Climate change is one of the biggest global challenges of our time, profoundly affecting both economies and ecosystems. Companies, as well as governments, have a critical responsibility in addressing this global challenge. The Science Based Targets initiative (SBTi) provides a global framework to help companies set their greenhouse gas emissions reduction commitments in light of the latest scientific data. So what is SBTi and why is it strategically important for companies?

What is the Science Based Targets initiative (SBTi)?

SBTi (Science Based Targets initiative) is an initiative that enables companies to set their greenhouse gas emission reduction targets in line with the rapid and deep emission reductions required to achieve the Paris Agreement's goal of limiting global warming to 1.5°C. SBTi guides companies in taking the necessary steps to avoid the worst effects of climate change. These targets are based on the latest climate science and the advice of scientists.

SBTi was created through the collaboration of four organizations:

• CDP (Carbon Disclosure Project): A global system that enables companies and cities to disclose their environmental impacts.
• United Nations Global Compact: A United Nations initiative that encourages companies to adhere to sustainability principles.
• World Resources Institute (WRI): A research organization that develops practical solutions to global problems.
• World Wide Fund for Nature (WWF): One of the world's leading conservation organizations.

Importance of SBTi and Benefits for Companies

SBTi provides many important benefits to companies:

• Managing Climate Risks: SBTi helps companies better understand and manage the physical risks (e.g., extreme weather events, sea level rise) and transition risks (e.g., policy changes, technological developments) resulting from climate change.
• Investor Confidence and Access to Finance: Science-based targets increase investors' confidence in companies' climate actions. Investors who value sustainability performance show more interest in companies that set SBTi targets. This facilitates companies' access to finance and strengthens their financial stability.
• Competitive Advantage and Market Leadership: SBTi enables companies to gain a competitive advantage by demonstrating sustainability leadership. Consumers and business partners prefer companies with sustainable practices. Companies that set SBTi targets stand out in the market and increase their brand value.
• Brand Reputation and Meeting Stakeholder Expectations: SBTi strengthens companies' brand reputation and helps them meet the expectations of stakeholders (e.g., employees, customers, suppliers, society). Transparent and science-based targets increase stakeholders' trust in companies.
• Legal Compliance and Future Preparedness: SBTi helps companies prepare for future climate regulations (e.g., carbon pricing, emission standards). A proactive approach enables companies to adapt more easily to regulatory changes and avoid potential costs.
• Operational Efficiency and Cost Savings: SBTi targets encourage companies to find innovative solutions to reduce emissions. In this process, companies can increase energy efficiency, optimize resource use, and reduce waste generation. Such improvements increase operational efficiency and provide cost savings.

How the SBTi Process Works

The SBTi process provides a structured approach for companies to set and achieve science-based targets. The process generally includes the following steps:

• Commitment: Companies commit to setting science-based targets through the official SBTi website. This step demonstrates the company's commitment to climate action.
• Target Development: Companies develop emission reduction targets in accordance with SBTi criteria and methodologies. In this process, companies consider Scope 1, 2, and 3 emissions. Targets must be aligned with the Paris Agreement's goals.
• Target Submission: The developed targets are submitted to SBTi in the format and with the required documents specified by SBTi.
• Target Assessment: SBTi experts evaluate the submitted targets in detail according to scientific criteria, methodologies, and SBTi's requirements. This evaluation process aims to ensure that the targets are based on scientific foundations and are sufficiently ambitious.
• Target Approval: Targets approved by SBTi are announced to the public on SBTi's website and the company's own platforms. Approved targets demonstrate the company's commitment to climate action and transparency.
• Target Implementation and Monitoring: Companies implement the necessary strategies and action plans to achieve the approved targets. In this process, companies develop emission reduction projects, increase energy efficiency, invest in renewable energy sources, and collaborate with the supply chain.
• Reporting: Companies regularly (usually annually) report on the progress they have made towards achieving their targets. This reporting ensures transparency and accountability. Companies share emission data, implemented projects, and achieved results with stakeholders.

SBTi Target Types and Scopes

SBTi allows companies to set targets for different emission sources:

• Scope 1 Emissions: Direct greenhouse gas emissions from sources owned or controlled by the company. Examples: Emissions from company-owned vehicles, production facilities, and equipment.
• Scope 2 Emissions: Indirect greenhouse gas emissions from the generation of purchased electricity, heat, steam, or cooling energy.
• Scope 3 Emissions: Indirect greenhouse gas emissions from other sources in the company's value chain (not included in Scope 1 and 2). Scope 3 emissions usually constitute a large portion of a company's total emissions. Examples: Production of goods and services purchased from suppliers, employee business trips, product use and disposal.

SBTi mandates that companies set targets for Scope 1 and 2 emissions. For Scope 3 emissions, companies are required to set targets if these emissions constitute a significant portion of their total emissions.

Net Zero Target and the Role of SBTi

SBTi also provides a framework for companies to achieve net zero emission targets. Net zero means that companies reduce their emissions to the closest possible level and balance the remaining emissions with projects that remove them from the atmosphere (e.g., forest restoration, carbon capture and storage).

SBTi ensures that companies comply with scientific criteria and methodologies when setting net zero targets. SBTi's Net Zero Standard provides companies with a clear roadmap to achieve net zero targets.

SBTi and Climate Science

SBTi helps companies align their climate actions with the latest climate science. SBTi is based on reports and recommendations from leading scientific organizations such as the Intergovernmental Panel on Climate Change (IPCC). SBTi guides companies in achieving the emission reductions required to limit global warming to 1.5°C.

Solutions

There are various solutions for companies to succeed in the SBTi process. These solutions may vary according to companies' needs and resources. Some common solutions include:

• Consulting Services: Companies can get support from expert consulting firms on issues such as SBTi target setting, carbon footprint analysis, emission reduction strategy development, net zero roadmap creation, and sustainability reporting.
• Technological Solutions: Companies can use various technological tools and platforms to collect, analyze, and report emission data. These tools can help companies manage and reduce their emissions more effectively.
• Collaborations: Companies can reduce their emissions by collaborating with their suppliers, customers, and other stakeholders. Value chain collaborations can help companies manage their Scope 3 emissions.
• Training and Awareness: Companies can increase their employees' awareness by educating them on SBTi and climate change. This can contribute to creating a culture that will help companies achieve their sustainability goals.

It is important for companies to identify and implement the right solutions to succeed in the SBTi process.

Frequently Asked Questions (FAQ)

• Who can join SBTi?

Companies of all sectors and sizes can join SBTi. SBTi also provides a specific roadmap for small and medium-sized enterprises (SMEs).

• Is setting an SBTi target mandatory?

Although not currently mandatory, setting an SBTi target is becoming increasingly important for companies to manage climate risks, increase investor confidence, gain a competitive advantage, and meet stakeholder expectations. Many countries and regions are introducing regulations that mandate companies' climate actions.

• How often should SBTi targets be updated?

SBTi targets should be updated at least every 5 years. However, it is important to follow developments in climate science and best practices and update targets more frequently if necessary.

• What is the difference between a net-zero target and an SBTi target?

An SBTi target ensures that emission reduction targets are based on scientific criteria. A net-zero target aims to reduce emissions to the closest possible level and balance the remaining emissions. SBTi provides a framework and methodology for achieving a net-zero target.

• Is it possible to get support in the SBTi process?

Yes, companies can get support from consulting firms in the SBTi process. These firms can help companies set their SBTi targets, measure their emissions, develop reduction strategies, and report.

• What is the cost of setting SBTi targets?

The cost of setting SBTi targets varies depending on the company's size, sector, complexity of emission sources, and the scope of consulting services needed. However, the long-term benefits of setting SBTi targets (e.g., risk management, investor confidence, competitive advantage) often outweigh the cost.

• How long does it take to achieve SBTi targets?

The time required to achieve SBTi targets varies depending on the company's current emission level, reduction potential, implemented strategies, and other factors. Companies can adopt a gradual approach by setting short, medium, and long-term targets.

• What challenges may be encountered when setting SBTi targets?

Companies may encounter various challenges when setting SBTi targets, such as data collection and analysis difficulties, challenges in calculating Scope 3 emissions, technological and financial barriers, stakeholder engagement difficulties, and difficulties in adapting to changes in climate science. Consulting services can help overcome these challenges.