Net Zero Standard for Companies through SBTi

Introduction to the Science Based Targets initiative (SBTi)

The Science Based Targets initiative (SBTi) is a global body that enables companies and financial institutions to set ambitious emissions reduction targets. These targets are in line with the latest climate science necessary to meet the goals of the Paris Agreement, which aims to limit global warming to well below 2°C above pre-industrial levels and pursue efforts to limit the temperature increase to 1.5°C. By providing a clearly defined pathway for companies to reduce their greenhouse gas (GHG) emissions, SBTi helps combat climate change and drive sustainable economic growth.

Key Concepts of the Corporate Net-Zero Standard

1. Science-Based Targets: These are GHG reduction targets aligned with the level of decarbonization required to keep global temperature rise within 1.5°C or well below 2°C compared to pre-industrial levels. The targets are based on climate science and provide companies with a clear pathway to reduce their emissions.
2. Net Zero Goals: Achieving net zero emissions means balancing the amount of GHG emitted with an equivalent amount removed from the atmosphere. This involves both reducing emissions as much as possible and using methods to remove remaining emissions, such as reforestation or carbon capture and storage.
3. Corporate Climate Action: This refers to the actions taken by companies to reduce their carbon footprint and contribute to global climate goals. This includes setting and achieving science-based targets, improving energy efficiency, transitioning to renewable energy, and engaging in sustainable business practices.

The Importance of SBTi for Indian Companies

In India, the need for corporate climate action is particularly pressing due to the country’s rapidly growing economy and the associated increase in GHG emissions. Indian companies that adopt science-based targets can contribute significantly to global climate goals while gaining substantial business benefits such as increased resilience to climate risks, enhanced reputation, and improved operational efficiency.

Corporate Net-Zero Standard V2.0

The Corporate Net-Zero Standard V2.0 is a major revision of the SBTi Corporate Net-Zero Standard. The objectives of this revision include aligning with the latest science and best practices, enhancing the approach to addressing value chain emissions (scope 3), integrating continuous improvement and assessment of target achievement, improving structure and interoperability, and ensuring a standardized and robust approach for companies to set net-zero targets.

Objectives of the Corporate Net-Zero Standard V2.0

1. Align with Latest Science and Best Practices: Ensure a standardized and robust approach for corporates to set net-zero targets aligned with the latest scientific findings, such as the IPCC Sixth Assessment Report.
2. Enhance Scope 3 Target Framework: Improve implementability and introduce a more nuanced approach for scope 3 target-setting based on climate materiality, significance, and influence.
3. Integrate Continuous Improvement: Introduce regularized target cycles and progressive requirements for companies over the target lifetime, enabling continuous improvement in their net-zero journey.
4. Improve Structure and Interoperability: Clarify the relationship between the Corporate Net-Zero Standard and other SBTi standards and enhance interoperability with other relevant standards and frameworks.

Case Studies of Indian Companies Implementing SBTi

1. Infosys

Sector: IT and Services

Infosys, a global leader in consulting and technology services, has committed to achieving carbon neutrality. The company has set ambitious science-based targets to reduce its GHG emissions by enhancing energy efficiency, increasing the use of renewable energy, and promoting sustainable operations. Infosys has already made significant progress by implementing energy-efficient technologies in its data centers and office buildings, as well as investing in large-scale renewable energy projects.

Key Initiatives:

• Energy Efficiency: Implementing advanced energy-efficient technologies in operations.
• Renewable Energy: Investing in large-scale renewable energy projects, including solar and wind power.
• Sustainable Operations: Promoting sustainable practices across its global operations to reduce carbon footprint.

2. Mahindra Group

Sector: Conglomerate (Automotive, IT, Real Estate, etc.)

Mahindra Group, a diversified conglomerate with operations spanning multiple sectors, is deeply committed to sustainability. The group has adopted science-based targets to cut down its carbon emissions across various businesses. Key initiatives include the adoption of renewable energy, the implementation of energy-efficient manufacturing processes, and the promotion of electric vehicles. Mahindra’s automotive division, for example, has launched a range of electric vehicles and is investing in the development of sustainable mobility solutions.

Key Initiatives:

• Renewable Energy: Increasing the use of renewable energy sources across business operations.
• Energy-Efficient Manufacturing: Implementing energy-efficient technologies and processes in manufacturing units.
• Sustainable Mobility: Promoting electric vehicles and investing in sustainable transportation solutions.

3. Tata Consultancy Services (TCS)

Sector: IT and Services

Tata Consultancy Services (TCS), a leading global IT services and consulting company, has embraced SBTi to guide its sustainability efforts. TCS’s science-based targets aim to reduce GHG emissions by enhancing energy efficiency in its operations and increasing the use of renewable energy. The company has invested in energy-efficient infrastructure and technologies, and it promotes sustainable practices within its extensive network of global operations. TCS’s commitment to sustainability is also reflected in its efforts to develop green IT solutions for its clients.

Key Initiatives:

• Energy Efficiency: Investing in energy-efficient infrastructure and technologies.
• Renewable Energy: Increasing the use of renewable energy sources in operations.
• Green IT Solutions: Developing IT solutions that help clients achieve their sustainability objectives.

4. Wipro

Sector: IT and Services

Wipro, a global information technology, consulting, and business process services company, has set science-based targets to achieve significant reductions in its carbon footprint. Wipro’s approach includes improving energy efficiency in its facilities, expanding the use of renewable energy, and reducing waste. The company has also implemented sustainable practices in its supply chain and works with suppliers to meet their own sustainability goals. Wipro’s integrated sustainability strategy not only focuses on internal operations but also extends to its products and services, helping clients achieve their sustainability objectives.

Key Initiatives:

• Energy Efficiency: Enhancing energy efficiency in facilities and operations.
• Renewable Energy: Expanding the use of renewable energy sources.
• Waste Reduction: Implementing waste reduction and management practices.

5. Hindustan Unilever Limited (HUL)

Sector: Consumer Goods

Hindustan Unilever Limited (HUL), one of India’s largest consumer goods companies, is committed to reducing its carbon emissions in line with science-based targets. HUL’s sustainability strategy involves sustainable sourcing, reducing the carbon footprint of its products, and improving energy efficiency in its manufacturing processes. The company has made substantial investments in renewable energy and is working towards making its operations more energy-efficient. HUL also engages with consumers to promote sustainable consumption practices, thereby extending its impact beyond corporate operations.

Key Initiatives:

• Sustainable Sourcing: Ensuring that raw materials are sourced sustainably.
• Energy Efficiency: Improving energy efficiency in manufacturing processes.
• Consumer Engagement: Promoting sustainable consumption practices among consumers.

The Role of SBTi in the Building and Construction Sector

The building and construction sector is a significant contributor to global GHG emissions, accounting for approximately 37% of emissions globally. In India, buildings account for about 25% of total carbon emissions, and this figure is expected to rise with increasing urbanization and economic growth. To address this, companies in the building and construction sector are adopting science-based targets to guide their decarbonization efforts.

Case Study: Mahindra Lifespaces

Sector: Real Estate Development

Mahindra Lifespaces, a part of the Mahindra Group, is committed to creating sustainable urban infrastructure and has set ambitious science-based targets. The company aims to achieve Net Zero Energy, Net Zero Waste, and Net Zero Water for all its developments. This commitment extends to both the construction phase and the operational phase of its projects.

Key Initiatives:

• Net Zero Energy Buildings: Developing buildings that produce as much energy as they consume through energy efficiency measures and renewable energy integration.
• Material Optimization: Optimizing the use of materials with high embodied carbon, such as steel and cement, by using alternative materials, improving construction practices, and engaging with suppliers to reduce carbon emissions.
• Sustainable Urban Infrastructure: Creating urban spaces that are not only sustainable in their construction but also in their long-term operation and maintenance.

Benefits of Adopting Science-Based Targets

Enhanced Reputation

Companies that commit to science-based targets are seen as leaders in sustainability. This can enhance their reputation among customers, investors, and other stakeholders, leading to increased brand value and loyalty. For instance, Infosys and TCS have strengthened their market positions by being recognized for their strong commitments to sustainability.

Operational Efficiency

Implementing measures to reduce emissions often leads to improved operational efficiency. For example, energy efficiency improvements can result in significant cost savings on energy bills. Companies like Mahindra Group and Wipro have reported substantial cost reductions through energy-efficient practices.

Risk Management

Companies that proactively manage their carbon footprint are better prepared for future regulations and market shifts related to climate change. This helps mitigate risks associated with regulatory changes, resource scarcity, and reputational damage. Hindustan Unilever Limited (HUL) and Mahindra Lifespaces have adopted proactive measures to ensure they remain compliant with evolving climate regulations.

Access to Capital

Investors are increasingly looking for companies with strong sustainability credentials. Adopting science-based targets can improve access to capital from sustainability-focused investors and financial institutions. Companies like Infosys and TCS have attracted investments by showcasing

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