The Science-Based Target Initiative (SBTi), jointly developed by CDP, the United Nations Global Compact, the World Resources Institute and Worldwide Fund for Nature, aims to promote the setting of greenhouse gas (GHG) reduction targets in alignment with the Paris agreement (2015), which set the limit of global warming at below 2°C. For addressing climate change and global warming, carefully set targets are essential to drive transformational actions in the business world, while SBT is a set of goals developed to reduce GHG emissions, consistent with climate science.
Alaya’s SBT Approach
At Alaya Consulting, SBTs are set in a rigorous and conscientious manner, starting with a GHG inventory for understanding the sources of emissions and their corresponding reduction potential. Then the baseline and the target year are ascertained, which are crucial for the computation process to commence. With all the analyzed data in hand, an ambitious yet achievable target is set, followed by recommendations for actions that can help achieve the set goals.
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Currently, over a thousand companies are taking science-based climate related actions globally of which nearly 500 companies have approved SBTs. Meanwhile in Hong Kong, only five companies including Alaya have their SBTs approved by SBTi. Nonetheless, setting SBT is of paramount importance in driving long-term changes. This signals a need for higher awareness of the need for carbon emissions target setting, so as to promote concerted efforts for addressing the issue of corporate sustainability.
The significance of SBTs to businesses is threefold
First, setting SBTs could help increase brand reputation and investor confidence, as both consumers and investors are becoming increasingly conscious of sustainability initiatives by companies. SBT serves as a benchmark for business credibility, offering businesses a way to meet customer and investor expectations. By boosting confidence and demonstrating commitment to tackle climate risks, companies could appeal to the environmentally conscious generation and gain a competitive edge over competitors.
Moreover, SBT is crucial for businesses to build resilience against regulatory uncertainties. The Paris Agreement in 2015 had a huge impact on how people think about sustainability, including national governments, who have been continuously working on new regulations that can help tackle climate change. In the foreseeable future, it is expected that there will be a gradual tightening of policies related to GHG emissions of business operations and activities. Therefore, setting SBTs at an early stage and adhering to the global trend earlier would help future-proof companies from potential regulatory risks.
Finally, SBT setting serves as a driver for innovation, as it provides an opportunity for businesses to develop new ways of saving energy and reducing harmful emissions. Having a clear GHG emission goal would motivate companies to use different technologies to actualize a low-carbon economy, which in turn catalyzes innovation and transformation. SBT aids in turning climate risks into business opportunities, while incentivising corporates to drive continuous changes, enhance innovative capabilities, and work towards mitigating the impacts of climate change.
Source: https://alayaconsulting.com.hk/sbt-is-key-to-future-proof-your-business/
