Why B2B Companies are Setting Science-Based Emissions Targets in 2024

January 22, 2024 Eliza Erskine

In a world grappling with the escalating impacts of climate change, the role of businesses in mitigating their environmental footprint has become more crucial than ever. Companies are increasingly recognizing the urgency to address their carbon emissions and contribute to global efforts to limit global warming. In 2024, setting science-based emissions targets stands out as a key strategy for corporations aiming to align their actions with the latest climate science. In this blog post, we will delve into what Science-Based Targets (SBTs) are, the reasons why companies should embrace science-based emissions targets and the benefits such commitments can bring to both the environment and their bottom line.

As the effects of climate change intensify, businesses are realizing the moral and ethical imperative to take responsibility for their environmental impact. Setting science-based emissions targets demonstrates a commitment to playing a part in the collective effort to limit global temperature rise to well below 2 degrees Celsius, per the Paris Agreement. By aligning with the latest scientific findings, companies send a powerful message that they are serious about their role in tackling the climate crisis.

What Are Science-Based Targets?

Science-Based Targets are emission reduction goals set by companies to ensure their contribution to limiting global temperature increase. What makes these targets unique is their grounding in climate science – they are established in line with the latest climate research and the goals outlined in the Paris Agreement. The aim is to prevent the catastrophic effects of climate change by aligning corporate actions with what science deems necessary.

How Science-Based Targets Work:

Setting Targets:

Companies typically collaborate with the Science-Based Targets initiative (SBTi) to establish their targets. SBTi provides a framework for target setting, ensuring that the goals are ambitious, verifiable, and aligned with the latest climate science.

Scopes and Boundaries:

SBTs often cover three scopes of emissions. Scope 1 includes direct emissions from owned or controlled sources, Scope 2 includes indirect emissions from the generation of purchased energy, and Scope 3 includes all other indirect emissions associated with the company's value chain.

Verification and Approval:

Once set, targets are submitted for verification to SBTi. An independent team assesses whether the targets are in line with the necessary criteria. The approval process adds credibility to a company's commitment, assuring stakeholders that their climate goals are rooted in scientific rigor.

So why are B2B companies setting SBTs? Similar to their rationale for considering a comprehensive ESG strategy, B2B operators have a variety of reasons for pursuing and committing to SBTs.

Meeting Stakeholder Expectations

In the modern business landscape, stakeholders are no longer limited to shareholders alone; they encompass a broad spectrum, including customers, employees, investors, and communities. These diverse stakeholders are increasingly vocal about their expectations for companies to act responsibly and contribute to sustainable practices. Setting emissions reduction targets is a tangible way for companies to demonstrate their commitment to environmental stewardship, meeting the expectations of a broad range of stakeholders who prioritize sustainability in their decision-making.

Risk Mitigation and Long-Term Resilience

Companies are recognizing that climate change poses a significant risk to their operations. From extreme weather events disrupting supply chains to increased regulatory scrutiny, the impacts of climate change can have far-reaching consequences. By setting emissions reduction targets, companies proactively mitigate these risks, ensuring long-term resilience against the evolving challenges presented by a changing climate. This strategic approach not only safeguards against environmental risks but also positions companies as leaders in adapting to a low-carbon future.

Regulatory Compliance and Future-Proofing

With governments worldwide intensifying efforts to combat climate change, regulatory frameworks are evolving rapidly. Setting science-based emissions targets helps companies stay ahead of regulatory changes, ensuring compliance with emerging standards. Proactively addressing emissions not only mitigates legal risks but also positions companies as leaders in their industries. By future-proofing their operations against increasingly stringent regulations, businesses can avoid costly retrofits and adapt more seamlessly to evolving environmental standards.

Cost Savings through Efficiency Improvements

Emission reduction targets often drive companies to implement energy-efficient practices and adopt cleaner technologies. These initiatives not only contribute to environmental sustainability but also result in tangible cost savings. Companies that invest in energy-efficient technologies, renewable energy sources, and streamlined processes not only reduce their carbon footprint but also enjoy the financial benefits of lower energy costs and improved operational efficiency.

Attracting and Retaining Talent

The modern workforce is increasingly drawn to organizations that demonstrate a commitment to social and environmental responsibility. Companies that set science-based emissions targets signal their dedication to a sustainable future, making them more attractive to environmentally conscious talent. Moreover, such commitments can boost employee morale and engagement, fostering a sense of purpose and pride among workers who want to be part of an organization making a positive impact.

Strengthening Supply Chain Resilience

Companies are interconnected through intricate supply chains, and climate change poses risks to these networks. Extreme weather events, resource scarcity, and other climate-related disruptions can impact the reliability and stability of supply chains. By setting science-based emissions targets, companies encourage their suppliers to adopt sustainable practices, thereby enhancing the overall resilience of the supply chain. This not only safeguards against climate-related risks but also creates a more sustainable and resilient business ecosystem.

Access to Capital and Investor Confidence

The financial sector is increasingly factoring environmental, social, and governance (ESG) criteria into investment decisions. Companies setting emissions reduction targets are more likely to attract investment from socially responsible investors who prioritize sustainability. Additionally, as disclosure and transparency become key considerations for investors, companies that communicate clear emissions reduction goals and progress reports enhance their credibility and build investor confidence. Access to capital is increasingly tied to a company's commitment to environmental responsibility, making emissions reduction targets a crucial aspect of financial strategy.

Examples of Companies with Science-Based Targets

Microsoft:

Microsoft, committed to being carbon-negative by 2030, has set science-based targets to reduce its Scope 1, 2, and 3 emissions. The company aims to cut emissions by more than half for its entire supply chain.

Unilever:

Unilever has pledged to become a carbon-neutral company by 2039. Their Science-Based Targets focus on reducing absolute Scope 1 and 2 emissions by 100% and reducing Scope 3 emissions by 50%.

IKEA:

IKEA has committed to science-based targets to limit global temperature increase to 1.5 degrees Celsius. Their goals include reducing greenhouse gas emissions from production by 80% in absolute terms and reducing emissions from the use of IKEA products by 15% per unit.

In 2024, as the urgency of addressing climate change becomes increasingly apparent, companies must step up and take decisive action. Setting science-based emissions targets is not just a business strategy; it is a moral imperative, a branding opportunity, a regulatory necessity, and a pathway to long-term sustainability. Embracing these targets aligns businesses with the latest climate science, ensuring that their actions contribute meaningfully to global efforts to combat the climate crisis. As we move forward, companies that proactively adopt science-based emissions targets will not only secure a sustainable future for the planet but will also thrive in an evolving business landscape driven by environmental responsibility and resilience.

Want to talk about what this might mean for your company? Reach out to chat.