Science Based Targets (SBTi)
What are they and what do they mean for the Steel Industry
The Science Based Targets initiative (SBTi) drives ambitious climate action in the private sector by enabling companies to set net-zero science-based targets in line with a 1.5°C future. If you need a reminder on what net-zero is, take a look at a previous newsletter - Carbon Neutral & Net Zero Carbon.
The key aim of SBTi is to show the private sector what they need to do (and how quickly) to reduce their emissions. But it isn’t just reduction targets, there is also a focus on showing the companies how such actions could be beneficial and improve their competitiveness as we transition to net-zero.
The 2020 Progress Report [Jan-21], notes that over 1,000 companies spanning 60 countries and 50 sectors are now ‘committed’. What is committed you ask? Here’s how it works, it’s a five-step process:
Commit: submit a letter establishing your intent to set a science-based target
Develop: work on an emissions reduction target in line with the SBTi’s criteria
Submit: present your target to the SBTi for official validation
Communicate: announce your target and inform your stakeholders
Disclose: report company-wide emissions and track target progress annually
Committed means a company has made a public commitment to set a science-based target aligned with the SBTi’s target-setting criteria within 24 months.
Be sure to note the ‘scope 3’ status of a company. I’m impressed that 94% of companies with targets approved by the SBTi have included scope 3 emissions. Why is this so impressive? Well, scope 3 is all the emissions not associated with the company itself, but that the organisation is indirectly responsible for, up and down its value chain (and scope 3 is often the big one!). So it’s great to see SBTi companies are taking responsibility for their value chain, thereby influencing their suppliers and customers.
Just in case you needed a reminder, scope 1 is emissions that a company makes directly (running a boiler in a building), and scope 2 is the emissions it makes indirectly (from electricity production which is then used in a building).
What does this mean for the Steel industry?
Globally, the steel sector’s direct CO2 emissions amounted to 2.6 Gt in 2019, or 28% of industrial emissions. And demand is expected to continue to rise.
SBTi had previously developed something called the Sectoral Decarbonisation Approach (SDA) - just think science based targets/guidance for an industry, rather than a company. This was back in 2015, when 2°C was the reduction target. The Paris Agreement superseding this is cause for a revisit of the SDA, this time with the 1.5°C reduction in its sights.
An Expert Advisory Group (EAG) has been set up, with funding from ArcelorMittal and SBTi as the project lead. The project aims to have guidance and a target setting tool ready for Q2 2023.
While reading up on SBTi, I didn’t come across any mentions of the SteelZero initiative (see previous newsletter), but I think these initiatives are striving for the same thing. SteelZero recognises the value in steel producers committing to SBTi, which it says are useful tools in their FAQ.