There are three science-based target (SBT) setting approaches:
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.
Absolute-based approach: The percent reduction in absolute emissions required by a given scenario is applied to all companies equally.
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 2°C scenario (2DS) developed by the International Energy Agency (IEA) as part of its publication, Energy Technology Perspectives (ETP) 2014 (IEA, 2014). 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 SDA tool allows companies to enter their data and determine their science-based targets according to the method and is regularly updated with recent ETP data. The latest version (V8.1) uses the ETP 2016 2 degree scenario (2DS) data. To obtain the most recent copy of the tool 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 Fifth Assessment Report RCP2.6 subcategory that keeps overshoot to under 0.4W/m2, and which requires at least a 49% reduction by 2050 from 2010 levels to stay under 2C. This equates to at least a 1.23% absolute reduction per year. Mars was one of the first companies to use this method to determine its science-based target. To find out more on its approach read here.
3) The economic-based approach
We are currently in the process of updating the economic-based approach and will provide new guidance upon completion.
Companies who wish to use economic-based methods to set intensity targets 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 or are modelled using an approved sector pathway or method approved by the Science Based Targets initiative (e.g. the Sectoral Decarbonization Approach). Reductions must be at a minimum consistent with the low end of the range of emissions scenarios consistent with the 2°C goal,2 or aligned with the relevant sector reduction pathway within the Sectoral Decarbonization Approach.”
For information on how these approaches are applied in the SBTi target validation criteria please see here.
Acceptable ambition for Scope 1 & 2 targets (according to SBTi Criteria and Recommendations V3.0)
The table below summarizes how the ambition of different types of Scope 1 and 2 targets submitted (absolute, activity-based intensity target, economic-based intensity target, and power generators targets) are evaluated by the SBTi technical reviewers. “OK” indicates the circumstances under which targets are considered as acceptable in terms of ambition. This table can be used as a guide for companies to verify whether their target(s) would meet the validation criteria regarding ambition.
Key takeaways are:
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. Note that for certain sectors and specific cases where these two methods lead to very different targets in terms of ambition, the targets might have to be in line with both of the methods.
Economic-based intensity targets can be considered ambitious enough if those targets align with the Absolute-based Approach and/or SDA. The intensity target may be expressed with an economic indicator, but the company must be able to show reductions are still be in line with the Absolute-based Approach and/or SDA when the target is submitted for validation. Note that for certain sectors and specific cases where these two methods lead to very different targets in terms of ambition, the targets might have to be in line with both of the methods.
Power generators’ targets must be in line with the SDA. 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 a rigorous assessment performed during the target validation.
When the target being validated is:
The technical reviewer checks against:
Absolute Emissions Contraction
Absolute, if covered in a heterogeneous or homogeneous sector
Intensity, if covered in a homogeneous sectors
Activity-based intensity target
Look at expected change in absolute emissions
Look at expected change in absolute emissions
Economic-based intensity target → convert values to check against other methods