Why science should guide corporate targets

18th February 2016

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For the greatest cost savings, sustainability managers should push for science-based targets.

Emissions targets matter. They are the foundation of a company’s climate strategy and inform countless decisions on low-carbon investments, product design and supply chain decisions. Sustainability managers often struggle to determine the ‘right’ target that supports significant emissions reductions while also gaining senior leadership support. Science-based target setting can be a solution to that problem.

Science-based targets align a company’s emission reductions trajectory with the global effort to limit warming to 2°C. These targets help a company cut its emissions at rate aligned with the global carbon budget.

In addition to helping a company to do its part to prevent life-threatening droughts, floods, sea rise, extreme weather events and the other catastrophic consequences of climate change, science-based targets offer multiple benefits for sustainability managers.

Firstly, they take the guesswork out of setting an emissions target. Sustainability managers and chief executives alike tend to appreciate the specificity, clarity and rigour that comes with adhering to climate science. Multiple methodologies exist to help companies to set a science-based target, taking into account the company’s size, industry, and growth rate.

Secondly, the ambitious nature of science-based targets provides the internal commitment to ambition that will drive low-carbon innovation. In order to achieve the sizeable emissions cuts that a science-based target requires, companies will need to take advantage of new technologies, engage with suppliers and operate more efficiently. Through this innovation, a company can transform into a company that can lead in a low-carbon economy. Conversely, companies with cautious targets tend to pursue low-hanging-fruit energy efficiency upgrades. They may cut emissions, but they will ultimately remain carbon-dependent.

Third, science-based targets are quickly becoming the litmus test used to determine whether a company’s climate action plan is credible. In December last year, nations of the world set a mandate to limit warming to 2°C. As Eric Roston from Bloomberg pointed out: ‘The global economy is the engine driving climate change, and major companies are responsible for much of the world's economic activity. A treaty among nations is one thing, but what about a climate agreement among corporations?’ Science-based targets align company emissions with this global mandate, which is likely to satisfy the growing number of investors who wish to decarbonise their assets.

The Science Based Targets initiative, a joint effort of WRI, CDP, UN Global Compact, and WWF, has made it easier and more rewarding for companies to raise the ambition of their targets. Sustainability managers can choose from multiple methodologies when setting their target and find helpful guidance. Companies that commit to setting a target are publicly recognised by the Call to Action campaign, as well as companies with targets that have been approved through a criteria-based review process.

For the greatest cost savings, sustainability managers should push for science-based targets now. According to the 3% Solution report, American businesses must collectively cut emissions by 3% annually through to 2020 if they are to respect the global carbon budget. If they do this, they will collectively save $190 billion by 2020. However, if companies wait until 2020 to make significant cuts, they will need to cut emissions by 9.7% annually, and such drastic cuts could be costly and disruptive.

Increasingly, business leaders are realising that their company’s long-term competitiveness hinges on the ability to operate within planetary boundaries. Companies that begin undergoing low-carbon transformation today will be positioned to lead in a future economy that no longer runs on fossil fuels.


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