Rush of ‘Science-Based’ Climate Pledges Puts Pressure on Group That Checks Them

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Eight analysts from the Science-Based Goals Initiative are approving about 60 corporate goals a month; Bezos Earth Fund and others are providing $37 million to aid in its expansion

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Alberto Carrillo Pineda, co-founder and managing director of SBTi, said it took five years for the number of companies in its pipeline – which at least said they would seek SBTi’s support – to reach 1,000. The next 1,000 took a year.

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“There is a lot of skepticism, healthy skepticism in the ecosystem about all these announcements,” said Mr. Pineda. “We need to encourage companies to meet their goals, to create transparency about target delivery, and also to ensure that a standardized method of assessing whether companies are decarbonizing Is.”

SBTi originated in 2014 when four environmental groups—the World Resource Institute, the World Wide Fund for Nature, the CDP and the United Nations Global Compact—joined an effort to make corporate emissions targets more stringent.

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SBTi begins with scientists’ estimates of the amount of greenhouse gases that can be emitted to keep global warming within a less-harmful range, then allocating each company its fair share of that budget.

SBTi-approved targets must account for Scope 3 emissions from suppliers and use of companies’ products. Mr Pineda said each goal encourages other companies to line up.

Most are committed to a reduction in emissions of about 4.2% per year. In highly polluting industries, they can set a target based on factors such as their growth rate and how carbon-intensive they are compared to their peers.

SBTi charges a similar fee of $9,500, a price designed to make the service more widely available. Still, Pineda said, setting targets requires companies to take inventory of their greenhouse-gas emissions, an obstacle for some businesses.

While SBTi does not tell companies how to achieve the required emissions reductions, the process can influence their strategies.

“It was a real learning opportunity for us,” said Eileen Boone, chief sustainability officer at CVS Health. Corporation

CVS Health set its first SBTI-approved target in 2018 and recently set a tougher target, becoming one of the first seven companies backed by the group to aim to achieve net-zero carbon emissions. The tough target encouraged CVS Health to find sources of wind and solar power locally, for example, Ms. Boone said.

SBTi is not the only group that reviews climate plans, but has become a reference point for investors and executives.

“What we need to do is to expand the capacity and capacity of … [the SBTi] Analytical framework so we can tell any company in any industry in any part of the world this is the right path for you,” said Sandra Boss, BlackRock Inc. NS

The global head of investment management at an event at the United Nations Climate Conference in Glasgow last week.

Last week, SBTi said it raised $37 million in grant money, with the Bezos Earth Fund and the IKEA Foundation providing $1.8 million each over three years, and a foundation funded by the Brenninkmeijer family of the Netherlands providing $1 million. The funding will expand the SBTI, but will not ease the pressure, Mr. Pineda said.

The group has publicly approved a target of 1,006 companies, with another 1,116 in the pipeline, according to its website. SBTi says its adoption rate should increase rapidly to help reduce emissions.

SBTi has about 45 employees, but targets are assessed by only eight analysts. They are currently approving about 60 targets a month, Pineda said. He noted that SBTi’s review process, in which multiple analysts support each decision, means that the increased workload is not affecting the credibility of SBTi’s decisions.

Despite its obstacles, SBTi wants to do more. Many companies now have goals, but the test lies ahead: Will the promises be fulfilled? Pineda said SBTi wants to help assess their progress by building a technology platform that lets companies share emissions data.

SBTi believes its method works. In January, it reported that companies with approved targets have reduced their combined emissions by 25% since 2015, more than the pace required by the Paris climate agreement.

But for now, Pineda said it’s hard to be sure of companies’ emissions because they don’t measure and disclose pollution in the same way, despite early efforts by regulators and standard-setters to mandate and simplify sustainability reporting. Huh.

“Right now, there is no standardization around it, and it is really the next step in the ecosystem,” said Mr. Pineda.

Meanwhile, the growing importance of SBTi as a standard-setter is drawing pressure from industry groups.

With its new framework for companies aiming to reach net-zero emissions, SBTi gives its seal of approval for the first time to targets relying on carbon offsets—paying for services such as plantations that remove carbon dioxide from the atmosphere. The group wants companies to prioritize drastic reductions in emissions, and the new framework seeks to reduce companies’ use of offsets to meet their goals. Pineda said that in areas where it is difficult to decarbonize carbon, as well as the operators of carbon markets, want offsets to be allowed a bigger role.

“All these voices come through our processes, and we have to manage all of them,” he said.

Ed Ballard at [email protected] and Dieter Holger at [email protected]

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