Earning leadership status with SBTi could cost companies billions

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🗞️ Driving the news: The Science Based Targets initiative (SBTi) has introduced its updated Corporate Net-Zero Standard, which allows companies to gain formal recognition for addressing ongoing emissions
• However, achieving the highest “Leadership” tier could cost some major emitters billions annually, making it prohibitively expensive for the largest industrial players

🔭 The context: SBTi now offers three recognition tiers:

• Engaged: Carbon credits or internal carbon pricing for 1% of emissions
• Advanced: Covers all Scope 1 and 2 emissions plus at least 10% of Scope 3, with an internal carbon price ≥ $20/tCO2e
• Leadership: Requires a carbon price ≥ $80/tCO2e for 100% of emissions, with proceeds used for climate solutions

• Trellis and Supercritical’s modeling shows that for heavy emitters like Rio Tinto and Ford, achieving Leadership status could cost $23 billion and $13 billion per year, respectively, more than recent profits
• Tech and consumer goods firms with higher profit-to-emissions ratios could realistically pursue Leadership, though many will likely aim for the Advanced tier

🌍 Why it matters for the planet: The initiative is designed to incentivize action on ongoing emissions, including beyond a company’s own operations
• Widespread adoption of internal carbon pricing and carbon credits could channel billions toward climate mitigation projects, accelerating global decarbonization
• But if high costs deter participation, the largest emitters may remain largely unaccountable for their emissions, slowing climate progress

⏭️ What’s next: Companies are urged to decide whether to invest in carbon credits and internal pricing at scale or focus on internal reductions
• Observers are keenly watching whether the SBTi recognition effectively drives beyond-value-chain investments and motivates large industrial players to adopt high-tier commitments

💬 One quote: “Leadership status goes to large companies that apply a carbon price of at least $80/tCO2e to 100 percent of their emissions.” – Jim Giles, MIT Technology Review

📈 One stat: Rio Tinto would face $23 billion annually to achieve SBTi Leadership recognition, making the tier unattainable for the heaviest emitters

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