Low standards come at high cost: SBTi to issue results of consultation on environmental certificates including carbon credits

Background:
At the end of July, the Science Based Targets initiative (SBTi), a key organisation in the corporate sustainability standards sector, will publish the results of a call for evidence on the effectiveness of environmental attribute certificates (EACs), including carbon credits, in meeting corporate climate targets [1]. According to a leaked internal SBTi document reported by Reuters, these offsets are largely ineffective at reducing emissions [2]. This reflects the majority of peer-reviewed data and research studies on carbon credits, which show significant quality issues with carbon crediting programmes including lack of additionality, unrealistic baselines, potential leakage or rebound effects, non-permanent carbon removal and social and environmental harms [3].

The release of the findings of the call for evidence will come at a pivotal moment for the SBTi, following the Board’s controversial decision to allow the use of offsets for Scope 3 emissions without following the organisation’s established governance procedures. The move sparked a staff revolt and coincided with the resignation of the SBTi’s CEO. 80 leading civil society organisations have since issued a joint statement urging the SBTi to maintain its exclusion of offsets and adhere to scientifically sound methodologies for tracking corporate climate efforts [4].

Jill McArdle, International Corporate Campaigner, Beyond Fossil Fuels:

“Carbon credits enable corporations to evade responsibility for cutting emissions across their operations and supply chains and breed distrust in the credibility of the climate and sustainability standards sector itself. It is crucial that the Science-Based Targets initiative (SBTi) avoids becoming a tool for corporate greenwashing by enforcing strict standards that exclude carbon offsets from corporate climate targets.”

Rachel Kitchin, Senior Corporate Climate Campaigner, Stand.earth:

“The research is clear – carbon credits do not equal climate action. If the Science Based Targets Initiative (SBTi) wants to live up to its name, it must keep offsetting out of its standards, or risk prioritising corporate convenience at the expense of the planet. There is an urgent need for deep emissions cuts across all sectors. With Scope 3 representing the majority of emissions in manufacturing sectors like the fashion industry, allowing offsets would essentially let companies off the hook from taking meaningful climate action.”

Myriam Douo, Senior False Solutions Campaigner, Oil Change International:
“Oil and gas companies focus more on appearing climate-friendly than on actually reducing emissions. They spend billions on smoke and mirrors, such as carbon offsetting, to support the illusion that they have solutions for a livable planet. In reality, they prioritise profit over the damage they cause to our climate and communities. The Science Based Targets Initiative (SBTi) cannot fall for these industry schemes. It must uphold stricter standards and stop dangerous distractions like carbon offsets.”

Timeline of events:
April 2024: The SBTi Board of Trustees announced [5] that it would allow company climate targets to make use of carbon credits – or offsets – to address their scope 3 emissions [6]. This generated criticism from staff [7], and members of the SBTi’s Technical Advisory Group (TAG) and Scientific Advisory Group sent a letter [8] to the Board calling for a retraction because the Board’s statement had bypassed SBTi’s Standard Operating Procedure [9]. The Board then updated its statement with a clarification that ‘no change has been made to SBTi current standards’ yet and that ‘any use of EACs for Scope 3 will be informed by evidence’. 

May 2024: Submissions to the SBTi’s call for evidence were analysed and weighted for quality by the SBTi review. A leak of this early internal analysis indicated that the high quality evidence submitted showed offsets to be largely ineffective [10]. 

July 2024: 80 NGOs issued a joint statement on 2 July calling for scientific and credible rules on carbon accounting and corporate climate target setting, and for the exclusion of offsetting from voluntary and regulatory frameworks on climate transition planning [11]. It argued the following: 

• The majority of peer-reviewed data and research studies on carbon credits reveal significant problems with carbon crediting programmes including lack of additionality, unrealistic baselines, potential leakage or rebound effects, non-permanent carbon removal and social and environmental harms. 
• Allowing carbon offsets for emission targets could seriously delay real climate action, as companies are incentivised to buy credits instead of reducing their own emissions. 
• There is a limited supply of “quality” credits that could be used as offsets. Even if all the quality issues mentioned could be fixed, the available projects and land would not be sufficient to satisfy the increased demand for credits that would occur with the inclusion of carbon offset credits into scope 3 emissions accounting.
• Offsetting does not address climate funding and undermines carbon prices by providing a false sense of availability of ultra-cheap abatement options around the world. This risks disincentivising the real investments and finance needed for profound changes to corporate value chains around the world. 

Contacts:

Shane Reese, Corporate Campaigns Media Director, Stand.earth, shane.reese@stand.earth, +1 919 339 3785 (Eastern Time)

Jill McArdle, International Corporate Campaigner, Beyond Fossil Fuels, Jill.McArdle@bff.earth, +32 456 723 993

Al Johnson-Kurts, Oil Change International Communications Manager, al@priceofoil.org, +1 802 595 9593

 

Notes:

1. https://sciencebasedtargets.org/resources/files/call-for-evidence-environmental-attribute-certificates.pdf 
2. https://www.reuters.com/sustainability/corporate-climate-watchdog-document-deems-carbon-offsets-largely-ineffective-2024-05-09 
3. Scientific literature on carbon credits has shown significant quality issues with carbon crediting including:  

• the likelihood that the majority of the billions of credits created up to now are not additional, i.e. that any reduction in emissions would likely have happened regardless of the carbon market (thus undermining the entire rationale for carbon crediting);  
• the difficulty to set meaningful baselines, and the temptation to set unrealistic baselines and generate more carbon credits;  
• the potential leakage or rebound effects, e.g. by merely shifting deforestation away from a project area to nearby areas;  
•  non-permanent carbon removal which is falsely equated with the reduction of (permanent) emissions from the combustion of fossil fuels;  
• and social and environmental harms uncovered by numerous investigations over decades showing that projects have e.g. been imposed without local consent or violated the land rights of Indigenous Peoples and local communities. 

1. https://beyondfossilfuels.org/wp-content/uploads/2024/07/Joint-CSO-Statement-Offsetting.pdf
2. https://sciencebasedtargets.org/news/statement-from-the-sbti-board-of-trustees-on-use-of-environmental-attribute-certificates-including-but-not-limited-to-voluntary-carbon-markets-for-abatement-purposes-limited-to-scope-3
3. Scope 3 emissions, the emissions that a company is indirectly responsible for through its global value chains, account for the vast majority of emissions in many sectors. Supply chain emissions are 26 times higher than operational emissions, and upstream emissions just from the manufacturing, retail, and materials sectors have a footprint that is 1.4 times the total CO2e emitted in the EU in 2022. 
4. https://www.dropbox.com/scl/fi/gvjkqr4k4cdtt57qit9s6/SBTi-Staff-Response-to-the-Board-of-Trustees-April-9-Statement.pdf?rlkey=o38yubknqezjqzim44wjtk5fb&e=3&dl=0
5. https://www.edie.net/experts-threaten-to-quit-sbtis-advisory-groups-over-potential-weakening-of-offsetting-rules/
6. https://sciencebasedtargets.org/resources/files/SBTi-Procedure-for-Development-of-Standards_V1.0.pdf
7. https://www.reuters.com/sustainability/corporate-climate-watchdog-document-deems-carbon-offsets-largely-ineffective-2024-05-09/
8. https://beyondfossilfuels.org/wp-content/uploads/2024/07/Joint-CSO-Statement-Offsetting.pdf
9. How big is the net zero financing gap?: https://www.climatepolicyinitiative.org/wp-content/uploads/2023/09/How-big-is-the-Net-Zero-financing-gap-2023.pdf
10. In July, WWF, a founding member of SBTi, released a paper on SBTi’s scope 3 requirements, saying it does not support the use of offsets to meet company climate targets (except for residual emissions), ‘because they would redirect efforts away from the investments and innovations needed for driving systemic change and deep decarbonisation in companies’ value chains’. https://wwfint.awsassets.panda.org/downloads/discussion-paper—the-science-based-targets-initiative-s-scope-3-requirements.pdf 
11. The SBTi is also expected to soon release:

• A discussion paper on addressing challenges for companies in addressing their scope 3 emissions 
• A paper reviewing and analysing the record on a range of environmental attribute certificates, not limited to carbon credits.

1.  Scientists, experts, industry leaders and civil society are against the use of offsets:

• This week a draft UN document prepared by the UN task force on global carbon markets seen by the Financial Times said: ‘“Carbon credits used cannot be counted as their [polluters’] own emission reductions” when purchased in voluntary markets outside of government-regulated schemes in which companies can trade permits giving them the right to pollute.’ 
• Staff at SBTi shared a letter criticising the plan and the way it was disclosed, saying it “undermined” SBTi’s governance procedures. 
• In France, 378 people from business and civil society signed a statement (EN here) against the SBTi Board proposal to use offsets. 
• Fashion retailer H&M Group published a statement expressing its belief that “the priority for any climate strategy should be to take action within corporate value chains to reduce absolute greenhouse gas (GHG) emissions” and that  allowing offsets for value chain / scope 3 emissions would disincentivise companies from making investments in long term decarbonisation
• 32 scientists signed a letter in the scientific journal Nature calling on the SBTi to rescind its endorsement of carbon offsets 
• Last year, over 500 African civil society groups called on their leaders to take real action on the climate including “avoiding false solutions like carbon markets”.

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