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Lindsey Hall: Hi. I'm Lindsey Hall, Head of Thought Leadership at S&P Global Sustainable1.

Esther Whieldon: And I'm Esther Whieldon, a Senior Writer on the Sustainable1 Thought Leadership team.

Lindsey Hall: Welcome to ESG Insider, an S&P Global podcast, where Esther and I take you inside the environmental, social and governance issues that are shaping the rapidly evolving sustainability landscape.

Esther Whieldon: Climate Week is taking place in New York City from September 22 through 29. This annual event has taken place for more than 1.5 decades, and it's a big week for the sustainability world. Thousands of stakeholders come together for hundreds of events across the city.

Lindsey Hall: All this week, Esther and I are in New York covering a lot of these events. Today, I'm talking with Sue Jenny Ehr. She is the Interim CEO of the Science Based Targets initiative or SBTi. SBTi is a nonprofit that develops standards, tools and guidance to allow companies to set greenhouse gas emissions reduction targets in line with what's needed to keep global heating below catastrophic levels and to reach net zero by 2050 at the latest.

Sue took on the interim CEO role just a few months ago after the former CEO stepped down for personal reasons. That change in leadership came at a time that SBTi faced controversy related to its net zero standard. I asked Sue about this and more.

Here's our conversation from Climate Week NYC. By the way, I sat down with Sue on the sidelines of The Nest Climate Campus. ESG Insider is an official podcast of this three-day event. Okay. Here's Sue.

Sue Jenny Ehr: My name is Sue Jenny Ehr, and I'm the Interim CEO at the Science Based Targets initiative. The SBTi is responsible for helping companies, corporates and financial institutions to set greenhouse gas emission reduction targets in line with net zero 2050. And I was working as the Head of Legal for the organization, and I've been asked to step in as the interim CEO until we find an awesome new CEO from the organization.

Lindsey Hall: Okay. I'd like to know a little bit more about that because this is still fairly recent, this change. When did you take on the role? And what has happened in that intervening period?

Sue Jenny Ehr: Oh, thank you for your question. I took on the role in July. And what I'm really fortunate to be in charge of, shall we say, an organization with just a plethora of really capable, keen, enthusiastic climate scientists and professionals who are really, really committed to SBTi's mission and vision.

So my role has been to try and help the organization as we -- well, we started as an initiative hosted by five partner organizations. And as there has been an incredible demand for our services in helping corporates and FIs to set targets, we felt, and our partners supported in this, that it would be important to be independent. And so we are still in the process of finalizing spinning out from our five partner organizations.

And so my principal focus and priority is to make sure that process is completed and we turn to the next stage, which is an independent NGO, which was incorporated in the U.K. in June of 2023 and received its charity status in September of 2023. We have incorporated a trading subsidiary to deal with the validations side of the house. And so once we finalize that independence, we will then be starting to work on how the standard-setter charity parent operates separately from the validation trading company subsidiary but still is synergistic and we leverage the expertise that we have across the organization.

Lindsey Hall: Okay. Thank you for that background. I think a lot of our listeners will be interested in this sort of behind the scenes. We hear a lot about SBTi, but for anyone who's not familiar, can you just explain a little bit more about how the business is set up?

Sue Jenny Ehr: Absolutely. I can give you more detail. So the five organizations are We Mean Business, World Wildlife Foundation, World Resources Institute, CDP and the United Nations Global Compact, and so with the real need to address climate change by helping companies set these targets for greenhouse gas emission reduction. These partner organizations supported us as an initiative, and they are also now supporting us as we spin out to independence.

And what does that mean? Well, it's a process. But for now, once we finalize the transaction, we will have the standard-setting part of the organization, which is setting standards and guidance for companies who are going to be developing targets. And that is in the charity parent. And then in the trading subsidiary, we have a target validation and target operations team, which actually then help the companies set the targets and validate the targets.

Lindsey Hall: How is SBTi used by companies? Can you just give us like a little bit of very plain English explanation, help our listeners who don't know understand that?

Sue Jenny Ehr: Okay. So I'm company A, and I look around and I see, goodness gracious, we've got environmental issues. We need, for maybe part of our ESG report, to be able to demonstrate that we're actually thinking about these issues and then we're addressing them. Well, one good way to do that is set a target with science-based targets. And the way you do that, the way one can do that is contact our validations team, and they will provide the documentation.

They'll sit down and talk to you about, what sector are you in? What do you need? What are your ambitions? What is the business footprint? Where do you see your greenhouse gas emission challenges? And then we work with them, and also we rely on the standards and the guidance that may relate to their particular sector or the Corporate Net-Zero Standard, which is our sort of umbrella standard. And then we help them put together the target and set the target, and off they go.

Lindsey Hall: Okay. And I mean on the face of it, like having a science-based target sounds much better than having a not science-based target. What does that mean? Why would someone opt not to have a science-based target?

Sue Jenny Ehr: Well, if you don't have a science-based target, you can do kind of whatever you want, right? But it may not get you to a place where you're actually going to, as an organization, reduce your greenhouse gas emission in line with net zero 2050. What the science of Science Based Targets initiative is that we have developed standards pursuant to which the targets are set by an individual company that are scientifically demonstrated to result in reduced greenhouse gas emissions when applied appropriately.

Lindsey Hall: Okay. And so the work that you do, it really touches on all different sectors, all different kinds of companies. Tell me more about sort of who you work with in the corporate and financial institution space.

Sue Jenny Ehr: Certainly. Well, right here right now, we are in the process of a revision of our flagship Corporate Net-Zero Standard. We're also in the process of revising our Financial Institutions Net-Zero Standard. Those are the sort of the umbrella or the overarching standards that can be applied by companies and inform their setting of targets. But we also then have sector-specific targets that provide additional guidance for companies in a particular sector.

Lindsey Hall: Okay. Yes. I'd like to dig in on this. I think a lot of our listeners may have heard or read some of the headlines around when there was first this discussion about revising the Corporate Net-Zero Standard. What should our listeners know about how that discussion is playing out, this process to revise your Corporate Net-Zero Standard?

Sue Jenny Ehr: Well, how we're revising the Corporate Net-Zero Standard plays well into what I talked about, the process of formalizing the organization and setting up specific structures. So as we envisaged, how are we going to be setting standards as an independent, robust, transparent organization? We developed a standard operating procedure for the development of standards, which went into effect at the end of 2023.

And that provides for a very, very clear-cut, transparent way of developing standard, which includes input from stakeholder groups and the Technical Council, which is an independent body of experts that we have set up to help inform and approve our standards as they are developed.

Lindsey Hall: Okay. And so what should our listeners understand about how you're navigating sort of the views of that technical group and the employees at SBTi? And also, I imagine you're still getting input from some of your partner organizations as you're transitioning into independence.

Sue Jenny Ehr: Well, right now, the revision of the Corporate Net-Zero Standard is in the research phase. And for example, in the end of July, the organization published three papers specifically around Scope 3, which Scope 3 addresses the aspects of a company's emissions that relate to their supply chain. So if you think about it, 75% of average company's carbon footprint is related or comes from their supply chain.

So we published a paper on that. We also published a paper on environmental attribute certificates and some additional research. And these are now out. They're published on our website. You could go and read them tomorrow if you'd like to. And they form then an opportunity for others to put input. I think October 4 is when we sort of closed the time for input on those particular papers. And we continue to move forward and continue to look to various stakeholder groups to continue to get their input on the development of the standard.

Lindsey Hall: Okay. Anything you can say in particular about how SBTi is thinking about offsets as it relates to the Corporate Net-Zero Standard? Or is that still TBD?

Sue Jenny Ehr: That's still TBD. It is part of the information and the research that is being gathered. No decisions have been made. And any decisions that are made will be informed by the standard operating procedure for the development of standards, which involves the input of our Technical Council.

Lindsey Hall: Okay. And so as I'm just trying to think through the next steps or as we're trying to understand the next steps, it sounds like October 4 is when that comment period closes.

Sue Jenny Ehr: For just those papers, but we're still in the research phase.

Lindsey Hall: Okay. And so what are you looking forward to in the next couple of months? What should we expect for the remainder of 2024 from SBTi, would you say?

Sue Jenny Ehr: Continued diligent pursuit of ensuring that we develop the Corporate Net-Zero Standard in line with our standard operating procedure for the development of standards. This is, as far as I'm aware, I think this is correct, the first standard that we are doing from beginning to end under this new standard operating procedure for the development of standards, which is a very rigorous, very clear and fabulous really way of making sure that we are developing a standard that is rigorous, transparent and involves the input of a variety of stakeholders but really relies on the expertise of the Technical Council, of course, as well as our really top-notch group of internal -- our technical team is just excellent, and they are very, very devoted to the development of the standard.

Lindsey Hall: You've mentioned a couple of times the standard operating procedures. What should I understand about that? What should we know about what's involved in that?

Sue Jenny Ehr: Well, the standard operating procedure for the development of standards, available on our website if you'd like to read it, does provide for what needs to be done from the time a standard is just a twinkle in somebody's eye until it is finally approved, the final version is approved by the Technical Council and then validated by the Board of Trustees.

Lindsey Hall: Okay. So a lot of different steps, a lot of different stakeholders. You mentioned your background was in the legal side of the business. How have you brought those skills to bear in the interim CEO role?

Sue Jenny Ehr: One of the things that's really key in an organization, as we spin out from five partner organizations who have provided guidance for us on our journey, is to make sure that as we set up and as we put into place our structure that it is put in place with the appropriate robust corporate governance and that we put in place policies, processes and procedures that are fit for purpose for an organization of our size and level of development. And I'm absolutely passionate about that.

Lindsey Hall: I can see that. That passion comes across for sure. As you're thinking about your own career path, is this something that you expect to be in this interim role long term? Or do you have a sense of what the selection process will be for the permanent CEO?

Sue Jenny Ehr: Well, what I can say is I am only serving as the interim CEO. I think it's really important when an organization is looking for a new CEO like we are, and we're going to get somebody who's really awesome, that I can tell you, we need to ensure that in that interim phase, we have a person who is, shall we say, leading the ship or captaining the ship, who is really focused on keeping the organization moving forward, staying aligned, ensuring that the staff are informed and there's effective communication and we're all working together. And I think if that interim CEO is also looking at potentially a role as the CEO on a longer-term basis, then that important focus is lost.

Lindsey Hall: Okay. So that makes a lot of sense. I mean you have a big job to do kind of bringing along all these stakeholders in this transitional -- what sounds like a kind of transitional period.

Sue Jenny Ehr: Definitely transitional period. And I look at it, if we want to put it in very simple terms, setting the table for the new CEO.

Lindsey Hall: So as we talk about the next couple of months then, what are the big challenges that you see and also the big opportunities on the horizon?

Sue Jenny Ehr: The big challenges are following completion of the spinout from our partner organizations, making sure that as we set up as, as I said, the charity parent with the trading subsidiary, with the validation services, that we utilize all of our very capable staff appropriately and allocate the resources in a way that leverages the talent across the organization but respects the separation between the two functions. That's the challenge.

Lindsey Hall: That's the challenge, yes.

Sue Jenny Ehr: The opportunity is finally being independent from our partners who have been absolutely fantastic to us as we've grown, then looking forward to, now we're on our own, what can we do? We've got lots of opportunities. We've got lots of options. And that, to me, is the real -- the opportunities that we have in the next few months.

Lindsey Hall: Okay. This might be kind of a basic question, but what does that independence grant you? Are there things you'll be able to do with that independence that you can't do currently?

Sue Jenny Ehr: Well, that's a very good -- yes, that's a good question. I guess it's really we are making the decisions within the organization, and we are responsible for those decisions. We can't just say, oh, well, if it doesn't work out, our partners will help us out. They still will continue to be supporting of us of our mission and our vision but in an indirect way. And we are now responsible to ensure that we take the organization forward and address the real demand in the market for setting targets and for helping corporates and financial institutions to address their greenhouse gas emission reduction.

Lindsey Hall: Thank you very much. Sue, before we go, anything that I haven't asked about that you wanted to touch on or you think is important for our listeners to understand about SBTi and sort of the journey that you're on?

Sue Jenny Ehr: All I can say is that we are absolutely committed to continue to work to help corporates and financial institutions to set greenhouse gas emission reduction targets in line with 2050. And we want to ensure, as we become more formal and structured and robust and scale up, that we continue to listen to what the climate community needs and do our best to address those needs.

Lindsey Hall: Okay. And those needs that you're talking about, are those the needs of this climate science community? Are those the needs of the institutions or companies that use the SBTi standards? Or is it sort of all-encompassing? Tell me more.

Sue Jenny Ehr: I think it's all-encompassing. But at the end of the day, if we aren't really listening to what corporates and financial institutions need, we won't be able to be in a position to provide the relevant standards for them to be able to reduce their greenhouse gas emissions in line with 2050. At the same time, as you rightly point out, we need to listen to the science and the science of the community to make sure that we are setting standards that are robust enough to get us to net zero 2050.

Lindsey Hall: Okay. Wonderful. Well, thank you so much for sitting down with me. It's a pleasure to meet you, and I hope you have a great Climate Week.

Sue Jenny Ehr: Thank you so much. Thank you so much for your time.

Lindsey Hall: So as you can hear, there's a lot to look forward to in the days ahead.

Esther Whieldon: Please stay tuned as we bring you more special coverage from Climate Week NYC.

Lindsey Hall: Thanks so much for listening to this episode of ESG Insider. If you like what you heard today, please subscribe, share and leave us a review wherever you get your podcast.

Esther Whieldon: And a special thanks to our agency partner, The 199. See you next time.

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