Leading up to COP26, the Science-based Targets Initiative (SBTi) led the Business Ambition for 1.5°C to get as many companies as possible to commit to SBTi and set targets ahead of COP26 in partnership with the Race to Zero. By mid-way through October, SBTi reported that more than 2,000 companies (internationally) had submitted their commitments and just under 1,000 with approved science-based targets. In fact, SBTi has seen so many target submissions that there will be no more approvals in 2021, and bookings are now being taken up for 2022. This is an important signal that more serious and transparent targets are coming from the private sector.
While many Canadian companies have committed to science-based targets, many others have announced their own targets and commitments with varying degrees of credibility. Indeed, there is a long journey ahead for some of Canada’s most impactful sectors and investors to get to science aligned net zero pathways.
For example, this summer SBTi released a report detailing progress on decarbonization target setting by major stock indexes globally. The two major metrics were percentage of listed companies covered by an SBTi-approved target, and a temperature rating for all public targets.
Canada scored very poorly. The TSX 60 was dead last in company coverage (10%) and temperature rating (3.1 degrees) was well below both the US and Australia. The reason? The TSX is heavily weighted by oil and gas and mining stocks—two carbon-intense and hard-to-abate sectors.
Fortunately, changes are coming to make science-based targets more prevalent in Canada. On the first day of COP26, Prime Minister Trudeau announced a commitment to cap oil and gas sector emissions and ensure they decrease at a pace and scale needed to reach net zero by 2050. This comes after the Oil Sands Pathways to Net Zero initiative launched in June with a joint commitment from the companies that operate 90% of Canada’s oil sands to achieve net zero GHG emissions from oil sands operations by 2050. However, the initiative does not include Scope 3 emissions or interim targets for 2030 or 2040 (both requirements of science-based targets).
The big six Canadian banks are all taking on financed emissions this year, both in quantification and target setting, including Scope 3 emissions. The FSB Task Force on Climate-related Financial Disclosures (TCFD) has created a framework for measuring the alignment of investment portfolios with climate targets. The push to measure investment emissions will hopefully signal a shift (or a warning) for other investors and sectors to start quantifying Scope 3 emissions. We have already seen many Canadian mining companies seeking approval for SBTis this year, a trend which will continue in 2022.
Further, SBTi recently launched new Net Zero Standard that provides criteria for companies to set science-based net zero targets consistent with limiting global temperature rise to 1.5°C. The standard covers emissions from the entire value chain (Scope 1, 2 and 3) and requires deep decarbonization of 90-95% to reach ‘net zero,’ with carbon removals needed for remaining emissions.
To reach absolute zero in time, we need governments, companies and investors to set science-based targets, and then meet them. Companies who are working to determine Scope 3 investment emissions can at a minimum, work towards Scope 1 and 2 targets. Companies can also make commitments to set science-based targets through SBTi’s website, which gives two years to quantify and submit.
We have made our own commitment to achieving net zero emissions across our value chain by 2040 using science-based greenhouse gas reduction targets.
Our team supports clients in quantifying Scope 1, 2 and 3 emissions (including investment emissions) and can help set science-based targets. Further, we can help companies and financial institutions measure, manage and disclose emissions and other climate-related information with a comprehensive climate change strategy.
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