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Martin Wright talks to Carlsberg, BT, Mahindra Group and Landsec about how signing up to the Science Based Targets initiative has turned business as usual on its head
Fingers on buzzers, here’s your starter for 10: what do sustainability heavyweights Ben & Jerry's, Danone, L'Oréal and Marks & Spencer have in common with Auckland Airport, Turkish tyre manufacturer Sabanci Holding and Stanley Black & Decker?
They are all among over 500 companies who have signed up to the Science Based Targets initiative (SBTi) for reducing their greenhouse emissions.
And if the very phrase “emissions targets” is second only to Brexit for sending you into a catatonic daze, then reach for the smelling salts. Because behind the bland words is an initiative that many see as our best slim hope of hitting those elusive Paris targets, and so starting to tame the tiger of climate change.
Why? Because it’s a quiet revolution in corporate responsibility. Until recently, for most companies, emissions target-setting was an exercise in the art of the possible: working out what was feasible to achieve without creating a hostage to fortune – and then making that their declared ambition. Sometimes, if emerging technologies fell into place, or a business model shifted, that could result in some pretty impressive ambitions. Others, however, were distinctly modest.
The SBTi chucks such incremental caution out the window by saying: commit to doing what the science requires, rather than what you think you can manage. “It gives absolute clarity to the scale of the challenge, and what needs to be done to meet it,” says the Carbon Trust’s Guy Rickard, a member of the initiative’s technical advisory group. And coming face-to-face with that clarity can be a bit of a shock to the system. Rickard advises companies adopting SBTs, and “when we present the numbers to our clients, there’s often a sharp intake of breath”.
We used to look three years into the future. Now we’re dealing with a much longer timespan
It’s a view echoed by those at the sharp end. “It’s totally different from how we did things before,” says Simon Hoffmeyer Boas, sustainability director at Carlsberg. “We’re stretching every single part of our business in the way we think about everything, from supplier agreements to future technologies.”
And Carlsberg’s goal of zero-carbon breweries by 2030 has meant a stretch in the corporate event horizon, too. “We used to look three years into the future – that was the absolute maximum. Now we’re dealing with a much longer timespan, and that’s impacting investment decisions.”
For Caroline Hill, head of sustainability and public affairs at property manager Landsec, the shift has been equally profound. “We used to set targets in a very bottom-up way: we’d tot everything up and work out what we thought was possible. The SBTs have completely turned that approach on its head.”
India’s giant Mahindra Group conglomerate, which signed up in 2018, is so enthusiastic about the initiative that its CEO, Anand Mahindra, issued a challenge at Davos last year for 500 companies to sign up to the initiative in time for September’s Global Climate Action Summit last in California. Although they didn’t quite meet the target, more than 130 companies heeded the call.
Anirban Ghosh, chief sustainability officer of the Mahindra Group, said previous to joining the initiative, “Most of the [group] companies have been reporting on emissions for some time, but no-one was in a position to say they were doing enough, because ‘enough’ wasn’t defined.”
But once a SBT is firmed up, adds Carbon Credentials CEO Paul Lewis, who advises leading companies on the issue, “it provides a guiding light for future strategy. Say your target requires you to commit to zero net emissions by 2045: you can almost annotate the curve leading up to it, to say, ‘OK, this is the point where we need to go all-electric in our vehicle fleet’.”
We can’t just let someone else fix it in 2028. We need to start our transition today
Such interim targets are part and parcel of the SBTi approach. Carlsberg’s zero-carbon deadline is 2030, but it also has an interim goal of a 50% cut by 2022. “So we can’t just rest on our laurels and let someone else fix it in 2028,” says Hoffmeyer Boas. “We really need to start our transition today.”
Sometimes, SBTs serve to confirm programmes already under way – like BT’s pursuit of 100% renewable electricity (it’s currently on around 96%). In other cases, they spur new commitments, like Carlsberg’s aim to use biogas or sustainable biomass where possible as a replacement for thermal coal by 2022.
And sometimes they promote new thinking entirely. At Landsec, says Caroline Hill, “we’re starting to explore battery storage [to complement large-scale onsite solar], which is very exciting”.
One of the initiative’s most striking impacts to date has been to cascade tight emissions targets down value chains, encouraging companies and customers alike outside the “usual suspects” to embrace them. That’s because they are designed to cover both scope 1 and 2 emissions (ie, those directly under the company’s control, such as from energy consumption) and scope 3 (covering indirect impacts, such as emissions generated in the supply chain, or by a company’s products when in use).
Alex Farsan, global lead on SBTs at WWF International, says: “There’s been a virtuous cycle by which companies have engaged their suppliers: sometimes a single supplier is engaged by multiple customers, and that can drive change very quickly indeed … We recently ran an SBT workshop in China, and it was apparent that many of the companies attending were only there because of [pressure from] their customers.”
This domino effect can be very powerful, says Owen Hewlett, chief technology officer at The Gold Standard. “If you can persuade key nodal companies to adopt rigorous SBTs, many others will fall in behind. For example, when Mars and Ben & Jerry’s set really aggressive targets, you got the likes of Cargill and General Mills effectively saying ‘oh, right, well we’d better do that too if we want to keep the business’. Get the big actors on board, and a lot of the others will come into line.”
We spend quite a bit of time talking to the big construction players and encourage them to follow suit on SBTs
And that’s not surprising, since contracts can depend on it – and sizeable ones at that. “We spend quite a bit of time talking to the big construction players and encourage them to follow suit [on SBTs]”, says Landsec’s Hill. “We make it clear that this is part of how we make our decisions as to who we’ll be working with in the future.” So there’s a touch of the stick as well as the carrot? “Absolutely. But it’s not just the stick, it’s also about partnership – about how much more we can achieve if we work closely together on it.”
Such partnerships are core to BT’s scope 3 target of cutting supply chain emissions by 29% over the next decade, explains Gabrielle Ginér, BT’s head of environment and sustainability. “We run a ‘Gamechanging Challenge’, where suppliers come in and pitch ideas of how to deliver their products and services to us in ways which cut emissions.” If that doesn’t motivate them, there is a new sustainability clause that requires suppliers to do so over the term of their contract – “and we benchmark and monitor progress”. BT talks to its customers too – including such mammoths as the National Health Service – to discuss how they can collaborate on carbon cuts.
Customers of a different scale altogether are in Carlsberg’s sights: its Scope 3 target is 30% by 2030, with half of that to be achieved by 2022. Packaging suppliers account for some of that, but so do customers such as retailers and pubs and the people who actually drink the beer. And that needs a light touch, says Hoffmeyer Boas: “After all, who wants to worry about the state of the planet when they just want a beer?”
Cue more playful messaging, such as the “bike power” bar – “if you don’t pedal hard enough, you don’t get a beer!” There’s a serious point behind the play, though: “Beer is not elitist; it’s something everyone enjoys,” Hoffmeyer Boas points out. “And that actually gives us the chance to reach more people, and so have a bigger intrinsic impact than some other companies.”
Key to securing buy-in at board level, of course, is the business case. So does it stack up? At Mahindra, Ghosh is confident. “Most of the initiatives you take to reduce your carbon footprint have a payback of nine-24 months. That’s nothing that a good, healthy corporation can’t afford to invest in.” Gabrielle Ginér agrees. BT adopted an early version of an SBT back in 2008, since when “our finance director has seen the cost savings that result – over £250m in energy costs alone”.
For many corporates, energy use is one of the biggest emissions sources, and here, the recent plummeting cost of renewables, particularly solar and wind, have been the finance director’s friend. It’s brought once-expensive options into the low-hanging fruit category, notes Lewis, making a shift to green power “a smart investment decision, never mind all the other factors at play”.
If car companies had committed to SBTs 15 years ago, we’d have seen electric cars happen a lot faster
Another virtuous cycle is under way, and it goes like this: booming corporate demand for low-carbon energy, driven by climate commitments, helps drive down the costs, which encourages corporates to sign up to more ambitious climate goals, and so on. The same cycle is spurring rapid electrification of transport, Lewis points out: “If car companies had committed themselves to SBTs 15 years ago, we’d have seen electric cars happen a lot faster.”
He cautions against a purely financial interpretation of the business case, though. Sure, there may be swift paybacks in some areas, but it won’t always be the case. “If you’re purely talking in terms of ROI, you’ve got an uphill conversation.” Better by far to focus on issues like brand, reputation, engagement with clients, and above all recruitment, retention and motivation of staff. (See, If companies want to meet ambitious climate targets, they have to take employees on the journey)
“There’s an incredible amount of untapped energy and motivation in the workforce for this, and that’s especially true for millennials.” A strong climate target can put flesh on the bones of the whole purpose agenda, Lewis suggests. “If you can add percentage points of productivity and ability to recruit the best staff [by committing to an SBT] then it’s a no-brainer; you do it.”
Some of the biggest business opportunities, though, says Mahindra’s Ghosh, are those that may not occur to you until you’re forced to think out of the box. “If you adopt one which is a little bit beyond what you think is possible, then it will of necessity trigger innovation. You start looking for new ways to make it happen – and that’s where the fun starts. It dovetails nicely with the circular economy. So, our steel services business has got into making transformer cores from little bits of steel left behind when they cut large sheets of it. They’re treating slag and using it in construction. They wouldn’t normally have thought about this, but since they’ve got these mavericks sitting in head office trying to make miracles happen, such opportunities are opening up.”
And as stringent targets become the norm, more will follow, he says. “There will be opportunities in all sorts of green businesses – micro-irrigation, energy-efficient motors, electric cars, green building technologies – all fantastic businesses to get into, and likely to turn into multi-billion ones in the medium- to long-term.”
But the most tantalising opportunities of all may be ones we simply can’t conceive of yet – but which will arise of necessity from the sheer scale of innovation that science-based targets demand. As Caroline Hill says: “Our goal is pretty ambitious, and to be honest we don’t know exactly how we’re going to achieve it. But if we did, it wouldn’t be that ambitious in the first place.”
We expect that by 2025 the range of technologies available to help us achieve these targets will be very different from today
At Carlsberg, Hoffmeyer Boas openly talks of the need for a leap of faith. “We hope and expect that by 2025 the range of technologies and solutions available to help us achieve these targets will be very different from today. We cannot know for sure. But our starting point is that if nobody sets [such demanding] goals, then we won’t have those solutions. Our role is to help create the demand for the solutions, which can then make the targets achievable. And that’s what makes leadership. If more people take the lead like this, then fixing climate change becomes a self-fulfilling prophecy.”
Paul Lewis sums it up by recalling an earlier period of great leadership ambition: the 1960s, and specifically John F Kennedy’s resolve to have a man on the moon by the end of the decade. “In effect, he was saying: ‘I don’t know how to get to the moon. That’s not my job. My job is to decide that we’re going to get there.’
“And they did.”
Launched in the run-up to the Paris COP in 2015, the Science Based Target initiative (SBTi) is a collaboration between the Carbon Disclosure Project (CDP), the UN Global Compact, the World Resources Institute and WWF, in partnership with We Mean Business. It has the suitably immodest aim that SBTs become standard business practice by 2020 – and with sign-ups running at around two per day, that’s well within sight.
Initially, the targets were pegged to the 2 degree limit decreed by Paris, but in the light of alarming evidence of the acceleration of climate change, as summed up in the latest IPCC report, the SBTi is working on a revised protocol to support targets compatible with a 1.5 degree goal. (See 'We can only achieve a 1.5C world if business and science work together') A few pioneering companies – BT, Carlsberg and Tesco among them – have already embraced that aim, and others are sure to follow, which is just as well: given the scale of the task, many think our best hope of even coming close to 2 degrees is to shoot for 1.5.
Targets are determined through a fairly rigorous process, the detail of which is best left to climate wonks. Essentially, it breaks down the available global carbon budget into different sectors – taking into account the fact that some will be easier to decarbonise than others, which gives a note of realism to the process. Depending on which sectors they operate in, any given company can then work out its individual carbon budget, typically using a tool called the Greenhouse Gas Protocol Corporate Standard. The SBTi then reviews the target against the methodology and – all being well – approves it. To date, just over a third of companies committed to SBTs have received approval.
To some extent, the process mirrors the Paris Accord’s provisions for each country to set its own goal (the so-called INDCs – individual nationally determined contributions), but with one crucial difference: unlike the SBTs, these aren’t subject to independent assessment and approval – which doubtless explains why, taken together, they would result in a substantial overshoot of the 2 degree goal. So the SBTs are, in effect, Paris for the corporate world – and Paris done properly.
Martin Wright (@martinfutures) is a writer, adviser and public speaker specialising in environmental solutions and sustainable futures. He is a former Director of Forum for the Future.
Anirban Ghosh, chief sustainability officer of the Mahindra Group, and Gabrielle Ginér, BT’s head of environment and sustainability, will be speaking at the 18th Responsible Business Summit Europe in London on 10-12 June.
Main picture credit: Carlsberg
This article is part of the in-depth briefing Stepping up to 1.5C. See also: