At the time of writing this article on October 31st 2021, the COP 26 summit is getting underway in Glasgow. This conference has been heralded as the most significant fortnight for humanity, this century. Not only is there a global recognition of the threat of climate change to our fundamental way of life, there is also an unequivocal acceptance of anthropogenically induced acceleration of climate change. This chapter of humanity’s story is undoubtedly a pivotal one. The COP 26 conference is a tacit acknowledgement of the need for collaboration between business, academia, and government for the successful achievement of the Sustainable Development Goals.
One of the most beneficial tools at our disposal in the corporate environment, is the SBTi’s Net Zero framework, launched on October 28th 2021. This is the first science-based framework, designed, built, and developed to guide companies to set Net Zero targets, that are aligned to limiting global temperature rise to 1.5°C above pre-industrial levels. The term “Net Zero” has become one of many buzzwords, thrown around by stakeholders, both within and external to organisations. Yet, surveys have found that there is still much confusion over the terms that are being used, their specific meanings, and their implications. Net Zero and Carbon Neutral, for example, seem remarkably similar, if not entirely identical. However, Net Zero refers to the full compensation of GHG emissions against reductions over a specified period, whereas Carbon Neutrality is a gross balance of contributions to, and reductions of carbon emissions, irrespective of the time-period. Although similar methods can be used to achieve Net Zero and Carbon Neutrality, the concepts differ in both scope and ambition, in their efforts to limiting global warming. This necessarily has strategic and operational implications on the activities that businesses choose to undertake. Establishing a firm understanding of the conceptual framework behind the multiplicity of jargon terms that dominate this space, will allow organisations to design suitable climate strategies that are aligned to their own visions.
This highlights the distinct value of the SBTi’s new science-based Net Zero framework, which by 2030 aims to halve GHG emissions from 2010 levels. Recognising that this is just a whisper more than 8 years away, calls for rapid and deep emissions cuts. This framework provides clear and precise methods that decision makers need, to implement appropriate processes. As well as clarifying how to prioritise, scope, and plan emission reduction activities, one of the key features of the framework is its interim target principle, recommending that companies set interim milestones at regular intervals, in the interest of accountability. This is aligned with demands from investors, who are increasingly and explicitly scrutinising companies’ short- and long-term climate targets and want to see rigorous plans in place. In addition to this, business should also acknowledge the capacity of the SBTi Net Zero framework in addressing external market pressures. Legislative and regulatory instruments are continuing to develop around emissions caps, allowances, and penalties, with many developed and developing countries introducing emission management measures in the form of carbon markets, for example. Companies that adopt the SBTi standard therefore have the opportunity to avoid potential and probable increasing costs, thereby becoming more competitive, and more sustainable.
The strong scientific foundation of this standard makes it an objective and reliable tool enabling companies to make valuable, accurate, and competitive commitments. This can enable their stakeholders, customers, and investors to understand the scope of efforts towards climate change mitigation measures.
Ultimately, it may be difficult for business to understand the contours of climate science, but this will no longer be a barrier to setting effective climate targets aligned to achieving Net Zero by the middle of this century. Adopting this standard, like the 2000 other businesses and financial institutions already involved, provides the scientific assurance that efforts aligned to this standard will achieve their strategic commitments.