ISSP-NYC UDPATE: Can Your Company Afford to Ignore Science-Based Targets (SBTs) for Carbon Reduction?

By Mark D. Wolf, President, LavaFish Advisors

Co-Lead, ISSP-NYC Chapter

The word science has been in the news a lot lately. C-Suite leaders use science and facts to make strategic decisions designed to keep their companies in business for the long-term and power their social license to operate.

Recently I had the privilege of moderating a panel with representatives from Estée Lauder Companies, Novartis, AEG and Valutus about the strategic, tactical and implementation outlook for SBTs. The event was co-sponsored by ISSP-NYC and Estée Lauder.

One thing stands out above all else – 

“Simplify it for management … even if the corporate ethos and founders values are totally aligned, and even if your CEO sits on the Board of Blackrock (see Larry Fink’s letter to CEOs),” says Al Iannuzzi, VP of Sustainability at Estée Lauder Companies. 

He and his team are in the middle of the SBT goal setting process and have found, “It’s not a precise science, a lot of proxy data gets used. It would be extremely costly to get the exact carbon footprint of just one raw material all the way through the value chain.” And, that’s okay.

According to James Goudreau, Head of Climate at Novartis, they won’t gain SBT certification the first time through. Now that their strategy is in place and goals certified, they recently secured a 100 megawatt (MW)  energy contract in Texas and are seeking to do the same in Europe. 

Estée Lauder recently signed a long-term power purchase agreement with a wind farm in Oklahoma providing 22 MW of electricity that will cover the company’s entire North American footprint. 

John Marler, VP of Energy and Environment, AEG has found terrific engagement with leaders at individual sports and entertainment venues asking for venue specific performance results so that they can compete on achieving their individual goals. Not a surprise when you think about the competitiveness of sports teams. 

John has found that this initiative is, “creating other value streams beyond efficiency, like brand equity – not directly tied, but very important to a publicly traded company.”

AEG, began its low-carbon economy journey using an intensity metric and learned that it did not move the needle enough. They switched to an absolute reduction measure and have had much more success using renewable energy contracts (RECs). In fact, they made a decision to forgo the formal certification/audit process and use their capital more efficiently by buying additional RECs.

The article title asks if your company can afford to ignore SBTs for carbon reduction. Clearly the answer is no and the time to start is right now.

To achieve a 50% carbon reduction goal by 2030 (per Paris Climate Accords), your company will need to achieve a reduction of 6.7%/year for the next ten years – tough but manageable. 

The longer you wait, the more difficult the challenge -- wait just one year and that number increases by 12%; wait two years and the number increases by 24%. (See article.)

As a strategy consultant to large and mid-size organizations, I have found that it is critical for sustainability, climate and energy leaders to have a well honed strategy for having conversations for greater impact with the leaders and functional peers. 

Are you ready to take action?