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Reports: SBTi faces internal revolt over plans to relax rules on use of carbon offsets

Staff at the influential nonprofit are calling for the CEO's resignation after a controversial move to consult on changes to the net-zero standard, according to a Reuters report.

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Source: Shutterstock/Volha Werasen

The Science Based Targets Initiative (SBTi) has reportedly been thrown into "turmoil," after a number of staff responded angrily to news this week the group could revise its guidance to corporates to allow greater use of carbon offsets to meet net-zero targets.

News agency Reuters reported it had seen a letter sent by a group of staff at the London-based nonprofit to the SBTi's board of trustees and CEO, which accuses the organization's leadership of inflicting "grave reputational damage" on the initiative.

The letter is said to call for the resignation of SBTi CEO Luiz Amaral and any board member who supports new proposals to allow corporates to increase the use of carbon offset credits to meet net-zero targets for their value chains.

It is signed by "the Target Validation Team, Target Operations Team, the Technical Department, Communications, Impact and IT, and multiple department heads," and says the group is ready to take "further action" if necessary.

"As staff representing SBTi on a daily basis, we demand immediate action to mitigate the grave reputational damage caused by the actions of the Board," the letter stated, according to Reuters.

One well-placed source confirmed to BusinessGreen there was "growing fury" at the SBTi's plan to tweak the rules governing how carbon offsets can be used to count toward corporate net-zero targets, adding there was "an internal revolt afoot."

BusinessGreen has approached the SBTi for comment.

The SBTi provides independent validation of corporate climate targets which is designed to ensure they are in line with the goals of the Paris Agreement. The group has become increasingly influential in recent years as a means of demonstrating that businesses' targets are scientifically credible.

In 2021 the group — set up by a network of leading green NGOs, including CDP, WWF and the We Mean Business Coalition — significantly strengthened the methodologies it used for assessing corporate targets with the launch of a new Net Zero Standard.

The standard required firms signed up to the initiative to commit to halving their Scope 1, 2 and 3 emissions by the end of the decade, before delivering a minimum 90 to 95 percent reduction in emissions by 2050. Significantly, it also stated that companies could only use "environmental attribute certificates," more colloquially known as carbon offsets, to abate the residual 5 to 10 percent of greenhouse gas emissions.

However, the rules have faced growing criticism from some corporates and carbon offset providers, which have warned the tight restrictions on the use of carbon offsets could prove counterproductive, as they could undermine investment in carbon removal projects that are likely to be required to meet economy-wide net-zero goals and delay action to tackle corporates' Scope 3 emissions from supply chains, which typically prove harder to reduce than direct emissions.  

Demand for carbon offset credits through the Voluntary Carbon Market slipped 6 percent in the first half of 2023, according to BloombergNEF data, on the back of concerns over the credibility of carbon offset projects and moves by a number of corporate buyers to curb the use of carbon credits in line with the SBTi's guidelines.

The latest row was sparked Tuesday, when the SBTi Board of Trustees published a statement on its website confirming that following a six-month consultative effort it had decided to "extend" the use of carbon offset credits to count towards for the purpose of Scope 3 emissions abatement beyond its current limits. 

"While recognizing that there is an ongoing healthy debate on the subject matter, SBTi recognises 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," the board said.

It also confirmed it would consult on the revision of its Scope 3 framework, including the use of environmental attribute certificates in target setting, and would seek cooperation agreements with other relevant initiatives and a broad set of stakeholders.

"This will entail the definition by SBTi of specific guardrails and thresholds as well as the rules to be applied for these certificates to be considered valid for Scope 3 emissions abatement purposes respecting the principles of mitigation hierarchy," it said.

The statement added that the SBTi thinks the proposed changes provide "a way to accelerate the decarbonization of value chains with compensation logic while companies make their way to eliminate carbon emissions at the root through innovation and technology improvements."

A first draft of basic rules, thresholds and guardrails for the potential use of environmental attribute certificates for abatement purposes of Scope 3 emissions is slated to be issued by July.

The proposals were warmly welcomed by business groups and carbon offset providers, who maintain that dampening demand for carbon offsets could undermine efforts to boost flows of finance into nature and technology based carbon removal projects and ultimately jeopardize efforts to meet net-zero goals.

"The voice of business on this issue is clear," said María Mendiluce, CEO of the We Mean Business Coalition, which represents a host of leading businesses that are working to accelerate action on climate change. "Companies value SBTi and are committed to delivering on their emissions reductions targets, but need greater clarity and flexibility in how to navigate Scope 3 emissions. This change empowers companies to bring more innovation and investment into cutting emissions from their value chains, whilst also bringing in much needed funding for climate projects in the Global South."

The Voluntary Carbon Markets Initiative (VCMI), which has been working to strengthen standards for carbon offsets in the wake of a series of scandals over projects that have failed to deliver promised emissions savings, also welcomed the move.

"SBTi's recognition that carbon credits and other market-based instruments have a role in helping companies address their scope 3 emissions is welcome," the group said in a statement. "Companies are not reducing emissions fast enough and most are struggling to meet their Scope 3 goals. Without the requirement that they fill any gap with high quality carbon credits once they've made every reasonable effort to meet their targets, we risk falling further even behind in our efforts to reach net zero."

But some environmental groups are understood to be furious at the proposed changes, fearing they will dilute pressure on corporates to reduce emissions at source and provide a boost for a carbon offset market they argue is yet to adequately prove it can ensure it is delivering high integrity projects. The latest reports suggest they have plenty of allies working within SBTi itself.

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