Brightest's Guide to Setting GHG Emissions Targets

The Strategy of Setting GHG Emissions Reduction Targets

Emissions reduction targets are one the best ways to focus and communicate your organization's attention on climate change and ESG performance. Emissions targets are clear, quantifiable goals and market signals that help align your company's purpose and sustainability strategy with a carbon accounting process and operational steps to reduce its environmental footprint.

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.

Unilever Science Based Target Chart Example

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.

Types of GHG Emissions Reduction Targets

There are a few 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. Scope-specific - Scope-specific targets can be either absolute or intensity-based but are focused on a specific carbon accounting scope. 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

Keep in mind that from a climate change and global warming standpoint, our planet and economy 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, and can be operationally helpful, 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.

Science-Based Emissions Reduction Targets (SBTs)

Every company is at a different stage of their 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.

The most rigorous emissions reduction targets are science-based targets (SBTs). A science-based target is a third party-verified business sustainability, climate, or greenhouse gas (GHG) emissions reduction goal that meets three criteria:

  1. It has a clearly-defined emissions reduction pathway
  2. It has a defined baseline amount and year, as well as target goal date (i.e., reduce absolute GHG by 50% by 2030)
  3. It's set in line with the latest climate science necessary to meet the goals of the Paris Agreement: limiting global warming to well-below 2°C above pre-industrial levels and pursuing efforts to limit warming to 1.5°C

Science-based targets come from the Science-Based Targets Initiative (SBTi), a partnership between CDP, the United Nations Global Compact (UNGC), the World Resources Institute (WRI), and the World Wide Fund for Nature (WWF). SBTi is the lead partner of the Business Ambition for 1.5°C campaign - an urgent call to action from a global coalition of UN agencies, business, and industry leaders focused on mobilizing companies to set net zero science-based targets in line with a 1.5°C future. SBTi defines and promotes best practice in emissions reductions and net zero targets in line with climate science.

The Business Case for Science-Based Targets

A science-based emissions target is a top-level corporate target within your organization's overall sustainability strategy and ESG roadmap. For modern brands looking to improve corporate reputation, reduce regulatory and climate risk, and unlock business innovation, science-based targets offer a number of benefits:

  1. SBTs provide strategic and operational clarity on top-level sustainability and ESG targets
  2. SBT adherence reduces regulatory risk in countries and states with current and/or future environmental laws
  3. SBTs strengthen investor confidence, credibility, and ESG transparency
  4. SBTs publicly signal your business is a sustainability and environmental leader

Successful science-based target execution can also drive second-order benefits as well, including operational cost savings, supply chain improvements, employee engagement and retention benefits, and more.

Typically, within a corporate ESG or sustainability maturity model, we see organizations planning and adopting science-based targets once they pass their basic compliance and public obligation steps, and start proactively focusing on environmental efficiency, leadership, innovation, and excellence.

Science-Based Emissions Target Setting & ESG Strategy

How Widely Used are Science-Based Emissions Targets?

According to SBTi, as of March 2022, 2,643 companies around the world have made science-based target commitments, and 1,226 companies have set and are working toward defined SBTs. 74% of companies reporting they've set a science-based emissions target are large enterprises or global brands, and the practice is much more common today among corporations compared to small businesses.

Currently SBTs are only used by companies. SBTi does not currently assess targets for cities, governments, public sector institutions, educational institutions, or non-profits. However, if you are a non-corporate, emissions-focused organization you should still feel empowered to design and set an emissions reduction target following these principles.

Like any other emissions target, SBTs can vary by scope. For example, a company might set an SBT for only it's Scope 1 and 2 emissions, and perhaps a second SBT for its Scope 3 emissions.

Science-Based Target-Setting Example

While SBTi offers guidance on setting a science-based target, there's no rule to follow today on what your emissions target needs to be. Some organizations select one flagship target like "reduce absolute corporate GHG by X% by 2030,"" while other companies may set multiple more specific SBTs.

For example, global consumer goods brand Unilever sets three primary science-based targets:

  1. A Short-term Emissions Reduction Target - Reduce in absolute terms our operational (Scope 1 & 2) emissions by 70% by 2025 against a 2015 baseline
  2. A Medium-term Emissions Reduction Target - Reduce in absolute terms our operational emissions (Scope 1 & 2) by 100% by 2030 against a 2015 baseline
  3. A Long-term Net Zero Value Chain Target - Achieve net zero emissions covering Scope 1, 2 and 3 emissions by 2039
Unilever Science Based Emissions Target Example

Source: Unilever

How to Set Science-Based Emissions Targets At Your Organization

If your company's considering setting science-based sustainability targets, we recommend following these steps:

Step #1 - Measure Your Emissions Baseline

First, you'll need to measure your emissions baseline. Your baseline is your starting point. For example, if your carbon accounting shows your company generated 1,000 tons of CO2-e in 2021, you might set that as your baseline amount and year. You can use a carbon accounting tool like Brightest to measure your baseline, or collect and calculate all your emissions manually. Depending on your organization's size, industry, operational complexity, and resource availability to complete your baselines analysis, the time it will take to complete this process will vary.

Science-Based Emissions Reduction Target Definition Example

A science-based emissions reduction target example measured in CO2-e and automatically graphed in our sustainability reporting software dashboard

Step #2 - Evaluate the Feasibility of Your SBT Among Key Internal Stakeholders

Next, work with executive leadership, your operations and supply chain teams, and other relevant stakeholders to determine what a realistic science-based target is for your company. By definition, science-based targets are based on clear science and a feasability estimate of what your organization can achieve by your target date. For example, after internal discussion and analysis, you might determine it's realistic to reduce your emissions 30% by 2025 to 500 tons of tons of CO2-e in that year, consistent with 2°C, your SBT.

Remember, carbon offsets do not count as progress for a science-based target. For a formal science-based target your company needs to achieve measurable operational and value chain emissions reductions. For informal or internal emissions targets, carbon offsets are acceptable to use for a portion of your GHG reduction.

Step #3 - Make a Formal Science-Based Target Commitment

Your science-based target process formally begins when you register your organization with SBTi, and submit a commitment letter to recognize your company as ‘committed’ to aligning its emissions reduction targets to the Paris Agreement 1.5°C target. Your company will then be added to the SBT website and partner sites like CDP and We Mean Business. You have 2 years (24 months) after your commitment letter is received to complete the remaining steps and officially declare your public SBT. You can also use this period to measure or continue refining your emissions baselines and optimal target.

Your official SBT should include at least five components:

  1. Boundary - Your science-based target should include at least company-wide Scope 1 and Scope 2 GHG emissions
  2. Timeline - Your science-based target goal period should be between 5-15 years from your baseline. Keep in mind, currently SBTi considers your "start" period to be the year you submit your SBT to them for review, and since submissions can take up to a year to be formally approved, a five-year target would only have four years to report and achieve the target.
  3. Level of Ambition - At a minimum, your target must be consistent with the economic pathway to 2°C mean global warming by 2050
  4. Scope 3 Screening - If Scope 3 emissions cover a significant portion of your organization's emissions (i.e., greater than 40% of total aggregate Scope 1-2-3), your company should also set an ambitious, measureable Scope 3 target
  5. Reporting - Your company must report annually on its SBT progress

When your SBT is ready, submit it to SBTi, where it will be peer-reviewed and validated against SBTi's criteria. SBTi recommends submitting your target within 16 months of your commitment, in order to allow enough time for review, feedback, and refinement, if necessary.

Step #4 - Target Announcement Communications

Once your science-based target is approved by SBTi, your company must publicly announce its commitment within 6 months. How you choose to do this within the context of your corporate communications strategy is up to you, but be sure to communicate your new SBT to all material stakeholders.

Step #5 - Complete Your Decarbonization Work and Track Progress

Once you've finalized and announced your science-based target, you're ready to continue the decarbonization work to reach your target. It's equally important to track your carbon accounting and emissions reduction progress along the way to make sure your organization's on track to meet its commitment.

Formal SBTs require ongoing tracking and reporting on your target(s) over time, as well as ESG disclosures through CDP, annual reports, sustainability reports, your website, and other communication channels.

Next Steps and Concluding Thoughts

One thing to keep in mind is 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. Science-based targets are an open standard, method, and approach any company can use. If your company doesn't have high confidence in a target, or is early in its sustainability journey, it might 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 and achieve your emissions reduction goals. If you need expert guidance at any point in your emissions or science-based target-setting process, feel free to contact us for help.