‍What is a BVCM strategy & how does it contribute to climate mitigation?

In a BVCM strategy, companies provide finance for scalable solutions, including activities that avoid, reduce, or remove GHGs but do not count as reductions in a company’s emissions inventory. These activities can range from high-integrity natural or technical removal credits, financing of permanent reductions, or conservation on natural carbon sinks. Beyond broader climate goals, these strategies enable companies to take responsibility in the near term, as advised by corporate target setting standards such as SBTi’s recent Corporate Net Zero Standard.

Integrated into the world of CO2 credits, a BVCM pledge may look closer to a contribution strategy, compared below:

• Compensation: a strategy in which carbon credits offset specific emissions in a company’s value chain (e.g., addressing residual emissions in Net Zero goals).
• Contribution: a strategy where corporations purchase units to support the development of essential solutions. This allows them to take meaningful action on their ongoing emissions, even though these activities do not directly reduce or offset their own Scope 1, 2, or 3 emissions. 

Overall, BVCM helps close the gap between ambitions and actual implementation, catalyses immediate mitigation, and accelerates global climate efforts by securing finance for emerging solutions. Without additional financing of mitigation measures today, climate action lags–risking even a 2°C target. In the long-term, solutions including technologies or natural ecosystems that enable permanent reductions and removals may lack the necessary gigatonne scale for a 2050 net zero deadline.

For further reading on creating and implementing a BVCM pledge: https://www.klimate.co/insight/science-based-targets-releases-guidance-on-beyond-value-chain-mitigation

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Who engages with BVCM and why?

Organisations with net-zero targets and those seeking to take immediate responsibility for emissions beyond their value chains are the primary groups engaging with BVCM. Companies engage with BVCM for several reasons:

• Urgency of climate action: BVCM allows companies to act on ongoing emissions even when direct reductions are not yet possible.
  
  
• Demonstrating climate leadership: For net-zero target setters and early adopters of climate strategies, BVCM provides a strategic way to show commitment to long-term emissions reductions.
  
  
• Credibility and responsibility: Organisations want to take responsibility for their ongoing emissions, building credibility in their climate actions.
  
  
• Mitigating greenwashing risks: Separating contribution strategies from core emissions inventories enables clearer reporting and more credible climate commitments.
  
  
• Scalability of solutions: BVCM offers a flexible approach, making it suitable for both organisations just starting their climate journey and those with ambitious, long-term sustainability goals.
  
  

For many, the tangible benefits of contribution strategies are already becoming clear, reinforcing BVCM as a critical element of a comprehensive corporate climate strategy. 

”Our customers are striving to reduce emissions within the value chain. In addition to that, they also make an effort to remove emissions outside their value chain as a supplement to the reduction journey. Because we work with afforestation, which is both a measurable AND noticeable climate action, the investment is not only tied to the sustainability or finance department, but also often in HR, Marketing and Sales.” says Poul Erik Lauridsen, CEO Klimaskovfonden

Still, clear incentives and mechanisms for a wide-spread BVCM adoption are needed now. To this end, SBTi’s latest guidance may address adoption delays by providing clear instructions and recognition for organisations going above and beyond with BVCM. 

Case Study: national climate commitments and local benefits in Denmark

BVCM strategies align with broader climate goals by supporting local afforestation projects in Denmark. With the Danish government aiming to plant 250k hectares of forest by 2045, companies can contribute to national climate commitments while enhancing local ecosystems. Klimaskovfonden’s tree planting projects offer tangible benefits, from carbon storage to improved biodiversity and water quality, making them a prime example of a high-quality BVCM project.

Supported by science-based frameworks like SBTi and Gold Standard, these initiatives show how BVCM can drive both global and local impact.

How will SBTi incentivise widespread adoption of BVCM?

Negative emissions pathways are increasingly central to corporate climate strategies, and SBTi’s latest guidance reinforces this by highlighting the need for removals, alongside other near-term mitigation actions, to ensure the 'net' in net zero. The guidance urges companies to act now to integrate removals into their near- and long-term strategies, in particular through use of Scope 1 neutralisation and beyond value chain mitigation.

This draft standard clarifies multiple aspects regarding corporate near-term action:

1. This draft acknowledges the urgency of addressing emissions released into the atmosphere today and the critical role that companies can play in mobilising finance for mitigation activities beyond their value chain.
2. Since ongoing emissions are a primary driver of negative climate impact, it is crucial for companies’ credibility to take responsibility for them.
3. The SBTi aims to incentivise companies to take responsibility for the impact of ongoing emissions by providing optional recognition for these actions.

This degree of recognition has the potential to create wide-spread BVCM adoption from both SBTi target-setters and beyond by standardising science-backed best practices for investment. With this increased visibility of contribution actions and products, we anticipate that contribution products will increasingly gain a footing and recognition in the voluntary CO2 market in the coming years.

Still, without broader requirements for BVCM or removals across all industries, demand generation could stall. This could work against the noted ambition gap recognised by the scientific community. The question remains if companies are both knowledgeable of the need and ready to act, otherwise the demand levers of a ‘gold star system’ to recognise leadership may not be strong enough. To combat this, a stronger clarification of the link between BVCM strategies and corporate responsibility is essential from frameworks such as SBTi.

Driving value through climate action.

As further climate regulations change, BVCM will become increasingly relevant in demonstrating commitment to real, impactful climate mitigation while mitigating greenwashing risk. Already today, contribution approaches that follow leading frameworks remain popular to boost company reputation and climate leadership.

The characteristics of a strategic contribution strategy include:

• Support scaling of both nature-based and engineered carbon removal solutions with synergies across biodiversity and local communities.
• Provide flexible investment opportunities outside the direct scope of emissions, broadening the scope of corporate engagement.
• Separate reporting inventories of overall decarbonisation and other financial contributions allow clear communication of progress with key stakeholders and audiences.

The growing importance of BVCM in bridging the climate action gap is made clear by it’s rise in climate reporting frameworks such as SBTi. This strategy unlocks massive potential for companies to drive both immediate and long-term mitigation outcomes through strategic BVCM investments–and speed up action even while other levers may slow down. One thing is certain–deploying climate finance to help reach our broader goals is possible today and an essential element of corporate climate action.

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Links for further reading:

https://www.klimaskovfonden.dk/blog-carbonmarked (in Danish)

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About the partnership: Klimate has partnered with Klimasovfonden as a provider of high-quality contribution credits associated with afforestation projects here in Denmark.