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The scope of corporate carbon reduction mandates continues to expand, with the Science Based Targets initiatives (SBTi) releasing two new reports on Feb. 28. These reports offer clearer guidance for companies to reduce the greenhouse gas (GHG) emissions beyond the value chain (Beyond Value Chain Mitigation, BVCM). Analysts believe that this move will contribute to ensuring the legitimacy of carbon offset usage and reducing controversies related to greenwashing.
BVCM refers to mitigation actions or investment conducted outside the corporate value chain or business activities. It encourages companies to invest beyond their internal decarbonization efforts, including initiatives such as expanding carbon removal and storage, reducing methane emissions, and eliminating industrial gas emissions. The goal is to achieve a gradual decline in global emissions after reaching a peak in the mid-2000s and to halve emissions by 2030.
One of the reports is titled “Above and Beyond: An SBTi Report on the Design and Implementation of BVCM.” This report provides strategies and methods for companies to implement the BVCM and features case studies of four companies from various industries. These companies include the U.S. food and beverage enterprise Umbrella Corporation, Brazilian technology firm Rede Camp, Japanese software startup Pikatto, and Indian private equity fund Vihaan Ventures. The report offers industry-specific recommendations based on these examples to accelerate the global achievement of net-zero emissions.
In that report, SBTi puts four key principles, including:
- Scale: Maximize mitigation outcomes
- Financing need: Focus on underfinanced mitigation
- Co-benefits: Support the SDGs
- Climate Justice: Address inequality
The other report is “Raising the Bar: An SBTi Report on Accelerating Corporate Adoption of BVCM”, delves into the specific research findings discussed in the previous report. It explores the incentives and barriers associated with the adoption of BVCM, highlighting factors influencing this adoption include non-governmental organizations, academic institutions, legislators, regulatory bodies, advocacy groups, and multilateral organizations. The report aims to provide a comprehensive understanding of the challenges and motivations for companies in embracing BVCM.
In October 2021, SBTi announced the Corporate Net-Zero Standard, providing companies with a scientific framework, standards, and recommendations to control global temperature rise within 1.5°C. BVCM was identified as one of the four key elements, alongside setting near-term targets, establishing long-term goals, and neutralizing residual emissions. This standard aims to guide and assist companies in their efforts to contribute to climate change mitigation and align with the goal of limiting global temperature increases.
SBTi emphasizes that BVCM doesn’t directly assist companies in reducing carbon emissions within Scope 1, 2, and 3. Instead, it plays a role in helping other economic and social participants to prevent, reduce, remove GHG emissions, and most importantly accelerate the global transition to net-zero emissions. However, SBTi acknowledges that a verification plan for BVCM has not yet been developed.
Despite the acknowledgement from SBTi about the lack of a verification plan for BVCM, the non-profit organization Carbon Market Watch believes that the new reports provide positive assistance to companies incorporating carbon credits into their climate strategies and reduce corporate inaction on greenwashing issues.
The organization’s chief expert, Gilles Dufrasne, stated that “By encouraging companies to set a science-based carbon price for their internal emissions and use the funds for short-term, quantifiable, long-term climate actions, SBTi explicitly states, ‘corporate finance for broader climate action is direly needed,’ and ‘This initiative should not be equated with or considered to meet the company’s internal decarbonization goals.’ In the current absence of a more idealistic global carbon tax system, such initiatives that stimulate private investment should be encouraged.”
