Climate Targets: Intensity-Based vs Absolute-Based
In the pursuit of sustainability, setting clear and measurable targets is essential for driving meaningful progress. These targets not only help businesses reduce their environmental impact but also provide valuable insights for investors, researchers, and innovators looking to support sustainable solutions. Understanding intensity-based and absolute-based targets equips a wide range of stakeholders—from academics to startups—with the tools to assess progress, make informed decisions, and drive impactful change.
This article explores these two critical approaches within the Greenhouse Gas (GHG) Protocol framework, offering actionable insights for anyone looking to strengthen their climate strategies and align with global sustainability goals.
Understanding the Basics
What are Intensity-based Targets?
Intensity-based targets measure GHG emissions relative to a unit of economic output, such as revenue, production volume, or energy generation. Rather than focusing on overall emissions reductions, these targets prioritize efficiency, allowing businesses to grow while reducing their emissions per unit of output. This approach is particularly advantageous for companies in high-growth industries or those with fluctuating production levels, where maintaining a balance between expansion and sustainability is critical.
The key characteristics of intensity-based targets highlight their adaptability and effectiveness for industries experiencing growth and fluctuating outputs, as follows:
- Relative Measurement: Emissions are calculated proportionately to a specific metric (e.g., CO2 per $1 million in revenue or per megawatt-hour of energy).
- Flexibility for Growth: Businesses can expand operations without breaching sustainability commitments as long as efficiency improves.
- Sector-Specific Applications: Best suited for industries where output scales rapidly or varies significantly, such as manufacturing and energy.
- Benchmarking and Comparison: Facilitate comparisons across similar businesses by normalizing emissions based on output.
ConocoPhillips, a leading international energy company, is a notable example of this approach. They have set ambitious intensity-based targets to reduce their GHG emissions. The company aims to decrease its GHG emissions intensity by 50% to 60% by 2030, using a 2016 baseline. This target focuses on reducing emissions per unit of production, allowing ConocoPhillips to align its environmental objectives with business growth. The company plans to achieve this through various initiatives, including enhancing energy efficiency, minimizing flaring, and investing in low-carbon technologies.
What are Absolute-based Targets?
Absolute-based targets focus on reducing the total volume of GHG emissions a company produces, regardless of changes in output or revenue. These targets are rooted in the need to lower overall emissions to align with global climate goals, such as limiting global warming to 1.5°C above pre-industrial levels. Unlike intensity-based targets, absolute-based targets prioritize the total reduction of environmental impact, making them a critical component for achieving long-term sustainability.
The defining characteristics of absolute-based targets underscore their role in driving substantial environmental change:
- Total Reduction Focus: These targets emphasize cutting total emissions, measured in absolute terms, such as reducing total CO2 emissions by 25% over a decade.
- Growth with Emissions Constraints: Unlike intensity-based targets that allow growth through efficiency gains, absolute targets require that any expansion directly contributes to lowering total emissions. This means that growth strategies must be carefully planned to avoid increasing overall emissions.
- Relevance and Comparability Across Industries: While applicable to all sectors, these targets are especially significant for industries with substantial carbon footprints, such as energy, real estate, and transportation. Their absolute nature makes it easier to compare environmental performance across different industries.
- Impact-Oriented Accountability: By focusing on tangible reductions in total emissions, absolute-based targets demonstrate a clear commitment to reducing environmental impact—an approach that resonates with regulators, investors, and the public.
Maersk, a global leader in shipping and logistics, provides a clear example of absolute-based targets aimed at reducing total emissions across its operations. With a baseline year of 2022, Maersk has set ambitious targets to achieve a 35% absolute reduction in Scope 1 and Scope 3 emissions from its container shipping operations, 100% reduction in Scope 2, and a 22% reduction in total Scope 3 emissions across its value chain by 2030. These targets align with the 1.5-degree pathway outlined in global climate agreements. To achieve these reductions, Maersk is transitioning to alternative fuels, such as green methanol, for its fleet, while redesigning its operations to optimize energy use.
Choosing the Right Target
Selecting between intensity-based and absolute-based targets is a strategic decision influenced by a company’s objectives, industry characteristics, and growth trajectory. Intensity-based targets are particularly beneficial for businesses in rapidly growing sectors or those with fluctuating outputs, as they emphasize efficiency improvements without restricting operational expansion. These targets allow companies to scale while maintaining their commitment to sustainability.
Conversely, absolute-based targets are better suited for organizations in sectors with stable growth or industries where a direct reduction in total emissions is essential, such as transportation or energy. These targets reflect a commitment to achieving tangible environmental outcomes, often aligned with science-based reduction goals or net-zero ambitions.
A frequent challenge with intensity-based targets is their potential to obscure overall emission increases during periods of significant growth. For example, a company may lower its emissions per output unit while its total emissions rise due to increased production. To mitigate this, organizations can combine intensity-based targets with absolute benchmarks, ensuring both efficiency and overall reductions are addressed. Another challenge lies in setting overly ambitious targets that may appear unattainable, ultimately undermining stakeholder trust. To avoid this, companies should rely on robust data, realistic projections, and incremental milestones to build credibility.
Decision Matrix: When to Use Intensity vs. Absolute-Based Targets
| Criteria | Intensity-based Targets | Absolute-based Targets |
|---|---|---|
| Industry Growth | Suitable for high-growth sectors with fluctuating outputs. | Ideal for industries with stable or declining growth. |
| Focus Area | Emphasizes operational efficiency and emissions per unit of output. | Prioritizes total emissions reductions, independent of output. |
| Examples of Industries | Manufacturing, energy, and technology sectors experiencing rapid expansion. | Real estate, transportation, and heavy industries with significant carbon footprints. |
| Alignment with Climate Goals | Addresses efficiency improvements but may require supplementation with absolute targets. | Directly aligned with science-based and net-zero commitments. |
| Key Advantage | Allows flexibility to grow operations while improving efficiency. | Demonstrates a strong, tangible commitment to reducing environmental impact. |
| Potential Pitfalls | May obscure total emissions increases during growth. | Can appear rigid or overly ambitious without careful planning and incremental milestones. |
Pros and Cons: Comparing Intensity-Based and Absolute-Based Targets
| Aspect | Intensity-Based Targets | Absolute-Based Targets |
|---|---|---|
| Growth Flexibility | Pros: - Allows businesses to expand operations as long as emissions intensity improves. - Adaptable for sectors with fluctuating outputs. Cons: - Total emissions may still increase with growth. |
Pros: - Ensures that any growth is offset by actual emissions reductions. - Directly contributes to overall environmental improvement. Cons: - Can constrain expansion, requiring significant emissions cuts for any growth. |
| Measurement & Benchmarking | Pros: - Normalizes emissions based on output, enabling comparisons within similar sectors. Cons: - Relative metrics can mask rising total emissions over time. |
Pros: - Provides a clear, tangible metric of total emissions reduced. - Easier to compare performance across industries, regardless of scale. Cons: - Less flexible in accommodating growth without additional reductions. |
| Operational Impact | Pros: - Encourages continuous improvements in efficiency and process innovation. Cons: - May allow for efficiency improvements even if the overall environmental impact is not reduced. |
Pros: - Demonstrates a firm commitment to lowering environmental impact, resonating with regulators and stakeholders. Cons: - Often requires more drastic operational changes and higher upfront investments. |
Scenario Spotlight: Ms. Garcia’s Dilemma
Meet Ms. Garcia, the CEO of a mid-sized manufacturing company striving to balance profitability with environmental responsibility. Her team faced a significant challenge: deciding whether to adopt intensity-based or absolute-based targets. On the one hand, the company needed a strategy that could accommodate its rapid growth and fluctuating production levels. On the other hand, there was a strong desire to establish a long-term commitment to reducing its overall environmental footprint.
To navigate this dilemma, Ms. Garcia and her team began by conducting a comprehensive emissions baseline assessment. This involved using tools from the GHG Protocol to measure their current Scope 1, 2, and 3 emissions, providing a clear picture of where the company stood. They then compared their data against industry benchmarks to identify gaps and opportunities for improvement. Recognizing the need for a structured approach, they turned to the GHG Protocol’s decision matrix to evaluate which type of target would best suit their operational realities and sustainability goals.
The result was a dual-target strategy. For the short term, the company adopted intensity-based targets, focusing on improving efficiency while supporting its growth trajectory. They committed to reducing emissions per unit of production by 20% within three years, leveraging energy-efficient technologies and optimizing processes. Simultaneously, they set absolute-based targets to achieve a 50% reduction in total emissions by 2030, ensuring their overall environmental impact would decrease regardless of production levels.
This strategic approach proved successful. Within three years, the company improved its operational efficiency by 15%, significantly reducing its emissions intensity. At the same time, their commitment to absolute reductions positioned them as a leader in their sector, earning recognition for their proactive ESG strategy and boosting stakeholder confidence.
By combining thorough analysis, structured decision-making, and a phased implementation, Ms. Garcia’s company demonstrated how businesses can align short-term operational needs with long-term environmental commitments.
Unlocking Opportunities for Sustainable Growth
Sustainability targets go beyond regulatory compliance—they drive innovation, resilience, and leadership in an evolving landscape. Organizations, investors, and policymakers that align their targets with global climate goals can unlock opportunities for growth, credibility, and long-term impact. Whether it’s responding to increasing consumer demand for sustainable solutions or addressing investor expectations for ESG performance, setting clear and transparent targets strengthens trust and enables meaningful progress.
Adopting intensity-based or absolute-based targets isn’t just about meeting obligations—it’s about building a future-proof strategy that supports a low-carbon economy. By leveraging tools like the GHG Protocol and setting actionable, science-driven goals, organizations can contribute to real, measurable climate progress.
Ready to Begin Your Journey?
Take the first step in setting impactful sustainability targets with the right tools and insights. Explore Tracenable’s Climate Targets Data Product Factsheet to access climate targets from over 5,000 companies worldwide. Whether you're a business, investor, or sustainability professional, understanding industry benchmarks and best practices will help you align with global climate goals and build trust with stakeholders.
