The number of companies and financial institutions setting greenhouse gas reduction targets and having them validated by the Science Based Targets Initiative (SBTi) has doubled to 4,204 in 2023 (2022: 2,079). This extraordinary demand for corporate decarbonization standards and target validation services has prompted a major scale-up effort to rapidly develop a broader range of trusted, credible emission reduction standards and increase capacity for corporate target validation while striving for the highest level of service quality for companies and financial institutions.
SBTi now independent organization
A few months after the SBTi announced its separation from its partner organizations, it was granted charitable status by the Charity Commission for England and Wales. Previously, SBTi was a joint initiative of CDP, We Mean Business Coalition, World Resources Institute (WRI), World Wide Fund for Nature and UN Global Compact. Now it is taking its place as an independent organization alongside its partners to expand its important role in the business climate ecosystem.
The SBTi has also established a subsidiary which, once fully operational, will offer its target validation services, with all profits being donated to the charity. The standard setting will remain with the charity, which announced a legal board of trustees chaired by former ENEL CEO Francesco Starace in September.
The registration of SBTi’s charitable status by the UK Charity Commission means that the IKEA Foundation’s funding commitment of $18 million will now come to fruition, supporting the development of standards and the building and strengthening of the SBTi infrastructure. This matches the $18 million from the SBTi’s other main funder, the Bezos Earth Fund, which has been instrumental in significantly upscaling the SBTi since 2021.
SBTi standard development priorities for 2024
In 2024, the SBTi will review the Net Zero standard for corporates with a view to possible updates in the following year. Building on the short-term targets for financial institutions, the SBTi Net Zero standard for financial institutions will be developed in parallel. The SBTi is also prioritizing the development of sector-specific standards for six particularly affected sectors: oil and gas, utilities, automotive, chemicals, insurance and apparel.
In addition, the SBTi will test a hybrid model for the development of sector-specific standards by partnering with external organizations and pooling expertise. This model could lead to a step change in the way some SBTi standards are developed and pave the way for a significant acceleration in the development of sector-specific standards in 2025 and beyond.
Call to members of Validation Council
Following on from work started in 2023 to strengthen the robustness of SBTi standards, including the appointment of an independent Technical Council, a similar process is underway to improve the efficiency, accessibility, and credibility of SBTi validation services. A Validation Council is being formed to ensure independence in decision-making. A call for applications for the Validation Council, together with the mandate of the Council and the requirements for Council members, will be published on the SBTi website in the coming weeks.
The appointment of two Compliance Managers and the forthcoming appointment of two Quality Managers will increase compliance capacity. The pace of validation continues to increase: the number of companies setting targets has doubled by 2023, while average waiting times have halved.
