(This blog is part one of a three-part series on needle-moving actions businesses can take on climate. The second and third blogs will be released in the coming weeks).
We are in a decisive decade for climate. To limit planetary warming to 1.5°C by 2050, we must go all in to halve greenhouse gas emissions by 2030. For businesses, that means the window for meaningful climate action is shrinking.
Fueled by investor pressure and findings from new reports like the IPCC’s Sixth Assessment, corporate climate commitments are at an all time high. Nearly half of world’s largest 2000 companies have some kind of climate target, and over a third have made net-zero commitments. As we enter the first week of Earth Month, we will without a doubt see an uptick in these numbers.
However, corporate climate action has so far been characterized by a “say-do” gap. According to the Corporate Climate Responsibility Monitor, surveyed companies are on track to cut only 23% of emissions by 2030, missing the mark on the 50% that’s needed.
To take action that counts, you first need to make the right commitments, supported by the right external initiatives. There are a lot of climate commitments and initiatives out there, and it can be difficult to see past the jargon. Read on as we spell out the elements of a trustworthy climate commitment and which initiatives to align with for the highest impact.
Elements of a Credible Climate Commitment
To avoid falling victim to the “say-do” gap (or worse, risk accusations of greenwashing), you need a commitment that builds trust with all your stakeholders. Here are the key attributes of a robust, credible climate commitment:
- Encompasses all scopes. Your commitment must address your emissions impact across your entire value chain. This not only includes Scope 1 and 2 emissions – emissions from sources you own and operate and from energy you purchase – but also Scope 3. In fact, supply chain or Scope 3 emissions are 11.4 times higher than operational emissions and can often account for over 90% of impact. While Scope 3 emissions are harder to tackle, companies that fail to set Scope 3 targets will fall short.
- Aligned with climate science. Your commitment should be aligned with the 1.5°C ambition and based on goals set out by the most recent IPCC reports. For businesses, this means focusing on absolute emissions as opposed to relative emissions intensity and achieving net-zero by no later than 2050.
- Includes both long and short-term goals. One of the main reasons so many businesses are failing to deliver is a lack of near-term action. It’s not enough to simply commit to net-zero by 2050. You must set concrete one and five-year goals with firm emissions reduction objectives to ensure you get there.
- Transparent, verifiable, and reported on annually. Your company should disclose detailed data on past and present emissions and report progress at least annually. Not only this, but your emissions data should also be assured by a third party following the GHG Protocol.
The Right Initiatives
Now that you’ve made the right kind of commitment, what external initiatives are out there to support your progress? Luckily, there’s no shortage of industry groups and coalitions to collaborate with, and you absolutely should engage with them. However, to drive the most impact, you should also align with the following initiatives regardless of your industry:
To build trust and demonstrate progress on your climate commitments with key stakeholders, disclose your environmental impact through CDP. Formerly known as the Carbon Disclosure Project, CDP is the gold standard for environmental disclosure, with the world’s most comprehensive dataset on corporate climate action. Over 13,000 companies disclosed through CDP in 2021, and this number is shaping up to be even bigger this year.
There are a myriad of benefits you’ll gain from environmental disclosure, from peer benchmarking and risk management to streamlined supplier engagement and elevated brand value. Not only this, but as mandatory climate disclosure becomes the new normal, the CDP platform itself is positioned to play a key role in consolidating and standardizing this kind of information.
Interested in reporting to CDP or looking for ways to boost your score? As an Accredited Solutions Provider, our team can help! Learn more here.
Science-Based Targets Initiative (SBTi)
Just as CDP is the gold standard for environmental disclosure, the Science-Based Targets Initiative (SBTi) is the gold standard for emissions reduction target setting. There are a lot of ways to set climate targets. Validating your emissions goal through the SBTi aligns your business with the latest climate science and allows you to stand behind a verified framework.
Companies with SBTs are held to the rigorous standards needed to limit temperature rise to 1.5°C. Here are a few ways the SBTi accomplishes this:
- Targets are only validated if they support a 1.5°C world. The SBTi will not accept emissions reduction pathways in line with 2°C of warming or more.
- Targets must cover all three scopes. Your company must set goals for Scope 1 and 2 emissions. If Scope 3 emissions cover at least 40% of your GHG footprint, you must also set Scope 3 targets. Given that Scope 3 accounts for the lion’s share of impact, this is almost always required.
- Annual disclosure. To uphold corporate accountability on climate action, the SBTi requires that your company annually discloses progress to key stakeholders.
- Targets must be short and long-term. Emissions reduction targets are only validated if your company supports long-term SBTs with short-term (five to ten year) targets.
- Creation of a Net-Zero Standard. With so much ambiguity around net-zero, the SBTi recently released its Net-Zero Standard. This standard gives businesses the information they need to set science-based net-zero targets. Additionally, it provides a common understanding of what “net-zero” actually means.
Task Force on Climate-Related Financial Disclosures (TCFD)
To increase your resilience to climate risks, meet investor demands, and prepare for new regulation, implement TCFD’s Key Recommendations. If you’re a public company, you’re probably already quite familiar with TCFD. TCFD is the most heavily requested reporting framework by today’s investors, and more than 2,600 companies support its recommendations. Additionally, it’s becoming the framework of choice for mandatory climate risk disclosure.
The above reasons aside, aligning with TCFD’s Key Recommendations will help you embed climate considerations throughout your entire business, from governance and strategy to risk management, and act accordingly. Whether requested by your investors or not, TCFD’s recommendations are a proven strategy for uncovering gaps, encouraging innovation, and delivering on ambition when it comes to climate.
No matter what industry you’re in, renewable energy is a critical component of the net zero journey. Led by The Climate Group and in partnership with CDP, RE100 brings together hundreds of leading businesses committed to 100% renewable energy. With over 350 members, this corporate initiative is accelerating change towards zero carbon energy grids, and at scale.
If fleets and transportation contribute to a sizable amount of your emissions impact, also consider joining the newer EV100 initiative. Supported by over 120 companies, EV100 strives to make electric transport the new normal. By taking the lead in their own operations and committing to electrifying their fleets by 2030, EV100 members demonstrate the growing case for going electric.
Making commitments is a great place to start on your climate action journey. In fact, to have any real impact, this is where you must start. Just remember that your commitments must be credible and supported by external initiatives that challenge the status quo. Be wary of initiatives that rely too heavily on strategies like carbon offsets, don’t encourage short-term action, or don’t require emissions reporting across all Scopes.
In our next blog, we’ll explain what objectives and tactics can meaningfully reduce both your short- and long-term emissions impact.