The Urgency to Decarbonize

The global community is perilously near to exceeding the 1.5°C limit established by the Paris Agreement, and time is running out to avert dire consequences related to climate change. To remain on course, the private sector must act with urgency and commitment in its efforts to reduce carbon emissions.

Numerous companies are already taking steps to minimize emissions across their operations and supply chains by following an approach that emphasizes direct emission reductions first. Nonetheless, certain emissions are inevitable. This is where the concept of Beyond Value Chain Mitigation (BVCM) becomes essential. According to the framework provided by the Science Based Targets initiative (SBTi), BVCM refers to mitigation actions or investments made outside a company’s direct value chain. This includes activities designed to avoid or decrease greenhouse gas emissions or those that focus on capturing and storing these gases from the atmosphere.

BVCM and Corporate Responsibility

With the recent release of SBTi’s Corporate Net-Zero Standard v2, BVCM is officially recognized as a vital tool for companies to address their remaining emissions while also expanding climate finance. One impactful way for companies to engage beyond their own operations is by investing in and supporting high-quality carbon projects. Voluntary carbon markets (VCMs) function as a crucial avenue for directing private sector funding toward significant climate initiatives.

Understanding Carbon Credits

At their essence, carbon credits signify the reduction or removal of one metric ton of CO₂-equivalent emissions. Companies can acquire these credits from the secondary market via carbon registries or brokers, depending on their requirements for quality and volume.

High-quality carbon credits provide several important advantages:

• They enable companies to take responsibility for emissions that cannot be eliminated within their value chains.
• They act as a financing mechanism for advancing climate solutions, including nature-based solutions and innovative carbon removal technologies requiring external investment for commercialization.
• They contribute additional benefits beyond mere carbon mitigation, such as protecting biodiversity, restoring ecosystems, and enhancing community welfare.

Moreover, high-quality credits can yield widespread benefits, including job creation, enhanced biodiversity, better air quality, and support for community-driven projects.

Choosing High-Quality Carbon Credits

The voluntary carbon market is diverse and continuously changing, featuring varying standards that have historically been plagued by loopholes. This inconsistency has often led to differing levels of credit quality and project effectiveness, creating difficulties for stakeholders trying to assess true impact. Some initiatives might exaggerate their climate benefits, while others may lack robust governance structures, which influences how funds are allocated. To manage these uncertainties, it is vital to invest in high-caliber carbon projects that align with credible methodologies, deliver measurable results, and withstand critical examination.

Characteristics of Quality Carbon Credits

As the voluntary carbon market evolves, new integrity frameworks are guiding companies toward credible carbon credits prompting substantial environmental change. For instance, the Integrity Council for the Voluntary Carbon Market (ICVCM) has introduced Core Carbon Principles (CCPs)—a science-based benchmark aimed at assuring the validity of carbon credits. In conjunction with these principles, industry-leading standards such as ICROA and the IPCC also work to maintain integrity within VCMs.

To facilitate effective credit selection, keep these key attributes in mind:

• Additional: Emissions reductions must exceed what would have occurred without the project.
• Permanent: Projects should guarantee long-term emissions reductions, equipped with measures to prevent reversals.
• Verified: Independent validation is essential to ensure proper measurement and reporting of outcomes.
• Unique: Each credit should be accounted for singularly to prevent double counting.
• Supportive of co-benefits: Initiatives should also contribute positively to broader environmental and social objectives, including biodiversity conservation and community health.

While collaborating with experts can simplify navigation through this intricate market, having a solid understanding of the standards is equally important.

The Path Forward for Companies

Exemplifying true climate leadership involves extending efforts beyond immediate control and contributing towards wider impacts. Companies are increasingly expected to serve as catalysts for sustainable progress, and engaging with voluntary carbon markets offers an effective strategy for achieving and amplifying sustainability goals.

As you assess your environmental objectives and consider incorporating beyond value chain mitigation into your operations, prioritize procuring high-quality carbon credits and collaborate with project developers to invest in initiatives aligned with your corporate principles. By focusing on verified projects, you minimize the risk associated with supporting initiatives of minimal impact and bolster efforts that genuinely promote climate and community progress.