There is an urgent race to curb rising temperatures and prevent the worst effects of climate change. This is reflected in a growing number of countries, companies and cities committing to climate or so-called net zero targets.
Almost half of the 2,000 largest publicly traded companies in the world have a net zero target, according to Net Zero Tracker, but these targets often lack integrity. Several initiatives have emerged to help companies understand how much, and how quickly, they need to reduce their greenhouse gas (GHG) emissions to prevent the catastrophic impacts of climate change. There are, however, emerging disparities between the ambitions of some of these initiatives and the latest science – and this has allowed some companies to greenwash their climate commitments.
The Science Based Target Initiative (SBTi) – a partnership between CDP, the United Nations Global Compact, World Resource Institute, and the Worldwide Fund for Nature – is largely seen as the gold standard on corporate climate action. Companies use guidance from SBTi to set “scientifically based” emission targets and validate that they are on a pathway to their chosen climate (or emissions reduction) target.
Despite this, the SBTi has failed to uphold the latest guidance laid out by the United Nations’ (UN) High Level Expert Group (HLEG) in their special report released at COP27, Integrity Matters: Net-zero Commitments. When this report was launched, UN Secretary General António Guterres sent a clear message to all entities with net zero targets, saying: “Abide by this standard and update your guidelines right away – and certainly no later than COP28.”
According to the SBTi website, over 6,300 companies are taking climate action, while over 2,500 have net zero commitments with the initiative. Therefore, if SBTi were to adapt its methodology to the UN’s standard, this would send a powerful message to companies and raise the level of ambition. However, SBTi methodology falls short on almost all the criteria.
For example, while the UN High Level Expert Group report calls for company targets to align with the goal to limit global warming to 1.5˚ C, the SBTi will continue to allow companies to have higher targets for another five years. Additionally, the UN recommends that companies include separate targets for material non-CO2 GHG emissions, such as methane and nitrous oxide, but the SBTi allows companies to forgo this. In the case of meat and dairy companies, methane can represent more than half of company’s emissions. Scientists have also been clear that rapidly cutting methane emissions is one of the most important climate actions we can take this decade to keep temperature increase under control.
Current SBTi guidance requires companies in forest, land and agriculture sectors to report only 67% of their supply chain emissions, while the UN HLEG recommends that companies’ targets should account for 100% of all emissions (including Scope 3). This means that a company like Brazil’s JBS, the world’s largest meat producer, could obscure emissions similar in volume to the annual emissions of Belgium.
Lastly, the UN suggests a focus on reducing absolute emissions rather than emissions intensity. Here again, the SBTi allows companies such as Procter & Gamble to choose between an intensity-based target and an absolute one. In my view, that illustrates the SBTi’s half-hearted approach to reducing emissions.
Greenwashing climate commitments
By keeping such huge loopholes, SBTi allows companies to greenwash their climate commitments. Let’s take JBS again, which announced a net-zero climate target by 2040 back in March 2021. By our estimates, the meat producer has overall GHG emissions comparable to the size of Spain, while its methane footprint exceeds that of the combined livestock emissions of France, Germany, Canada, and New Zealand. However, the company has not even reported its total emissions, much less produced a plan on how to reduce them. Despite this, JBS is still listed as “committed” to both “near-term” change and “net-zero” on the SBTi website and has used this for greenwashing purposes.
This led the global advocacy organization Mighty Earth to file a complaint with the US Securities and Exchange Commission earlier this year charging that JBS’ misleading and fraudulent green bonds and accusing the Brazilian meat giant of failing to disclose 97% of its emissions.
Companies have 24 months after announcing a climate target to come up with a plan, which must be approved by SBTi and align with their methodology. Until recently, if a company did not submit a plan, they were just quietly removed from the SBTi dashboard. The group now lists companies that had their commitment removed. Among the more than 130 companies on the list is Irish dairy company Glanbia, US meat producer Smithfield Foods, and the world’s largest retailer, Amazon.
Although this is a step in the right direction and adds some badly needed transparency, SBTi should go much further in enabling the public to understand what stage of the process a company is at. It seems outrageous that we still don’t know if JBS even submitted a climate plan despite the prolific greenwash around their commitment.
Strengthening climate pledges
Alain-Richard Donwahi, President of the UN’s Biodiversity conference COP15, recently warned that the agriculture sector could be impacted even before the 1.5˚ C mark is hit, listing soil degradation, water scarcity, and desertification as likely possibilities – disrupting food supplies worldwide and accelerating biodiversity loss. It is therefore paramount that companies take climate action and ensure we don’t cross thresholds that could trigger a range of climate tipping points that will result in worldwide and permanent environmental damage.
The good news is that the SBTi has demonstrated that it is open to changing for the better – and is now publicly removing some companies from the initiative that failed to provide a credible climate plan.
More, however, must be done if the 1.5˚ C goal is to be met. Cutting methane – which accounts for around 30% of the rise in global temperatures post-industrial revolution – should be at the top of the list. Changing Markets Foundation and a group of more than twenty NGOs have released an open letter calling for the SBTi to do more and adjust its standards to UN High Level Expert Group guidance as soon as possible. Having reached out to SBTi with the concerns outlined in the letter, Changing Markets and the other NGOs await a response.
It’s time for the SBTi to stand by their science-based foundations and integrate the latest science and UN recommendations into its guidance. Ironically, SBTi welcomed the UN HLEG report upon its launch. Through a thorough revamp of its guidelines, the SBTi would respond to the call to action by Guterres and reclaim its title as the gold standard on climate action, starting a race to the top for companies that have done the work and are contributing to a greener and safer future.
The time for action is now. As the ‘gold standard,’ it is imperative that SBTi urgently accelerate their efforts and commit to raise their standards before COP28.
Nusa Urbancic is CEO of Changing Markets Foundation.