Brightest's Guide to Setting GHG Emissions Targets

Comparing GHG Emissions Reduction Target Types

Emissions reduction targets are one the best ways to focus and communicate your organization's attention on climate change and sustainability performance. Emissions targets are clear, quantifiable goals and market signals that help align your company's purpose and sustainability strategy with tangible, operational steps to reduce its environmental footprint. There are multiple different types of emissions targets you business can use - absolute targets, intensity-based targets, scope-specific targets, or even compound targets.

Which one is right for your organization? And what's the difference? Let's dive in:

An emissions target starts with a baseline year, then sets an emissions reduction trajectory over time to reach the emissions reduction goal in your target year. Emissions reduction targets should follow established carbon accounting and sustainability measurement standards in terms of how you track and calculate carbon equivalents (CO₂-e), then account for reductions.

The right emissions reduction target for your organization should balance ambition with feasibility. Too conservative, you're not really decarbonizing or driving positive change, which may look less favorable compared to your peers and competitors. Too ambitious? You may not be able to achieve it and will need to revise or restate your target.

The right balance to a thoughtful, effective target lies somewhere in the middle.

Absolute vs. Intensity GHG Emissions Reduction Targets

As we mentioned at the outset, there are different types of emissions target:

1. Absolute - An absolute emissions reduction target focuses on reducing the total quantity of greenhouse gas emissions (GHG) emitted by a company or entity. As a simple example, if our company emits 1,000 metric tons (MT) of CO₂-e in 2021 and our goal is to reduce absolute emissions by 10% in 2022, we need to reduce our annual emissions by 100 MT year-over-year from 1,000 to 900 MT of CO₂-e
2. Intensity - An intensity-based emissions target compares your organizations emissions to some unit of economic output. Examples could be revenue-based (i.e., MT of CO₂ per million dollars in sales), per capita or per employee, per building or facility, per unit or finished product, or another material operational indicator
3. Combined Absolute-Intensity - It's also possible to combine absolute and intensity emissions targets into a single unified or multi-level goal. For example, a services company might set an absolute GHG target for its Scope 1-2-3 emissions based on a target to reduce its emissions intensity per employee during the same period. A transportation company could target an overall GHG emissions reduction target based on a Scope 3 intensity reduction per vehicle or shipment.

Keep in mind both absolute and intensity emissions targets can be scope-specific targets. For example, it's common for many companies to set one target for their Scope 1-2 direct emissions, and a separate target for their indirect value chain Scope 3 emissions. As long as your targets are designed from a credible, standards-based methodology, your company should feel empowered to mix and segment targets based on what makes the most sense for your business model and value chain.

Absolute vs. Intensity Targets - What's Right for Your Business?

There's no clear "right" or "wrong" or "better" or "worse" between absolute and intensity-based emissions targets. Both can be meaningful and operationally useful. That said, from a climate change and global warming perspective, our planet and economy clearly need companies to achieve absolute reduction targets, not intensity targets.

For example, a high-growth company could achieve its intensity-based emissions reduction targets but still end up increasing its absolute GHG emissions at the same time, an overall negative for the environment. Intensity-based emissions targets are not intrinsically bad per se, but they are less-aligned with Paris Agreement 1.5°C and 2°C global warming thresholds and often do not have the same stakeholder perception of environmental leadership and responsibility.

Intensity targets are also a better fit for energy or emissions-intensive industries, like electrical utilities who might adopt an intensity emissions targets based on emissions per megawatt hour (MWh) or kilowatt hour (kWh) of electricity delivered to customers. That said, intensity targets shouldn't be used to hide or obscure emissions-intensive operations. Those efforts are easy to see through.

Every company is at a different stage of its emissions reduction journey, with different business model considerations around their GHG targets. If your company sells or manufactures a physical product, your Scope 3 emissions target will be heavily informed by your supply chain sustainability initiatives. But even for companies with a large percentage of Scope 3 emissions it's often easiest to start with operational Scope 1 and Scope 2 targets, then build toward value chain baselines and targets.

Finally, remember that if your organzation's pursuing a validated science-based emissions target (reviewed and verified by SBTi), intensity targets are only eligible when they lead to absolute emission reductions or are based on an approved sector pathway or method.

For Organizations Newer to Sustainability Targets - Consider Starting with Intensity and Growing Toward Absolute

Remember, your business doesn't have to publicly disclose to SBTi or undergo SBTi review in order to set an emissions reduction target or work on decarbonization projects. Emissions targets and even science-based targets are an open standard, method, and approach any company can use. Same goes for absolute and intensity target types.

If your company doesn't have high confidence in a target, or is early in its sustainability journey, it may make more sense to work toward a private, short-term 'informal SBT' until you have higher confidence in the progress your organization can make year-over-year to go public with your emissions reduction goals. Starting with an intensity-based target might make sense. Then, as you progress along the sustainability maturity curve and improve your carbon accounting, you'll be in a position to design and set absolute targets.

As always, if you need expert guidance at any point in your emissions or science-based target-setting process, feel free to contact us for help.