Beyond Science-Based Targets: A BLUEPRINT FOR CORPORATE .

CORE RATIONALE FOR ANEW BLUEPRINTA new model for corporate climate action is needed for a number of reasons,but they can be boiled down to one key meta-problem—a mismatch betweenthe current solution set available and the scale of the problems they aretrying to solve.Existing ‘Footprint-based’ approaches (e.g., carbonaccounting, life cycle assessment) are ‘attributional’ andbackward-looking. They focus on the question “what is mycompany’s responsibility for GHG emissions in the previousyear?” This reductionist approach has been—and continuesto be—a critical component of corporate accountability. Itis the basis for today’s leading corporate climate mitigationstandard — the Science Based Targets Initiative (SBTi) — butit is only one component of what could be a more holisticsolution for corporate climate strategies today, where thefocus is also about looking forward. In short, the goal postshave moved; companies are no longer being asked about howthey plan to take responsibility for last year’s emissions alone,but also their long-term transitions to becoming net-zerobusinesses, their contribution to securing a net-zero economywrit large, and the appropriate role for nature-basedsolutions both inside and outside of their value chains.Another characteristic of footprint-based approaches is afocus on the singular measure of CO2 equivalents. However,companies rarely report performance based solely onprofitability; to maximize shareholder value, they mustmanage a variety of metrics including nonfinancial ones,and what they prioritize will vary by stage of growth andcontext. We need similar variety to evaluate and improvecorporate climate performance. The focus on companies’individual CO2e footprints has incentivized some corporateactions over others. From the desire to offset a company’sremaining emissions came a voluntary carbon market thatalso measures outcomes in CO2e units but that in some casesis not simultaneously able to deliver needed environmentaland social co-benefits and/or broader systemic change. It’sa reason for why the average quality of carbon credits in themarket must improve if it is to be a valid climate solution,and it’s also why companies need to be pursuing new waysof investing in climate and nature that reflect the scale oftransformation required to solve the challenges we face.3Redirecting businesses - and our economy – toward anet-zero and ‘nature positive’ future is the challenge of ourlifetime: we need 75 trillion in investments3 to deliveron the Paris Agreement, plus tremendous ingenuity andwillingness to change. The response must build on eachother’s efforts over a long-time horizon—with companiessimultaneously reducing their own operational emissions,decarbonizing their value chain, driving innovation tocreate future solutions for harder-to-abate emissions andengaging consciously and constructively on how to reachnature positive, including its biodiversity and societal values.Leading companies are already looking to invest in climatestrategies that go beyond their value chains.Each of these changes—leaders going beyond value chainboundaries, forward-looking and longer time horizons, andthe need for scaled finance—begs for a new model. A new wayfor companies to move from “I” to “we”, helping to achievethe kind of scale that science tells us is needed to achievesystem transitions in land & ecosystems, energy, urban &infrastructure, and industrial systems. A new way to buildbig-picture innovation for tomorrow’s climate solutionsdirectly into corporate climate strategies. A new way togenerate and capture value, while benefiting society and theplanet.The Corporate Climate Mitigation Blueprint discussed in thenext section proposes innovative solutions to solve the keychallenges companies are struggling with (outlined above)while ensuring robust credibility through a hierarchical setof actions that ensure companies do their part to rapidlydecarbonize and build scaled solutions within or outsidetheir value chain. The approach builds on existing practice—ensuring a critical use case for current tools like SBTi targets—but also goes beyond to add new tools and approaches,meeting the new needs of ambitious corporate leadership andscience-based system transformation.The Economic Case for Combating Climate Change, BCG Report, 20185

Jason Houston / WWF-USTHE CORPORATE CLIMATEMITIGATION BLUEPRINTThe Corporate Climate Mitigation Blueprint is a tool configured forcompanies to craft an action plan for maximizing their climate impact. Itcan be used both by companies looking to create their first comprehensiveclimate strategy and by those hoping to upgrade their strategies to stay atopthe leaderboard.As shown in Figure A, the Blueprint builds on the principlesthat underpin “the mitigation hierarchy,” a concept widelyknown and used in the field of sustainability.We recommend that companies:(1) Account and disclose their emissions across the valuechain(2) Reduce value chain emissions emissions, in line withan ambitious science-based target pathway(3) Make a financial commitment that internalizes theexternal costs of any remaining GHGs, and disclose allassumptions, including the implicit carbon price.(4) Invest the financial commitment on a menu ofpotential high-impact climate and nature actions. Someof these actions might generate quantifiable emissionreductions or remove carbon from the atmosphere,while others might unlock the pipeline of future climatesolutions. These solutions could include nature-basedsolutions, new emissions capture technologies, andeven business innovation and transformation effortsthat can further society’s move toward a net-zeroeconomy.The following sections lay out each of the four components of the Corporate Climate Mitigation Blueprint in greater detail.BEYOND SCIENCE-BASED TARGETS: A BLUEPRINT FOR CORPORATE ACTION ON CLIMATE AND NATURE

Figure A: The Corporate Climate Mitigation Blueprint and additional critical elements of corporate climate strategyCorporate Climate Mitigation Blueprint1Account& disclose23Reduce value chainemissions, in linewith an ambitiousscience-based targetpathwayaQuantify financialcommitment bypricing remainingemissionsb4Invest the financial commitmentfor climate and nature impactFurther emissionsreductionsUnlockingclimate solutionsQuality carboncredits/mitigationoutcomescLandscape financedClimate innovationeGHG reductionGHG removalAlongside and throughout .Influence climate policy inown sector and beyondCollaborate with value chain, peers,employees, and other key stakeholdersBuild resilience in achanging climatea. Emissions reductions must be compliant with the Paris Agreement to limit warming to 1.5ºC, or at most well-below 2ºC, above pre-industrial levels, such as by following a pathway providedby the Science-Based Targets initiative.b. Companies should disclose assumptions, including the internal carbon price used (even if implicit). Please refer to more detailed guidance on how to size financial commitments in the text.c. The term “mitigation outcome” refers to any type of ex-post climate mitigation, whether emissions reductions or the removal and sequestration of emissions from the atmosphere. Forreadability and simplicity the term “carbon credit” is instead used through the document; however, a carbon credit is a subset of the term mitigation outcome. Please refer to Annex 3regarding the dimensions of carbon credit quality.d. For example: Projects operating at a landscape or jurisdictional levele. For example: Technological and R&D innovation, efforts to advance climate business model innovationBEYOND SCIENCE-BASED TARGETS: A BLUEPRINT FOR CORPORATE ACTION ON CLIMATE AND NATURE7

1. ACCOUNT AND DISCLOSE EMISSIONSFull transparency is critical to companies’efforts to reduce their carbon footprint.Without an accurate and verified accounting of their GHGemissions across scopes 1, 2, and 3, companies cannotdetermine their baseline emissions, set reduction targets, orevaluate their progress.The first step is to use internationally recognized GHGaccounting standards, such as the GHG Protocol, tocreate a full accounting of their carbon footprint. Thenthey must transparently and publicly disclose their levelof emissions, mitigation targets, and the actions theyare taking now and in the future, through their regularcorporate reporting mechanisms or through organizationssuch as CDP. Companies should also disclose their climaterelated risks, opportunities, and strategies in line with therecommendations of the Task Force on Climate-relatedFinancial Disclosures (TCFD) and other best-in-classdisclosure frameworks and standards.42. REDUCE VALUE CHAIN EMISSIONS, IN LINEWITH A SCIENCE-BASED TARGET PATHWAYThe Paris Agreement requires that we limit global warmingto as close to 1.5 C as possible. If we are to meet this goal, wemust reduce GHG emissions by around 50% between nowand 2030, and reach net-zero globally by the second half ofthis century, according to the “Special Report on 1.5 C” fromthe UN’s Intergovernmental Panel on Climate Change.Companies should therefore begin by mitigating GHGemissions throughout their value chain (see Figure B). Asa first step, they should reduce their own emissions wherepossible, by avoiding emissions-producing activities, and byhalting carbon intensive operations, such as deforestationand land conversion. Then they should lower the carbonintensity of activities—their own and those across their valuechain—that cannot be avoided. This could include reducingthe use of fossil fuels, improving efficiency, purchasingrenewable energy, encouraging upstream suppliers to reducetheir own footprints, decreasing land degradation, andreducing the carbon impact of the products and servicesthey sell. To support these efforts, the Science Based Targetsinitiative (SBTi) provides clear guidance for differentcorporate sectors on how to develop and set GHG reductiontargets that are aligned with the latest climate science.Figure B. Reducing value chain emissions, in line with an ambitious science-based target pathway 52020203020402050Business as usual (BAU)baseline trajectory for emissions.Remaining emissionswhile delivering on SBTicommitmentSBTi 1.5 CPathway targetset by companyFor example, a company sets and delivers on their SBTi 1.5 C target. The gray bars reflect ‘remaining emissions’as the company works toward reductions.4These include SASB, CDSB, the Integrated Reporting Framework, and GRI.5While companies should ideally be setting 1.5 C-aligned targets under SBTi, the initiative also allows companies to set well-below 2 C targets.BEYOND SCIENCE-BASED TARGETS: A BLUEPRINT FOR CORPORATE ACTION ON CLIMATE AND NATURE

Meeting science-based emissions reduction targets is not justcritical from an environmental perspective. Doing so alsolowers the significant business and reputational risks faced bybusinesses as they make the transition to a net-zero businessenvironment. Every company is already facing considerableregulatory, policy, investor and consumer pressure to lowertheir carbon emissions, and the pressure will only increase inthe future. Companies that transform their business now arebuilding competitive advantage compared with those thatdelay the transition, something that investors increasinglyrecognize and reward.6As essential as this step is, for many companies it will likelybe the most difficult. It requires companies to undergo amajor transformation of their operations, their value chains,and their business models. Some com

NEW BLUEPRINT A new model for corporate climate action is needed for a number of reasons, but they can be boiled down to one key meta-problem—a mismatch between the current solution set available and the scale of the problems they are trying to solve. 3 The Economic Case for Combating Climate Change, BCG Report, 2018