CO₂ Performance Ladder

Comparing the Science-Based Targets Initiative (SBTi) with the CO2 Performance Ladder

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The Science-Based Targets initiative (SBTi) and the CO2 Performance Ladder (the Ladder) are two powerful tools for organisations aiming to address climate change and reduce carbon emissions. While both share common goals, they differ in approach, scope, and application. This article provides a comprehensive comparison to help organisations understand their similarities, differences, and potential complementarities.

1. What is the CO2 Performance Ladder (the Ladder)?

The CO₂ Performance Ladder is a certification system that helps organisations reduce their CO₂ emissions and operate more sustainably. Developed in the Netherlands, it is now widely used across Europe to integrate emissions reduction into business operations, projects, and supply chains.

The Ladder consists of five levels, each reflecting a greater commitment to decarbonisation. At the lower levels, organisations focus on optimising their own business operations by reducing energy consumption and cutting direct (Scope 1) and indirect (Scope 2) emissions. Higher levels challenge organisations to look beyond their own footprint, addressing emissions across supply chains and industry-wide activities (scope 3). Certification is awarded through independent verification, ensuring credibility and transparency.

2. What is the Science-Based Targets Initiative (SBTi)?

The SBTi is a collaborative initiative led by CDP, the UN Global Compact, WMBC, WRI, and WWF. It helps organisations set science-based emissions reduction targets in line with the Paris Agreement’s goal of limiting global warming to 1.5°C or well below 2°C. Companies can set near-term targets (5–10 years) and long-term net-zero goals, which must be validated by SBTi Services, a separate commercial entity, ensuring adherence to rigorous and transparent standards.

SBTi caters to a wide range of organisations, offering two pathways:

  • A rigorous and in-depth validation process for large companies.
  • A streamlined option for SMEs (less than 250 FTE, 10,000 t CO₂e, or €50m revenue), making it accessible to organisations of varying sizes.

3. What are the main similarities between the Ladder and SBTi?

Voluntary Participation:

Both frameworks are voluntary, allowing organisations to choose whether to adopt them. However, participation is increasingly seen as a mark of leadership in climate action, and many companies engage to strengthen their sustainability commitments.

Emphasis on Emissions Reductions:

Both tools aim to reduce greenhouse gas (GHG) emissions, with a shared focus on Scope 1, 2, and 3 emissions where applicable.

Transparency and Accountability:

Organisations using either tool must disclose progress publicly, fostering accountability and alignment with global climate goals, such as the Paris Agreement.

Use in Procurement:

Both tools are increasingly integrated into procurement strategies, enabling organisations to set clear expectations for supplier climate commitments.

4. What are the main differences?

Scope and Structure:

  • SBTi: Supports organisations in establishing a robust and rigorous baseline as the foundation for setting and validating science-based emissions reduction targets.
  • The Ladder: Goes beyond reduction targets, incorporating a broader management system based on continuous improvement (Plan-Do-Check-Act [PDCA] cycle). It extends beyond reduction targets to include stakeholder engagement, energy efficiency, and sustainable procurement practices (including life-cycle analysis), fostering a more integrated approach to carbon reduction.

Application in Procurement:

  • SBTi: Primarily serves as a benchmark for supplier climate commitments, evaluated on a binary or target-based basis. Additionally, some organisations set Scope 3 engagement targets, requiring suppliers to establish their own SBTs. This approach uses procurement as a lever to align supply chains with science-based targets.
  • The Ladder: Provides an incentivisation mechanism in procurement, including the use of fictitious discounts or points-based systems in award evaluations. This approach rewards higher certification levels and drives systemic decarbonisation across supply chains.

Validation and Certification:

Both frameworks require organisations to conduct an initial self-evaluation to assess their commitments before undergoing external validation or certification, but they differ in their approach:

  • SBTi: Validation is binary (“approved” or “not approved”), focused on setting a robust baseline from which a target and pathway can be set. Approval is granted by SBTi services.
  • The Ladder: Certification is multi-level, allowing for incremental progress. Certificates are issued by accredited third party certification bodies.

Costs of Engagement and Certification:

The cost of engaging with SBTi and the CO₂ Performance Ladder varies depending on an organisation’s size, scope, and level of ambition:

  • SBTi: Costs are primarily associated with target validation. Large companies pay fees for validation, while SMEs have access to a streamlined, lower-cost process.
  • The Ladder: Costs include a contribution to the scheme manager (based on organisation size), internal resources for implementation, and third-party auditing fees. Auditing fees may vary by auditor and could also be influenced by the level of certification an organisation seeks. Higher levels of certification typically involve more extensive audits and require greater resources for implementation, which may lead to higher certification costs.

5. Key Insights into Overlaps and Work Required for Compliance

Overlap:

  • SBTi’s focus on emissions accounting and reduction targets aligns closely with the CO2 Performance Ladder’s core requirements. Organisations using SBTi will find significant alignment with the Ladder in these areas.

Additional Work Required:

  • To comply with the Ladder, organisations using SBTi must implement broader carbon reduction measures, including sustainable procurement practices, and establish a management system structured around the PDCA cycle.
  • For Ladder users aligning with SBTi, the primary additional effort involves validating science-based targets through SBTi’s rigorous process.

6. Summary at a Glance

CriteriaSBTiCO2 Performance Ladder
ScopeGHG emissions reduction targets onlyBroader management system for carbon reduction
StructureTarget validationMulti-level certification
ProcurementBinary or target-based evaluationMulti-level incentivisation through fictitious discounts in procurement
ValidationSecond-party validation by SBTi ServicesThird-party validation conducted by accredited certifying bodies
Cost SummaryCosts associated with target validation, with a lower-cost process for SMEsCosts include a contribution to the scheme manager (based on organisation size), internal resources for implementation, and third-party auditing fees. Auditing fees may vary based on level and auditor

Both SBTi and the CO2 Performance Ladder provide robust, measurable and reportable pathways for organisations to reduce their carbon footprint and contribute to global climate goals. While SBTi excels in providing science-based target validation, the Ladder offers a broader, structured framework for continuous improvement. Together, they can complement each other, allowing organisations to achieve ambitious climate targets while addressing wider sustainability challenges.