1.5°C Targets: The Business Case for a Climate Transition Plan

The future of corporate climate targets has been the subject of much debate recently. But the main target-setting framework, SBTi, continues to show strong momentum despite recent controversies it will have to solve.

Foto: Photo by james freemantle on iStock



Giulio Berruti, Nina Hatch, and Erin Leitheiser, BSR

Key Points

  • The future of corporate climate targets has been the subject of much debate recently. But the main target-setting framework, SBTi, continues to show strong momentum despite recent controversies it will have to solve.
  • 1.5°C targets and corresponding climate transition plans are here to stay, clearly embedded in regulations and increasingly present in customer demands.
  • Companies should stay focused on the long-term goals of the Paris Agreement, build 1.5°C climate transition plans, and collaborate to unlock net zero transformation.

The future of corporate climate targets has been a theme of fierce debate recently, especially in relation to announcements and steps taken by the main corporate climate target-setting framework, the Science Based Targets Initiative (SBTi), which generated uncertainty in the market, and some signs of companies watering down ambition in an uncertain environment. But don’t be fooled—in 2024, 1.5°C aligned corporate targets are here to stay, and for most companies, different drivers such as regulations and customers have moved the conversation beyond targets, and toward developing 1.5°C aligned climate transition plans.

SBTi momentum has steadily grown over the past three years, while recent announcements generated uncertainty and put its governance into question. 

In 2015, when the SBTi was first created, there were no science-aligned climate target methodologies, or externally validated near-term or long-term climate targets aligned with the Paris Agreement. In 2024, SBTi is the common reference initiative in the space and currently the only framework for third party-validated, climate science-aligned targets for businesses: its growth is therefore an important sign of the momentum behind climate targets. SBTi-validated targets have grown 100 percent annually over the past three years, to over 5000 approved targets worldwide to date.

Recently, a small group of companies (around 10) withdrew from SBTi, mostly due to methodological misalignment. 

SBTi got into the spotlight for the recent statement from its Board of Trustees on changing rules regarding the use of environmental attribute certificates (EACs) within Scope 3. The initiative has since put forward a clearer process and timeline to establish any changes to its guidance. But this issue puts the initiatives’ governance mechanisms into question, and trust will need to be rebuilt. 

A small group of corporate commitments were for the first time removed from the SBTi website, as part of an effort for corporate accountability.

In 2024, for the first time SBTi removed 284 expired corporate commitments that were set in 2021 as part of the Business Ambition for 1.5°C campaign, in which companies did not submit for validation in time. There are several reasons why companies were not able to submit their target in time, from internal staff changes delaying the process, to confusion about SBTi evolving methodologies, to changes in companies structures making the initial commitment irrelevant. The three most common reasons revolve around the SBTi Net-Zero Guidance being published after the time of commitment, concerns about the feasibility of targets, and challenges with Scope 3. While many reasons are valid, removing expired commitments is crucial for holding companies accountable.

What’s more, most of the removed commitments are related to long-term targets, with the same companies having already validated near-term SBT. This points to the fact that long-term targets require the ability to navigate complexity and uncertainty, fundamental shifts well beyond incremental change, and pulling systemic levers that are critical for transformation. 

1.5°C targets, and how to achieve them, are clearly embedded in regulations.

Setting and delivering 1.5°C targets continues to be a top priority for companies worldwide. While cases exist of companies pulling back their climate targets, the overall trend is in the opposite direction, pushed by regulations as well as customers. The regulatory landscape points toward a doubling down in climate action and ambition, driven by EU’s Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). 

  • Under CSRD, climate is de facto a material issue unless a company can prove otherwise. The CSRD’s European Sustainability Reporting Standards (ESRS) requires disclosure of Scope 1, 2, and 3 GHG emissions in line with GHG Protocol; absolute emissions reduction targets; and reporting and disclosure of a transition plan to a 1.5°C future. Companies with SBTs are well placed for the CSRD target requirement, as this WWF analysis shows.
  • CSDDD requires companies to develop a climate transition plan, including a 1.5°C aligned time-bound target “for 2030 and in 5-years steps up to 2050.” 

Companies should stay focused on setting and implementing 1.5°C targets, build 1.5°C climate transition plans, and collaborate to unlock the net-zero transformation.

BSR encourages its members not to lose focus on the end goal outlined in the Paris Agreement, so staying focused on setting and implementing 1.5°C targets. This should include both near-term and long-term (2050) goals, as well as a plan to reach them. Today, SBTs are the only externally certifiable science-based climate target companies can use. External validation and transparency on methodology are key for accountability, so we encourage BSR members to continue on their SBT journey. 

High-quality carbon credits are critical for quickly scaling the desperately needed investments in the nature-based solutions necessary for addressing the twin climate and nature crisis. BSR encourages an approach to credits that is differentiated from Scope 3, and stands ready to support its members navigate the volatile space with integrity.

Finally, transformative business action is critical to address the climate crisis: developing 1.5°C-aligned climate transition plans is the way to do so. BSR stands ready to work alongside our members to understand climate transition plan requirements, build climate transition strategies, and collaborate to unlock systemic barriers to net zero. If you still aren’t sure how to move forward with your climate targets, or would like to learn more about BSR’s work on Climate Transition plans, please don’t hesitate to reach out to the Climate team.



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