SBTi recently released “Catalysing Value Chain Decarbonisation”, a comprehensive, global and cross-sector survey to better understand the barriers and limitations companies face when baselining, setting and delivering scope 3 science-based targets.
Below is a summary of the survey:
The report and survey highlight the crucial role of value chain decarbonisation in the transition towards a net-zero economy. It reveals that value chain emissions, also known as scope 3 emissions, make up more than 70% of corporate greenhouse gas (GHG) inventories and are a part of 96% of validated science-based targets.
Given the scale and importance of scope 3 target-setting, the Science-Based Targets initiative (SBTi) has launched a process to review and update guidance, methods, and criteria to ensure effective value chain decarbonisation. To this end, a stakeholder engagement survey was conducted to understand the challenges faced by organisations when baselining, setting, and delivering scope 3 targets.
Scope 3 emissions and science-based targets
The survey found that most organisations include scope 3 emissions in their GHG inventory, with a majority driven by a desire to set a science-based target. While regulatory disclosure was not a motivator, 60% of respondents believe that compliance scope 3 reporting will be required in the future. However, data access is a significant barrier to developing a robust baseline, with limited supplier data being a primary issue. In addition, companies face challenges such as limited time and resources, interpretation of GHG accounting standards, and low comparability of baselines between peers. 70% of organisations have re-baselined their emissions in the last five years, 50% of which have been due to methodological changes.
Despite the inclusion of scope 3 commitments in 96% of validated science-based targets, 90% of respondents believe that the process for setting a scope 3 science-based target is challenging. Companies experience difficulties with low confidence in their ability to deliver scope 3 decarbonisation due to perceived consequences of failure and the maturity of delivery roadmaps. Additionally, a lack of target-setting methods tailored to company circumstances is a barrier, including sector specificity and accounting for growth. Respondents also cited unclear or ambiguous SBTi requirements, weak or unknown business cases, and a lack of understanding amongst company decision-makers as challenges for target setting.
Progress on decarbonisation
When it comes to delivering scope 3 decarbonisation, 50% of respondents report being off track for delivering their scope 3 target, despite executives being directly accountable for decarbonisation. Respondents identified emissions in scope 3 cat. 1, purchased goods and services, and scope 3, cat. 11, use of sold products as the most challenging to decarbonise. The top three challenges for target delivery include the ability to influence upstream suppliers, cost of decarbonisation, and the ability to track progress towards a target due to insufficient access to primary data. Company growth, ability to influence end-users, availability of decarbonisation technologies, and understanding which levers to use for demonstrating progress towards a science-based target were also considered barriers to target delivery.
Unlocking action through stakeholders
The report concludes that tackling the challenges identified in the survey will require action from stakeholders across the climate ecosystem. Six high-level solutions have been identified:
- improving data collection and supply chain traceability
- enhancing accounting frameworks
- target-setting guidance and methods
- collective value chain action
- continued engagement of financiers and regulators
- increased internal efforts.
Addressing the structural challenges companies face when setting and delivering science-based targets is critical to unlocking action and accelerating progress towards a net-zero economy. This paper serves as a call to action for all stakeholders in the climate ecosystem.