On Tuesday, the Science Based Targets initiative (SBTi) released its updated draft Net Zero Corporate Net Zero Standard (Version 2.0) for public consultation. The AIM Platform welcomes the draft standard’s broader vision of “what counts” towards a value chain target through indirect mitigation1 and activity pools2. These changes are a significant step to strengthen corporate accountability and ambition to implement value chain abatement targets.
The AIM Platform believes that thoughtfully designed flexibility is critical for companies to meet their value chain targets. Under existing target setting standards, value chain decarbonization is limited by barriers such as traceability, data quality and access, and supply chain dynamics. While companies have made some progress in overcoming these barriers and working towards their value chain targets, it has also become clear that such targets cannot be met solely through direct supplier engagement.
The AIM Platform is therefore encouraged by SBTi’s inclusion of additional target attainment flexibility and supports and encourages the use of activity pools and indirect mitigation. The use of market mechanisms such as Environmental Attribute Certificates (EACs), when structured appropriately, are a real opportunity to drive investment into the hardest-to-abate sectors.
We look forward to engaging with SBTi to further refine their use in the Version 2.0 Standard, including but not limited to:
- Developing robust and effective quality criteria requirements for indirect mitigation, which are not yet defined;
- Refining the use cases where activity pools and indirect mitigation should be allowed;
- Understanding the durability and conditions of the use of indirect mitigation as an “interim” measure towards scope 3 targets (as compared to scope 2, for which there is no similar time bound);
- Emphasizing the importance of scope 3 as an impetus for investment in the hardest to decarbonize sectors, which often are much more deeply embedded in supply chains than with tier 1 suppliers; and,
- Emphasizing that while working to improve traceability is important, in certain low-traceability sectors, deep abatement should be the priority.
Additional clarity will be crucial as companies consider making investments on the basis of these revisions, and we believe that the outputs of the AIM Platform can be an important resource to SBTi as it further refines this draft. For example, with regards to clarifying when the use of activity pools or indirect mitigation should be allowed, the draft AIM Platform Association Test details how to credibly assess whether an intervention is associated with, or relevant to, a company’s value chain and should therefore “count” towards a climate target. The AIM Platform is currently piloting the Association Test with 20+ leading companies to ensure the final document is clear and actionable. Similarly, the AIM Platform’s forthcoming Accounting and Reporting Standard and Guidance (expected Q2 2025) will, among other things, outline quality criteria requirements for indirect mitigation.
The AIM Platform is deeply appreciative of the work of the SBTi team. We encourage continued collaboration between SBTi and the Greenhouse Gas Protocol to create a clear path for how indirect mitigation actions that are properly accounted for and reported fit within the updated SBTi Corporate Net Zero Standard. We look forward to continuing to share our work with SBTi and GHGP in the coming year and contributing to their Standard revision processes.
(1) SBTi defines indirect mitigation as “Mitigation actions that contribute to net-zero-aligned transformation relevant to the company’s value chain but that cannot be traced back to activities or emissions sources within the company’s value chain. This may include chain of custody models like book and claim systems. Indirect mitigation is distinct from beyond value chain mitigation (BVCM) in that it is intended to contribute to net-zero transformation relevant to the value chain, whereas BVCM contributes to global climate mitigation for activities that are not associated with the value chain.”
(2) SBTi defines activity pools as “The set of emissions sources which may physically serve the reporting entity, but within which further traceability to the specific physical sources used by the reporting entity is not possible. Examples include an upstream supply pool, such as a supply shed from which companies source a specific commodity, or a downstream activity pool, such as the electricity grid powering the products that the company brings to market.