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Ready, set, aim: Setting the right decarbonisation targets for your business

Why should businesses set decarbonisation targets?

As businesses navigate the complex decarbonisation landscape, it can be difficult to know where to start when setting a target and what is the appropriate target to set for your business and sector.

To start with, there are many benefits to setting a target, including:

  • Show commitment and leadership: Quantifying your carbon emissions and setting credible targets to reduce them demonstrates to your staff, investors, shareholders and clients that you are taking the climate emergency seriously.

  • Comply with regulations: some businesses, depending on their size, sectors or turnover, are required to reduce and report on their emissions. This includes regulations such as TCFD, SECR and PPN 06/21.

  • Drive action: Setting a target is key when creating a decarbonisation plan and can help build momentum and drive carbon saving actions within your organisation. It provides you with a timeframe to achieve reductions and with an end goal.

  • Engagement and retention: With more and more employees, investors and shareholders asking for climate-smart organisations, setting a target and reducing your emissions can help you engage your internal and external stakeholders as well as attract and retain talent.

What steps should you take when setting a target?

Step 1: Set a carbon accounting baseline year

You need to set a baseline year to set a starting point from which you will measure the percentage of carbon emissions you have reduced and to determine if you have met the target you have set.

A baseline year can be selected for several reasons:

  • It aligns with the Science-Based Targets initiative best practice, which is to use your most recent year.

  • It is a year for which there is good data.

  • It is representative of normal operations, i.e. not 2020 or 2021 which may have been atypical due to disruptions throughout the pandemic.

  • For a new business, it is the first year of operations.

Please note that certain standards, like the Science-Based Targets initiative set specific requirements for setting a baseline year.

Step 2: Quantify your emissions

This may be an obvious step, but it is key to quantify your carbon emissions. At a minimum, you should quantify your carbon emissions for your baseline year and your current year of operation. It is highly recommended that you quantify your carbon emissions regularly, every quarter if possible, to monitor your progress.

Step 3: Set a net emissions target

A net emissions target is a catch-all for various terms which cover not only reduction but also often removal of carbon from the atmosphere.

There are four commonly used net emissions targets:

  • Net Zero: The IPCC defines Net Zero as achieving a balance between the amount of anthropogenic greenhouse gas emissions released to the atmosphere and anthropogenic removals of emissions over a specific time period. In contrast to a gross-zero target, which would reduce emissions from all sources uniformly to zero, a net-zero emissions target is more realistic because it allows for some residual emissions. Although some offsetting is implied, you should always reduce as much as you can before considering carbon removal.

  • Carbon Neutral: Carbon Neutral, or “Net Zero Carbon” refers specifically to a balance between carbon emissions released and carbon emissions mitigated. It traditionally does not consider wider greenhouse emissions. Occasionally, people will use carbon neutral and Net Zero interchangeably. Certifications such as PAS 2060 also extend the boundaries of Carbon Neutrality to include greenhouse gas emissions. Pursuing Carbon neutrality, whilst possibly more attainable in the short term, may not future proof your business sufficiently when compared to a Net Zero target. Further, businesses who champion carbon neutrality in place of Net Zero can be susceptible to claims of greenwashing.

  • Climate Positive: Climate Positive refers to activity that goes beyond balancing GHG emissions to remove additional greenhouse gas emissions. The aim is to deliver a net environmental benefit by removing more greenhouse gas emissions than are emitted. When deployed correctly, climate positive is more rigorous and goes beyond even Net Zero. Some companies are using Net Positive strategies to remove historical carbon emissions.

  • Reduction-Only: A reduction-only target means offsetting is not considered as a potential parameter, either for policy or financial reasons. Reduction-only targets can apply to Scopes 1 and 2, or also to Scope 3.

When setting a target, you should also consider setting a science-based target. A carbon target is deemed “Science-Based” if it is developed in line with the goals of the Paris Agreement to limit global temperature increase to well-below 2°C above pre-industrial levels and pursue efforts to limit warming to 1.5°C. The methodology for setting science based targets assumes a global approach to carbon emissions reduction. Individual business targets are set on the assumption that similar businesses will be following the same trajectory, thus collectively reducing the overarching carbon emissions to prevent temperatures from rising by more than 2°C.

The Science Based Targets Initiative defines and promotes best practice in emissions reductions and net-zero science-based targets

Step 4: Set a timeline

A target is meaningless without a timeframe in which to achieve it. You can choose a year suitable for your business, to align with other plans or strategies, or with commonly seen dates:

  • 2030 has been used by many institutions and businesses, and this is the year committed to by the EU for net domestic reduction of at least 55% compared to 1990 as part of the Paris Agreement

  • 2050 is the year Net Zero goal set by the UK government. However, many have suggested that this is too long a time period.

What to do next?

To ensure your business agrees a suitable decarbonisation target, it’s important to consider the context surrounding any action plan that you may design, and implement.

Here are some questions you should ask before setting a decarbonisation target:

  • How frequently should progress against the target be reviewed?

  • How does this align with your current reporting processes?

  • Which decision makers need to be consulted?

  • Do you need to engage any internal/external stakeholders before choosing a target?

  • What is your appetite for risk? How ambitious do you want to be?

  • Do you have a budget for decarbonisation to allow you to meet your target?

  • Can you implement enough interventions to reach the set target?

  • What barriers may prevent you from reaching your target and/or delivering your strategy?

  • What risks may arise from pursuing your decarbonisation targets?

  • What opportunities can you unlock by pursuing your decarbonisation targets?

  • What extra things can we do that may not have a carbon impact but would deliver social good?

Still not sure what target is appropriate for your business or how to reach it? Get in touch with us, we can help!


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