In our strive for a sustainable future, it is indispensable that corporations accelerate their financial contributions towards climate mitigation strategies that reach beyond their individual supply chains. The pressing need to halve worldwide emissions by 2030, and to attain carbon neutrality by 2050, is not just a challenge, but a call to action for every enterprise across the globe.
In response to this call, the Science Based Targets initiative (SBTi) is in the process of formulating guidance to facilitate corporations to extend their climate finance beyond their pre-established science-based targets.
Why this transition is critical?
The urgency stems from the Intergovernmental Panel on Climate Change’s (IPCC) alarming estimate that only a carbon budget of 500 gigatons of CO2 remains if we aspire to have a 50% chance of keeping the global warming increase below 1.5˚C. The current trajectory, even under favourable projections, portrays a worrying discrepancy between where we are heading by 2030 and where we ought to be.
To meet the climate goals internationally agreed upon for 2030, our annual climate finance requirements need to be amplified by at least sevenfold. This translates into an annual requirement of $4.3 trillion USD by 2030. The current availability of funds, around $665 billion USD, falls far short, with corporations contributing merely a fifth of this sum.
Despite many SBTi-validated corporations contributing towards climate finance to achieve their science-based targets, the SBTi encourages these corporations to exceed these targets by funding mitigation efforts beyond their supply chains. This is due to the substantial number of corporations yet to adopt science-based targets, significant emission sources outside corporate supply chains, and the current lack of ambitious governmental policies that can deliver a 1.5°C future. The SBTi refers to these efforts as Beyond Value Chain Mitigation (BVCM).
A study by Systemiq for SBTi discovered that around 70% of the surveyed corporations believe the private sector should do more than just abating value chain emissions. However, they expressed the need for guidance on how best to invest in and execute BVCM activities.
The Beyond Value Chain Mitigation (BVCM) Project
Reacting to the need for guidance, SBTi has initiated a project to release a Beyond Value Chain Mitigation Guidance Paper in 2023. This paper will offer best practice recommendations for corporations regarding credibility benchmarks and transparency. The role of climate claims and other mechanisms for the upscaling of private sector climate finance will also be explored.
So far, the SBTi has executed several steps in the development of this guidance, starting from the request for consultancy work in April 2021, launching the Net-Zero Standard, and kick-starting the BVCM guidance project among others.
A public consultation on BVCM is in progress from June 19 to July 30, 2023, inviting feedback and input from all.
How We Can Help
At McGrady Clarke, we acknowledge the vital role of beyond value chain mitigation in achieving net-zero targets. As an Energy and Sustainability Consultancy, we can provide guidance and strategies tailored to your company’s needs, helping you understand and implement BVCM initiatives and navigate the intricacies of climate finance. Our team can support you in integrating sustainability into your core business strategy, ensuring your company can contribute to this global mission effectively and efficiently. Contact us today to discuss how we can assist your organisation with their SBTi targets.