August 11, 2021
Looking around at recent news headlines from heat waves blanketing northwestern Canada and the U.S. to floods in Belgium, western Germany, China and India, the impacts of climate change can already be felt by millions around the world. While scientists have agreed for years that climate change is manmade and have sought to sound the alarm around potential catastrophic impacts, it is still a relatively nascent endeavor to connect specific extreme weather events to climate change. Yet, recent extreme weather events should shatter the common perceptions that climate change is only a problem for future generations. Having far exceeded mainstream modeling around the rapidity with which the climate is changing, businesses not only have the opportunity to adapt to these changing conditions but also to mitigate the worst of the impacts that are yet to come.
To focus organizational attention on addressing climate change and decarbonization—that is, reducing carbon emissions from a company’s direct operations as well as its supply chain—it’s crucial for companies to set a public goal. The gold standard for credible goal setting is to adopt a science based target. The Science Based Target Initiative (SBTi) encourages businesses to adopt an aggressive climate goal to limit warming to 1.5°C by 2050 and, as of July 2021, the SBTi no longer accepts “well below 2°C” targets. The significance of aligning corporate targets in line with a 1.5°C future is to follow the scientific community’s consensus on what is needed to avoid catastrophic impacts of climate change as enumerated in the 2018 Intergovernmental Panel on Climate Change (IPCC) report as well as to realize the world governments’ stretch goal to limit warming to 1.5°C per the 2015 Paris Agreement. Additional benefits to setting a science based target include the ability to proactively address climate and regulatory risks, and ensure that businesses remain competitive in the 21st century.
The first step to setting a goal is to establish an organization’s starting point by conducting a carbon inventory and create a baseline year to track progress. There may be a number of challenges involved but it is well worth the effort to then make data driven decisions when assessing mitigation projects and modeling future scenarios. Just as companies model scenarios to forecast business growth in order to make capital investment and resource planning decisions, so too is it important and valuable for companies to model future carbon scenarios to be able to decarbonize over time and de-risk its operations. The sooner one gets started, the sooner that companies are able to take actions and set targets in line with a 1.5°C future.
With the SBTi’s recent announcement to raise its ambition to 1.5°C by 2050, some companies that have set “2°C targets” or “well below 2°C targets” may be in a quandary. Yet, it’s important to realize that companies have until 2025 to update their goals so that they are in line with the latest SBTi guidance. To best position organizations to increase their level of ambition, immediate steps should be taken to implement cost effective near- and medium-term projects. These organizations need robust processes and systems to measure the impact of the near-term projects, not only in terms of environmental impacts but also the financial payback. Over the next few years, these organizations need effective tools to conduct future scenario planning to work towards a low carbon future. This is where technology platforms can provide the necessary versatility to track and analyze the impact of near-term mitigation projects while supporting effective deployment of capital investments as well as long-term scenario planning for ambitious goal setting.
SINAI Technologies is focused on automating the way companies monitor, price, analyze risk and reduce carbon emissions. Whether you are new to setting a science based target or already have an ambitious goal that you want to take to the next level, we look forward to scheduling a call to discuss your climate strategy and decarbonizing your business together.