Why is the SBTi advocating the Carbon Offsets Market?
A few days ago, the Science Based Targets initiative lit the fuse under an explosive subject – the use of controversial carbon credits as a way for big businesses to offset their emissions and hit net zero targets.
It was a short fuse: the explosion was almost instantaneous.
This – the key part of an SBTi public statement – is what has provoked anger, consternation, confusion (and some support).
The SBTi Board of Trustees said: “SBTi recognizes that, when properly supported by policies, standards and procedures based on scientific evidence, the use of environmental attribute certificates for abatement purposes on Scope 3 emissions could function as an additional tool to tackle climate change.
“Consequently, SBTi has decided to extend their use for the purpose of abatement of Scope 3 related emissions beyond the current limits.”
It adds: “SBTi considers this step a way to accelerate the decarbonisation of value chains with compensation logic while companies make their way to eliminate carbon emissions at the root through innovation and technology improvements.”
There are many who are dumbfounded. Reaction includes that it is "carte blanche" for businesses to "continue business-as-usual for another decade and take no responsibility for reducing the large majority of their emissions" - and that the change will "encourage carbon cowboys".
Backed by Bezos
The statement includes predictable promises of “specific guardrails and thresholds”, plus consultation with relevant stakeholders.
The statement has strong support from The Bezos Earth Fund, a key SBTi supporter, which was created by a commitment of US$10bn from Jeff Bezos in 2020 to be disbursed as grants to address climate and nature within the current decade.
- Jeff Bezos set up the fund with US$10bn
- The money is to be handed out from 2020-2030 as grants to address climate change
- The fund is a team of 'thought leaders, problem solvers and doers' from science, government, private and non-profit
- The team invests in big ideas, bold concepts and major transformations to increase the pace of positive environmental change
To critics, the fund seems to be advocating a change that prioritises greenwashing over genuine sustainability programmes - effectively a get out of jail free card, enabling them to hit their green targets without taking tangible action.
Three days later, SBTi frantically hit the brakes, with a ‘clarification statement’ that says: “No change has been made to SBTi current standards.
“Any use of EACs for Scope 3 will be informed by evidence. Any change to SBTi standards, including use of EACs for Scope 3, will be conducted according to previously approved SBTi Standard Operating Procedure for developing standards.”
It may just as well have tried to force a genie back into a bottle.
- In 2015, the CDP, the United Nations Global Compact, World Resources Institute and the World Wide Fund for Nature collaborated to launch the Science Based Targets initiative (SBTi) to support businesses and organisations set and achieve sustainability goals. By setting science-based targets, companies are able to assess how much and how quickly they need to reduce their greenhouse gas (GHG) emissions, while also enabling them to define best practices in emissions reductions and net-zero targets. Businesses and organisations that commit to SBTi will also have exposure to a team of experts to provide independent assessment and validation of targets, to help them keep on track to set and achieve net-zero targets in line with a 1.5°C future. To date, more than 4,000 companies have used the initiative to set a science-based climate target to reduce their emissions.
Encouraging carbon cowboys?
Many see the initial statement as a clear indication of SBTi’s direction of travel – and a betrayal of its founding principles.
Simon McKeating, programme manager at the Scotland Food & Drink Partnership’s Net Zero Commitment, said: “SBTi’s decision to allow companies to use carbon credits to offset their emissions sets a dangerous precedent. It could undermine SBTi’s credibility and encourage a new wave of carbon cowboys flogging carbon credits.
“The principle of setting targets – and not including carbon off-sets – to count as progress towards your targets has been enshrined in the SBTi Corporate Net Zero Standard since it was first published in 2021 and should be protected.
“Real progress on emissions reduction can only be made by taking action in your own operations and along your value chain.
“We cannot simply buy our way out of climate change.”
‘Carte blanche to take no responsibility’
The New Climate Institute said: “If companies are allowed to achieve their scope 3 targets through offsets, they have little incentive to align their business model with the Paris Agreement’s 1.5°C temperature limit.
“Instead, companies would get a carte blanche to continue business-as-usual for another decade and take no responsibility for reducing the large majority of their emissions.”
Carbon Market Watch Executive Director Sabine Frank added: “This decision defies both good governance and science. If it is not reversed, it will strip the SBTi of its ‘science-based’ nature and will mark a step back for voluntary climate initiatives globally.
“By granting excessive flexibility to companies, SBTi will lose its raison d’être: promoting robust and effective corporate climate action.”
Mutiny at the institute?
SBTi’s controversial initial statement also triggered something of an internal revolt.
Employees at the organisation wrote an open letter, calling for the statement announcing the offsetting plan to be withdrawn. The staff have also pushed for the resignation of CEO Luiz Fernando do Amaral and any board members who supported the initiative.
- Luiz Amaral, CEO, previously led the World Resources Institute’s work on sustainable global supply chains as Director for Commodities and Finance. He has sat on the boards of companies including sustainable agriculture financiers &Green Fund, the Tropical Forest Alliance, the Brazilian government's National Fund for Climate Change and on the innovation and sustainability board at Minerva Foods.
- Maria Outters, Chief Impact Officer, previously served as Group SVP Sustainability for Sodexo, having begun her career as a consultant with McKinsey.
- Alberto Carrillo Pineda, Chief Technical Officer, co-founded SBTi in 2014, having previously been Director of Science Based Targets at CDP and Head of Climate Business Engagement at WWF, both companies now partners of SBTi.
- Alex Buss, COO, Operations and Finance Director, served as Finance Director for the Institute of War and Peace Reporting before joining SBTi.
- Luisa Pastore, Director of Communications previously managed communications at UK-based climate action NGO WRAP, developed Wales’ recycling communications strategy and in her spare time volunteers helping women from diverse backgrounds gain the skills they need to succeed in political or public life.
- Anita Sheth, Compliance Director, brings over 20 years’ experience to the team, having previously worked at Fairtrade International and Save the Children.
Paul Schreiber, senior policy advisor of research NGO Reclaim Finance and a member of the SBTi Technical Advisory Group, said: “This statement could lead to a critical change to the way in which companies set decarbonisation targets," said.
"If it is not retracted by the Board then I cannot continue to work with the Technical Advisory Group. I will not be part of a standard-setting process that is a potential cover for a greenwashing operation.”
SBTi gets some support
Not everyone believes SBTi’s thinking on carbon credits is muddled.
Elizabeth Sturcken, MD, Corporate Partnerships, Environmental Defense Fund, said: “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.”
Anna Lerner Nesbitt, Climate Collective CEO and former Lead, Project17 and Global Strategic Partnerships, Meta, said: “We're running out of time and are spending so much of our energy in-fighting. We need all the solutions.
“Carbon markets have spent the last two years strengthening process integrity and a myriad of new technologies and providers are shoring up data integrity.
We should celebrate the progress and start using this instrument to its full potential. I am grateful to the Science Based Targets initiative board for recognizing that.”
More on the incendiary statement
SBTi first hinted at the controversy to come in January, when it announced that work to revise its Corporate Net-Zero Standard was a priority for 2024 and that this revision would include “additional guidance on tackling Scope 3 emissions”.
With Scope 3 notoriously the most difficult emissions for companies to reduce – because they involve third parties – boardrooms were keen to find out what the ‘revision’ would amount to.
For ‘revision’, read ‘revolution’. That is what last week’s statement really was, while January’s teaser was an understatement.
As reported above, the declaration that “the use of environmental attribute certificates for abatement purposes on Scope 3 emissions could function as an additional tool to tackle climate change” was seismic.
And, despite the subsequent row-back, the rest of the statement – and the sheer volume of work it reveals – is a clear demonstration of SBTi’s intentions.
It says: “SBTi has carried out a wide consultative effort on this subject in the past six months and reported to the Board a summary of the call for evidence survey results.
“This will entail the definition by SBTi of specific guardrails and thresholds as well as the rules to be applied for these certificates to be considered valid for Scope 3 emissions abatement purposes respecting the principles of mitigation hierarchy.”
It adds: “As part of the Standard revision process, and following consultations with all the relevant stakeholders, a first draft of basic rules, thresholds, and guardrails for the potential use of environmental attribute certificates for abatement purposes of Scope 3 emissions will be issued by SBTi by July 2024.”
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