Science Based Targets Archives

Broader science-based frameworks

There are a number of broader science-based frameworks that are well established and which are used by companies to frame their own sustainability goals and priorities. These encompass a range of issues and indicators which, at their heart, seek to steer businesses to operating below the ceiling of environmental limits and above the foundation of social justice and equity.

Notable examples include:

Vision 2050 and the Action2020 platform which stems from it, led by the World Business Council for Sustainable Development. It defines a number of societal “must-have” issues for 2020 across the themes of climate change; release of nutrient elements; ecosystems; exposure to harmful substances; water; basic needs and rights; skills and employment; sustainable lifestyles; and food, feed, fibre and biofuels.

The framework of Planetary Boundaries 2.0, developed originally in 2009 and updated by the Stockholm Resilience Centre in 2015, uses scientific data to set precautionary boundaries for nine critical processes of human-driven environmental change, four of which have already been surpassed.

One Planet Living, a framework of ten principles based on ecological and carbon footprinting as its headline indicators, was developed by BioRegional and WWF and has been adopted by several organisations (both public and private sector). It has particular provenance in the context of property development projects, but is applicable more broadly too. Those in the One Planet Living Network have each developed Action Plans either at the corporate level or to be applied to projects.

Perhaps the most significant framework in terms of its political capital is the UN Sustainable Development Goals. Updated in 2015 and agreed by 193 Heads of State and High Representatives, the SDGs are a framework of 17 goals focused on people, planet and prosperity which is underpinned by 169 global targets. The Heads of State call upon businesses to apply their creativity and innovation to solving sustainable development challenges; identifying those goals and targets that are of particular relevant to the activities of an individual organisation can be a useful basis for defining a corporate sustainability framework and action plan.

Implications for real estate companies and owners

As expectations of businesses’ approaches to sustainable development, and tackling climate change in particular, become stronger amongst an array of stakeholders, so too does the need for clarity of approach and transparency in performance and impact. It is therefore clear to see why attention is turning to the principle of science-based target setting. They certainly command a strong hypothetical rationale. For real estate owners, this brings both opportunities and challenges. Amongst the myriad considerations for those exploring the efficacy of science-based targets for their organisation, the following might be pertinent:

selecting the most appropriate methodology, scope and metrics will be key to driving performance and ensuring relevance – careful thought is needed to ensure that the approach to target-setting is grounded in the drivers of business and asset value (which may included the use of existing non-financial reporting systems);

the need to communicate the meaning of any science-based targets clearly to both internal and external stakeholders – some approaches can appear to be something of a black art, and many involve complex analysis, so distilling key messages through impactful communication is paramount;

science-based targets are typically associated with long-term goal-setting and are proving to be a catalyst in pushing organisations to think further ahead than has often been the case with sustainability or ‘ESG’ targets and objectives in the past – this can bring particular challenges for asset owners with short-term holding strategies whose ability to influence or control long-term performance outcomes across a portfolio might be limited;

having systems for, and approaches to, data management which are rigorous and navigable is vital – tracking and reporting progress reliably is critical to credibility and effectiveness; and

adopting science-based targets requires organisations to accept that they should be just that – based on the science of climate change, planetary limits and social boundaries, and not just a creative use of mathematics to derive arbitrary numbers!

Science Based Targets are being adopted by companies across multiple sectors as the basis for setting long-term goals. But how relevant and useful are they?

We’ve recently been advising a number of real estate organisations and funds on their responsible investment strategies and, as part of that, their approaches to target setting for energy consumption and carbon emissions reduction. Knowing where to set the bar is a often a primary concern. Historically, organisations have generally set themselves relatively arbitrary targets based on intuitively manageable goals. This is all well and good, up to a point, but does not necessarily mean that genuinely sustainable levels of carbon emissions will be achieved. If they are, it’ll more likely be by luck rather than judgement.

Increasingly, and catalysed by COP-21 and the Paris Agreement on Climate Change, the Science Based Target (SBT) approach is being adopted by companies across multiple sectors as the basis for setting long-term goals for greenhouse gas emissions reductions. Much has been made of their relevance, complexity and usefulness, with opinions quite broadly spread.

In the first of two blogs which we’ll publish in quick succession, we discuss the various methodologies which exist under the umbrella of SBTs for greenhouse gas emissions reduction and the background to their application.

Methodologies

The Science Based Targets Initiative (SBTI) – a joint initiative between CDP, UN Global Compact, World Resources Institute and WWF – defines such targets as:

Targets adopted by companies to reduce GHG emissions are considered “science-based” if they are in line with the level of decarbonisation required to keep global temperature increase below 2^oC compared to pre-industrial temperatures, as described in the Fifth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC).

There are, however, multiple methodologies for setting Science Based Targets each with their respective strengths and weaknesses. Some of these are bespoke to individual organisations, such as those developed for their own purposes by BT Group, Ford Motor Company and Mars, although this does not preclude other organisations from adopting the same methodology because they have been published on an open source basis. Others are particular to defined geographies, such as the 3% Solution which was developed specifically for the US.

More widely used open source versions are also available, although most of these are based on normalised intensity metrics based on the economic output of organisations. The GEVA (Greenhouse Gas Emissions per unit of Value Added) method, for example, is developed from the principle of reducing GHG emissions by 5% per year per unit of GDP created by individual corporations, based only on Scope 1 GHG emissions (thereby excluding emissions associated with electricity consumption or of supply chain activities). The C-PACT method, developed by Autodesk, and the Context Based Carbon Metric, developed by the Centre for Sustainable Organizations, similarly use an economic output normalisation metric. A key disadvantage of these methods from a real estate owner’s point of view would be the distorting impact of commercial property value volatility.

The Sectoral Decarbonisation Approach (SDA) is the most recently developed and arguably the most complex methodology, but it is also the most applicable to real estate organisations in our opinion. It provides sector-specific emissions reduction pathways, with intensity measures premised on more useful and meaningful measures. For real estate, the normalisation approach is based on a CO₂/m² of floor area metric, with a carbon intensity pathway established of 55 percent by 2050 from a 2010 baseline (premised on a CO₂ budget allocated to the sector by the SBTI which is considered proportionate in the context of the wider economy, yet in line with the goal of limiting global temperature increases to 2^o above pre-industrial levels). The scope of the emissions to which SDA-based targets should be applied for real estate encompasses Scope 1 & 2 emissions, thereby including energy use associated with space heating and cooling, water heating, lighting, appliances (HVAC), and miscellaneous equipment (such as office equipment and other small plug loads in the service sectors).

Notably, the one commercial real estate owner that has developed a SBT to date, Land Securities, has used the SDA method with a target of achieving 40% reduction in the carbon intensity in property under management for at least two years by 2030 when compared with a 2013/14 baseline. This is deemed by Land Securities to be consistent with the trajectory needed to achieve the 80% reduction in carbon emissions in property required by 2050, and is complemented by a target of reducing energy intensity by 40% by 2030 in the same buildings.

However, it is important to remember that the SBTI has appropriated words and formed a definition to suit its own agenda. There is no reason why “science-based targets” should mean anything to do with limiting global warming to below 2^oC. Indeed, the principle of science-based target-setting can be applied to a much broader range of issues.

In our next blog, to follow this in quick succession, we discuss alternative and broader frameworks within which appropriate science-based target-setting can be made and some of the key SBT considerations for real estate owners.