Oliver Balch talks to the SBTi's Alberto Carrillo Pineda about how the organisation is aiming to boost companies’ role in addressing the climate crisis with the launch of a new net-carbon standard
The world faces a climate crisis. Of that, the science is no longer in doubt. As the latest report from the Intergovernmental Panel on Climate Change made clear, we are left with two options: either we drastically reduce current rates of greenhouse gas emissions by 2050, or we must accept the consequences.
It no longer takes a climate scientist or meteorologist to set out the ramifications of option two. Just turn on the TV news. “Once-in-a-generation” weather events are fast becoming habitual.
Science is doing an increasingly compelling job of telling us where we currently stand, as well as where we need to end up (at no more than 1.5C above pre-industrial levels by mid-century). But how to get there remains highly contested.
Providing clarity is the task that Alberto Carrillo Pineda and his 40 or so colleagues at the Science Based Targets initiative (SBTi) have set for themselves.
From the beginning, SBTi has had the priority of making sure targets lead to an absolute reduction of emissions
Pineda, a Mexican-born former carbon market consultant, is adamant about the driving purpose of the organisation that he helped found back in 2015.
“From the beginning, SBTi has had the priority of making sure that [climate] targets lead to an absolute reduction of emissions,” he says.
In other words, forget the notion that climate security can be achieved by making a tweak here and there to business-as-usual, and then offsetting everything else. Such a strategy is an invitation to irreversible climate change, he argues.
Pineda concedes that 5% to 10% of emissions may prove technologically impossible or economically unfeasible to remove (think: eliminating methane from livestock or living without cement).
In the absence of a breakthrough solution, offsetting these residual emissions appears to be the only viable option – at least for now.
Likewise, SBTi doesn’t rule out offsetting as an interim measure as companies decarbonise. The emphasis is on the word “interim”, however. Ultimately, everything that can be reduced must be reduced, without undue delay.
Such a “near zero” goal means, among other changes, “no room for new fossil fuel development”. It also implies a reversal in almost all climate plans by business, which, in his qualified opinion, are “not consistent with the transformation that needs to happen at a global level”.
SBTi’s role is not about pointing the finger, however. Instead, the Berlin-based voluntary organisation endeavours to work alongside companies and others to establish scientifically robust and empirically verifiable climate reduction strategies.
Building on this work, it is preparing to launch a new net-zero standard at the upcoming UN climate summit in November. The tool, which Pineda says is designed as a “transparent mechanism for validating net-zero targets”, is currently being road-tested by 79 companies.
Sign up 2,000 companies, Pineda says, and you reach 45,000 more
According to a draft of the standard, the validation criteria are in addition to SBTi’s existing criteria for determining whether a company complies with its new goal of a 1.5-degrees trajectory.
In their net-zero plans, which must be communicated publicly in full, companies will be required to clearly indicate the magnitude of emissions reductions that will be achieved through their plan, and provide interim targets.
The draft offers the following hypothetical example: “Company A commits to reach net-zero greenhouse emissions across scopes 1, 2, and 3 by 2040 from a 2020 base year. As part of this commitment, the company commits to reduce absolute emissions 50% by 2030 and 90% by 2040.”
SBTi intends to use the GHG Protocol Land Sector and Removals Initiative to accurately account for carbon removals, although it concedes that criteria may face “further refinement” as the standard develops.
“Hopefully it will address some of the noise we’re seeing today with net-zero target setting,” Pineda adds.
In other new developments, SBTi is preparing to unveil a series of sector-based roadmaps for high-emitting industries.
First out of the blocks will be guidelines for the oil and gas industry, as well as shipping, aviation, forestry and agriculture, all of which are expected in the coming months. Similar guidance for the cement, steel, construction and chemical sectors is scheduled to follow over the next year or so.
SBTi’s sector focus ties into a long-standing theory of change that prioritises persuading the 2,000 companies with the largest carbon footprint to commit to robust reduction targets.
The logic here relies as much in the cascade effect that such commitments will have through their value chains as it does on these big hitters reducing their own direct emissions. Sign up 2,000 companies, Pineda says, and you reach 45,000 more.
SBTi has to date validated the targets of 863 companies, with about the same number again waiting in the wings for SBTi’s official tick. The majority, moreover, tend to be large-scale multinationals operating in the pivotal sectors identified.
Ultimately, governments need to create the conditions to transition to a net-zero economy
A key challenge for the voluntary standard-setter going forward is to widen its net. Most of SBTi’s verified companies are predominantly clustered in the U.S., UK, western Europe and Japan.
Notable absentees from the global north are Australia and Canada, while some “initial momentum” is being seen in the large economies of the global south, such as China, Mexico, Brazil and Indonesia.
State-led companies are also absent, a problem that Pineda puts down to government policy not being “where it should be” with respect to climate.
“In countries like China and South Korea, the main driver [of climate action] is policy … ultimately, governments need to create the conditions to transition to a net-zero economy,” he states.
In this regard, he’d welcome legislators the world over to establish their own mandated target-setting rules. It would do SBTi out of a job, but, in his view, that would be all to the good.
For now, however, the patchwork nature of national regulatory approaches means SBTi is very much still in business. It also means that the systems-wide changes required for SBTi-verified companies to hit their individual targets are yet to happen.
The disconnect between action and ambition creates a tension that Pineda welcomes. Alone, companies can only go so far in decarbonising, he reasons.
“Setting targets create a tension with what companies can do by themselves [and] that tension is exactly what is needed to create alignment between business, the financial sector and governments to actually go through the transition we need.”
Another tension is where to set the bar with regards to carbon reductions. Remarkable as the 2015 Paris Agreement was, it left this question hanging. Was it “well below” 2 degrees, or “preferably” no more than 1.5 degrees, as also stated?
SBTi’s historic policy has been to give companies the choice. Little wonder that most opted for the more lenient of the two benchmarks.
When the IPCC published a landmark report in 2018 strongly laying out the case for the stricter 1.5C target, it forced SBTi into a rethink.
All companies submitting new carbon reduction plans to SBTi for verification now have no option but to commit to the 1.5C milestone
Changing tack immediately wasn’t feasible, Pineda insists. Most carbon reduction plans it had verified were pinned to a “below 2-degrees” threshold. Second, despite the IPCC’s confidence, it was still far from clear what a 1.5 pathway looked like for an individual business.
“We only got a 1.5C-aligned scenario from the IEA [International Energy Agency] in May. So before then, it was actually very difficult to be able to model sector-specific 1.5-degree aligned targets,” he explains.
Back in May 2019, SBTi launched a high-profile campaign to persuade businesses to increase their ambition. From an initial group of 28, the number of companies committed to a 1.5C target stands at 732 (with a collective market capitalisation of over $13tn).
As of July this year, all companies submitting new carbon reduction plans to SBTi for verification have no option but to commit to the 1.5C milestone.
Those companies with existing plans verified at below 2C will be encouraged to update their commitments. Some already have. Those yet to do so will not have their verification status withdrawn, Pineda confirms, but their ongoing involvement in SBTi is conditional on them updating to 1.5C when their plans are next up for revision (in effect, by 2023 or before).
“We have just two or three years to get most of the companies on this new trajectory. Otherwise, we are going to miss the opportunity of limiting warming to 1.5 degrees.”
Fortunately, enough policymakers now seem to agree to make the 1.5C target “almost unavoidable” for companies, he adds, citing ambitious 2030 climate goals in the UK and European Union by way of examples.
Should legislators begin to mandate the reporting requirements laid out by the Taskforce on Climate-related Financial Disclosures (as Pineda hopes they will), then the pressure to set clear and ambitious climate targets will build.
The two organisations are currently working on a joint project funded by the Bloomberg Foundation to assess the convergences between their respective methodologies and requirements. The result will be published in a forthcoming report.
Such cooperation is welcome. Influential as SBTi has become over recent years, it is not the only target-setting initiative in town. Pineda points to a surge in attempts at assessing and benchmarking corporate climate strategies, particularly by financial institutions. The risk of fragmentation is obvious.
If we take planetary sciences, then a major transition across multiple environmental dimensions is what is needed
Another fast-moving trend is transfer of science-based target setting into other environmental fields, such as nature, water and waste.
SBTi’s four founder partners – the World Resources Institute, the UN Global Compact, CDP and WWF – recently teamed up with around 40 other charitable, academic and business institutions to launch a similar initiative for nature.
Despite sharing the same essential goals, SBTi and the similar sounding Science Based Targets Network operate as separate entities. The logic here, according to Pineda, is that the two fields find themselves at different points of development; for climate targets, it is all about scaling an established methodology and set of protocols; while for nature, the emphasis is still on putting this basic architecture in place.
Complicating matters further, the impacts and metrics for measuring and managing climate impacts are global and uniform, while for nature they tend to be local and heterogenous.
Even so, Pineda concedes that today’s climate and nature crises are interlinked and a more coordinated response from business would be welcome.
Ultimately, whatever issue happens to be subject to science-based target setting, the end point is the same: learning to live within the “boundaries of the planet”.
In that regard, SBTi’s managing director judges today’s current economic model to be “untenable”. The implication? “If we take planetary sciences, then a major transition across multiple environmental dimensions is what is needed.”
Setting climate targets used to be a veritable Wild West. Over the last half-a-dozen years, SBTi has done a huge amount to draw some lines in the sand. The current splurge of offset-dependent net-zero commitments indicates that there is still some way to go.
That said, if science teaches anything, it’s that there is a solution out there just waiting to be found. What’s hard, as SBTi’s impressive example demonstrates, is to keep pushing until you find it.
Maiin picture credit: Jetcat/shutterstockIPCC SBTi science based targets network Net Zero GHG Protocol Land Sector and Removals Initiative Aviation forestry agriculture Carbon offsetting IEA