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Climate change and energy

Inside the little-known group setting the corporate climate agenda

The Science Based Targets initiative has earned praise for pushing companies to take climate action, but can voluntary emissions targets really get the world where it needs to be?

May 16, 2023
Climate researchers at work in an office environment look out the window to see corporate lobbyists waving from their boardroom in the building next door
Daniel Stolle

As thousands of companies trumpet their plans to cut carbon pollution, a small roundtable of sustainability consultants has emerged as the go-to arbiter of corporate climate action.

The Science Based Targets initiative, or SBTi, helps businesses develop a timetable for action to shrink their climate footprint through some combination of cutting greenhouse-gas pollution and removing carbon dioxide from the atmosphere. 

For a fee, this team of several dozen analysts and technical experts will work with companies to set and publicize targets for cutting their share of emissions, deeply and quickly enough to conform with international efforts to limit global warming to 1.5 ºC above preindustrial levels. SBTi says the goals it sets are meant to convey that the business has put in place a credible schedule for driving down or eliminating emissions, in line with “the latest climate science.” 

After years of small-scale sustainability work, SBTi is growing rapidly. It has now stamped its approval on the emissions reduction timelines of more than 2,600 companies, including Nestlé, PepsiCo, and Apple. It’s working to develop climate targets with more than 2,300 more, and hopes to help set them for some 10,000 businesses by 2025.

Governments are taking notice of its work as well. Last November, the White House proposed rules that would require large federal contractors to set SBTi-approved emissions reduction plans.  

The group has earned praise for some of its strictest policies, and for reeling the private sector into a constructive conversation about climate emissions.

But its rising influence has also attracted scrutiny and raised questions about its outsize role. The fact that a single organization is setting the standards for many of the world’s largest companies makes it essential for those climate targets to be trustworthy. A number of researchers now question whether SBTi’s corporate guidelines are adequately aggressive, equitable, and clear.

Critics say SBTi is giving companies too much latitude in how they set their targets; that it is allowing them to rely on certain dubious tools to address emissions; and that it is holding emerging companies in poor nations to the same standards as huge historic polluters. 

Several studies find that the group’s methods may overstate corporate climate progress. Bill Baue, an early technical advisor to the organization and now one of its most outspoken critics, says it has exhibited  a “persistent pattern of reckless disregard for truth and transparency” in its responses to such critiques.

The broader danger, some experts say, is that the public is getting a second-best approach to climate action as companies take elective steps while governments largely fail to pass strict emissions rules.

“The optimists say, ‘We need to use every tool in the tool kit, including this voluntary initiative,’” says Jessica Green, a political science professor at the University of Toronto who studies how the private sector regulates itself. “That isn’t wrong, but companies are patting each other on the back for climate action that isn’t sufficiently credible to deal with the climate crisis.”

Alberto Carrillo Pineda, SBTi’s chief technical officer, defends the organization’s practices, noting that the companies it works with have cut emissions faster than required. He also stresses that SBTi is working to address concerns.

“No one has really done what we’re doing until we started doing it,” he says. “And once you start doing it, you start to learn and learn more. It’s an evolving field.”

Setting standards

Under the landmark Paris climate agreement, reached in 2015, most of the world’s nations committed to keep global warming to “well below” 2 ºC, and to strive to limit it to 1.5 ºC. But they didn’t lay out the path to get there––or who would pave it.

So the same year, sustainability professionals from the World Resources Institute, the World Wildlife Fund, the Carbon Disclosure Project (now CDP), and the UN Global Compact created the SBTi. The consortium devised ways to distribute the corporate responsibility for cutting emissions and meeting temperature targets, on the basis of sector, company size, and other factors. 

Other organizations offer similar sustainability accreditation, but SBTi stands out as a one-stop shop for translating climate science into goals for firms. The UN affiliation and environmental reputation of SBTi’s founding groups also helped make it the popular choice among businesses looking to set emissions plans perceived to be scientifically sound.

“Pretty much everything you touch in private-sector governance comes back to the question of ‘What’s SBTi going to do?’” says Danny Cullenward, a carbon market expert and research fellow at the Institute for Carbon Removal Law and Policy at American University. 

Observers praise many of the organization’s standards, and particularly its refusal to use carbon offsets to meet targets. Offsets allow companies to pay others to reduce emissions or remove carbon dioxide from the atmosphere through tree planting, reforestation, or similar projects and then count the climate benefits against their own emissions. But numerous studies and investigations have found that such programs frequently inflate actual climate progress.

Others give the group credit for helping persuade a rising share of the private sector to take meaningful steps to address emissions. SBTi says companies with targets that it’s approved are typically reducing their direct emissions by 12% each year, well ahead of what the organization requires. The goal-setting has had a wider effect on the field as well, helping to ratchet up the standards of other companies and corporate standard-setting groups, observers say.

Picking pathways

The starting point for SBTi’s approach is what’s known as the world’s “carbon budget.” The UN Intergovernmental Panel on Climate Change determined that collectively, nations can only afford to emit another 500 billion metric tons of carbon dioxide over roughly the next three decades and still have a 50-50 shot at holding warming to 1.5 ºC.

SBTi allocates shares of that carbon budget to sectors and companies, which then have several choices in setting targets. Two-thirds of companies have selected the simplest method, committing to per-year emissions cuts through 2030. To be in line with 1.5 ºC targets, SBTi requires companies to plan to reduce emissions across their supply chains by at least 4.2% every year. (Some companies, like Tyson Foods, Cargill, and McDonald’s, opted for a 2 ºC goal, but SBTi has recently stopped approving plans for this looser target.)

For the most part, the private sector isn’t legally required to drive down its emissions. But firms face growing pressure from investors, customers, activists, and policymakers to show that they’re taking emissions seriously and addressing rising bottom-line risks from climate change itself. Companies that secure SBTi’s approval can assert in their boardrooms, product marketing, and investor communications that they’re doing both. 

SBTi has developed a process for measuring a company’s baseline emissions based on work by Greenhouse Gas Protocol, a similar partnership between NGOs and the private sector that sets standards for reporting emissions and then signs off on a firm’s timeline for reducing them. SBTi stresses that it doesn’t evaluate or endorse the specific strategies companies use to get to the target. However, it does exert some control over the choice of those tools, as in prohibiting the use of offsets. 

Companies can also choose to follow a sector-specific pathway, which tends to be more attractive for industries such as aviation, cement, and aluminum, which are particularly difficult to clean up with today’s technologies. In that case, SBTi assigns shares of the carbon budget to sectors and the companies within them on the basis of scientific literature, market data, and guidance from industry experts.

The maritime industry, for example, gets a total budget of 12 to 16 billion tons of carbon dioxide to emit until 2050. SBTi gives the sector more time to decarbonize than other industries because it’s expected that methods for cutting emissions from shipping, including switching to low-emission fuels like ammonia and hydrogen, will take a while to scale up. 

SBTi has also developed long-term net-zero targets, with the goal that by 2050, companies will emit only as much greenhouse gas as they can reliably and durably remove from the atmosphere. They have approved such goals for around 200 companies, including Colgate Palmolive, Etsy, and H&M. 

In 2022, SBTi approved targets set by more than 1,000 companies. Firms signing up now may have to wait in line for up to six months. Steve Suppan, a policy analyst at the Institute for Agriculture and Trade Policy, says the small size of its validating team, which grew from 11 people last year to 15 in 2023, is “the biggest single challenge that SBTi faces.”

SBTi requires companies to review their targets at least every five years, and work with the organization to recalculate them when there are major changes that affect the goals. The group is also preparing to implement ways of monitoring and verifying whether companies’ progress is on track. 

A fine line 

The process of allocating the limited carbon budget to individual companies, sectors, and regions hangs on assumptions about what the economy of the future will look like and how to fairly assign responsibility for climate action.

“That’s where these metrics and indicators depart from science and take us into the realm of values, ethics, and morality,” says Mark McElroy, director of the Center for Sustainable Organizations and an original member of the SBTi technical advisory group.

Some critics, for instance, argue that SBTi’s methods don’t adequately consider the historical responsibility for current warming or the barriers developing countries might face in cutting emissions. The concern is that entrenched companies in wealthy regions that have pumped out climate pollution for decades are largely treated the same way as emerging firms in poor countries with limited resources to alter their business practices.

For that reason, scientists have said that SBTi’s methods do not support a UN principle, established in 1992, that richer countries should bear a larger share of the responsibility for mitigating climate change.

McElroy developed one of the few methods for setting private-sector emissions targets that can incorporate such global equity considerations. It also reevaluates targets each year, forcing companies to do more to stay within their sector’s cumulative emissions budgets over time. 

Anders Bjørn, a postdoctoral fellow at the Technical University of Denmark, found in a 2021 study that SBTi’s methods for setting targets may grant companies too much slack, permitting total sector emissions to surpass what’s allowable under the 1.5 ºC temperature target. (When he tested the accuracy of a variety of such approaches, he found that McElroy’s method, which SBTi doesn’t use, does the best job of keeping companies in line with those goals.) 

Bjørn’s research has also highlighted another worry among scientists: SBTi companies may overstate their progress by relying on renewable energy credits, which have raised concerns similar to those surrounding carbon offsets. The tool allows companies to count payments to low-carbon energy projects as reductions in their own emissions. However, renewables like wind and solar power plants are becoming cheaper and benefit from government incentives, so it’s increasingly difficult to justify the credit as necessary for their development. 

“SBTi is walking a very fine and nuanced line,” Cullenward says. “In specific applications … the concept of offsetting is very much in place.”

Recent research from the NewClimate Institute and Carbon Market Watch has also highlighted the fact that SBTi allows certain sectors to use offset-like projects so long as they’re within their own operations or supply chains, a practice they refer to as “insetting.” In an earlier investigation, the same two organizations also found that companies took advantage of an SBTi policy that allows companies to select years with especially high emissions as their starting point, making it easier to achieve subsequent annual reductions.

In addition, SBTi has raised concerns about potential conflicts of interest, most conspicuously by earning money from the companies it evaluates. It charges companies for its services, with prices ranging from $1,000 to $14,500, depending on the company’s size and the complexity of its climate targets. In 2021, it also raised $36 million from the Bezos Earth Fund, the Laudes Foundation, and the IKEA Foundation. (IKEA has received approval for its near-term targets.)

Still another concern involves carbon removal. Under SBTi’s net-zero plans, companies can counterbalance up to 10% their emissions with “permanent removal” of carbon dioxide from the atmosphere. These efforts, it expects, will have negated 20 to 40 billion tons of emissions by 2050.

But SBTi hasn’t clarified how to do this carbon removal. Not all techniques for taking carbon out of the atmosphere can do it permanently, and none of the reliable and long-term options are cheap and widely available yet. Amid these concerns, a collection of research groups and businesses have asked SBTi to define “permanent” as lasting at least a thousand years and to encourage companies to invest in developing the technologies. 

SBTi’s process also leaves at least two glaring gaps. To limit warming to 1.5 ºC, every company around the world will need to cut emissions at similar annual levels. But so far, companies with approved targets and commitments to develop them account for only 3 billion tons of carbon dioxide (or other greenhouse gases with equivalent warming effects). Meanwhile, the world produces around 41 billion tons per year from energy use alone. Notably, the group also doesn’t currently approve targets for companies in the fossil-fuel sector, the source of the overwhelming majority of human-caused emissions. Even substantial emissions reductions across other sectors can only do so much to ease climate change without radical changes in the way oil and gas companies operate. 

Addressing challenges 

In response to various criticisms, SBTi says it is adjusting how it structures the organization. It has hired a compliance director to manage complaints and formed a technical council to review and approve more technical decisions.

But it has defended its methods for setting targets, saying that other approaches, including McElroy’s, rely on volatile economic measures. It adds that its approach should be judged on many different measures, and that it must balance rigorous science against “viable” implementation. In the same vein, it says companies ought to be able to choose the year to establish baseline emissions, because businesses change structure often and emissions accounting principles continually improve.

The group said in a statement that it is working to incorporate regional data to ensure that targets are more ambitious and globally fair, another subject that the technical council will consider. 

SBTi is also working with Greenhouse Gas Protocol to boost transparency and assess whether it should update policies regarding the use of renewable energy credits. “This isn’t a challenge that’s unique to the SBTi, but it’s one that it is committed to addressing,” the statement said. 

The group disagrees that any of the practices it allows amount to a form of offsets. It says that more work is needed to understand the climate benefits from insetting and that it will assess such projects on a case-by-case basis.

As for the concerns about conflicts of interest, SBTi says its fees are only meant to ensure that the organization can handle the demand for its services. Most funding, it says, comes from charitable trusts and foundations. “We have no commercial interest at all,” Pineda says. “With the entities that we assess, we have completely independent governance.” 

He stresses that methods to suck carbon out of the atmosphere represent a small part of SBTi’s approved plans. The world “cannot really rely on high-scale adoption” of carbon removal, he says. “What we need to rely on is rapid decarbonization.”

Finally, SBTi plans to release details this year about how it plans to monitor whether companies are on track to meet their targets, and what it will do if they are not.

Providing cover

By 2025, SBTi hopes to approve targets for companies worth a total $20 trillion and responsible for 5 billion tons of annual emissions. But that would still represent only a sliver of global climate pollution. And some fear that the group’s standards could slip rather than strengthen from this point, as more big companies join the fold and push against the strictest rules.

Doreen Stabinsky, a professor of global environmental politics at the College of the Atlantic, fears that “in order to try to be palatable to the corporate sector,” SBTi will relax its requirements over time. Without public access to the emissions data SBTi sees, its climate targets are “effectively inscrutable,” she and other scientists told the organization in October. (Stabinsky and Bjørn are part of SBTi’s newly created technical council.)

Others argue there’s a more fundamental problem that can’t be addressed through any technical updates. Voluntary standards may simply be incapable of pushing profit-driven companies hard enough to undertake the rapid, systemic transformations that the UN temperature targets and climate realities demand. 

In addition, the group’s formally approved targets could have the perverse effect of providing climate cover for companies, allowing them to drag their feet on making the necessary changes or even lobby against stricter rules. 

SBTi acknowledges that government action is important, calling regulation vital to encourage “slower adopters” of climate action. But notably, a number of companies with SBTi-approved targets have publicly railed against rules proposed by the US Securities and Exchange Commission to require companies to publish their emissions plans and disclose exposure to risks from climate-related impacts like floods and fires.

Tyson said climate disclosures could “chill innovation and lead to competitive harm,” and Walmart asked the commission to remove requirements to report climate-related financial information. Executives of Apple and PepsiCo are members of the Business Roundtable, which has lobbied the commission to undercut obligations to report climate risks within supply chains, according to an analysis by the Guardian.

In Green’s view the SBTi acts more like a club than a regulator, more interested in getting people to join than in changing their behavior. It’s not the only or even the best option for driving climate action, she says. It’s just the one that’s available now, while countries still lack the will to pass and enforce stringent emissions rules despite the growing dangers from climate change.

Ian Morse is an independent journalist based in Seattle who has contributed to The Washington Post, Mongabay, Undark Magazine and other outlets, and who writes the Green Rocks newsletter.

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