ABB, Climate Change, Net-zero commitment to include Scope 3 emissions
Details of engagement:
Since 2020, EOS has encouraged ABB to set a long-term ambition to reach net-zero value chain emissions by 2050, with science-based targets on Scope 3 product-use emissions in line with this pathway. EOS consider setting such targets a constructive practice for managing transition risks. The company’s sustainability strategy that was launched in 2020 had a target to reduce the carbon emissions of its customers by more than 100 megatons by 2030 but it appeared to be conservative. The company have also been asked to describe in a comprehensive transition plan the decarbonisation levers for tackling its Scope 3 emissions.
In 2021, ABB started to make progress with the validation by the Science Based Targets initiative (SBTi) for its 2030 targets to reduce absolute emissions by 80% for Scope 1 and 2 emissions, and the announcement of a 2030 target to reduce by 15% its scope 3 emissions. It also made a commitment that by 2030 it will completely electrify its vehicle fleet (EV100 initiative), source 100% of its electricity from renewable energy sources (RE100 initiative) and improve energy efficiency and productivity across its operations (EP100 initiative). ABB later joined the Business Ambition for 1.5°C campaign which required it to commit to achieving net-zero value chain emissions by no later than 2050, and to setting interim and long-term science-based targets aligned with this pathway across all relevant scopes. EOS met with the chair of the board in 2022 and he acknowledged the need to have greater focus on Scope 3 emissions.
Outcomes and next steps:
During a meeting with the head of sustainability in 2023, EOS was told that ABB had submitted updated targets to SBTi aligned with the new Net-Zero Standard of SBTi and this led to an increased focus on Scope 3 emissions. EOS attended the capital markets day later that year when the company announced 2030 and 2050 targets across all emissions scopes. These targets are aligned with a 1.5°C pathway and validation was obtained by the SBTi in 2024. ABB also announced a target for avoided emissions which is aligned with the latest guidance from the World Business Council for Sustainable Development (WBCSD).
EOS congratulated the new head of sustainability, and will continue to encourage the development of a roadmap explaining the key sources of emissions and the levers identified by the company to achieve its targets.
At time of publication ABB is held in our Global Sustainable Equity, Passive Developed Equities, CTB Passive Global Equities, PAB Passive Global Equities and Passive Smart Beta Equities portfolios.
