Target Setting – Value Chain Support

Why are you being asked about target setting?

Customers or investors will want to understand whether you have set a “Net Zero Target” and how you are progressing towards it. If a company’s suppliers or an investors portfolio companies aren’t actively reducing emissions, they won’t be able to reach net zero either.

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Don’t have a target? There is less of an expectation on SMBs to have a net zero target approved by a third party like SBTi. You should still share any targets you have set internally and provide notes on what actions you’re taking.

What does “Net Zero” mean?

When we talk about ‘”net zero”, we’re referring to the state where there’s a balance between the amount of greenhouse gas emissions produced, and the amount removed from the atmosphere.

In order to achieve net zero, an organisation is required to significantly reduce its emissions. Under the Science Based Targets Initiative (SBTi), the ones providing the standards and guidance for target setting, organisations must reduce their emissions by at least 90% compared to their baseline to make a Net Zero claim credible.

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To achieve their own net zero goals, organisations need to significantly reduce their emissions from suppliers and their portfolio. Your suppliers emissions count towards your own. We all have a part to play in this journey.

The key terms and what they mean

Term	What does this mean?
Baseline year	To track emissions performance, you need a starting point. For most organisations, this will be the most recent year before setting a target where you have measured your emissions.
Net Zero Target	This is the year in which you have pledged to meet the criteria necessary to achieve Net Zero.
Near Term Target	This serves as an interim target to ensure significant reductions on the path to Net Zero. The Target includes both a target date and an annual reduction percentage (e.g. target to reduce emissions 15% by 2027).

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The first step is to measure your emissions, starting with Scope 1 emissions. We can walk you through this too, just reach out here 👋

Benefits of setting targets

✅ Meet Stakeholder expectations and respond with confidence!

✅ Identify the path towards net zero emissions

✅ Build compelling business cases for reducing emissions (and potentially $) that align with your pathway to Net Zero

✅ Demonstrate your efforts to reduce and show you're progressing towards your target.

Learn More

Standards Guidance 📑

Visit The Science Based Targets Initiative. The SBTi provides resources such as:

Getting Started Guide

Step-by-step process on how to set a target here.

The Corporate Net-Zero Standard

How to target set in Sumday 🎯

Find the Net Zero Graph under Reports within Carbon Accounting in the left hand menu.

This tool, which uses the data from the emissions assessment calculated in Sumday, allows you to model and visualise your net zero journey, tracking emissions performance with features to adjust your residual emissions, percentage of annual decreases, and near-term targets (Definitions below)

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Tip: We can walk you through this, just reach out here or get your accountant, sustainability or finance team involved.

Definition of features and notes from the standard

Object	What does this mean?	Notes from the standard
Baseline Year	To track emissions performance, you need a starting point. For most organisations, this will be the most recent year before setting a target.	Companies need to establish a base year to track emissions performance consistently and meaningfully over a target period. Companies that are submitting targets for the first time are encouraged to set the most recent year with available data as the base year. If a company has more detailed data for a previous year, this is acceptable for validation purposes as long as the most recent year's data is also submitted to be assessed for ambition. The following considerations are important for selecting a base year: - Scope 1, 2, and 3 emissions data should be accurate and verifiable. - Base year emissions should be representative of a company’s typical GHG profile. - Targets must cover a minimum of 5 years and a maximum of 10 years from the date the target is submitted to the SBTi for validation. - The choice of base year must be no earlier than 2015. - For targets submitted for an official validation in the first half of 2024, the valid target years are 2028-2033 inclusive. - For targets submitted in the second half of 2024, the valid target years are between 2029 and 2034 inclusive. - For targets submitted for validation in 2024, the most recent inventory data submitted must be for 2022 at the earliest.
Residual	To credibly achieve Net Zero, organisations must cut emissions significantly and neutralise any remaining with carbon removals. Residual emissions should not exceed 10% of the base year.	To reach a state of net-zero at the corporate level, companies must deeply reduce emissions and counterbalance the impact of any emissions that remain. The SBTi Net-Zero Standard defines corporate net-zero as: - Reducing scope 1, 2, and 3 emissions to zero or a residual level consistent with reaching global net-zero emissions or at a sector level in eligible 1.5°C-aligned pathways; and - Permanently neutralizing any residual emissions at the net-zero target year and any GHG emissions released into the atmosphere thereafter. 2.3 Neutralization What: Measures companies take to remove carbon from the atmosphere and permanently store it, counterbalancing the impact of emissions that remain unabated. Why: Although most companies will reduce emissions by at least 90% through their long-term science-based targets, some residual emissions may remain. These emissions must be neutralized to reach net-zero emissions and a state of no impact on the climate from GHG emissions.
Implied Annual Decrease	This is what the annual reduction would be in order to achieve your stated Target.
Net Zero Target	This is the year in which you have pledged to meet the criteria necessary to achieve Net Zero.	2.2 Long-term science-based targets What: These targets show companies how much they must reduce value chain emissions to align with reaching net-zero at the global or sector level in eligible 1.5°C pathways by 2050 or sooner. Why: Long-term targets drive economy-wide alignment and long-term business planning to reach the level of global emissions reductions needed to meet climate goals based on science.
Near Term Target	This serves as an interim target to ensure significant reductions on the path to Net Zero. The Target includes both a target date and an annual reduction percentage.	2.1 Near-term science-based targets What: Previously known as “science-based targets”, these are 5-10 year GHG mitigation targets inline with 1.5°C pathways. When companies reach their near-term target date, they must calculate new near-term science-based targets to serve as milestones on the path towards reaching their long-term science-based target. Why: Near-term targets galvanize the action required for significant emissions reductions to be achieved by around 2030. Near-term emissions reductions are critical to not exceeding the global emissions budget and are not interchangeable with long-term targets.
Total emissions - Actuals	Actual annual emissions as calculated in Sumday
Total emissions - Target	Net Zero annual reduction pathway including both near term and Net Zero target
Net Zero threshold	Target Net Zero gross emissions based on the selected residual. This amount will need to be neutralised using removal credits to achieve Net Zero

Notes from the standard are sourced from SBTi Corporate Net Zero Standard v1.1