New Metrics
#SustyGoals 6:
Setting Standards for Ambitious Carbon Targets – A Dialogue with GHG Protocol's Pankaj Bhatia

“Given that carbon footprinting is predicated on climate science, why doesn't the Greenhouse Gas Protocol include guidance on setting science-based emissions goals and targets?” That's the question I asked Janet Ranganathan, Vice President for Science and Research at the World Resources Institute (and founding director of the GHG Protocol at its outset), at the 2012 Ceres Conference (she's a Ceres boardmember). Her response has unfolded in words and actions over time, first by introducing me to Pankaj Bhatia, the current director of the GHG Protocol, at lunch in Washington, DC in the fall of 2012, where we discussed this gap and potential ways to fill it.

I next ran into Pankaj at the Global Reporting Initiative Conference in May 2013, where he announced that the GHG Protocol is “creating guidance on setting science-based GHG reduction targets,” and we've been in dialogue since then. As part of the #SustyGoals series on the #NewMetrics channel, here's a deeper view of this ongoing dialogue that points toward the future of sustainability goal-setting on the carbon front.

Bill Baue: What's the next frontier in terms of goal-setting for GHG emissions?

Pankaj Bhatia: The next frontier for goal-setting is bringing GHG reduction goals in alignment with the scale required by the climate challenge, and goals which will lead to transformative change in the economy. This is relevant for all entities that generate GHG emissions but for now we are focusing on national, city and local governments and companies.

Baue: What gaps in current best practice need to get filled, and what are some of the promising ideas emerging for filling those gaps?

Bhatia: Historically, many companies have set modest absolute GHG reduction goals or intensity goals. In many cases, intensity goals allow the company to increase their production and their emissions, while making some efficiency improvements that reduce the GHG emissions emitted per unit of production or revenue. The total amount of GHG emissions may still increase. Both of these types of goals are often designed to be a slight stretch, and be mostly achievable with relatively small changes and investments required to meet the target. Climate change demands something more. Part of the scale-alignment could mean targets based on or consistent with science, since climate science is what will tell us what the total, global levels of greenhouse gases should be to maintain climate stability.

Some companies, such as Autodesk and Mars, are recognizing the importance of reducing emissions to the levels called for by science and have taken an important first step in committing to use science to inform their long term goals. Autodesk's goal is to align their GHG reduction target with the IPCC science and have a fiscal year 2014 target of 23.4% absolute reduction from a 2009 baseline. Mars has committed to selecting reduction targets based on the best science, with their current goal to reduce emissions from their direct operations by 2015 by 25% from a 2007 baseline and a long term goal of 100% below that same baseline by 2040. This is a step in the right direction and it is important that companies continue to implement effective and ambitious GHG-reduction goals. When companies take risks and set aggressive reduction targets, it often spurs high levels of innovation and investment that causes them to not only meet, but even exceed their targets.

Various levels of governments are also beginning to align their reduction goals with climate science. These include the UK government who committed to an 80% reduction of GHG emissions by 2050 and a carbon budget approach that caps emissions levels for multiple years in the shorter term. Several cities including Chicago, Berlin, and Melbourne have set similar targets. The GHG Protocol is developing a Mitigation Goals Accounting Standard, which can assist governments and organizations in setting these goals.

What is missing is a clear way to translate the global "cap" on emissions that science tells us is necessary into individual targets for companies, organizations, and governments based on their individual GHG inventories, and to specify the right time frame in which these need to occur. Even if individual companies were to entirely transform their value chains and achieve "zero emissions," would this mean we are on track globally? Probably not, unless all sectors of the economy in major emitting countries were covered by such goals and they were effectively implemented. It is important to translate the global target into country targets as well as other kinds of targets — cities, residents, organizations, etc that together serve to ensure we are all on a level playing field and provide a common transformative signal to the market.

Bhatia: WRI is collaborating with CDP to develop a working paper that will make the case for increased ambition on corporate target setting. With no widely accepted method available to set ambitious GHG targets and an uncertain future legislative environment, companies lack incentives to achieve significant reductions in line with current climate science. The aim of the working paper is to provide recommended approaches to goal setting to raise the ambition on target setting levels, drive more bold business solutions, and increase the level of reductions achieved by companies worldwide.

Once the working paper is complete, WRI and CDP will collect input on it from stakeholders through workshops and a survey. WRI will use the input to determine the next steps for GHG Protocol, which could include case studies or launching a multi-stakeholder process to develop a GHG Protocol Guidance.

Baue: GHG Protocol released its Scope 3 guidance before making strides on setting science-based targets. What are the challenges of applying science-based targets up and down the value chain, and what's your preliminary sense of solutions?

Bhatia: The same principles would apply in implementing science-based targets in scope 3 as it would in scope 1 or 2. While there are currently no standardized approaches for setting science-based scope 3 targets, it is important that companies identify opportunities within scope 3 and set ambitious scope 3 targets accordingly. A truly ambitious target would include the full value chain (scopes 1, 2, and 3).

Setting scope 3 targets could pose new challenges in data availability and quality, but since this is often where the majority of emissions are located for a company there could be significant opportunities for identifying hot spots for emissions reductions. Focusing reduction targets on scope 3 could help companies collaborate with their value chain partners on GHG reduction efforts as well as help companies focus their attention and efforts most strategically. However a key challenge in including scope 3 targets could be around how to design allocation and how to determine accountability of emissions and emissions reductions in the value chain.

Baue: You mentioned the gap of translating the global "cap" on emissions that science tells us is necessary into individual targets for companies, which echoes what WBCSD has been saying. What are some of the promising emerging solutions on this front?

Bhatia: The IPCC fifth assessment report provides a good framing for the discussion of the need to translate the global “cap” on emissions to individual targets for companies and countries. Allocating these targets to specific companies, however, is challenging; solutions for doing so vary widely and have not yet reached consensus from companies. Obtaining consensus around these methodologies is essential. Some of the solutions that are currently discussed include looking at historical emissions, allocating emissions amongst industries, or allocating based on revenue.

WBCSD has begun to address this challenge through Action2020, which defines Societal Must-Have for Climate Change i.e with the goal of limiting global temperature rise to 2°C above pre-industrial levels, the world must, by 2020, have energy, industry, agriculture and forestry systems that, simultaneously meet societal development needs and implement the necessary structural transformation to ensure that cumulative net emissions[1] ;do not exceed one trillion tonnes of carbon. Peaking global emissions by 2020 keeps this goal in a feasible range, and are becoming resilient to expected changes in climate.

GHG Protocol and CDP in partnership with other leading experts and institutions including the Center for Sustainable Organizations and WWF are beginning to work on creating a methodology for more ambitious goal setting. In some respects, providing methodologies that demonstrate potential cost-savings and benefits of both reducing emissions and minimizing the corporation’s resource consumption could be more successful than allocating reductions from the global cap. Convening will be a key element of this work stream and will include working with companies to determine the approaches and methodologies that can be rapidly adopted.

[1] Anthropogenic CO2 emissions from preindustrial levels as outlined in the IPCC Working Group I Fifth Assessment Report. One trillion tonnes carbon = 3.76 trillion tons of CO2.