Month: July 2023

How we used carbon management platform Sweep to boost scope 3 decision making (video)

As a global climate solutions provider, 3Degrees helps organizations achieve renewable energy and decarbonization goals. With a full suite of solutions for addressing emissions of all scopes, their climate consultancy team partnered with Sweep to offer clients a carbon management software solution. 

This partnership strengthens 3Degrees’ goal setting, greenhouse gas (GHG) footprinting, carbon credit strategy, supply chain engagement, and renewable energy  procurement offerings. Ensuring the highest quality emissions data, Sweep’s platform allows for better customer assistance in understanding and reducing their carbon footprint. This carbon management platform coupled with 3Degrees’ climate tech advisory services, streamline the climate software selection and adoption process for smoother progress towards a decarbonized future. 

In this short video, Karlina Wu, Manager on the Energy & Climate Practice Team at 3Degrees, covers challenges and discoveries related to supply chain management. Read along or press play to get the scoop. 

What is a common challenge your customers face when combating scope 3 emissions

One of the key challenges we see with organizations tackling scope 3 greenhouse gas emissions is that after measurement, it’s not always clear what the next step is. It’s easy to get stuck making the leap from measurement to reductions, and understanding exactly what you need to do or what you need to ask your suppliers to do and having real actionable next steps. 

Can you provide a real life example of the above pitfall? 

We helped an international consumer goods client identify where the majority of their emissions are coming from – in order to provide specific emission reduction actions. Our client knew most of their scope 3 emissions were coming from category 1, which is goods and services. And within that, most of those emissions were coming from advertisements. 

However, we were able to dig into their data and learn that a majority of their advertising emissions are from digital ads, which are being hosted by platforms that actually already have renewable energy targets and decarbonization plans in place. So, rather than focusing on the hosting emissions of those digital ad suppliers, we refocused on the next highest sources of emissions and directed our efforts toward higher impact areas. 

Which key factors come into play when doing this work?

In this case, data transparency was crucial for the organization to trace the emissions back to their suppliers and the specific activities contributing to their emissions. Carbon management software can help with managing emissions data and provide the transparency and reliability needed in order to drive decision-making, allowing our clients to focus on reduction actions with their suppliers. 


About 3Degrees

3Degrees is a leading global climate solutions provider and Certified B Corporation. Our work is driven by the need for urgent climate action, and has been for more than 20 years. We deliver a full suite of clean energy and decarbonization solutions to help global Fortune 500 companies, utilities, and other organizations achieve their climate goals and address emissions in the fight against climate change. The 3Degrees team brings a commitment to integrity and deep expertise in climate strategy and implementation across scopes 1, 2, and 3 emissions, including net zero, global environmental commodities, renewable energy and carbon project development, transportation decarbonization, as well as electric and gas utility voluntary programs. We help develop and deploy impactful climate solutions that make good business sense and advance an equitable transition to the low-carbon future.

SBTi is developing a Net-Zero Standard for Financial Institutions: what you need to know

The Science-Based Targets Initiative (SBTi) has recently released a package of consultation documents aimed at financial institutions, including the conceptual framework for the Net-Zero Standard for Financial Institutions (“FINZ”). The document is neither an exposure draft nor the final standard, but serves as an important milestone along the way to their expected publication in Q4 2023 and in 2024, respectively.

We have gleaned two major takeaways from the FINZ conceptual framework. First, much work lies ahead for SBTi before a FINZ draft will be ready for exposure. Specific definitions, metrics, methods, and examples are still works in progress and will need significant fleshing out before publication of the final standard. The consultation document is also full of optionalities that are open for comment, such as whether financial institutions should aim for 90%, 95%, or 100% net zero-aligned finance.

More important, though, is our second takeaway – regardless of the decisions SBTi makes with the minutiae of the final validation criteria, this conceptual framework makes the ultimate destination clear: full decarbonization of the economy by 2050. SBTi acknowledges that the financial sector will be a key player in that transition, and has repeatedly noted that reducing exposure through divestment or portfolio shifting will not be adequate. Engaging portfolio companies to drive decarbonization will be the only credible path forward.

In this article, we’ll examine what the concept of net zero means for the financial sector and what financial institutions looking to set a science-based target (SBT) should consider. 

Transition to net zero will mean a paradigm shift for the financial sector

A transition to net zero will require financing to be diverted out of high-emitting activities (such as oil and gas) and into new and emerging ones (such as carbon removal). This presents a complete business model redesign, particularly for asset managers who operate in accordance with client mandates and banks that have diversified lending policies due to lending limits and liquidity requirements.

Practically, financial institutions considering setting an SBT or otherwise adopting a 1.5C-aligned strategy should start taking the following steps:


Most sustainability professionals at financial institutions are currently focused on the sustainability performance of their products (e.g., ESG funds) and/or climate risks (e.g., the insurance sector). Financial institutions will need to develop deeper sustainability bench strength, expanding their capabilities to include management of the environmental impact of their portfolios and, to a lesser extent, their own operations and value chains. And they will have to do so with a structural sustainability skills deficit in the workforce, with the demand for green skills now outstripping supply by a factor of 2:1[1].

With that being the case, financial institutions may have to look to new opportunities to get the needed education. They could take the lead from other industries (e.g. food and agriculture) that have found ways to successfully collaborate to build sustainability depth in their value chains. Asset managers might consider a similarly collaborative approach to educating their portfolio companies by developing customized “climate academies” to help accelerate their portfolio’s transition in a scalable fashion.

Going one step further, as many financial institutions have the same underlying investments, collaboration at the sectoral level with the help of industry bodies would benefit all players. A leaf can be taken out of the playbook developed by the investor group Climate Action 100+ to help businesses transition to a net-zero economy.


Greenhouse gas (GHG) emissions measurement tools and approaches have been improving recently, although challenges remain. Despite that, measurement should be seen as a stepping stone to enable your organization to start taking action. This phrase is becoming a cliche in the GHG accounting sphere, but bears repeating – don’t let perfect be the enemy of good.

The objective of GHG accounting is to identify hot spots in your portfolio to enable prioritization of decarbonization opportunities, in parallel with improving the quality of your GHG data over time. That prioritization could include assessments of which sectors/asset classes/investments in your portfolio you have the greatest amount of influence over, as well as which have the greatest emissions or most reliable data.


With over 150 commercial GHG accounting software tools available, it is imperative to select the best-fit software solution that can help:

  • Streamline data collection
  • Measure emissions
  • Track target-setting, decarbonization initiatives, and emissions reduction progress across a dynamic portfolio
  • Integrate with other ESG tools


Carbon removal technologies and permanent carbon storage solutions are critical to achieving societal net zero. Nascent and emerging technologies can present attractive investment opportunities given burgeoning demand, which includes advance market commitments of over $1B from corporate carbon credit buyers. If you are not already familiar with this sector, now is the time to start learning about it.


An integral part of decarbonizing portfolios involves new tools and protocols to enable your organization to screen potential investments in or out, depending on their environmental performance and potential for decarbonization. Private markets firms in particular will have to assess GHG emissions intensities, reduction targets, and transition plans as an essential part of their due diligence process.

One approach is to use temperature rating scores sourced from data aggregators or developing methodologies in partnership with GHG accounting experts. Another approach is to use taxonomies, either existing (e.g., EU taxonomy) or proprietary.


In order to make the net zero transition a Board-level issue, governance structures may also require updates. Below are some examples of measures that financial institutions have been taking:

  • Introducing Board-level oversight of processes and controls over GHG measurement as GHG emissions data is starting to make its way into financial statements
  • Tying executive compensation to ESG performance, and the same approach could be considered, where appropriate, at the portfolio company level
  • Calling on asset managers to incorporate decarbonization and other ESG priorities into their fiduciary duty

Continue to make progress on your climate journey

While these steps can make for a long to-do list, financial institutions should continue to push forward quickly on each of these fronts. With emerging regulation (e.g., new SEC disclosure requirements), global trends like protectionist investment policies, and increasingly clear climate risks and opportunities, financial institutions that fail to act now risk being left behind.

Consultation on FINZ closes on August 14. Please get in touch if you would like to discuss anything that we have covered in this article.

[1] LinkedIn Global Green Skills Report 2023


SBTi FLAG Guidance criteria explained (video)

The world’s Forest, Land and Agriculture sector, known as FLAG, is responsible for around 22% of global greenhouse gas emissions. The Science Based Targets Initiative, or SBTi, has introduced specific FLAG guidance to address these emissions. This guidance requires SBTi committed companies to account for emissions from agriculture, forestry and land-related activities from their operations and across their value chain.

Watch this video to learn how you can determine whether your company should set a FLAG target.


Want to figure out if your company will be affected by FLAG target setting requirements? Download our FLAG Decision Tree.



What is Renewable Natural Gas (RNG) or Biomethane?

What is Renewable Natural Gas (RNG), as it’s called in the United States, or Biomethane, as it’s called in Europe? Our infographic explains how it is generated, what it is, and more.

Download now to get familiar with the basics behind this alternative, climate-friendly solution to natural gas. 

What is RNG?BIOGAS Biogas is methane generated from: Decomposition of wet organic waste. Anaerobic digesters at: Food processing plants Livestock facilities Wastewater treatment plants Gas collection systems at landfills RENEWABLE NATURAL GAS Renewable natural gas (RNG) is cleaned or “upgraded” biogas that has been injected into the national pipeline system. RNG is a climate-friendly alternative to fossil/geologic natural gas. Synonyms: biomethane, high BTU biogas RENEWABLE THERMAL CERTIFICATES (RTCs) RTCs are the environmental attributes associated with RNG. Synonyms: Thermal RECs, Green Gas Certificates, Renewable Gas Guarantees of Origin (RGGO), RNG Certificates

What is Biomethane?BIOGAS Biogas is methane generated from: Decomposition of wet organic waste. Anaerobic digesters at: Food processing plants Farms (using crop and/or manure) Wastewater treatment plants Gas collection systems at landfills BIOMETHANE Biomethane is cleaned or “upgraded” biogas, it is a climate-friendly alternative to fossil/geologic natural gas. Synonyms: Renewable natural Gas (RNG), high BTU biogas BIOMETHANE CERTIFICATES Biomethane Certificates are the environmental attributes associated with Biomethane. Synonyms: Thermal RECs, Biomethan Certificates, Renewable Gas Guarantees of Origin (RGGO), Renewable Thermal Certificates (RTCs), RNG Certificates

European Renewable Markets Insight Report | 1H 2023

There have been a number of interesting developments in the European market in the first half of 2023. To help organisations navigate these, we have developed the second edition of 3Degrees’ European Renewable Markets Insight report.

In this edition, we will look into:

  • Price stabilisation in the wholesale and PPA markets
  • Volatility in the GO market
  • Changes in the EU regulatory framework
  • And more

Start reading the Renewable Markets Insight Report now to take a closer look at the energy and PPA market landscape in Europe. 



Understanding volatility in Europe’s renewables Guarantee of Origin (GO) market

In spite of price and supply volatility in the European renewable energy market and its associated Guarantees of Origin (GO) market, corporate demand continues to increase. Driven both by consumers and regulations, corporate demand for quality renewables is growing the GO market. To help organizations understand both the short- and long-term supply and demand factors, this post summarizes recent developments.

Consumers and Regulations Drive Renewables Demand 

Recent data from the Association of Issuing Bodies (AIB) indicates that corporate demand for Guarantees of Origin (GOs) in Europe continues to experience a steady growth rate of  10-12% year-on-year (see chart). This surge in demand can be primarily attributed to corporations’ increased focus on sustainability as they aim to remain competitive amidst a market progressively driven by environmentally conscious consumers. Moreover, governments within the European Union (EU) are emphasizing the need for corporations to contribute towards meeting national and EU-level emission reduction targets.

Source: AIB

Earlier this year, I joined numerous renewable energy market players at the RECs Market Meeting to discuss the latest developments within the European GO market. I had the pleasure of contributing to the “European Volumes and Prices – Where are markets heading?” panel, focusing on the drivers behind corporate demand in the GO market.  This post includes observations from that event.

Short-Term Supply and Demand Drivers for GOs Increase Volatility

The GO market experiences illiquidity meaning the certificates cannot be effortlessly traded, leading to significant market volatility and imbalances between market players. This results in periodic surges in demand throughout the year influenced by the timing and manner in which buyers and sellers engage in the GO market and interact with one another.

On the supply side, the availability of renewable electricity is directly affected by weather conditions, such as hydro balances and wind speeds. This natural volatility can either ease demand during periods of surplus or intensify demand during periods of shortfall.  

For example, Europe experienced notably dry conditions in both 2021 and 2022, leading to diminished hydroelectric output due to reduced precipitation levels. It also saw decreased wind production caused by reduced wind speeds that lessened renewable energy supply.  In 2023, similar trends have persisted, particularly in Southern Europe, underlining the critical role of weather conditions and climate change in shaping the renewable energy landscape. 

On the other side of the equation, increasing demand from corporations has intensified competition among wholesale electricity suppliers in the European market, particularly in offering green tariffs. This surge in eco-conscious corporations has led to a significant expansion in green tariff offerings as seen in Germany, which further propels the demand for GOs.

In the short term, much depends on end users’ willingness to pay. Despite the market’s high volatility and price fluctuations in recent years (see chart), corporations continue to exhibit a strong interest in renewable energy and GOs, driven by environmental commitments, economic advantages such as green public procurement, and competitive factors.

Source: TP ICAP Group

Long-Term Supply and Demand Drivers for GOs Decrease Volatility

Long-term demand drivers for GOs differ from short-term drivers in several ways. The following political, regulatory, and corporate reporting factors are all shaping long-term trends with the net effect of decreasing volatility in the long-term market. 

Political Considerations Are Driving Corporate PPA Interest

The ongoing conflict in Ukraine has increased electricity price volatility in Europe due to concerns regarding supply disruptions in the Russian energy sector. This uncertainty is prompting corporates to hedge against rising volatile prices by  securing bundled energy supply at relatively stable prices. Consequently, interest is increasing for long-term energy contracts or Power Purchase Agreements (PPAs) and their associated green attributes, GOs. 

According to data from Pexapark, in 2022, corporate PPAs in Europe accounted for 80% of the total PPA deal count and 83% in contracted volumes and increased by at least 20% to 7 GW in 2022 compared to 5.8GW in 2021. 

EU Regulations Support Renewables Supply and Demand

As noted at this year’s RECs Market Meeting,  regulatory pressures exerted by the EU and individual Member States are supporting the growth of renewable energy and standardization of the GO market.

For example, the EU Green Deal is the overarching policy framework that encompasses several policies that work together to create an environment for renewable energy adoption and market growth. Key directives and proposals (e.g. recast RED II, REPowerEU) focus on removing barriers to PPA markets and  expanding renewable energy. Those efforts support the supply side of the GO market and create more harmonized and standardised rules in the market. Additionally, national full-disclosure policies (like those established in the Netherlands, France, and Austria) contribute to increased transparency and accountability in the renewable energy sector.

To bolster the demand side for renewable energy, the EU has introduced and continues to propose several measures under the EU Green Deal aimed at reducing emissions, mandating corporate sustainability reporting and guiding and controlling green claims made by corporations. 

These measures include the Corporate Sustainability Reporting Directive (CSRD), EU Taxonomy, Corporate Sustainability Due Diligence Directive (CSDD), Carbon Border Adjustment Mechanism (CBAM) and EU Green Claims Directive that provide a comprehensive regulatory framework, ensuring that corporations prioritize sustainability in their value chains, adhere to stringent reporting and green claims requirements. The EU Emissions Trading Scheme (EU ETS) and Industrial Green Deal Plan specifically target industries with high carbon emissions and drive sector specific decarbonization efforts. These regulations are all drivers for growth in the renewable energy and GO market.  

Corporate Renewable Sourcing and Reporting Initiatives Also Drive the GO Market  

Global emissions reporting and renewable sourcing initiatives such as the Greenhouse Gas Protocol (GHGP), Science Based Targets Initiative (SBTi), Carbon Disclosure Project (CDP) and RE100 play a key role in shaping corporate demand profiles, emissions reporting, and renewable energy sourcing methods. For example,  RE100 and CDP recently updated their technical criteria which included changes in the EU market boundary criteria for renewable sourcing and implemented a 15-year commissioning and repowering date limit on facilities that can be sourced. These changes  encourage corporations that report to these initiatives to invest in newer, more efficient renewable energy technologies within the geographical boundaries of their operations. That in turn increases demand for GOs and adds to the GO price differences. 

There’s also a trickle-down effect of these changes – large technological and industrial companies are increasingly influencing smaller corporations to adopt more sustainable practices. As large corporations strive to reduce their scope 3 emissions (indirect emissions from their value chain) due to mandatory EU level policies and voluntary reporting initiatives, they inadvertently create pressure on smaller companies in their value chain to decrease their emissions (usually scope 2 indirect emissions from electricity ). This causes a ripple effect that contributes to increased demand for renewable energy sources and GOs.  

More Growth Ahead for Renewables and GOs 

Corporate demand for GOs in Europe is growing rapidly, despite the market’s illiquidity. That growth can mostly be attributed to the long-term market factors outlined in this post. Another driver is increasing investor preferences for environmentally conscious companies. Collectively, these factors contribute to the accelerated adoption and demand of renewable energy sources and GOs, paving the way toward meeting the EU’s net zero goals.

For more about EU market trends, get in touch with us today. 


What the VCMI Code of Practice means for companies looking to make carbon credit claims

The past few years have seen an unprecedented and ever-growing number of corporate commitments to combat climate change. Carbon credits represent one integral tool that companies with such goals can leverage to support their own claims and contribute to global climate change mitigation. As carbon credit-based claims have become more common, a jumble of terms and recommendations for credible action has also arisen, with many market participants expressing valid concerns that lack of standardization is causing confusion and hesitation at best, and greenwashing at worst.

To address these concerns and promote greater standardization, transparency, and clarity around the use of carbon credits, the Voluntary Carbon Markets Integrity Initiative (VCMI), a global non-profit dedicated to enabling a high integrity voluntary carbon market, released part one of its much anticipated Claims Code of Practice in June 2023. The Code aims to provide a clear, operable framework for corporations seeking to make credible carbon claims and for observers looking to assess the integrity of these claims. 

Understanding the VCMI Claims Code of Practice

The VCMI Claims Code lays out an initial suite of high integrity claims, as well as the foundational criteria that organizations must meet before making any VCMI-aligned claim. From a 10,000 foot view, the guidance explains how companies should operationalize one major principle: direct emission reductions should be the top priority, and should not be treated as interchangeable with carbon credits from activities that mitigate emissions outside companies’ value chains. This is a principle that has already been endorsed by other widely-recognized corporate climate guidance, including the Greenhouse Gas Protocol and the Science-Based Targets Initiative.

VCMI’s Claims Code outlines a four-step process that companies must follow to make carbon credit claims in line with its guidance:

1VCMI specifies that claims must be contribution-based, meaning credits must be used for climate mitigation beyond a company’s internal decarbonization targets.
2VCMI may release additional tiering and naming systems in their second release in Nov 23 

What does the Claims Code mean for organizations already making (or intending to make) claims based on the use of carbon credits?

Moving forward, all companies communicating carbon credit-based claims will face the important choice of whether or not to ensure their claims are VCMI-aligned. Organizations that decide to meet VCMI’s requirements (i.e., can set and show progress towards a near-term science-based target and commit to net zero emissions by 2050) can operate with greater confidence that their carbon strategies are in line with robust, third-party standards moving forward. It is likely that these organizations will also be aligned with other prominent voluntary carbon market guidance, as VCMI has announced close coordination with other leading guidance providers such as the Science-Based Targets Initiative (SBTi) and the Integrity Council for the Voluntary Carbon Market (ICVCM).

Companies should consider contribution-based claims 

The Code also provides guidance and suggested language for companies navigating a shift towards “contribution-based” carbon credit claims. VCMI characterizes carbon credits as “contributions” to global climate change mitigation rather than tools to “offset” or compensate for ongoing value chain emissions. This solidifies a growing trend in the voluntary carbon market away from language that may imply carbon credits are interchangeable with direct emission reductions (e.g., “carbon neutral” or “reduced-carbon product” claims), towards a more transparent framing of the impact of carbon credits (i.e., contributing to mitigation beyond credit buyers’ own footprints). This trend has been fueled, in part, by efforts to implement Article 6 of the Paris Agreement, which allows countries to claim and trade carbon credits against their national emission reduction pledges, and has created confusion around acceptable carbon credit claims for non-government participants in the global voluntary carbon market. VCMI has provided an important indication of how companies can credibly claim to contribute to global mitigation using carbon credits, without countries having to formally relinquish the right to count the same emission impacts in their own national registries.

Companies must first align with SBTi guidance to make VCMI-aligned claims

However, VCMI’s requirements of an SBTi-aligned near-term target and a 2050 net zero commitment “in line with globally recognized sustainability frameworks” may significantly limit corporate adoption – and therefore the total emissions impact – of VCMI’s Code. Many companies remain unable to set goals in line with SBTi’s guidance, including certain hard-to-abate sectors (e.g., oil and gas), subsidiary companies of parent organizations, and (in many cases) small and medium enterprises. Throughout 2023, VCMI plans to develop a broader set of claims tiers and an “on-ramp” for companies that are not yet able to meet VCMI’s foundational criteria, which will be crucial for wider adoption and impact. 

Companies with leading investment-based approaches may not conform to VCMI

In addition, VCMI’s decision to default in full to the ICVCM to identify acceptable credits and to require volumetric (“ton-for-ton”)  matching of carbon credits to a company’s remaining emissions may limit adoption by companies with leading-edge carbon procurement strategies. Several companies seen as leaders in the voluntary carbon market have prioritized providing early-stage finance to nascent carbon reduction, removal, and storage technologies whose scale will be essential to stay on track to meet Paris Agreement targets. This is seen as a sophisticated, high risk, pioneering strategy because it comes with crucial tradeoffs: buyers likely receive very small credit volumes well into the future, with high risks of volume shortfall and non-delivery. Additionally, these buyers are often unable to rely on methodologies from major registries as a basic guarantee of credit quality due to the nascency of the reduction or removal approaches they choose to support. Because investment amounts, not credit volumes, are the focus of these organizations’ claims, and because ICVCM approvals will only be given to credits certified under approved programs (i.e., registries) and methodologies, it is unlikely that these types of buyers will be able to make VCMI claims unless the Code is expanded significantly.

What’s Next for the Claims Code of Practice?

With its first release of the guidance, VCMI also announced its plans to significantly expand upon the Code throughout 2023. Key areas VCMI has flagged to build out its framework include: the Measurement, Reporting, and Assurance (MRA) framework companies will need to use to validate VCMI claims, supplementary guidance for specific industries, sectors, and geographies, and potential new nomenclature for its claim tiers (per a review of marketing appeal), in addition to entirely new claims tiers and possible on-ramp option for companies who have not yet met VCMI’s foundational criteria. 

While it remains to be seen how widely companies adopt this new guidance, VCMI’s Claims Code has introduced a new standard that can be a useful anchor point in examining the integrity of carbon credit claims moving forward. The Code’s strong assertion that companies must procure high-quality credits to contribute to global climate ambition while still prioritizing internal decarbonization is a welcome addition to the guidance landscape shaping the voluntary carbon market. Given the potentially limited applicability of this first release of VCMI’s guidance, we hope that the forthcoming release of industry- and geography-specific modules, as well as the much-anticipated Measurement, Reporting, and Assurance framework, will provide a clearer roadmap for companies at all stages of their sustainability journeys to take ambitious action in the voluntary carbon market and make credible carbon claims with confidence.

If you are considering making a carbon credit-based claim, shifting your carbon strategy to prioritize a contribution-based approach, or have any questions about what carbon market evolutions mean for your existing or forthcoming climate commitments, please reach out.


Tory Hoffmeister is a Manager on 3Degrees’ Energy and Climate Practice consulting team




Emma Friedl is a Consultant on 3Degrees’ Energy and Climate Practice consulting team