New Metrics
Setting the Bar High Enough, Part 2:
What Exactly Is a Science-Based Target?

In this series of articles, the team at the Carbon Trust outlines the reasons for businesses to adopt science-based targets on climate change. Read part one.

To put it simply, a carbon emissions target is defined as science-based if it is in line with the scale of reductions required to keep global temperature increase below 2°C compared to pre-industrial temperatures.

The year 2050 can be a logical timeframe for setting long-term targets, but scientific emissions trajectories can be used to set targets for a shorter time horizon, such as 2025 or 2030. A more immediate target has advantages, as it increases the sense of urgency for achieving reductions, putting the challenge onto the priority list for management and boards today.

In less simple terms, science-based targets involve allocating a proportion of the required global emissions-reduction targets to an individual company in a fair and transparent way. This requires some serious thinking, as there are a range of factors that must be considered in setting the target.

There is a need to navigate through considerable uncertainty. Some of the important questions are ones that large corporates will have thought about in detail, such as predicting their own future growth, market share, asset portfolio and geographic locations.

Other questions can be more challenging. How do you allow for the fact that some sectors of the economy will grow and others shrink between now and 2050? Should a company that has already taken action to lower carbon emissions today need to achieve less steep reductions than those that haven’t started yet?

Fortunately there are also several methodologies to assist with setting science-based targets, which can provide useful frameworks for going through the process.

Perhaps the most detailed methodology released to date is known as the Sectoral Decarbonisation Approach (SDA). This has been developed over the last couple of years by the Science-Based Targets Initiative, a partnership between CDP, UN Global Compact, World Resources Institute and WWF (for full disclosure, I represented the Carbon Trust on the technical advisory group during its development).

This methodology enables companies to set a science-based target based on the expected emissions trajectory of the sector or sectors in which they each operate. This builds upon climate change mitigation scenarios developed by the Intergovernmental Panel on Climate Change and the International Energy Agency, which are based on the best available science and analysis from around the world.

The SDA takes into account the potential for sectors to reduce emissions through efficiency and new technology, factoring in future growth projections and market share for different geographies. However, the SDA can only be applied in certain sectors at present, so some companies choose to use different approaches, of which several are available. For example, a value-added approach involves setting emissions targets based on the contribution a business makes to the wider economy.

In essence, science-based targets build upon the expertise and rigor used to build international scientific consensus, combining it with a transparent approach to allocate a portion of the global carbon budget to the operations of a company. This means that a business is now able to practically demonstrate it is taking on its fair share of the emissions reductions required to limit global warming to no more than 2°C.

In Part 3 of this series, we explore the reasons for the growing popularity of science-based targets, discussing the external factors that are driving companies to align their performance with a 2°C world.