We are using the portfolio coverage approach. I am about to reach out to several companies about setting SBT, and I was wondering whether you have any engagement material you could share? Perhaps some responses to common pushbacks from companies or most relevant investor questions to ask?
I have recently received a response from a company saying that SBTi effectively assumes a linear intensity reduction or intensity convergence between the most recent year and 2050, and that it is not possible for a company like theirs due to the rapid growth of its business/capacity. They therefore expect that emissions will continue to increase until 2025 and gradually come down thereafter.
How would you suggest I engage meaningfully with the company about this?
There are several target-setting resources for companies that can found on the SBTi website. For example, please find linked the SBTi Supplier Engagement Guidance and Panel Discussion on Meeting Private Equity Sector SBTs webinar and slides in case they are useful.
Regarding rapid growth - in order to avert massive global warming, global emissions must reduce in absolute terms & companies are generally tasked with decoupling business/financial growth from GHG emissions. Some first steps are to identify the hotspots in baseline footprint, assess interconnectedness of GHGs and business growth, and identify key levers for emissions reductions, e.g. transitioning to renewable electricity, technology shifts, energy efficiency increases.
Specifically for target setting - we are aware the business nature of company’s economic growth and M&A possibilities. Below are some generic principles we’d suggest to take into account when designing and submitting your SBT:
- Companies are welcome to utilize physical intensity target, economic intensity target, and Supplier or customer engagement targets for their Scope 3 target setting, if in need to associate growth strategy with their targets (details see Corporate Manual from page 23).
- Companies are also welcome to utilise sector specific intensity target when the company lies within a specific sector that the SBTi has already designed a SDA for. Available sector pathways and target methods are laid out from page 40 on our Protocol.
- When any acquisition and merger happens that trigger significant GHG inventory baseline change (>5%), a mandatory recalculation and assessment for resubmission is needed (details see C26, C27 in Protocol).