The Booming of Net-Zero Commitments

Since the release of the Net-Zero Standard in October 2021, the SBTi dropped its fourth progress report in April 2023. The report addresses the exponential growth of SBTi’s companies committed to setting necessary targets to limit global warming to 1.5°C before 2030. 

The experts also announced that 1.5°C target should become the “new normal” for companies and financial institutions. 

The number of companies with SBTi-approved targets doubled between 2020 and 2021, and out of 2253 SBTi companies, 48% have had their targets approved, and 68% are aligned with the 1.5°C targets¹. 

Industrial and geographical gaps between SBTi companies are decreasing 

Geographical and sectoral gaps between SBTi companies tend to decrease. Although most SBTi companies are located in OECD countries. Non-OECD countries, such as Brazil and India, are increasingly keen to set targets. We can also point out that companies from high-emitting sectors, such as power generation or transportation services, have still not committed enough to the science-based targets. 

However, in 2021, SBTi reached a significant mass of so-called “emission-intensive” industries, such as transportation, manufacturing, or power generation. Most of these industries have exceeded 20% of commitments and approved targets.

But there is still work to be done regarding commitments and transparency. Even if 2021 has been encouraging in terms of SBTi commitments, there is still work to set concrete actions to tackle global warming.  

We need more commitments from emission-intensive and financial industries, a better consideration for scope 3, as it is a key challenge for companies and more transparency on progress data. Also, the commitment gap between non-OECD and OECD countries still needs to be narrowed, and more ambitious climate targets with a 1.5°C trajectory are to be implemented¹.

More actions are needed to reach carbon neutrality at a global level.

Legend: Annual cumulative number of companies with approved targets and commitments between 2015 – 2021.

Progress of Reporting 

To conclude on the 2021 year progress, we can notice that companies are cutting emissions, but better reporting is needed. Emissions disclosure is currently a voluntary option within SBTi.

As a result, most companies do not disclose sufficient climate data. In addition, emissions reporting practices significantly differ among companies, some use established tools like CDP, and others communicate through press releases or sustainability reports. 

There is also a lack of information on progress data. In 2021, the number of companies that didn’t report progress data was significantly higher than the previous year.

Transparent emissions reporting is challenged by the lack of a standardized calculation methodology. Companies often rely on estimates, especially for scope 3, which does not fully and transparently reflect the progress made. To remedy this situation, ​​SBTi is developing a measurement, reporting, and verification (MRV) framework that will provide a standardized mechanism that enables better reporting data quality and transparency¹.

Updates in 2023

Various documents have been revised in 2023, including the; SBTi Corporate Manual, SBTi Corporate Net-Zero Standard, along with the SBTi Criteria for Near-term Targets. Along with various terminology, for example; the word targets has been updated to specify either “near-term targets” or “net-zero targets”/“long-term targets”².

For more information on the difference between carbon neutral and net-zero, please read our article: "Carbon Neutral vs Net-zero: what is the difference."

Sources:

¹SBTi, 2022: https://sciencebasedtargets.org/resources/files/SBTiProgressReport2021.pdf

²SBTi, 2023: https://sciencebasedtargets.org/news/the-sbti-resource-update-april-2023