The world is about to breach the critical global warming threshold of 1.5°C – and the private sector needs to act now. In 2021 the Science-Based Targets initiative (SBTi) put forward a concept for addressing climate protection projects beyond a company’s own value chain – by supporting external climate protection projects, for example. These complement the scientifically-founded targets for reaching net zero emissions and the plans that a company adopts to meet these targets by reducing emissions from its own activities and within its supply chain.
The SBTi’s Corporate Net-Zero Standard is becoming increasingly relevant. It was developed by the SBTi following a broad-based public consultation process. Two studies on beyond value chain mitigation (“Raising the Bar” and “Above and Beyond”) were published in March 2024. The Gold Standard, along with independent market observers Carbon Market Watch and the NewClimate Institute, have also picked up on the BVCM concept, discussing it and examining it at greater length in their own publications (all studies mentioned in this section are included in the list of sources at the end of the article). Below we provide answers to the key questions about BVCM.
In its “mitigation hierarchy”, the SBTi sets out the measures that companies should consider and prioritise in a climate strategy. It takes a four-step approach: setting 1) short- and 2) long-term science-based targets (SBTs), 3) BVCM, and 4) neutralisation (see graphic). There is a comprehensive description on the page What are science-based targets (SBT)?
Measures beyond the company’s own business activities (BVCM) are explained in the graphic below under point 3 (light blue).
Many companies have put the focus on decarbonisation (points 1 and 2 in the graphic above) in their own business activities, and of course they are correct to do so. But reducing your own climate footprint is usually a demanding and often protracted process. But until these climate protection measures are completely and effectively implemented over the long term, greenhouse gases are still being pumped out all the time. Financing measures beyond the company’s own business activities (BVCM), on the other hand, generally has an immediate impact. And supporting global climate targets is the order of the day. In its report “Above and Beyond”, the SBTi also highlights two clear goals that should be supported with BVCM:
See also the next section and Why should companies support climate protection projects?10 good reasons (points 2 and 3).
In short, financing external climate protection measures (BVCM) should ideally complement comprehensive internal reduction efforts.
But what do BVCM measures actually entail? They could include activities for preventing or reducing greenhouse gas emissions, or for removing and storing GHGs from the atmosphere.
Today, this largely means purchasing CO₂ certificates, and in doing so financing climate protection projects. There are numerous such projects and they often have an immediate impact while at the same time improving biodiversity, increasing quality of life for local populations, and contributing to the UN’s Sustainable Development Goals (SDGs). And there are many other reasons why contributions to credible, audited climate protection projects at an advanced stage of development are important, and why they should be seen as part of a comprehensive climate strategy.
But the BVCM concept goes even further. In the area of mitigation, a company could for example also invest in direct air capture and storage (DACS) and geological storage of CO₂. Or it could finance climate adaptation measures or resilience projects. Or activities that are more likely to have a medium to long-term impact, such as advocacy or education projects and research and development (R&D). Although these are not certified, in the best case they are quantified or accompanied by qualitative monitoring. A corresponding catalogue of requirements is currently being drawn up by various organisations, including the WWF and SBTi.
The company can finance funds for these purposes, both internal and external. What matters is the externality – in other words, that these climate protection activities are carried out beyond the company’s own business activities and contribute to global climate targets. It is also crucial to maximise the transparency of project implementation, such as financial flows or monitoring in external communication. And that not only the net-zero targets are pursued, but that SDGs are also supported - in other words, that not only the climate, but also people and nature benefit from the projects. .
Below, the term “BVCM measures” should be taken to mean, specifically, climate protection projects on the voluntary carbon market. On the one hand, this is because climate protection projects have the advantage that they meet most requirements of the BVCM concept – including quantifiability, impact, scalability and additional benefits (SDGs). And on the other, because myclimate doesn’t offer other BVCM options, such as DACS.
The Gold Standard foundation was established by civil society institutions and the United Nations, and it registers and verifies most myclimate projects. In its guidelines “Funding beyond value chain mitigation. Step by step guidance for organisations taking responsibility for their emissions” it recommends a four-step process, which myclimate also recommends to its own clients. The four steps are:
These four steps are aligned with the SBTi (Above and Beyond), the WWF’s pioneering 2020 work as well as the NewClimate Institute. his alignment points to a strong consensus emerging among civil society institutions on how organisations should address their unabated emissions. The Gold Standard also emphasises that this four-step process guarantees a credible, integrated climate protection commitment that will boost the company’s reputation:
These steps collectively empower organisations to contribute significantly to global net zero efforts, affirming their commitment to responsible and sustainable business practices. This, in turn, enables them to present their efforts to stakeholders, such as consumers and investors as credible and distinctive from their competitors.
As the above shows, most companies finance BVCM by supporting climate protection projects from certified partners like myclimate with a financial contribution. The amount of this financial contribution is usually determined using one of the following three approaches. Companies are free to choose the approach that best suits their corporate objectives, their industry and the available resources.
Companies support climate protection projects with a contribution that corresponds with its carbon footprint in a certain period. Just a few years ago this approach was known as “offsetting” or “climate neutrality”, whereas now we refer to climate protection financing or contributions.
Example: Company A emits 2,000 tonnes of CO₂ per year and supports climate protection projects with a contribution that removes emissions from the atmosphere or prevents them in the same amount. The exact amount of the support should be aligned with the price per tonne of CO₂ which is removed, reduced or avoided by the climate protection project in question.
Companies determine a reference price per tonne that is multiplied by the volume of emissions. Along with the support of climate protection projects, this approach also serves as a financial incentive for companies to keep their emissions as low as possible. Ideally, this kind of internal carbon pricing has an influence on employees in decision-making positions by steering them towards more climate-friendly products and production processes.
Example: Company B decides to pay EUR 100–200 per tonne of CO₂ emitted into an internal climate fund, from which BVCM measures are financed.
Companies invest a proportion of their revenue or profit in BVCM measures. This approach links the amount of the climate protection investment to the financial performance of the company. This makes money-for-money a highly flexible approach.
There are numerous different ways that companies can get active and work with their employees as well as their customers for the protection of the climate. We have already mentioned the importance of a solid BVCM strategy. Calculating and reducing the company’s own emissions, optimising the value chain and educating employees are important and effective measures. Through transparent communications, companies also appear more credible to their clientele (see box).
Five steps to effective, successful climate protection:
Determine your own CO₂ emissions and identify effective levers
Optimise your value chain and reduce your carbon footprint
Train employees and get them involved
Finance climate protection projects to implement BVCM
Communicate climate protection efforts credibly and transparently, and where possible report on them
Companies can also decide from the outset to adopt a holistic climate strategy This forms the basis for a strategic anchoring of climate protection within the company.
Our guided tour or free tour vividly illustrates numerous other opportunities, both large and small, for tangible climate protection action within companies.
Sources:
SBTi Corporate Net Zero Standard v1.2, SBTi, March 2024
Above and Beyond – An SBTi report on the design and implementation of beyond value chain mitigation (BVCM), SBTi, February 2024
Raising the Bar – An SBTi Report on accelerating corporate adoption of beyond value chain mitigation (BVCM), SBTi, February 2024
Credible Climate Claims in a post-offsetting world – Frequently Asked Questions, Carbon Market Watch, February 2024
Funding Beyond Value Chain Mitigation, Gold Standard, March 2024
A Blueprint for Corporate Action on Climate and Nature. WWF, December 2020.
A guide to climate contributions. Taking responsibility for emissions without offsetting. NewClimate Institute, 2023.
