Following the publication of the Corporate Net Zero Standard V2.9 Terms of Reference by Science-Based Targets initiative (SBTi), the Value Change Initiative welcomes this revision as it aims to address the growing need for a common understanding of science-aligned Net Zero targets for corporates. There is a need for target setting to be simplified, and to empower corporates with a variety of tools to allow them to scale emission reductions in value chains and speed up the process.
SBTi has opened the consultation on the Terms of Reference, and the Value Change Initiative provided feedback with a focus on the “Objective” and “Scope,” mainly recommending better alignment between SBTi and GHG Protocol, as well as a greater emphasis on the co-claiming aspect to address Scope 3 emission reductions.

Standard harmonisation

We call on SBTi to prioritise compatibility with other standards, in particular the GHG Protocol. There is significant confusion as to what is accepted by SBTi vs what is accepted by GHG Protocol. Bringing clarification to this area, in particular relating to how the SBTi Net Zero Standard relates to the GHG Protocol’s Scope 3 Corporate Standard and Land Sector Removals Guidance, and SBTi’s own FLAG Guidance, would be greatly beneficial to our shared goal of credible climate action for the good of the planet.

Alignment on Scope 3 framework

There also needs to be more clarification on the Net Zero framework’s purpose, compared to the other existing frameworks. If the intention is for these frameworks to be aligned, the accounting methods must be consistent to ensure accuracy and legitimacy. For example, the focus of the GHG Protocol is on inventory accounting. However, this makes it challenging for organisations to account for value chain actions because only the removals/reductions during the current year can be accounted, and requirements for this (e.g., physical traceability) are not always fully met. We believe that performance-based metrics currently reflect contracts and agreements, when they should represent clear action that has already been taken, supported by evidence and verified against the right safeguards.

We also believe the SBTi must include very clear criteria for co-claiming Scope 3 efforts into their Net Zero standards, ensuring double counting is prevented and empowering value chain actors to actively participate in creating impact. The latest guidance from VCI on co-claiming can be found here.

Enhanced approach to Scope 3

An area of concern highlighted by VCI members relates to Environmental Attributes Certificates (EACs), and their quality in relation on how they are connected to the actual value chain and suppliers. VCI identifies three different levels of value chain connectivity:

• Direct – With physical traceability to suppliers and materials.
• Supply Shed – Where traceability is imperfect, or there is a possibility that not all goods impacted can be sourced. However, action has been taken to achieve impact.
• Landscape/Ecosystem – Where there is no connection between goods and impact.

VCI, with its members and partners, has explored the evidence that actions taken in the “Supply Shed” level can catalyse action by enabling investments and accelerating cooperation of value chain actors. For more detail on this subject, click to learn more.

The Value Change Initiative has been actively engaging with key players since its creation in 2017 with a focus on developing actionable Scope 3 solutions. Together with our members, we have been working on creating a credible path for the use of Scope 3, including Environmental Attribute Certificates, with strong safeguards in the food & agriculture and apparel sectors, through the use of approaches such as Value Chain Interventions and the Supply Shed. Our work has been defined by ensuring high environmental integrity while creating appropriate flexibility to incentivise action. We’ve made all our guidance available on our website, as our intent is to drive harmonisation and enhance collaboration between value chain partners.

We will continue our engagement with SBTi and support them as they work to clarify the appropriate use of Environmental Attribute Certificates in Scope 3, within the mitigation hierarchy and supporting a science-based Net Zero target.