Science-Based Targets for Westpac
Point Advisory were approached by Westpac to develop their Science-Based Targets. These targets had to be in line with the level of decarbonisation required to limit human induced global warming to 2°C, as set out in the Paris Agreement. The CDP reports that 81% of Global 500 companies have set targets, and our client wants to be part of this commitment to demonstrate leadership, and to be transparent about how they measure and manage climate-related risks across the business.
We encountered a number of challenges during this engagement, particularly in relation to Scope 3 ‘financed emissions’ in the bank’s institutional portfolio. There are still diverging views about how these emissions should be quantified, and there is currently no science-based methodology for calculating emissions reductions targets for financed emissions.
Notwithstanding these challenges, we developed interim absolute targets for the financial institution starting from 2020 out to 2050. These targets were modelled using the latest version of the Sectoral Decarbonisation Approach Tool. We provided an indicative pathway for our client to follow to achieve these targets, based on achievable and cost-effective reductions to their ‘business as usual’ emissions trajectory. We provided our client with a tailored, interactive tool that could be used to assess the impacts of changes to the business on meeting their targets.
This process allowed our client to set ambitious targets for reducing their emissions over time, identified an emissions reduction roadmap to achieve these targets; and will be beneficial in kick-starting the process for setting science-based targets for financed emissions when a method is released.