When we first launched our SCF policy back in early 2021, the guidance was to base SCF contributions on a price of £50-100 per tonnes of CO2e emissions. The second version of the SCF policy, published in May 2023, suggested that contributions be based on either a small percentage of annual revenue or a price of £50-100 per tonnes of CO2e emissions. Now, in the third version of our policy, we are advising members to calculate their SCFs using a percentage of annual revenue small enough to be realistic in annual budgets but significant enough to support meaningful action. You can find more details on our latest guidance here.
Rationale Behind Our Updated SCF Policy
We have reached these conclusions following consultation with advisors in both the environmental and cultural fields. There are few key reasons why GCC now recommends the “percentage” approach to SCFs and these points have been expanded on below:
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Funding climate action needs to be done in addition to decarbonisation, and should not be tied to it - this is still too close to offsetting.
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We should be ramping up our climate funding as we head towards 2030, not planning to reduce it.
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There is a growing consensus that setting individual “net zero” targets for organisations one-by-one is not the most efficient way to reach global net zero. More and more environmental organisations and networks are demanding alternative approaches. We want to help support and accelerate this positive shift.
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CO2e reporting is not an exact science, and so is arguably not the best metric to use in order to calculate SCF contributions.
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Tying climate contributions to revenue rather than emissions, and maintaining them even as operational emissions fall, is arguably more compatible with the principles of climate justice.
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The percentage approach is more applicable, and therefore more actionable, for more organisations.
1. Funding climate action needs to be done in addition to decarbonisation, and should not be tied to it - this is still too close to offsetting.
One of the main concerns with conventional carbon offsetting is that it promotes the idea that we can ‘pay our way’ out of the environmental damage we are causing. This isn’t just a theoretical issue. Right now, polluting corporations like Shell and Total are facing legal challenges for business plans that would have devastating impacts on the climate; one of their key defences is that they plan to spend enough money on climate-friendly measures like tree-planting or (unproven) carbon capture technologies, to “cancel out” the damage their emissions will cause.
Matching SCF funds to our measured emissions - while much better than offsetting - still promotes the idea that we are somehow “compensating” for those tonnes of CO2e, language that - we believe - is unhelpful in this wider debate. If we want everyone - including the big polluters - to take their emissions reductions seriously, then we should all be moving away from the idea that money we spend on external projects is in any way “compensating” for our own emissions.
We have been pleased to see this shift in language begin to spread across the environmental policy space, with both the Science-Based Targets initiative and the Gold Standard organisation noting the risks and challenges of “compensation”-based language in comparison with the idea of making “contributions” to help tackle the climate crisis, above and beyond your own emission reductions (see ‘Communicating SCF Action’).
2. We should be ramping up our climate funding as we head towards 2030, not planning to reduce it.
In theory, if our members are on track for their emissions reductions targets, annual SCF contributions calculated from CO2e emissions would be shrinking the closer we get to 2030. In practice, this will mean less funding for crucial climate initiatives at a time when funds may be critically urgent. The percentage of revenue approach is a more sustainable way of funding climate action in the longer term.
3. There is a growing consensus that setting individual “net zero” targets for organisations one-by-one is not the most efficient way to reach global net zero. More and more environmental organisations and networks are demanding alternative approaches.
We want to help support and accelerate this positive shift, not just by promoting alternatives to offsetting but by challenging the underlying myth that the “correct” amount of action to take should be based solely on your current or projected carbon emissions, rather than seeking out the most effective way to use whatever resources you have to help tackle the crisis.
The growing demand for this kind of approach - making positive contributions towards climate action that are not connected to your own carbon emissions - can be seen in the development of specific guidance on this topic by the Science-Based Targets initiative, Gold Standard, and others (see our page on ‘How our approach with SCFs fits in with others’).
4. CO2e reporting is not an exact science, and so is arguably not the best metric to use in order to calculate SCF contributions.
Carbon audits are very useful for internal planning and target-setting, but can vary depending on data quality, measurement boundaries etc. and should not be seen as precise measurements of environmental impact. As a result, estimates of carbon emissions are arguably not the strongest metric against which to calculate contributions to climate action. The percentage of revenue model does not rely on the accuracy of carbon audits and instead simply encourages organisations to give what they can.
5. Tying climate contributions to revenue rather than emissions, and maintaining them even as operational emissions fall, is arguably more compatible with the principles of climate justice.
From a climate justice perspective, our current carbon emissions do not accurately represent our responsibility for the climate crisis. In the Global North, the wealth, infrastructure and security that underpins today’s arts and culture sector has been built upon hundreds of years of fossil fuel extraction, much of it at the expense of the Global South. Tying our climate contributions to revenue rather than emissions, and maintaining them even as our operational emissions fall, helps to reflect this.
In the longer term, we hope this can form part of a larger conversation with GCC members about how action on the climate crisis ties into other crucial discussions around decolonisation and international reparations that are also taking place within the art world. What does it actually mean to acknowledge the climate debt that the North owes to the South, or to act in solidarity with communities on the front lines of the climate crisis? Can SCFs play a role in this? These are bigger topics that we hope to explore in the future.
6. The percentage approach is more applicable, and therefore more actionable, for more organisations.
Our updated SCF policy offers a formula that is actionable for all of our broad membership. Simply calculating contributions based on emissions does not take into account the nuances and complexities faced by different types of organisations or individuals who may be restricted by their funding arrangements or financial circumstances. By moving to a percentage model, all of our members, regardless of organisation type or size, can take action and be recognised and celebrated in doing so.
Acknowledging alternatives
We do acknowledge and understand that some organisations may have already started calculating their SCFs based on emissions as per our previous advice, or because this approach feels familiar and in line with prior offsetting work. We also recognise that other organisations continue to recommend funding climate action based on emissions. For these reasons, GCC accepts that some of our members will - for the time being at least - still be tied to an emissions based calculation. We acknowledge that this can still be effective and that some people may prefer to continue in this vein. However, for the reasons outlined above, this is not our preferred method.
GCC encourages any effective and ethical funding of climate action. If an organisation believes that the only way they can currently put money towards funding climate action is by linking it to their emissions, then of course that is a positive thing to do. In these cases, GCC would recommend looking for opportunities to switch to a percentage-based model in the future.
We are open to working with and mutually supporting other initiatives that take a different approach to get to the same endpoint. Find more information here about different organisations working in this space and their methods.
Summary
We believe that the new SCF policy is a more holistic approach to funding climate action. The updated approach creates a new framework for climate action, separates decarbonisation and climate funding, encourages a shift in the conversation, and, we hope, will set standards and encourage alignment across the sector.
The most important thing is that we are urgently addressing the climate crisis. Rapid decarbonisation should be the primary focus for our members. But, beyond that, Strategic Climate Funds can additionally help to accelerate decarbonisation and system change.
We are in a period of transition away from conventional offsetting, and there is not yet a standard model or approach for funding climate action. That’s why GCC has taken this time to learn and develop a policy that will continue to evolve with the best available evidence and advice. In the interests of transparency and clarity, and to future-proof our recommendations, we are making this evolution in thinking known to our members.
1 We recognise that revenue might not be an appropriate metric for everyone (see ‘The Economics of SCFs’ section above). It may be appropriate instead to find a percentage of ‘Net Income’, ‘Sales’, ‘Unrestricted Funds’, ‘Turnover’, ‘Gross Profit’, etc. What is most important is that individuals and organisations remain transparent about their choices, and generate enough money to support meaningful climate action. This approach is similar to other organisations such as 1% for the Planet, Earth Percent, One for the World and Giving What We Can.
2 See for example https://www.bloomberg.com/news/articles/2024-04-12/shell-climate-appeal-sees-dutch-group-push-for-tougher-rules
Further SCF reading:
