IC VCM approved carbon credits should count towards scope 3 targets

Science Based Targets initiative can simultaneously ensure that companies are focused on delivering within value chain abatement while also mobilizing critically needed finance for the global south, nature, and abatement that doesn’t touch company supply chains.

How?

By allowing A PORTION (say 30%) of a company’s scope 3 target to be met with IC VCM CCP labeled carbon credits, with appropriate guardrails.

Here are 9 reasons why including IC VCM approved credits for part of scope 3 target attainment is good for the climate fight and good for voluntary climate action ambition.

Reason # 1 (and the only reason that really matters): We are in a climate emergency. We have a responsibility to deliver as much mitigation as quickly as possible using the most effective methods available to us today. Mitigation at scale is science-based action. In fact, it’s the only thing that has a prayer of turning this titanic around before it hits the iceberg of runaway climate change. Within AND beyond value chain mitigation is not optional if we’re truly talking about scale and speed.

Reason #2: We can have our decarbonization cake and eat it too, I promise. Allowing a portion of scope 3 targets to be met with qualified carbon credits with appropriate guardrails is actually science aligned action.  That's why leading eNGO's EDF + Business The Nature Conservancy Conservation International American Forest Foundation Fauna & Flora Wildlife Conservation Society put together these common sense, science based principles for how Science Based Targets initiative can set strong guardrails for credit use, in their open letter linked here. By requiring that the majority of reductions come from within value chain we can keep the emphasis and focus on internal abatement, while also making it more likely companies will set targets in the first place and be able to meet them, delivering more climate action and ambition in the near term.

Companies will generally do the economically rational thing, which is why having a limit on the percentage of a target that can be met with beyond value chain credits is very important. In many instances beyond value chain will be less expensive than within value chain abatement, and that’s a feature, not a bug. We can do both of these things at the same time with well designed policy.

Reason #3:  Cost and scale matters. Making multiple pathways available for companies to demonstrate progress towards their climate targets, means that we get MORE climate ambition and impact, not less. The marginal cost of abatement varies dramatically across companies, across sectors, and across geographies and we should be driving investment into the lowest cost and most efficient abatement opportunities we have globally, while also creating the right incentives to get companies to buy the more expensive and cleaner new technologies that are beginning to become available.  In a climate emergency we should be looking for the lowest cost reductions to deliver mitigation at scale (here’s looking at you Marginal Abatement Cost Curves) while also pushing and seeding the early-stage technologies that will be required to fully decarbonize global commerce and are not yet available at anywhere near the scale or cost required. We can scale these technologies, but it’s not going to happen overnight, and certainly not within the next 5 years. Building a system that enables us to mobilize the MOST emission reductions in the most cost effective manner should be an overarching priority of any responsible and science-based climate change program.

Reason #4: Carbon markets aren’t the worst, they just went first. Intervention accounting is not an optional part of the net zero economy transition and we need to get it right; regardless of whether it occurs inside or outside of company supply chains (spoiler alert: the mechanics of this accounting are largely the same in both applications). We’ve learned a lot over the last 20 years of developing blueprints and methodologies for quantifying the impact of climate action through carbon markets. Have we got it all figured out yet? Nope. Will we ever get it perfect? Highly unlikely. Does that mean we give up? It does not. Because there’s no other way to measure and track the impacts of climate actions. Period.

Reason #5: Nature is required for human survival. Right now, it’s protection, preservation and restoration is dramatically underfunded. Carbon finance is one of the primary means of finance for nature to date and not one we can afford to leave on the table.

Reason #6: We need to scale carbon removal technologies and systems.  The IPCC estimates that we need to deliver up to 10 gigatons of carbon dioxide removal per year by 2050 (to put that in perspective that is about 20% of the world’s total annual emissions today). We are nowhere on track now to get to that scale at the current pace of development and investment. Providing companies with another avenue to invest in and begin to scale carbon reductions and removals is science aligned action. Including beyond value chain reductions and removals in some portion of scope 3 target attainment means that we can build investment flows and long-term scaling plans leveraging the long-term offtake agreements signed by some of the wealthiest companies in the world.

Reason #7: This is VOLUNTARY. Voluntary targets are just that, voluntary. We are—unfortunately—not designing a regulatory system with legally binding enforcement powers (oh, how I wish we were). This means that if companies aren’t on track for or miss their targets, they’re not going to shut down parts of their business, or voluntarily stop company growth to meet them, or give up their competitive advantage (see the AI energy arms race), they’re just going to miss their targets. Setting companies up to fail from the outset is not a recipe for scaled up voluntary action, which is unfortunately what we’re doing now.

Reason #8: Climate equity and justice matters. Developing countries and communities in the global south are disproportionately impacted by climate change. Carbon finance, when properly structured, is one of the most effective mechanisms I’ve ever seen for delivering climate finance directly to impacted communities and ecosystems. Funding nature protection and restoration delivers significant climate mitigation, resilience and adaptation co benefits directly to frontline communities.

Reason #9: This isn’t yesterday’s carbon market. The ICVCM is developing a global ruleset that represents the state-of-the-art science-based methods for quantifying climate action. This new rule set will ensure that carbon credits represent meaningful climate change mitigation. These rules are SIGNIFICANTLY more detailed and stringent than any accounting that occurs in the context of within value chain mitigation accounting today. Is it really hard? It is. Does that mean we don’t do it? It does not. It does mean that many of the short comings of carbon markets historically are being addressed in a comprehensive manner.

We can have our decarbonization cake and eat it too folks, we just need to set the guardrails correctly and start rebuilding sensible policy that meets the real economy where it is today, unlocks maximum climate impact and action, and puts us on the path to the net zero economy. SBTi has a chance to do right by the climate fight, by nature and by the net zero economy transition. I hope they'll take it.