Setting climate-related targets
Setting climate-related targets
Our sustainability webinar series aims to break the complex world of sustainability into digestible pieces to help you understand the fundamentals and start driving change in your organisation.
At our November event, Aletta Boshoff discussed the importance of setting climate-related targets and why this is not only important but essential for your organisation's future.
Why climate-related targets matter
In today’s rapidly changing world, setting and disclosing climate-related targets is more important than ever. Not only does it help organisations monitor their progress towards strategic goals, but it also ensures compliance with legal requirements.
Organisations should establish both quantitative and qualitative climate-related targets, including greenhouse gas (GHG) emissions targets. For each target, provide detailed information such as:
- What measurement will you use?
- What are you aiming to achieve?
- Which part of the organisation does this target apply to?
- Over what timeframe will you achieve this target?
- Base period for progress measurement – what is your starting point?
- What are the key steps along the way?
- Type of target - is it absolute or intensity-based?
Organisations must also disclose their approach to setting and reviewing targets, including third-party validation, review processes, metrics for monitoring progress, and how they will handle any necessary changes to targets.
Entities also need to regularly report their performance against each target and include an analysis of trends or changes to provide context and demonstrate transparency.
For GHG emissions targets, entities must specify which gases are included, whether the target covers Scope 1, 2, or 3 emissions, and whether the target is based on gross or net emissions after accounting for carbon credits.
Setting a target is just the beginning. You need a plan to achieve it, involving projects, systems, and processes to monitor and disclose progress. To maintain credibility, ensure your annual reports are comprehensive and subject to assurance.
Reasons for setting targets
Setting climate-related targets goes beyond mandatory disclosures and compliance with standards like AASB S2 Climate-related Disclosures. The goal, as outlined by the Greenhouse Gas Protocol established nearly 25 years ago, is to reduce your baseline over time and encourage businesses to decarbonise.
While mandatory reporting requires annual disclosures, the core principle remains reducing carbon emissions. Once you have a baseline, it's crucial to set targets and actively work towards lowering them. These targets should become key performance indicators (KPIs) for senior management, ensuring they remain a priority in decision-making processes.
Why set a GHG target?
Setting a greenhouse gas (GHG) target is crucial for keeping climate issues on senior management's radar and integrating them into key decisions about products, services, materials, and technologies. It helps minimise and manage GHG risks, achieve cost savings, stimulate innovation, and prepare for future regulations. Additionally, it demonstrates leadership and corporate responsibility, and supports participation in voluntary programs, showcasing a commitment to sustainability.
Steps in setting a GHG target
For the most comprehensive and widely used greenhouse gas accounting standards, which offer a robust framework for businesses, governments, and other entities to measure and manage their emissions, the GHG Protocol should be where you start.
Step 1: Obtain senior management commitment
Securing buy-in from senior management, especially at the board or CEO level, is crucial. This commitment ensures the necessary resources and support for achieving the GHG reduction goals. It also helps embed the target into your organisation's culture and decision-making processes.
Step 2. Decide on the target type
Choose between an absolute target, which aims to reduce total GHG emissions, and an intensity-based target, which focuses on reducing emissions relative to a business metric (e.g., emissions per unit of product). Each type has advantages and challenges, so select the one that best aligns with your organisation's goals and capabilities.
Step 3. Decide on the target boundary
Define the scope of your target by determining which GHGs, geographic operations, and emission sources are included. This step ensures clarity and transparency in what the target covers, making it easier to track and report progress.
Step 4. Choose the target base year
Select a base year against which future emissions reductions will be measured. This can be a fixed year in the past or a rolling base year that adjusts over time. The choice affects how progress is tracked and compared over time.
Step 5. Define the target completion date
Set a realistic and strategic completion date for achieving the target. Long-term targets allow for more comprehensive planning and investment, while shorter-term targets may be more practical for organisations with shorter planning cycles.
Step 6. Define the length of the target commitment period
Determine the period during which emissions performance will be measured. This could be a single year or multiple years. The length of this period influences the level of commitment and the ability to track progress over time.
Step 7. Decide on the use of offsets or credits
Consider whether to use offsets or credits to meet the target. Offsets can be useful when internal reductions are costly or limited. However, it's important to ensure their credibility and transparency and report them separately from internal reductions.
Step 8. Establish a target double-counting policy
Develop a policy to address potential double counting of emissions reductions, especially if offsets or credits are used. This policy should specify how reductions are reconciled with other targets and programs to maintain integrity and transparency.
Step 9. Decide on the target level
Set a specific reduction level based on an analysis of your organisation's emissions drivers and reduction opportunities. Consider factors like production plans, revenue targets, and existing environmental initiatives. Benchmarking against similar organisations can also help set a realistic and ambitious target.
Step 10. Track and report progress
Implement a robust system for tracking and reporting progress towards the target. Regular performance checks and transparent reporting are essential for maintaining credibility and demonstrating commitment to stakeholders. Include detailed information on emissions, reductions, and any offsets used.
These steps provide a comprehensive framework for setting and achieving GHG emissions targets, helping organisations contribute to a more sustainable future.
Learn more
The sustainability reporting landscape is evolving rapidly, making it challenging for organisations to stay current and determine where to begin with mandatory reporting. If you need assistance developing a plan, contact us.