Science Based Target Initiative for SMEs.

25.01.24 | Jakob Tresch

As of January 2024, a total of 7482 businesses have embraced emission reduction targets in alignment with Science Based Targets initiative (SBTi) guidance. The SBTi officially approved 4471 of these targets (Link). Notably, a third of the global market value has joined this green initiative. Collectively, these companies have committed to reducing emissions equivalent to 1.5 billion tons of CO2 according to SBTi’s guidelines.

SBTi is becoming more present in the food industry due to pressure from retailers, as they are pushing their suppliers to commit to SBTi as well. In this post, we give you an outline of the topics relevant to Small and Medium-sized enterprises (SMEs) in the food industry.

Are you an SME according to SBTi?

According to the SBTi, a company is generally considered a SME if it has fewer than 500 employees. This classification allows for simpler and more streamlined processes for setting and validating science-based targets, acknowledging the resource limitations and unique challenges faced by smaller businesses.

In addition to the employee count, the SBTi considers other factors for defining SMEs. These factors include annual revenues and financial assets. For the most current and detailed criteria, we refer directly to the SBTi’s official website (Link).

SBTi Pathways for SME.

Setting your targets always has to start with a carbon inventory. The data you provide to SBTi has to be based on the GHG protocol accounting standards. Additionally, you must include a confirmation that you did not exclude any scope 1 or 2 emissions that amount to more than 5% of your greenhouse gas inventory.

The next step is to select a scope 1 base year and a scope 2 base year including a method determination (market of location based). Also, you need to confirm to avoid offsets towards your targets, and that you will publish and share progress against your targets annually.

As defined by the SBTI, as an SME you mostly need to focus on scope 1 and scope 2 emissions and set targets accordingly. However, be aware of the Forest, Land and Agriculture Guidance (FLAG), which is likely to affect food manufacturers. To give a rough overview of the targets you can assume the following minimal baseline if you set your baseline to be after 2020:

ABSOLUTE REDUCTION TARGET SCOPE 1&2 = 4.2% (target year – 2020)

ABSOLUTE REDUCTION TARGET SCOPE 3 = 2.5% (target year – 2020)

As an illustration, if you would set a near-term target of 2030 you would have to reduce your emissions in scope 1 and 2 by 42% and 25% in scope 3 to be approved for SBTi. For more information have a look at the Validation Protocol (Link).

Forest, Land, and Agriculture Guidance (FLAG).

The FLAG (Link) guidance in SBTi must be applied by SMEs when their operations significantly involve land-intensive sectors. If an SME’s activities or value chain include notable land use, land use change, and forestry activities, or if they operate in agriculture or related sectors, the FLAG guidance becomes relevant. Specifically, FLAG guidance must be applied when more than 20% of emissions in scopes 1, 2, or 3 are linked to land-related activities and impacts. This means that most food manufacturers are affected by the FLAG guidance due to the high emissions in agriculture.

Net Zero Standard.

A new appearance made the net zero standard (Link) introduced in 2023. SBTi defines a net-zero target as one where a company aims to reduce its GHG emissions in line with what is required to limit global warming to 1.5°C. After achieving deep decarbonization, the company then neutralizes the impact of any remaining emissions by removing an equivalent amount of CO2 from the atmosphere. This approach emphasizes the importance of actual emission reductions within the company’s value chains as the primary effort before relying on offsets for any residual emissions. For a company to align with the SBTi’s net-zero target, it typically needs to decarbonize by 90-95% compared to a base year. This means the company must focus primarily on significantly reducing its greenhouse gas emissions through internal changes and innovations. The remaining emissions (5-10%) can be neutralized with credible carbon removals.

Conclusion.

In conclusion, SBTi’s influence continues to grow, and SMEs, including those in the food industry, have a vital role to play in shaping a sustainable future. By embracing science-based targets, SMEs can make substantial contributions to reducing global emissions and fostering a greener, more environmentally responsible world.