SBTi Progress Report 2021
The SBTi's third progress report, 'Scaling Urgent Corporate Climate Action Worldwide', finds the initiative in a period of exponential growth, with SBTi companies representing over a third of global market capitalization.
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SBTi companies reduce emissions at an accelerating pace
2020 saw record emissions reductions for companies with science-based targets. On average, between 2015 and 2020, companies with approved targets reduced combined scope 1 and 2 emissions by 29%, in comparison to a 25% reduction between 2015 and 2019.
2020 saw a year-on-year reduction in scope 1 and 2 emissions of 12%, an increase compared to previous years, which saw emissions reductions of 5-10% per year. In absolute terms, the difference between 2015 and 2020 emissions reductions is 419 MtCO2e, equivalent to 1.3x the United Kingdom’s total emissions in 2020.
Emissions reductions for 2020 are given because greenhouse gas inventories for 2021 had not been disclosed to CDP at the time of writing of this report.
Companies with approved targets significantly reduced emissions in 2021, exceeding global trends
A typical SBTi-approved company has reduced its annual scope 1 and 2 emissions at a linear rate of 8.8% since setting its targets, while 4.2% is the annual reduction required by SBTi for a 1.5ºC trajectory alignment. This means that a typical SBTi-approved company has been even more ambitious than the 1.5ºC trajectory.
These figures are to be put in perspective with the impact of COVID, which saw a 5% decrease in global emissions in 2020. Yet, despite this impact, SBTi-approved companies have delivered excess reductions. To understand the impact of geographical representation, the emissions reductions were analyzed in countries where at least 20 SBTi-approved companies are based. Those 20 countries covered 87% of all SBTi companies with approved targets. The analysis showed that the selected countries reduced emissions by 10% in 2020 on average - a significant difference to the global 5% emissions decline, but still smaller than the 12% emissions reduction from SBTi-approved companies. This indicates that SBTi-approved companies on average achieved overall higher emissions reduction from a geographical perspective.
Companies are cutting emissions but better reporting is needed
Progress reporting is integral to the credibility of companies’ science-based targets. All companies with targets are asked to publicly report their progress against published targets annually as per the SBTi Criteria and Recommendations. The SBTi recommends public disclosure through standardized, comparable data platforms such as CDP’s climate change annual questionnaire, companies’ reports or directly on their websites.
In its 2020 Progress Report, the SBTi analyzed for the first time the overall emissions trends of companies with approved science-based targets between 2015 and 2019. This year, the SBTi has undergone an assessment of publicly available reported target progress data for all near-term approved science-based targets as of 31 July 2021. This group consists of 834 companies (including SMEs), whose target progress was expected to be reported. The detailed results of the assessment, and the description of the methodology followed, are provided in the appendix.
This analysis shows that the majority of the companies are progressing well against their targets. Among the companies reporting on progress, 76% show a promising trajectory on the comparison between the time of the target elapsed, and the percentage of the target achieved.
The progress against targets was calculated for 967 out of 1,112 targets of 588 companies that reported on at least one of their targets. This estimation used the formula: (1-% target timeframe elapsed) / (1-% progress against targets). If the ratio was higher than -0.5, the company would have higher chances to achieve the target. Refer to the appendix for details. The comparison has been performed under the assumption that the company is progressing their targets in a linear way. This is a simplified view and might not be representative of individual companies, industries, or regional specificities.
Reporting gap among SBTi-approved companies widened in 2021
While this progress is impressive, there is an enduring gap in climate reporting among SBTi-approved companies, both in terms of disclosure and comprehensiveness of reporting against their published targets. In 2021, only 46% of companies with science-based targets (excluding SMEs) reported progress fully on all targets. Almost one in three (26%) reported for at least one target, but information for their other target(s) was reported in ways that were incomparable or lacked information and contextual data, or could not be publicly found. For around 28% of all companies, no public information on progress against their science-based targets was found or it was reported in ways that were incomparable, or lacked information and contextual data. 72% of companies with science-based targets publicly reported progress against their targets in some form, compared to 87% in 2020.
For this year’s edition, the progress of SMEs using the streamlined SME route was also reviewed, noticing significantly lower levels of disclosure on target progress compared to larger companies. Out of 142 SMEs which were part of this analysis, target performance information was found in public sources for only 12%.
These results highlight the need to improve transparency, consistency, completeness of the disclosure of progress and delivery of science-based targets over time. This could be bridged by strengthening reporting requirements, supported by guiding resources on disclosure.