Credible and effective
corporate climate strategies

Spotlight on climate action within and beyond value chain / SBTi
Lene Petersen, WWF Switzerland, 24.08.2023

Elements of a credible and effective corporate climate strategy▪

Greenhousegas inventory including
value chain (Scope 1-3)▪

Moving away from compensation(«ton-for-ton»)▪

Annual update and disclosure ofinventory▪

Pricing of remaining emissions
with the social costs of carbon▪

Application of global standards(Greenhouse Gas Protocol, CDP)▪

Investment of the budget withmaximum impact for people,
nature and climate▪

Mobilization of employees,suppliers, industry partners,customers, etc.

▪

Effective advocacy program forprogressive climate legislation▪

Withdrawal of support forclimate-desctructive activities▪

▪
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Science-based targets: reduction
targets on a 1.5°C pathway(according to SBTi)
Roadmap: Planning of measures toachieve target(s)External validation of progress© Green Renaissance / WWF-USWWF Switzerland«Truth in claims»

2Responsibility within & beyond value chain
Decarbonization ‘within value chain’ (corporate net zero)Engagement ‘beyond value chain’(contribution to global net zero/goals)

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Part 1: Science-based reductiontargets (SBTi)

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4The Science Based Targets initiative (SBTi)▪ Defines and promotes best practice in emissions reductions and netzero targets in line with climate science (and the Paris Agreement).
▪ Provides technical assistance and expert resources to companies
who set science-based targets in line with the latest climate science.
▪ Brings together a team of experts to provide companies withindependent assessment and validation of targets.

▪ Engages companies to position themselves for a transition to azero/low-carbon economy.
“The Science Based Targets initiative (SBTi) drives ambitious climate actionin the private sector by enabling organizations to set science-based
emissions reduction targets.”© Green Renaissance / WWF-US

WWF Switzerland5Success story SBTi

Source: https://www.linkedin.com/company/science-basedtargets/posts/ 18.8.2023© Green Renaissance / WWF-US

Source: https://sciencebasedtargets.org/reports/sbti-monitoring-report-2022/
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Geographic reach of science-based targets© Green Renaissance / WWF-US

Source: https://sciencebasedtargets.org/reports/sbti-monitoring-report-2022/
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7Key facts from the latest progress report▪ 34% of global economy covered▪ 2 billion t CO2 (Scope 1 & 2) covered▪ Average annual emission reduction for SBTicompanies: 5.9% (Scope 1 & 2)
▪ Countries with highest number of companies
setting targets in 2022: Japan, UK, US▪ Increasing participation of SMEs
▪ Increasing adoption of Net-Zero Standard© Green Renaissance / WWF-US

Source: https://sciencebasedtargets.org/reports/sbti-monitoring-report-2022/
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What are science-based targets?
Carbon Budget
Amount of emittable carbon until reaching atemperature threshold (e.g. 1.5°C).

Emissions Scenario
Distribution of the available
carbon budget over time.

Allocation Approach
Allocation of the budget to companies(depending on sector).

© Green Renaissance / WWF-US

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9Key elements of the net zero standard© Green Renaissance / WWF-US

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Net zero claim

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Part 2: Climate finance beyond
value chain – best practiceWWF Switzerland

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Recap: the problems with the offsetting-system➢ The zero-sum game: emissions saved in one place are emitted in another place.
➢ Wrong incentives through offsetting and neutrality claims: instead of reducing own
emissions, certificates are purchased.
➢ Quality problems, e.g. due to race to the bottom of price:➢ Baseline Inflation: overestimated baselines generate far too many certificates (see e.g.
Guardian article)➢ Leakage: avoided emissions in one place lead to emissions in another place (e.g.
deforestation happens somewhere else)➢ Permanence: CO2-sequestration/reduction does not happen at the same time scale asemission. The emitted CO2 stays in the atmosphere for about 1000 years, no project
can guarantee these time scales. The sold carbon credit does not have the same
currency as the emitted CO2 (Fungibility).
➢ Additionality: the project would have been realized anyway (e.g. renewable energyprojects)➢ Since Paris Agreement the risk of double counting & claiming comes on top: reduction iscounted/claimed in the host country and from the buyer of the certificate.
➢ ‘Corresponding adjustments’ only solve the problem to a limited extent as they do notprovide an incentive for countries to set amibitious targets (NDCs).

© James Morgan / WWF-USWWF Switzerland

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Increasing critic towards offsetting

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Exploding legal complaints against companies - Examples
USA:•Danone Waters of America is facing a class-action lawsuit claiming the company’s Evian NaturalSpring Water labels are providing false information that the product is carbon neutral, highlighting
a growing trend of legal questions surrounding sustainability claims.

Germany:•The airline KLM is facing a court action, supported by ClientEarth, for breaching consumer law withits CO2 compensation marketing.

•Legal action has been filed against Beiersdorf for the Nivea Naturally Good face care products anderman ivea shower gel range. Both are described as “100% climate neutralized by offsetting
C 2 emissions with certified reforestation projects,” but the company does not offer sufficient
information to corroborate these claims.

Switzerland:•Several NGOs jointly filed a complaint for misleading advertising (greenwashing) against theInternational Association Football Federation (FIFA) for using ‘carbon neutral’ claims.

•The Swiss consumer association recently filed 11 law cases against companies using ‘carbon neutral’claims

Netherlands:•Shell has found itself reprimanded twice in succession, first for advertising ‘C 2- neutral’ car petrol,then for trying a different claim that carbon credits mean ‘C 2 compensation’. n both occasions,the company was unable to persuade the Dutch advertising watchdog that the offsets advertising
was substantiated by the evidence.

•The airline KLM is facing a court action, supported by ClientEarth, for breaching consumer law with
its CO2 compensation marketing.

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Increasing regulatory framework – Examples
EU Levelhe U Commission has proposed a new ‘antigreenwashing’ consumer law, which will likely placeheightened restrictions on generic claims such as ‘carbon
neutral’ respectively ban them.
Francen France, after a citizens’ assembly called for a ban on‘carbon neutral’ claims, the legislature enacted a law
requiring companies to clarify how emissions are being
actually reduced before being offset.
UKCompanies listed in the UK are prohibited from publishingmisleading, false or deceptive information, and may besued by shareholders who suffer a loss as a result of ascandal linked to a misleading statement published by thecompany. Use of ‘offsets’ by financial businesses, or by
investee companies underlying investment products,implicate financial regulation.

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16Consumer misunderstanding
Studies from the US, UK and Germany show:•

Very few consumers know what the term “carbon neutral” actuallymeans.

•This also holds for self-defined ‘environmentalists’.

•Offsetting emissions with CO2 certificates is not enough for a majorityof consumers.

•Participants tended to believe that carbon neutral claims impliedthat an absolute reduction in carbon emissions had taken place orwould take place.

•Results suggested need/wish for increased transparency.

•Most consumers would welcome stricter regulation of climate claims.

Sources:
https://morningconsult.com/2022/08/02/carbon-neutral-consumer-awareness/© James Morgan / WWF-US
www.verbraucherzentrale.nrw/pressemeldungen/presse-nrw/klimaneutrale-produkte-89-prozent-fuer-klare-regeln-und-geprueftes-siegel-77472
https://www.asa.org.uk/resource/climate-change-and-the-environment-consumer-understanding-of-environmental-claims.html
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Increasing alignment of civil society
A broad coalition of over 170 NGOs, advocacy groups, and grassroots
organizations spanning the globe released a statement opposing the usage ofcarbon offset programs, declaring that carbon offset programs are false
solutions that will not solve the climate crisis:© James Morgan / WWF-US

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"Genuine climate protection is only possible if consumers receive honest
information about the climate impact of products or services. As consumer
protection association with the right to sue, we will consistently put a stop togreenwashing with supposed climate neutrality."Agnes Sauter, Head of ecological market monitoring,Deutsche Umwelthilfe“A crucial part of the solution is to let go of the need to claim carbon
neutrality”

Robert Höglund, Manager Climate Transformation Fund,Milkywire

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What’s happening at the moment?
▪ Companies turn away from compensation andneutrality claims▪ New claims and offers are being developed➢ It needs more than new claims and higher quality credits© James Morgan / WWF-US

WWF Switzerland➢ It needs new mechanisms & solutions and a mind-shift
20The necessary mind-shift„Carbon neutrality“ of own operations
Are we carbon neutral?

Are our actions aligned with and contributing to a
global net-zero objective?

Could we offset our emissions?

Could we fund an appropriate mix of measures inline with global goals?

How can we offset our emissions?

How can we maximize our contribution to global
goals, outside our own value chain?

What are the cheapest offsetting options?

WWF Switzerland„Contribution“ to global goals

Which external investments have the greatest value
in advancing global goals?
21Solution: the contribution model & internal CO2-feesTarget: compensate footprintcompensation„instead of reduction“
Carbon footprint
Purchase of carbon credits only

„neutrality“of the own
footprint

FHG-Impact & CO2-Metric„Race to the bottom“

Target: Contribution to global goals & transformation
Financial contribution„additional to reduction“
Carbon & Nature handprint
Investitionen into nature & climate
Holistic impact metric„Race to the top“„contribution“
to global goals

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Why contributing to climate finance beyond value chain?
▪ Contribution to reaching global goals (net zero) despite current ambitiongaps▪ Taking responsibility for remaining emission on the way to corporate netzero▪ Inspirational best practice for other companies to scale effective climate
finance beyond cheap offsetting▪ Investment in systemic solutions and transformational activities
lacking finance under current credit-focused VCM offers▪ Preventing negative business impact by accelerating climate change
and its worsening impacts▪ Opportunity for customer engagement and communication

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Part 3: SBTi BVCM

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Linking climate finance to the SBTi Net-zero standard© Green Renaissance / WWF-USWWF Switzerland

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BVCM objectives© Green Renaissance / WWF-US

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Overarching process for BVCM
12• Set and submit net-zero targets in line with the SBTi
Corporate Net-Zero Standard and develop and disclose
associated climate transition plan.

• Determine the nature and scale of commitment toBVCM→ How much money should go into BVCM?

• Deploy resources and fincances to BVCM

→ Where should this money go?

34• Disclose and transparently report on BVCM andassociated claims© Green Renaissance / WWF-USWWF Switzerland

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Insight from the BVCM public consultation documentMethods to determine scale and nature of BVCM:▪ Ton-for-ton▪ Money-for-ton▪ Money-for-money

Principles for designing the BVCM portfolio:▪ Scale: maximizing climate mitigation in the near-term▪ Urgency: Avoiding tipping points and lock-in▪ Transformation: Innovating for net-zero▪ Financing need: focusing on underfinanced mitigation▪ Co-benefits: supporting SDGs
▪ Climate justice: addressing inequality© Green Renaissance / WWF-USWWF Switzerland

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Recommended readings© James Morgan / WWF-USWWF Switzerland

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