Among ESG-related disclosure standards and regulations, the SBTs for Nature (science-based setting of nature-related targets) issued by the SBTN have recently been gaining attention.
SBTs for Nature is Nature's version of the Science-based Targets (SBTs) for greenhouse gas emission reduction targets and provides guidance for companies and organisations to set science-based targets with the mission to protect the global environment, including air, water and biodiversity.
This article provides an overview of SBTN and SBTs for Nature and their relationship with TNFD.
Table of Contents
SBTN and SBTi, SBTs for Nature
Composition of SBTs for Nature
Relationship with TNFD
Conclusion.
SBTN and SBTi, SBTs for Nature
Initially, we will look at the background to the establishment of the SBTN.
The SBTN is an organisation made up of international non-profit and economic organisations, including WWF, CDP, the World Resources Institute (WRI), the UN Global Compact, etc. Prior to its establishment, an initiative called the Science-based Target The WRI is an organisation made up of international non-profit and economic organisations, including the UN Global Compact.
SBTi
SBTi was established following the adoption of the Paris Agreement in 2015 and produced guidance for companies to set science-based greenhouse gas reduction targets with the aim of deterring climate change and improving the competitiveness of companies in a net-zero economy. The targets set in line with this guidance are Science-based Targets (SBTs), and as of February 2024, more than 900 companies in Japan are participating.
SBTs for Nature
The SBTN, organised in line with the SBTi trend, released the first edition of SBTs for Nature (science-based target setting on nature) in May 2023 as guidance for nature-related targets that go beyond climate change. The five areas covered are 'freshwater', 'land use', 'biodiversity', 'oceans' and 'climate change', and the targets are set by assessing and analysing corporate pressures on each. We will now delve a little deeper into the content of this guidance.
Composition of SBTs for Nature
The SBTN framework consists of five steps (Figure 1) and the guidance currently available is for steps 1 and 2 and part of step 3. This section provides an overview of each step and looks at what is actually required of companies working on SBTN.
Figure 1: Five steps of the SBTN framework
(Source:SBTN Guide for Readers Accompanying Text for Steps 1-3)
1. analysis and assessment (Assess)
The first step consists of 1a. materiality screening and 1b. value chain assessment. The former classifies all business activities within the scope of the organisation according to the International Standard Industrial Classification (ISIC4) and identifies the natural pressures for which target setting is most needed. The use of the materiality screening tool developed by SBTN is also recommended for this. In the latter 1b, for economic activities assessed as material, the magnitude of pressure exerted by the company is matched with the State of Nature (SoN) of each region to identify the geographical areas of particular impact (Figure 2).
Figure 2: Matching pressure and natural state
(Source:Technical-Guidance-2023-Step1.)
2. understand & prioritise (Interpret & Prioritise)
Step 2 consists of four sub-steps (Figure 3), each of which is followed by the following steps
2a. Determination of target boundaries:
Define target boundaries for both upstream and direct operations based on available data
2b. understanding/ranking:
Use environmental and social materiality to rank areas within target boundaries
2c. prioritisation:
Prioritise locations within target boundaries using additional criteria on urgency of action (cut-off) and co-benefits
2d. feasibility and strategic benefit assessment:
Incorporate additional social and human rights considerations and assess the feasibility of actions within the scope of the objectives
Figure 3: Overview of step 2.
(Source:Technical-Guidance-2023-Step2.)
3. measure, set & disclose
Of the five target areas in Step 3, technical guidance is available for freshwater and land (land is in beta) and a short paper on biodiversity. Reference is also given to SBTi for climate.
As an example, in the freshwater domain, 'water quantity (freshwater abstraction from surface water and groundwater)' and 'freshwater quality (the total amount of nitrogen and phosphorus taken up by surface water bodies within a given period)' are regarded as pressures on nature, and the information required to assess them and how to set specific targets are provided.
4. action (Act); 5. track (Track).
Specific guidance has not yet been published for Step 4 and beyond, but specific response options to achieve the set targets and methods for tracking and reporting on progress are being developed. In addition, for some areas, such as freshwater, a list for action is already included in the Step 3 guidance.
This is the general structure of the SBTs for Nature. Each step is characterised by the recommended use of SBTN's own tools and databases, as well as the advantageous target setting for companies that have already established their own greenhouse gas reduction targets (SBTs).
Relationship with TNFD
The Taskforce on Nature-related Financial Disclosures (TNFD) exists as an indicator for assessing a company's nature-related risks; for companies making disclosures based on TNFD recommendations, the SBTs for How should Nature respond?
Essentially, they can be seen as complementary to each other. With the common goal of positively impacting companies and organisations on nature, the TNFD is a framework for assessing the current situation and disclosing information, whereas SBTs for Nature is intended to set appropriate targets. the TNFD has published in 2023, an addition to the final recommendations. As guidance, it published a text in collaboration with SBTN showing the relationship between the two indicators. There, the relationship between the LEAP approach proposed by the TNFD and the SBTs for Nature approach is shown (Figure 2).
Figure 4: Relationship between TNFD and SBTN
(Source:Guidance for corporates on science-based targets for nature)
For companies that are trying to disclose information in accordance with the TNFD, the procedures for detailed assessment of the current situation and target setting have to some extent been left to the discretion of the company. In the future, specific methods for these may be established through the use of SBTs.
Conclusion.
This article introduces the background to the SBTs for Nature, which are attracting increasing attention, the responses required from companies and the relationship with the TNFD. However, taking into account the number of companies already participating in SBTi and the interest in the TNFD, whose final recommendations were published last year, it is highly likely that SBTs for Nature will become established as a standard for target setting in the future. It will be necessary to consider taking action from an early stage in order to set targets backed by scientific evidence and to conduct persuasive ESG management.
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