Will SBTi Survive the Storm over Carbon Offsets Support?

SBTi’s hokey-cokey on carbon offsets has angered many business leaders and climate organisations, even leading to calls for the organisation to step aside

When it comes to whether organisations can use carbon offsetting to hit their Scope 3 targets, it seems the standards body’s indecision is final.

It has been a veritable hokey-cokey, with the Science Based Targets initiative apparently declaring carbon offsetting “in”, then “out”, then “in” - maybe.

One thing is certain – SBTi has shaken the net zero sector all about.

In an apparent attempt to calm the storm, SBTi CEO Luiz Amaral wrote a blog, saying: “I acknowledge and deeply regret the concern and distress this situation has caused and want to reassure my SBTi colleagues and stakeholders that the SBTi’s dedication to science-based decarbonisation, public consultation and standard-setting governance is unwavering. The SBTi standards have not changed.”

That, hopefully, soothed the fears of those who are fundamentally opposed to the use of carbon offsetting – including the New Climate Institute.

It previously said “...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”.

Perhaps Luiz should have left the blog there. But he put his left foot in and out again.

He wrote: “I refuse to avoid a difficult discussion if it could potentially improve our standards to deliver a bigger impact. This deliberation is underway and advancing.

“...we are exploring changes to tackle the challenges that exist around Scope 3, including exploring responsible use of Environmental Attribute Certificates (EACs) with the right guardrails and limits.”

For those interested in the next step, it will come in July, when a draft paper is published on the issue, to produce a “more robust standard that will deliver greater impact”.

The question now is whether SBTi can retain (or regain) the confidence of the organisations it exists to work with.

That ship has sailed for some.

As reported on IPE.com, Udo Riese, Head of Sustainable Investing at Allianz Investment Management SE, said SBTi has done “a tremendous job” as an incubator, but “now it is time for standard setters, regulation and financial auditors to bring credible transition plans to scale”.

WWF, one of the organisations which co-founded the SBTi, issued a statement criticising parts of the SBTi’s approach.

It said: “Offsets cannot be a substitute for reducing emissions from company operations, products and value chains.”

The background

The storm was initially whipped up by the SBTi Board of Trustees, which said in a statement in April: “SBTi recognises 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 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.

To critics, the fund seemed 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 published a ‘clarification statement’ that said: “No change has been made to SBTi current standards. Any use of EACs for Scope 3 will be informed by evidence.”

It may just as well have tried to force a genie back into a bottle.

‘This defies good governance and science’

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: “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.”

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.”

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 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.”

There is clearly a divide about carbon offsetting. It remains to be seen whether SBTi’s July announcement will narrow it or broaden it.


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