IATP responds to the Science Based Targets Initiative on how corporate climate targets and risks should be reported
What is a corporation to do about reducing climate change impacts on its facilities, supply chains and financial viability?
Since 2015, the Science Based Targets Initiative (SBTi) has engaged about 10,000 companies in a greenhouse gas (GHG) emissions accounting and climate risk management process to identify sources, monitor and reduce company emissions. As of March 2025, 1,823 of those companies are committed in five to 10-year contracts with SBTi to align with the United Nations Paris Agreement objectives, including to achieve net zero emissions by 2050.
SBTi is midway through a two-year process to revise its standard for corporations to set and achieve targets to reduce emissions — this year, SBTi released Corporate Net Zero Standard Version 2.0 (V2.0) and a long survey of questions (now closed) seeking public feedback, to which IATP replied in late May.
V2.0, although developed by the SBTi staff, is still subject to the same institutional pressures that resulted in a staff revolt against its Board of Governors in April 2024. The Board declared, against both SBTi operating procedure and the existing net zero emissions standard, that voluntary carbon market credits and environmental attribute certificates (EACs) — such as renewable energy certificates — could be claimed to offset a company’s supply chain emissions (Scope 3). The Integrity Council for the Voluntary Carbon Market immediately welcomed the Board announcement. Shortly after the staff revolt, the Board said its statement had been “misunderstood” and that SBTi standards would continue to be based on science and SBTi operating procedures. In July 2024, the SBTi executive director resigned for “personal reasons.”
As IATP has documented in our Meat and Dairy Emissions Dashboard and related reporting, and as we commented on the SBTi draft standard for the Food Land and Agriculture Group of companies, a robust standard on Scope 3 emissions is crucial for reducing emissions. Up to 95% of food company emissions can come from commodities in their supply chains, including agricultural chemical inputs. According to the Intergovernmental Panel on Climate Change, agriculture is the largest source of methane from human activities, mostly from cattle production and their manure, and nitrous oxide, mostly from nitrogen fertilizer use. But because methane — with 80-times the Global Warming Potential (GWP) of carbon dioxide — remains in the atmosphere for more than a decade, methane reduction is the best short-term opportunity to avoid climate catastrophe.
IATP’s responses to the SBTi survey
IATP responded to about a third of the substantive survey questions, many of which were directed to corporations who had committed to reduce their emissions according to existing SBTi rules. Some of the questions concerned issues that IATP has worked on, e.g., Scope 3 emissions, climate disclosure requirements, and ensuring the data quality of emissions reporting. Other questions were new to us but adjacent to IATP’s priorities.
IATP praised many improvements in V2.0 over the existing standard. However, these improvements could nevertheless be undermined by two related bad proposals.
First, V2.0 proposes the option of requiring companies to set emissions reduction targets using such unproven and environmentally unsustainable technologies as Direct Air Capture and Bioenergy and Carbon Capture and Storage (BECCs). We opposed this option, writing, “A near-term removals requirement likely will help prime the pump to scale the CDR [Carbon Dioxide Removal] credit market” and drive investment away from technological innovation and operational efficiencies required to rapidly and greatly reduce company emissions.
Second, V2.0 allows companies to determine that 10% of its projected emissions will be “residual,” i.e., cannot be reduced in any targeting period before 2050, no matter what technological innovations and investments might occur to reduce those emissions. There is no scientific basis for this determination. V2.0 would allow companies to preemptively claim rights to not reduce its “hard to abate emissions.” This claim, if implemented, would be tantamount to expropriating a share of global GHGs before the Paris Agreement global warming target of 1.5 degrees Celsius above the mid-19th century baseline is exceeded. Such a GHG grab would prevent a just transition to avoid climate catastrophe.
There is an urgent need for companies to reduce their own emissions as quickly as possible. The World Meteorological Association reported in May that the average global temperature was projected to increase over the next five years to nearly 2 degrees Celsius (3.6 degrees Fahrenheit), resulting in decreases in crop yields and chronically exposing a third of the global population to extreme heat.
The quality of emissions data auditing is crucial for setting a company’s base year emissions from which reduction targets are set and interim progress measured annually towards achieving the target. V2.0 proposes that large corporations (category A) be required to have third parties audit company emissions reporting and provide an affidavit assurance of data quality. IATP urged SBTi to adopt the New Climate Institute’s recommendation that V2.0 require “reasonable assurance” (page 3), the highest auditing standard. To dissuade companies from contracting with unqualified auditors to audit emissions, SBTi would require emission auditors to follow an international standard, such as that of the Greenhouse Gas Protocol. IATP strongly agrees with this proposed requirement.
One of the draft standard’s innovations is to distinguish category A large companies from smaller corporations, including those located in developing countries (category B). Several questions concern whether rules should be mandatory for categories A and B, mandatory for category A, but recommended only for category B or recommended only for all companies. We strongly agreed with this distinction, particularly because category A companies often receive government tax credits, subsidies, grants, policy and research support, where category B companies, particularly in developing countries, have little or no access to such government support.
In response to a question about whether companies should be required to disclose their dependency on government support to achieve their emissions reduction targets, we wrote, “If a company relies on public policy and various forms of public financial and technological support for products, infrastructure and/or operational efficiencies to meet its targets, investors, insurers and other stakeholders should be informed about those kinds and degree of dependence.”
IATP supported SBTi’s proposal to require larger category A companies to report their climate risk management transition plans in addition to their plans for reducing their operational and production emissions (Scope 1), purchased electricity emissions (Scope 2) and value chain emissions (Scope 3).
SBTi has proposed a few requirements to enhance the likelihood that companies will be more proactive in annually reducing their Scope 3 emissions, rather than backloading their Scope 3 commitments into long-term targets. Under V2.0, companies would report specific “activity level” emissions reduction targets annually within their overall targets. We strongly agreed with this proposal and wrote, “For example, if the activity is dairy processing, activity levels for raw milk production and transportation to processing facilities can be estimated within the operational boundaries of the processing company.” Furthermore, companies would be required to report the emissions of their contracted (Tier 1) suppliers of inputs and components.
One of several incentives for companies to innovate and invest to reduce their emissions is to make public claims about their achievements. The V2.0 claims section asks whether companies should be allowed to make claims about their SBTi engagement beyond those strictly related to setting, achieving and renewing targets. We opposed allowing additional claims, e.g., a “Paris-aligned claim,” since the Paris Agreement is far from implemented, and additional claims would dilute the value of the claims that SBTi reviewers could substantiate.
The SBTi staff has worked diligently with corporations to develop an emissions monitoring, reporting and verification standard that is actionable and beneficial for all stakeholders and the health of the planet. IATP urges SBTi to follow its science-based mandate and not succumb to pressures that allow companies to divert their finance into buying carbon credits to achieve the “residual emissions” portion of their emissions reduction targets.
