The Science Based Targets initiative (SBTi) will allow companies to use carbon credits to offset their Scope 3 supply chain emissions as they work towards their climate targets – a move that has pleased businesses but frustrated environmentalists.
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In an announcement on Tuesday, SBTi said it had revised its corporate net-zero standard following a six-month consultation period and concluded that environmental attribute certificates, which include carbon credits, could be used to offset Scope 3, or full value chain emissions, “when properly supported by policies, standards and procedures based on scientific evidence.”
The move marks a major u-turn for SBTi, which previously had not permitted companies to use carbon credits to offset their emissions.
The organisation clarified that it would not get involved in the controversial process of validating the quality of carbon credits, which have faced intense scrutiny over the last 12 months amid accusations of fraud and over-claiming.
SBTi said that other carbon standards bodies are “better positioned” to determine carbon credit quality, but it would be working on establishing clear guardrails and thresholds for standards bodies to refer to, although no clarity has been given yet as to how these guardrails are defined.
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It’s a shockingly retrograde move to allow carbon credits to be used by companies to meet their supply chain emissions targets. It massively undermines the credibility of SBTi.
Grant Rosoman, senior campaign advisor, Greenpeace International
SBTi was formed after the signing of the Paris Agreement in 2015, and is regarded as the gold standard for corporate climate target-setting as it aligns decarbonisation goals with the aim of capping global warming at 1.5°C.
Scope 3, or full value chain emissions, typically account for the bulk of a company’s carbon footprint, particularly for carbon-intensive firms, but they are the most difficult type of emissions to abate as they are beyond a company’s direct operational control.
More than 80 per cent of firms do not have Scope 3 reduction targets approved by SBTi, according to a study by Boston Consulting Group.
SBTi’s announcement was welcomed by the We Mean Business Coalition, a corporate climate action non-profit, which said the move would empower firms to bring more innovation and investment into cutting their value chain emissions, and also funnel much-needed climate finance to the Global South.
The organisation’s chief executive María Mendiluce told Eco-Business that while SBTi’s decision may stir debate over whether carbon credits will effectively speed up decarbonisation efforts, guardrails put in place by SBTi will ensure the new Scope 3 rule leads to “additional climate action”.
SBTi’s allowance of carbon credits into its system would spur a “race to the top” for quality carbon credits and builds on recent work done by carbon industry watchdog the Integrity Council for Voluntary Carbon Markets (ICVCM) to determine what counts as a high quality carbon offset project.
The International Emissions Trading Association (IETA), a non-profit that supports the development of carbon markets, said SBTi’s revised net-zero standard for Scope 3 emissions offered a “practical” route for corporates to engage in climate action.
The organisation said the voluntary carbon market is “evolving and adapting to changing dynamics, reflecting a positive evolution in response to the climate imperative to do more, faster.”
Environmental groups were less impressed. Grant Rosoman, senior campaign advisor at Greenpeace International, a group that has investigated irregularities in carbon projects in Asia and elsewhere, said SBTi’s allowance of carbon credits for Scope 3 offsetting was a “shockingly retrograde move” that undermined the organisation’s credibility.
“In the face of runaway climate change we need real reductions in emissions, not copping out by relying on dodgy carbon offsets,” he said, referring to recent exposés that challenged the effectiveness of carbon projects.
“It raises serious questions about how much science there will be in SBTi and the influence over it by carbon market players and corporates.”
Carbon Market Watch, a non-profit, said SBTi appears to have “buckled to pressure” from corporate interests to allow firms to meet Scope 3 targets with carbon credits, “raising the risk that corporations can appear to be improving their climate performance on paper while actually spewing out more greenhouse gases into the atmosphere.”
Their comments echo doubts cast over the move by a group of SBTi staff, who have called for the organisation’s chief executive to resign for allowing companies to use carbon credits to offset their emissions. The announcement came as “a major shock” to staff and was “not a science-based decision,” Reuters reported.
The news emerges seven months after a group of Hong Kong real estate firms successfully lobbied against a proposed change to SBTi accounting rules they said would prohibit them from using renewable energy certificates procured overseas towards their net-zero targets.
