Science-Based Targets (SBTi): Aligning Your Business with Global Climate Goals

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Science-Based Targets (SBTi): Aligning Your Business with Global Climate Goals.

Reading Time: Approximately 7-8 minutes

Key Takeaway: Is your business feeling the heat to act on climate change, perhaps from investors, customers, or even your own employees? You might be making efforts to reduce your carbon footprint, but are those efforts truly enough to make a real difference, and more importantly, are they recognized as credible? Many companies struggle with setting ambitious yet achievable climate goals that genuinely align with global efforts. This article provides a clear guide to Science-Based Targets (SBTi): Aligning Your Business with Global Climate Goals, showing how this framework offers a clear, verifiable path to significant emissions reduction, boosting your reputation, attracting investment, and future-proofing your business in a rapidly changing world.

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Problem: Businesses worldwide face increasing pressure to address climate change. Many have sustainability goals, but these are often vague, not ambitious enough, or lack a clear scientific basis. This leads to accusations of "greenwashing" (pretending to be more environmentally friendly than you are) and a lack of trust from stakeholders, including investors, customers, and even employees who demand meaningful action. Without a credible, standardized approach, companies risk falling behind competitors, losing market share, and facing future regulatory challenges as climate action becomes more urgent.

Agitate: Simply saying you're "going green" isn't enough anymore. The climate crisis requires deep, rapid cuts in greenhouse gas emissions. If your climate targets aren't backed by science, they won't be seen as legitimate. This can hurt your brand reputation, make it harder to attract purpose-driven talent, and even deter investors who increasingly look for robust environmental commitments. Without a clear roadmap like that offered by Science-Based Targets (SBTi), businesses might make well-intentioned but ultimately ineffective efforts, wasting resources and failing to meet the global imperative to limit warming to 1.5°C.

Solve: This article will explore Science-Based Targets (SBTi): Aligning Your Business with Global Climate Goals, explaining how the Science Based Targets initiative provides a clear, scientifically validated framework for companies to set ambitious and credible emission reduction targets. We'll break down what SBTi targets are, why they matter, how businesses can set them, and the significant benefits they bring – from enhanced reputation and investor confidence to driving innovation and building resilience in a low-carbon economy. This framework empowers businesses to take meaningful climate action that genuinely contributes to global climate goals.

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Summary

Feeling the pressure to go green but not sure where to start with big, meaningful goals? That's where Science-Based Targets (SBTi) come in! This article explains Science-Based Targets (SBTi): Aligning Your Business with Global Climate Goals.

• What are SBTi? They are emission reduction targets that a company sets to reduce its greenhouse gas emissions. The key is that these targets are "science-based," meaning they are in line with what the latest climate science says is needed to limit global warming to 1.5°C – the main goal of the Paris Agreement.
• Who is SBTi? The Science Based Targets initiative (SBTi) is a group of organizations (like CDP, UN Global Compact, WRI, WWF) that helps companies set these targets and then officially checks ("validates") them to make sure they are strong enough.
• Why are they important?
• Credibility: It shows your company is serious about climate action, not just "greenwashing."
• Future-Proofing: Helps your business prepare for a world with less carbon.
• Attracts Investors & Customers: Many are now looking for companies with strong climate commitments.
• Drives Innovation: Forces you to find new, cleaner ways of doing business.
• Global Alignment: Ensures your efforts contribute to the big worldwide climate goals.
• Key Idea: SBTi gives businesses a clear, trusted way to cut down their pollution in a way that truly helps fight climate change, making them stronger and more respected.

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1. The Big Picture: Why Businesses Need Climate Goals

You've probably heard a lot about climate change, global warming, and the need to reduce carbon pollution. It can feel like a huge problem, and sometimes, it's hard to see how one business can make a difference. But the truth is, businesses play a massive role. Most of the world's greenhouse gas emissions (the gases that trap heat in the atmosphere) come from human activities, and a big part of that is from industries and companies.

Because of this, there's growing pressure on businesses to do their part:

• From Governments: Countries around the world signed the Paris Agreement in 2015, agreeing to limit global warming to "well below 2°C" (degrees Celsius) above pre-industrial levels, and ideally to 1.5°C. This means governments are putting in place new laws and rules to encourage or even force companies to reduce their emissions. For example, in Malaysia, the new Energy Efficiency and Conservation Act (EECA) 2024 is just one step towards this.
• From Investors: Big investment funds and banks are increasingly looking at how environmentally friendly a company is before they decide to invest. They want to put their money into businesses that are prepared for a future with less carbon pollution.
• From Customers: People are becoming more aware of climate change and want to buy products and services from companies that care about the environment.
• From Employees: Many talented people, especially younger generations, want to work for companies that have strong values and are making a positive impact on the world.
• From Your Own Operations: Reducing energy use and waste often saves money in the long run.

So, setting climate goals isn't just a "nice-to-have" anymore; it's becoming a crucial part of being a successful and respected business. But how do you set goals that are truly effective and that people will believe in? That's where Science-Based Targets (SBTi) comes in.

 

2. What are Science-Based Targets (SBTi)?

Imagine if every company just made up its own number for how much carbon it would cut. One company might say "we'll cut 10%!" and another "we'll cut 50%!" How would you know who's doing enough? You wouldn't. This is where Science-Based Targets (SBTi) provide a solution.

The Science Based Targets initiative (SBTi) is a global effort that helps companies set emission reduction targets that are in line with what the latest climate science says is necessary to meet the goals of the Paris Agreement – specifically, to limit global warming to 1.5°C.

Think of it this way: Scientists have figured out how much the world needs to cut carbon emissions to avoid the worst effects of climate change. The SBTi then takes that global target and helps individual companies figure out their fair share of that reduction. So, when a company sets an SBTi-validated target, it's not just a guess; it's a commitment based on scientific facts.

The SBTi is a partnership between several leading environmental organizations:

• CDP (formerly Carbon Disclosure Project)
• United Nations Global Compact
• World Resources Institute (WRI)
• World Wide Fund for Nature (WWF)

What makes a target "science-based"?

It means the target follows specific rules and calculations that ensure it contributes to the 1.5°C goal. It's not about what's easy or cheap; it's about what's needed to fight climate change.

 

3. The Different Types of Emissions (Scopes 1, 2, and 3)

Before a company can set a science-based target, it needs to understand all its emissions. The SBTi uses a framework called the Greenhouse Gas (GHG) Protocol which divides emissions into three "scopes":

• Scope 1 Emissions (Direct Emissions): These are emissions that come directly from your company's own operations.
• Examples:
• Burning natural gas or fuel oil in your factory's boilers.
• Fuel used in company-owned vehicles (cars, trucks, forklifts).
• Leaks from air conditioning systems (refrigerants).
• Emissions from chemical processes in your manufacturing plant.
• Scope 2 Emissions (Indirect Emissions from Purchased Energy): These are emissions that come from the electricity, steam, heating, and cooling that your company buys from external providers.
• Examples:
• The electricity you use for your office lights, computers, and air conditioning. Even though you don't generate the electricity yourself, the power plant that does generates emissions.
• Scope 3 Emissions (Other Indirect Emissions from the Value Chain): These are all other indirect emissions that happen both upstream and downstream from your company's activities, but are not controlled directly by your company. This is often the largest and most complex category.
• Examples:
• Upstream (before your product reaches you):
• Emissions from suppliers making the raw materials for your products.
• Transportation of goods from your suppliers to your factory.
• Employee commuting to and from work.
• Waste generated in your operations.
• Business travel (flights, hotels).
• Downstream (after your product leaves you):
• Emissions from customers using your products (e.g., if you sell appliances, the electricity they use).
• Disposal or end-of-life treatment of your products.
• Transportation of your products to customers.

Why are all three scopes important for SBTi?

The SBTi requires companies to set targets for Scope 1 and 2 emissions (usually aiming for deep cuts aligned with 1.5°C). For Scope 3 emissions, companies must also set a target if these emissions are 40% or more of their total emissions (which is often the case for many businesses). This is because a large part of a company's environmental impact comes from its supply chain and how its products are used. By tackling all scopes, a company shows it's serious about its entire environmental footprint.

 

4. The Benefits: Why Set Science-Based Targets?

Now that we know what SBTi is, let's explore Science-Based Targets (SBTi): Aligning Your Business with Global Climate Goals by looking at the real advantages for your business:

• 1. Boost Your Reputation and Brand Image:
• Credibility: When your climate targets are validated by the SBTi, it tells everyone – customers, investors, and the public – that your efforts are real and meaningful, not just empty promises. This helps you avoid "greenwashing" accusations.
• Leadership: You become a leader in your industry, showing that you are forward-thinking and committed to a sustainable future. This can attract positive media attention.
• 2. Attract and Retain Investment:
• Investor Confidence: More and more investors are looking for "sustainable investments." Companies with SBTi targets are seen as less risky and more resilient in a changing climate, making them more attractive to these investors. This can lead to easier access to capital.
• Future-Proofing: Setting targets helps your business prepare for future climate regulations, carbon pricing, and changes in the market, making it more resilient.
• 3. Drive Innovation and Efficiency:
• New Solutions: To meet ambitious targets, you'll need to find new, more efficient ways to operate. This pushes your company to innovate in its processes, products, and services. For example, you might develop cleaner manufacturing methods or design products that use less energy.
• Cost Savings: Reducing energy use, optimizing transportation, and minimizing waste directly lead to lower operating costs. These "bottom-line savings" can be significant over time. Think about replacing old, inefficient equipment with new, energy-saving models.
• 4. Get Ahead of Regulations:
• Proactive Approach: As governments worldwide (including Malaysia, with EECA 2024) put in place stricter environmental laws, companies with SBTi targets are already on the right track. This helps you stay ahead of compliance requirements and avoid penalties.
• Reduced Risk: You reduce the risk of future operational disruptions or financial losses due to climate-related policies.
• 5. Improve Employee Engagement and Talent Attraction:
• Purpose-Driven Workforce: Employees, especially younger generations, want to work for companies that align with their values and contribute positively to society. Having clear, science-based climate goals can boost employee morale and loyalty.
• Attract Top Talent: It makes your company more attractive to talented individuals who are looking for employers with strong sustainability commitments.
• 6. Enhance Supply Chain Resilience:
• Collaboration: Working to reduce Scope 3 emissions means you'll need to work closely with your suppliers and customers. This can lead to stronger relationships and a more resilient supply chain.
• Risk Mitigation: By helping your suppliers reduce their emissions, you also help them become more efficient and less exposed to climate risks, which benefits your entire value chain.

Companies like Axiata, Bursa Malaysia, and MSM Malaysia Holdings Bhd are examples of Malaysian companies that have already committed to or validated their SBTi targets, showing that this is a global trend reaching our shores.

 

5. The Process: How to Set Science-Based Targets

Setting Science-Based Targets (SBTi): Aligning Your Business with Global Climate Goals involves a clear, step-by-step process. While it requires dedication, the SBTi provides a lot of guidance.

1. Commit:
• Official Letter: Your company's top executive (like the CEO) publicly commits to setting a science-based target within 24 months. You submit a letter to the SBTi, and your company is listed on their website as "committed."
• Why this step? It shows serious intent and gets your company on the SBTi's radar.
2. Develop:
• Measure Your Emissions: This is the most crucial part. You need to calculate your current greenhouse gas emissions for all three scopes (Scope 1, 2, and 3) using the GHG Protocol standards. This means gathering detailed data on your energy use, fuel consumption, waste, business travel, supply chain emissions, etc.
• Choose Your Target Type: Decide if you're setting a near-term target (5-10 years out, focusing on immediate deep cuts) or a long-term Net-Zero target (by 2050 at the latest, aiming for a 90% or more reduction across all scopes).
• Apply SBTi Criteria: Use the SBTi's specific tools and criteria to calculate your target. The SBTi provides guidance for different sectors (like power, cement, steel, etc.) and for SMEs (Small and Medium-sized Enterprises). These tools help you ensure your target aligns with the 1.5°C pathway.
• Identify Reduction Opportunities: Based on your emissions data, figure out how you will actually reduce them. This might involve:
• Switching to renewable energy (solar panels, buying green electricity).
• Improving energy efficiency in your buildings and operations (e.g., LED lights, more efficient machines, better insulation).
• Optimizing transportation and logistics.
• Engaging with suppliers to help them reduce their emissions.
• Reducing waste.
• Developing new low-carbon products or services.
• Why this step? This is where you understand your footprint and plan your path to reduction. It can take time and resources, often involving consultants.
3. Submit:
• Formal Submission: Once you've developed your targets, you submit them to the SBTi for official validation. You'll provide all the data, calculations, and your reduction plan.
• Validation Process: Experts at SBTi Services (a part of the SBTi) will carefully review your targets to make sure they meet all the SBTi's strict criteria and are truly "science-based." This process usually takes a few weeks or months.
• Why this step? This is where your commitment gets its stamp of approval, ensuring its credibility.
4. Communicate:
• Announce Your Targets: Once your targets are validated, the SBTi will list your company on its website. You can then proudly announce your science-based targets to your employees, customers, investors, and the public.
• Why this step? Transparency is key. It builds trust and shows your leadership.
5. Disclose:
• Track and Report: You must publicly report your greenhouse gas emissions and your progress towards your targets each year. This is often done through platforms like CDP, annual sustainability reports, or your company's website.
• Why this step? It ensures accountability and demonstrates ongoing commitment. It's not a one-time thing; it's a continuous journey of improvement.

The SBTi journey is a serious commitment, but it provides a clear, credible, and globally recognized framework for businesses to genuinely contribute to solving the climate crisis. It moves companies beyond vague promises to measurable, impactful action.

In summary, Science-Based Targets (SBTi): Aligning Your Business with Global Climate Goals offers a robust and verifiable framework for businesses in Malaysia and worldwide to take meaningful action against climate change. By setting targets that align with the latest climate science, companies gain not only a clear roadmap for significant emission reductions across all scopes (1, 2, and 3) but also a powerful boost to their reputation, enhanced investor confidence, increased innovation, and greater resilience against future regulations. Moving beyond generic "green" claims, SBTi provides the credibility and structure necessary for businesses to truly contribute to limiting global warming to 1.5°C, ensuring a sustainable future while unlocking competitive advantages and long-term value.

Is your business ready to make a credible, impactful commitment to climate action and align with global climate goals? Don't let uncertainty hold you back from becoming a leader in sustainability. Our expert team can guide your company through every step of the Science-Based Targets (SBTi) journey – from calculating your emissions and developing ambitious targets to navigating the validation process and implementing effective reduction strategies. Take the decisive step to future-proof your business and demonstrate true environmental leadership. WhatsApp or call us today at 0133006284 for a strategic consultation on how your business can set its own science-based targets.