On July 30th of this year, the Science-Based Target initiative (SBTi) released technical publications to support the ongoing work of updating their Corporate Net-Zero Standard. This update will affect all organizations that have already, or are intending to set SBTi net-zero targets, so we're keeping a close eye on how the standard evolves.
These initial publications include the changes that are being discussed ahead of the updated first draft of the standard which will be available at the end of 2024, and they signal important developments that should be on Travel Managers' radars.
We dove into the publications and extracted what we believe are the key discussion points.
What are the SBTi and Net-Zero?
The SBTi was created in 2015 as a collaboration between CDP, the United Nations Global Compact, the World Resources Institute (WRI), and the World Wide Fund for Nature (WWF). The SBTi is leading the way in voluntary carbon reduction targets and plays a key role in defining best practices.
The Corporate Net-Zero Standard was first released by SBTi in 2021, setting a precedent for organizations aiming to align their targets with the Net-Zero transition. In May 2024, the SBTi announced the timing and terms of reference for updating the standard to ensure it remains aligned with the latest in climate science.
The update has been triggered by a surprising (or maybe unsurprising) stat: Scope 3 emissions, which includes business travel, account for about 75% of the average company’s emissions, and they pose the greatest challenge to decarbonize.
Changes to target boundaries
To address the outsized Scope 3 emissions, the publications discuss changing the "boundary" requirements for Scope 3 targets—but what is a boundary?
A science-based target covers the emissions of each individual Scope (e.g. X kg CO2e for Scope 3). A target boundary is the proportion of the total emissions for the Scope that is covered by the target. For Scope 3, the target boundary requirements are currently at least 67% of emissions for near-term targets and 90% for net-zero targets. Therefore, business travel emissions may or may not be included from an organization's science-based target based on materiality.
To understand more about target boundaries see the SBTi Net Zero criteria here.
The SBTi pointed out in the publications that organizations are finding it difficult to stay consistent with the emissions outside of the target boundary, and also in scaling up the boundary between near-term and net-zero targets. To this end, they are considering a number of options, including:
- Greater focus on materiality: Changing the Scope 3 boundary requirements to focus on the most significant, or "material" emissions (identifying the two most relevant Scope 3 categories) is one possible solution. This would mean:
- Organizations for which travel emissions are most significant will be able to focus solely on Category 6 (Business Travel) calculations and prioritize their travel decarbonization efforts.
- Organizations for which business travel is not material will need to focus on other Scope categories.
- Greater focus on the level of influence of emissions: Changing the Scope 3 boundary requirements to give greater weight to emission sources with higher levels of influence is another option. This would mean:
- Organizations could focus their decarbonization efforts on areas that are well within their control. For example, a company with large Category 11 (Use of Sold Products) emissions, which are largely out of their control, may switch to a greater focus on Category 6 (Business Travel) emissions.
Aggregation of Scope 3 categories
Given the discussion around target boundaries, it's clear that companies have unique emissions scenarios. The publications consider whether being more granular would lead to more effective targets and a better measure of their alignment with global climate goals. If adopted, this could mean separate targets for Upstream and Downstream emissions, or even each Scope 3 category, such as business travel.
Use of carbon credits
The publications also discuss the use of carbon credits in Scope 3 accounting. The discussion explores whether carbon credits can be used:
- From mitigation activities within the value chain to substantiate value chain emission reduction claims.
- To support the neutralization of residual emissions.
- To support beyond-value chain mitigation.
The publications don't provide a clear answer for where the SBTi will land on Scope 3 accounting practices for carbon credits, but future discussions should be followed closely to ensure carbon credits, including sustainable aviation fuel (SAF) direct procurement, are accounted towards Scope 3 reduction targets correctly.
Next steps
To ensure that Travel Managers are prepared for incoming changes to the Corporate Net-Zero Standard, we suggest that you review the materiality and level of influence your organization has over business travel emissions; these are the most relevant variables that will determine how the updates would impact your Scope 3 target.
The first draft of the Corporate Net-Zero Standard is expected to be released for public consultation towards the end of Q4 2024, which will provide greater clarity on how these discussion points may change all of our approaches to Scope 3 carbon reduction targets. When that draft finally drops, we'll be on the case!
