The organisation that has become the global authority for evaluating corporate climate targets is undergoing a significant restructuring to address concerns related to conflicts of interest and expedite the assessment of company plans.
As businesses, often responding to shareholder pressure, rush to commit to reducing their carbon emissions, typically aiming for net-zero emissions by 2050 with interim targets until 2030, it has become essential for these plans to be externally validated to ensure credibility, especially given accusations of greenwashing by many firms. Scientists, investors, and climate advocacy groups insist on the need for independent validation of emission reduction plans.
The Science Based Targets initiative (SBTi) has played a pivotal role in setting standards for targets and determining the adequacy of companies’ plans. However, concerns have arisen regarding its ability to conduct assessments with the utmost independence and rigour, as well as its capacity to handle a growing backlog of approvals.
In response to these challenges, SBTi has introduced a series of measures. Firstly, it has established a new company in the UK to ensure impartiality, with the fee-charging component responsible for validating corporate targets operating under a subsidiary, while standard setting will be housed within the new entity.
Additionally, SBTi has appointed Francesco Starace, a partner at EQT Infrastructure and former CEO of Italian energy giant ENEL, as the chair of its board of trustees, along with two independent trustees. Starace emphasised the pivotal role of SBTi in promoting ambitious corporate climate action, underpinned by credible target validation and robust standard setting.
To accommodate the surging demand, SBTi plans to expand its validation capacity, as evidenced by an 87% increase in the number of firms setting climate targets last year.
SBTi will also revamp its standard-setting procedures and plans to publish them following the appointment of an independent body to approve SBTi standards.
Originally founded by various climate groups, including the World Wide Fund for Nature and the United Nations Global Compact, SBTi charges companies a fee for validating their targets and counts among its funders the Bezos Earth Fund, IKEA Foundation, and Bloomberg Philanthropies.
Criticism has been levelled at SBTi regarding the transparency of its methodologies. Bill Baue, a vocal critic and sustainability activist formerly associated with the initiative, believes that the restructuring does not fully address the issue of SBTi’s effective monopoly on the validation process. He also points out that the appointment of trustees representing SBTi’s client base overlooks the voices of those disproportionately affected by climate change.
On the other hand, James Parker, head of sustainability at the carbon accounting software platform Minimum, views the appointment of new trustees, including Ivan Duque, a former president of Colombia, as aligned with the growing demand for stronger corporate targets. The separation of the validation and standard-setting functions within the organisation is seen as a positive step toward enhancing impartiality.
