What is climate finance? Taking responsibility beyond your own value chain

When a company contributes to emission reductions outside its own operations, it's often called Beyond Value Chain Mitigation (BVCM) [1]. It's a way of taking responsibility for greenhouse gas emissions beyond the direct impact of your own business. It's not about "offsetting" your emissions. It's about actively contributing to emission reductions globally, especially where it makes the biggest difference. The term "carbon offsetting" used to be widely used. The shift reflects a new mindset: we can't buy our way out of responsibility, but we all have a part to play in making the global transition happen.

By financing projects that reduce or capture greenhouse gases, we support sustainable development. More companies and individuals can take a concrete step towards a more sustainable world while contributing to systemic change. Investing in climate projects that are additional, verified and sustainable in the long term helps mitigate the climate crisis and is a way of taking moral responsibility. This applies especially to actors in the wealthy part of the world, where consumption-based emissions have historically been high and the ability to act is greatest.

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How does climate finance work globally?

The UN Framework Convention on Climate Change (UNFCCC) sets the framework and goals for climate finance [3], and international agreements determine how much should be mobilised. The previous goal was for wealthy countries to contribute USD 100 billion a year. At the COP29 climate summit in 2024, it was replaced by a new goal: at least USD 300 billion a year by 2035, along with a call to eventually scale up total finance to USD 1.3 trillion a year [4].

The money comes from public funds, private investment and international funds. International climate funds distribute grants and loans to developing countries [3], and on the capital markets, green bonds are used to finance environmental and climate projects [10].

The money goes towards two things:

• Mitigation: for example, investment in renewable energy and sustainable transport.
• Adaptation: for example, building flood defences and developing drought-resistant crops.

It's harder to raise money for adaptation than for mitigation. A solar farm can generate a return, but a flood barrier rarely does. And according to UNEP, the needs keep growing. In 2023, developing countries' adaptation finance needs were 10–18 times greater than the support they received [8]. Today, the need is estimated at more than USD 310 billion a year, roughly 12 times what is currently being paid out [9].

The EU and its member states contributed EUR 28.6 billion in 2023 and EUR 31.7 billion in 2024 [5]. Sweden gave around SEK 9.4 billion in 2023 [6] and set a new record the following year with SEK 11.1 billion [7].

Want to support projects that actually make a difference? With us, your company can finance certified climate projects, from wind power to efficient cookstoves and biogas. See our climate projects

SBTi for businesses

According to the Science Based Targets initiative (SBTi), BVCM should come on top of a company's own emission reductions. It's a complement, not a substitute [1]. Even so, the potential is significant, and it can speed up emission reductions where they're needed most [2].

The first step is knowing where your own emissions come from.
With GoClimate, your carbon footprint is calculated automatically from your invoices and receipts.

What are climate projects?

Climate projects aim to reduce the amount of greenhouse gases in the atmosphere. This can be done by:

Avoiding new emissions
Replacing fossil energy sources with renewables, or preventing greenhouse gases from biological processes from being released.

Capturing greenhouse gases that have already been emitted
For example through reforestation or technical solutions such as direct air capture (DACCS) or bioenergy with carbon capture and storage (BECCS).

The market for climate projects is constantly evolving, with new technologies, better methods for measurement and verification, and greater transparency. But quality still varies widely, so it's crucial to choose projects certified to standards such as Gold Standard.

Read more: Robert Höglund on negative emissions: "If everyone waits until 2030, the capacity won't be there."

Renewable energy – replacing fossil fuels

One clear type of avoidance project replaces fossil energy production with renewable energy such as wind, solar or hydropower. More than 80 percent of the world's energy still comes from fossil sources [11].

When we build wind power in India, where parts of the population still rely on coal or diesel generators for electricity, we help avoid emissions that would otherwise occur. At the same time, access to clean energy increases and living conditions improve for local communities.

These projects often take place in countries where costs, infrastructure or political interests mean that fossil energy still dominates. But additionality, meaning that the project wouldn't happen without external funding, has to be assessed project by project. In 2024, the ICVCM concluded that several common methodologies for renewable electricity don't demonstrate additionality clearly enough [12].

Biogas projects – from waste to energy

Another type of avoidance project converts greenhouse gas emissions from biological material into energy. This can be waste from agriculture, landfills or wastewater, where methane would otherwise leak into the atmosphere. Instead, the gas is captured and used as fuel. Emissions are avoided and fossil energy is replaced.

Biogas projects also often bring major local health and environmental benefits, and can sometimes create new sources of income in low-income countries.

More efficient cooking – small changes, big impact

In many parts of the world, people still cook over open fires. This leads to heavy firewood use, deforestation and harmful air pollution. Projects that introduce efficient cookstoves can therefore have several positive effects:

• Less need for firewood → less deforestation
• Less smoke → better health, especially for women and children
• Time and labour saved → greater gender equality

These projects are more complex to carry out because they require behavioural change and training. The effects are also hard to measure: a 2024 study found that cookstove projects had on average been over-credited by more than nine times. Gold Standard's methodology, which measures actual fuel use, came closest to reality [13]. Even so, the potential for climate benefits and social impact is significant.

Tree projects – protecting and restoring

Forest and tree projects can both avoid and capture greenhouse gases. They can involve:

• Reforestation (replanting forest in areas that have been cleared)
• Afforestation (planting forest where there was none before)
• Protecting existing forest

Forests are vital to the planet's carbon balance. The number of trees has fallen by around 46 percent since the start of human civilisation [14].

At the same time, these projects are difficult to measure and monitor, and long-term climate benefits are hard to guarantee. That's why GoClimate has chosen not to invest in forestry projects, despite their potential, and instead focuses on more measurable and reliable emission reductions.

Carbon capture technology – the solutions of the future?

To meet the goals of the Paris Agreement, we need to remove around 7–9 billion tonnes of CO₂ from the atmosphere per year by 2050. Today, about 2 billion tonnes are removed each year, almost all of it through forests [15]. Technical solutions, known as removals, are therefore a fast-growing field.

Examples:

• Climeworks uses giant fans to pull CO₂ directly out of the air.
• Biochar is made by heating biomass without oxygen. The carbon is locked in and can then be stored in the soil.

But the technology is still expensive. At Climeworks, it currently costs around USD 1,000 per tonne of CO₂ [16]. Biochar is somewhat cheaper, but still not on par with traditional projects.

It's also hard to scale these technologies up to the level required. And they risk drawing attention away from what matters most: cutting emissions here and now.

The cost of climate finance

Climate projects vary widely in nature and complexity, so their costs vary too. There's no universal price for a tonne of CO₂. The price depends on the technology, the region, the administration and the quality assurance.

Every climate project needs resources to be developed, monitored and verified. Part of the price goes to project developers, certification bodies and third-party auditors. These are essential for making sure the project actually delivers the climate benefits it claims.

GoClimate only works with projects that meet strict requirements for transparency, effectiveness and third-party certification. For many years, we have therefore only supported Gold Standard-certified projects. It also means we're selective: not every project makes the cut, and our job is to pick out the ones that deliver the most climate benefit per krona invested.

Climate responsibility you can follow up on. We measure your company's emissions, and you finance certified climate projects through the same platform, all clearly reported. See how it works

Why global projects rather than Swedish ones?

There are several reasons to support projects in countries like India and Indonesia rather than in Sweden. In some parts of the world, wind power can still be too expensive to build without help. Infrastructure and expertise may be lacking, or investment in fossil energy continues because of corporate interests and lobbying. In those cases, the project won't happen without support. This is called additionality [17]. Wind power can produce the same amount of energy in Sweden, but the marginal benefit is higher in a more fossil-dependent country. There, we avoid burning coal and diesel and help raise living standards locally.

Until we've achieved a society-wide transition away from a fossil-dependent economy, we have a moral obligation to take responsibility for the emissions we still cause, and to some extent for our historical climate impact too. Financing effective climate projects, as long as they're good and certified, is one of the best tools we have to do that under today's rules and frameworks.

Want to contribute?

Already know your company's carbon footprint? Then you can start financing certified climate projects through GoClimate right away.

Not sure yet? With GoClimate, your carbon footprint is calculated automatically from your invoices and receipts, so you know where you can make the biggest difference. It's the first step in taking climate responsibility.

Together, we can drive the global climate transition forward, with concrete action here and now.

Book a demo and see how GoClimate can help your company measure, reduce and contribute.