The Science Based Targets initiative (SBTi) has published four technical documents as part of the process of revising its Corporate Net-Zero Standard, but is facing criticism for failing to take a decisive step toward allowing carbon credits to be used to address Scope 3 emissions.
Scope 3 emissions make up 75% of the average company’s footprint and are considered a major challenge when it comes to corporate decarbonisation. The SBTi, therefore, said it was “responding to the experiences of the thousands of businesses” in exploring options to develop a more effective approach to addressing Scope 3 emissions and enhance the impact of its Corporate Net-Zero Standard.
Alongside evidence they have received on the effectiveness of Environmental Attribute Certificates, SBTi released a Scope 3 discussion paper, setting out their initial thinking on potential changes being explored around Scope 3 target setting, including underlying principles and concepts.
Additionally, SBTi released the findings of an independent systematic review of the effectiveness of carbon credits in corporate climate targets, which complemented a synthesis report on carbon credits – part one of three distinct reports on different EAC instruments.
According to the synthesis report, evidence suggests that various types of carbon credits “are ineffective in delivering their intended mitigation outcomes,” but there was an acknowledgment that “a more comprehensive evidence base would need to be reviewed in order to have more conclusive results”.
Further, the evidence submitted to the SBTi “generally suggests that there could be clear risks to corporate use of carbon credits for the purpose of offsetting,” with “the potential unintended effect of hindering the net-zero transformation and/or reducing climate finance”. On the other hand, Beyond Value Chain Mitigation and contribution approaches “may represent preferable models for accelerating net-zero transformation and increasing climate finance” in that those efforts are over and above a company’s efforts to reduce its own emissions.
However, “there is a clear need to assess a wider body of evidence to interrogate this research area more thoroughly”.
A draft Corporate Net-Zero Standard is set to be released for public consultation towards the end of Q4 2024, and stakeholders are also invited to share feedback on the Scope 3 discussion paper via this feedback form.
Alberto Carrillo Pineda, chief technical officer at SBTi, said: “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 decarbonization must remain the priority for corporate climate action and looks forward to the extensive public consultation on the draft Corporate Net-Zero Standard.”
Reaction
Allister Furey, CEO and co-founder of Sylvera, was disappointed with SBTi’s response: “Net zero faces a three trillion-dollar financing gap. That is a need so extreme that we can no longer ignore high-quality carbon credits as an efficient tool for driving capital to effective climate solutions, from scaling new carbon removal technologies to protecting and restoring natural carbon sinks.
“In delaying the decision, the SBTi has missed an opportunity to set an example for pragmatic action and encourage every business to expedite their emissions reductions and increase investment to bridge this gap – and it is time lost that we can’t afford.”
Meanwhile, Tommy Ricketts, CEO and co-founder of BeZero Carbon, went further in his criticism: “It’s hard to know what the SBTi is trying to achieve from this latest announcement. The focus on technical offsetting alone ignores so much of what’s happening in the carbon market and the ways in which carbon credits positively contribute to the planet and to communities.
“Scope 3 emissions are, by definition, someone else’s Scope 1 and 2 emissions – using carbon credits for Scope 3 is double-counting at the corporate’s expense, not the other way around. Businesses are once again left without clarity and firm guidance, and because of this, I expect the trend of companies leaving SBTi to accelerate in the next 12 months.”
