A decade ago, the Science Based Targets initiative (SBTi) was launched with the goal of mobilising the private sector for climate action.

Today, it stands as the largest and most influential validator of corporate climate targets, having confirmed the 2030 goals of around 5,000 companies.

Yet new analysis reveals a leniency within the initiative. According to the 2024 Corporate Climate Responsibility Monitor (CCRM), the emissions reduction commitments of 51 major global corporates are falling short of what’s needed at the global level.

Surprisingly, most of these companies received SBTi validation for their targets to be aligned with the 1.5ºC warming limit backed by governments in the Paris climate agreement. 

What explains this discrepancy?  

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Currently, the SBTi’s 2030 target validations often overlook substantial shares of companies’ full value chain emissions by excluding upstream and downstream value chain emissions, known as “scope 3”. Scope 3 emissions account for the majority of corporate greenhouse gas footprints, sometimes exceeding 95%.  

The SBTi requires companies to set a near-term target for scope 3 emissions, but only when those emissions account for more than 40% of their greenhouse gas footprint. However, these targets do not have to cover all scope 3 emissions and only need to be aligned with global warming of 2ºC or well below 2ºC, not 1.5ºC.  

While the SBTi checks whether companies have set a scope 3 target, the initiative does not provide a temperature classification for these scope 3 targets – only for companies’ scope 1 and 2 targets, which apply to direct operations and their energy use.

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This important nuance is often missed by the public, as many companies nonetheless prominently advertise their scope 3 climate targets as science-based.  

Take Fast Retailing, owner of clothing chain Uniqlo, for example. The company pledges to reduce its operational emissions (scope 1 and 2) by 90% by 2030, which represent just 5% of its total emissions.

It also commits to reduce its emissions from procured goods and materials (scope 3) by 20% by the end of this decade. However, upstream emissions in the fashion sector need to be reduced by around 40% to be aligned with global warming of 1.5ºC.

Whereas the SBTi validated the target for operational emissions as “1.5ºC temperature aligned”, the initiative did not provide a temperature classification for the scope 3 target.

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Yet Fast Retailing also describes this target as “science-based”. This pattern is not unique to Fast Retailing but common across companies validated by the SBTi. 

As a voluntary organisation primarily funded by third parties, the SBTi relies on the voluntary participation of companies. Its methodologies need to accommodate the perspectives of various stakeholders.

This may explain why the SBTi’s methodologies for 2030 targets are not necessarily always aligned with the scientific consensus on limiting global warming to 1.5ºC.

However, addressing the lack of stringency in scope 3 targets is key to ensuring that the SBTi can effectively drive corporate climate ambition. 

Offsetting controversy 

Despite the large degree of leniency that already exists in scope 3 standards today, there is a significant risk that the rules will be loosened even further.

Just this week, the SBTi Board of Trustees issued a unilateral and possibly illegitimate decision to revise scope 3 standards to allow for carbon offsetting.

This decision is not based on scientific insights but comes after a lot of pressure on the SBTi from supporters of carbon markets. SBTi staff have already reacted strongly to voice their discontent with the decision and the process. 

Introducing offsetting in the SBTi scope 3 standards could effectively nullify already insufficient targets, reversing years of incremental progress that SBTi and its member companies have fought so hard to achieve. 

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Allowing companies to offset their emissions could also deprive their suppliers – who are often located in the Global South – of much needed financial and technical support for their own emissions reduction efforts. 

Climate target-setting has become standard practice in the corporate world – progress the SBTi helped foster over the past decade. But the recent decision by the SBTi Board of Trustees on offsetting could bring any further advances to a halt.

Reversing this decision and tightening the rules for scope 3 targets would be the next step to propel corporate climate ambition forward. 

This article argues that the SBTI’s rules are too lax. We have also published a comment piece arguing they are too stringent.

The post SBTi needs tighter rules on companies’ indirect emissions appeared first on Climate Home News.

This has triggered an important discussion on how useful they are, how scientifically robust they are – and their real-world impact.

Well designed and ambitious net zero targets can play a key role in reducing global carbon dioxide and other greenhouse gas emissions to net zero around 2050 and 2070, respectively, to keep to the Paris Agreement’s 1.5°C warming limit.

However, net zero targets can distract from the urgent need for deep emissions reductions. Specifically, governments may “hide” behind aspirational net zero targets to avoid setting ambitious 2030 targets and taking short-term climate action. Unless governments start acting now, their chances of achieving net zero will be slim.

There are many uncertainties in estimating the potential impact of net zero targets: underlying assumptions may not be clear, they may not be comprehensive, or their legal status and likelihood of being fully implemented uncertain. This underlines a clear need for a nuanced assessment of national net zero targets. There is a risk that poorly backed up net zero claims could render the term meaningless.

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The Climate Action Tracker has developed a method for evaluating government net zero targets: it is applicable only to net zero targets by national governments, not other subnational or non-state actors, especially corporations, whose whose different emissions boundaries and, in many cases, reliance on creative accounting methods to claim net zero, warrant special attention.

We have identified ten key elements to assess whether a net zero target’s scope, architecture, and transparency meet what we define as good practice.

1. Target year: Governments should communicate their target year, or short period (such as a five-year interval), for achieving net zero.
2. Emissions coverage: Net zero targets should cover all greenhouse gases, all sources, and all economic sectors
3. International aviation and shipping: net zero targets should cover emissions from international aviation and international shipping.
4. Reductions or removals outside of own borders: the most transparent and comprehensive net zero targets explicitly state that the country will reach net zero emissions within its own borders.
5. Legal status: net zero targets should be enshrined in national law.
6. Separate reduction and removal targets: including separate sub-targets for emission reductions and removals creates transparency and makes it easier to track progress.
7. Review process: a legally binding, regular review and revision of the target, and progress against it.
8. Carbon dioxide removal: transparent assumptions on the role of the land use, land-use change, and forestry (LuluCF) sector and separate assumptions of technical carbon dioxide removal (CDR) options provide clarity on how a country wants to achieve net zero. Removals cannot replace deep emission reductions, and should be used to balance emissions that cannot be rapidly abated and to realise net negative emissions after achieving net zero. Particular caution should be taken over the use of forest and other ecosystem-based removals because of their high uncertainties and risk of carbon re-release from increasingly adverse climatic conditions.
9. Comprehensive planning: a comprehensive planning process and actionable short and medium-term measures to reach net zero increase the chances of a target’s successful implementation.
10. Clarity on fairness of target: a government should explain why its target is a ‘fair’ contribution to the global goal of limiting warming to 1.5˚C. Developed countries in particular should explain how they will make up for any difference between what would be a fair contribution and what would be a realistic contribution, for example by supporting other countries in decarbonising their economies without claiming credits for use towards their own targets.

We will use these ten elements for those targets with enough information available to give countries an overall assessment of ‘acceptable’, ‘average’, or ‘poor’. Our ratings of net zero targets will roll out in the near future along with the CAT’s new rating methodology.

Frederic Hans and Silke Mooldijk are climate policy analysts with NewClimate Institute;  Claire Fyson is a climate policy analyst with Climate Analytics. Together, the two research organisations collaborate on the Climate Action Tracker project.

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