Decarbonisation strategy

Article

Decarbonisation strategy

Companies define decarbonisation targets according to the Science Based Targets initiative (SBTi) methodology

As the pressure from customers and investors to take action to reduce environmental impact increases, the level of demands placed on company management increases. Making increasingly ambitious climate commitments is linked to the organization's need for accurate calculation of greenhouse gas (GHG) emissions in all three areas (Scope 1, 2 and 3), as well as conscious definition of decarbonisation goals along with estimation of the costs involved in their implementation.

What are Science Based Targets ("SBT")?

The Science Based targets aim to keep the global temperature increase below 2oC compared to the level of 1850-1900 (the so-called pre-industrial era). The Science Based Targets initiative (SBTi) defines a methodology that supports ambitious companies in setting emission reduction targets and transforming their business activities to match the realities of the future low-carbon economy. Greenhouse gas emission reduction targets adopted by companies are considered "scientifically justified" if they are in line with the latest climate research and are necessary to meet the goals of the Paris Agreement. SBTi is a collaborative initiative between CDP, the UN Global Compact (UNGC), the World Resources Institute (WRI), and the World Wide Fund for Nature (WWF), and is one of the commitments of the We Mean Business coalition.

What is the role of Science Based Targets?

Key activities of the Science Based Targets initiative include:

  • Defining and promoting best practices for reducing emissions and defining climate neutrality goals;
  • Providing technical assistance and expert resources to companies that set climate targets in line with the latest scientific knowledge;
  • Bringing together a team of experts that will provide companies with independent assessment and validation of objectives.
What is the application process for Science Based Targets?

Today, more than 2,000 entities from around the world have joined Science Based Targets initiative. Every organization, regardless of the sector or scale of activity, has the opportunity to join the initiative.

Those interested in joining the initiative go through a five-step process:

  1. Commitment – expressing an interest in setting a knowledge-based target within two years of sending the commitment (implementation time: up to 2 weeks);
  2. Developing a strategy – development of a decarbonisation strategy (including decarbonisation goals) in accordance with SBTi criteria (implementation time: up to 3 months);
  3. Review – sending an application for purpose validation by SBTi (delivery time: up to 1 month);
  4. Communication – public disclosure of information on target setting in accordance with the SBT methodology;
  5. Disclosure – annual publishing of the organisation's issue, together with information on the progress made in implementing the commitment.

Key benefits of adopting scientifically sound indicators

Innovation

In many companies, the process of setting targets for reducing greenhouse gas emissions is still largely arbitrary and refers to already developed plans. However, this approach limits the possibilities for innovation development, which in turn may completely prevent the achievement of the emission reduction target. Goals defined in accordance with the SBT methodology are a challenge for the company, forcing it to constantly verify what level of reduction they are able to achieve. Setting SBT objectives can therefore:

  • enable the adoption of ambitious solutions tailored to the company's conditions, allowing to speed up the process of implementing the adopted plan and even increase its reach;
  • Increase revenues and reduce operating costs by developing new business models and low-carbon processes, technologies, services or products.
Defining the areas with the highest emissions

The guidelines for setting SBT objectives are relatively flexible: a company can choose to set key performance indicators for Scope 1 (direct emissions) and/or Scope 2 (indirect emissions) and, separately, for Scope 3 (indirect emissions in the supply chain).

This approach can facilitate:

  • identification of a science-based emission reduction curve for the areas with the highest emissions in the value chain, improving the quality of analyses and the manageability of Scope 3 emissions;
  • identifying the need to establish contact with suppliers and customers in order to strengthen the cooperation to jointly reduce emissions throughout the supply chain.
Risk mitigation

The process of universal definition of greenhouse gas emission reduction targets and disclosure of information on the progress of implementation in non-financial statements is monitored. Emission taxes or emissions trading systems have already been introduced in forty countries. In total, they account for 20% of global emissions of these gases. Active measurement and management of data on energy consumption and gas emissions in the company - these are the actions necessary to achieve the set emission reduction target. In addition, they can help your business prepare for:

  • possible regulatory changes and modifying the operating rules, which will reduce costs and eliminate reputational risks associated with such changes;
  • risk associated with fluctuations in commodity prices due to reduced demand for electricity through the use of efficiency solutions and measures in the scope of energy supply (renewable sources, long-term contracts).
Improving reputation

Setting goals based on scientific knowledge is proof that the company has ambitions to neutralize its impact on the climate and has developed an action plan in line with the principles of corporate social responsibility, addressed to various stakeholder groups, while at the same time indicating that it is aware of the risks associated with climate change and is taking appropriate measures to counteract it.

Such an initiative may:

  • facilitate employee retention and recruitment of the best experts, which will reduce turnover costs;
  • Increase the trust and credibility of the company in the eyes of investors, customers, employees and the community.

How can we help?

The decision to build a strategic plan to achieve climate neutrality, set decarbonisation goals and estimate the costs of achieving them is the first step towards responding to growing peer pressure. If you are interested in obtaining detailed information about services related to combating the effects of climate change and planning sustainable development, please contact us directly.