#ScienceBased-Targets 

Sustainability challenge and related SDGs

Human induced global warming is at record highs. 2023 was the warmest year on the record and the  
months from June 2023 until May 2024 have been consecutively the warmest months on record. As a result, the effects of climate change are more and more observable and becoming increasingly damaging. While over 80% of global GDP has set net zero goals, we are heading towards a warming of approximately 3.2 degrees Celsius by the end of Century. Setting net zero goals is great, but the actual implementation and decarbonization is key.
 
The Paris Agreement requires limiting global warming to well below 2 degrees Celsius and ideally 1.5 degree Celsius by the end of the Century. To meet this climate goal, we must achieve net zero CO2 emissions latest by 2050, according to recent reports by the Intergovernmental Panel on Climate Change (IPCC). To be on an emissions pathway compatible with net zero, we must reduce approximately 50% of CO2 emissions by 2030. The SDG 13 “Climate Action” outlines the necessary action by 2030.

Possible solutions and their contribution to achieving the SDGs

Thankfully, we have many solutions available for the necessary net emission reduction by 2030, including #Solar and #WindPower, which have by far the largest emission reduction potential if they are replacing fossil fuels. The Science Based Targets Initiative (SBTi) is a corporate climate action organisation that enables companies and financial institutions to set and validate science-based climate targets.  

Launched in 2015, the SBTi is a collaboration between the Carbon Disclosure Project (CDP), United Nations Global Compact, World Resources Institute (WRI) and WWF. More than 8400 companies are taking climate action with SBTi, of which more than 5500 set science-based targets and more than 3200 have net-zero commitments. SBTi is accepted as the gold-standard for voluntary climate targets.
For companies and financial institutions setting and validating science-based climate targets and decarbonising is a cost-effective way to mitigate climate change and meeting net zero. Typically, companies can sign a net zero commitment to SBTi and submit their climate targets based on specific guidance within two years. When the climate targets are successfully validated by SBTi, they can be communicated, and their progress annually disclosed in sustainability reporting.  
A net zero target includes near-term targets and long-term targets until 2050 latest. They include emission scopes based on the Greenhouse Gas (GHG) Protocol for emission scopes 1 (direct emissions), scope 2 (indirect emissions from purchased energy) and scope 3 emissions (across the value chain, upstream and downstream).

Primarily related SDG Targets: 13.2, 13.3

Investment Rationale and Growth Potential

Climate change mitigation efforts require investments, to achieve the necessary to a low-carbon economy. Climate reports by IPCC effectively represent an investment agenda. However, there is a finance gap for climate finance. According to the Climate Policy Initiative, climate finance amounts to USD 1.2 trillion as of 2021/2022. However, the actual climate finance needs are approximately USD 8 trillion and go up to USD 10 trillion by 2030.  

More action is needed by investing into this transition. By setting and validating science-based targets, companies chart a pathway to net zero that investments and measures to decarbonise their operations and engage in decarbonising their value chain. By expanding renewable energy decreases dependency on energy prices, increased operational efficiency and better risk management that can lead to better financial performance. Therefore, companies and investors are better prepared for future regulation.  

Many countries have set climate targets and increasingly demand of the real economy and financial industry to align with net zero. #ScienceBasedTargets enable companies to do so. Which is why radicant also conducts #Engagement with invested companies to support their net zero journey with SBTi. By setting and validating #ScienceBasedTargets, companies actively consider climate-related risks and reduce their negative impact on the climate. The SBTi provides companies a robust and constantly improving framework to support their ambition towards achieving net zero.