An ICT company is saying they cannot commit to the SBTi because the requirement assumes not only an intensity convergence but also an absolute reduction, which is not possible for the company due to a rapid growth of its business.
Is this true? Does the company’s situation make it impossible for it to set SBTs?
All inputs are welcome. Thank you!
Well, this is a pretty typical situation that applies to all rapidly growing companies. This is a weakness in the “Absolute Reduction” method used by SBTi, which does not account for different growth rates of companies.
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).