BVCM is back

One of the very positive news in the new draft SBTi Net Zero Standard 2.0 is that beyond value chain mitigation (BVCM) is getting a revamp, with the SBTi preparing to offer recognition to companies taking responsibility for their ongoing emissions. SBTi, WWF, Gold Standard, New Climate Institute, Milkywire and others have been recommending a four-step approach for credible corporate climate action: 1.Setting targets and reducing emissions, 2. pricing remaining emissions, 3. Using the funds to finance climate action and then 4. Transparently report. Last year SBTi and Gold Standard/Milkywire published a detailed BVCM guide recommending companies to adopt this approach and offering guidance on how. The news is that SBTi is now moving from just recommending the approach, to offering formal recognition. This formal recognition has the potential to make a big difference. Milkywire has been pushing for the four-step approach above for four years now. We have had success, more than 20 partners support our BVCM solution the Climate Transformation Fund. But these companies are those that want to be forward-thinking climate leaders. They get it, and want to take responsibility for their emissions since it's the right thing to do, and because they want to do whatever is best-in-class. But experience tells us that without incentives, that group remains small. That goes both for carbon removal (CDR) and financing other climate solutions. Receiving formal recognition can help change this. The proposed updated SBTi BVCM approach would include companies reporting the financial contribution they have made to address ongoing emissions and a detailed description of the measures employed.

This can include different types of climate action, e.g. high-integrity carbon credit purchases, direct financing of mitigation projects, conservation efforts etc. This would then be validated by the SBTi. The details are to be fleshed out in consultation. The reason for including this is to incentivize companies to also help reach global climate targets. Our Milkywire Climate Transformation Fund was created for this purpose. To be a BVCM fund for best-in-class companies to fund external projects that maximize long-term impact towards global net zero. We supported 49 projects in over 20 countries with more than 14 million USD since the start in 2021. Backed by companies like Klarna, Spotify, Mentimeter and Biogaia. We look forward to helping more companies make an impact, and also to help them get recognition for it.  The SBTi differentiates between taking responsibility for ongoing emissions and residual emissions. Ongoing emissions are all the greenhouse gases a company causes on its net zero journey. All companies need to reduce emissions, but most can also take financial responsibility for what they are emitting. Residual emissions on the other hand are those that persist after net zero is reached, to be counterbalanced with permanent carbon removal. 

CDR Targets for residual emissions

The new standard also includes significant updates on removals, including a proposed requirement to start buying CDR. In a separate post, Robert Höglund, Milkywire's Head of CDR & Climate Strategy, analyzed the implications for the removal sector. Milkywire recently published a white paper on Corporate target setting for removals. Our key recommendations for companies with a net zero target include estimating their total long-term CDR needs for reaching net zero targets and setting near-term and long-term targets to scale up towards that. We also recommend companies to consider using an internal carbon fee to finance both CDR and other BVCM actions, adjusting it over time as targets evolve. Companies that support the Climate Transformation Fund are supporting an appropriate scale up of CDR as well as supporting other climate solutions. 

April 3rd we will arrange a webinar to discuss CDR target setting with Schneider Electric, Salesforce, WBCSD and Klarna. Register here.