Corporate climate watchdog keeps lid on buying carbon offsets to meet climate targets
Science-Based Targets initiative lays out options for credits
Cautious stance backs critics concerned about abuse
Proposes ideas to help companies manage Scope 3 emissions
Adds comments from BeZero
By Simon Jessop
LONDON, July 30 (Reuters) -The Science-Based Targets initiative (SBTi) said in a research paper on Tuesday there was not enough scientific support for the influential corporate climate watchdog to lift restrictions on companies using carbon credits to offset their emissions.
The paper's findings are in line with a preliminary draft Reuters reported on in May and make it more likely that the SBTi will continue to resist pressure from carbon offset advocates to allow their broad use in the accounting of climate targets.
The board of the group, which audits the emission reduction plans of companies, prompted a revolt among its staff in April by declaring its intention to allow broader use of carbon credits prior to concluding its research on them.
SBTi's trustees subsequently issued a clarification saying it had not yet changed its policy and that any decisions would be "informed by the evidence". SBTi CEO Luiz Amaral announced earlier this month that he would step down, citing personal reasons.
Selling credits from projects such as wind farms and reforestation schemes to a company so it can offset its carbon emissions is seen as a way to help move money to climate-friendly projects. Critics argue that they will result in companies doing less to reduce their own emissions, and worry about the quality of many offsets on the market.
The SBTi's current policy allows the use of carbon offsets for a small portion of emissions only once companies have done everything they can to stop polluting. Additional ways companies could be helped was by broadening the use of environmental attribute certificates, although these would not be classed as offsetting.
Examples the paper mentioned include where a company has helped a supplier reduce its emissions, or where it has reduced emissions by purchasing bulk commodities from a more climate-friendly supplier.
CONCERN OVER QUALITY OF OFFSETS
At stake is the growth of the still nascent market for voluntary carbon offsets. While they are used by some of the world's biggest companies, including Microsoft MSFT.O, Salesforce CRM.N and Amazon AMZN.O, the size of the market is small at around $2 billion, in part because of concerns about the quality of many offsets.
SBTi chief technical officer Alberto Carrillo Pineda called the research report a critical step in helping the group develop "a more sophisticated approach to Scope 3 to help more businesses set targets". Scope 3 are emissions generated from a company's supply chain or its customers.
Pineda added that cutting emissions directly "must remain the priority for corporate climate action".
Thomas Day, an analyst at non-profit climate research group NewClimate Institute, welcomed the report.
"We have often criticised the SBTi for drifting too far from its science-based mantra. But the papers published today stick to the science in ruling out offsets and exploring improvements to the standard, putting the SBTi back on track to remain relevant for company transformation," Day said.
Tommy Ricketts, CEO and co-founder of carbon ratings agency BeZero Carbon, though, said the position paper ignored the positive impact carbon credits can have on the planet and communities and would not help businesses.
"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," he said in a statement.
The SBTi said some of the ideas in the research report would require more work and discussion before being put before the group's technical advisors and eventually its board.
A draft Corporate Net-Zero Standard with updated criteria will be released for public consultation towards the end of the fourth quarter of 2024, the SBTi said. The updated policies are expected to be in place by the end of 2025.
Reporting by Simon Jessop in London; editing by Greg Roumeliotis and Emelia Sithole-Matarise
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