SBTi framework and decarbonization: everything you need to know!
Adopted in December 2015, the Paris Agreement aims to limit global warming to 1.5°C above pre-industrial levels. To achieve this goal, all economic sectors must commit to decarbonization approaches aimed at reducing their greenhouse gas emissions. This challenge is all the more important as the CSRD and carbon accounting are progressively coming into force.
In this context, the SBTi has established itself in just a few years as one of the main international frameworks for supporting corporate decarbonization and for helping them define and validate their climate targets: nearly 10,000 of them have already joined this initiative!
SBTi framework and decarbonization: what are we talking about?
SBTi, a science-based decarbonization methodology
Created ahead of COP21, SBTi has 5 founding members: the Carbon Disclosure Project, the United Nations Global Compact (UNGC), the We Mean Business coalition, the World Resources Institute (WRI), and WWF.
The ambition of the SBTi framework is to encourage private sector players to reduce their carbon emissions by providing them with a methodology developed from scientific knowledge. Indeed, the SBTi standards are practical translations of the scientific recommendations of IPCC experts (Intergovernmental Panel on Climate Change). SBTi also relies on a Technical Advisory Group, composed of institutional representatives, NGOs, and climate specialists from the private sector.
600
The number of French companies already committed to reducing their carbon emissions with SBTi, including 157 SMEs
Source: Science Based Targets
Dametis has many clients engaged in an SBTi and decarbonization approach. Among them: Danone, Bonduelle, Croda International Plc, ALBEA Group, Hutchinson, Legrand, Thales.
SBTi’s objectives and activities
SBTi sets 4 main objectives:
- Define rigorous standards to validate the targets set by companies,
- Perform validation in a neutral and impartial manner,
- Combat greenwashing by strictly framing the targets announced by companies,
- Promote transparency by favoring the reduction of carbon emissions rather than their offsetting.
To achieve them, the initiative has two distinct activities. On the one hand, the definition and drafting of standards, tools, and guides available to companies. They are designed to help stakeholders define their short- and long-term targets. On the other hand, SBTi ensures rigorous validation of the targets announced by companies through its subsidiary, SBTi Services.
Decarbonization VS carbon offsetting: be careful not to confuse them!
In its calculation methods aimed at achieving net zero emissions by 2050, the SBTi initiative favors decarbonization and the actual reduction of carbon emissions rather than their offsetting. According to ADEME, carbon offsetting consists, for a stakeholder, in supporting a project to reduce or sequester greenhouse gas emissions that are not directly attributable to them in order to generate “carbon credits.”
In April 2024, the SBTi board of directors announced it was considering relaxing the use of carbon credits in its calculations, primarily to achieve scope 3 decarbonization targets. This announcement sparked numerous reactions within the scientific community, which feared a weakening of the requirement for direct emission reductions. The use of carbon credits to offset scope 3 emissions was ultimately abandoned.
Committing to the SBTi initiative: why and how?
The benefits and challenges of the initiative
For any company wishing to join the SBTi initiative, the approach presents several advantages, while being accompanied by certain challenges.
The benefits of the SBTi initiative
To better understand the concrete effects of its methodology on committed organizations, SBTi publishes an impact study each year. The latest edition, The Impact of Setting Science-Based Targets on Businesses, highlights two major categories of positive outcomes: on one side, financial and commercial advantages and on the other, tangible results in terms of climate action.
The commercial benefits mainly stem from developing a competitive advantage. 91% of companies consider that joining the initiative has had a positive impact on their business in general (reputation and long-term financial performance). They also emphasize that it fosters investor confidence and facilitates access to financing. Finally, the investments made to achieve the set targets are often accompanied by substantial savings, thus reinforcing the economic interest of the approach.
The climate benefits, for their part, translate into better resilience to risks related to climate change. Commitment to an SBTi approach enables companies to more effectively anticipate the evolution of future regulations and strengthen the robustness of their value chains.
The challenges for companies
Regarding challenges, the collection and reliability of energy data often constitute a major obstacle for companies, particularly for establishing a reliable carbon footprint and tracking their emission reduction trajectory. On this management issue, our EMS software helps support industrial companies by facilitating the collection of information necessary for industrial energy audits and the definition of decarbonization targets.
Among other obstacles, the cost of target validation is also central. It can reach up to 14,500 euros for large companies and up to 2,500 euros for SMEs. Finally, many organizations highlight a complex methodology to implement, which is accompanied by regular changes. Despite this complexity, SBTi has designed a methodology flexible enough to adapt to a wide variety of private sector companies, supporting them in defining, validating, and monitoring their climate targets.
The key steps: concretely, how does it work?
To commit to an SBTi approach, a company must follow several steps:
1. Announce its commitment and define its reduction targets
The company begins by committing in writing to join the initiative. It must then define targets for reducing its emissions. They are of two types: short-term or long-term (net zero by 2050). The SBTi approach imposes requirements: reduction targets must cover 95% of the company’s scopes 1 and 2 and must necessarily be aligned with a +1.5°C scenario.
2. Submit its targets for validation by SBTi Services
Once defined, the targets must be submitted for validation to SBTi Services. For them to be validated, the company must have measured its emissions according to the GHG Protocol rules (scopes 1, 2, and 3).
Note: the SBTi standards currently in force remain applicable until early 2027, when a new version will be introduced. This evolution aims to go beyond simply defining targets by further encouraging companies to take action.
3. Communicate about its targets
The SBTi initiative requires companies to publicly communicate about their targets set within the framework of the approach. Once validated, companies have six months to make them public.
4. Manage emission reductions and report on results
Once committed to the approach, companies must update the progress of their targets by publishing their actual greenhouse gas emissions each year.
Here’s a reminder of the different scopes!
Greenhouse Gas (GHG) emissions are classified into three categories:
-Scope 1: greenhouse gas emissions that come from sources the company owns or controls, for example those emitted by industrial processes.
-Scope 2: indirect emissions related to the consumption of energy purchased by the company, such as electricity.
-Scope 3: It covers emissions generated throughout the value chain, both upstream and downstream of the company.
Faced with the climate emergency and the strengthening of regulatory requirements, SBTi is establishing itself as a reference framework for structuring a decarbonization strategy. Beyond defining science-based targets, this approach enables companies to strengthen their resilience and improve their competitiveness. While its implementation requires reliable data, appropriate management tools make it possible to meet these challenges and transform climate ambitions into concrete actions.
