With SBTI hitting 1000+ companies, and President-elect Biden pledging to re-join the Paris Agreement, will US participation accelerate?

It was announced in October than a significant milestone for the Science Based Targets Initiative (SBTI) had been passed: Over 1000 companies have now committed to set climate targets in line with the latest science.

These 1000 companies span 60 countries, include one-fifth of the Global Fortune 500, and have a combined market cap in excess of $15.4 trillion USD! 

Many of these businesses have huge up and downstream impacts, so the impact of publicly making these commitments should help to create huge momentum.

At the same time we have all watched the US presidential election results with bated breath. As of writing, barring any last minute legal challenges, we have a new President-elect in Joe Biden.

This should see the US re-join The Paris Agreement in January, and again take a leading role in climate action.

But did US industry, especially it's major global brands, ever really stop progression on climate action?

As it's a milestone initiative, I've taken a quick look at the 1000 companies who have committed to the SBTI, to see if there is anything interesting to help with this question.

Obviously there are many great companies based in the US doing really positive work on climate impact reduction, not all of whom are SBTI members - we work with some - so this is not to suggest if a company isn't in the SBTI list then they are not progressing. It's just a useful sample to review.

Just worth stating this is all publicly available information SBTI's great website.

First a general look at momentum of the SBTI as a whole.

Cumulative number of companies committed to the SBTI tracked by date of commitment date, or date targets were approved:

Looking at the dates that companies either committed or had their targets approved doesn't quite give us a full picture of growth of the SBTI. Those with targets approved (teal) had up to 24 months from their commitment date to do so, this does shift volume of the dates to the more recent making growth look more extreme.

This aside, there has definitely been a shift in momentum of new companies making commitments as of Q3 2019 - this is an initiative on the up with positive momentum.

You might note that there are some companies who committed to have targets approved more than 24months ago. A few of these are in the financial sector and have been working with SBTI on the newly launched financial sector pathway. There are also some well known names in that group who are overdue having targets approved, it'll be interesting to see if any start to get removed by the SBTI as time passes. I'm sure the internal challenges of target setting & sign-off have delayed a few.

Company Headquarters (HQ) - region

On to where these 1000 companies are based (by HQ). Is the US behind the rest of the world?

It is very clear Europe has a leading role in the SBTI to-date. There will no doubt be many factors behind this, which I won’t pretend to analyse in any great depth here. 

At a glance, given the market capitalisation of the US and Asian stock exchanges, compared to European ones, it would seem at that Europe is very much over represented, if just considering where large businesses in the world are headquartered.

So yes, maybe pulling out of the Paris agreement has slowed progress.

 Looking at global climate attitude surveys from the likes of YouGov and Pew Group, there is also not a clear match with the regional differences, suggesting that consumers are not the ones driving regional variation.

Without doing a real analysis, if I had to guess I’d go with it either being due to the prominence/marketing of the initiative itself (i.e. awareness in each region), or the current regulatory environments – with European counties tending to be further ahead at the moment with their GHG commitments on the whole – driving the difference so far.

So lets hope the recent exciting CO2 targets announced by Japan, China, and South Korea drives further growth in those regions, if the regulatory environment is indeed a key factor.

Time will tell if the US re-joining the Paris Agreement, will also help balance the numbers of US companies committing.

From a business perspective, US companies will now know even if one administration pulls out of the agreement(s), in all likelihood they will end up re-joining. You'd hope it therefore makes strategic sense to stay aligned with the goals as many plans & investments have a longer timeframe than the 4-8y terms of presidents.

(Looking at the commitment/target approval dates by region broadly matched the pattern of all regions - there did not seem to be any material difference in growth rate).

Finally, as I had the data to hand, a quick look at the sectors the first 1000+ companies committed to the SBTI represent:

As above, this highlights visually how all banks/finance companies have been waiting for the updated guidance before setting their targets.

It does also flag some major industries key to carbon reductions are this far under-represented. Hopefully, many major emitting industries will fall into the upstream emissions of other signatories with Scope3 targets, and influence on these sectors can still be exerted.

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