The Science Based Targets initiative (SBTi) reported a sharp rise in companies setting science-based targets in 2022, with 87% more having their targets validated that year (1,097) compared with 2021, and a number greater than the entire previous seven years combined (1,082).
In the SBTi Monitoring Report 2022, Japan emerged as a leader, with more companies setting targets there than in any other country. Companies with science-based targets represented 40% of the NIKKEI index by the end of 2022.
Asia showed strong growth overall with a 127% increase in companies setting a science-based target in 2022. China experienced the steepest growth curve with a 194% increase in the number of companies validated.
Companies representing more than a third of the global economy (34%) by market capitalization had set or committed to setting science-based targets by the end of 2022. 69% of FTSE companies had set science-based targets and 42% of S&P companies.
As of July 2022, the SBTi has only accepted new target submissions which are aligned with 1.5ºC, indicating a meaningful increase in the level of ambition for corporate climate action.
Speaking about the SBTi Monitoring Report, the SBTi’s CEO Luiz Amaral said:
“This annual update from the SBTi shows the enormous demand from the business world for credible, ambitious targets for reducing greenhouse gas emissions. As catastrophic floods in Pakistan to deadly heatwaves in Europe in 2022 demonstrated, the human and economic costs of climate change are already being felt around the world. Companies must act now.”
In 2022, the SBTi appointed its first CEO, Luiz Amaral as part of a strategic program to strengthen governance. It also started the process to appoint its first Chief Impact Officer and Compliance Director, who joined in January and April 2023 respectively. In addition, it shared plans to appoint an independent Technical Council to approve the SBTi’s standards, methodologies and guidance and provide the strong technical governance needed to maintain scientific credibility. The Technical Council was unveiled in March 2023 and held its first meeting this July.
An update on the SBTi’s governance will be shared in September 2023.
The materials industry experienced the greatest growth with a 160% increase in the number of companies setting targets. The top three represented sectors were Services, Manufacturing and Infrastructure, representing more than 60% of companies setting targets.
The three slowest growth sectors were Power Generation; Biotech, Healthcare & Pharma; and, hospitality - areas with room for urgent improvement.