Proxima

12 June 2024
Topics in this article
  • ESG
  • Net Zero | Scope 3
  • Sustainability

what exactly is Beyond value chain mitigation (BVCM) and what does it cover?

Introduced by the Science Based Target Initiative (SBTi) to accelerate global Net Zero efforts, BVCM, or Beyond value chain mitigation, focuses on mitigating emissions external to an organization’s value chain. Beyond its internal operations, processes, and supply chain, extending the scope to broader societal impact. It aims to complement a company’s science-based targets, offering a more holistic approach to Net Zero.

The goal of BVCM is two-fold:

  1. To avoid or reduce the production of greenhouse gas (GHG) emissions, and
  2. To remove and store existing GHGs from the atmosphere.

what are bvcm activities?

Since BVCM covers activity external to an organization’s immediate operations, much of the activity involves investing in and funding initiatives, ranging across environmental and social impacts – rather than getting involved in the delivery.

Investment in carbon removal – the capturing and storing of carbon dioxide from the atmosphere – typically takes one of two forms. Nature Based Solutions (NBS) absorb carbon through, for example, afforestation, reforestation, and wetland restoration, and Carbon Removal Technologies such as Direct Air Capture (DAC) or Bioenergy with Carbon Capture and Storage (BECCS), both of which interact more directly with production and manufacturing processes.

Other activities aimed at reducing the production of emissions might include investing in renewable energy such as solar, wind, and hydropower, purchasing high-quality carbon credits that contribute to projects that are reducing carbon elsewhere, and supporting biodiversity efforts to encourage healthy ecosystems that contribute to climate resilience and carbon sequestration.

From an advocacy perspective, organizations might also focus on promoting sustainable practices in supply chains, encouraging suppliers to change their behaviors beyond their scope of interaction with the organization. Similarly, collaboration with other organizations, governments, and NGOs can effectively implement emission-reducing initiatives.

why is it important?

With the average global temperature in 2023 being the highest since records began, we know climate change is here. We are seeing the effects of unabated greenhouse gas emissions in extreme weather events worldwide – events that, according to ‘World Weather Attribution,’ would have been ”virtually impossible” without human-caused change.

Arguably, addressing emissions within an organization’s control alone isn’t enough. By investing in BVCM activities, companies are actively contributing to global efforts to combat climate change. This allows those with Net Zero goals to address unavoidable emissions within their operations by reducing emissions from an external project elsewhere.

We are also seeing the introduction of stricter policies and regulations, such as the EU Carbon Border Adjustment Measurement and the Corporate Sustainability Reporting Directive. Investing in BVCM activities proactively will best position organizations for the evolving legislative landscape, protecting and preparing them for compliance.

Demand also comes from investors and consumers – increasingly conscious of where they spend their money. BVCM demonstrates a commitment to sustainability and acting responsibly as an organization, remaining competitive in a time when it would be easy to get left behind.

Perhaps above all, it is the innate responsibility to do good and contribute to progress and greater climate resilience for society beyond industry. Sometimes, it’s a stretch to make the connection between business and the planet, but when it comes to climate change, the connection – and therefore the potential influence business can enact with mitigation action – is undeniable.

what policy, frameworks, or requirements is it covered by?

BVCM is not currently mandated, nor are claims currently validated. Still, it is framed as a best practice recommendation by the Science Based Target Initiative, which has recently published comprehensive guidance on BVCM. It’s worth noting that others are working to define BVCM-related claims, including the Voluntary Carbon Market Integrity Initiative (VCMI).

It does, however, form one of the four pillars of SBTi’s Corporate Net Zero Standard, alongside near-term targets, long-term targets, and neutralizing residual emissions – comprising the world’s only framework for corporate Net Zero target setting.

The absence of a direct policy or framework reflects where BVCM is in its journey. However, if we take the learnings from other budding topics and trends – think, social value or scope 3 – we know that its potential prominence is not to be underestimated, nor is the regulation that could be brought in to support it.

where does it sit alongside scopes 1, 2, and 3?

A simple differentiator, Scopes 1, 2, and 3, are within the bounds of an organization’s operations – whether through direct emissions within Scope 1, indirect emissions through purchased energy in Scope 2, or indirect emissions generated from the upstream and downstream value chain – Scope 3. BVCM, on the other hand, relates to emissions outside of the organization’s control.

Importantly, BVCM should be seen as a complement to Scopes 1, 2, and 3. Although an essential step to reducing carbon emissions, BVCM must not replace or delay efforts to reduce an organization’s scope 1, 2, and 3 emissions.

what about scope 4?

Perhaps less known, Scope 4 refers to avoided emissions as a result of using more energy-efficient or environmentally friendly products or solutions. For example, opting for virtual meetings to avoid emissions associated with business travel and commuting.

Therefore, Scope 4 refers to decisions that relate to an organization’s operations. BVCM is again complementary and offers a different purpose to Scope 4. 

what does a ‘good’ bvcm strategy look like? any examples or case studies?

A good BVCM strategy aligns with business goals and helps to bridge the gap between short- and long-term solutions to reduce carbon emissions.

Although BVCM focuses on activities outside a business’s value chain, the strategy will still represent the business. Therefore, aligning to business goals will help effectively direct investment into projects that support your company’s reputation, talent strategy, and brand’s competitive edge.

Examples include companies such as BP and Shell advocating for climate policies and supporting the transition away from fossil fuels. Amazon has pledged to invest in Direct Air Capture technology, and Siemens and Vattenfall are investing in green hydrogen production—all reflecting a commitment to move with the wave rather than against it.

A leading example is Tony Chocolonely – a brand that has doubled down on doing good. Its advocacy and influence over fostering ethical and sustainable supply chains is a prime example of the impact BVCM activity can have. Their approach is to first raise awareness of issues in the cocoa industry – such as slavery and child labor. Secondly, they lead by example, striving to ensure that its own chocolate is 100% slavery-free by implementing innovative supply chain initiatives and, in doing so, demonstrating and advocating for ethical sourcing practices such as a transparent supply chain, fair wages for farmers, and the elimination of exploitation in the industry beyond their own operations.

Finally, Tony’s Chocolonely is inspiring action—encouraging conscious consumerism and informed decisions, partnering with strong farmer cooperatives across West Africa to develop the skills and resources needed to enhance productivity, and providing agricultural education to improve farming practices. This is encouraging healthier farms, leading to higher yields and reducing the need for encroachment into forests.

what opportunities does bvcm present? what is the business case?

Although the business case for BVCM depends on factors such as region, market, and industry – when implemented effectively, it can unlock multiple opportunities and help to futureproof an organization and wider society.

For example, a food and agricultural company might major its business case on restoring landscapes ecologically linked to its supply chain to drive resilience opportunities. In contrast, manufacturers may make their case around investing in direct air capture to get ahead of increasing regulation, which will result in fees and higher costs for carbon-intensive production. 

It also offers the opportunity to take immediate action. While many organizations are still grappling with reducing their Scopes 1, 2, and 3, investing in BVCM activity can demonstrate your commitment to acting responsibly while continuing to progress internally. The business case for this, however, must not replace the efforts of the former.

what are the challenges?

There are several challenges with BVCM, which again reflects its infancy as a concept. As explored earlier, there is currently a lack of clear guidelines, standards to adhere to, or reporting mechanisms to follow to validate claims. Additionally, the claims themselves are complex – capturing the impact of your investments beyond your value chain is challenging and, today, ill-defined, causing further concern about the credibility of projects.

It is being reiterated that BVCM should not replace your internal carbon emissions reduction efforts, yet this causes challenges around financial and resource constraints and prioritization – balancing the desire to show progress by investing in BVCM, but not so much that it delays internal efforts.

In addition, the fact that technology to effectively remove carbon from the atmosphere is still evolving raises an accessibility challenge. How do smaller organizations and developing countries access such new technologies cost-effectively, alongside other business priorities? 

On paper, BVCM is a concept that makes sense – contributing to global carbon reduction is undoubtedly a positive initiative. However, the reality of implementation has not been ironed out yet.

what first steps can businesses take to develop or implement bvcm strategies?

First, before developing a BVCM strategy, organizations should focus on establishing and working toward their internal Net Zero targets that account for their full GHG inventory. The next stage, in accordance with the SBTi guidance, is to determine what business case for BVCM is relevant to your business and organizational goals. Understanding how your BVCM goals fit with your wider sustainability and business goals will provide more context for the following steps: defining the time period and scale of the BVCM pledge.

Delivery and implementation of BVCM should be supported by established guardrails and quality standards agreed by key stakeholders involved in the initiative, ensuring that the deployment of resources and finance towards a portfolio of BVCM activities is in line with the intention set out.

With supply chains key to achieving sustainability goals, Proxima’s Sustainable Procurement services support organizations in achieving more significant environmental and social impact from suppliers and making change stick through appropriate governance. Solutions range from diagnostics to decarbonization and social value to capability transformation. Contact us to learn more.

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