FOUNDATIONS FOR SCIENCE-BASED NET-ZERO TARGET …

1 DISCLOSURE INSIGHT ACTIONFOUNDATIONS FOR SCIENCE-BASED NET-ZERO TARGET SETTING IN THE CORPORATE SECTORVERSION 2020 DEVELOPED BYThis report was developed by CDP on behalf of the Science Based Targets initiative (SBTi). The Science Based Targets initiative mobilizes companies to set SCIENCE-BASED targets and boost their competitive advantage in the transition to the low-carbon economy. It is a collaboration between CDP, the United Nations Global Compact, World Resources Institute (WRI) and the World Wide Fund for Nature (WWF), and one of the We Mean Business Coalition commitments. The initiative defines and promotes best practice in SCIENCE-BASED TARGET setting, offers resources and guidance to reduce barriers to adoption, and independently assesses and approves companies authors: Alberto Carrillo Pineda, CDP Andres Chang, CDPP edro Faria, CDP Editorial contributions and review from.

2 Alexander Farsan (WWF), Brad Schallert (WWF), Brett Cotler (CDP), Charlotte Bloomestijn (B Team/Shell), Christa Anderson (WWF), Christopher Weber (WWF), Cynthia Cummis (WRI), Emily Hickson (B Team), Frances Seymour (WRI), Heidi Huusko (UN Global Compact), Jennifer Austin (COP 26), Jenny Gleed (CDP), John Sottong (WRI), Kelly Levin (WRI), Kevin Kennedy (WRI), Lisa Grice (Anthesis), Martha Stevenson (WWF), Matt Ramlow (WRI), Nate Aden (WRI), Nicolette Bartlett (CDP), Paola Delgado (WWF), Ramiro Fern ndez (COP 25), Rodrigo Cassola (CDP), Sarah Savage (CDP), Stephan Singer (CAN), Tim Juliani (WWF), Tom Coleman (CDP), Tom Dowdall (CDP), Yelena Akopian (WRI)We would also like to thank everyone who participated in the consultation survey to help strengthen this paper.

3 Disclaimer: This research paper explores a selection of technical concepts related to corporate climate action and their relevance for corporate NET-ZERO targets. The paper is not intended to provide a fully formalized framework for corporate NET-ZERO targets, nor to comprehensively address all relevant dimensions of corporate climate targets and strategies. The Science Based Targets initiative will build on the conceptual FOUNDATIONS established in this paper to develop detailed criteria and guidelines to formulate, assess, and implement SCIENCE-BASED corporate NET-ZERO targets, following a transparent and inclusive for SCIENCE-BASED NET-ZERO TARGET Setting in the Corporate Sector | 3 ForewordExecutive summary1.

4 Introduction2. Deconstructing corporate NET-ZERO targets3. Defining NET-ZERO : Guiding principles for science based NET-ZERO targets4. Assessing the effectiveness of corporate mitigation strategies reach net zero5. Discussion and recommendations6. Annex 1: Summary of public stakeholder7. Annex 2: Supplementary discussion8. Annex 3: Supplementary tables9. References45121418223239434850 TABLE OF CONTENTS FOUNDATIONS for SCIENCE-BASED NET-ZERO TARGET Setting in the Corporate Sector | 4 These real economy actors, covering nearly 25% global CO2 emissions and over 50% GDP, are united by one thing: they have each committed to achieving NET-ZERO carbon emissions by 2050 at the latest, sending a resounding signal to governments that a NET-ZERO future is not only possible but an urgent priority.

5 As governments work to recover from the devastating economic impacts of the COVID19 pandemic, we have a unique opportunity to rebuild a healthier, more resilient and zero carbon economy that mitigates future threats, is anchored in a just transition, creates greener and safer jobs, and unlocks inclusive, sustainable growth. Ambition is growing, and now we must unite behind science to guide our action. That means a robust and SCIENCE-BASED understanding of what NET-ZERO means, and what needs to happen in order to get there. Over the past five years, the Science Based Targets initiative has pioneered using climate science as a guide to inform corporate ambition, with close to 1,000 companies joining its ranks to set emissions reduction targets grounded in science.

6 With the encouraging growth in the number of companies setting NET-ZERO targets, the initiative s work to define a standard, SCIENCE-BASED framework for setting corporate NET-ZERO targets and making related claims is critical. As recommended in this paper, we urge businesses to ground their NET-ZERO plans in science - a whole world of opportunity awaits the winners in the race to zero , and nothing less than the future of our planet depends on it. FOREWORDBy Gonzalo Mu oz and Nigel Topping, High-Level Climate Action ChampionsA vibrant, prosperous, NET-ZERO emissions world is within our reach and it is our collective responsibility to deliver it. Even in the middle of a global pandemic and the biggest economic crisis of the century, the signals of change from around the world are coming thick and fast: for the first time on record, the size of the global coal power fleet declined during the first half of 2020, with more generation capacity being shut than coming online.

7 Costs of renewable energy technologies continue to plummet, driving exponential growth in solar and wind technology uptake. The Global Wind Energy Council reported that the world s offshore windfarm capacity could grow eightfold by the end of the decade, powered by a clean energy surge led by China. Investment in resilience and zero carbon solutions are increasing, while greater awareness of impact and risk is causing investors to move away from high risk, high carbon assets. The UK s largest pension fund, covering millions of pensions, has said it will ban investments in any companies involved in coal mining, oil from tar sands and arctic drilling. Jurisdictions around the world are setting phase out dates for internal combustion engine vehicles and automakers are making plans for hundreds of new electric vehicle models.

8 Conservation and restoration of nature is increasingly being seen as a source for emissions reductions while simultaneously helping build resilience to climate change. As we move into this decisive decade of climate action, the stakes could not be higher. The science has warned of the catastrophic impacts of exceeding C global temperature rise. There are daily and sobering reminders of the adverse effects of our warming planet on communities, livelihoods and ecosystems. The time to ratchet up our collective global ambition is now. The Special Report on C from the Intergovernmental Panel on Climate Change catalyzed a turning point for a large part of society who, acknowledging the depth of the climate crisis, stepped up to align their goals and targets with a NET-ZERO world.

9 Even without having all the answers and systems in place, an ever-growing group of companies, cities, regions, investors and leaders from across civil society are leading the way in the Race to zero . Gonzalo Mu oz Nigel Topping FOUNDATIONS for SCIENCE-BASED NET-ZERO TARGET Setting in the Corporate Sector | 5 HIGHLIGHTSl The scientific community has clearly stated the need to reach NET-ZERO global CO2 emissions by mid-century in order to limit global warming to C and to reduce the destructive impacts of climate change on human society and As public awareness of the need to reach NET-ZERO emissions at the global level has grown, the number of companies committing to reach NET-ZERO emissions has increased rapidly in recent The growing interest in NET-ZERO targets represents an unparalleled opportunity to drive climate ambition from companies.

10 However, it also creates the pressing need for a common understanding on what NET-ZERO means for companies and how they can get there, so that the growing momentum behind NET-ZERO targets translates into action that is consistent with achieving a NET-ZERO world by no later than For the past five years, the SBTi has pioneered translating climate science into a framework that allows companies to set ambitious climate targets, and that allows for independent assessment of these targets based on a set of robust criteria and transparent validation protocols. As of August 2020, close to 1,000 companies are setting SCIENCE-BASED GHG emission reduction targets through the Science Based Targets Acknowledging the growth in NET-ZERO TARGET setting, the SBTi is developing a SCIENCE-BASED framework for the formulation and assessment of NET-ZERO targets in the corporate This paper provides the initial conceptual FOUNDATIONS for SCIENCE-BASED NET-ZERO TARGET setting.