What would billions of dollars in additional corporate climate finance mean for the world’s forests? It would mean protecting and enhancing biodiversity. It would mean supporting the millions of people who depend on forests for their livelihoods and call them home. And ultimately, it could mean ending tropical deforestation by 2030 and helping the world stay on a 1.5 degree Celsius path. What’s holding this back is the ongoing confusion over guidance issued by credible bodies like the Science Based Targets Initiative (SBTi) on the role forest protection should play in a company’s journey to net zero. But hopefully that will change now.
SBTi’s strong commitment to reducing emissions in the deep value chain has played an important role in shaping corporate climate action and is rightly seen as a best-practice approach to corporate decarbonisation. However, more recent SBTi blogs are unequivocal in insisting that companies must take urgent action outside of their value chains if society is to have any chance of reaching net zero by 2050.
New guidance on value chain mitigation (BVCM) is promised for next year, but the SBTi urges companies not to wait and take action now, identifying the protection of tropical forests as a priority.
In a blog published on Aug. 31, SBTi advised: “The urgent reduction in emissions in the value chain and contribution to BVCM combined will help reserve the remaining carbon budget that continues to shrink.”
The follow-up post, published on September 13, further emphasized the need to protect tropical forests. The authors wrote: “While each company has adopted and implemented a science-based target, there is currently no way to stay below 1.5 degrees C without protecting the world’s remaining tropical forests.”
While this isn’t exactly an about-face by the SBTi, it does represent a significant clarification of their position towards BVCM and a clear affirmation that action such as protecting tropical forests is not only vital but also urgent.
And why is that so important? Many reputable NGOs and climate scientists have been making this argument for years. The answer lies in SBTi’s strong influence on corporate climate policies and their ability to drive much-needed action.
My primary responsibility as Emergent’s Chief Commercial Officer is to attract companies to the LEAF Coalition, the world’s largest public-private coalition dedicated to tropical forest conservation. In discussions with sustainability officers, their interpretation of the SBTi advice on BVCM has repeatedly proven to be an obstacle to investments in forest protection. I believe this has discouraged up to 25 companies from joining the LEAF coalition, removing around $450 million in climate finance from forests. That’s almost half of the $1 billion raised by the LEAF Coalition to date; That corresponds to about 90,000 hectares of tropical forest that could have been protected. Others in the carbon ecosystem will have similar stories to tell. [Editor’s note: The author’s company, Emergent, is coordinator of the LEAF Coalition.]
Typically, sustainability officers raise two problems. First, that the SBTi’s guidance on BVCM is recommended rather than essential and therefore not something they can justify to their boards. Second, and perhaps more significantly, was the perception that SBTi advises companies to prioritize carbon removal (e.g. tree planting) over carbon reduction (e.g. forest protection ) to grant. Indeed, this is a misinterpretation of the SBTi’s requirement for permanent phasing to mitigate remaining emissions at the end of a company’s net-zero journey, i.e. in 2040 or 2050. Not today.
SBTi itself says: “BVCM is not limited to distances. BVCM activities can avoid or reduce greenhouse gas emissions or remove and store greenhouse gases from the atmosphere.”
To be fair to the companies, expect some misinterpretation. Advice on BVCM from SBTi and others has rapidly evolved as the urgency of the climate crisis has become clearer.
But it is important that the SBTi takes steps to clarify its position. His guidance is no longer prone to doubt or misinterpretation – BVCM is vital.
There are now a number of additional actions from SBTi that could help accelerate corporate actions.
Communicate the BVCM position more comprehensively and sustainably
A blog or even a series will not be enough to correct the ingrained misconceptions. The SBTi should be much more ambitious in promoting and defending BVCM and look for ways to publicly support BVCM by making clear the important role it plays. This includes updating historical guidance to replace all mentions of optionality with an acknowledgment that BVCM is both vital and urgent.
Recognize and celebrate companies that are taking action
In a recent survey conducted by Systemiq on behalf of SBTi, over half of the companies surveyed agreed that SBTi should play a role in enabling transparency (scoring/ranking) to incentivize companies to participate in BVCM. Companies making highly integrated mitigation investments beyond their value chain should be recognized for doing so.
For example, the SBTi website currently offers a dashboard of companies with science-based goals and commitments. Why not add companies investing in BVCM? This could highlight those who meet a set minimum level of ambition and give special recognition to those who go above them.
Expand the scope of neutralization
In addition to removal, SBTi should also include emission reductions as a tool for neutralizing residual emissions. This would recognize the valuable role that protecting carbon sinks such as tropical forests and peatlands can play, and remove any confusion that removals should be prioritized over reductions in a company’s journey to net-zero value.
There is no harm in deferring the requirement to prioritize deforestation for neutralization until it is evident that the battle to stop and reverse deforestation has been won. Investing in reductions to the company’s net zero and beyond with highly integrated carbon credits for forests will benefit the climate and protect biodiversity. As such, it could form a mainstay of a company’s nature-positive strategy.
Bring more companies into the group
The LEAF Coalition has already announced $1 billion in funding to protect forests, and more is to come. But billions more dollars in additional climate finance are tied to unfinished guidelines for hard-to-reduce sectors. The SBTi should accelerate this work to provide these companies with clear guidance, enable them to demonstrate that their BVCM activities are in line with the latest recommendations, and give them the potential to join highly integrated coalitions like LEAF.
SBTi is in the perfect position to take the lead. To drive a recovery beyond the value chain, in parallel with deep cuts in the value chain, and to accelerate the corporate climate ambition needed to help the world stay on a 1.5 degree path. The need is urgent. The time is now.