Companies worth more than $38trn now committed to science-based climate targets, with Europe leading the way
More companies set approved science-based climate targets in 2021 than in any other year to date, with companies collectively representing $38trn of global market capitalisation now working with the Science-Based Targets Initiative (SBTi).
That is the headline statistic from the SBTi’s latest annual progress report, published today (12 May).
The report confirms that, by the end of 2021, 2,253 companies had either committed to having their emissions reductions targets verified by the SBTi or had already achieved verification. The number of companies in this cohort more than doubled year-on-year. The global market capitalisation they represent is up 20% year-on-year.
While uptake of science-based targets has been unequal between regions and sectors, the Initiative believes it has now reached “critical mass” for the adoption of verified targets in all key regions. Globally, 27% of companies classed as high-impact in terms of their emissions and their wider influence have now set science-based targets.
This trend should pave the way for a continuation of rapid growth in support of the SBTi. In the first quarter of 2022 alone, a further 500 companies either had targets verified or committed to doing so.
As with uptake between 2015 and 2020, commitments and target approvals were most common from businesses in Europe in 2021. 116 European businesses either committed to set targets or had targets verified last year. Uptake also remained strong in North America, with 105 businesses added to the SBTi in 2021. Promisingly, 2021 saw increases in target adoption and commitments from companies in other geographies contributing significantly to global annual emissions, including China, India, Brazil and South Korea.
There are a wealth of reasons why target setting and commitments to set targets increased in 2021, including the build-up to COP26 and the related growth in net-zero targets set at national and regional levels. Net-Zero Tracker estimates that 90% of global GDP is now covered by a national and/or regional net-zero target.
COP26 President Alok Sharma has repeatedly stated that the Conference’s mission was to keep the 1.5C temperature goal detailed in the Paris Agreement “alive” and within reach. The SBTi last year announced that 1.5C alignment will become its minimum target-setting requirement in the coming years, instead of alignment with a “well-below” 2C temperature pathway. 1.5C alignment is notably a prerequisite for target validation in line with the SBTi’s new Net-Zero Standard.
Promisingly, around 80% of the targets approved by the SBTi in 2021 were verified in line with 1.5C. Businesses that chose to set 2C-aligned targets in 2021 will need to update them by 2025.
The SBTi’s chief executive Dr Luiz Fernando do Amaral said the organisation will “continue to work with governments, companies and NGOs, through strong collaboration, healthy debate and scientific research to reinforce 1.5°C corporate climate action as the new normal” – despite the challenges posed by the energy price crisis and Russia’s war in Ukraine.
He added: “The science is clear – we are already experiencing the impacts of climate change, and continuing on the current trajectory equals catastrophe. This report shows that the value the SBTi brings to society is more needed now than ever before – we must continue to drive the exponential growth of science-based targets and make them ‘business as usual’ for companies and financial institutions worldwide.”
edie recently spoke with Dr Amaral as part of a feature exploring whether national governments with net-zero targets should set legal requirements for businesses to have SBTi-approved targets. You can read that feature in full here.
© Faversham House Ltd 2022 edie news articles may be copied or forwarded for individual use only. No other reproduction or distribution is permitted without prior written consent.