New Releases of the SBTi
Back in autumn 2022 the Beyond Value Chain Mitigation (BVCM) guideline was announced by the Science-Based Targets Initiative (SBTi) and now it is finally here, serving as a further cornerstone of the SBTi Corporate Net Zero Standard. In February 2024 the SBTi published two BVCM reports:
- Above and Beyond: An SBTi report on the design and implementation of BVCM
- Raising the Bar: An SBTi report on accelerating corporate adoption of BVCM
The first report (Above and Beyond) is especially designed for companies as a guide for designing and implementing a BVCM strategy to accelerate the progress towards global net-zero. It provides a step-by-step guide in making a BVCM pledge, recommendations and best practices examples. The second report (Raising the Bar) focuses on a broader aspect. It explores the incentives surrounding BVCM within the holistic climate landscape, encompassing stakeholders such as civil society, academia, policymakers, standard setters, advocacy groups and multilateral organizations.
Later on, will go into the first report in more detail as it addresses the BVCM strategy at company level.
BVCM according to the SBTi
Being one of the four key elements of the Net Zero Standard BVCM is defined as “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.”[1]
BVCM does not reduce the companies’ scope 1, 2 or 3 emissions and therefore is not reduction action for the set targets. However, BVCM plays an important role allowing companies to help accelerate the global net-zero transformation by enabling other economic and social actors to avoid, reduce or remove greenhouse gas (GHG) emissions. Companies can deliver BVCM through a range of instruments including through the purchase and retirement of high-quality carbon credits and direct investments (e.g., equity, debt or project finance).
For more information see our other blog post: Why Beyond Value Chain Mitigation (BVCM) is essential to achieve our climate goals
Above and Beyond: developing a BVCM strategy
BVCM actions allow companies to take responsibility for unabated emissions that continue to be released into the atmosphere as they progress towards the delivery of their SBTs. For designing a BVCM strategy the SBTi defined two major goals and four supporting principles
Goals:
- Deliver additional near-term mitigation outcomes to achieve the peaking of global emissions in the mid-2020s and the halving of global emissions by 2030
- Drive additional finance into the scale-up of nascent climate solutions and enabling activities to unlock the systemic transformation needed to achieve net-zero by mid-century globally
Principles:
- Scale: Maximize mitigation outcomes e.g. having lover abatement costs due to improving energy efficiency
- Financing need: Focus on underfinanced mitigation e.g. support mitigation projects that need financing due to limited return on investment, have longer payback periods or higher investment risk
- Co-benefits: Support the Sustainable Development Goals (SDGs) e.g. secure water life and biodiversity through the protection and restoration of coastal ecosystems and urban nature-based solutions
- Climate justice: Address inequality e.g. deliver mitigation in lower, more vulnerable countries
Steps for developing a BVCM strategy
- The first step is s to set and disclose a validated net-zero climate target in line with the SBTi’s Corporate Net-Zero Standard and to develop an associated climate transition plan. To do this, the company must first calculate a carbon footprint. On this basis, a net-zero target can be defined and a climate transition plan can be developed.
- The second step is all about the BVCM pledge. First the company has to define its strategic objectives and determine BVCM activities that match with the business model. Each BVCM activity can unlock opportunities, minimize future risks and protect and enhance the company’s long-term value. Further, as with the SBTs a timeline should be set and the scale of the BVCM pledge needs to be defined. Since all efforts in reducing emissions are welcomed by the SBTi the company can choose what works best with its own strategy.
- In the third step the company should define quality standards and supporting manuals for evaluate BVCM activities and investments. Based on this, a portfolio of suitable BVCM activities and investments can be created. The SBTi recommends aligning the defined standards with the SBTi’s BVCM Goals and Principles. Other frameworks such as the SDGs can also be used as a guide.
- In the final step the BVCM activities and outcomes are reported. For doing this, the SBTi recommends to develop a framework to measure, report and verify the mitigation outcomes as a result of BVCM funding over a period of time. These outcomes can be verified by an independent third-party. The reporting should transparent and accurate regarding BVCM claims and should be on an annual basis as is the case with SBTs.
Further remarks
The Above and Beyond Report sets out suggestions to support the BVCM recommendation of the SBTi Corporate Net-Zero Standard (see Recommendation 9 (R9) in the SBTi Standard) and to provide companies with ideas how to design and implement BVCM strategies.
Currently, the SBTi does not have plans to validate BVCM claims, particularly given that others are already working to define BVCM-related claims, including the Voluntary Carbon Market Integrity Initiative (VCMI). Nevertheless, during the SBTi Net-Zero target validation process it is possible to inform the SBTi about current or planned BVCM actions. However, these actions are not mandatory in order to obtain a validated Net-Zero target.
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[1] https://sciencebasedtargets.org/resources/files/Above-and-Beyond-Report-on-BVCM.pdf
