do this.

If this form isn’t completed correctly, it can cause delays to the process - preventing your company from aligning its climate action with limiting global temperature rise to 1.5°C - which the IPCC tells us is necessary to avoiding the worst climate carnage.

These top tips will help you avoid the most common mistakes when completing your near-term submission form.

1: Only give us the facts

  • Do: Provide clear, factual descriptions of business activities
  • Don’t: Give us marketing copy

When it comes to providing a detailed description of business activities in section 1.2.7 of the submission form, companies must provide factual information only. This includes, but is not limited to:

  • Any distinct business divisions, including percentage breakdown by revenue/business activity.

  • Explanation of products sold.

  • Explanation of services your company offers and procures.

  • Your company’s place within the value chain of each business area, and description of operations.

  • Geographical markets your company operates in.

Don’t provide us with marketing content, such as a company overview from your website’s homepage. This won’t give us the information needed, and will delay your submission while we reach out to you for clarification.

Caitlin explains what sort of information we need from your company.

2: Explain your emissions

  • Do: Include details across all categories of your emissions generating activities
  • Don’t: Just provide emissions calculation numbers

In order to assess and approve your target, we need to understand all your company's business activities and associated emissions-generating activities. Emissions calculation numbers alone are not enough: We require companies to provide 50-100 words per emissions category (such as purchased goods and services; capital goods; and fuel and energy related activities) to explain the operations, locations, activities and emission sources. We also need adequate justification if a category is not relevant to your company.

This helps us ensure that all angles have been considered and your emissions have been calculated accurately. If you need to omit a category, provide a detailed justification as to why it’s not relevant so as to not slow down the validation process.

3: Justify your greenhouse gas inventory

  • Do: Explain how data reflects your emissions
  • Don’t: Just provide the figures with no justification

Because it can be difficult to acquire primary scope 3 data on real activities, we allow companies to develop targets based on secondary data. However, both primary and secondary data must be presented with a detailed justification of the emission estimates, and why secondary data reflect the company’s real-world emissions.

Don’t just include the figures: You must justify the business activities associated with each scope and category, and provide a high-level overview of the methodological calculations and any associated assumptions that were used to generate each estimate.

This will give our validation team the information needed to assess the target without having to contact you for further explanation.

4: Understand the difference between inventory exclusions and target exclusions

  • Do: Account for at least 95% of scope 1 and 2 emissions and 90% of scope 3 emissions
  • Don’t: Confuse GHG inventory exclusions with exclusions from the target boundary

In order to allow for data constraints within the greenhouse gas (GHG) inventory, companies are allowed to exclude no more than 5% of their GHG emissions from their scope 1 and 2 submission, and no more than 10% for scope 3. This is known as an inventory exclusion, and shouldn’t be confused with target exclusions.

Target exclusions refer to emissions that are reported in the inventory, but are not covered by the science-based target. This is known as the target boundary.

5: Understand the difference between omissions and emissions

  • Do: Detail any omitted greenhouse gasses
  • Don’t: Say that gasses you don’t actually emit are omitted gasses

In sections 2.5.1 and 2.5.2 of the submission form, you must detail gasses that have been omitted from your accounting. These are gasses that your company emits, but have not been accounted for in the submission form.

Don’t confuse these with gasses that your company does not actually emit.

6: Provide accurate growth projections

  • Do: Ensure growth projections are as accurate as possible
  • Don’t: Omit justification of growth projections

Growth projections must reflect the actual emissions that are being produced. If these are not accurate, companies may find achieving the target is easier - or more difficult - than anticipated.

To guard against this, justify growth projections by providing reasoning or supporting documentation, such as your company's business development strategy. All information shared is confidential.

7: ‘Category 15: Investments’ may apply to you - even if you aren’t a financial institution

  • Do: Read the GHG Technical Guidance for Calculating Scope 3 Emissions
  • Don’t: Assume this category is irrelevant to your company

Many companies assume that because they aren't a financial institution, this category isn’t relevant to them, but this isn't always the case.

To find out if this category is relevant to your company, review pages 130 - 135 of the GHG Protocol Scope 3 Technical Guidance for Calculating Scope 3 Emissions.

As explained in the guidance, companies that choose an operational or financial control consolidation approach to calculate their GHG inventory should account for emissions from any asset the company wholly or partially owns but does not control, in category 15. This relates to any subsidiaries, joint ventures, financing or other activity or project, that your company has a financial stake in but that does not sit within the organizational boundary.

Scope 1 and 2 emissions from these activities should be reported in scope 3 category 15 proportionate to your company’s equity share.

This category is especially important for companies to account for, not only so the GHG inventory is complete, robust, and accurate. but it also gives you visibility over the emissions sources your company profits from.

Watch Phoebe explain why Category 15 may be applicable to your company.

8: Correctly understand your scope 3 target coverage

  • Do: Fill in the percentage of the category’s emissions which are to be included in the target
  • Don’t: Label categories as ‘not applicable’ just because the value of emissions is low

Companies with scope 3 emissions that exceed 40% of total emissions must set scope 3 targets. Under version 5 of the SBTi’s criteria, these targets must at least be aligned with the well-below 2°C temperature pathway.

At least 67% of scope 3 emissions must be covered by near-term targets in total, whether that is multiple targets covering smaller portions of scope 3 emissions or one target covering various categories. For net-zero targets, at least 90% of scope 3 emissions must be covered. Because of this requirement, the SBTi always recommends maximizing target coverage. This to ensure the step between near-term and net-zero targets is as easy as possible and as well as maximizing real-world emissions reductions.

In table 3.1.5 of the near-term submission form, companies are requested to provide the percentage of emissions covered within each category to determine the coverage of near-term targets. For example, if a company wants the target boundary to include all category 1 emissions, then 100% must entered into the corresponding cell in the table.

Companies often mistakenly enter the percentage of total scope 3 emissions each category is responsible for, or the percentage of the total target’s coverage in each category. This results in confusion regarding target coverage.

Do provide

Do not provide

✓ Percentage of emissions covered within each category

⨯ Percentage of total scope 3 emissions each category is responsible for

Lucas outlines how to approach completing Table 3.1.5.

9. Don’t confuse upstream and downstream transportation and distribution emissions

  • Do: Ensure you allocate upstream and downstream emissions based on who is paying for the service
  • Don’t: Incorrectly categorize your transportation and distribution emissions based on if the service is inbound or outbound

Scope 3 categories 4 and 9 relate to transportation and distribution emissions, including refrigeration, freezing and heating services for storage of items being distributed. These categories cover any transportation emissions between a company’s own facilities and the next person or business to receive the goods or services.

The GHG Protocol defines these categories as upstream or downstream based on who purchased these third-party services.

  • Upstream means that the company setting the science-based target paid for these services.

  • Downstream means the services were paid for by any other entity, such as customers or suppliers.

Ensure you do not confuse these terms and allocate your emissions correctly.

Guillermo breaks down the difference between upstream and downstream emissions.

10: Assess your company’s future activities accurately

  • Do: Select a base year that is representative of future business activities and operations
  • Don’t: Under- or overestimate your base year

Anticipating your company's future business operations is extremely important as it ensures your decarbonization approach is as ambitious as possible.

Doing this correctly means getting three things right:

1. An accurate representative base year inventory

Having a representative base year inventory is very important as this is what your company’s future emissions reductions will be based on.

An over-inflated base year GHG inventory can create a situation where emissions reductions can be reported as having occurred, without any actual change in real world emissions. While a base year inventory that is too low will lead to unachievable or unrealistic targets.

2. Covid-impacts assessment

The Covid-19 pandemic changed the emissions profiles of many industries. While some industries are likely to bounce back to their old ways of working and thus emissions patterns, many sectors, such as the professional services sector, are adapting to a new, post-pandemic style of working.

When setting a base year, consider whether the base year selected is representative of your company’s future business activities and operations. This will ensure that your targets result in ambitious decarbonization, that goes beyond what will happen thanks to evolving business practices in your sector.

3. Forward looking ambition

If your company has already been taking decarbonization action before joining the SBTi, your target must lead to further action from the point of submission. That is why your target must have sufficient forward-looking ambition: To ensure it is not already achieved at the point it is being set.

We hope these tips help you to complete your near-term submission form successfully, and we look forward to evaluating your target.

If there are other SBTi tools and processes that you think would benefit from an explainer blog or video, get in touch at [email protected].