Over the last few years, numerous scientific studies published by different international organisations have shown that the current production model is not compatible with the correct conservation of the planet. The main cause of this situation is global warming caused by excess emissions of Greenhouse Gases (GHG).
To meet this challenge, governments around the world pledged at COP21 in 2015 to reduce their emissions so that global temperatures rise below 2°C (preferably 1.5°C) by 2100 compared to pre-industrial times.
This commitment required an across-the-board reduction in greenhouse gas emissions.
Types of Greenhouse Gases (GHG)
Greenhouse gases are gases that trap heat in the atmosphere and cause global warming. At present, the main gases are:
- The Carbon dioxide (CO2)emissions: It accounts for the vast majority of GHG emissions (almost 80%) as it is generated whenever a material is combusted, something very common in our daily lives due to our economy's dependence on fossil fuels.
- The Methane (CH4)It is the cause of 11% of the GHGs spread in the atmosphere and is produced by the decomposition of organic matter.
- The Nitrous oxide (N2O)emissions: It accounts for 7% of total human-induced GHG emissions, and can be emitted through the burning of some fuels, the manufacture and use of synthetic fertilisers, etc.
To combat global warming and reduce greenhouse gases, companies need to set targets and develop action plans that will enable these objectives to be achieved.
Types of carbon footprint that a company produces depending on the scope of its activities
- Outreach Footprint 1: direct emissions caused by the company's production process. This is, for example, the CO2 generated by a factory or a transport vehicle. To reduce these emissions, companies can take measures such as the optimisation of certain production processes, the purchase of less polluting vehicles, etc.
- Scope 2 Footprintindirect emissions caused by the production of energy consumed by the company in order to carry out its activity. It is relatively easy to measure. Just multiply the energy consumption of the company by the emission factor of the electricity generation of the supplier or the country.
The reduction of indirect emissions can be achieved through the implementation of energy efficiency measures. For example: contracting of PPAs renewables (long-term power purchase agreement); acquisition of RECs (Renewable Energy Certificates). These represent transferable proof that one MWh of electricity has been produced from renewable energy sources and added to an electricity grid. - Footprint Scope 3emissions: emissions indirectly caused by a company's value chain. For example, GHGs generated by the production and transport of fixed capital and raw materials needed for production. These emissions are the most difficult to quantify and reduce, as they do not depend on the company. If a company wanted to reduce its CO2 generation associated with sourcing, it could switch suppliers to those closer to home or lobby for more sustainable practices.
An increasing number of European companies are measuring their footprint and set targets for reducing their emissions. They have the dual objective of addressing current and future regulatory obligations. They also aim to strengthen their competitive advantage and improve their positioning vis-à-vis the market, investors or customers.
SBTi: the initiative to reduce corporate emissions
What kind of framework do companies use to align themselves with their objectives? How do you know if what you are doing in your company is sufficient?
It is in this context that the Science Based Targets Initiative (SBTi), an initiative developed by CDP, the United Nations, the World Resources Institute (WRI) and the World Wide Fund for Nature (WWF), which allows companies - of any size and sector - to set emission reduction targets compatible with a global temperature increase of +1.5°C by 2100.
To this end, SBTi allows companies to align to two complementary reduction initiatives from a base year:
- Near-term science-based targetsemissions reduction targets: these are scope 1, 2 and 3 GHG emission reduction targets to be achieved within 5 to 10 years. Companies will not need to set such targets for scope 3 if it is less than 40% of the sum of their emissions from all three scopes or if they have less than 500 employees. However, companies will be required to commit to measuring these emissions and reducing their scope 3 footprint.
- Net-zero targetsemissions: these are reduction targets to eliminate all Scope 1, 2 and 3 emissions in the long term and to be achieved by 2050 at the latest. In order to be able to set these targets, companies must have Near-Term targets validated by SBTi. In addition, companies are obliged to commit to neutralise the residual emissions that could not be eliminated by 2050 despite following the Net Zero plan.
The benefits of SBTi target setting for a company
The main benefit of SBTi is that it provides a rigorous roadmap based on scientific studies to determine the level of emissions that a company needs to reduce in order to achieve the Paris Agreement. In addition, for the most polluting sectors SBTi defines sectoral guidelines and reduction methodologies aligned to their specific challenges.
In addition, by starting to take measures to reduce GHG generation before such regulation comes into force, companies can increase investor confidence and, in some cases, gain an advantage over their competitors. Finally, certain emission reduction measures can also encourage greater efficiency, helping to reduce companies' operating costs.
How does SBTi membership work? To join SBTi, companies have to communicate their emission reduction commitment to the organisation. Once communicated, companies have 24 months to prepare a reduction plan aligned to the science-based criteria defined by the organisation, which must then be approved by the organisation.
Once this process has been passed, companies will appear on the SBTi website as companies with approved targets and will have 6 months to make them public. After approval, companies will be required to disclose their emissions annually and monitor their progress towards achieving the previously set targets.
It is a transparent, demanding and rigorous process that makes it possible to standardise the degree of compliance with environmental objectives by companies, as well as to reinforce the real commitment of companies in their climate change and sustainability strategies. Quite a challenge, but with enormous returns for those who know how to face it rigorously and with determination.
