Edited by: Julien Gervreau

Sustainability is reshaping the corporate landscape and changing how companies operate and make decisions. Integrating environmental, social, and governance (ESG) considerations into business strategies and operations is imperative for building a regenerative and just economy. It’s also critical for successfully attracting talent.

By 2025, an estimated 27% of the workforce will be Gen Z (people born between the late 1990s and early 2010s). This generation brings higher expectations to work on topics like work-life balance, environmental and social justice, and mental health support.

Talent scarcity is still a massive issue for most organizations. However, by leveraging sustainability practices and other social initiatives, companies can differentiate themselves and attract the post-millennial generation.

Younger generations have distinct values that influence their career choices. Having been exposed to an endless stream of news regarding the impacts of climate change and social injustice since birth, it’s not surprising they place a significant emphasis on environmental and social responsibility. Aligning these principles with their work is crucial to Gen Z as they strive for a broader sense of purpose in their careers.

Climate anxiety is highest among Gen Z, which increasingly distrusts institutions they view as having largely failed to address this crisis. They are not motivated by statements or words, but by action. It is not enough for them to work for a company who claims a commitment to sustainability and social justice; they want to see concrete evidence and are less forgiving of companies that do not follow through on their commitments.

From energy conservation and waste reduction to sustainable sourcing, Gen Z is looking to support companies that actively demonstrate their efforts to minimize or mitigate their environmental footprint.

Similarly, companies that prioritize diversity, equity, and inclusion (DEI) are highly attractive to Gen Z and younger generations. A recent poll conducted by TalentLMS revealed 77% of Gen Z individuals are interested in working for a company that prioritizes DEI. Therefore, it is crucial for companies to demonstrate their commitment to social causes, environmental sustainability, and purpose-driven work to entice the latest pool of talent.

Companies that prioritize sustainability offer more than just a job. They provide a sense of purpose by taking on important societal and environmental challenges through impactful projects. These companies also offer ample opportunities for personal growth, learning, and career advancement in sustainability-focused roles. It’s no wonder that Gen Z and new job-market entrants are drawn to these positions, as they allow individuals to make meaningful contributions while advancing their careers.

Regardless of where you are in your sustainability journey as an organization, it’s crucial to communicate these efforts effectively. Authenticity and transparency are key here. Your company’s website, job postings, and social media platforms need to show an ongoing commitment to sustainability initiatives and goals. Moreover, public sustainability reports demonstrate accountability and transparency to potential applicants and job seekers.

Your company can also share employee testimonials and stories. These highlight the fulfillment that comes from engaging in your sustainability efforts and demonstrate the importance of individual contributions to your overall success.

A valuable way to attract and retain sustainability-conscious job seekers is through partnerships with universities. Establishing an internship program that focuses specifically on your impact initiatives is a powerful way to provide hands-on experience to students and recent grads, and to attract emerging talent.

Engaging with other values-aligned organizations at industry events and conferences can also foster collaboration and help establish your company as a leader in your field. Moreover, supporting sustainability-related initiatives through sponsorships and partnerships enhances your brand reputation. Also, it helps you attract top talent by showcasing your commitment to making a positive impact on the environment and society.

Overall, companies that prioritize sustainability and ESG practices gain a competitive advantage in attracting top talent, especially among Gen Z. These individuals value employers who demonstrate a genuine commitment to ethical practices and personal growth opportunities.

To attract and retain sustainability-conscious individuals, organizations should integrate sustainability into their branding and recruitment strategies, which can build a positive brand image rooted in social and environmental stewardship.

Ready to gain your competitive edge? Get in touch with our sustainability professionals to learn more about the opportunities available for your business.

Edited by: Jennifer Harrity

In today’s rapidly evolving business landscape, employees look at companies with a discerning eye and pay close attention to how they incorporate sustainable practices into their daily operations. As a business, sustainability serves as a tool by which we measure our impact and it offers a path to assess the interconnectedness of environmental responsibility, social well-being, and economic growth. Ultimately, it sets us apart from other businesses and confers our potential competitive advantage.

Employees want to have a mission worth championing. At the same time, employers are seeking a stable, talented workforce to enhance the company’s ability to adapt to changing market conditions. There’s symbiosis in the relationship between increased sustainability efforts and employee retention. For employers, finding strategies to optimize sustainability offers employees a mission and purpose worth latching onto. Simultaneously, it enhances loyalty and commitment to the company.

More than ever, employees want to have their identities and values aligned with how their company does business. Concurrently, employers are responsible for keeping their employees satisfied, engaged, and productive — all of which can be leveraged through internal sustainability initiatives.

This commitment requires companies to look internally and understand what matters to their employees and stakeholders. By leveraging sustainable business practices that are material, companies can demonstrate their dedication to making a positive difference. This helps attract employees who want to be part of that mission, which, in turn, strengthens the company’s brand, reputation, and value alignment.

Furthermore, effective employee retention can be enhanced dramatically by a company’s ESG (environmental, social, and governance) initiatives. With a warming climate and heightened awareness surrounding social and environmental issues, employees want to know that their company is doing its part in fostering a diverse and eco-friendly space.

How can this be achieved? Ask your employees what changes they want to see. Implementing energy-efficient equipment in physical workspaces, utilizing renewable energy sources, encouraging waste reduction, and recycling are great places to start. Employers can also offer incentives for sustainable transportation, such as carpooling and public transit, or eliminate the commute altogether by encouraging remote work options.

On the social side, companies can promote work-life balance by discussing the importance of setting boundaries, offering mental health initiatives, and subsidizing wellness programs. Arguably most important, is setting DEI (diversity, equity, and inclusion) targets, emphasizing the value of an inclusive work environment that respects and celebrates differences. 

Investing in your employees can provide substantial benefits to your company and can be critical to long-term success. High employee turnover, for instance, not only results in a financial loss but also a loss of valuable institutional knowledge. By focusing on retaining talented individuals, companies can reduce recruitment and training expenses and allocate resources to initiatives that promote long-term growth and innovation.

One important way to invest in your employees is to offer tangible growth opportunities. By encouraging employees to take on leadership roles, learn new skills, and increase their responsibilities, they become more confident, efficient, and effective individuals. Simultaneously, employers eliminate the risk of stagnation and disengagement among their staff.

In a study conducted by MIT, researchers found that employees who engage in professional development not only exhibit enhanced productivity, but they also contribute enormously to company profitability. In this study, the MIT Sloan School of Management found that “an employer’s year-long training program led to a roughly 250% return on investment within eight months.”

In the quest to retain talent, prioritizing employee development serves as a distinct commitment to nurturing the well-being of your staff and the overall growth of the company.

An African proverb says, “If you want to go fast, go alone. If you want to go far, go together.” Achieving a strong sense of company culture and togetherness is essential in retaining talent and fostering a sense of loyalty within your team. Ultimately, this sentiment is set by leadership (the tone from the top). Upper management plays a large role in eliminating silos within the company and ensuring congruency between departments and people.

Above all else, employers must recognize that their teams have lives outside of their jobs. Their employees need to know their free time is valued just as much as the work they produce internally. Offering flexible hours and challenging the 9-to-5 schedule can be pivotal in retaining talent and cultivating trust. In addition, taking breaks from work can result in enhanced creativity, productivity, engagement, and loyalty in the workplace.

Profits don’t have to come at the expense of a company’s stakeholders and employees. Investing in your employees is mutually beneficial to your organization. At the end of the day, happy employees produce better work.

By cultivating a work environment that encourages personal growth, loyalty, and longevity, organizations can enhance their adaptiveness to market changes and maintain a competitive edge while simultaneously retaining their valuable workforce.

To learn more about what you can do internally to enhance your company’s sustainability and employee retention, get in touch with our team of sustainability consultants.

As stakeholder and regulator expectations grow for standardized environmental, social, and governance (ESG) disclosures and metrics, accounting firms have a tremendous opportunity to help clients through ESG compliance, assurance, strategy, and implementation engagements.

As CPAs, our professional integrity, skepticism, and responsibility for quality, as well as our understanding of the companies we serve, positions us as the ideal provider of ESG and sustainability services.

Even small ESG engagements can get your foot in the door with a business you have been courting for a while and open the opportunity for tax and audit work. ESG frameworks will have you digging into the corners of your client’s operations in a way that will help you unearth additional service opportunities you can offer, including specialized services such as service organization controls (SOC) reporting or research and development (R&D) tax credits.

A global benchmarking study by the International Federation of Accountants, The State of Play in Sustainable Assurance, exposed an excellent sustainability assurance opportunity for accounting firms. The report examines which companies are making sustainability disclosures and obtaining assurance on them. Additionally, it records the assurance standards firms are using and which of them are providing the assurance. 

The report notes: “With investors increasingly incorporating sustainability matters into their asset allocation decisions, low-quality sustainability assurance is presenting a significant, global investor protection issue.” Of the 91% of organizations making sustainability disclosures, only 51% gain outside assurance. In many cases, that assurance is provided by consultants or others rather than by independent professional accountants. 

The critical takeaway from the report is that while the regularity of reporting ESG information is high, the current prevalence of assurance is not. Our profession has the unique combination of skills, qualifications, experience, and professional ethical obligations to bring the confidence investors expect.

The best way to enter this practice area is to take your firm through its own ESG journey. Measuring your firm through a few frameworks provides several benefits. Doing so helps you:

Assessing firm performance through an ESG framework will allow you to look at processes and procedures from a new perspective. Engaging in this work will boost employee attraction and retention. It can also lower attrition and increase productivity for existing employees through greater social credibility.

Neglecting to perform this work on your firm can turn away prospects looking for a genuine ESG-minded service provider, and leave your firm exposed to its own ESG risk. Both factors can harm your bottom line, hinder growth, or detract from your recruiting efforts. 

Industries and businesses taking on ESG initiatives are more likely to engage with a firm that has a strong ESG ethos. In 2021, PwC published a survey stating that more than 75% of consumers say they are more likely to buy from a company that stands up for environmental (80%), social (76%), and governance (80%) issues.

 Another consideration to beginning an ESG practice without doing your own ESG reporting is the potential of creating the reputational risk of making false or misleading claims. The best way to mitigate this risk is to publish an ESG impact report showing where you stand in your journey. 

If you are struggling to find enough accountants to complete your compliance work, you might worry how you’d staff a new practice area. Here is some good news: If you hire talent with a background in sustainability, you’ll add credibility to your ESG practice at the same time. These professionals can help fill the knowledge gaps for accountants. Look for individuals with environmental science or corporate sustainability degrees.

We’ve hired a sustainable management MBA, a sustainable innovation MBA, and a marine biogeochemist for our team. We have also had staff bolster their credentials with a Fundamentals of Sustainability Accounting (FSA) Credential from SASB or a Sustainability Excellence Credential from the International Society of Sustainability Professionals (ISSP).

There is opportunity in ESG, no matter the size of your firm. Do not feel like you must shoulder all the services in-house. Look to partner with other service providers, after appropriate due diligence, to expand your offerings, particularly outside the accounting industry. In addition to service offerings, look to utilize those partnerships for co-developed webinars, white papers, in-person speaking engagements, and similar opportunities. Leverage their reputation and brand to bolster your identity within the sustainability space.

As with building any new practice, forging eminence within a space can take time. You can advance more swiftly by thinking outside the box for talent acquisition and undertaking the process first. In the end, firms need to undertake this work for the same reasons as our clients—to mitigate risk, prepare for new federal and state disclosures, meet consumer demand, improve talent acquisition, and bolster brand reputation. 

In recent years, supply chain issues and talent shortages have been the main challenges to conquer, capturing most of the attention. However, sustainability is now emerging as one of the biggest disrupters in the business world. It is one of the most significant opportunities in the accounting world in a very long time. There’s no better time than now to focus on your ESG efforts.

For questions or more information on how ESG impacts business, contact Jennifer Harrity, Director of Sustainability at Sensiba.

The International Sustainability Standards Board (ISSB) issued its inaugural standards at the IFRS conference in London in late June (colloquially known as IFRS S1 and IFRS S2). For the first time, we now have a common accounting language for disclosing the impacts of industry-specific sustainability issues and climate-related risks and opportunities in capital markets worldwide. IFRS S1 and S2 are effective for annual reporting periods beginning on or after January 1, 2024.

In his remarks introducing the new ISSB standards, ISSB Chair Emmanuel Faber underscored a disconnect that has existed between nature and economics for more than 100 years; a growing gap he ultimately cited as a need for the harmonized IFRS standards. “We are reaching planetary boundaries where uncertainty is growing and hitting the financial and systemic stability of the markets,” Faber stated. “Economics do not recognize nature. The price we pay and what we account for in the financial statements is not what it took nature to create oil … we consider that for free.”

The global economic system, which has driven linear growth for the past century, has run up against the reality of life on a circular planet. Resources are finite and must be renewed to remain viable for future generations. Today’s global capital markets are inextricably intertwined and transparency in global accounting is more important now than ever.

Faber pointed to recent climate change-induced heat waves in Europe that crippled infrastructure for millions of people. This is evidence of the urgent need for global action. He also referenced the recent announcements by insurance giants State Farm and Allstate, both of which ceased issuing new property and casualty insurance policies for homeowners in California (the world’s fifth-largest economy) due to increased concern of wildfires.

To be clear, the new ISSB reporting and disclosure standards are not new; they were adapted over the past 18 months from foundational ESG frameworks such as SASB, TCFD, and CDSB.  Faber indicated we have “crossed the frontier” with the launch of S1 and S2, which represent a “consistent and comprehensive accounting language” that can be leveraged to measure the material ESG risks and opportunities across a company’s entire value chain. Let’s explore what that means vis-a-vis the new IFRS 1 and IFRS 2 reporting requirements.

IFRS S1 is the ISSB’s foundational document. It sets out general requirements for a company to disclose information about its sustainability-related risks and opportunities that are useful in making investment decisions. IFRS S1 states that the value a company creates for itself is inextricably linked to its broader business ecosystem (I.e., civil society, human capital, natural resources, climate risk, etc.).

To be able to manage for the long term, companies must consider how they are approaching those relationships and dependencies and the impacts they have. Any ESG-related risk or opportunity that is likely to be financially material should be reported. IFRS S1 is focused on driving connections to sustainability within general-purpose financial reporting and, as such, it:

IFRS S2 is designed to help investors measure potential financial risks and opportunities that climate change poses to a company’s future performance and prospects. It helps investors understand how the company is responding, including any relevant transition planning, for areas under the company’s direct control, as well as its associated value chain. As such, IFRS S2:

All of this is likely quite daunting for leaders of small-to-medium-size enterprises (SMEs), many of whom are struggling with myriad business issues during this challenging economic time. Sensiba has a number of ESG and sustainability services that can help SMEs integrate ESG reporting into their planning initiatives and move confidently in the direction of a greener future.

For companies that are just beginning their ESG journey, we offer a High-Level ESG Assessment designed to help them understand the material ESG issues, topics, and metrics specific to their organization and industry. This first-step assessment is critical for building awareness around key issues and identifying improvement opportunities and serves as a precursor to more robust ESG reporting.

For companies looking for an investor-grade ESG benchmark and assessment, we offer the industry’s most comprehensive ESG intelligence and reporting tool in Impakt IQ. The Impakt IQ framework is a systems-based process that maps seamlessly to IFRS S1 and S2 and is designed to sit alongside a company’s financial statements.

The Impakt IQ Tool Set and Impakt Score provide company executives with a customized investor grade ESG framework through a suite of ESG statements and dashboards, enabling insight into material risks, value creation opportunities, industry benchmarks, and more.

To learn more, reach out to our ESG professionals today!

Discussing accounting and ESG in the same conversation is more common today as firms consider not only their environmental, social, and governance (ESG) metrics, but also see value in serving clients in this space. ESG opportunities are unfolding quickly, from compliance and assurance work to strategy and implementation assistance.

Accountants have worked with financial data since the 13th century, yet working with non-financial sustainability data is still relatively new. In November 2021, the International Financial Reporting Standards (IFRS) Foundation formed the International Sustainability Standards Board (ISSB). The ISSB is working to develop global disclosure standards for the accounting profession that are expected to be finalized in 2023.

With the relative newness of sustainability within the accounting field, small- and medium-sized firms may be apprehensive about building a practice in this niche. The accounting industry is the new kid in this space, whereas business consultancies have been performing sustainability consulting and implementation for over a decade.

However, we bring a great deal to the table with our reputation for analyzing business processes, determining value, and assessing and responding to risk.

Linking ESG reporting with financial reporting points to this type of work being done by accounting professionals. The CPA profession’s integrity, professional skepticism, and responsibility for quality, as well as our understanding of the companies we serve, positions us as the ideal provider of ESG and sustainability services. 

But this is an entirely different consulting realm requiring specialized training and, in many cases, science-based education and experience.

With the relative newness of sustainability within the accounting field, small- and medium-sized firms may be apprehensive about building a practice in this niche. The accounting industry is the new kid in this space, whereas business consultancies have been performing sustainability consulting and implementation for over a decade. 

However, we bring a great deal to the table with our reputation for analyzing business processes, determining value, and assessing and responding to risk. 

Linking ESG reporting with financial reporting points to this type of work being done by accounting professionals. The CPA profession’s integrity, professional skepticism, and responsibility for quality, as well as our understanding of the companies we serve, positions us as the ideal provider of ESG and sustainability services.

But this is an entirely different consulting realm requiring specialized training and, in many cases, science-based education and experience. To begin your education journey in this field, check out the AICPA’s courses and the ACCA’s course designed for accounting professionals to understand ESG fundamentals and assurance engagements.

The definition of materiality is broadening beyond financial risk. Whether or not a client considers ESG risks, these events can affect companies’ profitability and, ultimately, their value. Finance professionals must understand not only shareholder or investor concerns, but also broader stakeholder concerns and impacts. Including this expansive definition of materiality and ESG lens decreases volatility and increases value. 

Additionally, while the proposed SEC climate-related disclosure rules affect only public companies—and the California state disclosure rules only apply to organizations with $1 billion in revenue or more—there will be a massive trickle-down effect for small- to medium-sized (SMEs) privately held organizations. This will be particularly true for businesses within the supply chain of these organizations. 

One crucial area that will impact SMEs is reporting and verification of greenhouse gas (GHG) emissions. This requires companies to disclose information about any material indirect (Scope 3) emissions. Scope 3 emissions, also known as “supply chain emissions,” often comprise the most significant portion of the total emissions footprint of any organization. Therefore, Scope 3 emissions are a critical component of any climate-risk mitigation strategy.

SMEs that supply products to publicly traded or large companies should expect demand for standardized and verified emissions reporting to trickle down to them sooner than later.

The best way to enter this practice area is to take your firm through its own ESG journey. Measuring your firm through a few frameworks provides several benefits. Doing so, for instance, helps you:

Additionally, businesses undertaking ESG reporting will value higher than their competitors. Having a higher valuation is good for succession planning if you are planning a future exit. In a recent McKinsey Global Survey on valuing ESG programs, C-level leaders and investment professionals expressed a willingness to pay about 10% more to acquire a company with a favorable ESG record.

Another key benefit of measuring these non-financial metrics is the opportunity to share them. We can highlight our industry’s non-financial metrics with the public and be transparent about our own ESG performance. In doing so, our ESG practice can build deeper trust. 

Assessing your firm’s performance through an ESG framework will allow you to look at your processes and procedures from a new perspective. This often helps you identify any common ESG practices that still need to be documented. Engaging in this work will boost employee attraction and retention, lowering attrition and increasing productivity through greater social credibility. 

Contact us for guidance in starting or amplifying your ESG practice.

The term “carbon footprint” has been in the news, your online shopping shipping information, and even your company’s communications. From campaigns to using less plastic to eating less meat, it seems everyone is buzzing about ways to reduce their carbon footprint.

What is a carbon footprint? Why is it important? This article will unpack the term “carbon footprint” and some related terms as we dig into the elements of a carbon footprint and where to start measuring it.

A carbon footprint is the total amount of carbon dioxide and greenhouse gas (GHG) emissions caused, directly or indirectly, by an activity. Everything from the electricity to run your office, shipping gifts to grandma, the process of making an item, and even sending an email has a carbon footprint.

There are also natural sources of GHGs, including the respiration and decomposition of plants and oceans. The “size” of the carbon footprint depends on a few factors, but predominately it represents the amount of greenhouse gas emissions released into the atmosphere by an activity.

Excess greenhouse gases can cause a wide range of environmental and health implications. Our planet has a built-in system to clean greenhouse gases from the air. However, since the 1950s, we have produced more emissions than our planet’s natural system can handle.

Over time, the build-up of these gases has increased the planet’s temperature and thrown off the balance of its delicate ecosystem. These gases also contribute to:

Future temperature increases will bring more severe storms, increased drought, food shortages, and species loss. Kenya offers a current example of what can happen with a devastating drought. According to a Washington Post report, as of November 2022, animals are dying due to the drought, including 512 wildebeests, 430 zebras, 205 elephants, and 51 buffaloes. The photos are haunting and heartbreaking.

So far, the planet’s temperature has increased by 0.75˚ C since the start of the 20th century. Climate modeling predicts the global average temperature will increase an additional 4° C (7.2° F) during the 21st century if greenhouse gas levels continue to rise at present levels. The side effects of this global temperature rise are concerning and why so many are calling for change—lowering our collective carbon footprint.

Businesses have a corporate carbon footprint and, not surprisingly, the most significant footprint of all. In a 2017 report from the nonprofit Climate Disclosure Project (CDP) in collaboration with the Climate Accountability Institute, just 100 companies are responsible for more than 70% of the world’s emissions.

The global standard framework for measuring a carbon footprint is the Greenhouse Gas (GHG) Protocol. The GHG Protocol created accounting standards, tools, and training to help businesses measure and manage their carbon emissions. It also provides guidelines and requirements for organizations to inventory their greenhouse gas emissions, including calculating their corporate carbon footprint.

Greenhouse gas measurements are delineated between direct and indirect emission sources and are measured in three categories. Scope 1 is direct emissions from a company’s owned and controlled resources. This includes on-site energy like natural gas and fuel, emissions from boilers and furnaces, as well as emissions from fleet vehicles like trucks for a construction company or helicopters for a hospital. Scope 1 also covers emissions released during industrial processes and on-site manufacturing.

Scope 2 emissions are indirect emissions from purchased or acquired energy. For example, electricity purchased from a utility company or that runs your offsite company servers or website.

Scope 3 includes everything that doesn’t fit in Scopes 1 and 2. It includes all indirect emissions that occur in a company’s value chain (both upstream and downstream). The US Environmental Protection Agency (EPA) describes Scope 3 emissions as “the result of activities from assets not owned or controlled by the reporting organization, but that the organization indirectly impacts in its value chain.”

Reducing a company’s carbon footprint requires a multi-faceted approach. It involves combining tactics like looking at your energy efficiency, switching to renewable energy, moving to sustainable transportation, or establishing sustainable supply chain practices. You can engage your employees in the process.

One of the most effective strategies is increasing energy efficiency. Doing things like improving insulation, upgrading heating and cooling systems, and installing energy-efficient lighting is good not only for the planet, but also your bottom line. Currently, there are even federal tax rebates and credits for these upgrades for your business and home.

Companies can reduce their carbon footprint by leveraging renewable energy sources such as solar or wind power. This can be achieved by installing solar panels on company facilities, purchasing renewable energy credits, or switching to renewable energy providers. Most utility companies offer renewable energy solutions for corporate and residential customers, but they must opt into these solutions. While renewable energy might cost a cent or two more per kilowatt, it is ultimately cheaper than purchasing offsets on the tail end for the same amount of energy.

Promoting sustainable transportation options like cycling, walking, or using electric vehicles can also help reduce your carbon footprint. Consider providing incentives for employees to use subsidized public transportation or bike-share programs. This is an excellent way to engage your employees in the process.

Sustainable supply chain practices can take more work. However, once your supply chain policies and procedures are set, your company can see a positive impact on the bottom line. Promoting sustainable practices throughout your supply chain, such as obtaining materials from sustainable sources, using less packaging, and reducing waste, can be highly beneficial. Even a step as small as switching from air to ground shipping can make a difference.

Carbon footprints vary widely depending on business practices, such as production methods, transportation, and facility choices. However, according to the Global Reporting Initiative, the average carbon footprint for a company in the industrial sector is approximately 400 metric tons of carbon dioxide equivalent per million dollars of revenue.

We can work side-by-side with you to help measure and benchmark your organization and help you develop goals that make sense for your business and industry. Then we’ll help you create a strategic plan for reducing your footprint and finding responsible offsets for things you cannot reduce. We can even help you describe your carbon footprint journey to your internal and external stakeholders in an authentic way to mitigate any risk.

Visit our Sustainability page to learn more.

Science-Based Targets (SBTs) are emissions reduction objectives aligned with latest climate science as well as the Paris Agreement’s goal of limiting global warming to well under 2 degrees Celsius above pre-industrial levels.

These targets are intended to help companies reduce their greenhouse gas emissions and support the transition to a low-carbon economy. Companies that set science-based targets demonstrate their commitment to sustainability and willingness to lead in addressing the climate crisis.

The Science Based Targets initiative (SBTi), is a collaboration between several organizations including:

The SBTi provides a framework for companies to set specific targets and independently verify their goals are consistent with the Paris Agreement objectives. It offers guidance, tools, and resources to help companies determine and achieve their emissions reduction targets.

The Paris Agreement is an international accord adopted by the United Nations Framework Convention on Climate Change (UNFCCC) in 2015 to address climate change. By bringing countries together to collaborate on a common goal and approach, the agreement has created a framework for collective action to address the impacts of climate change.

The Paris Agreement sets an ambitious target to reduce global warming. Limiting warming to well below 2 degrees Celsius (with a further target of 1.5 degrees) is critical to preventing the worst effects of climate change. Some examples of climate change effects are rising sea levels, extreme weather events, and loss of biodiversity.

The agreement requires countries to report on their emissions and progress toward their targets, providing transparency and accountability for their actions. This reporting helps to ensure countries are taking meaningful action to address climate change and tracks progress toward meeting the agreement’s goals.

Financial and technological support is available to help developing countries transition to low-carbon and climate-resilient economies, as these countries are especially vulnerable to the impacts of climate change.

Companies adopting SBTs demonstrate their commitment to sustainability and addressing the climate crisis. Companies that set and achieve SBTs are seen as responsible and credible. This can enhance their reputation and build trust with stakeholders, including customers, investors, and employees.

SBTs can help companies stay ahead of regulations, reduce their exposure to compliance and policy risks, and benefit from new opportunities and technological advancements in the low-carbon economy.

There are several types of science-based targets that companies can set. A company’s specific targets will depend on its operations, emissions profile, and other factors.

Here are a few examples of science-based targets that organizations have set:

Setting science-based targets is a challenging yet rewarding process. Having a step-by-step plan and following it is critical for being able to hit those targets.

Your company needs to benchmark where it is in its sustainability journey to know where it wants or needs to go. Start by determining your company’s current emissions and establishing a baseline. This will serve as the starting point for measuring progress against your target.

Decide which parts of your operations and supply chain you want to include in your target. For example, you may choose to focus on direct emissions from your operations or on emissions from your entire value chain. Determine the reduction pathway you want to use to achieve your target. Several paths are available, including sector-specific and economy-wide reduction pathways.

Use the selected reduction pathway to calculate your science-based target. This will involve considering your company’s emissions profile, historical emissions trends, and future growth projections. Once you have set a target, you will need to implement a plan to achieve it. This may involve changing business processes, investing in new technologies, or engaging with suppliers and other stakeholders.

Regularly monitor your progress against your target and report on your emissions and other relevant data. This will help you identify areas for improvement and demonstrate your commitment to sustainability.

The Science Based Targets initiative provides a step-by-step guide with tools and resources to support the process. The SBTi also verifies companies’ targets to ensure they are aligned with the Paris Agreement.

There are over 4,500 companies worldwide with approved science-based targets. They span across various sectors such as energy, consumer goods, retail, finance, and more.

Some well-known companies include:

The Science-Based Targets initiative provides a publicly accessible database of companies with approved science-based targets. It can be searched by sector, company name, and country. This list is constantly expanding as more companies adopt SBTs, demonstrating the growing recognition of the importance of reducing emissions.

Science-based targets are crucial for companies to address the pressing issue of climate change, plan for a sustainable future, and enhance their reputation and competitiveness. The Sensiba Center for Sustainability can work side-by-side to guide you through this process. Starting from measuring and identifying your targets to implementing your plan and monitoring your progress. If you are considering setting science-based targets for your organization, contact us to learn more about how we can help!