Purchasing Carbon Offset Credits to support Beyond Value Chain Mitigation (BVCM)
Share on LinkedIn5 Nov 2024
When considering decarbonisation options, companies typically look within their own operations and value chain, and for good reason. It is increasingly also becoming important for influential companies to engage in Beyond Value Chain Mitigation (BVCM), such as carbon offsetting. Carbon offsets are credits for investments in projects working to reduce greenhouse gas emissions or remove carbon from the atmosphere. These enable the company to report the positive climate impact as their own and neutralise their emissions. Carbon offsets are not, however, a replacement for corporate decarbonisation and must be reported separately from any emissions reduction targets and claims. Projects can include: renewable energy, protection of the biosphere and its soils; carbon capture and storage at fossil fuel plants, biosphere restoration, and direct air capture of carbon with remineralisation.
Reaching Net Zero
To remain within the internationally agreed global warming target of 1.5°C above pre-industrial levels, it is necessary to reach net zero by 2050. This requires companies to balance any residual emissions they have, those which are not possible to be reduced, with anthropogenic carbon removals. SBTi guidance for long-term targets and net zero require companies to reduce absolute emissions by a minimum of 90% and to neutralise any remaining emissions by removing carbon from the atmosphere and permanently storing it.
SBTi and Beyond Value Chain Mitigation
SBTi guidelines published earlier this year have expressed benefits of companies engaging in BVCM in addition to science-based emissions reductions. BVCM improves progress towards net zero globally, directs finance towards emissions reduction projects required for net zero, and ensures emitters take accountability for neutralising unabated emissions. While they do not plan to validate any claims for BVCM, they do recommend companies engage in BVCM as best practice.
The SBTi lay out their scientific rationale behind this recommendation, claiming the current policies and finance mobilised to mitigate climate change are not close to sufficient to remain within 1.5°C warming targets and that, with many impacts of climate change already being seen, this target may not be enough to justly prevent climate impacts. Additionally, in order to reach net zero, new technologies, particularly for carbon removal, will be necessary and these require significant investments to develop to scale. Corporate investment is therefore required to provide sufficient climate finance to achieve global decarbonisation.
The SBTi also present the business reasons for engaging in BVCM. BVCM enables companies to keep up with market and societal changes, attracting investors, customers and employees interested in sustainable brands, as well as contributing to a positive corporate reputation. It helps companies mitigate potential future risks associated with climate change, particularly when supporting local biodiversity projects and those due to policies either penalising polluters or rewarding those taking action. Investments into BVCM can also help a company work towards their long-term science-based-targets through investing in the development of carbon removal technologies needed for net zero in the coming decades.
B Corporation and Beyond Value Chain Mitigation
Another way for a company to achieve best practice and show leadership in regards to ESG performance is to subscribe to voluntary certification programmes, such as B Corporation (B Corp).
The B Corp Climate Action requirements include recommendations for companies to fund climate projects, including GHG emissions removals or climate change mitigation outside their value change. This is not as a substitute for internal and value chain mitigation but an additional beneficial action. The purchase of carbon offsets can also help towards the achievement of B Corp’s requirements for Environmental Stewardship and Circularity requirements where companies are required to address their impact on the physical environment and biodiversity.
Advised actions include promoting and implementing practices that work towards maintaining or enhancing biodiversity and carbon storage and sequestration, both of these being types of projects which can be purchased as carbon offsets.
Ensuring High-Quality Credits
Carbon offsets have been critiqued by scholars and environmental activists due to concerns of negative impacts on food security, biodiversity and indigenous populations and the risk of carbon removal technology promises replacing actual emissions reductions. It is therefore imperative that any company considering carbon offsetting purchases high quality credits which are strictly regulated. It is also important that companies do not consider offsets as a way to achieve emissions reductions and instead as a separate opportunity for climate action.
While there are no universal criteria for offsets which must be followed, the Oxford Offsetting Principles set out a good baseline to guide companies in ensuring ethical purchasing of carbon offsets. There are 4 main principles:
- Prioritise emissions reductions of their value chain, ensure offset credits are measured, verified and correctly accounted for, to follow best practice, and maintain transparency. This point is regulated for in the ESRS carbon reporting guidelines, requiring companies claiming carbon neutral to prove they are actively decarbonising and not relying on offsets.
- Increase the proportion of offsets coming from removal rather than reduction projects, removals to account for 100% of offsets by 2050.
- Storage of carbon after removals must have a low risk of reversal or be nature based with long-term storage. While these approaches are being developed, moderate risk projects can be accepted and valuable if they are of high integrity.
- Support innovation and developments required for net zero.
Following these guidelines will ensure high quality offsets that are certified and attributed to one sole purchaser and that these do not hinder emission reduction or net zero progress.
How NUS can Help
NUS’ Energy and Sustainability (ESS) team can guide you through the entire process of purchasing carbon offset credits in accordance with best-practice standards, from assessing the feasibility for your company, to working with trusted partners to procure high quality solutions best suited to your company’s requirements. For more information contact us online or find your local NUS office.
More: Energy Market Commentary, Beyond Value Chain Mitigation (BVCM), Carbon Credits, Carbon Offsets
