In late 2023, we kicked off a multi-year process to advance our certification framework and ultimately transition our community to a new climate label in 2025. Our charge was simple in practice, yet difficult to achieve: design changes to our certification that are clear enough for people to grasp and trust, and concrete enough to motivate companies to act.
Core to achieving these goals is a transparent and inclusive stakeholder process that solicits a wide range of opinions and perspectives on what is needed to drive climate ambition within the corporate sector.
Over the past 10 months, we engaged in hundreds of conversations with NGOs, certified brands, and other partners; released a survey to solicit broad public feedback; beta tested draft requirements with over 20 companies; and secured input from our Standard Technical Advisory Committee (STAC).
Taken together, this outreach yielded thousands of perspectives on key questions related to the updated framework. Informed by these viewpoints, the final 2025 Standard will be publicly released in late September, during Climate Week NYC.
Here we preview some key takeaways from this stakeholder process.
#1. The certification should directly measure corporate financial investment in climate action, both within and beyond the value chain
At a time of many competing (and often confusing) standards, frameworks, and guidance documents, stakeholders expressed strong support for a more direct approach to assessing climate leadership. As one senior leader at an environmental NGO noted, “How companies actually invest in climate action matters more than aspirational pledges.”
Stakeholders like the practical approach taken by the draft Standard, focused on financial accountability and disclosure. A leading sustainable business consultant said, “I really like that this is a response to companies that are not on track to net zero. This provides a more systematic and transparent approach to carbon pricing and climate transition budgets for companies.”
#2. Carbon pricing is a direct way to establish financial accountability in corporate climate transition plans. The ‘right’ level for a carbon fee? It depends.
Setting a carbon fee gets companies to assign a value on carbon and dedicate appropriate levels of budget towards projects that will achieve Net Zero goals. As one climate consultant noted, “The carbon pricing mechanism [in the draft Standard] is brilliant. It’s shocking that companies still don’t have a budget set aside for decarbonization.”
Another stakeholder in carbon markets said, “I love that this will make it more accessible for companies to understand how to set an internal carbon price and a carbon budget.”
What’s less clear cut is what the price on carbon should be. Some stakeholders advocate for a $100+/tonne in the range of the “social cost of carbon.” Yet this is hard to reconcile with the overwhelming stakeholder support for considering companies’ “willingness/ability to pay.” In our public survey, a majority of respondents (53%) said that the carbon price for Scope 3 emissions should be set at $10-30/tonne.
Across the economy, few companies observe a carbon fee today. The framework should get companies started pricing their Scope 1-3 emissions by setting a reasonable level today and plan to grow that price over time.
#3. Companies should invest in projects that reduce their own emissions while also supporting projects that help achieve global net zero.
Most stakeholders support companies investing their climate transition budget in projects that reduce their own Scope 1-3 emissions while also investing in projects that help achieve global net zero emissions. As one NGO leader noted, “All companies and all individuals must do something to help address climate change. Companies are going to need different pathways to make a difference.”
Most stakeholders support a minimum requirement for value chain investments to ensure that companies prioritize operational and supply chain projects that reduce emissions. In the public survey, when asked how much of a company’s Climate Transition Budget should be invested to reduce value chain emissions, a plurality of respondents (29%) selected “20% of total investment.” Other top selections included “50% of total investment” (17% of respondents), “No minimum required” (17% of respondents), and “30% of total investment” (14% of investment).
Recognizing unique barriers to value chain investing for smaller companies, a majority of respondents (68%) support a lower minimum value chain threshold for small companies compared to large companies.
#4. Company climate spending should support and enable the ‘just transition’.
Stakeholders support the practice of factoring in ‘just transition’ principles. As one stakeholder noted, “It’s important for companies to provide climate investments that benefit the local frontline communities in which they or their suppliers operate.”
According to the United Nations, a ‘just transition’ is broadly defined as ensuring that no one is left behind in the transition to a low carbon world.
There are two ways for companies to support the just transition: by investing in GHG reduction projects that promote climate justice, and by making investments in community-led projects that have a primary purpose of improving the welfare of affected communities.
Given the direct GHG mitigation purpose of certification, stakeholders support limits on investment in indirect, market-transforming projects. 32% of respondents to the public survey recommend a 10% cap on climate transition budget credit for these indirect costs, while 28% support limiting credit to 25% of the total climate transition budget.
The entire Change Climate Project team offers our deep felt appreciation to everyone that has been involved in our process to date. We look forward to unveiling the final public version of the Standard in late September at Climate Week and will be offering ongoing educational briefings on the 2025 Standard to companies and other stakeholders in Q4.
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