Apparel and Footwear Sector Science-based Targets Draft Guidance Webinar. May 31, 2018

Transcription

1 Apparel and Footwear Sector Science-based Targets Draft Guidance Webinar May 31, 2018

2 Welcome and Introductions: WRI Team Nate Aden Senior Fellow WRI Cynthia Cummis Director of Private Sector Climate Mitigation WRI Michael Sadowski Research Consultant WRI

3 Agenda 1. Webinar Objectives & Overview of SBTi 2. Objectives of AP/FW Sector SBT Guidance 3. Scope 1 & 2 Criteria 4. Scope 3 Criteria 5. Recommendations and Q&A

4 Webinar Objectives 1. Provide an update on the Science Based Targets initiative 2. Present key recommendations for sector SBTs 3. Solicit your feedback on the draft guidance

5 A Reminder: Draft Guidance is Open for Review See link for the guidance document and an online survey Deadline for feedback is June 8

6 Science Based Targets initiative 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.

7 SBTi: Three Pillars STRATEGY Reduce the barriers to the adoption of sciencebased targets Institutionalize the adoption of sciencebased emission reduction targets Build a Movement

8 Call to Action Commit to set a sciencebased target Develop a sciencebased target Submit your sciencebased target for review Announce your sciencebased target

9 SBTi Call to Action Eligibility Criteria (All 5 Needed) 1. Boundary Covers company-wide scope 1 and scope 2 emissions and all GHGs as required in the GHG Protocol Corporate Standard. 2. Timeframe Commitment period must cover a minimum of 5 years and a maximum of 15 years from the date the target is submitted for an official quality check. 3. Level of ambition At a minimum, the target will be consistent with the level of decarbonization required to keep global temperature increase to 2 C compared to pre-industrial temperatures, though we encourage companies to pursue greater efforts towards a 1.5 trajectory. Intensity targets are only eligible when they lead to absolute emission reductions in line with climate science or when they are modelled using an approved sector pathway or method (e.g. the Sectoral Decarbonization Approach). 4. Scope 3 Companies must complete a scope 3 screening for all relevant scope 3 categories in order to determine their significance per the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard. An ambitious and measurable scope 3 target with a clear time-frame is required when scope 3 emissions cover a significant portion (greater than 40% of total scope 1, 2 and 3 emissions) of a company s overall emissions. The target boundary must include the majority of value chain emissions as defined by the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard 5. Reporting Disclose GHG emissions inventory on an annual basis.

10 Building Momentum Since officially launching in June ~ 2 Companies have reported to CDP that their intention to set a SBT by 2019 Companies have formally joined the SBTi Companies have approved targets Companies join the initiative on average every week

11 Geographic Distribution of Approved Targets

12 Approved AP/FW Sector Targets Kering commits to reduce scope 1, scope 2 and scope 3 emissions from upstream transportation and distribution, business air travel and fuel-and-energy related emissions 50% per unit of value added by 2025 from a 2015 base-year. In addition, the company commits to reduce scope 3 emissions from purchased goods and services 40% per unit of value added within the same timeframe. This is part of their overall goal to reduce environmental impacts upstream, such as air emissions, water use, water pollution, land use change and waste. Marks & Spencer commits to reduce absolute scope 1 and 2 greenhouse gas emissions 80% by 2030 below 2007 levels and has a longer term vision to achieve 90% absolute emissions reductions by 2035, below 2007 levels. Marks and Spencer also commits to reduce scope 3 emissions by 133 MtCO2e between 2007 and Wal-mart Stores, Inc. commits to reduce absolute scope 1 and 2 emissions 18% by 2025, from 2015 levels. Walmart will also work to reduce CO2e emissions from upstream and downstream scope 3 sources by one billion tonnes between 2015 and

13 Commitments to Set SBTs

14 Agenda 1. Webinar Objectives & Overview of SBTi 2. Objectives of AP/FW Sector SBT Guidance 3. Scope 1 & 2 Criteria 4. Scope 3 Criteria 5. Recommendations and Q&A

15 Objectives of the SBT AP/FW Sector Guidance Provide clarity on credible approaches to setting SBTs for operations and value chains Increase consistency across companies targets in the sector Identify barriers for setting SBTs and provide recommendations to address these barriers Define and provide examples of best practices Highlight opportunities for companies to collaborate in reducing emissions

16 Sector Ambition By the end of 2018, 30 of the largest AP/FW companies have committed to set science based targets By 2020, 50 of the largest apparel companies have set science based targets for their operation and ambitious targets for their supply chains

17 Intended Users of Guidance: Companies Across Value Chain

18 Summary of Feedback Received in Vancouver Workshop Provide more specificity where possible Clarify acceptable level of ambition for scope 3 targets Better articulate how guidance applies to all tiers of suppliers Provide guidance on industry-specific scenarios (e.g. how should tier 1 account for PG&S if no influence?) Advise on how retailers should approach targets for other brand products Dig deeper into Higg Index to understand how to use it for SBTs

19 GHG Emissions Reduction Framework

20 Special Thanks to Our Expert Advisory Group Naresh Tyagi, Adityla Birla Group (ABFRL) Honor Cohen, Anthesis Group Seiko Inoue, ASICS Kyle Chung, Crystal Group Arnaud Doré, EcoAct Jeroen Scheepmaker, Ecofys Christina Nicholson, Gap, Inc. Brian Johnston, Independent Francois Xavier Morvan, Kering Krishna Manda, Lenzing Liza Schillo, Levi Strauss Rowland Hill, Marks & Spencer VidhuraRalapanwe, MAS Holdings Joel Mertens, MEC Adam Brundage, NIKE, Inc. Jeremy Lardeau, NIKE, Inc. Lou Tarricone, Pure Strategies Rainer Zah, Quantis Matthew Thurston, REI Brian Au, Reset Carbon Aditi Suresh, SCS Global Services Dharashree Panda, VF Corporation Josh Nothwang, WSP USA Li Shen, Utrecht University

21 Agenda 1. Webinar Objectives & Overview of SBTi 2. Objectives of AP/FW Sector SBT Guidance 3. Scope 1 & 2 Criteria 4. Scope 3 Criteria 5. Recommendations and Discussion

22 Scope 1 & 2: Key Criteria Scope: Company-wide scope 1 and 2 emissions per GHG Protocol Corporate Standard (all relevant GHG gases, can exclude 5%) Timeframe: Minimum of 5 years, maximum of 15 years from target submission date (additional longerterm targets are encouraged) Progress to Date: Targets must be forward looking Ambition: Consistent with level of decarbonization required to stay below 2 C (with efforts towards 1.5 C encouraged) Absolute vs. Intensity: Intensity targets allowed only when consistent with 2 C pathway Offsets: Not counted as reductions toward progress of SBTs Renewable Energy: Acceptable for scope 2 formulations Reporting: Annual public disclosure of progress

23 Scope 1 & 2: Target Setting Methods Method Absolute contraction Sector Decarbonization Approach (SDA) - homogeneous sectors Allocation mechanism Results in terms of absolute emissions reductions Contraction of absolute emissions Absolute emissions always reduced if scenario has a decreasing trend. Lowest acceptable threshold for absolute reductions is an annual rate commensurate with 49% below 2010 by Equivalent to a 1.7% compound annual reduction rate (1.23% in linear terms). Convergence of physical intensity Emissions allocated among companies within a sector by market share of physical production. Total sector emissions decline in line with a 2 C pathway; companies can redistribute emissions among themselves by changing market share. GEVA methods (GEVA, CSI, CSO) Economic intensity in line with absolute contraction The more a company contributes to economic output, the more emission allowances it receives (targets expressed in emissions per unit value added). This method combines the absolute emissions pathway described by absolute contraction with an economic denominator.

24 Agenda 1. Webinar Objectives & Overview of SBTi 2. Objectives of AP/FW Sector SBT Guidance 3. Scope 1 & 2 Criteria 4. Scope 3 Criteria 5. Recommendations and Q&A

25 Why the Focus on Scope 3 For most AP/FW companies, majority of emissions occur in scope 3 A scope 3 target helps companies focus on where they can have the largest impact Upstream Scope 3 targets help build momentum and help broaden the adoption of SBTs

26 Scope 3 Criteria: Requirement and Boundary If scope 3 emissions are at least 40% of total scope 1, 2, and 3 emissions, a scope 3 target is required Target must collectively cover 2/3 of total Scope 3 emissions Companies must be explicit about what is included and not (with rationale) Scope 3 Categories

27 Scope 3 Criteria: Timeframe Target years must cover 5 to 15 years from date target is submitted to SBTi for validation

28 Scope 3 Criteria: Ambition Scope 3 targets (covering the entire value chain or individual scope 3 categories) are considered ambitious if they fulfill any of the following 3 options: Option 1: Absolute emission reduction targets in line with a 2-degree pathway

29 Scope 3 Criteria: Ambition Scope 3 targets (covering the entire value chain or individual scope 3 categories) are considered ambitious if they fulfill any of the following 3 options: Option 1: Absolute emission reduction targets in line with a 2-degree pathway Option 2: Physical or economic intensity targets consistent with a 2-degree pathway.

30 Scope 3 Criteria: Ambition Scope 3 targets (covering the entire value chain or individual scope 3 categories) are considered ambitious if they fulfill any of the following 3 options: Option 1: Absolute emission reduction targets in line with a 2D pathway Option 2: Physical or economic intensity targets consistent with a 2D pathway Option 3: Other emissions intensity reduction targets where the company can demonstrate that the target is ambitious and does not result in absolute emissions growth.

31 Scope 3 Criteria: Engagement Targets Companies may set supplier engagement targets around any relevant upstream categories Purchased goods & services Supplier 1 Supplier 2 Upstream transportation & distribution Supplier 1 Supplier 2 Suppliers must set SBTs for at least scope 1+2 and by at most 5 years from the target submission date

32 Scope 3 Criteria: Unacceptable Targets Targets to collect data Targets that cover avoided emissions (e.g. emissions reduced against a BAU baseline) Targets already that have already been achieved or nearly completed Targets without a set base or target year

33 Scope 3 Criteria: Combined Scope Targets When a company has a combined scope 1, 2, and 3 target the scope 1 and 2 portion of the target must be in line with a 2-degree pathway.

34 Agenda 1. Webinar Objectives & Overview of SBTi 2. Objectives of AP/FW Sector SBT Guidance 3. Scope 1 & 2 Criteria 4. Scope 3 Criteria 5. Recommendations and Q&A

35 Recommendations for Setting and Delivering Targets Invest in better systems and processes to get primary data across tiers Adopt, promote, and work to improve the Higg Index Involve and partner with your suppliers (and their suppliers ) Prioritize suppliers by emissions and / or spend Increase supplier disclosure across tiers to facilitate collaboration Incorporate SBTs into sourcing decisions Share examples of good practice so others can learn

36 Illustration: Mill-Specific Targets If a brand or finished goods manufacturer identifies mills as a prominent source of GHG emissions, it may set supply chain target focused on mills Given the nature of the value chain, we expect that such company or manufacturer will need to collaborate with other customers of these mills

37 Illustration: Indirect Use Phase Targets Targets for indirect use phase are recommended but not required These targets would be additional to a scope 3 target that covers the other emissions categories Given the challenges in measuring GHG reductions from indirect use, few companies have set these types of targets through the SBTi Procter & Gamble commits to reduce emissions from operations 30% by 2020 from a 2010 base-year. the company will also address the main source of emissions across its value chain by measures including: ensuring that 70% of all washing machine loads are washed in cold water

38 Next Steps in Project June 17 Nov 17 Jan 18 Sept 18 Dec 18 Project Scoping and Development Develop Options Papers Develop Guidance Publish and Market Guidance Webinar & WFSGI presentation Develop project plan Recruit members for EAG & SAG EAG call on tech options (Nov 8) Final draft of tech options EAG call on outline (Feb 15) First draft of guidance (spring 18) Final guidance ready Launch guidance 1:1 interviews w/ committed companies & experts SAG call on tech options (TBD) First draft outline of guidance Second draft out for review Develop launch and outreach plan

39 Q&A

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