A Practical Guide to Setting Emission Reduction Targets
Why Setting Emission Reduction Targets Matters
The Intergovernmental Panel on Climate Change (IPCC) has outlined targets in response to the Paris Agreement, aimed at addressing the growing risks of climate change. For businesses, aligning with these goals means setting emission reduction targets that contribute to the broader transition toward a more sustainable future.
While reducing emissions can be challenging, it also opens up opportunities for growth and innovation. It often requires businesses to rethink aspects of their strategy and day-to-day operations, leading to more efficient practices and long-term resilience.
Targets for greenhouse gas (GHG) reductions are a key part of managing this transition. They help organizations approach change in a structured and organized way, making it easier to track progress, adapt strategies, and contribute meaningfully to climate action.
Common Approaches to Setting Emission Reduction Targets
When setting emission reduction targets, businesses typically choose between two common approaches: absolute targets and intensity-based targets. Each offers a different way to measure and track progress, depending on your operations and growth plans.
- Absolute Emission Reduction Targets
These targets aim to reduce total greenhouse gas (GHG) emissions by a fixed amount over time, regardless of business growth. They contribute most directly to lowering overall emissions and are straightforward to track and report.
Example:
A company sets a target to reduce its total emissions from 1,000 tonnes of CO₂e in 2023 to 700 tonnes by 2030. This is a 30% absolute reduction, regardless of how much the company grows during that period. - Intensity-Based Emission Reduction Targets
These targets reduce emissions relative to a business metric, such as revenue or units produced. They allow for growth while improving efficiency but may not lower total emissions.
Example:
A manufacturer sets a target to reduce emissions per product unit from 0.5 tonnes of CO₂e in 2023 to 0.3 tonnes by 2030. Even if total production increases, the company is aiming to produce each unit with lower emissions.
Setting Targets Aligned with Climate Science: The Role of SBTi
After deciding on the type of emission reduction target, some businesses choose to go a step further by aligning their goals with climate science. This is where the Science Based Targets initiative (SBTi) comes in.
SBTi is a global initiative that supports companies in setting credible, science-aligned emission reduction targets. It is a collaboration between CDP, the United Nations Global Compact (UNGC), the World Resources Institute (WRI), and the World Wide Fund for Nature (WWF). Through its verification process, SBTi ensures that targets are consistent with the level of decarbonization required to meet the goals of the Paris Agreement.
For SMEs, SBTi offers a simplified route. Businesses can choose from two predefined targets—aligned with either keeping global temperature rise well below 2°C or limiting it to 1.5°C. In addition, the requirements around Scope 3 emissions are less demanding, making the process more accessible.
While aligning with SBTi can help strengthen your climate strategy and signal leadership in sustainability, it may not be suitable for every business at every stage. It's important to consider whether this approach aligns with your current context, including your industry, size, and available resources.
How to Set an Emission Reduction Target
- Establish a Baseline Year
A baseline year is the reference point against which future greenhouse gas (GHG) emissions are measured. Ideally, this should be a recent and representative year for your business, with reliable and verifiable emissions data available. Setting a baseline is essential to understand your current emissions profile and identify where your greatest impacts lie. - Define Your Target
Once a baseline is in place, the next step is to set a clear emissions reduction target. This target should be both ambitious and achievable, informed by current climate science. According to the Voluntary Sustainability Reporting Standard for non-listed SMEs (VSME), businesses are encouraged to consider the following scientific evidence:
- SBTi guidance: Reduce GHG emissions by 42% by 2030 and by 90% by 2050, using 2020 as the base year.
- Carbon Law (Stockholm Resilience Centre): Halve emissions every decade and rapidly scale up renewable energy to maintain a 75% chance of keeping temperature rise below 2°C.