SBTi Monitoring Report 2022
The SBTi's fourth report examining progress in science-based targets globally, 'Looking back at 2022 and moving forward to 2023 and beyond', finds continued significant growth in the number of companies and financial institutions setting science-based targets, despite an increasingly challenging global backdrop.
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Continued growth in the number of companies setting targets
Uptake of science-based targets is growing exponentially. More companies set science-based targets in 2022 than in the previous seven years combined. In 2022, 1,097 companies had their validated targets published, compared with a total of 1,082 in the previous seven years.
With 587 targets set in 2021, there was a year-on-year increase of 87% in the number of companies with targets validated. The number of companies committing to set science-based targets also continued to grow. 1,287 companies committed to set a science-based target within 24 months in line with the SBTi’s latest Commitment Compliance Policy.
By the end of 2022, the cumulative total number of companies with science-based targets validated by the SBTi since its inception was 2,079, with a further 2,151 companies with commitments to set targets.
Proportion of global economy covered by science-based targets increased
The proportion of the global economy represented by companies that have set or committed to set science-based targets increased by six percentage points between 2021 and 2022. By the end of 2022, companies with science-based targets or commitments represented 34% of the global economy by market capitalization, compared with 28% by the end of the previous year. Although the proportion of the global economy committed to science-based targets increased, overall stock market values fell (December 2021 compared with December 2022), resulting in a lower absolute value of market capitalization covered by science-based targets.
Japan, UK and US have the most companies setting targets
Progress in adopting science-based targets was particularly strong in developed economies. Four out of every ten of the most impactful companies,15 in terms of carbon emissions and economic clout, in G7 countries, and three out of every ten in G20 countries, are committed to set or have set science-based targets. It is important to acknowledge that the country designation refers to the location of a company’s headquarters and does not necessarily correlate with the location of the majority of its operations or supply chain.
Japan had the highest number of companies setting targets in 2022 (201), followed by the United Kingdom (181) and the United States (109).
Within the G20 there was also strong growth in the numbers of companies with validated targets based in the Republic of Korea, Brazil, China, and South Africa.
Five countries – Albania, Malta, Myanmar, Romania and Tunisia – had companies get science-based targets validated for the first time in 2022. In addition, companies from another five countries committed to set science-based targets for the first time: Argentina, Liechtenstein, Morocco, Sierra Leone, and the first Caribbean nation with a committed company, Trinidad and Tobago.
By the end of 2022, there were companies with validated science-based targets in 61 countries, with companies in a further 16 countries having committed to set targets.
Spotlight on Asia
During 2022, the continent which saw the greatest proportional growth in the actual number of science-based targets was Asia. 317 companies headquartered in Asia set a science-based target in 2022. This represented a 127% increase in the number of Asian companies setting a science-based target compared with 2021. In all, 24% of all companies with targets and commitments are from Asia (2015-2022). As mentioned above, Japan had the highest number of companies setting targets worldwide (201), representing 127% growth in companies with targets validated.
China’s growth curve was the steepest with a 194% increase in the number of companies with validated targets. As the source of many of the world’s supply chains, growth in China can have a powerful effect on the scope 3 emissions of companies all over the world.
Spotlight on the Global South
There was also strong growth in the number of companies in Africa and Latin America setting science-based targets. 11 companies in Africa and 24 companies in Latin America set targets in 2022. By the end of the year, the total number of companies in Africa and Latin America with science-based targets was, at 56, more than double that at the end of 2021.
Despite this strong growth in the Global South, the majority of companies with science-based targets continued to be found in countries with more developed economies. By the end of 2022, over 90% of all companies which had set or committed to set a science-based target were based in G20 countries, and over half of all companies which had set or committed to set a science-based target were based in Europe.
Uptake among stock market listed companies continues to grow
From a market perspective, the penetration of science-based targets was analyzed from leading equity indices, also referred to as stock market indices, for the G7 economies.
By the end of 2022, 112 of the Fortune Global 500 companies had set science-based targets. This brought the total number of Fortune Global 500 companies with science-based targets or commitments to 188 or 38% of all Fortune Global 500 companies.
In the US, 130 S&P 500 Index companies had set science-based targets by the end of 2022 and 82 committed to set targets, bringing the SBTi’s total coverage of S&P 500 companies to 42%.
70 companies listed on Japan’s NIKKEI Index had set science-based targets by the end of 2022 and 20 committed to set targets. This brought the SBTi’s total coverage of NIKKEI companies to 40%.
45 UK FTSE 100 companies had set science-based targets by the end of 2022, with a further 24 having committed to set targets. This means that by the end of 2022, 69% of FTSE 100 companies had either set or committed to set science-based targets.
26 companies listed on France’s CAC index, 18 companies listed on Germany’s DAX index, and 11 companies listed on Italy’s FTSE MIB had set science-based targets by the end of 2022. Coupled with commitments, this brought the SBTi’s total coverage of CAC Index companies to 88%, DAX Index companies to 70%, and FTSE MIB Index companies to 43%.
In Canada, 12% of the S&P/TSX 60 had set science-based targets by the end of 2022 and six committed to set targets, bringing the SBTi’s total coverage of S&P/TSX 60 companies to 22%.
Service, manufacturing and infrastructure industries account for 60% of targets
As in 2021, the services and manufacturing industries saw the highest number of companies setting targets in 2022. With 373 and 239 companies respectively, these industries accounted for over half of validated targets. However, in 2022, the infrastructure industry overtook food, beverage and agriculture to become the third-largest industry for validated targets, with 112 companies.
The industry with the highest growth rate was materials, with companies setting 109 targets in 2022 compared with 42 in 2021, representing a 160% increase. 33 companies in the transportation service industry set targets, representing an increase of 65% on the number in 2021. There was limited change in the number of targets set in the three sectors with the lowest uptake of science-based targets. The power generation industry was responsible for 17 targets, the biotech, healthcare and pharma sector was responsible for 23 targets and the hospitality sector responsible for 16 targets validated in 2022. Considering the urgent need to decarbonize power production globally, the power generation industry’s position as the sector with the lowest number of targets set during 2022 is concerning.