SBTi launches world-first net-zero corporate standard
28th Oct 2021
SBTi’s science-based Net-Zero Standard launches today to provide a credible and independent assessment of corporate net-zero target setting and enable companies to align their near- and long-term climate action with limiting global warming to 1.5°C.
Seven companies, including AstraZeneca, CVS Health and Ørsted, are the first worldwide to have science-based net-zero targets verified by the SBTi.
- SBTi’s Standard clarifies that rapid action to halve emissions before 2030 and long-term deep emissions cuts of 90-95% before 2050 are crucial for net-zero targets to align with science.
- To achieve net-zero with the SBTi, emissions that are not possible to cut - the final 5-10% - have to be neutralized through carbon removals.
Companies should invest in climate mitigation beyond their value chains on the road to net-zero, but this must be in addition to, not instead of, deep emission cuts in line with science.
(Thursday 28 October) The Science Based Targets initiative (SBTi), the global body enabling businesses to set emissions reduction targets in line with science, today launches the world-first Net-Zero Corporate Standard.
Recent years have seen an influx of net-zero commitments from companies, with 80% of global GDP covered by commitments to reach net-zero by 2050. However, the quality and ambition of such commitments have been inconsistent, leading to criticism and scepticism around the credibility of corporate net-zero targets.
To combat this, the SBTi’s Net-Zero Standard is the world’s first science-based certification of companies’ net-zero targets in line with the Paris Agreement’s goal of keeping planetary warming to 1.5°C.
Alberto Carrillo Pineda, Co-Founder and Managing Director of the SBTi, said: “Companies are currently self-defining net-zero targets without credible and independent assessment of their ambition and integrity.
“For the first time, the SBTi Net-Zero Standard offers companies robust certification to demonstrate to consumers, investors and regulators that their net-zero targets are reducing emissions at the pace and scale required to keep global warming to 1.5°C. We’re now inviting all companies with net-zero targets and ambitions to show stakeholders that their decarbonization pathway is aligned with science. And the rest of the business sector - we call on you to join the Race to Zero.”
The first seven firms to have their net-zero targets certified as part of the SBTi’s pilot scheme are unveiled today. They are: AstraZeneca (UK), CVS Health (US), Dentsu International (UK), Holcim (Switzerland), JLL (US), Ørsted (Denmark), and Wipro (India). More companies are now invited to commit to set net-zero targets, which the SBTi will begin validating from January 2022.
90%+ decarbonization by 2050 is the only route to science-based net-zero
Companies adopting the Net-Zero Standard will be required to set both near- and long-term science-based targets across all scopes.1 Near-term targets cover immediate emissions reductions for the next 5-10 years, while long-term science-based targets determine the total level of decarbonization by 2050 or before.
Through the standard, the SBTi clarifies that science-based net-zero requires companies to achieve deep decarbonization of 90-95% before 2050.2 At that point, a company must neutralize any limited residual emissions that are not yet possible to cut. However, the SBTi sets clear parameters that these residual emissions - which must be neutralized through carbon removals - cannot exceed 5-10% of a company’s emissions depending on its sector. Neutralization activities can take the form of technological removals (i.e. Direct Air Capture (DAC) with geological storage) and nature-based solutions (i.e. reforestation).
The principle at the heart of the SBTi Net-Zero Standard is the “mitigation hierarchy”. This means companies should address value chain emissions and implement strategies to achieve these targets as the main strategy to reach net-zero emissions.
Johan Rockström, Director of the Potsdam Institute for Climate Impact Research (PIK) and Professor in Earth System Science at the University of Potsdam, said: "The Net-Zero Standard gives companies a clear blueprint on how to bring their net-zero plans in line with the science, which is non-negotiable in this decisive decade for climate action. Because we are running out of time. Extreme weather events are occurring more frequently with greater intensity. We are also rapidly approaching critical tipping points. We have to bend the curve of emissions now. We have to create a net-zero world economy in just one generation. There is only one pathway forward, that involves rapid and deep emission cuts and additionally investment in nature-based solutions - which are absolutely fundamental."
The SBTi recognizes the urgent need to scale up near-term finance to help address the nature and biodiversity crisis and increase the likelihood the global economy limits warming to 1.5°C. Given that, the Standard recommends companies make investments to reduce emissions outside their value chains. However, these investments should be in addition to, not a substitute for, rapid and deep reductions of a company’s own emissions.
Furthermore, the role of finance in corporate decarbonization is vital for the world to reach net-zero emissions. The SBTi is therefore leading efforts to define and develop metrics around what net-zero looks like for financial institutions to decarbonize the real economy and is launching its Net-Zero Foundations for Financial Institutions: Draft for Public Consultation on 10 November 2021.
Developing the first-ever science-based net-zero target
The Net-Zero Standard was developed in consultation with an independent Expert Advisory Group, made up of experts from academia, civil society, science and business. More than 80 companies took part in a road-test of the Standard in August 2021.
The Expert Advisory Group will continue to refine and develop the Standard in early 2022, specifically looking at best practice in beyond value chain mitigation and how to further support companies in reducing scope 3 emissions.
To date, more than 600 companies have made a commitment to reach science-based net-zero before 2050 through the SBTi’s Business Ambition for 1.5°C campaign. Companies can commit to setting a science-based net-zero target, join this campaign and the UNFCCC Race to Zero on the SBTi website.
Michael Hugman, Director of Climate Finance at the Children's Investment Fund Foundation and a member of the Expert Advisory Group, said: "Ensuring investments and engagements are supporting true climate-alignment at companies has been almost impossible until now. There has been no way of knowing which net-zero targets are credible. The launch of the SBTi Net-Zero Standard is the solution to that problem. We can now clearly see which companies have net-zero targets that are aligned with climate science. This is a game-changer that will enable us to focus only on the companies with robust near-term climate action plans that deliver science based targets, and measure their annual emissions performance versus targets to hold them accountable."
Lila Karbassi, Chief of Programmes, UN Global Compact and SBTi Board Chair, said: “The Science-Based Target initiative’s new Net-Zero Standard is a historic milestone. Cutting emissions at the right pace and scale is key to reducing the impacts of climate change in all regions of the world and building resilience in the most vulnerable communities. We are witnessing a rise in the number of champion companies from developing and emerging markets adopting net-zero pathways. They represent the fastest growing sustainable markets for investment opportunities aligned with the goals of the Paris Agreement."
Thierry Delaporte, Chief Executive Officer and Managing Director of Wipro Limited, said: “Ambitious climate action towards a net-zero economy is achievable with clearly defined, science-based standards to which all companies and organizations can be held accountable. Wipro thanks the SBTi for their partnership, as we work towards achieving net-zero emissions across our entire value chain, by 2040."
Mads Nipper, CEO of Ørsted, said: “Ørsted is proud to join the Science Based Targets initiative in the launch of the new Standard and to become the first energy company in the world with a science-based net-zero target. We recognise that the only route to a climate-safe future is one that prioritises emissions reductions, both in the near and long-term. That’s why we’re set to reduce our carbon intensity by at least 98% by 2025 compared to 2006 in our energy generation and operations, and target net-zero emissions across our entire value-chain by 2040. We need bold but credible net-zero plans from companies. If you are a business leader who wants to walk the talk, I encourage you to align your company's climate strategy with what is required by science.”
Richard Batten, Chief Sustainability Officer at JLL, said:
“Without a common science-based definition of what constitutes a net-zero target, companies and their stakeholders can’t be sure that their long-term climate targets are credible or ambitious enough. The SBTi Net-Zero Standard applies the latest climate science to the target setting
process, providing organisations with a rigorous, consistent, and highly credible methodology to determine their net zero goals.
“Speaking from a JLL perspective, the Net-Zero Standard has helped create the discipline and focus to be truly ambitious in setting our own net-zero target: to reduce absolute emissions across all scopes by 51% by 2030, and 95% by 2040 from a 2018 base year.
Anna Lungley, Chief Sustainability Officer at Dentsu international, said: “At Dentsu International we are proud to be one of the first companies in the world with a science-based net-zero target. In 2020 we set a science-based target to reduce our emissions by 46% by 2030. But the latest climate science from the IPCC shows that the world is at a tipping point. Rapid and deep decarbonisation is essential if we are to have any chance of mitigating the worst impacts of climate change. So we have gone further, setting a new, additional, long-term target to reduce absolute emissions by 90% by 2040 across our entire value chain.
“The new SBTi Net-Zero Standard will create alignment, facilitate investment and most importantly, drive action. At Dentsu we are committed to the most ambitious level of climate action and won’t claim net-zero until we get there, and we urge others to do the same.”
Jan Jenisch, CEO of Holcim, said: “The building sector has an essential role to play to accelerate our world’s transition to net-zero. I am proud to be joining the Science-Based Targets initiative today to announce Holcim’s net-zero pathway to 2050. By setting the first Net-Zero Standard for our industry, we are walking the talk on our commitment to take science-driven action to win the race to net-zero.”
Eileen Howard Boone, Senior Vice President of Corporate Social Responsibility and Philanthropy, Chief Sustainability Officer for CVS Health, said: “CVS Health is proud to be one of the first companies in the world to have our net-zero targets validated by the SBTi’s net-zero methodology. We’re focused on taking bold, climate action to help improve the health and well-being of our communities and finding innovative solutions to further mitigate our impact on the environment. By 2030, we will reduce our environmental impact by more than 50% and achieve net-zero emissions by 2050.”
Katarina Ageborg, Executive Vice-President, Sustainability at AstraZeneca, said: "Since announcing our Ambition Zero Carbon strategy last year, we've made good progress towards eliminating greenhouse gas emissions from our global operations and value chain. We've much still to do and as a science-based company it is important to us that these targets, as well as how we achieve them, are verified independently. Working with the Science Based Targets initiative, their rigorous and high quality analysis of our emissions goals will support us in delivering AstraZeneca's net-zero climate commitments."
ENDS
