Net Zero Corporate Standard: Ground rules for science-based net zero targets unveiled
Firms must reduce emissions by at least 90 per cent to claim net zero target that aligns with Paris Agreement under rules drawn up by Science-Based Targets initiative
The Science Based Targets Initiative (SBTi) has set out its ground rules for corporate net zero targets that align with climate science, confirming firms must reduce their emissions by at least 90 per cent to secure accreditation for such goals from the independent certification body.
The new Net Zero Corporate Standard published today states that, in order to credibly claim that a mid-century net zero target aligns with the Paris Agreement, companies must aim to first halve their greenhouse gas emissions – across scopes 1, 2 and 3 – by the end of the decade, before targeting a minimum 90-95 per cent reduction by mid-century, with the exact percentage dependent on the sector.
SBTi, which is widely seen as the most credible framework for certifying corporate climate targets, set out the new net zero rules this morning, in a move designed to standardise the growing wave of net zero targets that have swept the corporate sector in recent years.
It said it would begin validating firms against the new standard from January 2022, with several major firms – AstraZeneca, CVS Health, Dentsu International, JLL, Holcim, Orsted and Wipro – having already clinched the certification after taking part in a pilot scheme earlier this year, the SBTi said.
Roughly 70 per cent of the global economy is now covered by some form of net zero target, but there is currently no single independent body to certify these targets. As such, net zero goals often vary in quality, scope and ambition, which led to criticism and accusations of ‘greenwashing’ in some instances.
Critics have raised concerns that weak net zero targets provide a license for some businesses firms to continue polluting through the extensive purchase of carbon offsets, without taking requisite action to reduce their own emissions. Just this week, findings revealed that 33 per cent of the G20’s largest businesses now have net zero targets in place, but warned that two-thirds of these targets were of questionable quality.
Aberto Carrillo Pineda, co-founder and managing director of the SBTi, said that the new standard had been developed to standardise what a credible net zero target looked like and ensure that climate targets drove ambitious action.
“Companies are currently self-defining net-zero targets without credible and independent assessment of their ambition and integrity,” he said. “For the first time, the SBTi Net Zero Standard offers companies robust certification to demonstrate to consumers, investors and regulators that their net zero targets are reducing emissions at the pace and scale required to keep global warming to 1.5C.”
Pineda also urged companies to sign up for verification: “We’re now inviting all companies with net zero targets and ambitions to show stakeholders that their decarbonisation pathway is aligned with science.”
The principle at the heart of the standard is that of mitigation hierarchy – in other words, that companies should make the reduction of value chain emissions their number one priority, and only tap the carbon offset markets once all avenues to reduce their absolute emissions have been exhausted.
The new rules come just days before the COP26 Climate Summit kicks off, at which the credibility of carbon offset markets and corporate and national net zero targets are set to be key issues.
Johan Rockström, director of the Potsdam Institute for Climate Impact Research, said the Standard provided companies with a “clear blueprint” on how to bring their net zero plans in line with science, stressing that robust targets were “non-negotiable in this decisive decade for climate action”.
“We are running out of time,” he said. “Extreme weather events are occurring more frequently with greater intensity. We are also rapidly approaching critical tipping points. We have to bend the curve of emissions now. We have to create a net zero world economy in just one generation. There is only one pathway forward, that involves rapid and deep emission cuts and additionally investment in nature-based solutions – which are absolutely fundamental.”
Recognising the urgent need to scale up near-term climate and biodiversity finance, the Standard recommends that companies make investments to reduce emissions outside of their value chains. But it stresses that these investments should be in addition to, and not as a substitute for, rapid and deep reductions of a company’s own emissions.
The SBTi said it would continue to develop the standard over the coming months, looking at best practice in beyond value chain mitigation and how to further support companies in reducing their Scope 3 emissions.
Mads Nipper, CEO of wind energy giant Ørsted, said the firm was pleased to be among the first raft of firms to have their net zero target validated by the new methodology.
“Ørsted is proud to join the Science Based Targets initiative in the launch of the new Standard and to become the first energy company in the world with a science-based net zero target,” he said. “We recognise that the only route to a climate-safe future is one that prioritises emissions reductions, both in the near and long-term.”
