A UN-backed body on Thursday launched a program to verify companies ‘net zero strategies, which will likely become a standard for regulators and investors to measure companies’ climate ambitions.
With increasing pressure from investors and society on companies to cut emissions to keep global warming below 1.5 degrees Celsius (2.7 Fahrenheit) above pre-industrial levels, companies have found multiple ways of expressing their climate strategies.
The Science Based Targets (SBTi) initiative, a collaboration between the United Nations and non-governmental organizations focused on commodities and climate, aims to make corporate climate commitments comparable and ultimately more credible.
“For the first time, the SBTi Net-Zero standard provides companies with a strong certification to demonstrate to consumers, investors and regulators that their net zero targets are reducing emissions at the rate and scale required,” Alberto Carrillo Pineda, general manager of SBTi, mentioned.
“We are now inviting all companies with zero net goals and ambitions to show stakeholders that their decarbonization journey is aligned with science. “
Large companies need to convince SBTi that they have a credible plan to halve their emissions by 2030 and eliminate 90-95% of emissions by 2050 compared to a baseline year after 2015.
The reductions must cover greenhouse gas emissions from the direct operations and use of electricity of a company, also known as Scope 1 and 2, as well as from the suppliers and end users of its products, or Scope 3.
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Many companies have indicated that they would rely heavily on carbon offsets to achieve net zero, which means buying or creating carbon offsets in a still small and unregulated market for such certificates.
But to get the SBTi seal of approval, companies can only use offsets to cover a maximum of 10% of their emissions.
Of the maximum 10%, only carbon removal projects, such as direct carbon capture in the air or reforestation, will be considered.
Avoided deforestation or carbon capture from chimneys and its sequestration (carbon capture and storage), which only prevent additional emissions from reaching the atmosphere, will be excluded.
By participating in a pilot program, Danish renewable energy company Orsted, US companies CVS Health and real estate group JLL, public relations company Dentsu International, Swiss building materials company Holcim and Indian digital services provider Wipro have met the requirements.
Some sectors, such as forestry and agriculture and oil and gas, will have to wait until next year to submit their strategies for verification.
(Reporting by Shadia Nasralla; editing by Barbara Lewis)
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