SBTi Reviews Scope 3 Emissions Guidance on Carbon Credits
The Science Based Targets initiative (SBTi) has released four new technical outputs as part of reviewing its Corporate Net Zero Standard.
This is the first step in the process of revising its guidance to companies, particularly surrounding Scope 3 emissions and carbon offsetting.
Sue Jenny Ehr, Interim CEO at SBTi says the announcement of these outputs “marks a key step in the revision process for the Corporate Net-Zero Standard".
“Over the last decade, the SBTi has validated the targets of over 5,000 companies with another 3,000 companies having committed to submit targets for SBTi validation," she says.
“Targets are the first step to decarbonisation and it is important that the SBTi conducts a comprehensive process to revise the standard to help companies take the lead on climate action and drive down emissions.”
New SBTi technical publications
The organisation has released four new publications as part of its review of the Corporate Net Zero Standard.
- Scope 3 discussion paper
- Evidence received on the effectiveness of Environmental Attribute Certificates
- Synthesis report of evidence on the effectiveness of Environmental Attribute Certificates in corporate climate targets – Part 1: Carbon credits
- Findings of independent systematic review on the effectiveness of carbon credits in corporate climate targets
The Scope 3 discussion paper includes scenarios on how environmental attribute certificates, including carbon offsets, may be used in science-based target setting.
In each of the scenarios outlined the priority remains direct decarbonisation of the value chain without using carbon credits as a substitute.
So far, the reports show mixed evidence on the effectiveness of carbon offsets.
Near the end of Q4 2024, a draft Corporate Net Zero Standard will be released for public consultation.
Alberto Carrillo Pineda, Chief Technical Officer at SBTi says: “The outputs released today are a critical step in understanding how the SBTi can develop a more sophisticated approach to Scope 3 to help more businesses set targets.
“The SBTi believes that direct decarbonisation must remain the priority for corporate climate action and looks forward to the extensive public consultation on the draft Corporate Net-Zero Standard.”
The Science Based Targets initiative
The SBTi is a corporate climate action organisation that develops standards, tools and guidance to support companies in setting greenhouse gas (GHG) reduction targets to reach net zero by 2050 and prevent catastrophic levels of global warming.
Net zero pledges now cover 92% of GDP and 88% of emissions worldwide, but the definition and path there can be interpreted in different ways.
Without a common definition, targets can be different in the sources including and the speed of reductions, causing confusion.
The SBTi aims to provide a common path to net zero using science to ensure that targets will reduce emissions to the levels needed to prevent extreme harm to the environment.
The institute was formed as a collaboration between the CDP, United Nations Global Compact, World Resources Institute and World Wide Fund for Nature.
It uses four aspects in governing its work:
- Collaboration
- Respect
- Integrity
- Accountability
In 2021 it launched the first Corporate Net Zero Standard to ensure companies targets are consistent in achieving these goals.
The Corporate Net Zero Standard
The Standard is the world’s only framework for corporate net zero target setting that is in line with climate science.
The Standard contains four key components:
- Neat-term targets
- Long-term targets
- Neutralise residual emissions
- Beyond Value Chain Mitigation (BVCM)
Companies that have taken on commitments under this framework include Microsoft, Alphabet, Toyota and Apple.
Sundar Pichai, CEO at Google, says: “Fighting climate change is humanity’s next big moonshot. And as with any moonshot, we’re going to have to answer some big questions to get there.”
Lisa Jackson, Vice President for Environment, Policy and Social Initiatives at Apple, says: “We’ll keep pursuing creative ways to reduce our footprint and only use high-quality carbon offsets to balance emissions we can’t zero out.
“Tackling climate change is possible only when we bring government, industry, and communities together.”
Carbon offsetting and the SBTi
In April 2024, the SBTi released a statement saying that, when properly supported, environmental attribute certificates could function as an additional tool to fight climate change.
This sparked controversy and more than 50 NGOs signed an open letter titled ‘Why Carbon Offsetting Undermines Climate Targets’.
In June 2024, H&M’s Head of Sustainability Leyla Ertur wrote to the SBTi, saying environmental attribute certificates “weaken corporate climate pledges and make real decarbonisation efforts within value chains less attractive".
Not everyone disagrees with the SBTi on this.
Elizabeth Sturcken, MD, Corporate Partnerships at the Environmental Defense Fund, says: “This move is a welcome shot-in-the-arm for corporate climate action.
“This new flexibility can be a gateway to SBTi’s ‘gold standard’ for corporate targets. SBTi’s previous approach to Scope 3 was not working for many companies - especially those with immensely complex global value chains.”
The SBTi stresses its new releases are an early step in the review and its current guidance remains unchanged.
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