Sustainability leaders clash over SBTi endorsement of carbon credits for Scope 3

Sustainability voices are divided over the possibility that the Science-Based Targets Initiative (SBTi) could allow the use of carbon credits for Scope 3 decarbonisation.

Two days ago, the SBTi Board of Trustees published a statement on the use of environmental attribute certificates, including credits from voluntary carbon markets, for Scope 3 abatement purposes.

In it, the board explained that as part of the revision of its Corporate Net Zero Standard, the SBTi has consulted with a wide range of stakeholders on this topic and concluded 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”.

As a result, the initiative is now working to allow Scope 3 carbon offsetting within its net zero standard, “beyond the current limits” – ie, 10% of a company’s overall footprint (with the remaining 90% having to be reduced).

The organisation says it is working on guardrails and thresholds for the responsible use of these environmental attribute certificates in target setting.

A win for the voluntary carbon market

The move was immediately hailed by those working to develop high-integrity carbon markets. 

Alexia Kelly, Managing Director, Carbon Policy and Markets Initiative at the High Tide Foundation and former Senior Advisor for the Integrity Council for the Voluntary Carbon Market (ICVCM), congratulated the SBTi for “doing the right thing by climate science and climate action by including responsible use of environmental attribute commodities (including carbon credits) for a portion of scope 3 emissions target attainment”. “Rather than displacing internal abatement, this common sense approach will enable companies to go further and faster and deliver more for the climate,” she added.

Speaking to CSO Futures last October, Kelly pointed out that as an intangible commodity, carbon credits’ value is “the value that the policy gives them”, and this week’s announcement is expected to boost carbon credit demand significantly.

“This announcement also means that investing in carbon projects will start to be recognised under the SBTi framework much earlier than anticipated (today instead of 2040-2050), which in turn means more climate finance towards high-integrity emissions reduction/sequestration activities with socio-economic co-benefits to vulnerable communities and jurisdictions in the Global South. One of the key purposes of the VCM in the first place,” said Leo Mongendre, Carbon Pricing and Nature Markets at KPMG.

A concerning backslide for others

But this positive reaction to the SBTi’s decision is far from unanimous. For some, it gives more wind to a recent trend towards more flexibility in how companies should approach Scope 3. 

NewClimate Institute, which recently warned against this leniency in its Corporate Climate Responsibility Monitor, expressed concern over the statement, which it says directly contradicts UN recommendations. “The use of offsetting mechanisms for Scope 3 targets could completely nullify the already insufficient climate commitments of most companies,” it said, adding that this “carte blanche to continue business-as-usual for another decade” would reduce the financial and technical support needed to decarbonise the Global South, where most supply chains are located.

An undermining of governance processes for SBTi staff

Perhaps most worryingly, the SBTi’s own staff published a letter today (April 11) expressing “deep concern about the content of the statement and the process by which it was developed and released”. (This is not the first time the initiative faces internal criticism over its governance processes.)

In the letter, the “overwhelming majority of SBTi staff” accused the Board of Trustees of undermining their ongoing work to make recommendations on this very topic, and failed to notify or consult the SBTi Technical Council on the decision. 

They also reminded companies that the statement does not equal an actual change in the net zero standard: “The SBTi’s standards will not change until we have completed the necessary research, consultation, and governance steps – all specified within SBTi procedures. Carbon credits are not permitted for emissions reductions according to the Corporate Net-Zero Standard nor the Financial Institutions Guidance.”