Beyond Absolute Targets: How Oatly Balances Growth with Climate Impact

In the evolving landscape of climate action, we’re continually refining our approach to help companies make the most impactful contributions to global decarbonisation. While we’ve made progress in carbon accounting and target setting, a deeper understanding reveals a critical gap: current net-zero frameworks – though well-suited for conventional businesses – may unintentionally miss opportunities to fully incentivise the growth and scaling of climate solutions.

This gap becomes clear when considering companies whose products enable emissions reductions across society. How can these organisations scale their positive impact while demonstrating robust climate credentials? If their growth displaces higher-carbon alternatives, limiting their expansion could inadvertently slow broader decarbonisation efforts.

Enhancing climate impact through strategic growth  

Oatly, the world’s original and largest oat milk company, exemplifies this challenge perfectly. Their oat-based dairy alternatives offer substantially lower carbon footprints than conventional options – making them a solution for addressing climate emissions from the food sector, which accounts for approximately one-third of global greenhouse gas emissions¹. 

The climate impact equation is compelling: as Oatly increases production, they displace more high-carbon products, potentially delivering greater system-wide emissions reductions. Yet this growth inevitably increases their own operational footprint in the short term, creating tension with conventional approaches to target-setting. 

When Oatly approached SE Advisory Services, they sought to maximise climate benefit without limiting expansion. This presented an opportunity to think beyond conventional approaches and find a framework that could accommodate the unique position of climate solutions companies.

Defining climate solutions companies 

Before exploring Oatly’s approach, it’s important to understand which organisations qualify as climate solutions companies. 

A climate solution is a product or service meeting societal need while enabling significant emissions reductions compared to conventional alternatives. This isn’t simply about having a marginally better footprint – genuine climate solutions demonstrate a carbon impact at least 50% lower than the market-weighted average of alternatives they replace. 

For a company to qualify as a climate solutions company, it must meet rigorous criteria: over 90% of revenues must come from climate solutions; public interim and net-zero targets must cover all emissions with a Climate Transition Plan and annual disclosure; active sector transformation work is required; and solutions must not harm biodiversity, water resources, or extend fossil fuel-dependent technologies.  

Applying the right framework  

At SE Advisory Services, we undertook a comprehensive review of major net-zero frameworks to identify the most appropriate approach for Oatly. Our analysis led us to the Exponential Roadmap Initiative’s (ERI) and Oxford Net-Zero Climate Solutions Framework² – designed specifically for companies whose products enable significant emissions reductions compared to conventional alternatives. 

Working closely with Oatly’s Sustainability Team, we conducted a detailed assessment of Oatly’s products against the Climate Solutions Framework’s requirements. Through life cycle assessment data and market analysis, this assessment supported the Exponential Roadmap Initiative’s classification of Oatly as a climate solutions company.  

SE Advisory Services then helped Oatly identify the correct intensity targets for maintaining this status in the long run by analysing their climate impact reduction opportunities alongside those of the market average. 

Science-aligned intensity-based targets  

The Climate Solutions Framework recognises that companies providing climate solutions need to grow to maximise their positive impact, which means their total emissions may increase in the near to medium-term. Rather than discourage this necessary scaling, the framework provides for intensity-based targets instead of absolute emissions targets for qualified climate solutions companies. This approach encourages and rewards the growth of innovations that can help counter the risks of global warming, acknowledging that existing accountability frameworks are not set up to reward companies with climate solutions that need to be scaled.  
 
For Oatly, these targets follow two key principles: alignment with the Carbon Law (a concept developed by the Stockholm Resilience Centre that proposes halving global emissions every decade to meet the Paris Agreement’s 1.5°C goal³) and maintaining a significant lower climate footprint over their market category. 

The graph below illustrates Oatly’s intensity-based reduction pathway to 2050, demonstrating how their targets compare to both the evolving market average and the Climate Solutions Framework threshold requirements: 

• 2030: 40% reduction in emissions per litre from 2020 baseline – ensuring Oatly maintains at least 60% lower climate impact than the ‘milk’ market average in 2030. 
• 2040: 70% reduction in emissions per litre compared to 2020 – widening the gap to at least 75% lower climate impact than the ‘milk’ market average in 2040. 
• 2050: 89% reduction in emissions per litre compared to 2020 – reaching 90% lower impact than the ‘milk’ market average in 2050, with remaining emissions counterbalanced through durable carbon removals. 

What makes this approach particularly powerful is how it compares to conventional dairy’s expected decarbonisation. According to the Science Based Targets initiative (SBTi) dairy commodity pathway, conventional dairy is projected to reduce its emissions by only 22% to 39% by 2050. Even with this improvement in conventional dairy, Oatly’s products will maintain and significantly widen their substantial advantage over time – highlighting the long-term value of scaling climate solutions. 

Throughout this trajectory, Oatly’s targets significantly exceed the minimum Climate Solutions Framework threshold requirement of being at least 50% better than market average. 

Scaling solutions for transformative impact 

The food system transformation requires bold innovation and practical solutions. By implementing intensity-based targets, Oatly has found a balanced approach that allows them to grow their positive impact, enabling more consumers to choose products with significantly lower climate impact. 

This differentiated approach is not about lowering ambition or avoiding responsibility. For most companies, absolute emissions reduction targets remain the appropriate and necessary method for aligning with global climate goals. However, for the specific subset of companies providing genuine climate solutions that meet rigorous criteria, a more nuanced approach can accelerate broader societal decarbonisation while maintaining scientific integrity. 

Market substitution effects are complex – increased production of climate solutions may not result in perfectly proportional reductions in conventional alternatives due to market dynamics. Nevertheless, the systemic transformation enabled by scaling climate solutions remains crucial for long-term decarbonisation. As frameworks continue to evolve, we must ensure they accommodate the full spectrum of actions needed to achieve a net-zero future. 

Our work in this space focuses on developing evidence-based approaches that help organisations navigate the rapidly evolving climate landscape. By applying robust methodologies that account for each company’s unique context, we can collectively maximise our contribution to global climate goals. 

Learn more about this approach in our Whitepaper, “Rethinking Net-Zero Frameworks: Enabling Climate Solutions Companies to Drive Societal Decarbonization“, developed in collaboration with Oatly. 

Ready to amplify your climate impact? Whether you’re scaling climate solutions or seeking to maximise your organisation’s contribution to global decarbonisation, contact our team and turn your ambition into impact.

Sources:

¹ Crippa, M., Solazzo, E., Guizzardi, D. et al. Food systems are responsible for a third of global anthropogenic GHG emissions. Nat Food 2, 198–209 (2021). https://doi.org/10.1038/s43016-021-00225-9

² https://exponentialroadmap.org/wp-content/uploads/2024/07/Climate-solutions-framework_v1.0.pdf

³ https://www.stockholmresilience.org/research/research-news/2017-03-23-curbing-emissions-with-a-new-carbon-law.html