The number of companies and financial institutions setting greenhouse gas (GHG) reduction targets and having them validated by the Science Based Targets initiative (SBTi) doubled in 2023 (up from 2,079 in 2022). This extraordinary demand for corporate decarbonization standards and target validation services has prompted a major scale-up operation to quickly develop a broader range of trusted, credible, emissions reduction standards and increase capacity for validating companies’ targets, while aiming for the highest level of service excellence for companies and financial institutions.
Several months after the Science Based Targets initiative (SBTi) announced its de-merger from its partner organizations, it has been granted charitable status by the Charity Commission for England and Wales. Previously a collaborative initiative between CDP, We Mean Business Coalition, World Resources Institute (WRI), World Wide Fund for Nature (WWF) and the UN Global Compact, the SBTi now takes its place as an independent organization alongside its partners to build out its critical role in the corporate climate ecosystem.
The SBTi has also incorporated a subsidiary which will, when fully operational, house its target validation services, with all profits donated to the charity. Standard-setting will remain in the charity, which announced a legal board of trustees in September, chaired by the former ENEL CEO Francesco Starace.
The registration of the SBTi’s charitable status by the UK’s Charity Commission means that IKEA Foundation’s $18m funding pledge is now coming to fruition, supporting the development of standards and building and strengthening of SBTi infrastructure. This matches the $18m from the SBTi’s other principal funder, the Bezos Earth Fund, which has been instrumental in enabling the SBTi’s significant upscaling since 2021.
SBTi standard development priorities for 2024
In 2024, the SBTi will review the Corporate Net-Zero Standard for potential updates the following year. Building upon the near term target-setting guidance for financial institutions, the SBTi Financial Institutions Net-Zero Standard will be developed in tandem. The SBTi is also prioritizing the development of sector-specific standards for six high impact sectors: oil and gas, electric utilities, automotives, chemicals, insurance and apparel.
In addition, the SBTi is to pilot a hybrid model for developing sector-specific standards, partnering with external organizations and pooling expertise. This model could lead to a step-change in how some SBTi standards are developed, paving the way for a major acceleration in the number of sector-specific standards developed in 2025 and beyond.
Call for Validation Council members
Following work started in 2023 to strengthen the robustness of the SBTi’s standards, including the appointment of an independent Technical Council, a similar process is also underway to strengthen the efficiency, accessibility, and credibility of SBTi validation services. A Validation Council will be formed to ensure independence in decision-making. A call for members for the Validation Council, along with Terms of Reference for the Council and requirements for Council Members, will be published on the SBTi website in the coming weeks.
Compliance capacity is increasing with the appointment of two compliance managers, and the forthcoming appointment of two quality managers. The pace of validation continues to accelerate, with the number of companies setting targets doubling in 2023, while average waiting times halved.
Speaking of the update, Luiz Amaral, CEO of the SBTi, said:
“We would like to extend our gratitude to IKEA Foundation, the Bezos Earth Fund and all our funders for their valuable contribution, supporting the SBTi in pursuit of its mission and the build out and scale up of our organization. We promised to prepare the SBTi for the next phase of growth and are delivering on that, once again doubling the number of companies validated in a single year while establishing our independence and strengthening our governance.”
Core funder IKEA Foundation’s new CEO Jessica Anderen added: “The SBTi’s transformation into an independent entity will strengthen the organization’s ability to drive ambitious corporate climate action. The IKEA Foundation is proud to support the SBTi and looks forward to seeing its contribution to rapid, deep, informed corporate decarbonization.”
Bezos Earth Fund Andrew Steer President & CEO says: “For companies seeking to be part of the climate solution, setting science-based targets is key. The SBTi has become the go-to resource for climate-leading companies to set ambitious targets. The Bezos Earth Fund is pleased to support SBTi as it continues to refine its rules and build its institutional capacity to meet growing demand.”
