“Basing” Corporate Emissions Targets

Global Emissions Goalposts Are Captivating C-Suites and Gaining Velocity in Corporations Around the World

In boardrooms worldwide, an interesting discussion is occurring as iconic brands and corporate titans reform their journeys to cut greenhouse gas (GHG) emissions, as well as their strategies for protecting the climate. Mindsets were rebooted by the 3% Solution and the Science Based Targets Initiative, and were energized by the global Paris Agreement, leading to waves of bold pledges from corporations. What are factors that make these concepts concrete for executives deciding on goals?

Putting the “Based” in Science-Based

Dating back to the mid-1990s, businesses developed emissions goals with arbitrary reduction numbers, intending to one-up a competitor or tag to a year with marketable slogans like “15% by 2015.” So why are science-based targets (SBTs) suddenly resonating as executives deliberate long-term objectives? Well, it looks like it's more about the “based” than it is about the “science.” It’s not that science is uninteresting to corporations, it just isn’t the only impetus for speed and adoption of the SBT approach to target setting. On topics of environmental protection, businesses often make a public case for certainty or a level playing field. Internal specialists tasked with emissions now have a tool that provides both of these even without a domestic compliance and regulatory framework in place to address GHGs. Many corporate anecdotes suggest that revising the terminology is also key to promoting the SBT concept, and although different terms are used (context-based, evidence-based, responsibility-based, even value-based targets), they appear to achieve the same outcome.

“Based” targets are winning out in a marketplace of climate goal concepts that is sometimes confusing; it’s about time there is one dominant framework. There's carbon neutral, climate neutrality, net-zero, net-positive, and even drawdown. Some have fallen out of favor because they require too much explanation while others signal new frontiers. “Based” targets are here to stay, and their current traction is similar to previous standards and certifications, such as the Forest Stewardship Council and the Marine Stewardship Council. The way it plays out, industry leaders or first movers set a target based on the sector's emissions budget and others follow suit, either exceeding the leader, or chasing that level of ambition. There are now 339 multinational companies committed to setting a target that follows the pathway to 2°. More of those companies are from the US than from any other nation in the world.

So What?

More than anything else, this concept helps internal discussions with the C-suite when a specialist can tell leadership that, by setting an SBT, the company is identifying its share of reductions in relation to the global emissions challenge and that cuts its footprint within the emissions budget for the sector and industry. Putting an emissions goal into a global context makes sense to internal stakeholders in a way that definitively makes a case for “how do we do our share?” It also makes sense to external investors and advocacy stakeholders that are starting to ask companies when they will have a science-based target—or why they haven’t set one yet.

Basing targets on global data is here to stay. Executives like the linearity of setting targets; 89 companies had them approved by the SBT Initiative in 2017. How can you take the next steps? 2018 is the year!

If you are looking at what paths to take, contact Matthew Banks for information on the projects and services Guidehouse’s Sustainability Team can offer as a strategy partner.