The Science Based Targets initiative (SBTi), a global organization that helps companies set science-based climate targets, has recently released a draft of a new and updated standard. This draft contains several major changes that could have a significant impact on companies' climate work.

Greater flexibility for Scope 3 targets

One of the most significant changes is that the new standard gives companies greater flexibility in how they set their Scope 3 targets. Scope 3 includes indirect emissions throughout the company's value chain, which is often the largest source of emissions for companies and organizations. Examples of emissions found within Scope 3 can range from office supplies to air travel and investments. In the new standard, the targets should be based on the intensity of activities and the possibility of influence, which increases flexibility but also requires clear guidance on what is essential. Without clear guidance, there is a risk of confusion when setting targets and that significant emission activities are missed. Goals that are difficult to interpret are also more difficult to communicate.

Another update is an increased focus on "Alignment targets", which means that targets are set for, for example, the proportion of suppliers or revenues that meet Net-Zero requirements. This is to provide increased flexibility when access to primary data is limited.

There are several reasons why SBTi is making these changes right now. Firstly, criticism of the current standard has increased, especially when it comes to Scope 3 targets. Secondly, scientific knowledge about climate change has developed, which requires the standard to be updated. Finally, the pressure on companies to act in line with the Paris Agreement is increasing, and SBTi wants to ensure that their standard is ambitious enough.

100% fossil-free electricity by 2040 – is it realistic?

Another of the updates in the new standard is that targets for scope 1 and 2 are divided instead of being reported together. For scope 2, a location-based target must be set, and the company must choose between setting a market-based target or a zero-carbon target. Achieving 100% fossil-free electricity by 2040 refers to the targets in scope 2. This is an ambitious goal that may involve major challenges, but it is also a goal that is absolutely necessary to achieve the Paris Agreement's goals. For it to be feasible, large investments in renewable energy and energy efficiency are required. The fact that the standard is now being developed to set this goal can help companies in turn put pressure on and invest in changes in infrastructure themselves.

Stricter requirements for residual emissions and carbon capture

The new standard also tightens the requirements for companies' handling of residual emissions and use of negative emissions. Residual emissions are those emissions that cannot be eliminated through emission reductions. Companies must now demonstrate how they plan to manage these emissions in a responsible manner, for example by investing in carbon capture and storage.

What should companies with existing SBTi targets think about?

Companies that already have Science Based Targets should carefully review the new draft and evaluate how it may affect their current targets. They may need to adjust their targets and strategies to ensure they are in line with the new standard.

Executive summary

The draft of the new SBTi standard entails major changes for companies' climate work. The increased flexibility for Scope 3 targets can both facilitate and complicate companies' climate efforts. The tightened requirements for fossil-free electricity and management of residual emissions are necessary to achieve the goals of the Paris Agreement. Companies should now carefully review the draft and prepare to adapt to the new standard.