SBTi forms target validation services subsidiary as corporate demand grows

The Science-Based Targets Initiative (SBTi) is forging ahead with reforms intended to increase its capacity for verifying business climate goals, confirming that it now holds charitable status and has separate standard-setting and target validation services.

SBTi forms target validation services subsidiary as corporate demand grows

The initiative first publicly announced its intention for new reforms last year, following an 87% increase in companies pledging to set SBTi-aligned climate targets between 2021 and 2022.

Confirming a year-on-year increase in corporate commitments exceeding 100% for 2023 today (30 January), the SBTi also announced the successful completion of several of its key reform priorities.

These include establishing the SBTi as an independent organisation through a de-merger with its founding partners (CDP, the UN Global Compact, the World Resources Institute and WWF); incorporating a new subsidiary to oversee target validation services and attaining status as a charity in England and Wales.

The SBTi’s new charitable status has enabled the completion of a $36m donation package. Half of the donation comes from the IKEA Foundation and the other half from the Bezos Earth Fund, which was established in 2020 with a commitment to disburse $10bn this decade.

IKEA Foundation chief executive Jessica Anderen said: “The SBTi’s transformation into an independent entity will strengthen the organization’s ability to drive ambitious corporate climate action. The IKEA Foundation is proud to support the SBTi and looks forward to seeing its contribution to rapid, deep, informed corporate decarbonisation.”

Standard-setting and target validation: What’s next?

The SBTi’s new target validation services subsidiary is not yet fully operational. Once it is, the hope is to further cut average waiting times for target validation, which halved year-on-year in 2023. Companies have 24 months from announcing their intention to set SBTi-verified targets to complete the process.

Key staff for the subsidiary including two new quality managers will be announced in the coming weeks.

To assist in-house staff at the subsidiary, a Validation Council of external experts will be formed with the intention of ensuring independence in decision-making. Applications for Council membership will open shortly.

All profits from the new subsidiary will be donated.

Standard-setting will remain in-house at the SBTi.

Setting out its standard-related priorities for 2024 this week, the initiative confirmed that it will undertake its first full review of the Corporate Net-Zero Standard, with any potential updates made in 2025.

It will work to the same timelines for further details on the introduction of a finalised Financial Institutions Net-Zero Standard, going beyond existing guidance on near-term targets.

The Corporate Net-Zero Standard launched in October 2021, in the lead-up to the COP26 climate summit in Glasgow. It compels businesses to target at least a 90% reduction in emissions across all scopes by 2050 at the latest. More than 2,800 companies have signalled an intention to align with the Standard.

The SBTi has, in recent times, been urged by NGOs to update this Standard in line with guidance issued by a UN-backed high-level expert group at the COP27 summit in Egypt in 2022. It has also been pressed to clarify how smaller businesses could possibly align with this Standard, which requires a 90% reduction in emissions across all scopes, while growing rapidly.

Another 2024 priority for the SBTi is developing sector-specific standards for six sectors – oil and gas, electric utilities, automotive, chemicals, insurance and apparel. The iniative will trial a hybrid model for developing these standards, pooling expertise with external organisations.

“This model could lead to a step-change in how some SBTi standards are developed, paving the way for a major acceleration in the number of sector-specific standards developed in 2025 and beyond,” the SBTi said in a statement.

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