Updated 7 April 2020

Traditionally companies set their ambitions for levels of carbon reductions based on the level of change that is most financially attractive – the most compelling investment plan – rather than an understanding of what reductions are necessary. Science-based targets require businesses to bridge the gap between the two.

The question for sustainability teams is usually, “What are the greatest improvements I can realistically achieve within our financial constraints?” With science-based targets the question shifts slightly, with the need to strategically consider, “What plan will deliver the best possible business case for achieving these goals?”

In the Carbon Trust’s experience working with multinational businesses on sustainability strategy and target setting, we recognise that internal teams can often struggle to align environmental improvements with wider business goals, in order to drive sufficient action. Agreeing targets out to 2050 can be difficult, especially when even the largest businesses struggle to make plans beyond a ten-year horizon.

Indeed, many of the changes in technology, policy and energy markets that will enable businesses to actually meet science-based targets are considered to be outside the control of any individual company. Nevertheless, it is very important to be able to demonstrate that the first few steps towards these targets are not only achievable, but positive for the business.

For most organisations, a large proportion of their current carbon emissions reduction potential today will exist in direct energy use. Understanding and explaining opportunities to reduce this is therefore an important precursor to securing internal buy-in. Most commonly, this includes a comprehensive approach to improving energy efficiency, which continues to be a highly cost-effective route to direct operational savings for most organisations. Given cost reductions in renewables, it can also be appealing to look at opportunities for installing these on-site.

The strategic approach to achieving reductions in energy has also changed significantly with the uptake of the new GHG Protocol Scope 2 Guidance, allowing companies to effectively account for their purchase of renewable and low carbon electricity. This is hugely important as a lever to support emissions reduction in the energy system, while also allowing companies to make progress before other transformational low carbon technologies become commercially attractive.

Multinational companies that cannot procure sufficient levels of renewable electricity in each of their markets will need to consider a blended strategy, leveraging a mix of solutions that are appropriate for each country in which they operate. And although initiatives to source low carbon electricity are typically the focus for many companies in the short term, in the longer term companies will also have to address other major emission sources such as heat, vehicle fleets or refrigerant leakage.

With emerging certification schemes for green gas associated with the injection of biomethane into gas grids, this will become an important lever for carbon reduction over time. At this stage the robustness of monitoring schemes has not yet reached the maturity of renewable electricity certificate schemes, but as the demand grows from ambitious corporates with deep decarbonisation strategies, the maturity gap should close rapidly.

When considering the route to achieving carbon reductions in line with a science-based target trajectory, it is important from the outset to understand when and how fast different emission sources will need to be phased out to keep on the required pathway. With this understanding it is then possible to look at developing a bottom-up target, that assesses the technical potential for reduction across all operations – taking into account likely technology development pathways and cost projections – to develop a complementary investment programme.

It is important at this stage to identify and engage with key stakeholders across a business, so that the implementation of a reduction programme will align with business strategy and be factored into future planning. Giving them evidence - that making reductions in line with a science-based target is both possible and can result in good financial returns - will be invaluable in securing consensus. . It is our experience that most companies will not have all the pieces of the puzzle in place when announcing their science-based targets but the need for long term transformational change is often a powerful spur for innovation.

Although companies may not know how they will reach the final destination, having a detailed map for the first stage of the journey can provide decision-makers with the confidence needed to set out in the first place.

This is the fourth in a series of five articles on science-based targets, first published in 2016 and updated with the latest developments:

Part 1: Why do we need to set science-based targets on climate change?
Part 2: What exactly is a science-based target?
Part 3: Why should a company set a science-based target?
Part 4: How do you make the internal business case for setting a science based target?
Part 5: How does setting a science based target fit in with your wider sustainability strategy?