Put simply, it is a company's ability to compete and succeed relative to peers as part of its transition to a sustainable economy. Achieving net-zero emissions is at the heart of it, a goal which requires a competitive emission reduction pathway. In this blog we want to show you how to make the most out of going down this pathway with a science-based target (SBT) and how to embrace climate action as a competitive opportunity.
The understanding that climate action is an essential component of competitive sustainability has grown at an extraordinary pace, and recently we have seen many companies eager to announce ambitious climate targets. Unfortunately, many of these companies fail to set interim science-based emissions targets. South Pole's recent report on the state of Net Zero commitments found that only 11% of companies with a net zero target back it up with an SBT. Making bold commitments without the scientific basis to back them up not only increases the chance that a company won't meet its net zero goal, but also exposes a company to criticism for talking the talk but not walking the walk. Only with true science-based climate action is a company putting itself on the right track. This means climate action which follows the polluter-pays-principle and takes into account the fact that the world only has one carbon budget.
The Science-Based Targets initiative (SBTi) puts this logic in practice by helping companies formulate and deploy medium- to long-term emissions reduction targets that are in line with what is needed to limit global warming to well-below 2°C or 1.5°C. Here is a practical guide to get most out of your science-based climate action and use your SBT on your path towards competitive sustainability.
Setting an SBT is in itself only the first step towards using climate action as an instrument for growth. For many companies, SBTs are still only viewed as a “nice-to-have." In reality, making a strong business case for having an SBT is about adapting your organization to doing business in line with climate science, taking advantage of emerging opportunities, and thriving because of it. Every company is on its own journey to identify and promote its sustainability USP in order to increase its competitive position in the market. For companies that embark on such a journey, they are offered a window of opportunity to be part of the 'smart frontrunners' that leverage their climate action to boost their competitive advantage.
There are myriad opportunities that an SBT can unlock:
So when should a company start its SBT journey? It is time to start thinking about setting a SBT once a company has both accepted the inherent need for science-based climate action and started planning its decarbonisation pathway. At this point it becomes vitally important to ask a few fundamental questions before committing to an SBT in order to start off on the right track. Addressing the following five topics will help a company understand how to make the most out of its SBT:
By answering these fundamental questions, a company can find its own unique path to a successful and beneficial integration of sustainability into its business model. As a north star for any business strategy, the SBT can be broken down into internal targets and governance processes in order to achieve the optimal outcome: a resilient business model that guarantees competitive sustainability.
Does it all seem a bit daunting? To start, it is really simply a matter of just getting going. You will only discover your specific challenges and uncover the opportunities once you begin your climate journey. Once you have started, it is important to gradually bring your actions in line with climate science, ensuring that the effort you invest is proportional to your impact.
Once your target is set and you have begun your journey, implementing your SBT and institutionalizing it in the core of your business is the next step. For any company serious about climate action, this is all part of achieving sustainable competitiveness, in itself a prerequisite for success in the marketplace of tomorrow.