Commitments and target setting
Corporate targets and commitments are a natural follow-on from greenhouse gas baseline measurements and reporting. In setting targets, typically the starting ‘baseline’ emissions are calculated for a recent year, with future emissions goals referenced against this to be achieved before a target year.
Broadly speaking, there are three types of corporate greenhouse gas commitments made: 1) internal, 2) externally reported, and 3) externally reported in line with a common protocol. The setting of any target brings benefits, through the process of looking forward and agreeing the appropriate level of future decarbonisation. In recent years however, much greater emphasis has been placed on standardised external reporting, for businesses to report formally in line with a third party initiative – the most established of which is now the Science Based Targets initiative (see below):
Science Based Targets initiative
The most prominent framework for setting science-based targets is the SBTi (Science-Based Targets initiative), a partnership developed by CDP, WRI, UN Global Compact and WWF, in alignment with GHG Protocol accounting methods. Setting a formal science-based target (SBT) with the SBTi is preferred due to its credibility, independent assessment, and associated level of rigour - at the time of publication, the SBTi has just under one thousand companies taking action including retailers Co-op, M&S, Lidl, Aldi, and IKEA, and the SBTi has recently introduced a new streamlined route for SMEs. Example texts of retailer SBTs include:
The Co-operative Group Ltd. - British consumer co-operative The Co-operative Group commits to reduce absolute scope 1 and 2 GHG emissions 50% by 2025 from a 2016 base year. The Co-operative Group also commits to reduce absolute scope 3 emissions from purchased goods and services, upstream transportation and distribution, waste generated in operations and end-of-life treatment of sold products 11% within the same timeframe.
Marks & Spencer - British multinational retailer Marks & Spencer commits to reduce absolute scope 1 and 2 GHG emissions 80% by 2030 below 2007 levels and has a longer term vision to achieve 90% absolute GHG emissions reductions by 2035, below 2007 levels. Marks & Spencer also commits to reduce scope 3 GHG emissions by 13.3 MtCO2e between 2017 and 2030.
Aldi South Group - ALDI SOUTH Group commits to reduce absolute scope 1 and 2 GHG emissions 26% by 2025 from a 2016 base year. ALDI SOUTH group also commits that 75% of its suppliers by emissions covering purchased goods will have science-based targets by 2024. The target boundary includes biogenic emissions and removals from bioenergy feedstocks.
Approaches to setting climate targets are evolving rapidly. In the last two years or so there has been a significant switch to ‘net zero’ targets, which has raised questions over definitions, the role of carbon offsets, risks of long term (>20 year) time horizons, and confusion over how these relate to science-based decarbonisation targets.
The SBTi’s recent net zero publication provides guidance on combining net-zero commitments with SBTs. In essence, achieving a corporate SBT-aligned net zero target involves satisfying two criteria:The company achieves value chain emission reductions that are consistent with science-based abatement pathways that limit warming to 1.5C (with no or limited overshoot).The company neutralises the impact of any residual emissions that are infeasible to mitigate by permanently removing an equivalent amount of CO2 from the atmosphere.
The SBTi indicates that the two strategic components need to be complementary, with longer-term net zero commitments only achievable through alignment with science-based targets for decarbonisation.
Case Study: IKEA Climate Positive
IKEA Climate Positive means to reduce more greenhouse gas (GHG) emissions than the IKEA value chain emits by 2030, while growing the IKEA business. IKEA is committed to the Paris Agreement and to contribute to limiting the global temperature rise to 1.5°C above pre-industrial levels. This includes a commitment to halve the absolute net GHG emissions from the total IKEA value chain by 2030. We will achieve this by drastically reducing GHG emissions through science based target and by removing carbon from the atmosphere through natural processes and storing it in land, plants and products through better forest and agriculture management within the IKEA value chain. Ingka Group has committed to following science-based targets:
- By 2030, reduce GHG emissions from across all Ingka Group operations (Scope 1 &2) by 80% in absolute terms, compared to 2016.
- Ingka Group also commits to reduce scope 3 GHG emissions from customer and co-worker travel and customer deliveries 50% per person by financial year 2030, compared to 2016.
- Inter IKEA Group, which is responsible for developing the IKEA range and supply chain, commits to reduce emissions relating to home furnishing products and food by at least 15% in absolute terms for the same period. This translates to a 70% reduced climate footprint on average per IKEA product.
We will contribute to further greenhouse emission reductions in society by going beyond IKEA, such as enabling customers to generate renewable energy at home. We will not use carbon offsetting. Climate positive described in the Foundations for net zero is considered as living up to the scope 3 highlight target for 2040. IKEA’s Climate Positive route is consistent with the net zero targets set in the BRC’s Climate Roadmap.
For more information please read: https://about.ikea.com/en/sustainability/becoming-climate-positive/what-is-climate-positive
For any emissions reductions target, effective embedding in retailers’ core operations and business strategies is essential. The ERI’s 1.5°C Business Playbook provides a number of useful mechanisms for achieving this, including:
- Reviewing and updating company visions and mission statements to reflect climate targets and commitments.
- Assessing and analysing if and how value propositions, solutions portfolios, algorithms and business models are aligned, or not, with a 1.5°C ambition. These can be transformed to address societal needs rather than just upgrading existing products - also an essential way to mitigate climate-related risks.
- Transforming to a model that is service-based and circular, with higher efficiency and minimal emissions – and moving towards a need-based and resource-efficient circular model that reduces, reuses and recycles materials.
- Encouraging and enabling purchase and investment decisions that are positive for the climate and in line with the 1.5°C ambition, never against. This includes digital platforms, advertising, finance and management consultancy.
- Integrating climate strategies into services, products and project roadmaps - and requiring all new solutions to be compatible with the 1.5°C ambition.
- Collaborating strategically with suppliers and customers to help build 1.5°C aligned, circular and emission-free value chains.
- Making qualitative and quantitative assessments of the climate impact of solutions.
- Making climate an integral part of all investment procedures using a price on carbon.