FRANCECORPORATE
CLIMATETARGETSENSURING THE CREDIBILITY OF EU-REGULATEDCOMMITMENTSFEBRUARY 2024

WWF
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Authors
Guillaume Bône, Antoine Pugliese andSebastien Godinot
Acknowledgements
WWF would like to thank the Science Based
Target initiative (SBTi) for their continued
cooperation in providing information for thisreport and providing data for the analysis ofmarket penetration of the SBTi.
The authors thank the members of the WWF EU
sustainable finance network, Paul Schreiber from
Reclaim Finance, and Romain Poivet from theWorld Benchmarking Alliance, who submitted
feedback for this report.

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Document published in february 2024
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Cover photography:© Copyright Sven Zacek / naturepl.com© Copyright Jason Houston / WWF

WWF FRANCE 2024

TABLE OF CONTENTS
Acknowledgements

2

Executive Summary

4

Scope and objectives

5

I - PRESENTATION OF EU REQUIREMENTS FOR CORPORATE CLIMATE
6
TARGET SETTING AND REPORTING
1 - The Corporate Sustainability Reporting Directive and8
the European Sustainability Reporting Standards
10
2 - The Corporate Sustainability Due Diligence Directive 	
3 - EU legal references to the 1.5°C limit oftemperature increase11

II - WWF RECOMMENDATIONS ON ESRS CLIMATE TARGETDISCLOSURES

12

1 - Climate targets must be compatible with a 1.5°C limit
15
of temperature increase
2 - Climate targets must fully cover undertakings’ activities
16
and value chains
3 - Climate targets must be set for the near term anddemonstrate a commitment to net zero emissions on
the long term
4 - Climate targets must be expressed in absolute andintensity-based form

18
19

5 - Climate targets must also be set at the level of
GHG‑intensive assets and geographies

21

III - SBTI: A FRAMEWORK FOR SCIENCE-BASED CORPORATE
CLIMATE TARGET-SETTING

22

1 - The SBTi’s target-setting methodology helps companies
and financial institutions to comply to relevant legal
24
requirements under CSRD
2 - Analysis of market penetration rates of
the Science Based Target initiative35

3 - SBTi use cases: examples of good practicein target setting

39

Conclusion and next steps

45

Appendices46

Glossary

49

3

EXECUTIVE SUMMARY
This report focuses on the EU policy requirements forcorporate climate target setting and reporting set by
the Corporate Sustainability Reporting Directive (CSRD), which
would also be applicable under the Corporate Sustainability
Due Diligence Directive (CSDDD1). It assesses the degree ofalignment of the underlying methodological requirements in
the Science Based Target initiative (SBTi) – a voluntary
initiative established to drive ambitious climate action in theprivate sector by developing standards, tools and guidance toenable organizations to set science-based emissions reduction
targets – with the EU legal requirements from CSRD.
This report exclusively addresses climate targets for companies
and financial institutions, and not the transition plans that must
be associated with targets set by companies in order to achieve
their decarbonization objectives. WWF acknowledges that climate
targets are essential to set the ambition for transition planning bycompanies and financial institutions ; however, climate targets
alone are insufficient to guarantee the sustainability ambitionsof undertakings, or to characterize companies as transitioning.
WWF has already released reports outlining the importance ofa transition plan, and will continue through additional reports.
The findings of the report indicate that:• The CSRD requires companies to disclose (1) climate targets
on all 3 scopes of carbon emissions, (2) whether these targets
are compatible with the 1.5°C limit of temperature increaseand (3) what and how scenarios were used to construct thesetargets. This requirement would be complemented with an
obligation of means under CSDDD.
• Under CSRD companies must disclose targets for the nearand long terms, every five years between 2030 and 2050, andexpress them in absolute values, so as to ensure the rapid
decarbonization of economic activities. For a summary of thefive key technical recommendations regarding climate target
setting, see Section 2 page 14.
• The Science Based Targets initiative (SBTi) represents
the gold standard for climate target setting with independent validation to date and enables companies to ensurethat their decarbonization targets are aligned with 1.5°C-aligned
climate scenarios. As of 2024, more than 4000 companies andfinancial institutions have validated science-based targets anda further 3000 have commitments to set them. The companies
span almost 100 countries, including 2300 in the EU.
• The methodological requirements for target creation,
submission and validation by the SBTi correspondto, and at times exceed, the requirements set by the
CSRD, which provides the methodological basis forclimate target disclosures.

• The SBTi can therefore greatly facilitate theimplementation by companies of EU climate target
setting and reporting requirements.This will improvethe credibility and comparability of corporate climate targets,better contributing in turn to the EU 2030 climate objectives
and the European Green Deal as well as to the long-termclimate resilience and financial stability of companies.
• The SBTi is explicitly mentioned in ESRS E1 asa reference for the minimum rate of carbon emissions
reduction needed to align with 1.5°C.
Based on these findings, WWF issues the following threerecommendations:
1. EU institutions and Member States, relevant
regulators and supervisors, and assurance providers
on CSRD disclosures should immediately recommendthat companies and financial institutions set SBTivalidated climate targets to ensure compliance with
EU requirements on corporate climate target setting
and reporting, and provide greater transparency on theirforecasted emission reductions. In its Strategy for financing
the transition to a sustainable economy from July 2021, theCommission committed to examine to what extent moreguidance could ensure that science-based climate targets
are credible.
2. Building on the SBTi notably, the EU should develop
a methodological framework of reference forcorporate climate target setting aligned with the
1.5°C limit of temperature increase, the use of whichshould become mandatory over time. It is necessary
to ensure credibility and comparability of corporate climate
targets, and in turn better contribute to the EU 2030 climate
objective and the European Green Deal. The relevance ofsuch a standard has been demonstrated by the wide adoptionof SBTi-validated targets by economic actors of all sectors
and sizes globally.
3. These climate targets must be monitored by relevant
regulators (national competent authorities - NCAs)and supervisors: these authorities should ensurethat appropriate means are allocated to achieving
these targets and monitor progress on corporate
commitments. In this sense, CSDDD represents
an essential part of the EU corporate regulatory
framework. It will have to be complemented with thedevelopment of a robust Measurement, Reportingand Verification (MRV) process for corporate
climate targets2.

Any information regarding CSDDD contained in this report refer to the agreement of the Parliament and Council datingfrom December 14th 2023. WWF acknowledges and regrets the uncertainty on the final step of CSDDD, which it views as
an essential element of the regulatory framework for climate targets and transition plans in the EU. However, the same
methodological requirements apply for corporate climate target setting and disclosure under CSRD and CSDDD.
2
The same will be relevant as well for corporate climate transition plans - which are not the focus of this report.
1

WWF FRANCE 2024

SCOPE AND OBJECTIVES
Building on previous work by WWF3, this report has two objectives:•

It assesses the relevance of the SBTi for EU corporate
climate target setting and reporting requirement forcompanies and financial institutions, in alignment withthe 1.5°C limit of temperature rise. Given our positive
assessment, EU institutions and Member States, relevant
regulators and supervisors, and CSRD assurance providers
should recommend the adoption of the SBTi as a methodology ofreference for corporate climate target setting.

•It brings complementary elements for the implementationof the CSRD (and more specifically ESRS E1) by providing
methodological guidance for climate science-basedtarget setting based on SBTi and WWF technicalexpertise, which should be used to develop a normative EU
methodological framework of reference for corporate sciencebased climate target setting - the use of which should become
mandatory over time.

These elements can largely be drawn from the SBTi’s methodology, which
provides an internationally recognized, comparable and ambitious
science-based tool for GHG target design. Additional elements will

also be provided in the report when gaps exist between SBTi and what
is considered best practice by WWF.
Finally, the relevance of this approach will be illustrated with thepresentation of five different use cases of SBTi target-setting bycompanies or financial institutions. This report does not explicitly
address the transition plans that need to be associated with targets set
by companies in order to achieve their decarbonization objectives. It
is important to distinguish between targets and transition plans, as atarget that is validated on the basis of its alignment with the 1.5°C limitof temperature increase is not a guarantee that companies will eventually
implement the relevant strategies and actions to reach their statedobjectives. WWF plans further reports on transition plans specifically.
The elements provided in this report are intended to contribute to
EU efforts to create the appropriate legislative framework to guidethe ecological transition in the EU, to be used by information users toevaluate the quality of data provided in the context of CSRD-mandated
publications, and to be adequately monitored by relevant regulatorsand supervisors. This report is part of a series of WWF publications
around climate and nature targets and transition plans, presented in
the timeline below:

FRANCE

RECOMMENDATIONS FOR A CONSISTENT EUREGULATORY FRAMEWORK ONCORPORATE
CLIMATETARGETS

NATURE IN TRANSITION
PLANS: WHY AND HOW?

CORPORATE SUSTAINABILITYTARGETS AND TRANSITIONPLANS

ENSURING THE CREDIBILITY OF EU-REGULATEDCOMMITMENTSFEBRUARY 2024

How companies can consider climate and nature togetherin current transition planning

EU recommendationon corporates targets
and transition plans

Nature in transition
plans: why and how?

Corporate climate
targets

WWF EU climatetransition plans
assessment report

NOVEMBERJANUARYFEBRUARYSEPTEMBER

2022

2023

WWF report on
measurement, reporting andvalidation (MRV) systems
for climate commitments

2024

DECEMBERJANUARY

2025

MAY

OCTOBERWWF EU naturetargets report

WWF EU Naturetransition plans guidance

WWF’s criteria for

credible climate andnature transition plans
for financial institutions

Promote sustainable financeNovember 2022

Summary for policy makers
Transition plans are a vital tool that allows financial institutions andcompanies to set out clear and actionable steps to achieving sciencebased climate and nature targets, enabling the transition towards
sustainability across the whole economy.
The existence of credible transition plans for financial institutions will help alleviate concernsof greenwashing and provide forward looking information to a range of stakeholders
including governments, clients and portfolio companies, regulators and civil society.
This position paper presents WWF’s key criteria and expectations that make up a credible
climate and nature transition plan for financial institutions, including guiding principles andrecommendations.

2024 EU Elections© Getty Images / pidjoe / WWF-US

The EU can become the catalyst that kick-starts the world’s transformation to sustainable and inclusive
economies. Sustainable finance is a key lever, offering major opportunities for everyone.

WWF’s key criteria and expectations for credible financial institution transition plans are
as follows:
Ambition and Prioritization: commit to net zero in line with 1.5°C warming; setscience-based (interim) targets; identify high-impact decarbonization levers or
actions.
Nature and Just Transition: commit to nature-protection and restoration goals;
manage risks and opportunities of nature; capitalize on nature as a carbon sinkand resilience measure; enable a “just” transition.
Action and Implementation: adopt policies that commit to fossil fuel phase-out;scale up financing for climate and nature-based solutions; implement credible
engagement strategies and escalations processes.

WHAT WE NEED
1. Close gaps between EU sustainability reporting laws
2. Align transition finance with environmental objectives
3. Integrate environmental risk into prudential rules

Accountability and Verification: establish clear governance structures; seek
third party verification; transparently report on progress and results.

4. Improve investor due diligence and director’s engagement

Feedback and Flexibility: embed flexibility into implementation; ensurematerial updates inform future iterations of plans; enact clear adjustments if
there are deviations from targets.

5. Ensure retail finance policies foster sustainability

Policy makers, regulators and supervisors should consider the following WWF
recommendations:
1. By 2023, adopt legally binding science-based net zero and nature positive targets,
translated into publicly available sector-specific transition pathways.
2. By 2024, require financial institutions and large or listed companies to develop anddisclose science-based targets and credible climate and nature transition plans on a
mandatory basis.
3. Introduce targeted and coherent policy measures to help facilitate near term phaseout of high carbon activities, such as the development of market models to support
low-carbon technologies and the key inputs for those technologies.
4. Central banks, financial regulators and supervisors should utilize published transition
plans to assess the transition risk profile of surveyed financial institutions andcompanies; for example, instigating necessary adjustments to capital or liquidity
requirements.
© Paul Pastourmatzis / Unsplash

5. Establish independent transition plan verification bodies or processes to monitor andassess transition plans.

International WWF’s criteria
for credible climate andnature transition plans

INTRODUCTION
No sustainability economy exists without a sustainable financial system
A sustainable economy provides good quality of life for people, stays within the limits of the planet and keeps
global warming well below the 1.5°C threshold. Finance is a critical component of the EU and global economies.
With EU banks, investors, insurers and other financial institutions providing essential services and possessing
almost 4 times more financial assets than non-financial corporations, the financial sector is a key stakeholder
in the economy. We therefore need to build a sustainable financial system in order to achieve sustainableeconomies.

WWF Promote sustainablefinance 2024 EU Election3
See notably WWF - Recommendations for a consistent EU regulatory framework on corporate sustainability targets and transition plans(2022) or WWF - Transformation mit Plan (2023, German version only)

5

1

WWF FRANCE 2024

PRESENTATION OF EUREQUIREMENTS FORCORPORATE CLIMATETARGET SETTING
AND REPORTING© Copyright Meridith Kohut / WWF

7

PRESENTATION OF EU REQUIREMENTS FOR CORPORATE
CLIMATE TARGET SETTING AND REPORTING

1 - THE CORPORATE SUSTAINABILITY REPORTING
DIRECTIVE (CSRD) AND THE EUROPEAN SUSTAINABILITYREPORTING STANDARDS (ESRS)The Corporate Sustainability Reporting Directive (Directive
EU 2022/2464), published in the Official Journal of theEuropean Union in December 2022, sets the minimum
standards for sustainability reporting for European companies.
Complementarily, the European Sustainability ReportingStandards (ESRS, as a Delegated Act of CSRD) specify thedisclosure contents required by the CSRD. Among these, ESRS 1(General requirements) and 2 (General disclosures) are mandatory
and establish the basis for all other potential thematic disclosures.
In the context of the rapidly accelerating physical and economic
impacts of climate change, it is expected that a great majorityof the companies in the CSRD scope (>250 employees and/or 40M€ revenue and/or 20M€ benefits, and listed SMEs)
will also be subjected to ESRS E1 (climate change), due to themateriality of this topic for a large share of economic activities.
It is also worth noting that any company subjected to the CSRD

Relevance: Sustainability information is relevant when
it may make a difference in the decisions of users undera double materiality approach. It may impact decisions ofusers if it has predictive value, confirmatory value, or both.
Faithful representation: To be useful, the informationmust not only represent relevant phenomena, it mustalso faithfully represent the substance of the phenomenathat it purports to represent. Faithful representation
requires information to be (i) complete, (ii) neutral and(iii) accurate. Completeness of information implies thatall data relevant to decision making for users is present,
and not presented on a selective basis meant to influence
said decisions - whether favorably or unfavorably. Neutral
representation means that the information does not underor overstate certain risks and opportunities so as to bias
information users. Finally, accurate information implies
that the undertaking has implemented adequate processes
and internal controls to avoid material errors or material
misstatements. As such, estimates shall be presented
with a clear emphasis on their possible limitations andassociated uncertainty.

that does not identify climate as a material topic will have tojustify this choice in its sustainability reporting4.
Presupposing that an undertaking has identified climate change
as a material issue for its business model, ESRS 1 and E1 set
a number of principles and requirements for the disclosure of
GHG emissions reduction targets (disclosure requirements).
These are complemented by methodological suggestions forthe development of such targets that should be applied whensetting decarbonization objectives (application requirements)5.

ESRS 1 (GENERAL REQUIREMENTS)
ESRS 1 lists the following different qualitative characteristics
of information to be disclosed by companies. Definitions havebeen simplified to facilitate the understanding and uptake ofreporting principles under the CSRD:

Comparability: Sustainability information is comparable
when it can be compared with information provided by theundertaking in previous periods and can be compared withinformation provided by other undertakings, in particular
those with similar activities or operating within the same
industry. Consistency is related to, but is not the same as,comparability. Consistency refers to the use of the same
approaches or methods for the same sustainability matter, fromperiod to period by the undertaking and other undertakings.
Consistency helps to achieve the goal of comparability.
Verifiability: Verifiability helps to give users confidence that
information is complete, neutral and accurate. Sustainability
information is verifiable if it is possible to corroborate theinformation itself or the inputs used to derive it. This implies
that various knowledgeable and independent observers could
reach consensus, although not necessarily complete agreement,that a particular depiction is a faithful representation.
Understandability: Sustainability information isunderstandable when it is clear and concise. Understandable
information enables any reasonably knowledgeable user toreadily comprehend the information being communicated6.

ESRS E1. See also https://www.carbone4.com/en/article-csrd-opportunity
All definitions from ANNEX to the Commission Delegated Regulation (EU) .../... supplementing Directive 2013/34/EU of the European
Parliament and of the Council as regards sustainability reporting standards, Appendix B, pp. 4
6
All definitions from ANNEX to the Commission Delegated Regulation (EU) .../... supplementing Directive 2013/34/EU of the European
Parliament and of the Council as regards sustainability reporting standards, Appendix B, pp. 27-29
4
5

WWF FRANCE 2024

ESRS E1 (CLIMATE CHANGE)
Based on the set of principles presented above, ESRS
E1 provides undertakings with a list of data points
that they are required to disclose in the context ofsustainability reporting. It is useful to rememberthat although methodological guidance is provided,
it is the presence (or justification of absence) rather
than the quality of the different elements requiredthat is generally addressed in the CSRD context.
As a reminder, this report focuses on the sectionsof ESRS E1 specific to companies’ and financial
institutions’ climate targets. The objective of thisreport is to assess whether, and to which extent, theSBTi helps companies and financial institutions tomeet the requirements of climate target setting for
CSRD reporting. This report also provides various
methodological recommendations that could be
used to develop a normative framework of reference
for climate target setting at the EU level.
The first key element required by ESRS
E1 is for the undertaking to state whether
its GHG emission reductions targets are
science-based and compatible with the 1.5°C
limit of temperature increase. Companies
shall also state which framework andmethodology have been used to determine
these targets – including whether they arederived using a sectoral decarbonization
pathway and what the underlying climate
and policy scenarios are and whether thetargets have been externally assured orcertified by a third party. Undertakings shallpresent the information over the target period withreference to a sector-specific, if available, or a crosssector emission pathway compatible with the 1.5°C
limit of temperature increase. For this purpose, theundertaking shall calculate a 1.5°C aligned reference
target value for Scope 1 and 2 (and, if applicable, aseparate one for Scope 3) against which its own GHG
emission reduction targets or interim targets in therespective scopes can be compared. It is important
to note that in this case, 1.5°C-aligned targets imply
that companies are planning to align their businessmodels with emissions targets compatible with thisclimate threshold. Thus, companies in hard-toabate sectors should not set targets that imply
emissions associated with a higher limit oftemperature increase while expecting that
other sectors could decarbonize at a speed
that would compensate for their own slower
decarbonization. Indeed, all sectors will have toconverge to the decarbonization objectives compatible
with the 1.5°C limit, implying faster emissions
reductions for sectors that disproportionately
contribute to climate change.

In terms of activity and value chain
coverage, ESRS E1 requires that GHG
emission reduction targets be disclosed
for Scope 1, 2, and 3 GHG emissions,either separately or combined. Companies
shall specify, in case of combined GHG emission
reduction targets, which GHG emission scopes (1,2 and/or 3) are covered by the target, the sharerelated to each respective GHG emission scope
and which GHGs are covered:•

Scope 1 and 2 emissions and associated targets
should be calculated and established on thebasis of operational control: companies must
consider 100% of their operations in thesecalculations, including for joint ventures,
associations, unconsolidated subsidiaries andcontractual engagements.

•

For Scope 3 emissions and targets, these shall
include GHG emissions in metric tons ofCO2eq from each significant Scope 3 category(i.e. each Scope 3 category that is a priority forthe undertaking).

The GHG Protocol and ISO 14064-1 arecited as proper methodological guidelines
to establish the boundaries for GHG
reporting. The emissions factors used for GHG
accounting, which will influence the target set by
the company, should be calculated by multiplying
the GHG emissions in the base year with either
a sector-specific (sectoral decarbonization
methodology) or cross-sector (contraction
methodology) emission reduction factor. Theseemission reduction factors can be derived fromdifferent sources. The emission reduction
factors are subject to continuous development.
Consequently, undertakings are encouraged toonly use the latest publicly available information.
ESRS E1 requires that companies set shortterm decarbonization targets, without
necessarily disclosing long-term, net-zero
objectives. Indeed, the reporting standards
state that GHG emission reduction targets shallat least include target values for the year 2030
and, if available, for the year 2050. From 2030,
target values shall be set in five year increments
up to 2050. As part of the critical assumptions
for setting GHG emission reduction targets,
undertakings shall briefly explain how they haveconsidered future developments (e.g. changes
in sales volumes, shifts in customer preferencesand demand, regulatory factors, and newtechnologies) and how these will potentially impact
both GHG emissions and emissions reductions.

From 2030,
target values
shall be set
in five year
increments up
to 2050

9In the case where companies disclose a net-zerotarget in addition to the gross GHG emission
reduction targets, they shall explain the scope,methodologies and frameworks applied, and how
the residual GHG emissions7 are intended to be
neutralized by, for example, GHG removals in theirown operations and upstream and downstream value
chain. For each target, the disclosure shall include
the following information: “[...] the performanceagainst its disclosed targets, including information
on how the target is monitored and reviewed andthe metrics used, whether the progress is in linewith what had been initially planned, and ananalysis of trends or significant changes in theperformance of the undertaking towards achieving
the target.”

ESRS E1
requirescompanies
to publish
absolute
decarbonization
targets

ESRS E1 requires companies to publish
absolute decarbonization targets, and statesthat this can also be accompanied by intensity
targets: “GHG emission reduction targets shall be
disclosed in absolute value (either in tons of CO2eq
or as a percentage of the emissions of a base year)
and, where relevant, in intensity value” (ESRS E134(a)). Intensity targets are a complementary tool toabsolute decarbonization targets and are formulated
as ratios of GHG emissions relative to a unit ofphysical activity or economic output (e.g. tons ofCO2eq per ton of steel produced). Relevant units ofactivity or output will be referred to in ESRS sectorspecific standards, to be published at a later date. In
cases where the undertaking has set a GHG intensity
reduction target, it shall disclose the associatedabsolute values for the target year and interim target
year(s). This provides increased transparency on thereal GHG emissions volume implied by a company

or financial institution’s activity: intensity targets
and indicators alone cannot provide information
users with a vision of the total volume of greenhousegasses emitted by economic actors. For example,
a company may increase the efficiency of its
production processes, resulting in lower intensity
indicators per unit of production, while seeing its
overall emissions rise due to organic growth of its
business. Providing absolute targets and indicators
is therefore essential to ensure the alignmentof an activity’s GHG emissions with a 1.5°C
decarbonization pathway. Therefore, companies
should state whether set targets are compatible
with the 1.5°C limit of temperature increase, andspecify the frameworks and methodologies used
to determine targets. It should also be explained
whether future developments, both internal andexternal to the company’s activity, are consideredin this assessment.
Consideration for relevant geographic levels of
disaggregation regarding sustainability information
are also provided by ESRS 1. According to thisreporting standard, for a proper understandingof material impacts, risks and opportunities,
undertakings shall disaggregate reported
information by country, or by significant site orassets. The level of disaggregation provided should
be guided by the materiality analysis performed bycompanies in the scope of CSRD. A country-level
breakdown helps to identify significant variationsin impacts, risks and opportunities, which could
be obscured or hidden by providing solely global
aggregated information. Similarly, site or assetlevels disclosures are needed to do the same forhighly impactful specific locations and assets.

2 - THE CORPORATE SUSTAINABILITY DUEDILIGENCE DIRECTIVE (CSDDD)
The Corporate Sustainability Due Diligence
Directive (CSDDD), tabled by the Commission in
February 2022, was agreed in a trilogue’s politicaldeal in December 2023. The directive is still being
negotiated by Member States. The final text shouldbe published in the Official Journal of the European
Union a few months after being voted into law andsubsequently be transposed by Member States.
In terms of entry into application, CSDDD should
apply in 2027 to companies with 1000+ employees,
in 2028 to companies with 500+ employees andin 2029 to high-risk sector companies with 250+
employees.

Residual emissions are the remaining ones after approximately 90-95% of GHG emission reduction, with thepossibility for justified sectoral variations in line with a recognized sectoral decarbonization pathway.

7

WWF FRANCE 2024

The elements provided below with regard to two
specific articles build on their quasi-final wording,agreed in the December trilogue. Although it isstill unclear what the final outcome of the vote on
CSDDD will be, the methodological requirements
on climate targets in this directive are directly
linked to CSRD. Therefore, the technical analysis
and recommendations issued in this report remain
relevant whatever CSDDD outcome. Some targeted
wording may be slightly updated before publication
into the Official Journal. Stakeholders will need tocheck the final version published in the Official
Journal.
Currently, Article 15(1) states that Member Statesshall ensure that companies in the scope of CSDDD
adopt and put into effect a transition plan forclimate change mitigation which aims to ensure,through best efforts, that the business model andstrategy of the company are compatible with thetransition to a sustainable economy and with thelimiting of global warming to 1.5 °C in line with theParis Agreement, including its intermediate and2050 climate neutrality targets.
The transition plan would be required to contain,
among others, time-bound targets related toclimate change for 2030 and in five-year steps
up to 2050 based on conclusive scientificevidence and including, where appropriate,
absolute emission reduction targets for greenhousegas for Scope 1, Scope 2 and Scope 3 greenhouse gas
emissions for each significant category.
In its current formulation, Article 15(3) clarifies
that companies in the scope of CSRD that reporta transition plan for climate change mitigation inaccordance with Article 19a, 29a or 40a of CSRD
shall be deemed to have complied with the adoptionof the target required in Article 15(1) of the CSDDD.
Said differently, CSRD and CSDDD climatetransition plans would be identical contentwise and CSRD compliance would thus entail
CSDDD compliance. This is true for adoption
only: CSDDD would also set an obligation ofmeans (‘best effort’ clause) to implement
and reach the set target.
The Article 18 in CSDDD currently states thatsupervisory authorities shall be required
to supervise the adoption and design ofthe transition plan in accordance with therequirements of Article 15(1).

In the current
formulation,
CSDDD transition
plans must
aim to ensurebusiness modelcompatibility
with 1.5 °C inline with theParis Agreement,
includingintermediate and2050 climate
neutrality
targets

3 - EU LEGAL REFERENCES TO THE 1.5°C
LIMIT OF TEMPERATURE INCREASE
Both the CSRD and the current version of CSDDD
explicitly refer to the 1.5°C upper boundary objectiveof the Paris Agreement for temperature increase, as
opposed to “well below 2°C” (see in Section 2.1 therelevance of this approach).
It is also the reference climate objective in the EU
Taxonomy (Article 10 on Substantial contribution
to climate change mitigation and Article 19 on
Requirements for technical screening criteria).
The 1.5°C limit is also explicitly mentioned in
the Benchmark Regulation setting EU Climate
Transition Benchmarks, EU Paris-aligned
Benchmarks and sustainability-related disclosuresfor benchmarks.
At the overarching level, the EU Climate Law
explicitly mentions the 1.5°C limit.

European Commission has issued the following‘recommendation to undertakings seeking transition
finance’: “When using scenarios or pathways, it isrecommended to use those that are science-based,
and in the case of decarbonization pathways, thosethat are in line with the Paris Agreement, suchas the 1.5°C scenarios of the International
Energy Agency or the International Panelon Climate Change with no or limited
overshoot.”
There is therefore a very clear and consistent EU
regulatory framework for undertakings to set theirentity-level climate target: they should ensurecompatibility with the 1.5°C upper boundary
objective, and therefore select a 1.5°C reference
scenario and pathway.

There is avery clear andconsistent EU
regulatory
framework forundertakings to
set their entitylevel climate
target in linewith 1.5°C

At a more granular level, in its Recommendation
on facilitating finance for the transition to asustainable economy from June 2023, the11

2

WWF FRANCE 2024

WWF
RECOMMENDATIONSON ESRS CLIMATETARGET DISCLOSURES© Copyright Cesar David Martinez / WWF-Columbia

13WWF RECOMMENDATIONS ON ESRS CLIMATE TARGET DISCLOSURES

Given the close alignment between CSRD and the current
version of CSDDD on corporate climate targets presented
in section 1, the much higher level of granularity of ESRS
on such targets, and the fact that ESRS is the foundational
standard to report on targets and progress against them, we
focus hereafter on ESRS.
This section issues recommendations on the main building
blocks of GHG target-setting as described in section 4 of thisreport, dedicated to the description of ESRS requirements
around targets. Methodological elements meant to provide
guidance for the analysis of the targets’ quality are also
provided. As a reminder, this report does not focus on therelevance and credibility of transition plans: it addresses only
decarbonization targets, which alone are not a guarantee thatthe underlying strategies and actions plans for reaching thesetargets are valid.

© Copyright Alejandro Pabon / WWF

WWF FRANCE 2024

Key recommendations resulting from this analysis are the following:
1.

Companies and financial institutions must
develop climate targets aligned with a 1.5°C limitof temperature increase, with reference to robust
science-based scenarios to be identified by the EU;

2.

Climate targets must include Scope 1, 2 and 3
emissions using recognized frameworks andmethodologies (GHG Protocol, ISO 14064-1, SBTi);

3.

Targets should be set for the near term (2030) andin increments of five years until the attainment of anet zero target, by 2050 at the latest;

4.

Absolute decarbonization targets must be publishedby companies and financial institutions;

5.

Specific targets should be provided for carbonintensive assets or geographies to guide action at
operational level.

1 - CLIMATE TARGETS MUST BE
COMPATIBLE WITH A 1.5°C LIMITOF TEMPERATURE INCREASEESRS REF: [ESRS E1 Objective 1, DRE1-1, DR E1-4.34(e) and all associatedApplication Requirements]
In recent years, with the evolution ofclimate science, scientists and world
leaders alike have stressed the need toaim for the 1.5°C objective of the Paris
Agreement8 – instead of the well below
2°C objective9.
This is because the projected impacts
of a change in the climate at these twodifferent levels are radically different:risks associated with a 1.5°C temperature
increase are quite significant but can besomewhat predicted, and adaptation
solutions could therefore be developed
to mitigate some of the impacts thatwould come with such a change. On theother hand, risks may skyrocket with
2°C of global warming: scientists havenotably pointed to the risk of activating
several climate feedback loops (linked
to various tipping points) susceptible
to generating even higher levels ofglobal warming. From a risk mitigation
perspective, it is therefore imperativethat economic actors, as well as public
institutions, strive to maintain climatechange within the 1.5°C boundary10.
An Oxford study finds that a level of
2.2°C of global warming by 2050 could
diminish GDP levels by up to 20% in thissame period, with even greater consequences on the 2050‑2100 timeframe11.

A Deloitte report published for the2023 Davos summit also estimates thatinaction on climate change could cost
the world economy US$178 trillion by
207012 – compared to the necessary 6.9
trillion dollars necessary to invest yearly
until 2030 to reach Paris Agreement
goals, according to the OECD 13. This
last figure does not take into account thevalue to be created by these investments.
Finally, it is worth noting that thesestudies typically lack the appropriate
tools to estimate the potential of largescale, systemic breakdown: severe andwide-spread climate impacts could
destabilize our global value chainsbeyond evaluated figures.

A level of
2.2°C of global
warming by
2050 could
diminish GDP
levels by up
to 20% in thissame period

This is why the EU established a clear
and consistent EU regulatory framework
for undertakings to set an entity-levelclimate target that is compatible withthe 1.5°C limit of temperature increase,as presented in Section 1.

Inaction on
climate change
could cost theworld economy
US$178 trillion
by 2070

One key methodological element ofcorporate climate target-setting should
thus be to ensure alignment with the
1.5°C limit of temperature increase.
This issue has been taken into account inmost well-recognized climate scenarios:
for example, both the International
Energy Agency’s Net-Zero Emissions
by 2050 Scenario (NZE) and the SBTi
reference scenario have been developedin alignment with the 1.5°C target.

https://www.theguardian.com/environment/2023/mar/20/ipcc-climate-crisis-reportdelivers-final-warning-on-15c9https://unfccc.int/process-and-meetings/the-paris-agreement10
https://www.ipcc.ch/sr15/chapter/spm/
11
https://www.oxfordeconomics.com/resource/the-global-economic-costs-of-climateinaction/
12
https://www.deloitte.com/content/dam/assets-shared/legacy/docs/gx-global-turningpoint-report.pdf
13
https://www.oecd.org/environment/cc/climate-futures/policy-highlights-financingclimate-futures.pdf
815

For companies seeking to establish GHG emissions
reduction targets, compatibility with the 1.5°C
objective (with no or limited overshoot)thus constitutes a methodological priority.
In this case, “no or limited overshoot” means thata given scenario does not excessively consider
the global capacity for development of carbon
capture and storage (CCS) or carbon dioxide
removal (CDR), and does not therefore allow
for significant “negative emissions” in transition
planning 14. Any company that is not alignedwith such an objective should raise alert as toits level of ambition, and understanding of thepotential impacts of climate change. Moreover,the choice of reference scenario is a key
consideration in target-setting: anchoring
GHG reduction goals to well-establishedand science-based frameworks is critical toensure the credibility of an undertaking’s
engagements. This can be a reference
scenario at the international (IEA - NZE,
SBTi, NGFS – ordinate transition, IPCC –SR1.5), regional (EU Fit for 55 roadmap),or national (French Stratégie Nationale Bas
Carbone - SNBC) levels, provided that thesescenarios are science-based and in line withthe 1.5°C objective.
Sector-specific roadmaps can also help to refinetarget-setting efforts, and identify appropriate levers
for attaining the undertaking’s objectives. However,companies should strive to avoid basing
their targets solely in frameworks developedin the context of industry representationgroups (although these may be used in conjunction
with other scenarios) to avoid any conflicts ofinterest inherent to the development of such tools.
WWF recommends that EU institutions andMember States, as well as relevant regulatorsand supervisors, make specific reference toscenarios that are considered appropriate
for climate target setting on the basis oflimited or no overshoot of the 1.5°C limit oftemperature increase objective. This will bringclarity for companies and financial institutions, andfacilitate the implementation of their EU climate
target setting and reporting requirement – while
improving their contribution to the EU 2030 climate
objectives and the European Green Deal. WWF is
preparing a paper on this specific issue.

2 - CLIMATE TARGETS MUST FULLY COVER UNDERTAKINGS’ACTIVITIES AND VALUE CHAINS (BOUNDARIES DEFINITION)ESRS REF: [DR E1-4.34(b), DR E1-6 and all
associated Application Requirements]
GHG accounting has developed a well-establishedmethod for distinguishing emissions stemmingfrom direct operations, energy purchases, andtheir value chain at large. These are separated into
different scopes, detailed below and aligned with
GHG protocol and/or ISO 14064-1 definitions.

SCOPE 1
Scope 1 GHG
emissions occur
from sources
directly owned
or controlled by
the company

Scope 1 GHG emissions occur from sources directly
owned or controlled by the company. For example,
these may include emissions from combustion in
owned or controlled boilers, furnaces, vehicles, etc.
emissions from chemical production in owned orcontrolled process equipment.
Direct CO2 emissions from the combustion of
biomass shall not be included in Scope 1 but
reported separately.

GHG emissions not covered by the Kyoto Protocol,e.g. CFCs, NOx, etc. shall not be included in Scope 1
but may be reported separately.
Companies should report on the totality of theirdirect emissions, and seek to be as granular as
possible in the calculation of GHG emissions
associated with different activities and processes.
In accordance with ESRS 1 recommendations, both
Scope 1 accounting and targets should cover thesame activity perimeter as the financial statements
published by the company.

The Production Gap Report, produced annually by a coalition of research and academic institutions backed
by the UN, stresses the need to adopt a precautionary approach limiting the consideration of CCS and CDR
technologies in transition planning, in line with IPCC analysis on these technologies’ potential.

14

WWF FRANCE 2024

SCOPE 2
Scope 2 accounts for GHG emissions from thegeneration of purchased energy (electricity, steam,heat or cooling) consumed by the company. Purchased
energy is defined as energy that is purchased orotherwise brought into the organizational boundaryof the company. Scope 2 emissions physically occur
at the facility where energy is generated.
As for Scope 1 emissions, companies should reporton the totality of purchased energy in their Scope 2
disclosures. The emissions factors used to estimate total
GHG produced by purchased energy should rely on thetightest possible node available for associated emissions
factors. Indeed, the level of emissions associated witha given volume of purchased electricity, for example,
could vary largely from country to country, and evenstate-to-state - or at even finer geographical levels.
On the topic of green energy, it should be noted thatby convention, green energy purchased directly fromphysical sources or produced on site by the company

could be counted as contributing to zero emissions
on Scope 2 (although some Scope 3 emissions may
be associated with such forms of energy production).
Companies should also transparently disclose thevolume of green energy purchased for their operations,to the extent that this is possible. However, green
energy purchased through certificates should not be
considered zero-emissions; companies could disclosethat they have put in place such practices, but still
count emissions associated with the energy purchasedfrom the energy provider’s physical infrastructure,as these will still have occurred from a physicalperspective. Undertakings should therefore reporton their Scope 2 using the location-based approach
to better account for the real impact of emissions
induced by use of the local energy grid.
In accordance with ESRS 1 recommendations, both
Scope 2 accounting and targets should cover thesame activity perimeter as the financial statements
published by the company.

SCOPE 3
Scope 3 emissions are a consequence of the activitiesof the company, but occur from sources not owned orcontrolled by the company. These emissions can occur
either upstream or downstream of the company’s value
chain, and cover the following categories described in
the GHG Protocol Scope 3 Calculation Guidance:of the emissions associated with a source, degree of
influence on the source, contribution to risk of financial
exposure, materiality to stakeholders, outsourced
nature of activities, association with high expenses orrevenues, and identification of a particular source asmaterial in well-established sectoral guidance.

The value of Scope 3 emissions
calculation and target-setting isthat although companies may
Purchased goods and services
Downstream transportation andhave less direct control over these
Capital goods
distribution
outputs, they can use their influence
Fuel and energy-related activities
Processing of sold products- sometimes conjointly with othernot included in Scopes 1 and 2
Use of sold products
actors sharing the same sources - toUpstream transportation andstrive to lower emissions in theirEnd-oflife
treatmentofsolddistribution
products
value chain. For example, if multiple
Waste generated in operations
large companies influence and coDownstream leased assets
Business travelsponsor the reduction of emissions
Franchises
Employee commuting
for a given supplier of a critical
Investments
Upstream leased assets
material to all their activities, thismay incite the supplier to transition
faster than if no pressure were applied to them.
Moreover, Scope 3 emissions should be published forall value chain sources that significantly impact theIn accordance with the consistency principle
GHG inventory of the company. One way to ensurepresented in section 2.4 of this report, GHG targets
sufficient coverage of Scope 3 emissions is to ensure
should also be created and published on allthat these cover activities equate with more than
3 scopes, in line with GHG inventory best
two-thirds (⅔) of the company’s purchases and/practices. Emissions factors used to calculate
or revenues, and progressively seeking to cover the
total GHG production could stem from selffull extent of Scope 3 emissions categories over time.
measured values for processes to reliable,
The GHG Protocol provides multiple criteria for further
precise and well-recognized proxies (ADEME
identifying relevant Scope 3 activities to include in an
Base Carbone, IPCC, EEA, IEA…)
undertaking’s GHG inventory. These include the size

UPSTREAM SCOPE 3 EMISSIONSDOWNSTREAM SCOPE 3 EMISSIONS

Scope 2
accounts for
GHG emissions
from thegenerationof purchased
energy(electricity,
steam, heator cooling)
consumed by
the company

Companies
must ensure
the coverage ofat least 2/3 ofpurchases and/or revenues
when reportingon Scope 3
emissions17

3 - CLIMATE TARGETS MUST BE SET FOR THE NEARTERM AND DEMONSTRATE A COMMITMENT TO NET
ZERO EMISSIONS ON THE LONG TERM (PROGRESSIVE
AND TIME-BOUND REDUCTION OF EMISSIONS)The European
Union's "Fit for
55" strategy
requires EU
member states
to decarbonize
theireconomies by
55% by 2030
to contribute
their fairshare to global
emissions
reduction
efforts

ESRS REF: [DR E1-4.34(d), and all associatedApplication Requirements]
GHG emissions reduction targets offer multiple
benefits to both companies and information users
in terms of realism and reliability related to climate
action. From the perspective of undertakings,
targets help to set the ambition for decarbonizationand further transition efforts. They can also serve
as a benchmark against which to compare progressas their transition plans spur into action. On theside of information users, GHG targets help toboth assess the level of ambition being proposedby companies, and track companies’ progresson their commitments. This can help them toeither progressively direct financial flows to best
performers, or to put pressure on companies that
do not deliver on their targets and transition efforts.
In order to show their commitment to
the 1.5°C limit of temperature increase,
companies should produce two types oftargets: near-term emissions reduction
targets, and long-term, net-zero aligned
targets. ESRS 1 proposes certain definitions of
the time scopes relevant for environmental action:
they suggest that medium-term efforts should becontained within a 5-year interval starting fromthe date of a given report, while long-term time
horizons could stand between 5 years after the dateof a publication and further along in the future. For
the purpose of this report, these definitions will beapplied to near-term target-setting (periods of 5
years), and long-term target-setting (in the future,aligned with net-zero emissions by 2050 at most).
Near-term targets should be set at regularintervals, preferably in alignment with thedefinitions given above. Setting targets every
five years creates a motivation to impulse
action at the moment that the decarbonization
efforts are set, as they create intermediarybenchmarks with which an undertaking
can compare its real trajectory. Therefore,
an incentive will be created to simultaneously
work towards quick wins in terms of reduction
efforts, while pushing for the creation of relevant
strategies, actions plans and monitoring tools to
implement their transition plans. Additionally, theconfrontation of the real decarbonization trajectorywith projected targets, combined with an analysis ofpreviously implemented actions can help to identify
any inefficiencies and opportunities that exist in theundertaking’s strategy. The establishment of thesetargets also helps to ensure that the total GHG outputof the company is aligned with their 1.5°C budget
allocation; indeed, not only do companies need toattain net zero emissions by 2050 in order to bealigned with the objectives of the Paris Agreement,
but they also need to decarbonize at a high speed in
the first years of their decarbonization efforts to staywithin budget. Indeed, emitting at constant rates
over ten more years releases much more carbon
into the atmosphere than halving emissions over thesame time period - and would require a very abrupt
transition following this time period to stay in linewith the Paris Agreement. This is the concept that
underlies the European Union’s Fit for 55 strategy,
by which EU member states must decarbonize theireconomies by 55% by 2030 to contribute their fairshare to global emissions reduction efforts15.
It is important to note that companies should notinclude carbon offsets in their near-term targets,as both nature- and technology-based solutions forcarbon entrapment are long-term endeavors andpresent major uncertainties concerning feasibility
and real impact of contribution to mitigation efforts16.
Long-term net-zero targets are also an essential
component of proper target-setting practices.
Setting such objectives empowers companies
to demonstrate their alignment with boththe Paris Agreement and EU Net-zero goals.

https://www.consilium.europa.eu/en/policies/green-deal/fit-for-55-the-eu-plan-for-a-green-transition/
Achakulwisut, P., Erickson, P., Guivarch, C. et al. Global fossil fuel reduction pathways under different climate
mitigation strategies and ambitions. Nat Commun 14, 5425 (2023). https://doi.org/10.1038/s41467-023-41105-z

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WWF FRANCE 2024

The combination of near and long-term targets also
provides companies with a clear path to follow, which
in turn enables them to develop proper roadmaps forfollowing their projected decarbonization paths andmeet their objectives. It is well-established that inorder to bring the impacts of economic activity in linewith planetary boundaries, transformational change
will be needed in the way we conduct business andperceive value and growth. In a logic complementary
to that of near-term targets, long-term net-zero goals
enable undertakings to rethink their business models,
identify spaces for which innovation - whether
technical, technological or system-oriented - is key,
and to develop the proper tools to create perennial,
structural changes. On the topic of carbon offsetting,undertakings should not excessively rely on carbon
credits to reach their net-zero ambitions: indeed,both nature- and technology-based carbon capture
mechanisms still lack proper demonstration in theirlong-term ability to compensate for significant sharesof carbon emissions.

In line with the recommendations from the SBTi’s
target-setting methodology described in section 3.1of this report, companies should use the mostambitious decarbonization scenarios to establish
their targets. The SBTi facilitates the scenario
selection exercise for companies, as the platform
builds a reference decarbonization pathway inline with a 1.5°C limit on temperature rise on thebasis of principles described in its Foundationsof SBT Setting paper17. Companies that do notdevelop their science-based targets and get themvalidated by the SBTi are recommended to screen
multiple frameworks, in particular other sectoral
decarbonization pathways, and select those thatmaximize their incentives to decarbonize rapidly, ina way that is aligned with global efforts to stay below
the 1.5°C limit of temperature increase. However,the SBTi greatly reduces the burden of identifying
and selecting scientifically robust pathways forcompanies, while bringing credibility to their targetsetting efforts through independent validation.

4 - CLIMATE TARGETS MUST BE EXPRESSED IN
ABSOLUTE AND INTENSITY-BASED FORMESRS REF: [Targets MDR-T, DR E1-4.34(a),and all associated Application Requirements]
A distinction exists between emissions targets
expressed in absolute and relative, or intensitybased values. Absolute emissions reduction targets
provide undertakings and information users
with a view of the company’s intention to abate
its real, total emissions over time. In contrast,
intensity targets provide stakeholders with avision that relates GHG emissions to businessactivity. These approaches are complementary,and undertakings should strive to publish
both absolute and intensity targets toaddress different stakeholders’ information
requirements, and provide a full-picture
view of their decarbonization efforts.
Absolute emissions targets provide a “hard”
reference point for illustrating a company’s

decarbonization efforts. These targets are
independent from any business-oriented projections
or considerations, and solely concern the reduction
in total emissions produced by an undertaking. The
question that this sort of target provides an answer
to is: “will the company practically reduce its GHG
emissions over time and thus align itself with a given
scenario ?” This type of objective is constructed by
setting a total carbon budget that a company canemit in order to stay in line with global efforts to bealigned with the 1.5°C limit of temperature increase.
This takes into consideration both the end-point(long term net-zero target) and the trajectory ofemissions reduction projected by the undertaking(by setting near-term targets as described in section
4.3 of this report). Absolute targets therefore enable
clear readability on the capacity of the company’s
strategy to provide a satisfactory contribution to the
1.5°C limit of temperature increase.

Absolute
targets help
to answer thequestion: will
the company
practicallyreduce its GHG
emissions overtime and thusalign itself
with a given
scenario ?

17“SBTi scenarios are drawn primarily from the Integrated Assessment Modeling Consortium (IAMC) and theInternational Energy Agency (IEA). The IAMC hosts an ensemble of more than 400 peer-reviewed emissions
pathways, which have been compiled and assessed by the authors of the Intergovernmental Panel on Climate
Change (IPCC) Special Report on Global Warming of 1.5˚C (SR15); and the IEA publishes its own scenarios
regularly, which provide a greater amount of sectoral granularity.” (p. 7, Foundation of SBT Setting)19and information users to see if decarbonization efforts
are integrated into the general business strategy of
the company, which could be especially useful in theearlier periods of emissions reduction efforts.

Intensity targets are a complementary tool thatcan be used to relate decarbonization efforts to theevolution of the given business. They are expressed
as a ratio - typically GHG emissions to revenue, or
GHG emissions to sold unit of a product (e.g. tonsof CO2e per ton of cement produced) - and enable
undertakings to see if they are conducting theiractivities in increasingly efficient ways. The question
answered by this type of target is thus: “is theundertaking producing more efficiently, regardless of
inflationary, growth or recession-oriented impacts on
the business ?” This can facilitate a better integrationof ecological and economic objectives for thecompany, by taking into account growth projections
and other economic conjunctions in indirect fashion.
Indeed, a company could continue to grow its activity
while simultaneously increasing the efficiency of its
productive processes, which would often translate toa shrinking GHG intensity metric. Such objectives are
typically set by referring to sectoral decarbonization
scenarios, which usually take expected growth or
shrinkage of the economic volume of the relevant
sector in plotting emissions reduction trajectories.
The targets are created to converge on a level ofintensity compatible with the sector’s necessary
decarbonization efforts to be aligned with the Paris
Agreement. Intensity targets thus enable companies

100

Starting products sold:100

Annual rate of
reduction of GHG
emissions/product sold:

2,5%

Annual rate of growthof products sold:3%

In order to provide a full-picture view and avoid anyof the pitfalls that may come with using one or theother type of target, companies should set one
target of each type (i.e. one absolute and one
relative) and annually publish information
regarding their progress against each. The
sole reference to intensity targets is insufficientin the long term, because if a company grows its
activity massively, even sustained GHG efficiency
efforts may prove insufficient to align with the upperboundary of 1.5°C temperature increase. This is why
absolute targets are required in the first place.
This is especially true for GHG-intensive sectors: if
we suppose a 6% annual reduction of relative GHG
emissions from an oil & gas undertaking, but that undertaking grows its business activity by 8% a year, thereal emissions induced by the undertaking’s businesswill continue to grow. If this is projected at the aggregate sector level, or for the whole economy, there isa huge risk that long-term growth and business evolutions could overshadow decarbonization objectives
and bias the perceptions of the public over time.

140

10 400120

10 300100

10 20080

10 10060

10 000

40

9 900

20

9 800

0
Year

n

n+1

n+2

n+3

n+4

n+5

n+6

n+7

n+8

n+9 n+10

Reading key
Total GHG emissions

Starting GHG
emissions/product:

GHG emissions per product soldand total products sold (base 100)

Intensity
targets help
to answer thequestion: is theundertaking
producing more
efficiently,
regardless of
inflationary,
growth orrecessionoriented
impacts on thebusiness ?

GHG
emissions/product soldTotal products
soldTotal GHG
emissions

9 700

Fig.1: A reduction in emissions intensity combined with high growth may lead to increasing absolute emissions

Reversely, absolute emissions reductions may
provide a more objective measure of the degree
to which a company is aligned with the objectivesof the Paris Agreement, but could lead to certain
misrepresentations about global decarbonizationof the world economy. To be sure, if a company
reduces its business activity, but that this same
volume of activity is taken over by a competitor that
does not provide the same efforts to decarbonize its
activities, the net result could be a rise in emissions- although, on paper, the first company will be doing
its fair share of efforts towards the Paris Agreement
goals. To be sure, the publication of intensity
targets does not guarantee an absence of emissions
transfer risk. To avoid these transfers, companies
WWF FRANCE 2024

must plan the decommissioning of carbon-intensive
assets, or ensure that any carbon-intensive assets
sold off by the company are subject to a guaranteeof closure by Paris-aligned deadlines and subject tothe highest environmental management standards.
Intensity figures, however, may enable information
users to verify whether any sudden drop in absoluteemissions is linked to the sale of a given asset or site,or to a change in business models.
To return to our oil-and-gas example: supposethat company A decides to terminate its activity
in exploration of new fields, in line with theglobal scientific consensus that no new fossil fuelassets should be developed to be aligned withthe 1.5°C limit of temperature increase. One option could
be to decommission or convert its current assets linked to
exploration, retrain the portion of its workforce dedicated to thisactivity, while simultaneously diversifying into other businesslines. All of this would, however, come at a cost; Company A
might therefore be incentivized to sell off all relevant assets
and transfer its associated workforce to Company B, which has

Carbonintensive asset

Company A

Scenario 1

DECOMISSIONS

Scenario 2

SELLS TOCOMPANY B

no stated intention to contribute to the objectives of the Paris
Agreement and does not monitor its emissions. Company A
would therefore be in alignment with global efforts to maintaintemperature increase below the 1.5°C limit, but nothing wouldchange in real terms, as company B would continue to emit toa level similar to what company A would have done without
the sale of assets.

Company A’semissionsCompany B’semissionsGlobalemissions

N/A

Diag. 1: GHG impact of decommissioning or selling carbon intensive assets under different scenarios

To mitigate both risks mentioned above, and help to create acomplete, global picture of the state of decarbonization of thereal economy, undertakings therefore need to publish

one of each type of targets and report on the progressagainst each.

5 - CLIMATE TARGETS MUST ALSO BE SET AT THE LEVEL
OF GHG-INTENSIVE ASSETS AND GEOGRAPHIESESRS REF: [ESRS 1-3.7.54 and all associated Application
Requirements]
GHG emissions reductions objectives set at the levelof a company can help create a global strategy for the
decarbonization of its activities and business model.
However, for this to be declined into an operational,
action-oriented transition plan, it is important that
undertakings identify the key geographies and assets
from which emissions emanate. Indeed, by pinpointing
where the most emissive infrastructure or activities are in
their direct operations, undertakings can focus their efforts ontransitioning specific elements of their business, or even inferconclusions as to what activities are viable in the long term, byseeing if trends emerge around certain types of assets when
performing this analysis. It is also essential that companies do
not invest in assets tied to high levels of locked-in emissions, so
their efforts in respecting their climate targets at specific sites
are not offset by investments in other carbon-intensive assets.
On a direct operational level, companies should seek to map out
where emissions are primarily emitted. This could be done ona geographic level, an asset level (a plant, factory, or even at afiner node such as specific manufacturing equipment), or otherrelevant scales (owned logistics, services etc.). This enables
undertakings to identify the proper levers available for the
decarbonization of whatever elements the analysis was conducted
upon. For example, if a factory regroups highly carbon-intensive
equipment, this could be a sign that the equipment is not up
to standards with transition requirements. This could either
lead the company to invest in new, more efficient technologies,
or even invest in research and development for the creation ofsuch new equipment. Another example is a power utility having
notably coal and gas-fired plants in its fleet: it needs to know
the emissions of each plant to properly set up its coal phase-out
and then gas phase-out plans18 while developing solar and windfarms in parallel. On a more systemic view, if an undertaking
identifies that all locations producing a certain type of productor service are systematically high carbon, this may provide an
incentive to orient their product or service mix toward lesscarbonated activities.
This therefore constitutes an essential building block thathelps to bridge the gap between target-setting and transition
planning, which will be the focus of a subsequent WWF report.

Phase-out plans are increasingly discussed in the net zero context, see for example GFANZ (2022), The Managed Phaseout of
High‑emitting Assets.

18

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SBTI: A FRAMEWORKFOR SCIENCE-BASEDCORPORATE CLIMATETARGET-SETTING© Copyright Emmanuel Rondeau / WWF

23

SBTI: A FRAMEWORK FOR SCIENCE-BASED CORPORATE CLIMATE TARGET-SETTING

1 - THE SBTI’S TARGET-SETTING METHODOLOGY HELPSCOMPANIES AND FINANCIAL INSTITUTIONS TO COMPLYTO RELEVANT LEGAL REQUIREMENTS UNDER CSRD
Given the close alignment of CSRD and the current version of
CSDDD on corporate climate targets presented in section 1, themuch higher level of granularity of ESRS on such targets, andthe fact that ESRS is the foundational standard to report on
targets and progress against them, we focus hereafter on thecompatibility of the SBTi’s methodology with ESRS.
Multiple challenges exist for companies attempting to set
targets aligned with the 1.5°C objective of the Paris Agreement.
As highlighted previously, the variety of scenarios that exist
around climate change and decarbonization pathways, the needto quantify a specific company’s contribution to climate change
mitigation efforts, or technical difficulties that exist in setting
targets in both absolute and intensity measures can make itcomplicated to both set targets and understand whether thesetargets are sufficiently ambitious to be aligned with the 1.5°C
limit of temperature increase.

© Copyright Alejandro Pabon / WWF

WWF FRANCE 2024

The Science Based Targets initiative (SBTi) drives ambitious
corporate climate action by enabling businesses and financial
institutions globally to set science-based greenhouse gas
emissions reduction targets.
It was formed as a collaboration between CDP, the United
Nations Global Compact, World Resources Institute (WRI),
the World Wide Fund for Nature (WWF) and the We Mean
Business Coalition. The SBTi’s goal is to enable companies
worldwide to do what climate science requires of the global
economy: to halve emissions by 2030 and achieve net-zero
before 2050.
The SBTi develops criteria and provides tools and guidance
to enable businesses and financial institutions to set GHG
emissions reduction targets in line with what science tells us isneeded to keep global heating below 1.5°C.

To date over 4400 companies in 80
countries have set science-based targets
and had them validated by the SBTi,
and a further 2850 have committed to
set targets. Of those companies withtargets, all 4400 have near-term targets
and close to 2800 have net-zero targets(which include near-term and long-termtargets). 1435 companies with targets(32%) are headquartered in the EU.
It is important to acknowledge that while
this provides transparency, reliability
and credibility to the objectives set bycompanies, the SBTi does not validate
the transition plans designed toachieve science-based targets. Thus,
the SBTi validates that targets set
are indeed aligned with the 1.5°C
objective, but not that companies
are going to hit their targets at thegiven deadlines19. WWF conducted
an analysis of the different elements
demanded by ESRS E1 for the climate
targets-related disclosure requirements,
and compared these to the conditions
set by the SBTi for target validation.
In order to validate the targets set
by companies, the platform requires
a certain number of methodologicalelements that are well-aligned with thedisclosure requirements of ESRS E1.
To be sure, all near-term Scope 1 and2 targets published by companies
must be consistent with the level ofdecarbonization required to keep global
temperature increase to 1.5°C compared
to pre-industrial temperatures. Thesetargets can be set in absolute, implying
a rapid decarbonization rate at the2030 horizon (as defined per the SBTi’s
calculation of the remaining carbon
budget to limit temperature increase
to 1.5°C), or in intensity, if a company’s
sector is eligible for the sectoral
decarbonization approach (SDA).

In this case, the company must also
communicate the absolute emissions
volumes associated with their intensity
target to the platform, but need notdisclose these publicly. For the near term
(2030), the SBTi also requires businesses
whose Scope 3 emissions are 40% ormore of their total GHG emissions to set
Scope 3 targets. Targets are then meant
to be updated on a 5-year rolling basis,
with Scope 1, 2 and 3 targets that need
to be aligned with a limit of temperature
increase of 1.5°C at a 2050 horizon as described in the SBTi’s Corporate
Net‑Zero Standard.
Companies are expected to cover the
majority of their Scope 1 and 2 emissions
within their targets (>95%), although at
this stage the SBTi enables companies
to determine their organizationalboundaries according to different
methods (operational control, financial
control or equity share). Moreover,companies for which Scope 3 emissions
account for over 40% of total GHG
emissions must develop and publish
associated targets covering at least two
thirds (2/3rds) of these emissions. Thesetargets must be aligned with a minimum
ambition for the rate of decarbonizationin the near-term (defined by the SBTi),and a 1.5°C scenario on the 2050 horizon.
It is mandatory that companies set thesetargets for the near-term (a minimumof 5 years and a maximum of 10 years
after the date of target submission), andrecommended that targets are set again
at regular intervals of 5 years. Longterm, net-zero targets are not explicitly
required by the SBTi, but strongly
encouraged. The SBTi’s Corporate NetZero Standard has been developed tohelp companies develop these types oftargets and was launched in October
202120.

Companies
are expected
to cover the
majority of
their Scope 1
and 2 emissions
within theirtargets (>95%)
and at least
2/3 of Scope 3
emissions19
SBTi is in the process of developing an MRV (monitoring, reporting and verifying)process on the achievement of science-based targets. A first landscape report was
published November 2023. In addition, WWF will issue a dedicated paper on MRV of
corporate climate targets in 2024-25.
20
The time gap of this standard’s launch by the end of 2021 compared to the launch of
the initiative (2015) partly explains why 39% of SBT companies have long term, net-zerocommitments - while 60% have a validated near term target.

25

Per the latest version of the Procedure for the
Validation of SBTi Targets published by the SBTiin December 2023, the temperature classificationof validated targets does not extend to Scope 3
targets. Indeed, while the SBTi requires companies
whose Scope 3 emissions are equal to 40% ormore of total GHG emissions to submit Scope 3
targets and sets a minimum ambition for the rateof decarbonization to be achieved in companies’
value chains, the SBTi cannot provide a temperature
rating for these types of targets21. For companies in
sectors without a sector-specific pathway, the SBTi
validates targets on the basis of a cross-sector rateof emissions reduction to bring global emissions
in line with a 1.5°C limit of temperature rise22. For
Scope 3 targets, the SBTi also enables companies
to set engagement targets with their suppliers
and/or clients, pushing their value chain to adopt
science-based decarbonization targets themselves.
The combination of absolute contraction targets
with value chain engagement targets helps toset a credible ambition for rapid and ambitious
decarbonization efforts from companies on their
Scope 3 emissions. In this sense, the SBTi validates
the “ambitious” characterization of Scope 3 targets,but cannot guarantee their temperature alignment.
This approach is reflected in the SBTi’s Financial
Sector Science-Based Targets Guidance: as the
majority of financial institutions’ emissions
are linked to its financing activities, targets are
submitted per portfolio and must answer thesame requirements as other Scope 3 targets. Thus,
financial activities must also be compatible with amaximum temperature increase of well-below 2°C.
A draft conceptual framework and initial criteria
document was released for consultation in 2023,
with further developments planned in 2024. This
standard will define a methodology for setting
1.5°C-aligned, near- and long-term net-zero targets
for financial activities.
It is also important to note that coverage raterequirements for Scope 3 targets are different for
financial institutions. Indeed, the coverage required
for financed emissions depends on the asset classbeing addressed. For example, equity and corporate
bonds must be fully covered by a Scope 3 target,
while for corporate loans, the minimum coverage

requirement stands at 67%. These coverage raterequirements will be updated in the version of
the financial institutions standard to be publishedin 2024.
Moreover, the SBTi requires most undertakings
to publish absolute targets. Some GHG-intensive
sectors (electricity generation, iron and steel,aluminum, cement, pulp and paper, transport including road, rail and air passenger or freighttransport -, commercial buildings, manufacturing, as
well as chemicals and petro-chemicals) are allowed
to submit intensity targets that are validated throughthe SDA (sectoral decarbonization approach)methodology, which compares the expected rateof intensity reduction with what is considerednecessary for these GHG-intensive sectors to alignwith the 1.5°C limit of temperature increase. The
SBTi also requires the companies eligible to thismechanism to disclose the associated expected
absolute emissions reductions, which helps themto verify the adequacy of stated objectives with a
1.5°C scenario. It is not mandatory for companies
validated through the SDA to communicate publicly
on these absolute emissions reductions. Moreover,
the SBTi requires businesses to set targets at thelevel of the parent company or group, and leaves
them a choice to have their subsidiaries pursue
validation of their own science-based targets. It
does not, however, require the companies to trace
decarbonization targets to the levels of specificgeographies or assets23.
Upon target submission to the SBTi, its Target
Analysts assess companies’ and financial
institutions’ targets against the science-based
decarbonization pathways. Sector-specific pathways
are also designed to ensure that companies in
specific GHG-intensive sectors are in line withthe decarbonization objectives for their sectors.
When developing targets, companies are therefore
expected to rely on ambitious and science-based
scenarios aligned with the 1.5°C objective of theParis Agreement24.
The SBTi is explicitly mentioned in ESRS
E1 as a reference for the minimum rate of carbon
emissions reduction needed to align with a
1.5°C objective.

With the exception of financial institutions, for which a temperature alignment can be verified for financing
activities included in SBTi.
22
Minimum contraction rates required under this approach are 42% GHG emissions reduction between the baseyear and 2030, and a 90% reduction at the 2050 horizon.
23
SBTi Corporate Manual, April 2023
24
SBTi Corporate Manual, April 2023
21

WWF FRANCE 2024

SBTI FOR FINANCIAL INSTITUTIONSThe SBTi developed a guidance and target-setting
methodology for investment and lending activities toaccount for the specific role of financial institutions in
the development of economic activity. Indeed, the SBTi
recognizes that financial sector actors are “uniquely
positioned to influence other actors through theirinvestment and lending activities”, which affords unique
opportunities in mobilizing resources towards corporates
and activities in alignment with the 1.5°C objective of theParis Agreement. Financial institutions that set targets on
their lending and investment portfolios thus align theiremissions footprint with the 1.5°C limit of temperature
increase, influencing and enabling companies that theylend to or invest in to also set targets and work toward
their decarbonization objectives in line with their debtors’
engagements.
At this stage, only the near-term alignment of investment
and lending activities with a 1.5°C objective is validated by
the SBTi via the Financial Sector Science Based Targets
Guidance, on the basis of the alignment of underlying
Scope 1 and 2 emissions trajectories of different asset
classes through the Sectoral Decarbonization Approach,Portfolio Coverage, and Temperature rating methods. In
the summer of 2023, a consultation draft of version 2.0
was shared publicly for stakeholder input to revise thecurrent version 1.1 of the guidance. Stakeholder feedback
has since been integrated into the guidance, and a pilot
testing exercise has been launched to test the proposedchanges with interested financial institutions. Results fromthe pilot testing will inform the guidance which is due tobe submitted for internal governance approval and public
release in the coming months.
Additionally, the SBTi published a consultation draft for a
Financial Institutions Net-Zero Standard. Once finalized,
this net-zero standard will allow for incorporation offinancial activities outside of investment and lending (i.e.
Facilitated and insurance associated emissions), to set bothnear- and long-term targets in line with a 1.5°C limit oftemperature rise at a 2050 horizon.
Financial institutions must set targets for Scope 1 and2 activities in the same manner as companies set theirobjectives for their direct operations and energy purchases.
The financial sector guidance provides an abbreviatedversion of the criteria for target setting applicable tocompanies more broadly on these two scopes, and refers
financial institutions to the latest version of the GHG
Protocol and the SBTi Corporate Manual for any updates
to the methodology concerning Scopes 1 and 2 accounting
and target setting.
As Scope 3 emissions represent the vast majority of financial
institutions’ emissions, associated targets possess theirown methodological requirements. Financial institutions
must set targets on their investment and lending activities,
and may choose among different methods for this exercise
according to the portfolio being considered. The proposed
update to the financial institutions near-term target setting
framework (V2) broadens the scope of sectors or asset
classes available for target-setting and provides guidanceon the financed emission calculations for activities at theasset class and portfolio level25.
Table 1, published in the SBTi guidance for financial
institutions, provides detail on the different activities thatmust currently be covered by Scope 3 targets for SBTi tovalidate a financial institution’s objectives (broken down byasset class), and the expected level of coverage associatedwith the identified portfolios. To account for the potential
absence or insignificant materiality of portfolio emissions
data, activities are classified between required, optionaland out of scope. Targets are submitted per required
activity on the basis of minimum coverage thresholds foreach asset class described in table 1. Financial institutions
need to submit a complete GHG inventory for all inscope asset classes to determine their respective climate
materiality. As shown in the table, financial actors may
currently choose between different methods for target
setting depending on the activity they are setting targets
for (with the exception of certain activities where specificmethodological requirements are imposed). The four
principal approaches to target setting that exist at this time
are the following:
Sectoral Decarbonization Approach (SDA) targets:financials may use this approach for the relevant activities
identified in table 1. SDA targets must meet the minimum
ambitions provided for each sector the methodology isavailable for, and cover all scopes and time horizons demanded
in sector-specific guidelines provided by the platform.

When establishing an emissions inventory, the FI shall include Scope 1 and 2, for all portfolio holdings, and shall include
Scope 3 for key sectors: automotive, oil and gas, and Forest, Land and Agriculture (FLAG). The emissions inventory should where
possible provide at least an estimate for the Scope 3 emissions for all other sectors.

25

27

This implies a management of the portfolio and engagementwith undertakings in the financial institution’s portfolio to bringthe emissions intensity and associated absolute GHG output
in line with a 1.5°C decarbonization pathway. This is the only
sector-specific approach that requires emissions measurement
on an asset-class level.
SBT Portfolio Coverage Targets: in this approach, financial
institutions must engage with companies in eligible portfolios
to adopt science-based targets. Financial institutions must
commit to having 100% of the companies in a given portfolio
adopt a science-based target by the year 2040, in alignment
with a 1.5°C pathway. These commitments must cover all 3
scopes of GHG emissions on the corporate level in accordancewith SBTi corporate guidelines, and financials must provide
information on the percentage of corporate equity and debt
portfolios covered by such targets.
Portfolio Temperature Rating Targets: for this method,
financials must calculate the temperature rise implied by theirinvestments or loans in a given portfolio, according to an opensource methodology developed by WWF and CDP on behalf of
SBTi26. The calculation of implied temperature rise is calculatedon the basis of public GHG reduction targets set by companies
in the portfolio, as compared to necessary GHG emissions
reductions to bring the global economy in line with a 1.5°C
limit of temperature rise according to selected IPCC sharedsocioeconomic pathways (SSP). Financial institutions are then
expected to engage with the companies in their portfolios orinvest in companies that are better aligned with the objectivesof the Paris Agreement to bring their own implied temperaturerise in line with their stated targets.
Fossil Fuel Finance Targets: FIs required to set targets on
the fossil fuel sector according to the coverage requirements
outlined in Table 5.2 of version 2 of the financial institutions
near-term guidance may set such targets using any of theavailable methods specified in Table 5.2 or use the following
requirements.
•

First, FIs shall set targets on their loans, investments, andassets under management in fossil fuel-related projects
and companies as delineated in the boundary requirementsof Criterion 17.4 for coal, oil and gas companies or projects.

•

Second, FIs must disclose financial services, absolute GHG
emissions, and a breakout of methane emissions across all

financial services provided to counterparties within theboundary.
•

Third, FIs shall commit, via a publicly available policy
published prior to submission of the FI’s science-basedtarget, to the immediate cessation of activities incompatible
with low-no overshoot 1.5°C scenarios.

•

Fourth, FIs shall establish near-term targets to reduce
absolute GHG emissions attributed to their loans,investments, and assets under management in coalprojects and companies and upstream oil and gas projects
and companies.

•

Finally, FIs shall commit, via a publicly available policy
published prior to submission of the FI’s science-basedtarget, to the phasing out of existing financial services
to all coal projects and coal companies (as defined in
the Boundary section of this method) in line with a fullphaseout by the end of 2030 for projects and companies
operating in OECD (The Organization for Economic Cooperation and Development) countries and by the end of2040 globally.

More details on the proposed requirements and associatedrecommendations for the fossil fuel finance policy may
be referenced from page 20 of the pilot testing version of
the Financial Institutions Near-Term V2.0 criteria andrecommendations.
To calculate the emissions associated with their activity prior
to target-setting, financial institutions should use the PCAF
framework. They can then prioritize the different portfolios
to focus on for target-setting in accordance with the level ofemissions associated with different lending or investment
vehicles. Financials should then report their progress against
the targets they have set, showing their degree of alignment
with the target and disclosing absolute emissions reductions
implied by this progress.
The SBTi target setting methodologies for investment andlending activities have been available since October 2020
(including methods, criteria, tools and guidance). To date,
90 financial institutions have validated targets with the SBTi
platform, and another 152 have committed to set a target. In
December 2023, the SBTi published a new brief as a first step
towards the development of a standard for the insurance sector.

Method developed by CDP and WWF. SBTi developed the Python tool used to implement the method. Both components are open sourcewith MIT licenses.

26

WWF FRANCE 2024

Asset class

Products and Requirement for
Inclusion in Targets

Required Minimum Coveragefor Required Activities

Residential mortgages

Consumer loan

Optional

Motor vehicle loan

Corporate loan

SDA

Not applicable

Personal loans

Project financeApplicable Methods

Electricity generation project finance100% of base year activity (kWh)Other project finance (e.g., infrastructure)

Not applicable

Corporate loan: commercial real estate

Min. 67% of base year activity(m2)

Corporate loan: electricity generation

100% of base year activity (kWh)Fossil fuel companies: min. 95%
of base year corporate lending(loan value)

Corporate loan: other long-term debt
(more than one year), excluding electricity
generation project finance and real estate

Other companies: min. 67% ofbase year corporate lending (loanvalue or financed emissions)Not available
SDA
Not available
SDA

SBT Portfolio
Coverage

Temperature
Rating

SDA
SDA(whereavailable)

SBT Portfolio
Coverage

Temperature
RatingSDA

SBT Portfolio
Coverage

Temperature
Rating

Corporate lending: SME loans
Corporate lending: short-term debt (less than
one year, such as line of credit, intraday, andoverdraft facilities)

Optional

Corporate loan: other project financeNot applicableNot available

Common stock
Preferred stock
Corporate bonds

100%

Exchange traded funds

SDA

Investments in real estate investment trusts(REITs), listed real estate companies, and realestate mutual funds

Listed equity
and bonds

Funds of funds

SBT Portfolio
Coverage

Temperature
RatingOptional

Derivatives
Sovereign and government bonds
Supranational, subsovereign (including
municipal) bonds

Not applicable

Agency bonds

Not available

Securitized fixed income (includes assetbacked securities/mortgagebacked securities,
covered bonds)

Private equity
and debt, includes
venture capital

Private equity and debt, e.g., mezzanine capital, ordinary shares, preferred shares, shareholder loans, private real estate companies

Optional

Advisory services,
if relevant

Advisory services (e.g., Mergers and acquisitions), debt and equity underwriting, brokerage-securities and commodities, trading
securities and commodities, credit guarantees,
insurance contracts, transaction services

Not applicable

Reading key

Required activities

Optional activities

SDA

SBT Portfolio
Coverage

Temperature
RatingNot available

Out of scope activities

Table 1: SBTi requirements for target setting at asset class level29

It is important to reiterate that although the SBTi represents
the gold standard of target validation mechanisms to date, anapproved target does not imply the validity of the associatedtransition plan issued by companies. The assessment oftransition plans requires different, dedicated tools that differ
from the SBTi platform and will be assessed by WWF in a
subsequent report.
As reflected in our detailed review below, we believethat the SBTi appropriately answers reporting
requirements under ESRS E1. More broadly, given
the close alignment of CSRD and the current version

Disclosure ESRS
requirement reference

ESRS
detailSBTi
referenceof CSDDD on corporate climate targets presented in
section 4, the SBTi should be used as a frameworkof reference for all companies setting and reporting
climate targets under CSRD (and eventually CSDDD).
Indeed, a target validated by the SBTi platform implies that
it is aligned with the Paris Agreement, provides a declinationof decarbonization goals on all 3 scopes of GHG emissions,requires near-term targets compatible with a 1.5°C pathway
and recommends long-term net zero commitments, andis expressed either in absolute terms in most cases, or in
intensity measures with associated expected absolute emissions
reductions in specific cases.

SBTi
detail

SBTi adequacy
to ESRSWWF
recommendation

SBTi adequacy to WWF
reccomendations

2

Reference
to a 1.5°C
targetReferencetoambitious,
sciencebased andwellestablishedscenarios

E1-4.34(e)1E1-4.34.(e)1.5°C upper boundary compatibility

The undertaking
shall state whether
the GHG emission
reduction targets
are science-basedand compatible
with limiting global
warming to 1.5°C.

The undertaking
shall state whichframework andmethodology has beenused to determine
these targets
including whether
they are derived
using a sectoral
decarbonisation
pathway and what theunderlying climate
and policy scenarios
are and whether thetargets have beenexternally assured.

SBTi
Corporate
Standard,
pp. 10,22-25 ;
SBTi
Corporate
Net ZeroStandard,
p. 37

SBTi
Corporate
Standard,
p. 15 ;
SBTi
Corporate
Net ZeroStandard,
pp. 22-25

Scope 1 and 2 targets must be consistent
with the level of decarbonization required
to keep global temperature increase
to 1.5°C compared to pre-industrial
temperatures. For the near term (5 to 10
years from date of submission), the SBTi
also requires businesses whose Scope 3
emissions represent 40% or more of
total emissions to set Scope 3 target(s).
These targets must be aligned with theminimum rate of decarbonization definedby the SBTi for Scope 3. Targets arethen meant to be updated on a 5-year
rolling basis, with Scope 1, 2 and 3 targets
that need to be aligned with a limit oftemperature increase of 1.5°C at a 2050
horizon - as described in SBTi’s net-zerostandard for companies.

One key methodological element ofcorporate climate target-setting should
thus be to ensure alignment with the
1.5°C limit of temperature increase.
[…] For companies seeking to establish
GHG emissions reduction targets,compatibility with the 1.5°C objective(with no or limited overshoot) thus
constitutes a methodological priority.

The SBTi uses its own science-based,
methodological framework, whichdraws on a variety of reference climate
scenarios compatible with a 1.5°C
limit of temperature increase. It also
has broken this down this into several
sectoral sub-scenarios for intensitybased convergence scenarios. Upontarget submission to the SBTi, its
Target Analysts assess companies’ andfinancial institutions’ targets against
the science-based decarbonization
pathways. Sector-specific pathways arealso designed to ensure that companies
in specific GHG-intensive sectors are inline with the decarbonization objectives
for their sectors. The absoluteemissions reductions associated withintensity targets are also analyzed by
the SBTi to ensure the compatibilityof intensity targets with a 1.5°C limitof temperature increase. However, theabsolute emissions reduction implied
by intensity targets does not need to bedisclosed publicly.

The choice of reference scenario is a
key consideration in target-setting:anchoring GHG reduction goals towell-established and science-based
frameworks is critical to ensure
the credibility of an undertaking’s
engagements. This can be a reference
scenario at the international (IEA NZE, SBTi, NGFS - ordinate transition,
IPCC - SR1.5), regional (EU Fit for 55
roadmap), or national (French Stratégie
Nationale Bas Carbone - SNBC) levels,
provided that these scenarios are
science-based and in line with the 1.5°C
objective. Sector-specific roadmaps
can also help to refine target-setting
efforts, and identify appropriate
levers for attaining the undertaking’s
objectives. However, companies should
strive to avoid basing their targets
solely in frameworks developed in thecontext of industry representationgroups (although these may be used inconjunction with other scenarios) to
avoid any conflicts of interest inherent
to the development of such tools.

Reading key:
Full alignment

WWF FRANCE 2024

Near-full alignment(wording/arrangement
difference, but satisfactory)

Partial alignment(certain elements missing)

Misalignment(key component missing)

Not applicable(due to previous dependency not being fulfilled)

Disclosure requirement ESRS reference

ESRS detail

Coverage

8 of value
chain

31

E1-4.34(b)7Presenceof a
Scope 3targetScope 1 target mandatory.

Undertakings shall include the GHG emissions inaccordance with the extent of the undertaking's
operational control over them, and targets should bealigned with the GHG inventory. GHG Protocol andISO 14064-1 are explicitly referenced for boundarysetting and must be used for carbon accounting.

SBTi
Corporate
Standard,
pp. 14-18

Near-term SBTs must cover at least 95% ofcompany-wide Scope 1 and 2 emissions.

Companies should report on the totality of their direct emissions,and seek to be as granular as possible in the calculation of GHG
emissions associated with different activities and processes, in linewith GHG Protocol and/or ISO 14064-1 guidelines.

See line 3

SBTi
Corporate
Standard,
pp. 14-18

Scope 2 target mandatory.

Scope 2 accounts for GHG emissions from the generation ofpurchased energy (electricity, steam, heat or cooling) consumed
by the company. Purchased energy is defined as energy that ispurchased or otherwise brought into the organizational boundaryof the company. Scope 2 emissions physically occur at the facility
where energy is generated. These definitions are in line with GHG
Protocol and/or ISO 14064-1 guidelines.

See line 4

SBTi
Corporate
Standard,
pp. 14-18

Near-term SBTs must cover at least 95% of company-wide
Scope 1 and 2 emissions.

As for Scope 1 emissions, companies should report on the totalityof purchased energy in their Scope 2 disclosures, in line with GHG
Protocol and/or ISO 14064-1 guidelines.

Scope 3 targets are a requirement under the SBTi Corporate and
Net-Zero Standards. The SBTi Criteria for near-term targets
also states that if a company’s Scope 3 emissions are 40% ormore of total Scope 1, 2, and 3 emissions (i.e. the vast majority
of companies), a Scope 3 target is required. These targets should
cover at least 67% (two-thirds) of Scope 3 categories and mustbe aligned with the minimum rate of decarbonization defined by
the SBTi for Scope 3. Businesses may also choose to set supplier
and/or customer engagement targets to ensure the mobilizationof the company’s value chain in emissions reductions efforts.
Long-term, net-zero targets require a 90% reduction by 2050, inline with net-zero and Paris Agreement requirements.

Scope 3 emissions are a consequence of the activities of thecompany, but occur from sources not owned or controlled by
the company. These emissions can occur either upstream or
downstream of the company’s value chain, and cover the categories
described in the GHG Protocol Scope 3 Calculation Guidance.

As per the SBTi Criteria for Near-term Targets, two thirdsof Scope 3 emissions must be covered by a target, ordisaggregated Scope 3 targets. At a 2050 horizon, Scope 3
targets should be aligned with a 1.5°C-compatible level of
reduction, implying at least a 90% reduction in emissions on
this scope.

Scope 3 emissions should be published for all value chain sourcesthat significantly impact the GHG inventory of the company. One way
to ensure sufficient coverage of Scope 3 emissions is to ensure thatthese cover activities equate with more than two-thirds (2/3) of thecompany’s purchases and/or revenues, and progressively seeking tocover the full extent of Scope 3 emissions categories over time. The
GHG Protocol provides multiple criteria for further identifying relevant
Scope 3 activities to include in an undertaking’s GHG inventory. These
include the size of the emissions associated with a source, degree of
influence on the source, contribution to risk of financial exposure,materiality to stakeholders, outsourced nature of activities, association
with high expenses or revenues, and identification of a particularsource as material in well-established sectoral guidance.

E1-4.34(b)6Coverageofactivity

SBTi adequacy to WWF
reccomendations

Scope 1 GHG emissions occur from sources directly owned orcontrolled by the company. For example, these may include
emissions from combustion in owned or controlled boilers,
furnaces, vehicles, etc. ; emissions from chemical production in
owned or controlled process equipment.

E1-4.34(b);E1-6.46;
AR-39(a)5Presenceof a
Scope 2targetWWF
recommendation

SBTi
Corporate
Standard,
pp. 14-18

E1-4.34(b)4Coverageofactivity

SBTi adequacy
to ESRSGHG emission reduction targets shall be disclosed
for Scope 1, 2, and 3 GHG emissions, either
separately or combined. The undertaking shallspecify, in case of combined GHG emission
reduction targets, which GHG emission scopes (1,2 and/or 3) are covered by the target, the sharerelated to each respective GHG emission scope
and which GHGs are covered.

E1-6.44(c); AR-46(h)3Presenceof a
Scope 1targetSBTi
detail

E1-4.34(b); E16.46; AR-39(a)Coverage of activities and value chain

SBTi
reference

SBTi
Corporate
Standard,
pp. 19-27,

See line 3

The disclosure of gross Scope 3 GHG emissions
required by paragraph 44 (c) shall include GHG
emissions in metric tons of CO2eq from eachsignificant Scope 3 category (i.e. each Scope 3
category that is a priority for the undertaking).
GHG Protocol and ISO 14064-1 referenced forboundary-setting and must be used for carbon
accounting.

SBTi
Corporate
Net ZeroStandard,
pp. 30-42

SBTi
Corporate
Standard,
p. 22
SBTi
Corporate
Net ZeroStandard,
pp. 30-42

10Reportingperimeter

AR-27; AR-39(b)9Source ofemissionsfactors

E1-6.50(a); AR-46

WWF FRANCE 2024

ESRS
Disclosure
requirement reference

ESRS
detailThe reference target value may be calculated
by multiplying the GHG emissions in the baseyear with either a sector-specific (sectoral
decarbonisation methodology) or cross-sector(contraction methodology) emission reduction
factor. These emission reduction factors
can be derived from different sources. The
emission reduction factors are subject to further
development. Consequently, undertakings
are encouraged to only use updated publicly
available information. Undertakings should betransparent about the emissions factors they use
to establish GHG inventories and targets.

The undertaking shall explain how theconsistency of these targets with its GHG
inventory boundaries is ensured (as required
by Disclosure Requirement E1-6): For Scope
1 and Scope 2 emissions the undertaking
shall disaggregate the information, separately
disclosing emissions from: (a) the consolidated
accounting group (the parent and subsidiaries);and (b) investees such as associates, joint
ventures, or unconsolidated subsidiaries that are
not fully consolidated in the financial statementsof the consolidated accounting group, as wellas contractual arrangements that are joint
arrangements not structured through an entity(i.e., jointly controlled operations and assets),for which it has operational control. Scope 3
emissions inventories and targets must cover
GHG emissions from each significant Scope 3
category.

SBTi adequacy
to ESRS

SBTi
reference

SBTi
detailSBTi
Corporate
Standard,
p. 45

There is no mandatory source for the emissions factors that must
be used by companies or financial institutions to set climate
targets. However, the SBTi platform demands transparency on
the sources of emissions factors used by companies or financial
institutions setting climate targets. A coherence check is also
conducted by SBTi on the factors used for GHG inventory
calculations.

WWF
recommendation

SBTi adequacy to WWF
reccomendations

Emissions factors used to calculate total GHG production could
stem from self-measured values for processes to reliable, precise
and well-recognized proxies (ADEME Base Carbone, IPCC, EEA,
IEA…)Companies must align the boundaries of their near-term SBTs withthose of their GHG inventory. To do so, they must select a single
consolidation approach based on a range of company-specificconsiderations and apply that approach consistently across its
corporate structure, for both the corporate inventory and the SBT.
This implies that the consolidation approach for target-setting
under SBTi must be aligned with financial reporting. The GHG
Protocol defines three different approaches for determining theorganizational boundaries of corporate GHG inventories:

SBTi
Corporate
Standard,
p. 11• Operational control: A company accounts for 100% of theemissions from operations at which it has the full authority
to introduce and implement operating policies. It does notaccount for any of the emissions from operations in which it
owns an interest but does not have operational control.
• Financial control: A company accounts for 100% of theemissions from operations at which it can direct financial andoperating activities with a view to gaining economic benefits
from those activities.

In accordance with ESRS 1 recommendations, Scope 1 and 2
accounting and targets should cover the same activity perimeteras the financial statements published by the company and include
any entities over which the reporting structure has operational
control. Scope 3 accounting and targets should strive to cover
all significant emissions within the value chain of the company,
based on the principles mentioned above.

• Equity share: A company accounts for GHG emissions fromoperations according to its share of equity in the operation. The
equity share reflects economic interest, which is the extent ofrights a company has to the risks and rewards flowing from an
operation.
Moreover, companies should report and establish targets covering
at least two thirds of their Scope 3 GHG emissions.
The GHG Protocol Corporate Standard provides further guidance.

11

Presence ofnear termtarget

12

Presence ofsequential
targets

E1-4.34(c)Near- and long-term target setting
GHG emission reduction targets shall at least
include target values for the year 2030 and, if
available, for the year 2050. From 2030, target
values shall be set after every 5-year period
thereafter.

SBTi
Corporate
Standard,
pp. 9-10

Companies must set a near-term target that covers a minimum of
five years and a maximum of 10 years from the date the target issubmitted for validation.

Near-term targets should be set and aligned with science-based,recognized frameworks that enable the real decarbonization of
the undertaking’s activity over time.

SBTi requires that companies update their targets every five
years to ensure compatibility with the latest climate science.
If significant changes arise in the targets set by companies orfinancial institutions, targets must be re-validated by the platform.

The near-term targets set by the company should be sequential
over five year intervals from the date of publication.

WWF
recommendation

SBTi adequacy to WWF
reccomendations

Near-term targets must be aligned to SBTidefined, 1.5°C-compatible trajectories since
the publication of the updated SBTi Criteria
and Recommendations for Near-Term targets,
published in April 2023. Prior to this standard,
companies could validate a well-below 2°C
target, but this has been phased out by theplatform. Offsets and removals must be reported
separately from the rest of the GHG inventory,
and must only be used to neutralize residual
emissions or other emissions not covered by the
SBTi-validated target. Avoided emissions should
not be considered in the GHG inventory either.

The establishment of these targets also helps to ensure that the total GHG
output of the company is aligned with their 1.5°C budget allocation; indeed,
not only do companies need to attain net zero emissions by 2050 in order tobe aligned with the objectives of the Paris Agreement, but they also need todecarbonize at a high speed in the first years of their decarbonization efforts
to stay within budget. Indeed, emitting at constant rates over ten more years
releases much more carbon into the atmosphere than halving emissions overthe same time period - and would require a very abrupt transition following
this time period to stay in line with the Paris Agreement. In line with therecommendations from the SBTi target-setting methodology describedin section 3.1 of this report, companies should use the most ambitious
decarbonization scenarios to establish their targets. It is important to notethat companies should not include carbon offsets in their near-term targets,as both nature- and technology-based solutions for carbon entrapment are
long-term endeavors and present major uncertainties concerning feasibility
and real impact of contribution to mitigation efforts.

E1-4.34(e)17Reporting on
establishedlong-term
target33

16

Quality of
establishedlong-term
target

SBTi adequacy
to ESRS

MDR-T-80

15

Presenceof a longterm netzero target

SBTi
detailThe undertaking shall disclose the measurable,
outcome-oriented and time-bound targets on material
sustainability matters it has set to assess progress.
For each target, the disclosure shall include thefollowing information: [...] the performance against
its disclosed targets, including information on how
the target is monitored and reviewed and the metrics
used, whether the progress is in line with what had
been initially planned, and an analysis of trends
or significant changes in the performance of theundertaking towards achieving the target.

SBTi
Corporate
Standard, p.
44-46Companies are expected to report on theirprogress yearly through the CDP platform, or
another publicly available source (annual report,sustainability report, dedicated webpage…).

The confrontation of the real decarbonization trajectory with projected
targets, combined with an analysis of previously implemented actions
can help to identify any inefficiencies and opportunities that exist in theundertaking’s strategy. This data should be disclosed in a standardized
format, as proposed by the upcoming ESAP which should allow
information users to access all sustainability data in a standardized
format at a single location. However, measurement, review andvalidation is outside the direct scope of this document.

E1-4.34(e)14Reporting on
establishednear-term
targets

SBTi
reference

The undertaking shall state whether the GHG emission
reduction targets are science-based and compatible withlimiting global warming to 1.5°C. The undertaking shallstate which framework and methodology has been used
to determine these targets including whether they arederived using a sectoral decarbonisation pathway andwhat the underlying climate and policy scenarios are
and whether the targets have been externally assured.
As part of the critical assumptions for setting GHG
emission reduction targets, the undertaking shall briefly
explain how it has considered future developments (e.g.,changes in sales volumes, shifts in customer preferencesand demand, regulatory factors, and new technologies)
and how these will potentially impact both its GHG
emissions and emissions reductions.

GHG emission reduction targets shall at least include
target values for the year 2030 and, if available, for theyear 2050. From 2030, target values shall be set after
every 5-year period thereafter.

SBTi Corporate Standard,p. 7 and SBTi
FAQ page

The long-term net-zero target is not mandatory.
However, companies that committed to the SBTion or after July 15, 2022 must use Version 5 of
SBTi criteria, which requires alignment with a
1.5°C-pathway for most companies.

Long-term net-zero targets are also an essential component of propertarget-setting practices. Setting such objectives empowers companies
to demonstrate their alignment with both the Paris Agreement and EU
Net-zero goals.

In the case where the undertaking discloses a net-zerotarget in addition to the gross GHG emission reduction
targets, it shall explain the scope, methodologies
and frameworks applied and how the residual GHG
emissions (after approximately 90-95% of GHG
emission reduction with the possibility for justified
sectoral variations in line with a recognised sectoral
decarbonisation pathway) are intended to be
neutralised by, for example, GHG removals in its own
operations and upstream and donwstream value chain.

SBTi
Corporate
Net ZeroStandard, pp.
53-55

If companies establish a long-term net zerotarget, these must be aligned with the SBTi
reference scenario compatible with a 1.5°C
pathway. Offsets and removals must be reported
separately from the rest of the GHG inventory,
and must only be used to neutralize residual
emissions or other emissions not covered by the
SBTi-validated target. Avoided emissions should
not be considered in the GHG inventory either.

In line with the recommendations from the SBTi target-setting
methodology described in section 3.1 of this report, companies should
use the most ambitious decarbonization scenarios to establish theirtargets. Companies that do not validate their targets through the SBTi
platform are recommended to screen multiple frameworks, in particularsectoral decarbonisation pathways, and select those that maximize their
incentives to decarbonise rapidly, in a way that is aligned with global
efforts to stay below the 1.5°C limit of temperature increase.

See line 14

SBTi
Corporate
Net ZeroStandard,p. 55

Companies are expected to report on theirprogress yearly through the CDP platform, or
another publicly available source (annual report,sustainability report, dedicated webpage…)

The confrontation of the real decarbonization trajectory with projected
targets, combined with an analysis of previously implemented actions
can help to identify any inefficiencies and opportunities that exist in
the undertaking’s strategy. Companies should therefore report on theirprogress toward their decarbonization targets yearly. This specific topic
will be the focus of a later publication regarding measurement, reportingand verification (MRV) for climate targets and transition plans.

MDR-T-80

13

Quality of
establishednear-term
targets

ESRS
detailE1-7.60

ESRS
Disclosure
requirement reference

SBTi
Criteria andRecommendations for
Near-Term
Targets, p. 13

19

Alignmentof absolutetargets
with a1.5°C-compatible
scenario
Alignmentof intensity
targets witha sectoral
trajectorycompatible
with a 1.5°C
scenario

MDR-T-80; E1-4.34(a); AR-23

18

Presenceof bothabsolute
and intensity-based
decarbonization
targets

20

ESRS
detailSBTi
reference

SBTi
detail

SBTi adequacy
to ESRSWWF
recommendation

SBTi adequacy to WWF
reccomendations

Absolute and intensity-based targets

E1-4.34(e)WWF FRANCE 2024

ESRS
Disclosure
requirement reference

The undertaking shall disclose the measurable,
outcome-oriented and time-bound targets on material
sustainability matters it has set to assess progress. For
each target, the disclosure shall include the following
information: [...] the defined target level to be achieved,
including, where applicable, whether the target isabsolute or relative and in which unit it is measured.
If the undertaking has set GHG emission reduction
targets, ESRS 2 MDR-T and the following requirements
shall apply: GHG emission reduction targets shall be
disclosed in absolute value (either in tons of CO2eq or
as a percentage of the emissions of a base year) and,
where relevant, in intensity value. Where intensity
targets are published, associated expected absolute
reduction targets are expected to be communicated.
The undertaking shall state whether the GHG emission
reduction targets are science-based and compatible
with limiting global warming to 1.5°C. The undertaking
shall state which framework and methodology has beenused to determine these targets including whether they
are derived using a sectoral decarbonisation pathway
and what the underlying climate and policy scenarios
are and whether the targets have been externallyassured. As part of the critical assumptions for setting
GHG emission reduction targets, the undertaking
shall briefly explain how it has considered future
developments (e.g., changes in sales volumes, shifts incustomer preferences and demand, regulatory factors,
and new technologies) and how these will potentially
impact both its GHG emissions and emissions
reductions.

SBTi
Corporate
Standard,
p. 14-19

Absolute targets are required for the sectors forwhich no sectoral scenarios have been established.
For hard-to-abate sectors, specific contraction
scenarios have been developed that allow for thesetting of intensity-based targets. Companies canchoose to report either or both types of targets.
When companies submit their targets to the SBTi,
they must also disclose the expected absoluteemissions reductions from intensity-based targets,
if the latter are being submitted for validation.
However, there is no obligation to publicly
communicate on this absolute reduction volume.

SBTi
Corporate
Standard,
pp. 14-22

Targets must be aligned to SBTi-defined,
1.5°C-compatible trajectories. SBTi demands thatcompanies submit either (or both) an absolutetarget, or an intensity target with associatedabsolute emissions reductions (for sectors eligible
to this methodology). This enables the platform toverify that a company’s emission targets are indeed
compatible with a 1.5°C remaining carbon budget.
However, companies do not necessarily have to
publicly disclose their projected absolute emissions
reductions if their intensity targets are validated.

SBTi
Corporate
Net ZeroStandard,
p. 54

SBTi only requires that companies disaggregate
their target publication by scope (separate Scope 1,
2 and 3 targets). Companies may also establish theirtargets by sector, Scope 3 category or methodology
if different methods are used to set targets. The
emissions reductions are assessed by scope, witha requirement on minimum emissions reductionsindividual to each 3 scopes.

A distinction exists between emissions targets expressed in absoluteand relative, or intensity-based values. Absolute emissions reduction
targets provide undertakings and information users with a view of
the company’s intention to abate its real, total emissions over time.
In contrast, intensity targets provide stakeholders with a vision that
relates GHG emissions to business activity. These approaches arecomplementary, and undertakings should strive to publish bothabsolute and intensity targets to address different stakeholders’information requirements, and provide a full-picture view of theirdecarbonization efforts.

This kind of target is constructed by setting a total carbon budgetthat a company can emit in order to stay in line with global efforts
to be aligned with a 1.5°C limit of temperature rise. This takes into
consideration both the end-point (long term net-zero target) andthe trajectory of emissions reduction projected by the undertaking.
Absolute targets therefore allow clear readability on the capacity of
the company’s strategy to provide a satisfactory contribution to 1.5°C
upper climate heating boundary objectives.
Such targets are typically set by referring to sectoral decarbonization
scenarios, which usually take expected growth or shrinkage of theeconomic volume of the relevant sector in plotting emissions reduction
trajectories. The targets are created to converge on a level of intensity
compatible with the sector’s necessary decarbonization efforts tobe aligned with the Paris Agreement. Intensity targets thus enable
companies and information users to see if decarbonization efforts areintegrated into the general business strategy of the company, which could
be especially useful in the earlier periods of emissions reduction efforts.

21

Desiredlevel ofdisaggregation

1.3.7.54

Granularity of targets for highly emissive assets
When needed for a proper understanding of its material
impacts, risks and opportunities, the undertaking shalldisaggregate the reported information: (a) by country,
when there are significant variations of material
impacts, risks and opportunities across countries andwhen presenting the information at a higher level ofaggregation would obscure material information about
impacts, risks or opportunities; or (b) by significant siteor by significant asset, when material impacts, risks
and opportunities are highly dependent on a specificlocation or asset.

For a company-level GHG emissions reduction strategy to be declined
into an operation, action oriented transition plan, it is important that
undertakings identify the key geographies and assets from whichemissions emanate. This enables businesses to pinpoint and focus ontransitioning specific elements of their business or even infer what
activities are viable in the long term.

2 - ANALYSIS OF MARKET PENETRATION RATESOF THE SCIENCE BASED TARGET INITIATIVEThe SBTi framework represents the gold standard
for target setting in the corporate and financial
sectors, and appropriately answers the reportingneeds of ESRS E1. The initiative has gained traction
over the past decade, with close to 2800 companies
and financial institutions publishing science-basedtargets with an objective to become net-zero before
2050, with a trajectory aligned with the 1.5°C
objective of the Paris Agreement. This is particularly
true in the EU, where the take-up on SBTi has been
widespread. Indeed, based on the latest SBTi data,
as of the end of 2023, around 2300 companies
based in the European Union had SBTivalidated targets or commitments: around
60% (close to 1400) had set and validated
science-based targets and 40% had committed
to target setting with a publicly stated goal to gettheir objectives validated in a 2-year timeframe.
It should be added that the adoption rate has
drastically increased in the last few years: since
2018, the minimum growth rate for the combinationof committed and validated targets has been 100%
per annum - which means that since 2018 thenumber of such companies has more thandoubled every year. This reflects a broader
worldwide trend on science-based climate target
adoption, as a skyrocketing number of companies
have joined the initiative in their ambition to alignto the 1.5°C objective of the Paris Agreement.
As a matter of comparison, the number ofcommitments to set targets by the end of2023 represented close to 5% of companies
in the scope of CSRD (around 50,000) andnearly 19% of EU companies that could end
up in the scope of CSDDD (around 12,800 EU
companies according to the Commission27).
If we assume that the growth rate of SBTi companies
remains the same as in the last five years (doubling
every year), by the end of 2026 the number ofcompanies setting targets through the SBTi will
represent around 37% of EU companies in the scopeof CSRD and nearly 140% of EU companies that
could end up in the scope of CSDDD. As a reminder,
CSDDD should enter into application in 2027 forthe largest companies only (1000+ employees), if
the Council votes it as planned.

5%of companies
in the scopeof CSRD hadcommitted
or validated
science-basedtargets in 2023

Committed and Validated Targets per Year - EU

450

Reading key

400

Committed

350

Targets Validated

300
250
200
150
100
50
0
2015

2016

2017

2018

2019

2020

2021

2022

Fig. 2: New Committed or Validated SBT per Year (EU).

These curves in the EU are similar to those observed globally.

27

On the basis of the Commission’s legislative proposal on CSDDD from February 2022.

35

Additional details of the committed and set targets can befound below, with a repartition of SBTs set by EU country,
as of the end of 2022. At this date, companies in 18 out of
27 EU countries had committed or validated their sciencebased targets.

Validated Targets per EU Country

Committed Targets per EU Country

Greece 4

Czech Republic 2
Malta 3
Poland 7

Estonia 2

Lithuania 2

Poland 8

Greece 1

Portugal 16

Hungary 1

Portugal 9Austria 15x
42

Czech Republic 1
Hungary 1

Luxembourg 16

Romania 1

Luxembourg 10

Lithuania 2Austria 18

120

126

25

Germany

Finland44

30

Belgium

Netherlands
32
44

Germany

Italy

Italy

FranceFinland

110

France

Spain

44

Spain
46

Denmark

Belgium
Denmark

SwedenNetherlands

53

49
106
75

Fig. 3.1: Validated Targets per EU Country

This rapid uptake of the SBTi framework has enabled theplatform to cover a decent share of global GHG emissions
issued by companies. Together, commitments and set
targets cover around 2 billion tons of CO2-equivalent GHG
emissions at the global level, representing around 3% ofworldwide emissions. This coverage only accounts for Scope
1 and 2 coverage, while Scope 3 targets engulf a much larger
share of the emissions covered by the SBTi. Interestingly, incomparison to the global level, EU companies within SBTihave set CO2 targets that cover a very significant share of theregion’s emissions; indeed, set Scope 1 and 2 targets in the

WWF FRANCE 2024

61

Sweden96

Fig. 3.2: Committed Targets per EU Country

EU 27 account for close to 1 billion tons of CO2 equivalent
GHG emissions, out of the 3.5Bn tons emitted by the EU:
EU companies’ commitments and targets within SBTi
represent close to a third of total EU emissions. Thisis promising as it highlights the fact that even with partial
coverage of EU companies, high levels of emissions coveragecan be achieved.

99

Cumulative emissions - World and EU

2500

Reading key

2000

MtCO2eWorld cumulativeemissions

1500

EU cumulativeemissions

1000

500

0
2015

2016

2017

2018

2019

2020

2021

2022

Fig. 4: Emissions covered by committed and validated SBTs - World and EU.

This large coverage of emissions in the EU also reflects a wide
uptake of the initiative across the different economic sectors
present in Europe. Indeed, while services lead the way interms of committed and set targets, manufacturing, food &beverages, retail, materials and infrastructure companies havealso joined the SBTi, at increasing rates. This reflects a trend
existing at the global level where companies in the materials
and transportation sectors were committing and submitting

targets at rapid rates between the years 2021 and 2022.
Worryingly, one sector where the uptake of SBTs is still low is
the power sector; given the high volume of emissions associatedwith this sector, it is critical that power companies acceleratetarget commitments and target setting compatible with the
1.5°C objective and implement transition efforts to reach theirobjectives.

SBTi-validations and commitments per EU country
Reading key

140

Committed
Targets Validated

120

100

80

60

40

20

0

y
e
y
e
d
lic ark
ia
ia
m
us
nd
ar
ec
an
nc
ub
str
pr
lan
on inlagiu
ra erm Gre ung
nm EstF
Cy RepIre
Au Bel
e
F
H
G
D
h
ec
Cz

Ita

g
a
n
d
ia
n
a
al
ds
ni ourdean tugan Spaialt lan
ua
b
ol
r
m
r
M
we
P
o
e
o
ti h em
S
P
R
th
L
x
Ne
Lu

ly

Fig. 5: Committed and validated targets per EU country37WWF FRANCE 2024
A further breakdown of sectoral
targets per EU country is provided
in the infographic below. The precise
number of targets per sector in each
EU country is also given in Fig. A1
and A2 of the appendices.

VC

VC
V

Reading key
Transportation services

VC

Services

V C

VC

RetailPower generation

VC

Materials
Manufacturing

VC

VC

Infrastructure
VC

Hospitality
Food, beverage & agriculture

V C

VC

V C

VC

Biotech, health care & pharma

C

VC

ApparelV Validated climate targets per industry
C

Number of committed climate targets
per industry
VC

VC

VC

V C

C
V

Diag. 2: Committed and validated per sector in different EU countries

It is also important to note that the SBTi coverageof companies is consequent both for large actors
and, increasingly, for small and medium-sizedenterprises (SMEs). In the 2022 SBTi Monitoring
Report, it highlighted that close to 90% of
French CAC 40, 70% of German DAX 30,
and above 40% of Italian FTSE MIB 40
companies have either set or committed
to setting science-based targets. However,it also finds that the greatest growth for new
commitments and validated targets comes fromSMEs, as highlighted in the graph below. The
report also communicates that this large uptake
from companies has resulted in a total market
capitalization-based coverage of 34% of
the global economy on a global scale forcompanies within SBTi.

Given the CSDDD and CSRD requirements(presented in section 1), it is necessary to implement
such a framework to ensure that all the relevant
actors in the economic sphere follow a standardized,
science-based methodology for target-setting,thereby raising the credibility of their engagements,
providing transparency on the compatibility of theirtargets with the 1.5°C limit of temperature increase,and increasing the comparability of corporate
targets and the relevance of their aggregation. Sucha methodological framework will both facilitate
the implementation of CSRD (and eventually
CSDDD) target setting and reporting
requirements, and significantly improve therelevance of CSRD (and eventually CSDDD) in theircontribution to the EU 2030 climate objectives andthe European Green Deal.
It should be reminded thatin its Strategy for financing
the transition to a sustainableeconomy from July 2021, theCommission committed
to examine to what extent
more guidance could
ensure that science-based
climate targets are credible(Action 4 a).

Cumulative SMEs - EU
700
600
500
400
300

Therefore, it seems bothreasonable and necessary
to rapidly develop thefollowing three steps:

200
100
0

•
EU institutions andMember States, relevant
regulators and supervisors,
Fig. 6: Number of SMEs with validated SBTs (cumulative) - EU
and CSRD assurance providers should immediately recommend
As a matter of comparison, the number of SMEs
companies and financial institutions
within SBTi in 2023 represented around 30% of theto set SBTi-validated climate targets
listed SMEs in the scope of CSRD (around 2,000
to ensure compliance with CSRD (andaccording to the Commission).
eventually CSDDD) on corporate climate
This analysis demonstrates that while there aretarget setting and reporting, and provide
still significant efforts to be made in sciencegreater transparency on their forecasted
based climate target setting by companies, theemission reductions.
global penetration of SBTi, particularly on the EU•
Building on SBTi notably, the EU
market, is important and accelerating. This allows
should develop a methodologicalfor wide coverage of European GHG emissions
framework of reference for corporate
by corporate climate targets, and demonstrates
climate target setting aligned with thegrowing corporate interest in science-based
1.5°C limit of temperature increase,methodological frameworks that enable
the use of which should become
the standardization of corporate targetmandatory over time. It is necessary
setting efforts. It is important to add that this is
to ensure credibility and comparability oftrue in a large variety of economic sectors, and forcorporate climate targets, and in turn better
undertakings of all sizes including SMEs - notably
contribute to the EU 2030 climate objective
as the SBTi gains in recognition and traction withand the European Green Deal.
more economic actors in recent years.
2015

2016

2017

2018

2019

2020

2021

2022

2023

39

and supervisors: these authorities should rapidly
develop a robust Measurement, Reporting andVerification (MRV) process for corporate climate
targets28.

The relevance of such a standard has been demonstrated
by the wide adoption of SBTi by economic actors of all
sectors and sizes globally.
•

These climate targets must be monitored byregulators (national competent authorities - NCAs)

3 - SBTI USE CASES: EXAMPLES OF GOOD PRACTICE IN TARGET SETTING
The companies that have set science-based targets have often
already implemented practices that enable them to alreadycomply with specific ESRS requirements linked to climate
target-setting. WWF has selected companies from different
economic sectors as examples of best practices in target
setting. We believe that these actors’ practices represent thehighest standard for this exercise in their respective sectors.

It is important to reiterate that target-setting alone is nota guarantee that companies will implement the proper
strategies and actions to reach their objectives, but rather
that the methodology implemented to define and set theirdecarbonization targets are in line with ESRS requirements, andwith a large majority of WWF target setting recommendations.

FORVIA
1.5°C upper boundary
compatibility

IBERDROLALA BANQUEPOSTALESAINTGOBAIN

Reference to a 1.5°C target
Reference to ambitious, science-based and well-establishedscenarios
Presence of a Scope 1 target
Coverage of activity
Presence of a Scope 2 target

Coverage of activities
and value chain

Coverage of activity
Presence of a Scope 3 target
Coverage of value chain
Source of emissions factors
Reporting perimeter
Presence of near term-target
Presence of sequential targets

Near- and long-termtarget setting

Quality of established near-term targets
Reporting on established near-term targets
Presence of a long-term net-zero target
Quality of established long-term target
Reporting on established long-term target

Absolute and intensitybased targets
Granularity of targets forhighly emissive assets

Presence of both absolute and intensity-based decarbonization
targets
Alignment of absolute targets with a 1.5°C-compatible scenario
Alignment of intensity targets with a sectoral trajectorycompatible with a 1.5°C scenario
Desired level of disaggregation

Reading key:
Criteria fulfilled

Criteria nearly fulfilled

Criteria partly fulfilled

Criteria not fulfilled

No elements communicatedDiag. 2: Committed and validated per sector in different EU countries

28

The same will be relevant as well for corporate climate transition plans - which are not the focus of this report.

WWF FRANCE 2024

SODEXONEAR AND LONG TERM TARGETS
Forvia published Scope 1, 3 and 3 targets
with differentiated time horizons. The
fulfillment of these commitments would
allow the company to decarbonate at a
rate compatible with an upper limit of
1.5°C climate heating.

Forvia emissions over time
25000000

14000000

20000000

12000000
10000000

15000000

8000000
10000000

6000000
4000000

5000000

2000000

S1,2,3 uncontrolled (tCO2)

S1,2,3 controlled (tCO2)

16000000

0

0
2019

2020

2021

SCOPES 1-3 COVERAGEThe near-term targets published for
Scope 1 and 2 emissions and for Scope 3
emissions have different time horizons,reflecting the amount of perceived
agency Forvia has on the various levers.

2022

Reading key
Scopes 1 + 2 (tCO2)
Scope 3 controlled (tCO2)
Scope 3 uncontrolled (tCO2)

2025
S1*+S2: -80%

2030
S3: -45%2045
S1+S2: -90%
S3: -90%

Forvia published its SBTi-validated targets in 2022, becoming
the first company to do this in the automotive sector. The
group is composed of the fusion of Faurecia and Hella, andhas been working to refine its carbon accounting methodology
for the past years. This has led to the recent inclusion of Hella’s
emissions, and a subsequent re-baselining of its starting point
for decarbonization objectives.
The company has established different time horizons for thetargets set on Scopes 1 and 2 and Scope 3 objectives, reflecting
their perception of operational control on decarbonization
levers that exist on each of these perimeters. They have alsodecided to separate their Scope 3 emissions between elements
on which they have more or less operational control.
The efforts engaged by Forvia to decarbonate its direct
operations have shown promise. In the four years since it
has set its baseline, Scope 1 and 2 emissions were reduced by
31% on an absolute basis. This was facilitated notably by the
implementation of energy sobriety measures, installation ofrenewable energy capacity on certain production sites, andcontractualization for green energy purchases.
Scope 3 emissions have only gone down by 3% in total, withgreater diminution of downstream carbon emissions than
upstream counterparts. Multiple tools have been implemented
in-house to incentivize the continued amelioration of Forvia’s
carbon footprint, such as internal carbon prices and top
management remuneration dependencies on carbon objectives.

ABSOLUTE GHG REDUCTIONSForvia published its decarbonization
targets on an absolute basis for all
three scopes. Scope 1 and 2 emissions
show very ambitious 2025 targets, withsignificant targets on Scope 3 emissions
on the 2030 horizon. For long-term
objectives, all three scopes converge on
a 90% reduction by 2045.

• Forvia had their SBTi targets validated
and published in 2022, becoming
the first company in the automotive
sector to obtain certification from theplatform.
• At this stage, Forvia has reduced its
direct emissions (Scopes 1 & 2) by
31%, while Scope 3 emissions have
only been diminished marginally (by3%).
• Forvia also provides useful
information about the degreeof uncertainty that exists in its
calculation of carbon emissions.
• Use of sold products in cars is treatedas a specific Scope 3 category due tolow levels of agency and certainty on
associated carbon emissions.

*S1 stands for Scope 1, S2 for Scope 2, and S3 for Scope 3

41

NEAR AND LONGTERM TARGETS
Iberdrola has published targets for thenear and long term with an objective toreach net zero emissions by 2039, witha 2020 baseline.

GHG emissions (tCO2)

80000000

120

70000000

100

60000000

80

50000000
40000000

60

30000000

40

20000000

20

10000000
0

0
2019

2020

2021

Emissions intensity (gCO2/kWh)

Iberdrola emissions over time

SCOPES 1-3 COVERAGE
Iberdrola covers all 3 scopes in its
decarbonization targets. It also provides
a level of dissagregation on its objectives
relevant to its different activities as anenergy provider.

2022

Reading key
Scope 1 emissions

ABSOLUTE GHG REDUCTIONS

Scope 2 emissions
Scope 3 emissions

Iberdola publishes its group-level GHG
emissions reduction targets in absoluteterms, while the disaggregated targets
per scope and activities are publishedin intensity. This ensures coherence
between forecasted business evolutions
and necessary levels of decarbonization
expressed on a absolute basis.

Emissions intensity

1.5°C
NET ZERO BY

2039

2030
S1+S2+S3:
-80%

2039
S1+S2+S3:-90%

Iberdrola has published near and long term targets on all 3
Scopes for its decarbonization efforts. In particular, for both
2030 and 2039, Iberdrola provides some detail for the way inwhich it diseggregates its targets. The company also publishes
both intensity targets and higher-level aggregate absolutetargets for the group as a whole.
In particular, Iberdrola expects that in 2030, it will reduce
Scope 1 and 2 emissions from power generation 83% per kWhby 2030 and Scope 1 and 3 emissions from fuel and energyrelated activities covering all sold electricity 85% per kWh in thesame time horizon. Scope 3 use of sold products emissions will
also be reduced by 42% by 2030, with other Scope 3 emissions
being reduced by 46% simultaneously. This would allow thecompany to reduce Scope 1, 2 and 3 emissions by 65% in 2030.

Iberdrola is one of two energy
providers to have its decarbonization
targets certified for a 1.5°C ambition
by SBTi.

•

So far, Iberdrola has achieved an
overall reduction in its emissions of
20%. This figure concerns absoluteemissions reduction on all 3 scopes.

•

The targets published by Iberdrola
are separated per key activities
exercised by the company andthen aggregated at the level of thegroup, providing more granularity
to information users.

•

Iberdrola has also phased out its
most emissive assets in order toanswer to fossil fuel phase-out
requirements consistent with a
1.5°C upper limit on climate change.

The same breakdown is provided for the company’s 2039
targets, amounting to 90% emissions reduction.
Iberdrola has already begun to implement multiple actions
to reach its objectives. On the power generation side, thecompany is dedicated to financing 100% renewable technology
generation and increasing its storage capacity. For its electricity
sales activities, the group is investing in the digitalization
and resilience of transmission and distribution grids to adapt
them to the electrification of the energy mix. Moreover, it
is developing new sustainable solutions for customers thatfacilitate the decarbonisation of energy demand, notably throughelectrification. On the upstream side, Iberdrola is also engaging
with its suppliers to lower its overall Scope 3 carbon footprint.
The ambitious targets set by Iberdrola have thus contributed
to sparking large-scale investments and direct action intransitioning its power provision business model.

WWF FRANCE 2024•

NEAR AND LONGTERM TARGETS
Sodexo has published both short-termand long-term targets. To the extent
that objectives are met, this ensures thatthe rate of GHG emissions reduction iscompatible with a 1.5°C limit on climatechange.

16000018000000

14000016000000

12000014000000
12000000

10000010000000

80000

8000000

60000

SCOPES 1-3 COVERAGE

6000000

40000

Sodexo is committed to contributing to
net-zero both at the level of its direct
operations and its value chain, as
reflected by their targets on all three
scopes. They also consider emissions
linked to agriculture in their targets.

4000000

20000
0tCO2e (S3)tCO2e (S1, 2 and FLAG)

Evolution of Scope 1, 2 and 3 GHG emissions (incl. FLAG)

2000000
2023

2017

0

Reading key
Scopes 1 + 2 (tCO2e)
Scope 3 (tCO2e)
Scope 3 (FLAG) (tCO2e)

1.5°C
NET ZERO BY

2040
2030

S1+S2: -55%
S3: -55%
FLAG: -40%

2040
S1+2: -90%
S3: -90%
FLAG: -72%

ABSOLUTE GHG REDUCTIONS

Sodexo first published its validated science-based targets in2019 when the company signed on to the Business Ambition
for 1.5°C commitment with a near term goal for 2025.
Subsequently, in 2023, Sodexo set and validated sciencebased Net Zero targets within a 2040 timeframe. These targets
include Scopes 1, 2 and 3 with ambitious decarbonation goals
for 2030.
Included in these targets are specific Scope 3 FLAG emissions(related to land-use changes and agriculture), a priority topic
for food services. Stopping deforestation is one of the key leversfor decarbonization as production of certain key commodities(palm oil, beef, etc.) is highly linked to this practice.
As methodologies became more refined for GHG accounting
over the years, the company updated its 2017 baseline to reflect
updates in the GHG protocol, ameliorations in data collection
at the local level, and scope changes in accounting for GHG in
the business.
Sodexo has already gone a significant share of the way
in reaching its climate objectives. Indeed, Scope 1 and 2
emissions were reduced by 33% since 2017 (and 41% on an
intensity basis, reflecting strong decarbonation efforts in direct
operations in parallel of economic growth in the company).
Moreover, Scope 3 emissions were reduced by 20.6%. Since
value chain related emissions represent 99% of emissions for
Sodexo, this has translated into an overall progress of 20.7% inemissions reduction on all scopes of carbon emissions.
Priority levers for decarbonization in the company include
actions to decarbonize the supply chain, shift to lower carbon
meals, use of renewable energy directly at client sites, andreducing waste with a particular focus on food waste.

The targets published by Sodexo aredisclosed in absolute terms, whichmeans that the company is dedicated toabating emissions regardless of its levelof economic activity.

•

Sodexo set their targets in 2019using a 2017 baseline and performs
a re-baselining yearly, as necessary– adjusting the emission figures forincreased accuracy.

•

So far, Sodexo has achieved an
overall reduction in its emissionsof 20.7%. This figure concerns
absolute emissions reduction on all
3 scopes.

•

Sodexo has published separate
Scope 3 targets for emissions linked
to Forest Land and Agriculture(FLAG) and for other value-chain
emissions.

•

Much of the Scope 3 emissions
reductions are linked to changes
in the supply chain and use of soldproduct emissions.

43

NEAR AND LONGTERM TARGETS
Saint Gobain has published targets bothfor the near and long term. To the extent
that objectives are met, this ensures thatthe rate of GHG emissions reduction iscompatible with a 1.5°C limit on climatechange.

Evolution of Scope 1, 2 and 3 GHG emissions
0,35

25

0,3
0,25

15

0,2

10

0,15
0,1

5
0

kgCO2/€

tCO2
MtCO2

20

0,05
2017

2018

2019

2020

2021

2022

0

Reading key

SCOPES 1-3 COVERAGE
Saint Gobain is committed tocontributing to net-zero both at the levelof its direct operations and its value
chain, as reflected by their targets on all
three scopes.

Scopes 1 + 2 (tCO2)
Scope 3 (tCO2)
Intensity (kg CO2/€ revenue)

1.5°C
NET ZERO BY

Saint-Gobain published its first approved science-basedtargets in 2019 after signing the Business Ambition for 1.5°C.
These targets were disclosed across the 3 scopes of GHG
accounting, and updated in 2022 to reflect Saint-Gobain’s
ambitions to adopt more ambitious intermediary objectives
for its transition.

ABSOLUTE GHG REDUCTIONS
The targets published by Saint Gobain
are disclosed in absolute terms, whichmeans that the company is dedicated toabating emissions regardless of its levelof economic activity. Carbon emissions
are also tracked on an intensity basis bycomparing total emissions to revenue
generated and EBITDA.

2050

The company’s pledge covers CO2 emissions as well as other
GHG such as SOx, NOx and other fine particles. The baseline
for emissions reduction is 2017, which is the first year forwhich Saint Gobain had a comprehensive inventory acrossall three scopes.

2030

The Scope 3 calculations for GHG emissions have been
progressively refined to include more of the emissions factors
for the company. The company now considers that more than
66% of emissions across its value chain are covered.

• Saint Gobain updated its targets inyear 2022. They cover a period goingfrom 2017 to 2050, with intermediaryobjectives.

Saint-Gobain’s commitment to both ambitious near and longterm absolute targets for GHG reductions has translated into
real action from the company on this issue.

• So far, Saint Gobain has achieved
an overall reduction in its emissions
linked to direct operations of 25%
since 2017. Scope 3 emissions grewover this period.

S1+S2: -33%
S3: -16%2050
S1+2: -90%*
S3: -90%*

Scope 1 and 2 emissions have already reduced in absolute
expression, providing a large reduction in the carbon intensityof Saint Gobain’s operations. This places them as a leader inthe construction sector, one of the most emissive in the world.
Different tools have been put in place to reach decarbonization
objectives. The group has produced a roadmap to be declined
at the level of its production sites. This approach is bolsteredby the use of an international carbon price, investment planand incentivization scheme to reach its objectives.

• The company is dedicating significant
resources (100M€ /year) to achieving
its 2030 and 2050 targets.
• Multiple tools are in use within
operations to incentivize thereduction of GHG emissions.

*Saint-Gobain is aiming to reduce its emissions by as close to 100% as possible. The 90% figure represents theminimum ambition set by the company for its decarbonization efforts.

WWF FRANCE 2024

NEAR TERM TARGETS
La Banque Postale has set near-termtargets for both its direct operations
and its lending and investing activities,
seeking to align with a 2°C trajectoryby 2025 and build to more ambitious
objectives following this date.

COMMERCIAL REAL ESTATE
2030: -36%/m2

EQUITY AND BONDS
S1+S2 2025: 2.2°C ITR
S1+S2+S3 2025: 1.9°C ITRMORTGAGE
2030: -46%/m2

LONG-TERM LENDING
S1+S2 2025: 2.3°C ITR

PROJECT FINANCE
2030: 100% renewables

PORTFOLIO COVERAGE
La Banque Postale has set
decarbonization targets over 85% of
its lending and investment portfolios,
thereby covering the great majority of
its financed emissions (Scope 3).

S1+S2+S3 2025: 2.1°C ITR

85% financial activity coverage

La Banque Postale has committed to aligning with a 1.5°C
trajectory in its direct operations and energy sourcing. Since
scopes 1 and 2 emissions represent only a minute share ofemissions at the bank’s level, this is complemented with
objectives on its financial activities. Thus, the bank has becomeof the first financial institutions of its scale to set and validate
science-based climate targets covering a large majority of its
financing and investment activities (85% coverage). Whilethese targets are not explicitly aligned with a 1.5°C maximumof climate heating objective, they set ambitious goals for the
decarbonization of different activity portfolios through 2025.
This helps to drive immediate action in the bank’s strategy now,
while preparing it for its 2040 net zero engagement taken with
the NZBA.
La Banque Postale has distinguished itself among its peers byadopting multiple constraining policies that will help it shift
away from fossil fuels and other carbon-intensive sectors.
LBP has placed objectives both at portfolio and sector levels.
This has resulted on strong exclusions in the fossil fuel sector,
whereby the bank possesses no portfolio exposition to coal,has declared that it will finance no upstream and midstream
oil & gas projects, and conditions any financial services to acommitment to end up- and midstream fossil fuel activities
by 2030.
The use of ITR targets for investment activities further ensures that
responsibility for transition planning is not only left to corporates
in LBP’s investment activities, but rather tracks the alignment of
the bank’s portfolios with a 1.5°C climate heating target.

ADAPTED TARGETS
La Banque Postale has set different
types of targets for its varied lending
and investment activities, which range
from intensity targets with associatedabsolute reductions (SDA approach) to
implied temperature rise (ITR) targets
for its equity & bonds as well as longterm lending portfolios. Project financeporfolios will only invest in renewableenergy at a 2030 horizon and beyond.

• La Banque Postale set its sciencebased targets in 2021 with a 2025
horizon for financial activities and2030 goal for direct operations.
• The bank has committed to ambitious
near-term targets that have sparked
meaningful engagements andexclusion policies to phase out fossil
fuels by 2040.
• Any activities or sectors not yet
covered by SBTs are adressed in thescope of LBP’s work with the Net Zero
Banking Alliance, and are based on
IEA net zero scenarios.
• The bank uses ITR rather thanportfolio coverage methodology for
its investment activities.

45

CONCLUSION AND NEXT STEPS
In conclusion, WWF recommends that the European Union
immediately recommends use of the SBTi by companies
and, in parallel, develops a methodological frameworkof reference building on the SBTi for corporate climate
target setting, which should become mandatory overtime. The CSRD has created new and important requirements
for companies, notably on transition plans developed by economic
actors to ensure their alignment with EU environmental and social
objectives – which should eventually be complemented with
CSDDD requirements. In the process of transition planning, target
setting is a critical exercise as it determines the level of ambition
that companies will dedicate to the transition of their businessmodels to align with the Paris Agreement. ESRS E1-4, along withthe associated application requirements and other elements of
ESRS E1 and ESRS 1, establish guidelines for setting and reporting
corporate climate targets.
However, it remains unclear whether relevant regulators andsupervisors and/or CSRD assurance providers will go beyond
mere compliance verification of disclosure requirements,

towards an assessment or certification of the relevance andcredibility of corporate climate targets. Demanding thatcompanies standardize their climate target-setting efforts in linewith the current highest standard for that purpose would ensurethat targets are indeed science-based and aligned with a 1.5°C
scenario. The SBTi currently represents this gold standard andprovides a solid basis for complying with all CSRD and related
ESRS requirements (as well as eventual CSDDD requirements)
related to climate target setting and reporting, sometimes going
beyond these regulatory expectations in alignment with WWF
target setting recommendations provided in the report. The
current market penetration of SBTi demonstrates that while
this may represent a challenge for some companies, widespread
adoption of such a standardized methodological framework is
possible and beneficial for all sectors and all sizes of companies.
WWF is publishing a series of reports around transition plansfor climate and nature, some of which were released prior tothis report. Other publications are planned throughout 2024
and 2025. These are detailed in the timeline shown below:

FRANCE

RECOMMENDATIONS FOR A CONSISTENT EUREGULATORY FRAMEWORK ONCORPORATE
CLIMATETARGETS

NATURE IN TRANSITION
PLANS: WHY AND HOW?

CORPORATE SUSTAINABILITYTARGETS AND TRANSITIONPLANS

ENSURING THE CREDIBILITY OF EU-REGULATEDCOMMITMENTSFEBRUARY 2024

How companies can consider climate and nature togetherin current transition planning

EU recommendationon corporates targets
and transition plans

Nature in transition
plans: why and how?

Corporate climate
targets

WWF EU climatetransition plans
assessment report

NOVEMBERJANUARYFEBRUARYSEPTEMBER

2022

2023

WWF report on
measurement, reporting andvalidation (MRV) systems
for climate commitments

2024

DECEMBERJANUARY

2025

MAY

OCTOBERWWF EU naturetargets report

WWF EU Naturetransition plans guidance

WWF’s criteria for

credible climate andnature transition plans
for financial institutions

Promote sustainable financeNovember 2022

Summary for policy makers
Transition plans are a vital tool that allows financial institutions andcompanies to set out clear and actionable steps to achieving sciencebased climate and nature targets, enabling the transition towards
sustainability across the whole economy.
The existence of credible transition plans for financial institutions will help alleviate concernsof greenwashing and provide forward looking information to a range of stakeholders
including governments, clients and portfolio companies, regulators and civil society.
This position paper presents WWF’s key criteria and expectations that make up a credible
climate and nature transition plan for financial institutions, including guiding principles andrecommendations.

2024 EU Elections© Getty Images / pidjoe / WWF-US

The EU can become the catalyst that kick-starts the world’s transformation to sustainable and inclusive
economies. Sustainable finance is a key lever, offering major opportunities for everyone.

WWF’s key criteria and expectations for credible financial institution transition plans are
as follows:
Ambition and Prioritization: commit to net zero in line with 1.5°C warming; setscience-based (interim) targets; identify high-impact decarbonization levers or
actions.
Nature and Just Transition: commit to nature-protection and restoration goals;
manage risks and opportunities of nature; capitalize on nature as a carbon sinkand resilience measure; enable a “just” transition.

WHAT WE NEED
1. Close gaps between EU sustainability reporting laws

Action and Implementation: adopt policies that commit to fossil fuel phase-out;scale up financing for climate and nature-based solutions; implement credible
engagement strategies and escalations processes.

2. Align transition finance with environmental objectives

Accountability and Verification: establish clear governance structures; seek
third party verification; transparently report on progress and results.

4. Improve investor due diligence and director’s engagement

Feedback and Flexibility: embed flexibility into implementation; ensurematerial updates inform future iterations of plans; enact clear adjustments if
there are deviations from targets.

5. Ensure retail finance policies foster sustainability

3. Integrate environmental risk into prudential rules

Policy makers, regulators and supervisors should consider the following WWF
recommendations:
1. By 2023, adopt legally binding science-based net zero and nature positive targets,
translated into publicly available sector-specific transition pathways.
2. By 2024, require financial institutions and large or listed companies to develop anddisclose science-based targets and credible climate and nature transition plans on a
mandatory basis.
3. Introduce targeted and coherent policy measures to help facilitate near term phaseout of high carbon activities, such as the development of market models to support
low-carbon technologies and the key inputs for those technologies.
4. Central banks, financial regulators and supervisors should utilize published transition
plans to assess the transition risk profile of surveyed financial institutions andcompanies; for example, instigating necessary adjustments to capital or liquidity
requirements.
© Paul Pastourmatzis / Unsplash

5. Establish independent transition plan verification bodies or processes to monitor andassess transition plans.

International WWF’s criteria
for credible climate andnature transition plans

WWF FRANCE 2024

INTRODUCTION
No sustainability economy exists without a sustainable financial system
A sustainable economy provides good quality of life for people, stays within the limits of the planet and keeps
global warming well below the 1.5°C threshold. Finance is a critical component of the EU and global economies.
With EU banks, investors, insurers and other financial institutions providing essential services and possessing
almost 4 times more financial assets than non-financial corporations, the financial sector is a key stakeholder
in the economy. We therefore need to build a sustainable financial system in order to achieve sustainableeconomies.

WWF Promote sustainablefinance 2024 EU ElectionAPPENDICES
1 - EU REGULATORY CONTEXT ON CORPORATESUSTAINABILITY REPORTING
The 2015 Paris Agreement set the stage for a coordinated global
effort to contain climate change due to anthropogenic emissions
to a maximum of 1.5°C. Since then, multiple countries and/or regions (the European Union, for example) have adopted
pledges to contain their greenhouse gas (GHG) emissions toa level compatible with the 1.5°C objective. If this represents
an encouraging starting point for a global transition toward
a decarbonized economy, uncertainties remain regarding theoperationalization of such engagements. Some of these concerns
relate to the capacity of economic actors to decarbonize theiractivities. In order to reach its ambition of net-zero emissions
by 2050, the European Union will have to spur private sector
companies into action as these undertakings contribute thelarge majority of GHG emissions to the region’s global budget
in this domain.
The EU has already started to drive ecological transition
efforts for economic actors through the development andimplementation of multiple legislative vehicles published in
the context of the EU Sustainable Finance Strategy - a core
strategic pillar of the EU Green Deal.
The legislation passed under this umbrella targets multiple typesof economic actors, from corporates to financial institutions.
Different foci, from GHG accounting standardization totransition plan design and implementation, are also containedin this broad-spanning legislative package. Such texts as the
EU Taxonomy, the Sustainable Finance Disclosure Regulation(SFDR) and the Corporate Sustainability Reporting Directive(CSRD) are creating a normative framework for transition
planning at the corporate and portfolio levels. Within thisframework, the CSRD specifically targets large companies
and seeks to standardize sustainability disclosures for EU
companies and foreign companies with significant activities
in the region.
The related European Sustainability Reporting Standards(ESRS), as a Delegated Act of the CSRD, establish specificallythe information to be disclosed by undertakings subject to the
CSRD. Among the ESRS, ESRS 1 establishes the rationale andgeneral principles for these disclosure requirements and ESRS
2 focuses on general strategy, governance and materiality issues
for companies. On the basis of the double materiality analysis
performed under ESRS 2, companies must report on thematic
ESRS which are material for their activities. Of the ten thematic

ESRS, ESRS E1, which focuses on climate change, is expected
to be applicable to a large majority of companies in the context
of global climate urgency.
Some of the key disclosure requirements in ESRS E1 concern
GHG accounting and target-setting. These topics are covered
specifically by disclosure requirements E1-4 - Targets related
to climate change mitigation and adaptation and E1-4 - Gross
Scopes 1, 2, 3 and Total GHG emissions. Complementary
information regarding these thematics exist in other ESRS,
other sections of ESRS E1, and in the Application Requirements
appendix of the ESRS E1. These normative efforts are essential
in the design of appropriate transition plans for companies,
as they set the stage for any strategy design targeted toachieve the 1.5°C objective of the Paris Agreement. Indeed,
a comprehensive and reliable assessment of GHG emissions
provides undertakings with a view on their current situationin terms of their contribution to climate change, while theestablishment of targets compatible with the EU’s net-zero by2050 strategy will determine the level of ambition necessary toalign themselves with EU objectives.
While the current legislation provides a strong basis for thenormalization of these elements, a legal framework dedicatedto proper GHG measurement, accounting and target setting is
still not developed at the EU level. Indeed, the ESRS indicate
certain elements necessary to design GHG inventories andtargets properly, and provides some guidelines and principles
to produce these properly; however, little guidance is provided
for the establishment of GHG accounting and target setting
standards fully compatible with the EU’s net-zero by 2050
objective, and more broadly with Paris Agreement ambitions.
In order to achieve these goals, it is necessary to move froman approach in which regulators verify the publication of GHG
inventories and targets by companies to an approach where thecontent of disclosed information is analyzed with regard to real
impacts on decarbonization of companies’ activities.

47

2 - DEFINING PRINCIPLES FOR GHG TARGET-SETTING
A - GENERAL

F - ACCURACY

The disclosure of GHG targets should be accompanied byelements allowing to contextualize and better understand theobjectives established by companies through the establishmentof such targets. The SBTi corporate manual, which provides
general guidance to companies for target-setting, anchors
its reporting principles in the GHG Protocol Corporate
Standard. This broadly-recognized framework guides thedevelopment of GHG inventories for companies, and the SBTi
recommends that the same deontological principles should
apply to the establishment of GHG targets. These principles
and their definitions are provided below, and completed witha last principle of verifiability, which seems essential for thesubsequent assessment and monitoring of GHG targets by third
parties (such as information users or assessors). Some of the
GHG protocol definitions have also been amended to reflect
best industry practices, and consideration of specific WWF
target setting recommendations.

Ensure that the quantification of GHG emissions is
systematically neither over nor under actual emissions, as far
as can be judged, and that uncertainties are reduced as far aspracticable. Achieve sufficient accuracy to enable users to makedecisions with reasonable assurance as to the integrity of thereported information.

G - VERIFIABILITY

Ensure the GHG inventory and associated reduction targets
appropriately reflects the GHG emissions and decarbonization
ambitions of the company and serves the decision-making
needs of users – both internal and external to the company.

Ensure the information required to assess the quality of atransition plan, including any quantitative or qualitative data
pertaining to the plan itself and inputs used to obtain it, iseither verified through third-party certification or verifiable
by potential information users. Different levels of certification
exist for extra-financial information - notably in the form oflimited or reasonable assurance issued by auditors external
to the undertaking. These assurances seek to attest to theconformity and sincerity of presented information, rather thanon the correctness of a given approach to sustainability withina structure. It is important to understand that while thirdparty assurance diminishes the risk of material misstatement,
it is generally not an indication of the quality of the actions
implemented in the context of a company’s transition plan orsustainability strategy.

C - COMPLETENESS

H - AMBITION

Account for and report on all GHG emission sources andactivities on the undertaking’s direct and significant indirect
GHG emissions (meaning Scope 1, Scope 2 and significant
Scope 3 emissions), and align GHG reduction targets with GHG
inventory scopes. Disclose and justify any specific exclusions.

GHG targets set by the company must be aligned with the 1.5°C
limit of temperature increase. The targets should be constructedin such a way that provides both short-term incentive for real
decarbonization of activities, and long-term transformational
potential for its business model.

D - CONSISTENCY

I - CONSERVATIVENESS

Use consistent methodologies to enable meaningfulcomparisons of emissions over time. Transparently document
any changes to the data, inventory boundary, methods, or
any other relevant factors in the time series. This also enables
information users to measure progress on GHG reduction
targets over time as compared to the selected baseline.

The scenarios, tools and methodologies used for target-setting
should be science-based and their quality and relevance broadly
recognized by institutions and policy makers. Conservative
estimates should be used when considering the inputs to GHG
target design by undertakings.

B - RELEVANCE

E - TRANSPARENCY
Address all relevant issues in a factual and coherent manner,
based on a clear audit trail. Disclose any relevant assumptions
and make appropriate references to the accounting andcalculation methodologies and data sources used. Clearly
identify the different scenarios used to establish GHG emissions
targets aligned with the 1.5°C limit of temperature increase.
WWF FRANCE 2024

3 - DETAILED BREAKDOWN OF SBTI COMPANIESPER COUNTRY AND SECTOR
140

Number of set near-term targets

120

100

80

60

40

20
Reading key

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Fig. A1: Repartition of validated climate targets by EU country and by sector

Transportation
services
Services
RetailPower generation
Materials
Manufacturing
Infrastructure
Hospitality
Food, beverage& agriculture
Biotech, healthcare & pharma

100

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Fig. A2: Repartition of committed climate targets by EU country and by sector

49

GLOSSARYGreenhouse gas (GHG): Gases that contribute to reinforcing
the greenhouse effect that is the key driver of climate change.
In the Kyoto protocol, the 6 identified greenhouse gases arecarbon dioxide (CO2), methane (CH4), nitrous oxide (N2O),
hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur
hexafluoride (SF6), nitrogen trifluoride (NF3).
GHG inventory: A greenhouse gas (GHG) inventory is a listof emission sources and the associated emissions quantified
using standardized methods.
Science-based GHG or climate target: Science-based
GHG or climate targets give companies a clearly-defined path
to reduce greenhouse gas emissions, typically in line with adefined objective such as limiting temperature increase to 1.5°C
in alignment with the Paris Agreement. They define how muchand how quickly a company must reduce its emissions to be inline with their stated goal.
Scope 1 emissions: Scope 1 GHG emissions occur from sources
directly owned or controlled by the company. For example, these
may include emissions from combustion in owned or controlled
boilers, furnaces, vehicles, etc. ; emissions from chemical
production in owned or controlled process equipment.
Scope 2 emissions: Scope 2 accounts for GHG emissions
from the generation of purchased energy (electricity, steam,heat or cooling) consumed by the company. Purchased energy
is defined as energy that is purchased or otherwise brought into
the organizational boundary of the company. Scope 2 emissions
physically occur at the facility where energy is generated.
Scope 3 emissions: Scope 3 emissions are a consequence of
the activities of the company, but occur from sources not owned
or controlled by the company. These emissions can occur either
upstream or downstream of the company’s value chain, andcover the following categories described in the GHG Protocol
Scope 3 Calculation Guidance.
Emissions factors: Emissions factors relate the amountsof greenhouse gases emitted by a business to a set amount ofactivity performed by that business.
Emission reduction factor: The emissions reduction factor
is the average percentage of decarbonization that needs tobe achieved year-to-year at the entity or sectoral level for acompany or a sector to be in line with a given climate objective- typically a maximum rise of 1.5°C in global temperatures.
Corporate Sustainability Due Diligence Directive(CSDDD): A planned European Union directive that should
create an obligation for companies to set up a human rights
and environmental due diligence process. Specifically, its
Article 15 would require companies to set a climate transition
plan including a target compatible with the 1.5°C limit oftemperature increase.
WWF FRANCE 2024

Corporate Sustainability Reporting Directive (CSRD):A European Union directive that creates an obligation for andstandardizes sustainability reporting for companies. This
directive notably includes obligations for the creation andpublication of climate targets and transition plans.
European Sustainability Reporting Standards (ESRS):The Delegated Act published to specify the CSRD. The ESRS
describe the different disclosure requirements imposed by
CSRD and provide technical guidance for the development
and communication around these sustainability informationand data points.
Science Based Targets initiative (SBTi): The Science
Based Targets initiative (SBTi) drives ambitious corporate
climate action by enabling businesses and financial institutions
globally to set science-based greenhouse gas emissions
reduction targets. SBTi develops criteria and provides tools
and guidance to enable businesses and financial institutions to
set GHG emissions reduction targets in line with what sciencetells us is needed to maintain a 1.5°C limit of temperature rise.
1.5°C-aligned or 1.5°C-compatible: In this report, theseterms are used interchangeably to signify that a given entity isplanning to decarbonize its activities in a way that is compatible
with limiting climate change at a level of 1.5°C with no or
limited overshoot. This implies that companies must consider
their own emissions trajectory based on absolute contraction
to net zero rather than plan their emissions reductions basedon what other actors or other sectors are planning in terms of
reductions (‘fair share’ effort).
Sectoral decarbonization pathway: In this report, sectoral
decarbonization pathways are the trajectories of emissions
reductions that actors in a given sector must follow to be alignedwith the 1.5°C upper limit on climate change. They outline theshare of the global remaining carbon budget allocated to a given
sector and calculate a GHG emissions reduction trajectory fromthis allocation.
Sectoral decarbonization approach (SDA): This SBTicreated methodology provides guidance for hard-to-abate
sectors to set intensity-based targets for their emissions
reductions. In this approach, companies in a given sector are
meant to reach a given level of emissions per unit of productionthat is common to all actors regardless of their starting point,and compares this to projected growth in the sector to check
whether intensity targets provided by a company are alignedwith the necessary emissions reductions to stay below the
1.5°C limit of temperature increase. Companies must calculate
the absolute emissions reductions implied by their intensity
targets, but do not have to disclose this volume publicly.

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