To read about cross-sector SBTi targets, visit this article.

I - Overview

At the moment, the SBTi is the only organization proposing sectoral trajectories, as this requires a political decision on how to divide up the emissions pie in 2050.

The SBTi sector-specific guidelines are based on relative objectives, since they focus on an objective of “physical intensity” reduction, over scope 1, 2 and 3. See this article to read about relative objectives and physical intensity.

Additionally, SBTi has produced specific approaches for financial institutions, the shipping industry, and the forest, land and agriculture sectors (FLAG).

II - Supporting guidance

Where does the SBTi Net Zero certification fit into all of this?

The SBTi Net-zero targets follow on from the short-term objectives. The aim is to commit to a trajectory that will enable the company to reduce its emissions by 90% in absolute terms (or -97% in physical or economic intensity) in scope 1, 2 and 3 by 2050.

This target certifies the company's strong, long-term commitment. Once the target has been set, it is reviewed at least every 5 years, and the company must set itself short-term objectives on a regular basis until it reaches its objective. The submission of a long-term objective implies the submission, simultaneously or not, of a short-term objective.

For specific sectors, the trajectories may vary: the scope 1&2 reduction is set for 2040 for the power and maritime sectors. The specifics of each sector are described in the Net-Zero Standard, figure 9.

III - SBTi setting tool demo

Here is an example of a firm setting its “physical intensity” SBTi target.

2. The company enters a base year and the size of its operations that same year, in a unit specific to its sector, given by SBTi (here, the square meters). The company also enters the total quantity of greenhouse gasses they emitted over the base year, under respective emission scopes 1 and 2.

3. The company enters a target year, which it chooses to achieve an emissions reduction trajectory.

4. Finally, the company provides an estimate of its activities' future annual growth (if known) by selecting the "target year output" setting. If the future growth of the company activities is unknown, it should select the "fixed market share" setting.

Once all information is entered into the software, it computes the “physical intensity” reduction target automatically, which is broken down into a target year reduction goal in objective and in relative terms:

You then need to set an annual reduction target to meet the annual SBTi target.

IV - Conclusion

You can define your climate objectives using several methods by choosing the one that suits you best. The idea is obviously not to follow the "easiest" trajectory obtained. Besides, note that the absolute emission reduction of 4.2% per year and the SDA objectives lead to the same outcome over the long term.

Depending on your industry, one of the methods may be the most relevant. In general, economic intensity objectives are more coherent in sectors where the products are very diversified (chemicals, for example). While the physical indicators are more representative in homogeneous sectors (such as real estate).

However, the minimum objective of 4.2% absolute emission reduction year-by-year and the SDA are the most recommended because they cover all the scopes of emissions and are not dependent on inflation and product price fluctuations.

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