Climate discussions are full of terms related to emissions reduction targets. In this blog, we explain what concepts such as the carbon budget, science-based target (SBTi), and net-zero actually mean. Using precise terminology is important to ensure that discussions about climate targets remain clear and well-founded.
The first part of this blog series covered terms related to carbon footprint accounting. In this second part, we focus on concepts related to emissions reduction targets. We’ve included the terms that most commonly appear in discussions about reducing greenhouse gas emissions.
The Paris Agreement, and its goal of limiting the increase in global average temperature to 1.5°C above pre-industrial levels, has provided the foundation for setting climate targets. The terms explained below may have different meanings depending on whether the targets are viewed from the perspective of a country, a company, or another type of organization.
What does a carbon budget mean?
A carbon budget refers to the amount of carbon dioxide that can still be emitted into the atmosphere while remaining on track to achieve a specific climate target.
According to the IPCC, at the beginning of 2020, around 500 billion tonnes of CO2e remained in the carbon budget for limiting global warming to 1.5°C. Since then, the budget has shrunk rapidly because emissions have not been reduced quickly enough. More recent estimates indicate that by the beginning of 2026, only around 170 billion tonnes of CO2e remained. At the current rate of emissions, this means the remaining carbon budget would be exhausted by around 2030.
What is a carbon sink?
A carbon sink can be nature’s mechanism or a human-made mechanism that absorbs carbon dioxide. Increasing the capacity of carbon sinks helps mitigate and slow climate change by removing carbon dioxide from the atmosphere, preventing it from contributing to global warming. The most important carbon sinks are forests, soils, and oceans. According to the Natural Resources Institute Finland (Luke), the carbon sink provided by Finland’s forests has declined significantly over the past 15 years, due in part to increased logging.
What does carbon neutrality mean?
Carbon neutrality is generally understood as a state in which the amount of greenhouse gases does not increase in the atmosphere.
The International Organization for Standardization has developed the ISO 14068-1:2023 Carbon neutrality standard to provide a clear framework for companies making carbon neutrality claims. Under the standard, organizations should first determine their carbon footprint and prioritize reducing emissions through their own operations as much as possible. They should also increase carbon removals before offsetting any residual emissions.
Finland has set a target of achieving carbon neutrality by 2035. At the European Union level, the goal is to achieve carbon neutrality by 2050.
What is the Science-Based Target?
The Science Based Targets initiative (SBTi) is an international initiative developed in collaboration by the UN Global Compact, the We Mean Business Coalition, WWF, CDP, and WRI. Its purpose is to help companies set science-based climate targets aligned with the Paris Agreement and reduce their emissions.
Setting an SBTi target and the steps involved depend on the size of the company. For small and medium-sized enterprises (SMEs), committing to the SBTi initiative is a lighter and faster process than for larger companies. The basis for target setting is corporate-level emissions accounting conducted in accordance with the GHG Protocol standards (for SMEs scopes 1 and 2, and for larger companies scopes 1–3).
When a company commits to the requirements of the SBTi, it can choose either a short-term target or also commit to a net-zero target. The short-term target covers the next 5-10 years, during which the company commits to reducing emissions in line with the 1.5-degree target. For the net-zero target, the target year is typically between 2040 and 2050, depending on the industry in which the company operates. With the net-zero target, the company commits to reducing its emissions by more than 90% compared to the base year. The SBTi and emission reduction targets vary slightly by sector, and specific guidelines and targets exist for certain energy-intensive industries.
Learn more about the SBTi and find out whether it is the right fit for your company in our previous blog post.
What does Net-zero mean?
Net zero means that the amount of greenhouse gas emissions released into the atmosphere is balanced by the amount of emissions permanently removed from it.
The SBTi Corporate Net-Zero Standard defines what a net-zero target means for companies. According to the standard, companies must reduce their scope 1, 2, and 3 emissions to zero or to a level consistent with a global or sector-specific net-zero pathway. Any residual emissions, as well as emissions generated after the target year, must be neutralized through the permanent removal of greenhouse gases from the atmosphere.
What are FLAG emissions?
FLAG emissions refer to greenhouse gas emissions caused by agriculture, land use, changes in land use, or forestry. Companies operating in these sectors or using products and services from them in their own operations must, when calculating emissions in accordance with GHG Protocol standards and setting science-based climate targets (SBTi), assess the significance of FLAG emissions in comparison to the company’s other greenhouse gas emissions. If a company’s FLAG emissions are significant, they must be quantified in accordance with the new GHG Protocol standard and a separate FLAG target must be established under the SBTi.
Want to understand the climate discussion better?
In many cases, different emission reduction targets are mixed in marketing. When setting a target, it is essential to know the baseline level of emissions. It is also important to decide on the method and standard based on which the target will be set. Whatever the goal, our own efforts to reduce emissions are central.
Check out our training and the first part of this blog series, which clarifies terms related to carbon footprint calculating. You can also contact us and ask more about our services.
