SPONSORED CONTENT: Sarah Leugers, director of communications for Gold Standard, talks about how the certification body is working with CDP and WWF to develop a Benchmark for Corporate Climate Leadership in this question and answer session
With the ambition of the Paris Agreement set at a well below 2 degrees temperature rise but country commitments that lead to 3C-4C degrees, bolder climate action is needed from non-state actors, with a growing focus on the business sector. At the same time, the new rules taking shape for the Paris Agreement mean that corporate climate action must evolve for a new era.
Gold Standard, CDP, and WWF are working toward building a consensus on how companies can navigate the prevalent climate initiatives to elevate their climate strategies from carbon management to climate stewardship within the context of the Paris Agreement. The proposed Benchmark for Corporate Climate Leadership recommends reducing emissions within corporate boundaries according to Science Based Targets and applying the principle of “common but differentiated responsibility” to contribute finance to accelerate the global transition to a zero-carbon resilient economy.
Q: Why are these guidelines needed? Why now?
A: Companies understand that they need to take climate action. Yet the proliferation of initiatives – great initiatives! – has meant that many sustainability professionals struggle to navigate the landscape to clearly craft a robust climate strategy that will earn them recognition for leadership. As the rules for the Paris Agreement are coming into focus, as we’ve just seen at COP23 in Bonn, there is a need for consensus on what is best practice and how initiatives should fit together. So we joined forces with the Science Based Targets partners to see how this could happen. These guidelines are meant to be a compass to inform the development of an ambitious climate strategy.
Q: I see that there’s a lot of practical and actionable detail in the guidelines, but how would you summarise climate leadership, in a nutshell?
A: We’ve highlighted four key pillars:
Measure and disclose This has become standard business practice for companies interested in sustainability. But it’s important that measurement extend through the full value chain.
Reduce emissions within your operations This should be in line with what science tells us is needed to limit warming to 2C, ie, adopt a Science Based Target.
Finance emission reductions beyond your direct operations. It’s here – and at the intersection with “pillar 2” – that Gold Standard is offering ways to take action. This can happen through a number of mechanisms: purchasing carbon credits, introducing supply chain emission reductions, or investing in low-carbon solutions.
Advocate for strong climate policy. Share best practice and use your influence to drive greater ambition. And also, conversely, ensure policy efforts don’t contradict your climate action.
Q: How does climate finance fit into the picture of best practice? Shouldn’t companies be focused within their own operations?
A: The answer isn’t binary. It’s not one-or-the-other, but rather a combination of the two. There’s a moral argument for helping the global community decarbonise and shift to sustainable development, which NGOs frequently highlight. And rightly so; climate justice is imperative to the low-carbon transition. And frankly, we won’t be able to meet the ambition of limiting global warming to well below 2C without the private sector engaging in climate finance. But there’s also a practical business reason, especially for companies with carbon-intensive value chains. For example, a retailer or a food and beverage company may be investing in its supply chain to reduce emissions. Today, there isn’t clarity on how to consistently draw boundaries for project-based initiatives or how collective action among several companies with shared suppliers can be recognised.
A bank may look to decarbonise its portfolio over the long term in order to avoid risk and to stay competitive. Indeed, this is where the material climate impacts lie, yet we lack sufficient, consistent, and practical ways to account for this. Or companies might make long-term investments in climate-smart products or technologies to bring their own commercial expertise to the low-carbon transition, but recognition for these investments has not been formalised.
The most exciting dimension of “finance beyond” is the multiplier potential. For example, high quality carbon credits can deliver tremendous dividends in development impacts above reducing carbon emissions. You only need to look at community-based projects like clean cookstoves or water access to see that positive impact goes far beyond climate mitigation. And this is something that can be easily shared with customers who are demanding, more and more, that companies demonstrate how they are serving as a force for good.
Likewise, investments in smallholder farmers, for example, can be transformative in terms of food security, improved livelihoods, water conservation, even gender equality. That’s a lot of Sustainable Development Goals (SDGs), and a lot more bang for your sustainability buck.
Q: We see an uptick in the number of companies going “carbon neutral.” How does this fit in?
A: Carbon neutrality is a brilliant way to internalise the real costs of carbon pollution. By committing to take financial accountability for your carbon footprint, you, defacto, create an incentive to further de-carbonise. And let’s be honest: how many companies can instantly go to net-zero carbon emissions? Using carbon credits is a way to take immediate action and can also help fill the gaps between, for example, major improvements like on-site renewables or the full realisation of forest restoration. Companies who have committed to carbon neutrality should be applauded and rewarded for taking climate action beyond their own borders.
At the same time, we need to keep an eye on the new reality of the Paris Agreement, post-2020, when it becomes more complex to trade and account for carbon emission reductions internationally. These accounting challenges will be solved, but we also think this presents an opportunity to change our narrative to one that is even more inspirational. So that the average person on the street intuitively understands and supports it. That’s why we’ve put forward Climate+: Reduce emissions in line with science; finance more global reductions than you emit; ensure these efforts contribute to the SDGs.
Climate+ avoids the carbon accounting challenges and also speaks to consumers in a way that can be understood at a glance, and even move them to take action themselves.
Q: What are the next steps? How can business engage in the process?
A: The Corporate Climate Leadership guidelines are in public consultation through the end of November. We’re working with our partners at CDP and WWF to determine how the programme will move forward in light of the input we receive during this consultation. We are also seeking alignment with other organisations working in the corporate climate space, so that there truly is an ecosystem of actors advocating with a common approach.
What’s already clear is that we need new tools that bridge the gap between “reducing within” and “financing beyond”. So we’re working with CDP, WWF, the World Resources Institute (WRI), and Climate KIC to develop a framework to recognise emission reductions that historically have not been accounted for within the Greenhouse Gas Protocol, which will also count towards a Science Based Target.
We also appreciate that more detailed sector-based guidance is needed for the financial services sector in particular. And finally, we wish to explore the potential for these guidelines to become a benchmark for companies to use for self-assessment and how Climate+ can be extended as a call to action up and down the value chain, even to our own individual roles as consumers.
We welcome comments from the Ethical Corporation community during the consultation and are open to collaborations to develop and scale solutions within this framework of corporate climate leadership.