The most significant evolution to the Standard is the introduction of the Climate Transition Budget (CTB). Starting in January, certifying companies will meet a standard of climate action based on a minimum per-tonne threshold of funding for climate solutions. For 2025, certifying companies will demonstrate that they are allocating a CTB equal to $15 per tonne of emissions.
Each company will determine where to invest the CTB across three categories:
Other Contributions projects: up to 15% of the CTB can go toward research & development projects, climate advocacy, or climate justice initiatives to continue building capacity for the net zero transition
The CTB is a new way of thinking about climate funding. It replaces tonne-for-tonne neutrality with dollar-for-tonne funding. Companies gain flexibility to count value chain projects, and gain the opportunity to better align their funding with their climate goals.
Now, the implementation of a Climate Transition Budget can feel daunting and intimidating at first. Where within your value chain can you make the most impact? Is it still worthwhile to invest in offsets? Is this going to be more expensive than just buying carbon credits? What kind of projects will qualify across the various categories of the CTB?
In 2025, amika joined our Beta Program to test the new framework on the ground. amika is a premium hair care brand with a focus on using high-quality and sustainable ingredients and packaging within the Bansk Beauty family of brands alongside Eva NYC and Ethique. The company’s tagline sums up their ethos succinctly: amika is a friend to you, him, her, them, and the planet.
Let’s take a closer look at where amika began their climate journey and how the Climate Transition Budget unlocked new opportunities for amika to make progress on impactful decarbonization projects.
Since establishing a dedicated ESG department in 2022, amika has worked with The Change Climate Project on making meaningful strides in climate action initiatives through our certification program. So, when the opportunity arose for amika to participate in helping shape and test the 2025 Standard, Jamie Richards, Director of ESG, and Chandler Frenken, Associate Manager of Sustainability, jumped at the chance to participate.
Prior to establishing a Climate Transition Budget, amika had a dedicated budget solely for investing in ESG expenditures such as software, carbon offsets, and various certification fees. (In addition to its Climate Neutral Certification, amika is also a certified B Corp and holds certifications from Leaping Bunny and Level Access.)
While some of the ESG budget was dedicated to post consumer recycled materials and other key ESG initiatives, their emissions kept rising – and their offset budget kept growing and growing. This created a challenge for amika’s ESG team: they had to request portions of other departmental budgets to invest in climate related projects, slowing down progress as they made a case each time for why those dollars should be diverted to climate action. Delays and limited funding curbed the impact the ESG team was able to have on actually reducing emissions year over year. But this all changed with the implementation of amika’s Climate Transition Budget.
At amika the ESG budget became their Climate Transition Budget, with a broader mandate for any climate-related spend. As these funds were set aside for climate action and reduction work, amika’s ESG department no longer had to request money from other departments to implement their reduction action plans. It unlocked autonomy and quicker action on the pressing climate crisis.
How exactly did they make this work? Amika’s ESG budget is based on previous spend and yearly emissions projections. The team works hard to track emissions on a monthly basis so they can make accurate predictions on the needed funds to earmark for the CTB by mid year. By having a dedicated budget, amika’s ESG team is able to prioritize projects that are necessary to reduce their annual GHG emissions, but otherwise weren’t being implemented.
Take lower carbon ingredients, for example. One of the barriers to implementing lower carbon ingredients is the requirement to test new product formulas for performance and shelf stability. The CTB has allowed for the acceleration of a 1:1 ingredient swap that encompassed carbon reduction in addition to traditional product efficacy, unlocking a new frame of innovation.
By allocating this cost to the CTB budget, the team was able to do the necessary R&D work: they confirmed the same performance criteria were achieved with preferred ingredients, opening the door to move forward. Enter: lower-carbon ingredients across the product line.
Another key action was the ESG team’s decision to move the direct purchase of lower-carbon raw materials into the ESG budget. While this may seem unconventional, this creative approach allowed them to:
With the new budget structure, amika’s ESG team is able to undertake new initiatives to reduce emissions across their value chain. To date they’ve invested in increased PCR in packaging, eliminated direct-to-consumer air freight for shipments, and supported suppliers with renewable energy and efficiency improvements.
It’s important to note that while some of these projects cost amika more overall, many of them reduce costs for the business as well. Switching to intermodal transportation and removing air freight from their DTC shipments led to a 30% reduction in emissions associated with travel and transportation and an overall cost savings in excess of $1 million.
For amika, the Climate Transition Budget has made future ESG investments actionable and achievable. Keeping categories broad allows them to react in real time with flexibility while simultaneously providing stronger visibility as to where those investments and dollars are being put to work. Instead of just purchasing carbon credits, the CTB in action is resulting in more meaningful reduction work directly within amika’s operations and supply chain.
Not only is the team more efficient and proactive with investing in decarbonization projects — but most importantly, it’s working. Amika has made incredible progress in reducing it’s annual GHG emissions since entering the certification program in 2022, when they measured 2021 emissions. Total emissions that year measured in at 9,529 tCO2e. Through multiple initiatives across Scope 1, Scope 2, and Scope 3 such as transitioning all haircare packaging from Virgin Plastic to PCR, improving efficiency across their warehouses, transitioning 10% of truck freight to rail freight across shipments from California, and more, it’s clear amika’s investments are paying off. While 2022 emissions were a little bit higher, the results started to show in their 2023 inventory. Absolute emissions decreased by over 30% and emissions intensity dropped by more than half — indicating lasting improvements for a growing consumer business.
We’re excited to see where the Climate Transition Budget leads in the coming years and how it evolves not only for amika but our entire certified community.
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