Today, the Science Based Targets initiative (SBTi) has published its third annual Progress Report: ‘Scaling Urgent Corporate Climate Action Worldwide’. The SBTi is the gold standard for net-zero target setting, which is vital in enabling companies to identify and reduce their emissions and limit temperature rise to 1.5°C.
CDP welcomes the launch of this latest impact assessment and the SBTi’s ongoing work in supporting organizations through the crucial steps that follow disclosing emissions, from creating transition plans fully aligned with climate science to measuring progress towards halving emissions by 2030 and reaching net-zero by 2050.
We are delighted to see a record number of companies are committing to and setting science-based climate targets, particularly with the programme having reached the 20% critical mass of science-based targets adoption among high impact companies, key regions and countries that will motivate the remaining stakeholders to follow suit.
Despite the impressive growth of the SBTi, corporate action remains slower than we need it to be. The report shows that certain high-emitting industries, such as power generation, are lagging. We look forward to seeing further engagement from the SBTi to mobilize corporations with initiatives such as the Net-Zero Standard, the world’s first science-based standard providing guidance, criteria and recommendations to support corporates on their net-zero journeys.
The report also shows that scope 1 and 2 emissions covered by the SBTi has increased more than ten-fold between 2015 and 2021, from 145 million to 1.5 billion tonnes of CO2e. Almost all SBTi companies have approved science-based targets and 16% set supplier engagement targets, requiring their suppliers to set their own science-based targets.
However, CDP data shows that only 2.5% of suppliers have approved science-based targets. As supply chain emissions account for, on average, 11.4 times more emissions than direct operations, it is crucial that supplier engagement on emissions reduction, along with nature-based impacts, becomes business-as-usual.
In 2021, our Supply Chain programme mobilized over 200 major companies representing US$5.5 trillion to drive 11,457 supplier disclosures on climate change, forests and water impacts, demonstrating the game-changing potential of cascading action down the supply chain.
It is clear from the findings of ‘Scaling Urgent Corporate Climate Action Worldwide’ that science-based targets are driving economy-wide change. However, corporate ambition alone is insufficient. Governments must strengthen their Nationally Determined Contributions (NDCs) and long-term strategies (LTS) this year to ensure that they are in line with limiting global warming to 1.5°C. We hope to see the effects of mandatory disclosure accelerate the “ambition loop” between the private sector and governments, in turning net-zero commitments into action at pace over the coming years.
With the IPCC’s Sixth Assessment Report of August 2021 issuing a “code red for humanity”, now is the time for urgent, system-wide action. A group of the world’s biggest companies by market capitalization have valued the climate risks to their businesses at almost US$1 trillion. It is clear, then, that decision-makers from the boardroom to the benches of parliament need to learn from the immense challenges of the past few years – from COVID-19 to the current energy crisis – that failing to engage suppliers on climate action leaves organizations vulnerable.
Only when companies are truly transparent about their scope 3 emissions and nature-related impacts can we achieve a net-zero future and a resilient economy for people and planet.