Why Setting Science Based Targets Matters

Corporate sustainability reporting and disclosure to climate organizations like CDP is a must-do for companies — 81 percent of S&P 500 companies published these reports in 2015, up from just 20 percent five years ago.

Some enterprising companies, however, are taking their environmental efforts to the next level and setting science based targets: greenhouse gas emissions reduction goals in line with what scientists say is necessary to keep global warming below the 2-degree threshold.

“It’s definitely a growing movement in the mindset of many companies,” said Alicia Godlove, FirstCarbon Solutions sustainability project manager. FirstCarbon Solutions is an environmental sustainability consulting services provider and a long-time scoring partner for CDP. An increasing number of its clients are looking for help establishing science based targets, FirstCarbon Sollutions executives say.

“Especially with the Paris agreement, science-based targets are quickly becoming the standard,” Godlove added.

The Science Based Targets initiative, a joint effort of CDP, the UN Global Compact, World Resources Institute and World Wildlife Fund, works with companies to set emissions targets and only approves those that meet its strict criteria. The four have said they aim to establish science based target setting as mainstream corporate practice. This year, CDP added science based targets as a component of scoring for companies that disclose emissions each year.

At last count 176 companies including Ikea, Unilever, Kellogg, Walmart, Dell and Enel have committed to setting science based targets. Of these, 19 companies have targets in place that have been certified by the initiative’s experts. The initiative’s organizers say companies have been joining at a rate of two per week since its launch last year.

“These companies are at the forefront of the global transition to a low-carbon, climate resilient economy,” CDP CEO Paul Simpson said. “They are showing that all types of companies — including carbon-intensive industries such as energy, chemicals and steel — can get on a low carbon path. Science based targets help drive innovation, reduce costs and enhance profitability. Companies that set them gain long-term competitive advantage and safeguard their future prosperity.”

Companies that have had their science based emissions reduction targets approved say setting these emissions goals have benefited their business on several levels, from improving their relationships with regulators to driving innovation. Kellogg, for example, says it has seen reductions in energy use as a direct benefit of setting science based targets. The food company now has a fuel cell at a waffle-making facility in San Jose generating half of the facility’s electricity.

This is not to say that setting — or achieving — science based targets is easy. It first requires companies to first collect a comprehensive inventory of their global scope 1 (direct), scope 2 (indirect from purchased electricity) and scope 3 (value chain) emissions. And then they must develop a plan to achieve, and report on, emissions reductions that will bring their company inline with the level of decarbonization required to keep global temperature increase below 2 degrees Celsius, compared to pre-industrial temperatures.

Because the targets are typically set for 2050, this requires companies to examine several unknowns, like future growth, market share and geographic locations. The Science Based Targets initiative recommends several different methodologies to help companies answer these questions and set GHG emission reduction targets in line with climate science.

“It’s a very ambitious undertaking, not to be taken lightly,” Godlove said. “These are usually long-term targets, looking out to 2050 or beyond. Companies need to full appreciate what that means and that they are looking at very large reductions.”

“It is not uncommon at all for a company to set their science based target as a reduction in direct and indirect emissions by 70,80, 90 percent,” added Michele Carchman, FirstCarbon Solutions director of sustainability services. “So it’s pretty important to get all stakeholders involved. You don’t want executives or other stakeholders to say ‘that’s utterly impossible.’”

In fact, all companies that have set these targets said they faced challenges. Internal buy-in, setting long-term emissions reductions goals and working with suppliers and customer to address scope 3 emissions are common challenges mentioned in a series of case studies on the Science Based Targets website.

So why should companies set such targets? In a column on Sustainable Brands, Hugh Jones, managing director of advisory at the Carbon Trust, answers this question and says there are several reasons. These include getting ahead of regulator risk, driving operations savings through reduced energy costs, managing reputational risk and improving access to capital.

“The more and more leading companies set science based targets, the easier it will become for others to follow them,” Jones writes. “This will help to normalize the approach and create a critical mass that can help drive forward the move to a sustainable, low-carbon economy.”

Carchman says science based targets are the next phase in the “evolution of transparency.”

“You can’t manage what you can’t measure,” she said. “And so with science based targets you are measuring what you have and setting a target for a long-term future that gets us where we need to be. If you don’t have that compass of where you are going, you are absolutely going to get lost. Science based targets drive companies to where we need to be 25, 30 years from now.”