The Science-Based Targets initiative has come in for a lot of criticism recently: about its governance, which it has now revised; about its board’s proposal to allow a greater use of offsets to substitute for Scope 3 emissions reductions; and about the way its methodology implicitly allocates the world’s remaining ‘carbon budget’ to incumbents, not leaving any space for new entrants.
I would add another methodology concern that makes its Science-Based Targets insufficient.
The SBTi considers targets as “science-based” if they are “in line with what the latest climate science deems necessary to meet the goals of the Paris Agreement – limiting global warming to 1.5C above pre-industrial levels”.
But what does it mean to be “in line with” what the science deems necessary?
If all companies adopted and met targets that matched this standard, it would mean that we would meet the Paris goals.
But in a world where we know most companies do not have such targets, is it “science-based” for the leading companies to set a target that would be sufficient only if everybody did the same? This denies the reality, and sets us up for underdelivery.
The SBTi recognises that there will be leaders and laggards. Its theory of change is based on a classic diffusion curve.
The idea is that a critical mass of leaders will take voluntary action, which will stimulate regulation, which will bring the mainstream of business along behind.
The leadership part of this theory appears to be working, with an exponential growth of companies registering with the SBTi and more than 5,000 companies setting science-based targets so far.
But the theory of change does not allow for the time lag of any followership.
If it takes most of the decade for action to diffuse along the curve, then we need to have set the hurdle for the leading companies at a higher level to compensate, in order to achieve the cumulative goal.
The more the world deviates from its 1.5C ambition, the more significant this problem becomes.
In theory we could make a correction to the level of the targets, asking sustainability leaders to do more than the theoretical average. And we could correct the transition pathways behind the targets, to make room for new entrants.
But to do that, we would need to make judgements about future policies, technology innovations and market behaviours. The more we make these manual adjustments, the less we can claim the authority of being science-based.
A fundamental problem
There is a fundamental problem in the idea of science-based targets for individual companies.
Climate science tells us objectively what the whole economic system needs to do. It can’t tell us what an individual company needs to do because that depends on what everybody else will do.
A company-level science-based target is based on science in much the same way that a Hollywood movie is based on a true story. When we claim otherwise, we are misusing science as a facade of authority.
So rather than go down the rabbit hole of tweaking the targets to correct for the issues above, we should recognise company-level Science-Based Targets for what they are.
They are not robust quantifications of what we should demand of companies who see themselves as climate leaders – they are set at too low a level of ambition for that.
But they have proved themselves a powerful tool for getting companies into making climate commitments in the first place.
The prize of SBTi certification, and the concern that without it companies may be left out of procurement opportunities, has been instrumental in getting the climate agenda into executive teams and boardrooms.
There are plenty of companies that can still benefit from that. SBTi provides an accessible and safe way into an unfamiliar world: My First Climate Target.
Once in, companies need to look beyond compliance with science. The problem with SBTi targets comes from looking for a certainty that doesn’t exist.
Thinking beyond formulas
We won’t find an alternative formula that gives us the right number to use instead. Companies need to think differently about what they are trying to do, and not manage to a simple metric.
Some asset owners are already exploring richer approaches that tackle the uncertainties using narrative scenarios, such as those developed by USS and the University of Exeter.
These scenarios are qualitative, but are rigorously structured to anticipate different policy and market environments that a company may face.
They will evolve as events play out. Their real-world contexts invite strategy and purposeful risk-taking, and avoid a false predictability.
Outside the climate world, the speed awareness courses that some states offer to people caught speeding illustrate a similar shift of thinking.
These courses get people to take responsibility by developing their knowledge and mindset—and are more effective than penalties in stopping people from speeding.
They focus on the desired impact (road safety), not just the measured output indicator (keeping within the speed limit).
Participants immerse in the issues around speeding, beyond compliance: why it matters in terms of accidents and injury, how to read a road and make judgments about speed. It’s all about achieving your goal without creating negative externalities.
Maybe shareholders should require executive teams to take a comparable climate impact course, rather than expecting metrics to do something they can’t do.
Simon Glynn is founder of Zero Ideas, challenging leadership thinking on climate action
