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Understanding Science-Based Targets Initiative (SBTi): A Comprehensive Guide for the Textile Industry

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Understanding Science-Based Targets Initiative (SBTi): A Comprehensive Guide for the Textile Industry

Abstract

Since the adoption of the Paris Agreement in 2016, nations have taken various measures to achieve their Nationally Determined Contributions (NDCs) submitted to the UNFCCC. These measures include increasing renewable energy capacity and imposing carbon taxes on imported goods and services. As a result, companies are increasingly setting science-based targets (SBTs) to make their production processes and supply chains more sustainable. The Science-Based Targets initiative (SBTi) provides a standardized, scientifically-backed framework to help companies align their goals with global climate objectives. This article explores the reasons behind the growing adoption of SBTs, outlines the criteria set by the SBTi for target setting, and highlights how carbon accounting tools and expertise can facilitate the transition to sustainable practices.

Introduction: Why Science-Based Targets Matter

In the Paris Agreement, countries committed to limiting global temperature increases to below 2°C and pursuing efforts to keep the rise below 1.5°C. Temperatures above these levels are linked to catastrophic climatic impacts and humanitarian crises. Rising temperatures are primarily due to increased greenhouse gas (GHG) emissions, a significant portion of which are attributed to the corporate sector, particularly industries like textiles that contribute approximately 10% of global carbon emissions. This is largely driven by the fast fashion trend and high consumption rates.

More than 70% of the GHG emissions in the textile industry come from upstream activities, while the remaining 30% are generated downstream . Recognizing the risks posed by climate change and the opportunities for innovation, companies are setting science-based targets (SBTs) to align their goals with the Paris Agreement and mitigate their environmental impact. However, many targets set by companies have historically been inadequate and inconsistent with the goal of limiting global warming to 1.5°C. The Science-Based Targets initiative (SBTi) provides a critical framework to guide corporations in setting more ambitious and scientifically-aligned targets.

What are Science-Based Targets (SBTs)?

Science-based targets (SBTs) are carbon emissions reduction goals that align a company's climate mitigation strategies with the Paris Agreement's objectives. These targets provide clear pathways for reducing Scope 1, 2, and 3 emissions based on rigorous scientific assessments. Unlike traditional targets, SBTs are grounded in what is necessary for global GHG reduction rather than what is convenient or achievable for any one company.

The Science-Based Targets initiative (SBTi) offers methodologies and guidance for different sectors on setting targets, evaluates and validates these targets, and has become the de facto standard for corporate climate action. Over 8,000 companies and financial institutions are registered with the SBTi, and more than 5,500 have validated their science-based targets .

Sectoral Guidance and Support by SBTi

The SBTi offers sector-specific guidance tailored to the unique challenges and opportunities within different industries, including textiles, chemicals, and manufacturing. This guidance includes:

  • Approaches to Target Setting: Sectoral Decarbonization Approach (SDA) models, which outline pathways for reducing emissions based on the specific needs of each sector.
  • Identifying Sector-Specific Barriers: Highlighting common obstacles to setting and achieving targets, such as technological limitations or regulatory challenges.
  • Examples of Best Practices: Sharing case studies and successful strategies employed by companies within each sector.
  • Opportunities for Collaboration: Encouraging partnerships and collective action among companies within the same sector to enhance consistency and impact.

Additionally, SBTi has developed the Net Zero Standard, a comprehensive framework guiding companies toward achieving net-zero emissions by 2050. The initiative regularly assesses companies' progress and publicly discloses their status, promoting transparency and accountability .

Why Companies Are Adopting SBTs

More than 8,000 companies have already registered with the SBTi, with over 3,000 committing to the Net Zero Standard. Several key reasons drive this growing trend:

  1. Enhanced Organizational Reputation: As consumers become more environmentally conscious, companies that demonstrate a commitment to sustainability gain a competitive edge. Setting science-based targets enhances a company’s reputation by signaling responsible practices and a commitment to the planet.
  1. Resilience Against Regulations: With increasing regulations targeting carbon-intensive production, such as the European Union’s Carbon Border Adjustment Mechanism (CBAM) and the U.S. Securities and Exchange Commission (SEC) rules, having SBTs helps companies remain compliant and mitigate regulatory risks .
  1. Increased Investor Confidence: Sustainable investing is becoming a priority for many investors. A recent survey found that 77% of investors are interested in sustainable investments, with 54% planning to increase their portfolio allocation to sustainable assets within the next year . SBTs provide a clear framework for demonstrating a company's commitment to sustainability, bolstering investor confidence.
  1. Opportunities for Innovation: Transitioning to a low-carbon business model fosters innovation, as companies explore new technologies and practices. For example, Indo Count Industries Ltd. has implemented several initiatives, such as a Back Pressure Turbine and a Hot Water Heat Recovery System, to reduce its reliance on coal .
  1. Cost Savings and Efficiency Gains: Many early adopters of sustainable practices have already realized cost savings through improved energy efficiency, reduced waste, and optimized resource use. These savings are crucial for maintaining profitability in a world where non-renewable resources are becoming scarcer and more expensive.
  1. Competitive Advantage: Companies with robust sustainability strategies and science-based targets are better positioned to capitalize on the opportunities presented by the low-carbon economy. They lead in innovation, compliance, and brand trust, giving them an edge over competitors.
  1. Access to Sustainable Financing: Companies like H&M, Adidas, and Burberry have raised funds through green and sustainability-linked bonds to decarbonize their supply chains. These financial instruments align with SBTi targets and provide a cost-effective means of funding sustainable initiatives .

How to Set Science-Based Targets in the Textile Sector

The SBTi offers tailored pathways for different types of organizations:

  • Large Companies and Financial Institutions: The process involves a five-step approach:
  1. Submit a Letter of Intent: Companies formally express their commitment to setting science-based targets.
  1. Develop Targets: Following the Sectoral Decarbonization Approach (SDA) provided by SBTi, companies develop their targets.
  1. Validation: Submit targets to SBTi for validation within six months.
  1. Public Disclosure: Announce validated targets publicly within six months.
  1. Annual Reporting: Regularly report emissions to monitor progress against targets.
  • Small and Medium Enterprises (SMEs): The process is simplified, allowing SMEs to skip the initial step. They need to fill out an online application, select a target validation service, provide an emissions profile, and pay a nominal fee. Once validated, targets are published on the SBTi website.

Criteria for Setting Science-Based Targets

Companies setting SBTs must comply with several critical criteria:

  1. GHG Emissions Inventory:
  • Companies must cover all relevant emissions according to the Greenhouse Gas Protocol, including Scope 1, 2, and 3 emissions. They may exclude up to 5% of Scope 1 and 2 emissions combined.
  1. Target Ambition:
  • Targets must be consistent with a pathway to keep global temperature increases to well below 2°C, with efforts toward 1.5°C. At least the Scope 1+2 portion must align with this trajectory.
  1. Time Frame:
  • Targets must cover a period of 5 to 15 years from the submission date. Mid-term targets are required for targets extending beyond 15 years.
  1. Recalculation and Validity:
  • Targets must be reviewed and, if necessary, recalculated every five years or whenever there are significant changes in the company’s structure or emissions profile.
  1. Reporting:
  • Companies must publicly report their GHG emissions inventory and progress against published targets annually.

Steps for Achieving Science-Based Targets

To meet their SBTs, companies in the textile sector can implement various strategies:

  • Switch to Low-Carbon Materials: Replace carbon-intensive materials with alternatives, such as recycled polyester instead of virgin polyester.
  • Optimize Supply Chains: Invest in renewable energy, sustainable packaging, and energy-efficient technologies in factories.
  • Engage Suppliers: Collaborate with suppliers to set and achieve emissions reduction targets. Programs like the CDP Supply Chain Program can help track and reduce supply chain emissions .

Conclusion

The textile industry's transition to a low-carbon future is not just about compliance; it is an opportunity to innovate, reduce costs, and enhance brand value. Science-based targets offer a clear and credible pathway for companies to align with global climate goals, reduce their carbon footprint, and build a more sustainable future. As the regulatory environment becomes more stringent, the time for action is now. Partnering with experts and leveraging advanced tools can simplify this transition and position companies as leaders in sustainable practices.

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