‘Transition over targets’: Digging into SBTs for nature

Jefferies analyses the SBTN's first technical guidance released last week

Investors looking at companies’ nature targets should pay attention to location data, making use of tools such as geospatial mapping, Jefferies has said.

This comes following the news last week that the Science Based Targets Network (SBTN) has released the first version of its technical guidance to help companies assess their environmental impacts and set targets for freshwater and land, drawing insight from more than 80 global NGOs and mission-driven organisations.

This guidance is designed to help companies in the assessment, interpretation and prioritisation, measurement, and setting and disclosing targets steps, with guidance on acting and tracking set to be released in 2024. Companies should also be preparing to set freshwater and land targets to be validated in 2024. Guidance for financial institutions can also be expected in the near future.

Starting with a pilot group of 17 companies including Tesco and GSK, the network is trailing its initial methods, tools and guidance, with the aim of each company having set nature targets this year. The guidance has also been tested by more than 115 companies in more than 25 countries representing more than $4trn in market capitalisation.

“We have designed the guidance to build on companies’ existing sustainability strategies and have proactively aligned with existing and upcoming standards and frameworks – including the Science Based Targets initiative and the Taskforce on Nature-related Financial Disclosures risk management and disclosure beta framework,” Erin Billman, executive director of the SBTN, said.

The targets complement the existing science-based targets for climate and aim to provide a mechanism for companies to act in line with Target 15 from the Global Biodiversity Framework agreed at COP15, which focuses on the role of business in managing and disclosing their impact on nature. 

In the assessment phase, companies will have to conduct a materiality screening and value chain assessment, which will highlight the environmental impacts that most likely need targets and which parts of the business are the highest priority to begin with.

These assessments will help determine target boundaries, interpret, rank and prioritise targets, and then evaluate their feasibility and strategic interest. Companies can then set targets and submit them for validation.

In its analysis of the new guidance, Jefferies highlighted that companies’ science-based targets for nature should be nuanced by location data.

“From a single materiality perspective, investors need not be concerned about a company’s ecosystem service dependencies — even if they are irreplaceable and critical to a production process — unless there is a risk to the provision of a given ecosystem service,” it said.

“With targets on water use, for example, investors may wish to make use of geospatial mapping tools such as the WRI Aqueduct tool or the WWF’s Risk Filter Suite and to examine a corporate’s water targets in the context of projected water risks in their areas of operation.”

It also stressed that assessing how a company is transitioning away from nature-related risk will be key. It said: “If we have learned anything from the climate movement, it’s that we need to focus on transition over targets.”