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Our 2021 progress at a glance
Record numbers of companies commit and set science-based targets in 2021 - and the Net-Zero Standard is the new call to action.
In 2021, the SBTi entered a period of exponential growth and increasing corporate ambition - doubling the number of new companies setting and committing to set targets, and tripling the rate at which new targets were validated. At the end of 2021, more than 2,200 companies covering over a third of the global economy’s market capitalization, were working with the SBTi - a rate of more than 110 new companies per month.
The launch of the SBTi Net-Zero Standard ahead of COP26 was a milestone, providing the world’s first framework for corporate net-zero target setting. Anchored in climate science and 1.5°C pathways, the Standard requires companies to make rapid and deep emission cuts, through both near- and long-term science-based targets. We want this to become the new normal for all businesses.
A record year for new approved targets and commitments
Driven by the SBTi’s Business Ambition for 1.5ºC campaign and the SBTi ambition update, the majority (80%) of companies with approved targets in 2021 were in line with a 1.5ºC trajectory. Nearly two-thirds (63%) of companies with 1.5°C-classified targets say they intend to cut their emissions at higher rates than is required. Encouragingly, 96% of SBTi companies with approved science-based targets have targets covering scope 3 emissions.
The most impactful companies are now setting science-based targets as the SBTi reached a ‘critical mass’ globally and in key regions, with 27% of high-impact companies – representing the largest companies by market capitalization and emissions – setting science-based targets worldwide.
These numbers clearly show the appetite, and the potential, for companies to tackle the climate crisis via science-based targets – but considerably more action is still required. A very high proportion of targets are from companies in Europe, North America and Japan, with relatively few elsewhere in Asia, Africa and Latin America. Sectorally, heavy-emitting industries continue to be under-represented.
Science-based targets deliver biggest emissions reductions to date
SBTi companies with approved targets are reducing emissions at an accelerating pace, collectively achieving 12% scope 1 and 2 emissions reduction in 2020. This resulted in a total-emissions decrease of 29% between 2015 and 2020 (compared to 25% between 2015 and 2019). Beyond the impact of COVID on global emissions, this demonstrates that SBTi companies have delivered excess reductions in comparison to their peers within their countries.
An annual 4.2% emissions reduction is required for a 1.5ºC alignment for science-based targets. A typical SBTi-approved company has been even more ambitious than the 1.5ºC trajectory, with a linear rate of 8.8% scope 1+2 reductions a year during the period with approved targets. There is, however, a gap in reporting practices: of the 692 companies included in this year’s analysis, 46% of companies reported progress on all targets, while 26% reported progress on at least one target. For 28% of companies, no public information on progress against their targets was found, highlighting the need for harmonized reporting against science-based targets.
The SBTi is responding to systemic challenges to target adoption
The SBTi’s 2021-2025 strategy aims to close the current ambition and emissions gap by massively scaling up 1.5°C-aligned corporate climate action in the next three years, especially in the areas where it has been lacking to date - the heaviest-emitting sectors and emerging markets. The SBTi Country Activation and Incubators Projects, which focus on increasing engagement in Latin America, Asia and Africa, have already delivered promising results. Scope 3 and additional sector-specific guidance, especially for financial institutions, are also in development to enable science-based target setting in specific industries and across the value chain.
Setting net-zero science-based targets aligned with 1.5°C is only one element of a company's climate action journey. Businesses also need concrete plans to achieve them and must report on progress with due transparency. The SBTi is working to expand the scope of its climate alignment and certification framework from ambition (target-setting) to performance (target-delivery) through the development of a measurement, reporting and verification (MRV) framework. The framework will provide a clear and standardized mechanism to assess, verify and enhance corporate accountability on progress towards science-based targets.
To accelerate climate action, companies must also increase their efforts in climate policy advocacy; and use their influence in a way that is consistent with the actions they are taking to achieve their science-based targets.
The path ahead
Global emissions bounced back by the end of 2021 as the economy recovered from COVID-19. The world is currently not on track to halve emissions by 2030. If we are to stand a fighting chance of keeping 1.5°C alive, all companies around the world, across all industries, must now set near- and long-term science-based targets in line with a 1.5°C trajectory.