New guidance from SBTN on setting science-based targets for nature

On 10 July 2024, the Science Based Targets Network's (SBTN) released its guidance on setting science-based targets for nature (the “Guidance”), which provides a structured and comprehensive guide for businesses aiming to set nature-based targets and to better understand a company’s impacts and dependencies on nature. 

Based on a corporate pilot programme that commenced last year and finished in June 2024, the Guidance includes technical guidance and resources for companies to use in setting science-based nature targets, and also sets out best practices for preparing these, such as: developing a nature strategy with clear definition and ambition; coordinating with internal stakeholders; understanding the data and tools available for use and setting a dedicated budget and realistic timeline, including dedicating time to engage with local stakeholders.

The Guidance currently relates to freshwater and land only.  However, further technical guidance in relation to the ocean is under development and is expected to be available in 2025. The SBTN also plans to announce further results from the pilot later this year, and to use the findings to shape the next iteration of guidance for corporates on nature target setting.

Whilst the Guidance is voluntary, there are nuances in the terminology used throughout, for example the terms “required,” “shall,” or “must” indicate what is required for targets to conform with the criteria, whereas the terms “recommended” and “should” indicate a recommendation, but not a requirement.

The Five-Step Approach

The Guidance recommends a five-step approach to navigate a company’s impacts on nature. This involves:

1. Assessing impacts on nature: Use the Guidance to get an understanding of the environmental materiality of a company’s activities and the state of nature associated with its value chains.
   • This involves a materiality screening to identify whether a company’s economic activities are material on eight “pressure categories” (i,e. LULUC; freshwater ecosystem use and change; marine ecosystem use and change; other (biological) resource use; soil pollution; water pollution; water use; greenhouse gas emissions) using the SBTN’s “Materiality Screening Tool” and also a value chain assessment based on the activities and pressures that were determined to be material in the materiality screening. This will help to determine how healthy or fragile the state of nature is in operating and sourcing locations. 
   • Identifying high-impact commodities and mapping value chain activities is crucial in setting effective science-based targets. By evaluating their operations closely, firms can uncover the commodities and activities that pose a significant threat to biodiversity.
2. Interpreting and prioritising activities by their impacts on nature – The Guidance defines the spatial areas where targets will be set and prioritises among them based on environmental and other factors.
   • Once a company has estimated the environmental pressures that result from its activities, as well as the state of nature in its value chain locations, this second step aims to enable companies to prioritise by weighing its identified pressures against the health (or fragility) of the environment in each value chain location. This is done by ranking all locations in a company’s target boundaries by how important it is to act in each one, and then to define a shortlist of top-priority locations for initial target setting.
3. Measuring, setting and disclosing targets and the progress against them – This involves firstly calculating the baselines of targets. The Guidance currently only covers freshwater and land and enables the setting of specific targets such as Water Quantity, Water Quality and Land Footprint Reduction targets. Once methods for setting targets for ocean realm pressures are developed, targets for this should be set and disclosed also. Technical guidance on this is currently expected in 2025 and SBTN has confirmed that this will cover three specific targets: (i) Avoid and Reduce Overexploitation target; (ii) Protect Marine Ecosystems target; and (iii) Protect ETP Species from Fishing Impacts target.
4. Acting: Guidance on the type of actions that can be taken to reach targets set is still in early development and is expected to be available in 2025.
   • The Guidance also refers to the “AR3T” framework that was introduced in the SBTN’s Initial Guidance for Business in 2020, which underscores the need for businesses to 'Avoid' and 'Reduce' pressures on nature, 'Regenerate’ and ‘Restore’ natural ecosystems, and 'Transform' the underlying dynamics that boost nature degradation.
5. Tracking: Guidance on the Measurement, Reporting and Verification (MRV) expectations to be followed is also in early development and is expected to be available in 2025. SBTN is also developing claims guidance which aims to describe the claims language that can be used after targets are validated.

The SBTN guidance breaks down each step by task, making it accessible for companies to follow. Once the first three steps described above have been completed a company can submit to the Accountability Accelerator (who is currently setting up the validation service)  for independent validation, before implementing steps 4 (Act) and 5 (Track). Validation of science-based targets is an independent process involving expert review of corporate submissions, ensuring they meet all requirements outlined in the SBTN methods. Governance for the validation process is under development and is expected to be launched later in 2024.

The Guidance indicates that companies should recalculate targets at a minimum of every five years to ensure consistency with the most recent science and best practices. Examples of changes which could trigger a target recalculation include significant: (i) changes in a company’s structure and activities; (ii) adjustments to baseline(s) resulting from data quality improvements or changes in data sources or calculation methodologies; or (iii) changes to growth projections used in the target language for intensity targets. 

A 5% change is the stipulated threshold to trigger a target recalculation, which is aligned with best practice in GHG accounting, reporting. Target setting and targets should be recalculated and revalidated within a maximum of one year from the moment the change or adjustment occurred.  

To comply with the Guidance, public reporting and disclosure of a company’s pressure indicators and progress against published targets is required on an annual basis. However, there are no specific requirements regarding where progress should be disclosed save that it should be publicly available, for example in standardised, comparable data platforms such as CDP’s Water Security and/or Forests annual questionnaire, through annual reports, sustainability reports, or on a company’s website.

Fostering Collaborative Action: Stakeholder Engagement

The Guidance acknowledges the critical role of collaboration, particularly with stakeholders such as Indigenous Peoples and local communities. By engaging with these groups, the Guidance advises that businesses can build holistic and inclusive strategies that pave the way for collective sustainability efforts and that key resources such as the UN Guiding Principles on Business and Human Rights can help to guide these engagements.

For more information on biodiversity and nature-related issues for businesses and how Linklaters can help, see our Biodiversity and Nature page.