This year is ending with a surge of Net-Zero target commitments. The Science Based Targets initiative (SBTi) announced this week that due to unprecedented demand they have received their full quota of submissions for 2021. The number of companies submitting targets per week is now matching what was being received per month last year.
This raises the obvious concern about the potential for greenwashing, particularly given the widespread criticisms around net-zero targets. A recent article by Climate Home News points out that these criticisms include a lack of accountability; SBTi does not track companies' progress toward their targets, and lack of transparency; companies setting climate targets under SBTi don’t usually disclose what methods they have used to set their goals.
The current problems with net-zero targets
Joel Makeover, Chairman & Co-founder of GreenBiz Group summarizes the problems with net-zero targets in his article The Coming Net-Zero Backlash, with the big concern being "Companies may be relying far too much on 'net' and far too little on 'zero.'" That is, companies are relying on the assumption that they will be using still-unproven carbon-removal technologies that they hope will be operating cost-efficiently at scale by some future date.
But the bar is about to be lifted.
On October 28, SBTi will launch the new Global Net-Zero Standard. This world-first standard is a game-changer because it seeks to address many of the criticisms about net-zero targets, as explained by SBTi's Tom Dowdall in his article Science-Based Net-Zero Targets: ‘Less Net, more Zero’. The standard will provide;
independent verification of targets,
long-term deep decarbonization of 90-95% across all scopes before 2050, and
only a very limited amount (5-10%) of residual emissions able to be neutralized with high-quality carbon removals.
Targets will need to consist of near- and long-term targets and companies can no longer exclude emissions generated from their supply chain. Additionally, it brings in a whole new accountability framework that has been missing to date.
This has important implications for businesses large and small.
The mandatory inclusion of a company's Scope 3 emissions in a verified science-based reduction target could have important implications for businesses that are part of supply chains.
The majority of a company's GHG emissions often come from its supply chain. The new SBTi Net-Zero Standard will require the inclusion of a company's Scope 3 emissions, meaning that, in order to meet their own reduction targets, companies will need to engage with suppliers and require them to reduce their emissions also.
This is happening now, with an example being highlighted by this week's article in The Grocer UK: Tesco calls on suppliers to share GHG data and target net-zero. Tesco Plc is one of the UK's largest retail groups, with over 3,700 stores. Chief product officer Ashwin Prasad wrote to the company's suppliers detailing four key actions Tesco wants them to take, including providing the retailer with details of their current greenhouse gas emissions by the end of this year.
"Tesco suppliers are also being asked to establish their own net-zero ambitions by the end of next year, and set themselves science-based targets to support the delivery of these ambitions by the end of 2023."
Of course, not all of these suppliers will rush out and submit their reduction targets to SBTi, but one can envisage perhaps a not too distant future when standards-based net-zero target verification could become mandatory.
This illustrates how critical it is for all companies to build resilience by acting now to implement a rigorous, business-wide sustainability strategy. Better to be a part of the systemic change rather than suddenly needing to change to fit the system.