Achieving corporate emissions reduction targets throughout the supply chain could become significantly harder thanks to a new stance by the Science Based Targets initiative (SBTi) on the use of carbon credits.
The SBTi is the world’s de facto authority on sustainability regulations. The organisation develops standards, tools and guidance which allow companies to set greenhouse gas emissions reductions targets. These targets intend to keep global emissions “in line with what is needed to keep global heating below catastrophic levels.” If the targets are adhered to, the world should theoretically be on track to reach net-zero by 2050 at worst.
Despite earlier announcing support for the expansion of carbon credits, the SBTi has called the practice largely ineffective in a new review of third-party studies.
The review, published at the end of July — a month which contained the hottest week in recorded history, and China’s hottest ever month — noted that “various types of carbon credits are ineffective in delivering their intended mitigation outcomes.” Not only that, but widespread use of carbon credits by corporate entities had the potential to actively stall other, more concrete, sustainability reform.
U-turning on carbon offsets
This represents a significant about-face from earlier this year, when the SBTi announced plans to allow the expansion of environmental attribute certificates, such as emissions reduction credits, as a way of tackling scope 3 emissions in corporate supply chains.
The announcement drew widespread criticism, both from outside the organisation and from scientists working within it.
Climate finance campaigner Paul Schreiber publicly threatened to resign from the SBTi’s technical advisory group in April unless the board reversed its position, saying that“I will not be part of a standard-setting process that is a potential cover for a greenwashing operation,” he said in a statement. The SBTi’s staff issued an open letter, expressing deep concern with the plans, and reportedly calling for the resignation of the organisation’s CEO and board members. Last month, SBTi CEO Luiz Amaral resigned from the SBTi, citing personal reasons.
The problem with climate offsetting schemes — like those that allow companies that emit fewer greenhouse gases to sell their carbon credits to polluters, allowing those corporations with dirtier supply chains to claim lower emissions, or even carbon neutrality — is that they provide a smokescreen for organisations’ failure to meaningfully address emissions.
The organisation’s latest review appears to be at least partially in line with offsetting sceptics’ assessment of the practice at last. The SBTi’s U-turn on carbon credits isn’t complete by any means, though. Alberto Carrillo Pineda, Chief Technical Officer, SBTi said in an interview with Bloomberg that he hopes the review will bring “a more nuanced approach” to the debate. He adds that people on either side of the debate currently have “very entrenched, very polarised positions.”
What does this mean for tackling Scope 3 emissions in the supply chain?
Scope 3 emissions account for, on average, 75% of a company’s carbon footprint. However, because the supply chain lies outside organisations’ direct control, finding ways to reduce carbon emissions is a challenging prospect. However, despite presenting a “major challenge when it comes to corporate decarbonization,” according to the SBTi, they also represent “the greatest opportunity.”
The scope 3 discussion paper explores three scenarios. These scenarios simulate ways in which environmental attribute certificates, including carbon credits, could be useful to meeting science-based target. However, the three scenarios it outlines related to carbon credits “do not include offsetting emissions… the priority remains the direct decarbonization of the value chain.” They add that carbon credits cannot be an effective substitute for emissions reduction.
Sue Jenny Ehr, Interim CEO of the SBTi said in a statement that “Targets are the first step to decarbonization 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.”
