Science Based Targets: Are They Realistic For Small Businesses?

You may have read or heard about science-based targets (SBT) as the next step after committing to reducing emissions and wondered whether this makes sense for your organization. My guess is that you likely work in a small or medium sized business (staff of 500 or less), since those businesses employ a large majority of individuals worldwide. If that is the case, let’s see if science-based targets do make sense for your organization – either now or in the future.

Emissions-reduction has increasingly been a focus for larger corporations, who recognize that their actions can positively or negatively impact the course of climate change. Per the CDP, “over 80% of the world’s 500 largest companies established emission reduction or energy-specific targets in the 2014-15 financial year.”

What are science-based targets?

If you are not familiar with science-based targets, it is a joint initiative of CDP, the UN Global Compact (UNGC), the World Resources Institute (WRI) and WWF. The idea behind the partnership is to ensure that the targets adopted by companies to reduce greenhouse gas emissions (GHG) are aligned with the goals of the Paris agreement to: ‘ limit global warming to well-below 2°C above pre-industrial levels and pursue efforts to limit warming to 1.5°C.’

Currently, there are 551 companies taking science-based actions and 202 have approved, science-based targets.  The main reasons cited by the larger companies for doing this is, predictably, that it makes sound financial sense. It puts them in a leadership role, ahead of their competitors, and also ahead of potential regulations. It also meets stakeholder expectations and in the case of publicly traded companies, investors’ expectations.

What actions does this translate to and what does it mean if you are a smaller business interested in taking some environmental sustainability steps?

At the basic level, it means that you need to calculate your carbon footprint, which is the amount of greenhouse gases (primarily carbon dioxide) released into the atmosphere by your organization’s activities. Once you calculate it, you will need to develop your GHG emissions reduction targets based on the guidelines provided by Science Based Targets and sign a commitment letter. You would then submit that target to Science Based Targets for validation, and announce the target. Then, ideally, meet that target!

To calculate your footprint, you need at the bare minimum to calculate your scope 1 and 2 emissions, and ideally, also scope 3.  Scope 1 emissions are direct GHG emissions.  Scope 1 includes emissions from business travel with company owned vehicles and planes as well as onsite power generation (typically from natural gas) at facilities that are owned or operated by your company.  These emissions are considered direct because they can be attributed to facilities that are directly owned or operated by your company.  

Scope 2 are indirect emissions from the consumption of electricity.  These emissions are considered indirect because they are attributed to your electricity consumption, but the emissions occur at a power plant that your company does not operate and that is located away from your facilities.

Scope 3 emissions comprise all indirect emissions that do not fall under Scope 2.  This can include emissions from business travel with vehicles and planes not owned by your company, energy use at outsourced facilities like remote employee home offices, your company’s supply chain.  These emissions are considered indirect because they can be attributed to your company’s operations, but the facilities that generate the emissions are not directly owned or operated by your company.

So, as you have likely figured out from the descriptions, scope 1 and 2 emissions are relatively straightforward to calculate while scope 3 can get tricky. And that’s just for your carbon footprint. Then you need to figure out the target. While the Science-Based Targets organization provides support and resources, this still takes some time and analysis.

Does it make sense for a smaller business to set science-based targets?

The answer to this question depends on many things, but let’s focus on three main criteria as a starting point: your organization’s sustainability IQ, tracking mechanism, and resources.

1. Sustainability IQ

First, let’s be clear – getting to this step means that you are not at the starting stage with your sustainability initiative.  You are at the intermediate or, more likely, advanced stage. This assumes that you have addressed the low-hanging fruit, and taken on some projects that require a more significant amount of time and resources. You have also likely implemented a sustainability strategy and begun incorporating sustainability into your organizational culture. So, your organization’s sustainability IQ, as I would call it, is relatively high.

2. Tracking Mechanism

If your organization has taken more advanced sustainability steps, you likely have metrics in place for your various sustainability initiatives. If this is the case, then calculating scope 1 and 2 emissions at the basic level should not take too long. If you have not developed metrics for your sustainability project(s) or initiative overall, then it is time to do this first, because without these, tracking your GHG emissions will be more time-consuming.  

3. Resources

As mentioned above, conducting a scope 1 and 2 carbon footprint analysis takes a bit of time but shouldn’t be too onerous if you have the processes in place for tracking the various components and can easily access that data. However, scope 3 emissions as well as setting the science-based target will require a more significant time investment. Scope 3 emissions, especially as these relate to the value chain, would need to be included in order to have a credible SBT. In addition, there are multiple methods for calculating an SBT, based on targets as a percentage reduction in absolute emissions or emissions intensity based on an economic or physical metric, and methods vary based on the sector and some other criteria.

Back to the original question, which is whether it makes sense for a smaller business to set SBTs. Using the criteria above, if your organization has a high sustainability IQ, put the tracking mechanisms in place and the resources to calculate scope 3 emissions and set an SBT, then this is certainly a goal to aim for, as it will likely be asked of them in the not-too-distant future.

As with many sustainability-related actions, if the larger companies are taking action in this direction and momentum builds, it is something that will be expected across the board, regardless of the size of the business. I’ve covered the reasons smaller businesses would be wise to incorporate environmental sustainability in various past blogs, including this one and this one.

If your organization isn’t anywhere near meeting the above three criteria for setting SBTs, don’t worry – but don’t wait to get started on a sustainability project! 

Check out our home page for a free sustainability checklist that can help you determine what you are already doing and some additional actions you can take.