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Getting to the Gooooal: Setting a Science Based Target

CBRE and Carbon Credentials co-hosted a workshop for members of the Legal Sustainability Alliance at Emirates Stadium for members who were eager to learn more about setting science-based targets (SBT).

New to the process? Take a look at our blog from July, which contains an easy to follow infographic, or read on for how winning a football match and setting a science based target are not that different.

Some of the identified challenges include:

  • Data: where is it, how much do you need and how to deal with poor quality data?
  • Scope 3 emissions: What does this entail and how to engage with suppliers?
  • Senior leadership support: How to get buy-in from leadership and from those that will have to deliver the target?
  • Lack of internal resource and skills to set and achieve the target
  • Organisational complexity, particularly for global firms
  • Size of the challenge: where do I begin?

Some solutions that the workshop participants brainstormed are strong football lessons too.

You’ve heard “there is no I in team” where cooperation is championed. However, a good team requires strong leadership and the same is true for successfully moving the ball forward when a company agrees to set an SBT.

Come prepared

One challenge to overcome is convincing senior leadership to set a target in the first place.

A player wouldn’t dare walking onto the pitch without his kit on, and when you approach senior leadership it’s best to arm yourself with fact and figures that articulate the benefits of setting a target.  Understand what you need to do and have a plan; be prepared to take ownership; and come in clued up about what it will take.

Remember, a season is composed of over 30 matches, so you can improve over time. The Legal Sustainability Alliance’s annual report is a great benchmark to see how you measure against peer organization.

Bringing a case study of a company that’s already achieved your goal can help show your CEOs and leadership that is not only possible, and that there is reputational benefit in setting the target.

Appeal to the desires for CEOs and execs to leave a legacy

Who wouldn’t want to be remembered as the Pelé of your company? Nearly 80% of corporate executives surveyed by CDP found a strengthened brand reputation to be one of the strongest benefits for their company for committing to a SBT. Business as usual is shifting as more than 141 global companies have approved SBTs. Don’t you want to be part of the leadership?

Another challenge that was discussed during the workshop was “where to start?” This reminds me of the nervous energy a player feels before the first match. Even if you have run drills hundreds of times, it can feel overwhelming once on the pitch.  What do you do?

Look to a teammate for help

In target setting finding the data and building a plan necessitates asking others for support. The data you need may exist in other departments, and together you can map out how best to obtain and use this information.

It may also be smart to get some tips from experts, either Arsene Wenger or a consultancy, to help.  Moving the ball forward may feel tedious when you are alone, but with others, the give and go can help you reach the goal sooner.

Finally, believe you can do it. Going in confidently to the match and the conversation about how to set targets will allow you to be results oriented.  Think about what matters most to the business and then position your arguments with those goals in mind.

Remember, you miss 100% of the shots you don’t take—think about what you will risk by not taking acting to set an SBT.

Go team!

Tackling Scope 3 for Science Based Targets

[Updated] Organisation completing science-based targets (SBTs) often experience challenges throughout the target setting process. Carbon Credentials has helped numerous clients satisfy the requirements set by the Science-Based Target initiative (SBTi) as many find the Scope 3 emissions assessment can often be the most troublesome requirement.

So what are Scope 3 emissions?

The Greenhouse Gas Protocol (GHG Protocol) is the most widely used accounting standard for GHG emissions. In another blog, my colleague Kyna wrote about the use of emission scopes for allocating emissions for investor reporting. The same methodology is also drawn upon by the SBTi to provide the basis for long-term target setting.

This GHG Protocol categorises an organisation’s emissions into three “scopes”.

  • Scope 1 emissions (direct emissions) are defined as emissions from sources that are owned or controlled by the organisation. This might include, for example, natural gas combusted in a boiler at a company’s head office.
  • Scope 2 emissions (indirect emissions) are emissions from purchased electricity, heat, steam or cooling consumed by the company, but generated elsewhere.
  • Scope 3 emissions (other indirect emissions) are emissions that occur as a consequence of the operations of the organisation but are not directly owned or controlled by that organisation. For example, emissions from waste generated by a company are defined as Scope 3 emissions.

The GHG Protocol Scope 3 guidance outlines the 15 different Scope 3 categories and each should be assessed in terms of their materiality in order to understand what an organisation should report on. A summary of the three scopes of emissions and their definitions can be seen in the infographic below.

Figure 1 A breakdown of how different emissions are categorised into Scope 1, 2, or 3.

Scope 3 emissions are especially important for organisations because they often make up the largest portion of the overall footprint. The challenge organisations face in quantifying Scope 3 lies in the degree of control they have over these activities and the collection of data associated with them. Paradoxically, the most significant emission reductions can be made by targeting Scope 3 activities. By calculating Scope 1, 2 and 3 emissions, an organisation can understand its full climate change impact and prioritise efforts to reduce emissions.

What does the Science-Based Targets initiative require for Scope 3?

Previously, the SBTi only recommended that companies submitting targets undertake a Scope 3 screening, but this is now a requirement of the process. This means that organisations must look at all relevant Scope 3 categories and determine their significance.

The SBTi requires that if Scope 3 emissions make up over 40% of total Scope 1, 2, and 3 emissions then the majority of Scope 3 emissions must be included in the target. The “majority” is defined as the top 3 categories or 2/3 of total scope 3 emissions.

In terms of ambition, it is not a requirement that Scope 3 targets are in line with a 2 degrees scenario, but that the targets are challenging and robust. The organisation must demonstrate that their Scope 3 targets are addressing the main sources of GHG emissions within their value chain in line with current best practice.

So how do I begin with setting a target on my Scope 3 emissions?

So far, most organisations have focussed on Scope 1 and 2 emissions and many are not yet even measuring Scope 3. The graph below demonstrates that over twice as many UK CDP respondents are setting Scope 1 & 2 targets versus those companies that are setting Scope 3 targets.

[image] Figure 2 A comparison of the number of UK companies setting Scope 1 and 2 versus Scope 3 targets as reported in CDP 2016.

Figure 2 A comparison of the number of UK companies setting Scope 1 and 2 versus Scope 3 targets as reported in CDP 2016.

It can be difficult to set a target when there is no baseline data to compare against. Subsequently, there is a lot of uncertainty about how to get started on the journey. The process diagram below gives a high-level understanding of the steps to evaluating an organisation’s value chain impacts:

[image] Figure 3 A high-level process diagram demonstrating the steps for understanding Scope 3 emissions.

Figure 3 A high-level process diagram demonstrating the steps for understanding Scope 3 emissions.

The first step in the process is to perform an initial Scope 3 gap analysis. The gap analysis is where organisations can assess current reporting against the 15 Scope 3 emissions categories to determine whether all relevant emission sources are covered. This analysis will allow you to either move on to set your targets or demonstrate that more work must be done in this area.

What should I do next?

If the results of the gap analysis show you haven’t quite analysed everything you need to, firming up the Scope 3 reporting boundary will be of huge benefit and move you along the SBT process. Remember, a central requirement of the SBTi is to demonstrate that you have considered the relevance of emission categories included and can provide a justification for excluding the others.

By evaluating Scope 3 emissions against the GHG Protocol Value Chain criteria, a company can identify which emission sources are truly relevant to their organisation and should, therefore, be included within the target. My colleague Scarlett Benson will describe this process in more detail in the second part of this Scope 3 SBT blog series.

If you would like help understanding your Scope 3 emissions or developing a science-based target, please get in touch with one of our experts here.

Emma Watson, Consultant

[Updated March 2018. Originally posted July 31st 2017]

From Theory to Practice: FAQs from our latest science-based target event

As my colleague Ben discussed in his blog last week, Carbon Credentials recently held an event at London’s RSA with speakers from the CDP, The Crown Estate, and Tesco. The purpose of this event was to explore the journey from theory to practice in setting ambitious science-based targets, and I found it incredibly exciting to hear our speakers talk so passionately about how far they’ve come.

Here I will follow up on Ben’s blog by clarifying a few questions that came out of the round table discussions.

Do science-based targets have to be aligned with a 2 degree or 1.5 degree Celsius warming scenario?

During the event, Christina Downend from Tesco‘s climate change team presented on Tesco’s 1.5 degrees Celsius science-based target. This target was the first of its kind to be approved by the Science-Based Targets Initiative (SBTi). The SBTi is a body that assesses and approves targets as “science-based”.

Targets are considered to “science-based” if they are in line with the level of decarbonisation required to keep the global temperature rise below 2 degrees Celsius compared to pre-industrial temperatures, as described in the Fifth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC AR5).

By this definition, Tesco has gone beyond what was required by the SBTi demonstrating leadership and commitment. The Paris Agreement’s central aim is to increase the international response to climate change by maintaining the global temperature rise well below 2 degrees above pre-industrial levels, whilst pursuing efforts to limit the temperature increase to 1.5 degrees. The definition for “science-based” may, therefore, be made more stringent in future as commitments made to support the Paris Agreement are ratcheted up.

How much of Scope 3 needs to be covered?

  • A company must assess all scope 3 categories and determine their significance. This is called a Scope 3 screening and is now required by the SBTi.
  • If Scope 3 is more than 40% of total emissions, then these emissions must be included with the target setting process.
  • SBTi guidance is that the target should cover the “majority of” or two-thirds of scope 3 emissions
  • The Scope 3 target is only required to be “ambitious”, not “science-based”.

Carbon Credentials will be publishing a follow-up blog on Scope 3 in the next couple of weeks, please contact us here if you would like to discuss this further.

Why do some sectors have lower targets than others?

The Sectoral Decarbonization Approach (SDA), which is the most widely adopted science-based target setting methodology, allocates the carbon budget to different sectors using the International Energy Agency’s 2°C scenario.

The Science Based Targets Initiative (and its partner organisations) provide guidance on methods available to set a science-based target and case studies on those who have already managed

There are inherent differences between sectors, including emission mitigation potential and emissions growth in relation to economic and population growth. For example, at Carbon Credentials we work in an office that runs 100% on electricity, we use no natural gas and do not own any vehicles so it is relatively easy for us to totally decarbonise our Scope 1 and 2 emissions. This is in contrast to a sector such as agriculture which must continue to feed our growing population, in addition to facing challenges such as emissions from livestock and fertilisers.

How does SBTi assess if the target is good enough to approve? Is it just an 80% reduction by 2050?

It is necessary for a company to demonstrate its target is in alignment with a 2-degree scenario and this can most easily be achieved by using an approved science-based target methodology. The SBTi will assess the accuracy, relevance, completeness, consistency, and transparency of the information provided by a company and this means a full evidence pack will be required which demonstrates a company has evaluated its full emissions impact.

Rather than just looking at the final number, it’s important to also consider the trajectory of your target using the concept of carbon budgets. If your target was to continue as usual until 2040, then achieve an 80% reduction in 10 years it would not be science-based as you would have gone beyond your carbon budget.

Figure 1: Pathways to decarbonisation; delayed actions is more disruptive for business.

There is a seven step process that the SBTi goes through to assess a science-based target. This is detailed on page 10 of this document.

Is it fair to use renewable energy instruments, e.g. through a commitment to RE100, and market-based emissions accounting to achieve a science-based emissions target?

According to the SBTi FAQs renewable energy instruments, e.g. renewable energy certificates (RECs), can be used to meet reductions of Scope 2 emissions using the market-based approach.

Organisations that report their greenhouse gas emissions according to the GHG Protocol must dual report their Scope 2 emissions using the location-based and market-based approaches. Along with increasing transparency, the aim of market-based Scope 2 reporting was to stimulate corporate demand for more renewable electricity.

Since this change in reporting, at Carbon Credentials we have without a doubt seen a change in the way that our clients are looking at how they purchase electricity. This change came at a particularly important time in the UK as the Chancellor, George Osborne, removed the Climate Change Levy exemption from renewable electricity which had a direct impact on the unit price. Changes to the GHG Protocol means that companies are encouraged to look at the impacts of the electricity they are purchasing. It is designed to get companies to use their purchasing power to increase demand for renewables, which will encourage additional supply and thereby increase the pace of grid decarbonisation.

I would argue that an organisation should be able to claim the benefit from its procurement decisions, and by accounting for emissions using the market-based approach this allows a company to reduce its emissions regardless of the situation within the national context, thereby removing risk within its commitment.

If all companies sign up to RE100, will the renewable electricity supplies all be taken up?

The idea of the RE100 commitment is to transform the renewable market; by creating demand, this will increase supply. When companies commit to 100% renewable electricity, this sends a strong signal to investors that this is what the consumer wants to purchase and the long term commitment provides security. This is much like a government setting a target to for a certain percentage of its power to come from renewables. By doing so it gives the market confidence to invest in this area. In addition, most companies will invest in their own renewable power as a method of reaching their RE100 target, further expanding renewable capacity.

In the UK and Europe, Renewable Energy Guarantees of Origin (REGOs) are used to prove to the consumer that a given share of energy was produced from renewable sources. Ofgem issues one REGO certificate per megawatt hour (MWh) of eligible renewable output to generators of renewable electricity. This ensures that there is a clear link between production and consumption, and a company can be sure that for every MWh of electricity they consume, there is the same amount of electricity being produced from renewables.

I hope this blog has answered some of your questions on science-based targets, but if there is anything else you would like to ask the Carbon Credentials team is on hand. Please see the FAQ section of the Science Based Targets initiative website, or send an email to info@sciencebasedtargets.org.

Emma Watson, Consultant

From Theory to Practice: Our Latest Science-Based Target Event

For our latest event, 50 professionals working in the diverse field of corporate sustainability joined us in the RSA’s Great Room in London to learn about science-based targets (SBTs). With speakers from CDP, The Crown Estate, and Tesco, this event promised to be a unique opportunity to listen, talk, and discuss the journey from theory to practice in setting ambitious science-based targets.

In May, Tesco became the first organisation in the world to align its SBT with keeping global warming below 1.5°C. As Tesco’s partner in helping them identify and set this ambitious SBT, we are incredibly proud of the outcome and are excited about the interest this commitment generated. We are grateful to have had the opportunity in this event to shed light on the SBT journey so that others can follow in Tesco’s footsteps.

Setting the Scene

Only 32 organisations in Europe (and 58 in the world) currently have an approved SBT from the Science Based Targets Initiative (SBTi) while hundreds of others have formally committed to setting one. With many of these organisations represented in the room, this was an amazing opportunity for people to meet like-minded professionals and share best practices from one another.

Paul Lewis opening the event, Science-Based Targets: from theory to practice

Paul Lewis, Carbon Credentials COO setting the scene and speaking to Carbon Credentials’ purpose “to enable a global, low-carbon economy”, at the opening of the science-based targets event

From Theory to Practice

The three speakers spent their time discussing their approach, challenges, and critical success factors in their journey to setting an SBT.

A regular theme of the event was the barriers to getting one’s company on board with SBTs. Special emphasis was placed on the importance of engaging not only with senior leaders and the board, but also other colleagues in the business who will have to implement the measures needed to enact an SBT.

One should also allow for flexibility and clear re-baselining methods to accommodate changes in business plans. It is important to communicate this to your colleagues and give room for growth and change. In doing so you will give greater confidence that your targets are achievable.

Difficulties in the Process – Mid-Journey and in Hindsight

Another highlight of the event was how SBTs are a way to build resilience in an organisation. Taking steps now to adapt to, and mitigate, climate change allows you to act proactively rather than reactively, reducing the associated risks.

Christina Downend, Climate Change Manager from Tesco discussing the challenges Tesco faced including setting a target on Scope 3 emissions, which account for over 80% of Tesco’s emissions.

During the event, it was clear that delegates saw setting a target on Scope 3 emissions as a key challenge. Understanding the materiality and relevance of Scope 3 emission categories, collecting data, and exploring the opportunities for reducing Scope 3 emissions were all referenced as a core challenge during the event.

However, it’s clear that the ambition from delegates was to use science-based targets as a lever to engage on this topic and to gain visibility on Scope 3 emissions.

Impassioned Debate and Discussion

To supplement the presentations, workshop sessions were held to discuss the opportunities and challenges that committing to an SBT will deliver to an organisation. A lot of great discussions and answers came from this and some of the challenges identified were:

  • Scope 3: difficult to quantify and when quantified, seemingly difficult to impact.
  • Business motivation: understanding senior management and co-worker motivations to get the correct level of buy-in.
  • Unknown future: fear of the unknown preventing long-term planning and commitments, such as legalities, changes in the business, and acquisitions and mergers.
  • Educating the business: understanding the extent of the problem, gaining company-wide support and buy-in, and demonstrating return on investment.

Delegates discussing the challenges and opportunities associated with committing to a science-based target.

To balance the challenges, opportunities that committing to an SBT would provide were also discussed in detail:

  • Added market valuation: committing will drive innovation and reform across the business, leading to efficiencies and reduced operating costs.
  • Market leadership: the reputational impact of being a leader here is huge when engaging both internally with employees, and externally with suppliers and customers.
  • Longer-term perspective: a commitment to climate change risk management will improve resilience and create a clear business plan for investor confidence.
  • Faster savings: the earlier a commitment is made, the sooner savings can be made.

The panel discussing internal and external challenges delegates face in setting a motivational science-based target

To close out the event, a panel Q&A was held with the three speakers and Will Jenkins, Senior Consultant at Carbon Credentials. The main points reiterated were:

  1. Just how important understanding senior management’s business motivations are when considering SBTs and looking for executive level buy-in.
  2. Scope 3 is complex and is a challenge for everyone. But don’t give up – given time and the correct tools, it is possible for everyone to calculate their impact and gain visibility on their Scope 3 emissions to set ambitious targets.
  3. Get your decision makers, influencers, and colleagues across the business on-board early. These are the people who will be delivering the organisational changes when your SBT is approved and put into motion. It will be harder to make progress without them being excited and committed to SBTs.

Going Forward and Setting Your Own Ambitious Science-Based Targets

Overall it was a successful and highly enjoyable event and, going by the feedback scores, most people left having learnt a lot about SBTs. This event showed delegates that many of their peers are in very similar situations and gave confidence that overcoming perceived barriers is possible.

If you wish to know more about the work Carbon Credentials did in partnership with Tesco to push for their groundbreaking SBTs, and our ongoing work with The Crown Estate, please read our case studies for Tesco here and The Crown Estate here.

If you would like to talk to one of our consultants about how Carbon Credentials could support your organisation in setting its own ambitious science based target, then please get in contact with us directly here.

We very much look forward to hearing back from you.

Ben Michaud, Event Operations