Approaches and methods

There are three science-based target (SBT) setting approaches:

      1. Sector-based approach: The global carbon budget is divided by sector and then emission reductions are allocated to individual companies based on its sector’s budget.
      2. Absolute-based approach: The percent reduction in absolute emissions required by a given scenario is applied to all companies equally.
      3. Economic-based approach: A carbon budget is equated to global GDP and a company’s share of emissions is determined by its gross profit, since the sum of all companies’ gross profits worldwide equate to global GDP.

1) The sector-based approach (Sectoral Decarbonization Approach (SDA)):


The Sectoral Decarbonization Approach is based on the Beyond 2°C scenario (B2DS) developed by the International Energy Agency (IEA) as part of its publication, Energy Technology Perspectives (ETP) 2017 (IEA, 2017). It was developed by CDP, WRI and WWF with the technical support of Navigant (formerly Ecofys) as a consultancy partner. The methodology was created with input from a group of technical advisors, two public stakeholder workshops and one online workshop, and aims to provide businesses with a sector-specific and research-backed method to set their emissions goals.

The accompanying SBTi tool allows companies to enter their data and determine their science-based targets according to both the SDA method and the Absolute Contraction Approach.. To obtain the most recent copy of the tool (V1.1) please see here.

2) The absolute-based approach:


This method requires all companies to reduce their own emissions by the same percentage of absolute emission reductions as required for a given scenario (e.g. globally or for a sector). When referring to this method at a global level, the SBTi is currently using the IPCC Special Report on Global Warming of 1.5°C (SR15) for two pathways, a well-below 2°C and a 1.5°C trajectory. . This equates to at least a 2.5% absolute reduction per year for well-below 2°C alignment, or a 4.2% absolute reduction per year for 1.5°C alignment.

The accompanying SBTi tool allows companies to enter their data and determine their science-based targets according to both the SDA method and the Absolute Contraction Approach. To obtain the most recent copy of the tool (V1.1) please see here.

3) The economic-based approach


Companies who wish to use economic-based methods to set intensity targets at this time may do so, but note that intensity targets would be considered science-based only if they lead to absolute reductions in line with climate science. . Reductions must be at a minimum consistent with the low end of the range of emissions scenarios consistent with the well-below 2°C or 1.5°C goal.

 

For information on how these approaches are applied in the SBTi target validation criteria please see here.

Acceptable types of targets for Scope 1 & 2 emissions (according to SBTi Criteria and Recommendations V4.1)

    1. If an absolute target is submitted for validation and it is in line with the Absolute-based Approach and/or with the Sectoral Decarbonization Approach, it will be considered sufficiently ambitious.

 

    1. Physical-intensity targets are acceptable and can be considered ambitious enough if those targets align with the Absolute-based Approach and/or the SDA.

 

    1. Economic-based intensity targets are acceptable and can be considered ambitious enough if those targets align with the Absolute-based Approach and/or the SDA.

 

  1. Power generators’ targets must be in line with the SDA ambition. This is because they are the largest contributors to global GHG emissions and are expected to decarbonize the most aggressively. The SDA approach recognises this imperative, which may be underestimated by other methods.

Please note that the SBTi recommends companies to screen several of the methods and choose the method and target that best drives emissions reductions to demonstrate sector leadership. That is, companies should not default to the target that is easiest to meet but should instead use the most ambitious decarbonization scenarios and methods that lead to the earliest reductions and the least cumulative emissions.

Please note that targets have to meet all the SBTi criteria to be approved and this can only be determined after targets are submitted to the SBTi via the target validation service.