As corporations have made promises of net CO2 emissions, investors have so far had little hope of holding them accountable. That is about to change.
The Science Based Targets initiative, a widely respected framework for corporate climate policy certification, is introducing a Net Zero standard to provide an “independent assessment of corporate net zero target setting.” That means there is now a tool that can reveal whether the growing list of companies (600 and counting) promising net zero emissions by mid-century actually have credible plans to reach that goal.
The standard is intended to ensure that companies can conduct their business in a manner consistent with limiting global warming to 1.5 ° C. An initial cohort of seven companies, including CVS Health Corp., cement maker Holcim Ltd., and Orsted A / S, the world’s largest developer of offshore wind farms, has seen its net zero targets verified by SBTi, according to a statement on Thursday.
Companies of all stripes, from Amazon.com Inc. to Royal Dutch Shell Plc, have responded to growing pressure from investors and civil society to play their part in the fight against climate change by announcing zero net targets. Science shows that the only way to stabilize global temperatures is to reduce emissions rapidly and remove residual greenhouse gases from the atmosphere.
But not all net zero targets are applied with the same rigor. There are different approaches to the type of emissions included, how quickly they are reduced, and whether tools such as offsets are used. Bringing clarity to this thorny issue will be crucial in determining which companies are moving at the pace necessary to align with 1.5 ° C and which are lagging.
SBTi said its new standard is the world’s first science-based certification of whether companies’ net zero targets are in line with the Paris Agreement goal of maintaining global warming at 1.5 ° C. Companies that meet the standard should cut emissions in half by 2030 and reach net zero by 2050.
The objectives must include all so-called scopes, with Scope 1 and Scope 2 covering direct emissions and those produced from energy sources purchased by a company, while Scope 3 emissions are those that result from the supply chain. supply and customers using the products.
The emphasis will be on reducing emissions, not simply offsetting them. That said, having phased out more than 90% of emissions by 2050, companies should be able to “neutralize any limited residual emissions that are not yet possible to reduce,” according to SBTi. That can be done using tools that permanently remove carbon dioxide from the air, although SBTi has not yet shortlisted the carbon removal techniques it considers credible.
SBTi is a collaboration between CDP, the United Nations Global Compact, the World Resources Institute and the World Wide Fund for Nature. And while its Net Zero Standard is a civil society initiative, Alberto Carrillo Pineda, Co-Founder and Managing Director of SBTi, said he hopes it will be included in regulatory frameworks because net zero claims must be regulated.
The standard does not apply to financial institutions, whose accounting of emissions is done differently from that of corporations. Pineda said work to create a zero net standard for financial institutions has begun, but added that it is too early to confirm when it will be ready.
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