The Science Based Targets initiative (SBTi) is a collaborative effort established by CDP, the United Nations Global Compact, the World Resources Institute (WRI), and the World Wide Fund for Nature (WWF). SBTi assists companies in setting science-based emissions reduction targets in line with the level of decarbonization required to keep global temperature increase below 1.5°C compared to pre-industrial temperatures [1]. 

SBTi plays a crucial role in providing a clear framework for businesses to set ambitious yet achievable climate goals. By endorsing targets based on the latest climate science, SBTi ensures that corporate actions contribute meaningfully to mitigating climate change. The initiative is gaining significant traction, with over 2,000 companies globally committing to set science-based targets as of 2023 [2]. According to a report by CDP, companies with science-based targets collectively represent over $38 trillion in market capitalization [3]. Furthermore, research indicates that companies setting science-based targets are more likely to achieve higher reductions in emissions compared to those without such targets. These statistics highlight the effectiveness and growing popularity of the SBTi framework in the ESG landscape. 

This article will present a comprehensive case study on a company’s journey with the Science Based Targets initiative (SBTi), detailing how it set and achieved its emissions reduction targets, the strategies employed, and the challenges overcome in the process. 

Overview of the Science Based Targets initiative (SBTi) 

The Science Based Targets initiative (SBTi) is a global body that enables businesses and organizations to set ambitious emissions reductions targets in line with the latest climate science. According to the official statement from the SBTi website, “The Science Based Targets initiative (SBTi) mobilizes the private sector to take the lead on urgent climate action. It is a partnership between CDP, the United Nations Global Compact, World Resources Institute (WRI), and the World Wide Fund for Nature (WWF). The SBTi calls on companies to demonstrate their climate leadership by setting science-based emissions reduction targets.” 

SBTi plays a crucial role in the realm of Environmental, Social, and Governance (ESG) by providing a standardized and credible framework for companies to align their emissions reduction efforts with the goals of the Paris Agreement. Setting science-based targets allows companies to mitigate their climate impact effectively, thus enhancing their sustainability performance and fulfilling their ESG commitments. 

Moreover, adherence to SBTi guidelines helps companies gain investor confidence, meet regulatory requirements, and build a resilient business model that can withstand future climate-related disruptions. As the demand for transparency and accountability in corporate sustainability practices grows, SBTi’s importance continues to amplify, driving a substantial shift towards more sustainable business operations globally. 

By setting and achieving science-based targets, companies not only contribute to global climate goals but also improve their competitiveness, operational efficiency, and reputation in the marketplace. This makes the SBTi a pivotal component of any robust ESG strategy, ensuring that companies are not only compliant with current standards but are also proactively contributing to a sustainable future. 

Case Study: H&M Group’s Supplier Engagement for SBTi Targets 

H&M Group, a global leader in apparel and footwear, is renowned for its commitment to sustainability. As part of its decarbonization efforts, the company aims to reach net-zero emissions across its value chain by 2040. Central to this mission is engaging suppliers to set and meet emissions reduction targets, a practice H&M Group has focused on since 2016. [4] 

H&M Group’s Supplier Engagement Target 

H&M Group commits to reducing absolute scope 3 GHG emissions by 56% by FY2030 from a FY2019 baseline. Although there isn’t a specific supplier engagement target, the supplier engagement program is crucial in achieving this overarching goal. 

Implementation of SBTi Targets 

The implementation process involves asking suppliers to commit to carbon reduction targets and submit detailed roadmaps outlining how these targets will be met. H&M Group’s sustainability team reviews and validates these roadmaps, setting internal targets that consider country-specific decarbonization barriers. This ensures that all suppliers, regardless of location, have feasible and tailored targets. 

Strategies for Achieving SBTi Targets 

Supplier Support and Engagement: 

• Renewable Electricity Sourcing: H&M Group assists suppliers in sourcing renewable electricity. The company is involved in developing new renewable energy infrastructure, particularly through power purchase agreements for its European operations, which total 200MW of renewable electricity. 

• Financial Assistance: Through its Green Fashion Initiative, H&M Group provides funding for supply chain factories to invest in technologies and processes that reduce energy demand and replace fossil fuels. 

Advocacy and Collaboration: 

• Government Advocacy: H&M Group works with governments in production markets to raise awareness about the competitive advantage of renewable electricity. This includes pushing for necessary energy market reforms. 

• Institutional Collaboration: The company collaborates with European and international institutions to secure financing and technical assistance, improving access to renewable energy. 

Training and Development: 

• Capacity Building: H&M Group offers training sessions to help suppliers set science-based targets. This support includes guidance on choosing suitable Energy Attribute Certificate schemes to substantiate renewable energy claims. 

Challenges and Solutions 

• Market Barriers: Suppliers often face obstacles in procuring renewable electricity due to market barriers and insufficient infrastructure. H&M Group addresses these challenges by advocating for energy market reforms and working with suppliers to navigate these barriers. 

• Resource Allocation: H&M Group employs in-house energy experts to conduct free audits for suppliers. These audits identify energy-saving measures that can enhance efficiency and reduce costs, avoiding the need for external consultants and building shared expertise. 

• Continuous Improvement: The company meets individually with suppliers annually to communicate sustainability requirements and review progress. The procurement team, acting as the primary point of contact, along with local sustainability teams, ensure regional requirements are met and improvements are continuously sought. 

Tracking and Monitoring Progress 

H&M Group collects monthly data from suppliers detailing energy consumption by source. This data is verified quarterly by a third-party to ensure accuracy and transparency. Regular reviews and communications with suppliers help address potential roadblocks and align efforts with the company’s sustainability goals. 

Case Study: Dentsu’s Net-Zero Journey 

Dentsu, a global media and digital marketing communications company, has committed to achieving net-zero greenhouse gas (GHG) emissions by 2030. This commitment is part of their broader strategy to align with the Science Based Targets initiative (SBTi), demonstrating leadership in sustainability and climate action within the advertising and communications sector. [5] 

Setting Ambitious Targets 

Dentsu’s journey towards net-zero began with setting ambitious science-based targets. In 2016, Dentsu committed to reducing its absolute Scope 1 and Scope 2 GHG emissions by 46% by 2030 from a 2019 base year, and to reducing Scope 3 emissions from purchased goods and services by 46% per full-time employee over the same period. These targets align with the goal of limiting global temperature rise to 1.5°C above pre-industrial levels, as recommended by climate scientists. 

Key Strategies and Actions 

1. Energy Efficiency and Renewable Energy: Dentsu has invested in energy efficiency measures and the transition to renewable energy sources across its global operations. This includes upgrading to energy-efficient lighting, optimizing HVAC systems, and sourcing renewable electricity. 
2. Employee Engagement: Recognizing the importance of employee involvement, Dentsu has implemented comprehensive internal engagement programs. These initiatives educate and empower employees to contribute to the company’s sustainability goals through everyday actions and innovative projects. 
3. Supplier Engagement: Dentsu collaborates with its suppliers to reduce emissions across its value chain. This involves working closely with suppliers to set their own science-based targets and providing support and resources to help them achieve these goals. 

Achievements and Progress 

As part of its commitment to transparency, Dentsu regularly reports on its progress towards its targets. By 2021, Dentsu had already achieved a 20% reduction in Scope 1 and Scope 2 emissions, demonstrating significant progress towards its 2030 goals. Additionally, the company’s focus on renewable energy resulted in 100% renewable electricity procurement for its offices in key markets, contributing to substantial emissions reductions. 

Future Plans 

Dentsu continues to innovate and refine its sustainability strategies. Future plans include enhancing data collection and reporting capabilities to better track and manage emissions, increasing the use of renewable energy, and further integrating sustainability into core business practices. Dentsu also aims to inspire and support other companies in the media and advertising industry to adopt science-based targets and take meaningful climate action. 

Conclusion 

The Science Based Targets initiative (SBTi) provides a robust framework for companies to align their emissions reduction efforts with the latest climate science, playing a critical role in the broader ESG landscape. Through the detailed case studies of H&M Group and Dentsu, this article illustrates that setting science-based targets not only helps companies mitigate their climate impact but also enhances their operational efficiency, competitiveness, and reputation. By following the SBTi framework, companies can lead the way in corporate climate action, contributing to global climate goals while ensuring sustainable business growth. 

In conclusion, the journeys of H&M Group and Dentsu underscore the transformative potential of SBTi in driving corporate sustainability. They serve as exemplary models for other companies aiming to integrate science-based targets into their ESG strategies, demonstrating that ambitious climate action is both achievable and essential for a sustainable future. 

 

Sources: 

[1] https://sciencebasedtargets.org/resources/legacy/2017/04/SBTi-manual.pdf 

[2] https://sciencebasedtargets.org/blog/500-companies-net-zero-ambition 

[3] https://sciencebasedtargets.org/news/companies-committed-to-cut-emissions-in-line-with-climate-science-now-represent-38-trillion-of-global-economy 

[4] https://sciencebasedtargets.org/companies-taking-action/case-studies/supplier-engagement-case-study-h-m-group 

[5] https://sciencebasedtargets.org/companies-taking-action/case-studies/net-zero-case-study-dentsu