Science Based Targets Initiative (SBTi) is a collaboration between four entities: the Worldwide Fund for Nature (WWF), the United Nations Global Compact (UNGC), the World Resources Institute (WRI) and the Carbon Disclosure Project (CDP). It helps businesses and financial organizations develop and implement guidelines to reduce their greenhouse gas (GHG) emissions in line with the goals of the Paris Agreement to limit global temperature to 1.5°C. Over a thousand organizations worldwide have joined the initiative to set science-based targets or commitments.
SBTi has introduced four guiding recommendations for steel and iron manufacturing companies and their distribution channels to help them set science-based objectives. Financial organizations that engage in financing and investing in iron and steel industries can utilize the SBTi recommendations in establishing goals for their scope 3 investments-related emissions.
The recommendations or roadmap should be leveraged by steel and iron organizations that engage in both upstream and downstream manufacturing businesses and are planning to set their verified carbon-reduction goals or want to integrate these targets into their overall sustainability journey.
Establish goals, perimeters, and techniques for setting the goals:
- Choose between setting a zero-carbon goal (combining both a short- and long-term plan) and a sole short-term objective.
- Select every goal’s starting year and final year, which should be 2050 or earlier. The short-term goals need to be achieved within 5 to 10 years from the day of goal submission to SBTi.
- Ascertain which of the scope 3 goals are necessary, voluntary, or desirable from the company’s perspective.
- Ascertain the emissions covered by and beyond the goal’s limits and align them with the SBTi-recommended goals.
- Select the strategy for establishing every goal
Track, monitor and evaluate all emissions:
- Determine the key performance metrics and necessary information, such as the starting year specific to the sector’s scope for recording and calculating the carbon-emission and production data (metric tonne) and scrap ratio (percentage) for the initial year, projected production, and scrap ratio for the target year.
- Consider ferrous metals and three types of scrap i.e., manufacturing plant scrap, obsolete scrap, and industrial scrap in ascertaining the above ratio.
- Follow the criteria, goal verification protocol and GHG Protocol Corporate Accounting and Reporting Standard provided by SBTi for carbon-emission inventory calculations done for establishing the emission-reduction goals.
Establish the science-based goals:
The iron and steel manufacturing firms are advised to adopt the below measures for their goal construction:
- Gather information for production projections up to the final goal year.
- Enter the carbon stock and related information from the prior stages into the goal-establishing technologies, such as tools offered by SBTi to determine the cutbacks necessary for acceptable objectives for all GHG scopes (1, 2 and 3)
- Choose the goal phrasing based on the SBTi gaol submission application format, the recommended guidelines, and the steel industry websites.
- Goal submission to the SBTi:
- Ensure short-term goals support the long-term goal strategy by identifying and mitigating financial and technological risks.
- Maintain transparent communication with the relevant stakeholders in case of any modification in the goals-setting approach. Ensure the new approach is more progressive compared to the previously decided target.
- Determine the most appropriate Steel Decarbonization Approach (SDA) developed by the SBTi, according to the nature of the organization or business (upstream or downstream)
Iron and steel is one of the most carbon-intensive sectors in the world, accounting for more than 7% of global carbon emissions. To align the sector with the previously mentioned Paris Agreement’s goal of limiting, it is necessary to transform the iron and steel manufacturing processes and reduce its emissions significantly. Climate-concerned bodies like SBTi are continuously taking several initiatives and projects that aim to provide guidance and support to the steel sector to set science-based targets consistent with the level of decarbonization required by the latest climate scenarios. Therefore, all the companies falling within the scope of the roadmap should follow the guidelines prescribed by the SBTi.