The Carbon Border Adjustment Mechanism (CBAM)
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In this article we’ll explore what the CBAM is, why it’s been created, and what importers need to know ahead of its introduction.
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What is the Science-Based Targets Initiative (SBTi)?
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Carbon accounting and sustainability are growing in popularity in the midst of global warming, and therefore – it's important that companies figure out how to set science based targets to achieve their emission reduction targets accordingly with accuracy, and that's where the science-based targets initiative, or SBTi comes into play.
Effectively limiting global warming will require ample action from companies around the world regardless of shape, size, or industry – and such targets to limit warming can be developed with science based framework from the SBTi.
👉 What is the SBTi initiative, and is science based target setting successful in helping companies to reduce their carbon footprint and fight against a drastic global temperature rise?
This article will explain what the science based targets initiative (SBTi), is, how climate science can help companies to reduce emissions, and ultimate deter the current climate crisis.
What is the SBTi?
The Science Based Targets initiative (SBTi) is a collaborative effort which works to encourage companies to set ambitious emissions reduction targets to mitigate greenhouse gas (GHG) emissions in conjunction with the latest climate science.
“ The SBTi has already helped thousands of companies and financial institutions to set ambitious emissions reductions targets and avoid an increase in global greenhouse gas emissions, seeing as of 2024 – over 3,000 companies are working towards corporate net zero standard and over 8,000 committed to general corporate climate action organization. ”
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Overview of the SBTi
Some key features of the SBTi include:
- Science-Based – The SBTi develops all of its ambitious climate targets in line with the use of science to ensure that temperatures do not increase within 1.5°C above pre-industrial levels according to the Paris Agreement.
- Framework for Recommended Action Plans – It can prove challenging for business and industry leaders to develop an actionable plan to achieve climate objectives within a dedicated timeframe. Luckily, the SBTi helps companies to create a clearly defined pathway to work towards net zero economy and provides business leaders clarity on the their company's current carbon emission reduction plan.
- Advice & Validation – Regardless of company sector, the SBTi enables companies and financial institutions worldwide guidance on how to best work towards net zero emissions. In addition to this, the SBTi provides official validation on all SBTi targets submitted on behalf of companies – whether they are publicly listed or in the private sector.
- Encourages Transparency – The SBTi helps to encourage large companies which stimulate our global economy around the world to reduce their emissions and take accountability for their negative impacts towards the environment.
The SBTi not only helps companies and financial institutions worldwide to set emission reduction targets, but to improve their risk management, appeal to investors, gain a competitive advantage, and become leaders in sustainability.
👉 Validated science based targets by the SBTi are developed in conjunction with partnerships with leading global organizations such as the CDP, United Nations Global Compact (UNGC), and the World Resources Institute (WRI).
How did the SBTi start?
The Science-Based Targets Initiative started back in 2014 with nothing more than a desire to motivate others to mitigate climate change through the help of science. Intrinsic desire to set emission reduction targets is key to following through with emission reduction goals, but science is the part of the equation that helps companies make educated decisions and implement successful actions that will lead to their climate change goals.
In less than a decade, SBTi has gone from a concept to a sought-after global program – acquiring more than 3,000 companies to partake in the SBTi program, including 1,000 additional commitments to the net-zero movement.
💡 The Science-Based Targets Initiative now has the ability to set new goals in place with the help of climate science following their unprecedented growth – such as advocating for net-zero and making science-based targets the new normal for companies around the world.
What is the main goal of the SBTi?
“ The main goal of the Science Based Targets initiative, known as SBTi for short – encourages numerous actions to improve the global stance on climate change by providing companies with science-based criteria to assist them in reducing the excessive emissions. ”
👉 The SBTi is partnered with several other programs of global coalition, such as the CDP, United Nations Global Compact, and the World Resources Institute.
“ The SBTi thrives on utilizing scientific data to demonstrate the dire need for companies around the world to reduce their greenhouse gas emissions and fight against climate change. In other words, the SBTi strives to be a mentor to organizations around the globe through the use of their scientific discoveries to create personalized plans for companies to reduce their environmental impact and transition to a world where net-zero will be the new normal. ”
What is the difference between net-zero and SBTi?
Net-zero refers to companies making an attempts to drastically reduce their GHG emissions, which often requires the use of carbon capture and storage systems. On the other hand, the SBTi can help to provide companies with both validated short-term and long-term targets as opposed to working towards unspecified net-zero goals.
💡The main goal of the SBTi is to help businesses around the world reduce their emissions through the collection and evaluation of scientific data, and to promote the idea that emissions can be reduced most successfully with the help of science.
Ultimately, the SBTi serves as a call to climate action to encourage business ambition and raise awareness on the catastrophic impacts of GHG emissions. The SBTi approves companies targets and can help other industry leaders create the best practice for their company with targets in line with the Paris Agreement.
👉 However, the SBTi has several other goals in mind – such as cultivating an experienced team of experts to harvest new scientific data on a constant basis, provide updated targets as often as possible in conjunction with these new scientific findings, and be a leader in the movement to ensure the globe does not surpass a global surface temperature of 1.5°C.
What are the benefits of joining the SBTi?
The overarching benefit to applying to be a part of the SBTi is to have constant access to the latest science-based data that can allow a company to set emissions based on tangible, numerical evidence.
👉 However, it is becoming clear that there are more benefits to using science-based targets than just improving environmental circumstances.
“ One of these benefits, which is vital to business success, is improved brand reputation. Investors, customers, and employees alike are beginning to recognize the importance of contributing to companies that don't cause the environment any more harm than many already have – and committing to the SBTi can help to demonstrate this now next-to-essential business value. ”
How do SBTi targets help companies boost sustainability?
Here are some of the benefits of applying to join the SBTi:
- Improved Brand Reputation – Investors, customers, and employees alike are beginning to recognize the importance of contributing to companies that don't cause the environment any more harm than many already have – and committing to the SBTi can help to demonstrate this now next-to-essential business value.
- Help to Acquire Other Environmental Certifications – The rigorous goals of the SBTi can help companies and financial institutions to achieve other environmental attribute certificates.
- Reduced Operational Costs – Those who join the Science-Based Targets Initiative may also notice that their company will save money in places they didn't expect to – as tailoring business models to reduce emissions can usually increase efficiency, seek the use of renewable energy, which ultimately reduce business costs.
- Stay Ahead of Climate Legislation – In any business, staying ahead of the game is essential to success – and by joining the SBTi, a company can be sure that they stay up-to-date with the latest regulations implemented to reduce emissions.
- Drives Innovation – Perhaps the most exhilarating benefit of joining the SBTi is the opportunity for innovation. Establishing emission reduction tactics through the use of scientific data requires creativity on a new level – and inventiveness can provoke novel ideas and business tactics that a company may not have thought of otherwise if they weren't reducing emissions through the SBTi.
💡 This will become pivotal, as the U.S., U.K., and Europe continue to grow more serious about climate change. Instead of scrambling to adjust business practices to adhere to new environmental regulations, companies a part of the SBTi will always be one step ahead.
How can companies apply to the SBTi?
Applying to partake in the Science-Based Targets Initiative works in a five step process.
1. Commit
First, a business or company seeking to reduce their emissions through the SBTi should write and send a letter illustrating their commitment to using science-based targets to improve their carbon footprint. This step isn't necessary if the company is a small or medium sized enterprise, or any company with less than five hundred employees.
A company can register online to send their letter of commitment. Advocating and delineating their commitment to other imperative climate change movements, like net-zero emissions, can help a company be accepted to the SBTi.
While your company waits to be accepted by the SBTi, development for a new emissions reduction plan should be made in accordance with the science based criteria provided by the SBTi.
2. Develop
All companies should develop new emission reduction plans in line with the science based criteria that is available on the Science-Based Targets Initiative website. The SBTi offers personalized assistance to help all companies achieve their environmental goals, as it is imperative that individual businesses strive to meet the requirements provided by their sector.
Companies have two years to submit their targets in line with the SBTi after signing their letter of intent.
3. Submit
After developing their targets, companies should apply for their new plans to be validated. The SBTi motivates all applying for approval to review the resources provided by the SBTi prudently to avoid any potential delays in approval.
👉 Did you know that Greenly can help guide your company through every step of the SBTi journey?
In fact, the Science-Based Targets Initiative offers a wide range of documents and services to ensure that your validation process goes smoothly. These include the opportunity to submit a second validation if the first one is not approved, new validation submissions if the new goals are updated to meet the expectations of the SBTi, submissions for financial institutions, and submissions based around achieving net-zero emissions, working towards emissions representative of pre-industrial levels, or various emissions reduction targets.
💡 Once a company has submitted their new targets to the SBTi, a team of specialists review the submission to ensure the goals are in line with the science-based criteria of the Science-Based-Targets Initiative. Regardless if the response is an acceptance or rejection, the SBTi team will provide in-depth feedback following submission of approval.
4. Communicate
Accountability is one of the most imperative components of achieving any goal. Therefore, it is crucial that companies then share their new environmental goals based on the scientific criteria provided by the SBTi with both consumers and stakeholders immediately.
If the new targets are approved by the SBTi, they will be published on the Science-Based Targets Intiative's official website, as well as on all of their partner pages for maximum visibility and accountability. However, this can only be done if a company ensures that their targets are announced to the public within the first six months following the initial approval. If a company doesn't make their targets known, then the SBTi will have to review them again.
5. Disclose
All companies that are approved by the SBTi are required to delineate their progress to the public. The initial targets should be monitored and reviewed annually at minimum to ensure continuous improvement. Assistance on how to report these targets can include providing the public with annual sustainability reports or sharing the progress on your company's website.
Here's a table summarizing the 5 steps to applying to the SBTi:
Steps to Apply to the SBTi
| Step | Description |
|---|---|
| Commit | Send a letter of commitment to the SBTi, illustrating the company's dedication to using science-based targets. SMEs (<500 employees) can register online without a letter. Begin developing an emissions reduction plan. |
| Develop | Create an emission reduction plan aligned with SBTi criteria. Companies have two years to submit their targets after committing. |
| Submit | Apply for validation of the new targets. Utilize SBTi resources to ensure smooth validation. A team reviews the submission and provides feedback. |
| Communicate | Share the approved targets with consumers and stakeholders. Publish the targets within six months of approval to avoid re-review. |
| Disclose | Annually report progress to the public. Use sustainability reports or the company website to share updates. |
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What other environmental initiatives does the SBTi support?
The SBTi doesn't want to just help businesses reduce their emissions, but the SBTi strives to bring awareness to other movements that will help improve global emissions – one of the biggest ones being the initiative to achieve net zero emissions by 2050.
💡 In fact, the SBTi has started the first global standard to provide companies around the world with a comprehensive guide on how to achieve net-zero emissions, called the Corporate Net-Zero Standard.
“ The Science-Based Targets Initiative values their collaborations, as they believe that governments and businesses must work together in order to achieve their respective goals. ”
This is because while a business may want to implement certain tactics to reduce emissions, it could very well be that a local government doesn't permit a business to take those actions without further approval. In short, the SBTi believes that decarbonization is more likely when various sectors work together harmoniously.
👉 The SBTi recognizes that they aren't the only global influence that can help to spread the importance of decarbonization around the world. Therefore, the SBTi takes pride in their partnerships with the UNGC, the WWF Climate Business Network, and many other organizations dedicated to raising awareness regarding climate change.
Has the SBTi been successful?
Given the SBTi started only eight years ago, it has been extremely successful – even separate from its short existence. For instance, last calendar year – the SBTi experienced a time of incredible growth and motivated other corporations to take part in their global decarbonization movement, which resulted in them recruiting twice the amount of companies committing to their scientific based targets than usual.
This means that over one hundred new companies were applying to partake in the SBTi monthly. While the SBTi recognizes this amazing accomplishment – they want to do even more, by encouraging all the companies currently enrolled with the SBTi to encourage their associated companies to join the SBTi as well.
“ This shows how the SBTi isn't willing to pull the brakes on their already monumental success, and illustrates their clear dedication to reducing climate impact around the world. It's difficult enough to figure out how to run a business, and these days – companies need to find ways to be financially successful while also pertaining to sustainability. ”
If you're looking for an accreditation to demonstrate your company's commitment to decreasing carbon emissions, as well as open several other doors that could result in multi various benefits for your business – the Science-Based Targets Initiative may be the stepping stone to your company going both green, and big.
Does committing to the SBTi lead to encouraging results?
Objectives aligned with the 2°C trajectory
Since the adoption of the Paris Agreement, the signatory parties have proposed climate commitments that remain insufficient. A United Nations report published in 2022 indicated that current climate plans would put the world on a trajectory towards a world 2.5°C warmer by the end of the century – compared to the required 2°C.
👉 Current commitments will lead to a 10.6% increase in emissions by 2030 compared to 2010 levels.
“ Companies play a major role in achieving a carbon-neutral economy and preserving the climate. As an example, 1,000 of the highest emitting companies are responsible for 20% of global GHG emissions. [SBTi, 2016] ”
Until recently, although they were already taking inventory of their GHG emissions with a carbon assessment – many companies did not set a reduction target in-line with scientific knowledge. After committing to the SBTi initiative, they were able to define their objectives aligned with the 2°C trajectory – which would ideally be garnered towards 1.5°C.
5,556 of the 8,413 companies committed to defining a science-based emission reduction target had their targets reviewed and validated by the SBTi.
👉 Maintaining the global average temperature below 2°C would be possible if all companies employed a common method to define their carbon strategies.
A few examples of objectives set by SBTi-committed companies
Any company, regardless of its size, sector of activity, and location – is encouraged to join the SBTi. This is already the case for many companies that have ambitious carbon strategies consistent with scientific recommendations.
Some examples of objectives validated by the SBTi:
- Pepsi is working towards reducing scope 1 and 2 greenhouse gas (GHG) emissions by 75% and scope 3 GHG emissions by 40% by 2030
- Microsoft is committed to becoming carbon negative by 2030
- Abercrombie & Fitch is set to reduce their scope 1 and scope 2 GHG emissions by 47% by 2030
👉 Did you know? Since July 2022, the SBTi only accepts files aligned with the 1.5°C trajectory.
Close monitoring of results
As the SBTi aims to create ambitious and collective climate action, they closely monitor their member companies' commitments. That's why the SBTi publishes an annual progress report every year, presenting the evolution of member organizations’ climate commitments.
👉 In 2022, the objectives set by SBTi companies were expected to reduce CO2 emissions by 76 million tons.
To track the progress of its members, the SBTi has created a dashboard updated every Thursday. Available to the public, it indicates:
- the status of the company (after committing to the SBTi, it has a 24-month deadline to specify its objectives based on SBTi criteria);
- short and long-term goals of companies and financial institutions - set respectively for the next 5 to 10 years and for 2050;
- temperature alignment - i.e., the degree of global temperature increase to which the company aligns its objectives (1.5°C, well below 2°C, or 2°C);
- information about the organization (sector of activity, type of structure, implementation locations, etc.)
- the reference date, the target year, and the publication date of the objectives.
💡Luckily, an increasing number of companies are committing to reducing emissions (in 2022, 58% of global organizations that set SBTi targets were SMEs).
Visible benefits within companies
Companies that have joined the SBTi initiative are already noticing significant benefits.
The example of Kellogg's is a testament to this. To encourage targeted emission reductions, fuel cells generating electricity have been installed at the San Jose waffle factory in the United States. This arrangement has enabled:
- Stimulating innovation among teams responsible for sustainable development;
- Encouraging managers - working along the entire value chain - to explore ways to reduce emissions that go beyond the usual framework. As a result of following their commitment to the SBTi, Dell... following its commitment to the SBTi, Dell has noticed an improvement in its relationships with legislators and governments.
Overall, applying to the SBTi can be a worthwhile endeavor for any company looking to reduce their emissions with science and be held accountable for their environmental commitments.
What about Greenly?
If reading this article about the Science-Based Targets Initiative in the U.S. has made you interested in reducing your carbon emission to further fight against climate change – Greenly can help you!
Greenly can help you make an environmental change for the better, starting with a carbon footprint assessment to know how much carbon emissions your company produces.
Click here to learn more about Greenly and how we can help you reduce your carbon footprint.
Don't wait any longer, take the first step towards reducing your carbon footprint by requesting a free and non-binding demo with one of our experts today and finding the solution that best fits your business needs.
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