Staying Ahead of the Curve: Important Updates from the Science Based Targets initiative (SBTi)

The Changing Landscape of Value Chain Emissions

A New Approach to Scope 3

The Net-Zero Standard v2.0 introduces a more nuanced framework for addressing value chain emissions. Rather than a one-size-fits-all approach, SBTi now recognizes that influence varies across supply chains. For large and medium enterprises in higher-income economies, comprehensive Scope 3 targets remain mandatory, but with increased flexibility. 

Key updates to the Scope 3 target-setting framework include:

• A boundary centered on the most significant emission sources for companies, promoting strategic supplier engagement in high-impact sectors.
• Increased focus on non-emission metrics and targets, such as the proportion of procurement supporting entities and activities aligned with global climate goals or the share of revenue from net-zero-aligned products and services.
• A comprehensive approach encompassing base-year performance evaluation, target setting, implementation, progress assessment, communication, and claims.

This shift acknowledges the case-by-case variations companies face, striving to address these differences while maintaining the scientific rigor of target setting.

From Pledges to Performance

Perhaps the most transformative aspect of the new standard is its emphasis on accountability. SBTi is moving beyond target-setting to create a more clear framework for progress tracking:

• Clear guidelines on documenting achievements against goals across various chain of custody frameworks.
• A more detailed method that evaluates current achievements against predefined benchmarks using various pathways and methodologies.
• A requirement to disclose plans for transitioning.

This evolution marks an effort to enhance transparency and assurance in corporate climate action, ensuring that claims are substantiated by measurable progress.

Rethinking Carbon Management

Carbon Removals

Quantifying and generating carbon removals are more important than ever. The new framework proposes multiple options for addressing hard-to-abate emissions, including a requirement for companies to set removal targets. This increases the standards for field-level GHG accounting, emphasizing the importance of rigorous data and project management.

Offsetting and Beyond Value Chain Mitigation (BVCM): 

The standard establishes clear boundaries around offsetting, limiting its place to unavoidable emissions. This represents a fundamental shift away from offsetting as a primary strategy toward viewing it as a last resort for residual emissions. However, the framework continues to incentivize action outside of the supply chain through BVCM, aiming to create stronger incentives for addressing the impact of ongoing emissions and supporting mitigation outside of their value chains.

Strategic Implications

These changes signal several important shifts that forward-thinking organizations should prepare for:

1. Data Integrity Becomes Paramount: As requirements grow more specific, the quality and granularity of emissions data will become a competitive advantage.
2. Supplier Relationships Transform: Collaborative decarbonization will require deeper engagement with key suppliers and potentially new contractual frameworks.
3. Carbon Strategy Needs Rebalancing: With tightened criteria for both removals and offsets, companies need to reassess their carbon management portfolios.

Technology Will Drive Compliance: Meeting these enhanced requirements will likely accelerate adoption of sophisticated emissions tracking and management solutions.

How to Prepare Your Organization:

1. Evaluate Your Role in the Shared Value Chain: Assess your agency within the value chain. Are you able to understand the sustainability aspects tied to your revenue and procurement processes?
2. Assess the Quality of Your Emissions Data: Evaluate the accuracy and reliability of your current emissions data, particularly for Scope 3. Is your data robust enough to identify emission hotspots and guide your transition plan effectively?
3. Streamline and Standardize Progress Reporting: Consider how you can simplify and standardize your progress reporting. Do you have a partner in place to help roll out your sustainability programs and integrate the data that reflects these improvements?

How We Can Help

At Arva, we’ve anticipated these shifts toward greater precision and accountability in climate targets. Our approach combines:

Data-Driven Decision Support: Our platforms enable the granular, high-quality emissions tracking that the new standard demands for both base year GHG emissions inventory quantification and intervention evaluation. Arva programs provide the data to substantiate progress traceable to the emission source. We strive to streamline the data connection of the value chain, making reporting a natural extension of business operations to simplify tracking progress.

Supply Chain Connectivity: At the heart of Arva is fostering collaboration among stakeholders, empowering farmers and companies to have a stronger voice in integrating sustainability into their supply chains. Through Scope Sharing, Arva’s collaborative network approach, we help companies engage suppliers in impactful decarbonization initiatives that lie at the core of Scope 3 interventions.

Agricultural Carbon Excellence: Our roots in sustainable agriculture position us uniquely to quantify high-quality removals data from within our supply chain. Our projects meet the enhanced standards for permanence and verification. Our experience and strategy in sustainable agriculture supports companies in establishing their transition plans to meet their sustainability targets.

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The proposed standard will remain open for consultation until June 1, with SBTi ensuring a thoughtful transition period. As active participants in the climate standards landscape, we are dedicated to helping our partners navigate these evolving requirements while advocating for the interests of our farmers. By focusing on the intersection of agricultural systems and corporate climate goals, we offer solutions that align with frameworks like SBTi, all while putting farmers first.

The path to net-zero is becoming more clearly defined, but also more rigorous. With the right partnerships and tools, your organization can turn these challenges into opportunities for leadership.

Contact our team to discuss how Arva can support your climate strategy.