Chemicals

Science-based targets for chemicals companies

Why take action?

The chemicals industry is the largest industrial energy consumer and the third highest contributor of carbon emissions worldwide. In addition to having a leading role in industries such as health care, agriculture, construction and renewable energy systems, it is also key to the plastics value chain. Chemical manufacturers have a crucial role to play in limiting global warming to 1.5ºC. Leading global chemicals companies have begun to set science-based targets that meet the sector-agnostic SBTi criteria while sector-specific guidance is in development.

Developing a target-setting guidance for companies in the chemicals sector

The SBTi has released new details on its plans to develop sector-specific guidance for chemicals companies to set near- and long-term science-based targets in line with 1.5°C. The plans, including details on the continued development of the guidance, topics to be addressed and timelines are outlined in the project Terms of Reference (TOR).

From May 15 to July 31, 2024, the SBTi held a public consultation for experts to provide feedback on the draft Chemicals Sector Guidance. Following this consultation period and in line with SBTi’s Standard Operating Procedure, a team of experts will carefully review all feedback received and incorporate relevant comments to undergo a second consultation phase.

As part of the project’s development process, the SBTi convened an Expert Advisory Group (EAG) and is expanding it. It also published the Chemicals Sector Status Report to provide an updated examination of the climate impact of the sector and describe how the SBTi is working to enable stronger climate action from this critical industry.

Aligning the chemicals sector with 1.5°C

The chemicals industry faces challenges in its path to decarbonization, largely due to the wide variety of products, the use of hydrocarbons as feedstocks and the industry’s many subsectors. Additionally, it is expected that demand for chemical products will continue to rise. It is therefore difficult to establish a single, comprehensive method for chemicals’ companies to set science-based targets. To spur further action, the SBTi has launched a project to develop sector-specific guidance for corporates in the industry to set ambitious decarbonization targets.

The SBTi completed the scoping phase of this project in 2020. This work identified areas where additional research and guidance was needed. Building on these foundations, in 2022 the initiative assembled a chemicals EAG that meet on a regular basis to analyze and participate in methodological discussions. In 2023 the Chemicals Sector Status Report was released to provide an updated examination of the climate impact of the sector and outline SBTi’s approach to this industry. The SBTi is continuing to develop guidance and to establish 1.5°C-aligned emissions reduction pathways for high-impact products in the industry.

Note that avoided GHG emissions generated from the use of products from the chemicals industry are outside the scope of the SBTi and will not be considered as part of this project. Avoided emissions fall under a separate accounting system from corporate inventories and do not count toward science-based emission reduction targets.

Project participants

This project is being developed by the SBTi with support of Guidehouse. Stakeholder involvement is possible via the following groups:

Expert Advisory Group (EAG): Composed of technical experts from stakeholder organizations and companies interested in setting science-based targets and contributing to the project execution. The project’s EAG currently consists of experts from the following organizations. Please note that the composition of the EAG may change over time, and this list will be updated as needed:

• Air Liquide
• Air Products
• BASF
• Borealis
• Braskem
• CEFIC
• Dow Chemical
• Eastman
• Indorama Ventures
• Institute for Sustainable Communities (ISC)
• Institutional Investors Group on Climate Change (IIGCC)
• LANXESS
• Lund University
• LyondellBasell
• Nutrien
• ShareAction
• Transition Pathway Initiative (TPI)
• WRI
• Yara

Seeking to expand its current EAG, from May 15 to June 14, 2024 the SBTi called for experts with deep understanding of global climate change mitigation and science-based target setting to apply to the EAG for the development of the Chemicals Sector Guidance. Applications are being reviewed, and the new EAG members will be listed on this page once selected.

Public consultation: Both industry and non-industry representatives provided feedback on each project component through a public consultation process that took place from May 15 to July 31, 2024.

Pilot testing: Companies will be able to apply to voluntarily pilot the implementation of the draft Chemicals Sector Guidance.

These opportunities will be promoted on the SBTi website, newsletter and social media platforms.

Financial support

Financial support for the initial phase of the project was provided by the following organizations.

• Air Liquide
• Air Products
• BASF
• Indorama Ventures
• LyondellBasell
• Nutrien
• Yara

Development process

The project is being built on the outcomes of the scoping phase. The guidance is being developed to align with the SBTi’s Corporate Net-Zero Standard. Additionally, emissions reduction pathways will be developed based on the principles of SBTi’s Sectoral Decarbonization Approach (SDA). The goals of the project are as follows:

• Develop sub-sector SDA pathways for high-impact products.
• Identify best practices for emissions accounting, with a focus on critical scope 3 categories for the industry.
• Provide guidance on addressing the impact of the circular economy (e.g. recycling) in accounting and target-setting.
• Set expectations for scope 3 target setting in high impact categories by chemical companies.