Global companies worth $38 tn had approved emissions reduction targets or commitments by the end of 2021 but the world is still not on track to halve emissions by 2030, according to new research from the Science Based Targets initiative (SBTi).
The global non-profit body, which aims to enable businesses to set emissions reduction targets in line with science, finds about 80 percent of the targets approved in 2021 were aligned with 1.5°C, the target set by climate scientists for the world to avoid the worst impacts of global warming.
A significant 78 percent of SBTi companies with approved science-based goals have targets covering Scope 3 emissions – the indirect emissions that occur in the value chain of the reporting company.
The SBTi report goes further to say that nearly two thirds (63 percent) of companies with 1.5°C-classified targets claim they intend to cut emissions at a higher rate than is required. Between 2015 and 2020, most companies with 1.5°C targets cut emissions twice as fast as required.
A ‘critical mass’ (27 percent) of high-impact companies have now joined the SBTi globally. Science-based targets are linked with 12 percent emissions reduction across Scope 1 and Scope 2 emissions in 2020 and longer-term reduction of 29 percent since 2015.
Climate action stock-take
The first assessment of the SBTi’s progress since the COP26 climate summit in Glasgow, released this week, reveals an increasing international appetite and interest in science-based targets but also acknowledges the need for more action. At the end of last year, 2,253 companies across 70 countries and 15 industries, representing $38 tn of global market capitalization, or more than a third of the global market cap, had approved 1,082 emissions reduction targets or commitments.
The 2021 increases in target adoption and commitments came from companies in G20 countries that are significantly contributing to global emissions, such as China and India, as well as Brazil, South Korea and South Africa. G7 countries represent 55 percent of all SBTi companies overall, with Canada and Italy still lagging behind.
According to the UN Environment Programme, the global economy must cut emissions by a challenging 7.6 percent every year between 2020 and 2030 to achieve the target of 1.5°C and avoid the worst impacts of global warming.
The SBTi’s findings chime with a white paper published by IR Magazine and sponsored by Aon, which finds there was a 10 percent rise in the number of – and support for – climate-related shareholder proposals in 2021. ‘Companies that have an effective strategy and board oversight on relevant environmental and social issues will have better outcomes in their relationships with investors, ability to hire and retain talent through a compelling employee value proposition, and in their risk-mitigation tactics,’ the white paper says.
Dr Luiz Fernando do Amaral, CEO of the SBTi, says in a statement that the initiative will continue to work with governments, companies and NGOs ‘through strong collaboration, healthy debate and scientific research to reinforce 1.5°C corporate climate action as the new normal.
‘The science is clear: we are already experiencing the impacts of climate change, and continuing on the current trajectory equals catastrophe. This report shows that the value the SBTi brings to society is more needed now than ever before – we must continue to drive the exponential growth of science-based targets and make them ‘business as usual’ for companies and financial institutions worldwide.’