Inside the little-known group setting the corporate climate agenda
Others give the group credit for helping persuade a rising share of the private sector to take meaningful steps to address emissions. SBTi says companies with targets that it’s approved are typically reducing their direct emissions by 12% each year, well ahead of what the organization requires. The goal-setting has had a wider effect on the field as well, helping to ratchet up the standards of other companies and corporate standard-setting groups, observers say.
The starting point for SBTi’s approach is what’s known as the world’s “carbon budget.” The UN Intergovernmental Panel on Climate Change determined that collectively, nations can only afford to emit another 500 billion metric tons of carbon dioxide over roughly the next three decades and still have a 50-50 shot at holding warming to 1.5 ºC.
SBTi allocates shares of that carbon budget to sectors and companies, which then have several choices in setting targets. Two-thirds of companies have selected the simplest method, committing to per-year emissions cuts through 2030. To be in line with 1.5 ºC targets, SBTi requires companies to plan to reduce emissions across their supply chains by at least 4.2% every year. (Some companies, like Tyson Foods, Cargill, and McDonald’s, opted for a 2 ºC goal, but SBTi has recently stopped approving plans for this looser target.)
For the most part, the private sector isn’t legally required to drive down its emissions. But firms face growing pressure from investors, customers, activists, and policymakers to show that they’re taking emissions seriously and addressing rising bottom-line risks from climate change itself. Companies that secure SBTi’s approval can assert in their boardrooms, product marketing, and investor communications that they’re doing both.
SBTi has developed a process for measuring a company’s baseline emissions based on work by Greenhouse Gas Protocol, a similar partnership between NGOs and the private sector that sets standards for reporting emissions and then signs off on a firm’s timeline for reducing them. SBTi stresses that it doesn’t evaluate or endorse the specific strategies companies use to get to the target. However, it does exert some control over the choice of those tools, as in prohibiting the use of offsets.
Companies can also choose to follow a sector-specific pathway, which tends to be more attractive for industries such as aviation, cement, and aluminum, which are particularly difficult to clean up with today’s technologies. In that case, SBTi assigns shares of the carbon budget to sectors and the companies within them on the basis of scientific literature, market data, and guidance from industry experts.
The maritime industry, for example, gets a total budget of 12 to 16 billion tons of carbon dioxide to emit until 2050. SBTi gives the sector more time to decarbonize than other industries because it’s expected that methods for cutting emissions from shipping, including switching to low-emission fuels like ammonia and hydrogen, will take a while to scale up.
SBTi has also developed long-term net-zero targets, with the goal that by 2050, companies will emit only as much greenhouse gas as they can reliably and durably remove from the atmosphere. They have approved such goals for around 200 companies, including Colgate Palmolive, Etsy, and H&M.