Beyond Value Chain Mitigation

• By taking science-backed actions to support global net zero goals as you work to decarbonize, your company can position itself as a climate leader – delivering competitive and reputational benefits. BVCM is recommended by the most respected climate NGO: The Science Based Targets Initiative (SBTi), which drives ambitious climate action in the private sector by enabling organizations to set emissions reduction targets in line with the science. SBTi recommends that while companies decarbonize their own emissions to achieve corporate net zero targets, they should also deliver beyond value chain mitigation (BVCM) to speed up the global transition to net zero.

• Combine high-quality carbon credits and innovative climate solutions to reach global net zero, unlock new innovation and revenue streams for your business, and help reduce emissions in areas that are harder to decarbonize.
• Have your climate program recognized as contributing to wider societal climate action alongside internal reductions to achieve net zero. This can be done through claims for BVCM such as The Voluntary Carbon Markets Integrity Initiative (VCMI)’s Carbon Integrity, which provides guidance for companies to make credible claims about their voluntary use of carbon credits.

No. SBTi will not validate BVCM claims, as other organizations are working in this space. However, companies are encouraged to transparently report their BVCM activities, detailing the nature of their investments and the estimated impact on global climate mitigation efforts. To enhance credibility, companies should seek external audits or certifications for their BVCM claims rather than relying on self-declared statements.

On the journey to Net Zero, SBTi highlights the need to deliver near-term mitigation outcomes as well as funding innovations for long-term outcomes. Near-term mitigation outcomes can be supported by purchasing and retiring high-integrity carbon credits, which should be verified by independent third parties using standardized carbon methodologies to meet recognized high-quality standards.

The long-term outcomes for funding new climate solutions can include CDR technologies, nature-based solutions, research, innovation, and policy-making. While it is understood that these are harder to quantify, it should still demonstrate how they support overall efforts to achieve Net Zero.

In addition to reducing internal emissions, companies can purchase carbon credits to offset their current CO2 emissions by investing in projects that remove or reduce an equivalent amount of CO2 from the atmosphere. This allows for immediate action within a company’s value chain while planning long-term decarbonization. Although carbon offsetting alone won't solve climate change, it is a crucial tool on the path to net zero.

The aim of the BVCM framework is to provide a structure for both near-term and longer-term action; both of which are needed to keep us on track to achieve Net Zero globally. SBTi recommends that corporates allocate part of the BVCM budget annually to purchase high-quality carbon credits to cover at least 50% of remaining Scope 1, 2, and 3 emissions (near term action); and finance climate innovations (longer term).

Insetting and BVCM represent two different initiatives that can be complementary in a company's overall climate strategy but fundamentally different in how they work.

• Insetting works towards supply chain decarbonization and corporate-level net zero: Insetting focuses on reducing emissions within a company's own value chain or supply chain. These projects directly reduce Scope 1, 2, or 3 emissions and are included in the company’s greenhouse gas inventory.

• BVCM works towards global net zero and societal decarbonization: BVCM refers to climate action taken outside of a company's value chain, including purchasing carbon credits or investing in innovative solutions. These actions are not included in the company’s Scope 1, 2, or 3 emissions inventory and do not count toward near term Science-Based Targets reductions.

Read here for a case study about how Bettys & Taylors (Yorkshire Tea) funded agroforestry and cookstoves projects within the tea farming communities it sourced from.

A ‘science-based carbon price’ should be applied annually or over a five-year pledge period to set the budget for addressing unabated Scope 1, 2, and 3 emissions. SBTi outlines several methods for companies to put a price on carbon:

• Ton-for-Ton: Linking BVCM actions to unabated value chain emissions. For each ton of carbon dioxide equivalent (CO2e) emitted, the company commits to mitigating an equivalent amount outside its value chain.
• Money-for-Ton: Applying an internal carbon price to unabated value chain emissions. A predefined carbon price is applied to the company's unabated GHG emissions over a defined period. The company then invests an equivalent amount of money into BVCM activities.
• Money-for-Money: Linking BVCM to a portion of revenue or profit. The company pledges to invest a certain percentage of its annual revenue or profit into BVCM activities, regardless of its direct emissions.

SBTi has a slight preference for the ton-for-ton method when considering which method would deliver the greatest climate impact and best reflect corporate climate leadership. However, civil society organizations, research and academia, and climate-focused consultancies and solution providers are more in favor of the money-for-ton method.

The four principles for making a BVCM pledge are:

1. Scale: to maximize mitigation outcomes
2. Financing need: to focus on underfinanced mitigation
3. Co-benefits: to support Sustainable Development Goals (SDGs)
4. Climate justice: to address inequality

The four principles are designed to guide companies in pursuing high-impact and high-integrity BVCM activities and investments. They relate to how well a company can explain and justify its actions and their potential impact. For example, you can show the challenges of funding difficult R&D projects.

While there is no specific criteria for each principle, the SBTi does provide helpful guidance on each principle – learn more here. In addition, validation of these principles is not required, it is self-defined.