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  • Writer's pictureAmpersand Partners

The market standard should not be the end game: going beyond



In our previous blog on Net Zero, we highlighted the need for more ownership and action on climate goals by being Carbon Responsible. We advocate for looking at sustainability in an active frame that inspires and requires steady, sustained and ongoing effort rather than a one-off push. In this blog we explain the considerations required to take a Carbon Responsible approach.


The easy prescription


Naturally, before creating a strategy to improve a company’s sustainability performance, it’s essential to first understand what the company is already doing. This is exactly the starting point that market standard frameworks like the Science Based Targets initiative (SBTi) outline for companies looking to set climate goals. SBTi guides companies in target setting to reduce CO2 emissions in line with climate science to keep within 1.5oC of warming.


The first requirement is to create a current emissions baseline in line with the Greenhouse Gas Protocol (GHG Protocol). SBTi then drives companies to set a climate target and tests the credibility of those targets at a very high-level. These first steps are important to get the ball rolling, but they by no means are the end game in terms of truly understanding what’s going on in your business and what needs to be done.


Going beyond


The New Climate Institute accuses SBTi of allowing companies to hide flaws in their sustainability plans and greenwash in their pursuit of mass evaluation of companies. To cover as many sectors and engage with as many players as possible requires a degree of expediency which leads to some shortcomings with SBTi’s approach (which they are working to partially improve with sector-specific guidance).


For example, under SBTi’s carbon reporting requirements, a company is allowed to simply conduct a screening of its Scope 3 emissions in its early years and is not required to conduct any third-party verification at all. There are clear benefits to this approach by being approachable for companies at different stages in their journey, but it leaves a lot of room for companies to tick the box and move on to business as usual, without treating their targets and committments as a business imperative.


On the targeting setting side, as it relates to renewable energy, SBTi accepts renewable energy certificates (RECs) as part of a company's Scope 2 emissions reduction pathway.

This approach is flawed: RECs fail to properly address the need to increase renewable energy supply and create additionality; and SBTi isn't particularly strict on the quality and type of offsets either.

Worthy offsetting is particularly complex and requires advanced planning to avoid pitfalls and risks to existing ecosystems and communities, reliability of emissions reduction predictions and, most importantly, the actual ability of the project to achieve additional climate and environmental benefits.


The SBTi framework, like other standards and guidelines, are important catalysts. Blindly following these frameworks without a clear business imperative does not create sufficient decisiveness and ambition to set indisputably impactful goals and decarbonization plans. It’s a mechanism to indicate the scale and scope of the problem without setting harsh requirements so as to get as many organizations involved as possible.


Challenging though it may be to ‘go beyond’, let’s not forget the upside: as more companies want to publicly express intent to reduce emissions, space is created for competitive differentiation which benefits not only the environment but also the company. Visible commitment and action set a company apart from the competition and build customer trust in the sustainability of the company's operations. Furthermore, by looking at things like quality renewable energy sources and offsets early, it gives them a pre-emptive competitive advantage against the eventual rise of these products in the future.


SBTi and other frameworks are clear on their goal and do provide a valuable role in tackling climate change. But remember: their role is partial, and they do not intend or pretend to be the end game.

To truly make an impact, the market standard should be seen as the market minimum and companies need to go the extra mile to get ahead of the game and demonstrate their ability to be Carbon Responsible.

 


by Anna Burrage

Senior Advisor at Ampersand Partner




by Iman Zukki

Consultant at Ampersand Partners

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