In advance of the 21^st Conference of the Parties in Paris (COP21) many companies recognized the need to reconsider past greenhouse gas (GHG) reduction goals, transitioning to more aggressive science-based goals that align with climate science and show strong commitment to reduce global warming. According to the Science-Based Targets initiative (SBTi), science-based targets (SBT) are those “in line with the level of decarbonization required to keep a global temperature increase below two degrees Celsius compared to pre-industrial temperatures, as described in the Fifth Assessment Report of the [IPCC].” In April 2017, SBTi released an updated Science-Based Target Setting Manual (SBT Manual) to guide companies in setting an effective SBT.

The new SBT Manual reflects advances in global emissions reduction efforts. It remains consistent with the previous manual on methodology recommendations and Scope 1 and Scope 2 guidance, but provides more detail and stringency around setting a Scope 3 target. Consistent with the previous manual, if Scope 3 emissions represent more than 40% of a company’s Scope 1, Scope 2 and Scope 3 emissions, they should set a Scope 3 target. The Scope 3 target is still not required to reduce emissions in line with the level of decarbonization required to keep global temperature rise below two degrees Celsius. However, it requires that targets:

• clearly demonstrate ambition to address the main sources of GHG emissions within their value chain;
• cover the majority of value chain emissions, which SBTi notes as ‘the top 3 categories or two-thirds of total Scope 3 emissions’;
• are in line with current best practices for their industry;
• are tailored to the Scope 3 source category being considered; and
• are ambitious and clearly demonstrate how the company is addressing the main sources of GHG emissions in their value chain.

While existing Scope 3 targets and those proposed to SBTi prior to April 15, 2017 will likely be grandfathered into the SBTi requirements, companies with significant Scope 3 emission sources in the process of setting or updating SBTs will need to think more critically about how they set and communicate their Scope 3 targets (Table 1).

Setting an SBT can help your company drive innovation, build credibility and reputation and demonstrate leadership. It can also improve your CDP Climate Change response score. The target does not need to be approved by SBTi to achieve the maximum available points in a CDP response. To meet the 2017 CDP SBT scoring requirements, a target must:

• cover at least 70% of both Scope 1 and Scope 2 emissions;
• have a mid-term target between 2020 and 2035 and a long-term target ending after 2035;
• reduce absolute emissions by an average of 2.1% annually; and
• be translated into absolute terms meeting the above requirements if it is an intensity target.

Interested in learning more about CDP and SBTs? Visit our website for guidance and perspective informed by our reporting support to over 100 clients since CDP’s inception, our support to clients in setting SBTs, and our participation in the SBTi Technical Advisory Group. We are proud to be a consultancy partner in the U.S. to CDP’s Climate Change, Water, and Cities programs.