Month: January 2023

In 2023 & beyond, corporates can lead with justice at the center of their climate action

From our CEO: The time is now for corporate sustainability leaders to deeply consider human impacts, and embed environmental justice into climate action to help build a more equitable low-carbon future

It’s the start of another year, a time when many of us reflect on the past and envision the future we want for ourselves, our families, and perhaps the broader world. In my work, I’ve been struck by how much has changed since my cofounder Dan Kalafatas and I started working together 20 years ago. I’m amazed and grateful for how much the renewable energy market has matured, how much our clients’ climate goals and actions have scaled in response to the increasing urgency of the climate crisis, and how far our company has come: from a few people in the Bay Area selling renewable energy certificates in the U.S., to a global team of 300+ experts developing and delivering a comprehensive suite of corporate and utility climate solutions. So much has changed.

As I reread the last few lines of my message to you at the beginning of last year, I was also struck by what hasn’t changed for me. I got into climate work 20 years ago because I wanted to help save the planet and ensure a livable future for those who will follow me. Back in the beginning, I was thinking mostly about my own children and grandchildren. Today, it’s still about people, but I know that climate change doesn’t affect everyone equally. Marginalized people and communities experience bigger impacts from climate change than those with privilege. We need to work to fix this inequity while we transition to a low-carbon future.

So I want to call you to action this year: it’s time for businesses to get serious about focusing on people, communities, and justice as they advance their climate and sustainability work. It’s time to use our critical climate work to build a more equitable, regenerative economy, for all people.

What climate justice means to 3Degrees and to our work

Over the past several years, our team at 3Degrees has been exploring, learning about, and grappling with what it means to center equity and justice in the work we do. We’ve done a lot of reading and listening, prioritizing learning from directly impacted individuals who are part of grassroots community movements that have been working toward environmental justice for decades. There are a lot of complexities in how businesses can and should support these efforts, and there is no single roadmap for all organizations to achieve climate strategies that meaningfully advance environmental justice.

While the benefits of today’s climate action lie mostly in the future, the benefits of acting to repair social inequity can be immediate. This makes identifying actions that genuinely deliver both kinds of benefits at once a complex, creative task.

This complexity is part of why I’ve hesitated to talk about all of this publicly, because it felt like we needed to have a perfect answer and tidy roadmap first. But I’ve come to realize that seeking perfection is a great way to delay action, and the world needs first movers to get started and show others what this can look like!

So even though our concept of what it means to embed justice into corporate climate work is still evolving, I’m putting this out there: 3Degrees is seeking to advance a just transition through our work. This approach will evolve over time. We’re not launching a whole new suite of solutions. We’re starting with simple principles to ensure justice is centered in our current offerings as much as possible, and being intentional about it in developing new offerings. These principles are aimed to guide not only our own operations and decisions, but also our approaches and advice to help our corporate clients move toward action in climate justice-oriented work.

Principles to build justice into corporate climate action

1. State your intentions.

Meaningful action must start with a clear-eyed understanding of past and current impacts. When it comes to seeking justice in corporate climate work, each organization must get real about how their work, operations, supply chains, et al., have had a negative impact on people and communities. Similarly to greenhouse gas accounting, understanding your current impact on people is essential to understanding how you can do better.

Armed with information, it helps to document a justice-centered goal that connects your opportunities to create positive social outcomes with your company’s climate goals — it can also help to identify connections with preexisting goals on diversity, equity, and inclusion. Document and track progress to avoid getting stuck in complexity or uncertainty.

At 3Degrees, we documented a social mission that explicitly states our goal of pursuing the principles of a just transition through our work; we committed staff and budgetary resources to pursuing the goal; we explained the initiative to our team during an all-company meeting, and got started on specific actions to advance it.

2. Start action by listening to – and investing in – people on the front lines

Any company starting in climate justice work must listen first and look to directly-impacted individuals as leaders and experts in what actions can advance climate justice in their communities. With a goal or initiative in place, the next step is often to seek information and partnership from people and organizations doing work connected to your goal. It is critical that corporate representatives act with care in this outreach to avoid doing harm and coopting work; doing justice work for an organization must start with doing personal work to identify and work to overcome inherent biases, particularly for those of us with historically privileged backgrounds and identities. So do your personal work first, and then partner intentionally with the people and organizations that can guide you about what they need.

At 3Degrees, we set aside funds in our budget for teams to spend work hours volunteering, to make donations to organizations working to advance a just transition, and to donate consulting time with these organizations, like Rising Sun Center for Opportunity, which delivers green careers training to youth, women, people of color, and individuals in reentry in the Bay Area. These partnerships help us learn more about the people and organizations on the front lines, and understanding their challenges helps us identify opportunities to hone our own solutions and develop new avenues for our corporate clients to invest in and serve these and similar community-focused organizations.

3. Act with integrity, learn from mistakes, and build on experience

There is no one playbook or checklist for business leaders who want to make their climate action more justice-oriented. That said, more and more successful examples are emerging. We’re deploying more Peace Renewable Energy Credits (P-RECs), which are international renewable energy certificates (I-RECs) that support renewable energy projects that deliver positive social impacts in fragile, climate-vulnerable countries. The latest P-REC purchase funded the electrification of homes, businesses, and social institutions in the Ndosho neighborhood of Goma (more about the project here). It’s exciting to see more companies on the leading edge sharing their experiences, which we can all learn from. See these examples from Microsoft and Unilever, Starbucks, and Wipro.

At the same time, governing bodies are pushing for more standards and guidance to help us move toward more shared understanding of what’s needed and what success looks like: we’re engaged with B Lab’s Climate Collective and new efforts to build on their Climate Justice Playbook to guide business action. And just recently at the World Economic Forum annual meeting in Davos, researchers announced what they call “the first quantitative, science-based attempt to factor justice into the way we understand the environment and act to protect it.”

At 3Degrees, we are also exploring new and creative ways to leverage our financial commitments to environmental commodities to support projects that advance a just transition. I look forward to sharing more details this year as the work develops.

Onward – Working together toward a just transition in the climate fight

As we move forward in 2023, I am truly energized to pursue social equity in our climate work, and believe there is endless opportunity for companies to advance positive social outcomes in balance with profitability and other core business goals. Join us in bringing justice to sustainability work. Use your sustainability resources to explore ways to repair damage done, give power back to people and communities, and build a more equitable and healthier future for all people.

Onward, together  – Steve

What you need to know about SBTi’s new FLAG target and your company’s climate goals

The world’s Forest, Land and Agriculture (FLAG) sector is responsible for approximately 25% of net anthropogenic emissions globally, but it also has the potential to absorb a significant amount of existing emissions from the atmosphere. To address this gap in emissions accounting and reduction, the Science Based Target initiative (SBTi) introduced new FLAG guidance that requires SBTi committed companies to account for their FLAG emissions and provide pathways for decarbonization in line with the 1.5C scenario. In this article, we help companies navigate the numerous important pieces of information contained in SBTi’s new FLAG guidance by breaking it down into the following components:

The need for a FLAG guidance

Source: SBTi Forest, Land and Agriculture (FLAG) / Launch of FLAG guidance and tool PDF, p.11

Companies have a relatively mature understanding of the requirements for energy and process-related emissions reporting. Guidance from organizations like Greenhouse Gas Protocol and CDP is well-established, and at least basic data sources exist to quantify direct emissions from primary sources of emissions. However, emissions from the forest, land and agriculture sector have been historically calculated at country, region or global level (usually addressed as LULUCF or AFOLU sector emissions) and not included in corporate emissions inventory. GHG accounting criteria and recommendations on FLAG emissions have been historically poorly addressed and there has been no framework on target setting for these emissions. Only a few companies have been accounting for and reporting these emissions at some level. 

The reason for this is lack of data and methodology, resulting in around 22% of global emissions from the land sector not being accounted for appropriately in corporate carbon footprint calculations. Based on SBTi assessment, mitigation measures in the FLAG sector offer a potential 30% reduction of global emissions by 2050 through its carbon sink capacity. In this context, both SBTi and GHG Protocol started working on accounting and target setting frameworks for these land sector emissions in order to increase the coverage of actions and bring the world closer to reaching the global emissions level to 1.5C degrees.  

The SBTi FLAG project developed guidance and a tool for how to set a science-based target for land-related emissions. The GHG Protocol’s Land Sector and Removals Initiative is a complementary project developing  guidance on how to account for land-related emissions and removals (both technological and natural) within a carbon inventory. This blog series is focused primarily on SBTi’s target-setting guidance.

By providing tools and clarity to the FLAG sector, companies finally have the structure they need to manage the 22% of global emissions that result from this sector, which is critical to global emissions reduction.

Criteria to set a FLAG science-based target

The SBTi FLAG guidance will ultimately affect all companies setting a science-based target. SBTi requires all companies that have, or plan to have, an SBT to calculate/estimate their FLAG emissions in their direct operations and supply chain in line with GHG Protocol’s Land Sector and Removals Guidance. Depending on the final share of FLAG emissions in their total scope 1, 2 and 3 emissions, companies will have various target-setting requirements and/or expectations for FLAG-related emissions.

SBTi requires companies that meet one of the following two criteria to set a FLAG science-based target:

For companies with FLAG-related emissions that fall below the 20% threshold, it is still recommended to set a FLAG target, though not a requirement. If the company chooses not to set a FLAG target, FLAG-related emissions still must be included in the overall target boundary and accounted for, together with energy/industry (non-FLAG) targets for a complete GHG inventory. In this case, nature-based emissions removals cannot be accounted for in calculating progress towards an emissions reduction target. 

Ultimately, all companies will need to account for FLAG-related emissions when setting a science-based target. Depending on the sector and materiality of their FLAG-related emissions, companies are required to either set a separate FLAG target or include these emissions in their non-FLAG target. 

Impact on calculating FLAG emissions

Organizations setting FLAG targets will be introduced to the following new categories of emissions accounting: emissions from land use change (LUC), emissions from land management, and emission sinks (also called carbon removals). Base year FLAG emissions must be calculated in line with GHG Protocol’s Land Sector and Removals Guidance, which is set to be finalized in early 2023. 

There are several challenges connected to the FLAG emissions calculation that will have to be addressed by SBTi-committers:

FLAG and non-FLAG targets need to be tracked and reported separately. This means that FLAG-related removals (i.e. biogenic removals) cannot be used to compensate for non-FLAG emissions. 

The two pathways for FLAG target-setting

SBTi developed two pathways for FLAG target setting:

Carbon removals within the FLAG pathways

FLAG pathways are the only means by which companies can include biogenic carbon removals in their target-setting and reporting under SBTi. To be reported, nature-based removals must be in the company’s supply chain (e.g., on-farm/in-forest actions). Removals must be accounted for in line with GHG Protocol’s guidance, including the requirement that a company may only include biogenic removals in its inventory that have ongoing storage and monitoring. While technological removals are included in the GHGP guidance, reporting on this category of removals will be addressed in separate SBTi guidance. 

While SBTi and GHG Protocol’s land sector guidance do not allow an organization to count a removal outside of its value chain towards its near-term targets (i.e., no carbon credits), the guidance documents do address accounting for the sale of carbon credits. 

In the case where a carbon removal or reduction within an organization’s value chain is quantified and sold as a carbon credit, that organization –and any other organization accounting for the activity in its value chain– cannot claim such carbon removal or reduction. Removal projects can be accounted for either within a company’s supply chain and its FLAG target or as a carbon credit by the external buyer, but not both to avoid double counting. 

Though companies are required to report gross emission and removals separately, the final FLAG target is a net reduction target that includes removals. This approach was adopted in order to maintain a focus on reducing cumulative emissions to the atmosphere, while separately increasing CO2 removals.

Complying with SBTi’s FLAG guidance

Although the SBTi guidance was released recently in September 2022, companies are already feeling its impact as the SBTi-committers have set a timeline of FLAG target compliance.

What should companies do to prepare for the new SBTi requirements on FLAG emissions?

In line with the compliance of SBTi’s FLAG guidance, there are eight steps that companies could take to prepare for the new SBTi requirements on FLAG emissions:

  1. Discovery: Get familiar with the new FLAG guidance and its implication on your emissions accounting and reporting. Determine if the new guidance is relevant to your company and if you will need to update your targets, if already set.
  2. Screening: Perform a screening exercise by reviewing your key operational activities connected to the land sector in order to identify and map your FLAG emissions, as well as their share in your total scope 1, 2 and 3. This will help identify whether or not you fall in a category of companies that needs to set FLAG targets.  
  3. Target modelling: If the company is required to update or set new targets, the next step is to model targets using either the FLAG sector pathway or the commodity intensity pathway, or a mix of both, then identify the required emissions reductions and removals. Note that the SBTi criteria on forward-looking ambition also apply to FLAG targets.
  4. Target submission: Prepare the target submission package for target-setting, then update and submit it for validation. Both emissions reduction target and removal target will have to be submitted. 
  5. Data: Develop a FLAG data collection process by identifying key data to be collected and key stakeholders to be involved; researching best databases to be used for emissions calculation for your specific case; having a platform or tool that works best for data collection and emissions calculation; and getting ready for an annual process of FLAG data collection and reporting. Currently GHG Protocol published only a draft version for its Land Sector and Removals Guidance and is recommended by SBTi, though there are various other guidance documents that could be used for reference before the new guidance is finalized. 
  6. Strategy: Develop a company-wide strategy in order to advance towards your targets by identifying key levers in emissions reductions and removals.
  7. Action: Act towards achieving your targets. Similar to non-FLAG targets, FLAG targets have a timeframe between 5 and 10 years, in order to prioritize immediate action over long-term ambition.   
  8. Follow up: Follow the latest versions of the SBTi FLAG guidance. An updated version of the FLAG guidance will follow after the GHG Protocol Land Sector and Removals Guidance is finished, to ensure alignment with corporate accounting guidance.

Emissions accounting and target-setting frameworks are constantly evolving, and SBTi acknowledges that the current version is only the first and updates will follow. As such, companies can have targets in place while continuing to improve their reporting through collaboration with suppliers. 

Any adjustments to accounting methods should be disclosed and implemented per the GHG Protocol Corporate and Value Chain Standards. Any impact of those adjustments on the company’s targets should be assessed in line with SBTi criteria and recommendations, which call for target recalculation when major changes occur in inventories.

Additional requirements and recommendations of the FLAG guidance

The additional SBTi FLAG guidance requirements and recommendations are necessary in order to get a target validated.
These include:

No-deforestation commitment

Companies are required to publicly submit a no-deforestation commitment along with their FLAG target. The no-deforestation commitment is covering all emissions, and isn’t limited to the 67% emissions coverage requirement under scope 3. The target date is no later than 2025, with a recommended cutoff year of 2020. The target year represents the date by which the company intends to have fully implemented its commitment or policy, while the cutoff date represents the date after which deforestation is counted in a company’s supply chain for the purposes of this commitment.

Just transition 

SBTi does not mandate how mitigation actions towards achieving the FLAG targets should be implemented. However, SBTi supports a “just transition,” and there are a number of important considerations that should be followed by companies implementing mitigation actions to meet their SBTi FLAG targets. In this context, companies should ensure climate equity and acknowledgement of carbon rights for farmers, foresters and landholders, including fair compensation for the implementation of mitigation efforts. 

Net zero FLAG targets

Companies are encouraged to set FLAG Net Zero targets, though, like non-FLAG targets, the prerequisite to setting a net zero target is to have a short-term target. The target development and submission process follow the criteria that are already provided in the SBTi Net Zero guidance and Net Zero tool.  

Since the FLAG sector represents almost a quarter of global greenhouse gas (GHG) emissions, the SBTi FLAG guidance seeks to redefine sustainable land use. Although an evolving project, organizations can count on this guidance as a first set of criteria and requirements to address their land-related emissions across all scopes of emissions.

The SBTi FLAG guidance helps provide a critically-important framework for organizations to make important progress in addressing their scope 1, 2, and 3 emissions. If you need help assessing the impact of the SBTi FLAG guidance on your company, or assistance setting climate targets in general, please reach out.

European Renewable Markets Insight Report | 2H 2022

Renewable Energy Markets Report

In many countries across Europe, demand for power purchase agreements (PPA) has remained strong due to sustainability goals and the appearance of specific countries in the market (e.g. in Eastern and Southeastern Europe). The ambitious renewable deployment targets have driven increased PPA volumes. At the same time, uncertainty is also growing in the market, particularly with unusually high prices spurring uncertainty and mobilising governmental interventions across the region.

Discover our latest report here.