Navigant Research Blog

In a “Daytona 500” Rally for Climate Pledges, 2018’s Race Is on from Davos to Denver

— April 5, 2018

At the World Economic Forum (WEF) in Davos, Anand Mahindra, chairman of the Mahindra Group, challenged 500 businesses to set a science-based target (SBT) aligned with the Paris Agreement ahead of September 2018’s Global Climate Action Summit in California (dubbed the Mahindra Challenge). Today, there are 369 companies committed to the SBT Initiative.

Racing Forward

On March 1, 2018, companies raced forward with pledges at the 2018 Climate Leadership Conference (CLC) in Denver. VISA committed to 100% renewable energy by 2019 and L’Oréal intends to reach carbon neutrality across all its US-based facilities after a deal to procure renewable landfill gas. After being bestowed CLC awards, 15 other companies also put points on the scoreboard.

At WEF New York on March 20, McDonald’s put forward its Scale for Good climate commitment as the first restaurant company to adopt a SBT, including:

  • Partnering with franchisees to reduce restaurant and office emissions offices 36% by 2030 below a 2015 base year.
  • Collaborating with suppliers and producers, McDonald’s committed to a 31% reduction in emissions intensity per metric ton of food and packaging across the supply chain by 2030 below 2015 levels.

McDonald’s expects to prevent 150 million metric tons of CO2 equivalent from being released to the atmosphere by 2030.

On March 27, MIT hosted the XLI Global Change Forum with the title, Science-Based Targets: Rationale and Challenge. The opening panel was led by Navigant and highlighted the practice of setting targets with two pharma titans, Novartis and Biogen, and perspectives from the UN Framework Convention on Climate Change (UNFCCC).

Officials and Race Organizers

The SBT Initiative defines and promotes best practices in target setting and offers guidance to reduce barriers, and independently assesses and approves companies’ targets. It also maintains an online site that lists all companies setting SBTs.

We Mean Business (WMB) is a global coalition of the most influential businesses acting on climate change. It catalyzes businesses to drive policy and accelerate the transition to a low carbon economy. WMB maintains an online site that recognizes companies taking action.

We Are Still In is a national coalition of more than 2,700 cities, states, businesses, and universities demonstrating an American commitment to tackling climate change, a clean energy future, and upholding the Paris Agreement. To date, We Are Still In is the largest US coalition in support of climate action.

SBT setting is already a part of the yearly CDP climate questionnaire and scoring process, and the data is used regularly by institutional investors.

Publicize a Pledge

Companies have sights set on four events: the Global Climate Action Summit, Climate Week NYC, UNFCCC COP24, and WEF 2019 Davos. At these events, and at the BSR and Net Impact conferences, new climate pledges will be publicized. 

Why Is 2018 a Special Year?

Public awareness focuses on five things as 2018 serves as a pivot point:

  1. The June 2017 White House announcement threatening the Paris Agreement
  2. As global stock takes dates, 2020 and 2030 loom closer on the calendar
  3. Climate impacts are getting more intense
  4. Investors and other stakeholders are demanding plans (e.g., Black Rock)
  5. Governor Brown hosting the Global Climate Action Summit in California

Tuning Up Strategies

Like Daytona, engines in the race to tackle climate change need tuning. From diagnostics to data management to testing the efficacy of abatement measures, Navigant improves strategies, gets them approved and recognized, and identifies the best places for amplification on a global stage. Now is the time to join the 2018 race. Start your engines!

 

“Basing” Corporate Emissions Targets

— February 6, 2018

Global Emissions Goalposts Are Captivating C-Suites and Gaining Velocity in Corporations Around the World

In boardrooms worldwide, an interesting discussion is occurring as iconic brands and corporate titans reform their journeys to cut greenhouse gas (GHG) emissions, as well as their strategies for protecting the climate. Mindsets were rebooted by the 3% Solution and the Science Based Targets Initiative, and were energized by the global Paris Agreement, leading to waves of bold pledges from corporations. What are factors that make these concepts concrete for executives deciding on goals?

Putting the “Based” in Science-Based

Dating back to the mid-1990s, businesses developed emissions goals with arbitrary reduction numbers, intending to one-up a competitor or tag to a year with marketable slogans like “15% by 2015.” So why are science-based targets (SBTs) suddenly resonating as executives deliberate long-term objectives? Well, it looks like it’s more about the “based” than it is about the “science.” It’s not that science is uninteresting to corporations, it just isn’t the only impetus for speed and adoption of the SBT approach to target setting. On topics of environmental protection, businesses often make a public case for certainty or a level playing field. Internal specialists tasked with emissions now have a tool that provides both of these even without a domestic compliance and regulatory framework in place to address GHGs. Many corporate anecdotes suggest that revising the terminology is also key to promoting the SBT concept, and although different terms are used (context-based, evidence-based, responsibility-based, even value-based targets), they appear to achieve the same outcome.

“Based” targets are winning out in a marketplace of climate goal concepts that is sometimes confusing; it’s about time there is one dominant framework. There’s carbon neutral, climate neutrality, net-zero, net-positive, and even drawdown. Some have fallen out of favor because they require too much explanation while others signal new frontiers. “Based” targets are here to stay, and their current traction is similar to previous standards and certifications, such as the Forest Stewardship Council and the Marine Stewardship Council. The way it plays out, industry leaders or first movers set a target based on the sector’s emissions budget and others follow suit, either exceeding the leader, or chasing that level of ambition. There are now 339 multinational companies committed to setting a target that follows the pathway to 2°. More of those companies are from the US than from any other nation in the world.

So What?

More than anything else, this concept helps internal discussions with the C-suite when a specialist can tell leadership that, by setting an SBT, the company is identifying its share of reductions in relation to the global emissions challenge and that cuts its footprint within the emissions budget for the sector and industry. Putting an emissions goal into a global context makes sense to internal stakeholders in a way that definitively makes a case for “how do we do our share?” It also makes sense to external investors and advocacy stakeholders that are starting to ask companies when they will have a science-based target—or why they haven’t set one yet.

Basing targets on global data is here to stay. Executives like the linearity of setting targets; 89 companies had them approved by the SBT Initiative in 2017. How can you take the next steps? 2018 is the year!

If you are looking at what paths to take, contact Matthew Banks for information on the projects and services Navigant’s Sustainability Team can offer as a strategy partner.

 

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