road through forest

Science Based Targets Releases Guidance on Beyond Value Chain Mitigation

The Science Based Targets Initiative (SBTi) has released updated guidance on Beyond Value Chain Mitigation (BVCM). This refers to actions outside your value chain that accelerate global climate goals towards net zero, but do not result in reducing or offsetting Scope 1, 2 or 3 emissions.

After first introducing the concept of BVCM, SBTi has researched its potentials and pathways including a survey of target setting companies and public consultation that we, at Klimate, contributed to.

It is clear that companies have a role to play in financing urgent climate action. The updated guidance from SBTi confirms this, encouraging companies to invest in climate mitigation, through carbon removal, alongside their science-based targets.

What are SBTi and BVCM?

  • SBTi: The Science Based Targets initiative is a body that defines and promotes best practice in science-based net-zero target setting followed closely by thousands of companies. It is a convergence of groups including non-for-profit Carbon Disclosure Project, UN Global Compact, World Resources Institute and World Wide Fund for Nature.
  • BVCM: Beyond Value Chain Mitigation, mitigation action or investments that fall outside a company’s value chain, including activities that avoid or reduce GHG emissions, or remove and store GHGs from the atmosphere. It is a strategy described by SBTi (and others, such as Gold Standard) that calls for more urgent climate action in order to reach our common climate goals.
net zero graph showing the need for carbon removal

Why should companies invest in BVCM?

According to the IPCC, there is no longer a realistic pathway to reach our climate goal of limiting warming of 1.5 or even 2 degrees C without carbon removal. But, the current rate of scaling CDR is not yet at the trajectory needed in the coming decades to bridge the gap of emissions.

This is where BVCM comes in, encouraging climate action for short-term, immediate mitigation, to funnel investment to scaling the necessary solutions.

An introduction to the new BVCM guidance

Releasing a report and accompanying research paper titled “Above and Beyond” and “Raising the Bar,” this updated guidance from SBTi includes support on the design and implementation of BVCM, as well as incentives and opportunities for accelerating widespread corporate adoption.

The main goals of these publications are twofold:

  1. To catalyse immediate mitigation outcomes
  2. To promote the scale-up of emerging climate solutions

What emerging climate solutions should be considered within a BVCM pledge? “Above and Beyond” offers four initial categories, or portfolio principles, that should be followed in the implementation steps below. These include maximising mitigation outcomes, focus on under-financed opportunities, support for sustainable development goals (SDGs), and climate justice.

How to implement BVCM alongside your net zero strategy

Implementing a BVCM strategy alongside your net zero target allows your company to take immediate action to further mitigate the impact on climate change that comes from your ongoing emissions. It involves three specific steps:

  • Pledge: determine strategic direction and define a time period, recommended 5 years or greater.
  • Act: design a portfolio of activities and investments, ensure you meet minimum standards (Like IVCVM Core Carbon Principles), pay and publicly disclose.
  • Report: establish annual cycle, verified by a third party, and comply with local existing standards (such as CSRD).

four step diagram for beyond value chain mitigation
Image Credit: Above and Beyond: An SBTi Report on the Design and Implementation of Beyond Value Chain Mitigation

What does SBTi say about carbon dioxide removal? 

SBTi’s inclusion of carbon removal investment within the BVCM framework is expansive compared to the previously defined role of CDR–a final stage action to neutralise unavoidable emissions. Now, it could open the door for more companies to get involved in carbon markets today, rather than waiting until all possible reductions have taken place.

SBTi builds the business case for carbon removal:

CDR reduces costs in damages of climate change, reflecting the CSRD approach of double materiality.
It helps companies secure and maintain investment, talent, and brand trust. 
To build a future-proof brand, you must get involved in the necessary process to scale and develop the market, specifically of durable solutions, to meet future demands.
The above framing of CDR is critical for the development of carbon markets as it lays out a credible path for companies to invest in carbon removal while they work on their short and long-term net zero target. Beyond this, it reflects the needs and aims of the carbon removal market today–this being the investment to scale and develop removal solutions to meet future demand.

But, this guidance is non-prescriptive, meaning sustainability leaders must to choose their own path for BVCM, depending on what is right for their company, and accomplish strategic goals rather than numeric targets. This puts the onus on companies to develop this in addition to their short-term and long-term net zero targets and general reduction efforts.

By leaving relatively open pathways of adoption and choices for investment, it could lead decision makers away from financing the ‘most necessary solutions’ deemed by the IPCC and SBTi and instead go for lowest-possible price point avoidance or renewables. Or, the lack of decisiveness could cause a sort of choice-paralysis, leading to a further stall in investment. Helping companies define BVCM targets and implementation plans can help avoid these pitfalls.

windmills in the ocean

How do SBTi’s Key Principles line up with Klimate’s Approach?

The guiding principles for BVCM are highly aligned with our own approach, where activities must meet minimum standards of integrity and quality including ensuring additionality, permanence, and avoidance of leakage and be verified by a third party. And, any adverse social and environmental effects must be safeguarded against.

Support for projects through BVCM can help scale carbon removal projects - both nature-based and engineered approaches - and provide much needed support in the early years. This helps increase the likelihood of reaching the necessary capacity needed for near-term and long-term net zero targets. It also detaches the investment from specific accounting exercises, which increases the flexibility for companies to engage in these type of projects. This also opens up for larger and broader types of investments from more companies, while reducing the risks of greenwashing coming from unsubstantiated carbon neutral claims tied to specific scopes.

–Simon Bager, Phd and CIO of Klimate

The updated BVCM toolbox will likely accelerate corporate adoption and implementation of this approach, meaning forward-thinking companies will need to update and align this guidance with their current sustainability aims. As this is still voluntary, it means that companies must be able to see the value in going “above and beyond” the required investments. The coming months and years will show whether the new guidance provide enough incentive to encourage this.

Nonetheless, the new BVCM guidance is a huge step in the right direction, as it provides companies with tangible guidelines for how to invest in projects that remove carbon from the atmosphere, while simultaneously working on their reduction efforts. All in all, this should lead to less carbon in the atmosphere, which is the ultimate goal.

Curious about how to implement a BVCM pledge alongside your overall sustainability strategy? Speak to a carbon removal strategist to learn more about the many relevant BVCM approaches to CDR.

For further reading, head to the SBTi website: https://sciencebasedtargets.org/news/the-sbti-releases-new-reports-to-help-accelerate-corporate-climate-action-beyond-the-value-chain