Setting Meaningful Emission Reduction Targets

In the first part of our series, we talked about measuring your organisation's carbon footprint. As previously established, measuring emissions is the essential first step for building a solid climate change strategy and futureproofing your business.

After all, you cannot manage what is not measured. Now that your organisation has measured its emissions, the next step is to start working towards reducing them. For this, we need to set targets to work towards. Setting targets not only helps to remain accountable but also helps get a better understanding of what is needed for your climate strategy to succeed.  

In the Paris Agreement, the global community agreed to limit global temperature rise to well below 2°C, and preferably halt it to 1.5°C from pre-industrial levels. To achieve this and mitigate the global risks of climate change, the Intergovernmental Panel on Climate Change (IPCC) has concluded the following: 

  • Global emissions caused by human activities would have to fall by 45%; 
  • This needs to happen by 2030, compared to 2010 levels; 
  • We need to reach net-zero by 2050.  

To reach these targets, all levels of society have to take action. For the corporate sector, the key is to develop emissions reduction targets that follow the trajectory of global climate goals. Not only is this necessary to mitigate climate change, but setting targets is also becoming an increasingly integral part of good business practices. In fact, companies demonstrating leadership on environmental and climate issues have been shown to economically outperform their peers. 


The business benefits of ambitious targets  

Setting targets for decarbonization efforts is an essential step on n organisation's climate journey. It gives a specific goal to work towards and helps define the exact actions that are needed to decarbonize your operations. Furthermore, setting public targets is an excellent way to show transparency and a commitment to climate actions for both internal and external stakeholders.  

Companies setting ambitious public targets have observed strengthened brand reputation, investor confidence, regulatory resilience, and even bottom-line financial savings. The reputational boost resulting from ambitious climate action can lead to new market opportunities, attract new customers, and invite new investments.   

Setting targets is not therefore only good for the climate – it’s good for business too.  


Setting science-based targets  

One way to set targets and communicate them publicly is by getting them verified through the Science-Based Targets Initiative (SBTi). SBTi provides a verification process that ensures companies are setting goals aligned with climate science and meeting targets in line with the Paris Agreement.  

Setting science-based targets have been proven to help companies cut their emissions effectively. A typical SBTi validated company is reducing their annual emissions at a rate exceeding the rate needed to limit global warming to 1.5°C. As shown in figure 1, companies with science-based targets managed to lower their emissions by 25% between the years 2015 and 2019. In contrast, global emissions rose by 3.4% in the same timeframe.   

 Comparison SBTi Companies Emissions to Global Emissions

  Figure 1. Comparison of SBTi companies’ emissions to global emissions. (Source: SBTi)  


Developing targets  

When setting targets, it is important to make sure they are realistic, but also have a tangible impact on your company’s carbon footprint. For this, it’s good to follow the SMART framework:  

  • Specific  
  • Measurable  
  • Achievable  
  • Relevant  
  • Time-bound  


Targets should be clear and well-defined, and they must always be based on accurate and transparent emissions reporting. For reporting purposes, targets need to be tied to a base year and have a clearly defined deadline. Additionally, they should be relevant to your sector and your company’s operational profile by targeting your main sources of emissions. And while targets must be achievable, it is key to also be ambitious.  

An organisation's willingness to take strong action on its climate journey sends a positive message to stakeholders and the public. First, you will need to complete a carbon footprint assessment. Then, as a start, you can set targets for your most important sources of emissions or those on which you have the most influence to reduce. Eventually, all emissions sources should be included in the targets.  

It is advisable to set climate targets that cover all 3 scopes of emissions. This means setting targets for emissions from your operations, as well as from your value chain. Your own operations are a good place to start, but a climate leader should always be inspiring others to make a positive change as well.  

Engaging with your value chain is important to curb emissions from your entire carbon footprint. Although scope 3 emissions occur outside of your operations, they make up the majority of emissions for many companies and are not outside of your sphere of influence.   


Absolute vs intensity targets  

Absolute targets are required by most reporting standards. An absolute target is a target that aims to reduce the total amount of emissions from your company. An example of a well-set absolute target is:  

  • Reduce your scope 1 and 2 emissions by 50%  
  • Reduce scope 3 emissions by 30% by 2030 compared to the base year of 2015.  

Another type of target is an intensity target. This type of target is set relative to productivity or economic output, such as annual revenue, the number of transport movements, or a number of products sold.  

Intensity targets stimulate businesses to improve efficiency and reduce greenhouse gas emissions on a relative basis.  

Examples of a well-set intensity target are:  

  • To reduce emissions per shipment by 30% by 2030 from a 2018 base year; 
  • To reduce emissions per product sold by 25% by 2030 from a 2014 base year.  

However, only reducing along intensity targets can allow for increases in the company’s total emissions due to growth in business operations. Therefore, intensity targets are not allowed in most reporting standards, or by the SBTi, unless they lead to absolute emission reductions.  

Setting both types of targets is the best course of action, intensity targets: 

  • Stimulate reductions in the total company footprint; 
  • Call for improvement in energy efficiency; 
  • Encourage emission reductions in specific parts of the operations or value chain; 
  • Which in turn helps achieve the absolute target.  


Net-zero targets 

The ultimate goal of setting targets and reducing emissions is reaching net-zero emissions by 2050. For this, the SBTi has launched a new Net-Zero Standard. IT aims to help companies set both short- and long-term targets that align with science and the sector-specific requirements to reach net-zero by 2050.  

Setting science-based targets according to this standard is necessary to make national net-zero commitments a reality. In 2021, nearly 70% of the global economy was covered by national net-zero pledges from world leaders. The net-zero standard requires companies to achieve deep long-term decarbonization efforts of 90-95% across all scopes by 2050. A limited amount of the remaining emissions that cannot be completely reduced can be offset with credible high-quality carbon removals. 

Setting emission reduction targets is an integral part of a successful climate strategy. Stakeholders and the public are showing a growing interest in climate action all around the world. Business ambition for 1.5 creates an opportunity to gain business benefits while making a positive change. Setting targets is an important step in both realising what your company can do to lower their impact and being able to communicate credible ambitions publicly.   

Once your organisation has measured emissions and set a target for reducing them, it’s time to move on to reducing emissions. Join us for the next instalment of our series or get started with setting a target for your company today!