SBTi’s New Stance on Carbon Credits: A Shift in Corporate Net-Zero Targets
Overview:
Earlier this year SBTi caused controversy by suggesting they would allow the use of Environmental Attribute Certificates to scope 3 emissions. In new publications by the organization, there are suggestions that this move is being reversed. The implications of this will be the need for new and clearer guidance by SBTi on the use of carbon credits and for companies whom were earlier relying on the use of credits to achieve reduction targets to rethink this.
Summary:
In a significant development, the Science Based Targets initiative (SBTi) has released a series of research publications that suggest a shift away from allowing companies to use carbon credits to offset value chain emissions. This move marks a departure from earlier indications by the SBTi board, which had generated considerable controversy.
Key Facts:
Source: https://sciencebasedtargets.org/
Research Findings: The new standard is unlikely to permit the use of carbon credits, deemed “ineffective” in delivering intended mitigation outcomes.
Background: The SBTi, established in 2015, aims to align corporate sustainability actions with global climate goals. It launched its Corporate Net-Zero Standard in 2021, requiring significant decarbonization by 2050.
Scope 3 Emissions: The revised standard will focus on tackling Scope 3 emissions, which are the most challenging to measure and manage but constitute the majority of companies’ emissions.
Controversy: Earlier this year, the SBTi board’s plan to extend the use of Environmental Attribute Certificates (EACs) to Scope 3 emissions faced internal opposition, leading to a call for evidence and subsequent clarification.
Takeaways?
Corporate Impact: Companies will need to focus more on direct emissions reductions rather than relying on carbon credits.
Future Guidance: The SBTi plans to issue a discussion paper and further guidance on the revised standard.
In summary this shift will force companies who were planning on relying on carbon emissions to rethink their plan, however it does promote an issue for SBTi in that they will have to also rethink how they will provide clear guidance on this matter. In an every developing area the use of carbon credits is very controversial, and within this companies and SBTi alike should think about the quality and type of credits they see forming part of the future.
