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The SBTi theory of change is becoming reality
According to the SBTi’s theory of change based on the ‘diffusion of innovations’ theory, adoption of an innovation by 10 to 25% of a system’s members is followed by rapid adoption from the remaining members. The SBTi takes the threshold of 20% as a critical mass, or potential ‘tipping point’, for setting science-based targets within a given sector or geography.
To measure progress towards the 20% critical mass threshold, this analysis uses a sample of 2,233 companies, with a potential “high impact” on climate mitigation. The 'High Impact Sample' was curated by CDP in 2019 and considers companies as “high-impact” based on a combination of greenhouse gas (GHG) emissions and market capitalization, using the MSCI ACWI Index as a starting point. This sample covers around $67 trillion worth of market capitalization and emissions, equivalent to the total annual emissions of the United States and the European Union combined. As the sample represents the largest, heaviest-emitting companies, they are the key private sector players to be engaged in science-based climate action due to their influence on market standards, width of supply chain, and emissions reduction potential.
In 2021, the SBTi High Impact Sample reached a critical mass globally and in key regions, surpassing the threshold with more than a quarter (27%) of high-impact companies setting science-based targets. Based on market capitalization, SBTi companies represent half of the high-impact companies, equivalent to $33 trillion out of $67 trillion.
As of December 2021, 598 SBTi companies are high-impact, including 386 with approved targets and 212 with commitments. There was a significant uptake in the High Impact Sample in 2021, with 308 additional high-impact companies setting targets or making commitments.
SBTi high-impact company coverage in 2021
Reaching a critical mass in key regions, countries and industries
Europe is leading with 46% of high-impact companies having set or committed to science-based targets in 2021, compared to 34% of companies in 2020. Encouragingly, three regions – North America, Latin America and Oceania – crossed the 20% threshold in 2021.
Uptake of science-based targets among high-impact companies has also been significant across all regions and countries. On average, 2021 saw a 14% increase in the number of high-impact companies with targets or commitments across all countries. The majority (almost 80%) of OECD countries have crossed the 20% threshold, with Denmark, France, Ireland, and the United Kingdom leading the way.
While progress is still slower in non-OECD countries, Brazil and Saudi Arabia crossed the 20% threshold in 2021, joining India and Singapore which reached a critical mass in 2020.
Critical mass progress by industry
In most industries, SBTi companies reached or surpassed a critical mass in 2021, including five new industries crossing the 20% threshold. Heavy industries, such as manufacturing, transportation, infrastructure, power generation and materials, represent a significant share of the High Impact Sample. Encouragingly, most have just reached the 20% threshold, with the exception of infrastructure and power generation, showing the persisting gap in these industries.