Convincing boards to adopt stretching environmental targets often requires the presentation of a business case and phased investment plan. Traditionally companies set their ambitions for levels of carbon reductions based on the level of change that is financially attractive – the most compelling investment plan – rather than an understanding of what reductions are necessary. Science-based targets require businesses to rethink this approach.
The question for sustainability teams is usually, “What are the greatest improvements I can realistically achieve within our financial constraints?” With science-based targets the question shifts slightly, with the need to strategically consider, “What plan will deliver the best possible business case for achieving these goals?”
From our experience working with multinational businesses on sustainability strategy and target setting, we recognise that internal teams can often struggle to align environmental improvements with wider business goals, in order to drive action. Agreeing targets out to 2050 can be difficult, especially when even the largest businesses struggle to make plans beyond a ten year horizon.
Indeed, many of the changes in technology, policy and energy markets that will enable businesses to meet science-based carbon targets are outside the control of any individual company. Nevertheless, it is very important to be able to demonstrate that the first few steps towards these targets are achievable, but positive for the business.
For most organisations, a large proportion of their current carbon emissions reduction potential will exist in direct energy use. Understanding and explaining these opportunities is therefore an important prerequisite for getting internal buy-in. The strategic approach to achieving reductions in energy use has also been impacted by the introduction of the new GHG Protocol Scope 2 Guidance last year. This enables companies to transparently account for purchasing renewables and low carbon electricity.
In the short to medium term, most companies can now choose from one of three levers to achieve carbon reductions: driving energy efficiency programmes; purchasing electricity from renewable energy sources; and installing on-site renewables. These levers each have advantages and disadvantages, as illustrated in the table below.
|Capital investment required per tonne of carbon saved||Complexity of implementation||Reduces annual energy cost?|
|Purchasing electricity from renewable energy sources||No||Low||No|
|Energy efficiency programmes||Medium||Medium||Yes|
|Installing on-site renewables||High||High||Yes|
Read more on how we can help your organisation set Science Based Targets