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Introduction:
In an era of increasing climate concerns, companies hold a significant role in curbing greenhouse gas emissions. The Science-Based Target setting initiative (SBTi) offers a powerful tool for organizations to align their emission reduction efforts with global temperature goals. By adopting science-based targets (SBTs), companies can contribute to the transition to a low-carbon economy while enhancing their competitiveness. This blog provides a comprehensive guide on how companies can navigate the process of setting science-based emission reduction targets through the SBTi application.

Phase 1: Choosing the Right Route
The initial step involves determining the appropriate SBTi route for the company. Based on the company’s characteristics, it can opt for a variety of different SBTi routes. The SBTi has outlined a streamlined route for Small and Medium Enterprises (SME) which includes Scope 1, 2, and 3 GHG emission target setting. There are also opportunities for sector-specific routes, like the Forest, Land, and Agriculture (FLAG) route. While the SME route could offer immediate target-setting opportunities, options like the FLAG route might align better with long-term expansion plans.

Phase 2: Crafting an Execution Roadmap
Depending on the chosen route, an execution roadmap is formulated. In our example, this roadmap acts as a project checklist, guiding the management through the requirements of either the SME Target Validation Application or the FLAG Target Setting Guidance.

Phase 3: Selecting a Target-Setting Method
There are three best practice target-setting methods:

• Absolute emissions contraction
• The Sectoral Decarbonization Approach (SDA)
• Allocation Approach (convergence or contraction)

The most fitting method is selected based on the company’s processes and available data.

Phase 4: Setting SBTs for Scope 1 and 2
Select a base year for Scope 1 and 2 emissions and set science-based emission reduction targets for Scope 1 and 2 that are consistent with the level of decarbonization required to keep global temperature increase to 1.5°C or, at minimum, well below 2°C compared to pre-industrial temperatures.

Some key criteria for Scope 1 And 2 SBTs include:

• An SBT should cover a minimum of 5 years and a maximum of 15 years from the date the target is publicly announced.
• SBTs should cover at least 95 percent of company-wide scope 1 and 2 emissions.
• SBTs should be periodically updated to reflect significant changes that would otherwise compromise their relevance and consistency
• Offsets and avoided emissions should not count toward SBTs.

Phase 5: Setting SBTs for Scope 3
The company should set a science-based emission reduction target for Scope 3 if a company’s Scope 3 emissions account for at least 40% of total Scope 1, 2 and 3 emissions combined. Even if Scope 3 emissions do not meet these criteria, there are several benefits to including Scope 3 targets including demonstrating leadership, managing supply chain risks, and identifying opportunities along the supply chain. The duration of this step will depend on the timing of available Scope 3 data.

Some key criteria for Scope 3 SBTs include:

• Scope 3 targets generally need not be science-based, but should be ambitious, measurable and clearly demonstrate how a company is addressing the main sources of value chain GHG emissions
• The scope 3 target boundary should include the majority of value chain emissions, for example, the top three emissions source categories or two-thirds of total scope 3 emissions.

Phase 6: Communication and Progress Tracking
After submitting and being approved for an SBTi application. The company should periodically recalculate SBTs as needed depending on changes in company structure and/pr developments in target-setting methodologies. It is also best practice to consistently communicate SBTs throughout the Company’s corporate communications.

Conclusion:
Science-based emission reduction targets are a pivotal mechanism for companies to contribute to global climate action. By embracing the SBTi application process, companies like the one highlighted in this blog can effectively align their strategies with a sustainable future, demonstrating leadership and resilience in the face of climate challenges.

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