New report reveals that by meeting their science-based targets, these companies — with more GHGs than France and Spain, combined — will eliminate 265 million metric tons of emissions from their operations, equivalent to closing 68 coal-fired power plants.
As world leaders meet in Madrid for COP25 this week, with one year left until countries are expected to submit enhanced climate targets to keep the Paris Agreement on track, a significant portion of the private sector is not only vocally expressing support for the 2015 global climate accord — they’re already delivering on it.
285 companies responsible for more than 752 million metric tons of CO2-equivalent emissions per year from their operations — more than the combined annual emissions of France and Spain — have set greenhouse gas emissions-reduction targets in line with what science says is required to avert dangerous climate change and meet the goals of the Paris Agreement. 76 of these companies’ goals are in line with limiting warming to 1.5°C above pre-industrial levels.
A new report published today by the Science Based Targets initiative (SBTi) reveals that by meeting their targets, these 285 companies — which include McDonald’s, Microsoft, Nike and Nestlé — will reduce 265 million metric tons of CO2e (approximately equivalent to shutting down 68 coal-fired power plants) — an average annual reduction of 35 percent compared to base year emissions.
“These companies are at the vanguard in the fight against climate change. They are proof that acting on climate science goes hand-in-hand with a successful business and economy,” said Alexander Farsan, Global Lead for science-based targets at WWF, a SBTi partner. “Every company in every sector must step up and reduce their emissions in line with what science says is needed, or risk being left behind in a changing world.”
The report, Raising the Bar: Exploring the Science Based Target initiative’s progress in driving ambitious climate action, is the first-ever assessment of the initiative’s impact since its launch in 2015.
Other key findings from the report include:
The 285 companies that have set science-based targets will drive investment of up to USD$18 billion in climate change mitigation and spur up to 90 TWh of annual renewable electricity generation, enough to power 11 million US households for a year.
In addition to setting science-based targets for their operations (which includes on-site emissions and emissions from purchased energy), more than 90 percent of the 285 companies have also set ambitious emissions reduction targets for their value chains emissions, which make up 3.9 billion metric tons of CO2 equivalent emissions per year — roughly equivalent to 90 percent of the European Union’s annual emissions.
Science-based targets are becoming standard business practice in some geographies and sectors. More than 20 percent of high-impact companies in the apparel, biotech, food and beverage, healthcare, hospitality, information technology, pharmaceuticals and telecommunications sectors have set science-based targets.
First-movers from high-emitting industries such as cement, steel, chemicals and automobiles are having their science-based targets approved. Among the trailblazers are thyssenkrupp AG, Royal DSM and HeidelbergCement.
At least 20 percent of high-impact companies headquartered in several large developed markets — including Finland, France, Denmark and Japan — are setting science-based targets.
Japan is the first country to provide explicit government support for companies to set science-based targets. As of October 31, 2019, there are 52 Japanese companies with approved targets, and the Japanese Ministry of Environment has set a goal of 100 Japanese companies with approved targets by 2020.
With the notable exception of India, which counts nine companies with approved science-based targets, few companies in emerging markets have set science-based targets. Companies headquartered in non-OECD countries make up only 6 percent of companies with approved targets.
The private sector’s uptake of science-based targets — as of last month, more than 700 companies are setting science-based GHG emissions-reduction targets, and more are joining the movement every week — sends a clear signal that the transition to a low-carbon economy is underway. Business action provides a foundation for governments to set more ambitious policies and regulations.
“We have to do our bit. But in order to be carbon neutral in our value chain we are dependent on clean electricity. Politicians have to act,” said Henrik Sundström, VP of Group Sustainability Affairs at Electrolux. “Ultimately, we are dependent upon decarbonizing the grid — we can play our part by creating demand for renewables, but governments need to commit to decarbonisation.”
While companies rely on governments to create the right conditions, policies and incentives to drive the rapid transformation needed and help businesses to accelerate their climate action across all sectors and geographies, the private sector is not waiting for governments to take the lead — as seen in the continued dedication of the US private sector to the Paris Agreement, despite the White House’s lack of interest.
Luckily, as the report states, regulators around the world faced with the task of decarbonizing the economy are both encouraging and responding to the ambition companies are demonstrating by setting SBTs. And over 92 percent of companies with approved SBTs have set ambitious value chain (scope 3) emissions targets, thereby cascading their ambition to suppliers and customers.
As Shannon Siart, Manager of Climate Strategy & Sustainability Initiatives at HPE, explains: “We have launched the world’s first comprehensive supply chain management program, [which] includes three key components: an aggressive new goal to drive accountability within our own supply chain; a plan to build the capability of our suppliers to set science-based targets in their own operations; and a commitment to lead the business community by setting a standard for supplier GHG engagement and abatement. It’s a ripple effect that will drive action through our suppliers, customers and the world.”
“A science-based target that includes scope 3 emissions signals little more than intent until a company’s suppliers are aligned and committed to the reduction required,” asserted Scott Vitters, Senior Director of Sustainable Manufacturing & Sourcing at Nike. “We have been setting carbon-reduction targets with our supply partners for nearly a decade and are using our science-based target to guide our current target setting process with both finished goods and materials suppliers. We have also initiated a discussion with several of our most strategic suppliers on having them set their own science-based targets.”
The SBTi is a collaboration between CDP, the United Nations Global Compact, World Resources Institute (WRI) and WWF. The initiative uses the latest available climate science to define best practice in science-based target setting, offers resources and guidance to reduce barriers to adoption, and independently assesses companies’ targets against its validation criteria.
More than 700 companies around the world have made a commitment to set science-based targets since the SBTi started in 2015. Once they commit, companies have 24 months to develop and submit their targets to the initiative for validation.
“This is an overarching societal task, which won’t work if one company alone tries to do it,” said Peter Lukas, Sustainability Manager at HeidelbergCement. “The whole industry needs to cooperate and fundamentally change the way it works. We need a lot of political support, regulatory support and commitment from companies.”