How mid-market companies can start with setting Science-Based Targets
Implementing verified science-based targets (SBTs) is the gold-standard for companies of all sectors and sizes committed to reducing their greenhouse gas emissions.
Establishing and committing to SBTs is a firm commitment to sustainability and sets a real statement of intention to stakeholders. It is a multi-step process which can benefit from experienced consultants helping navigate the technical aspects.
Firstly, what exactly are SBTs? In a nutshell, they are targets for reducing greenhouse gas emissions which are in line with what the latest climate science says is necessary to meet the goals of the Paris Agreement (limiting global warming to 1.5°C above pre-industrial levels).
The time and resource required is significant, so why bother? Failing to set and achieve targets poses significant reputational risks. “Companies must prioritise sustainability not only to enhance their market position but also to ensure long-term viability and compliance with evolving regulatory standards,” says Jennie Galbraith, ESG Director at Inflexion. But the impetus for setting targets is a stick as well as a carrot with myriad benefits:
- Enhanced accountability: Establishing benchmarks and a clear path towards sustainability can strengthen accountability.
- Competitive advantage: A commitment to sustainability may provide a competitive edge in the market.
- Risk mitigation: Reducing emissions helps mitigate regulatory and other risks.
- Operational efficiencies: The process can drive efficiencies and cost savings.
- Employee engagement: Sustainability initiatives can significantly improve employee engagement and morale.
- Industry dialogue: Sustainability has become a prevalent topic in many boardrooms when it comes to choosing suppliers.
How can I get started? The process involves five key steps:
- Commitment: This initial step requires the company to formally commit by sending a letter of intent to the Science Based Targets initiative (SBTi).
- Target development: Collaborate with the SBTi to set specific, measurable targets based on scientific criteria. Determining a baseline position is a priority as it enables a firm to understand which areas to address and makes meaningful measurement possible.
- Submission for validation: Submit the developed targets to SBTi for rigorous validation. With the appetite for publishing SBTs growing as companies increasingly realise the benefits, SBTi’s own pipeline stretches – so prepare for this to take some time.
- Stakeholder communication: Once validated, communicate the targets to relevant stakeholders.
- Disclosure: Publicly disclose the validated targets to ensure transparency and accountability.
Any tips for the journey? The experience of the Inflexion portfolio means there are lessons to learn from.
- Engage a consultant: Their technical knowledge and guidance can be crucial for navigating the process, providing insights, identifying areas for improvement and ensuring targets were sound and achievable.
- Centralise data collection: Decide on a method for collecting data and maintain a central repository of evidence, with integrity key. This will be required throughout the process, and collecting it helps drive employee engagement.
- Exercise patience: The process can be lengthy and requires perseverance – not only does setting your own targets take time internally, but the SBTi’s own worklog requires months of waiting.
- Monitor growth: Re-baseline if annual growth exceeds 5% of baseline year emissions.
SBTs in Action: BES’s journey to setting targets
BES Group is a provider of premium quality engineering testing, inspection and consultancy services backed by Inflexion and earlier this year had its SBTs validated. The process took approximately 18 months from start to finish, beginning in late 2022 with internal discussions and in February 2023 the engagement of a consultant specialised in sustainability and carbon footprint management. “The consultant’s expertise was crucial in navigating the complexities of the process,” recalls Helen Guest, Group Procurement Manager at BES.
The initial phase involved an extensive data gathering process, which took several months. Following this, they undertook internal validation and target setting, which required additional months of meticulous work. The targets were submitted to the SBTi in August 2023. Due to a backlog, the validation process extended until March 2024. During this period, BES responded to several rounds of additional queries from the SBTi.
BES’s baseline data revealed a total carbon footprint of over 15 tCO2, distributed as Scope 1: 10%, Scope 2: 2%, Scope 3: 88%. Helen describes the firm’s targets for 2030 as “ambitious, yet achievable” comprised of a 42% reduction in Scope 1 and 2 emissions and absolute reduction in Scope 3 emissions, with net-zero targeted by 2040.
BES is taking a number of steps on its journey:
- Investing in renewable energy: While this may seem straightforward, the influx of new companies and existing contract obligations can complicate the process.
- Adopting low-carbon refrigerants: Transitioning to environmentally friendly refrigerants is a key component of BES’s strategy.
- Employee engagement: Engaging colleagues in sustainability initiatives is crucial for success.
- Decarbonising the grey fleet: BES launched an EV salary sacrifice scheme to encourage the use of electric vehicles among employees.
Each Inflexion investment, regardless of size or stake, has full access to Inflexion’s value acceleration support which includes ESG strategy, international expansion, M&A, digital enhancement, talent management, and commercial effectiveness.
Inflexion’s ESG toolkit provides the portfolio with a suite of support to help them progress through the levels of the ESG Framework and drive value. It's designed to upskill the portfolio on relevant ESG topics, share best practice, and enhance collaborative opportunities. This is supported by 19 playbooks and over 30 vetted and experienced advisers to help guide the journeys.
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