02 Aug SBTi delays carbon offsetting decision to 2025
The science-based targets initiative (SBTi) will determine if businesses can apply carbon offsetting to leverage their climate targets. The group announced a series of technical measures to clarify the net-zero standard for larger organisations.
Operating since 2021, the standard requires companies to target a 90% reduction in absolute emissions within their operations and value chain. Many companies have struggled to create a pathway to achieve this reduction, particularly from scope 3 sources. Based on this, the SBTi suggested earlier this year that it could relax the rules regarding environmental attribute certificates, including carbon credits, enabling companies to offset scope 3 emissions, rather than generating direct reductions.
The announcement caused discussions within the SBTi and the global business sustainability space. NGOs were concerned about whether offsetting provided a free pass for large emitters. The SBTi assured they would announce further information, which has now been released.
The latest documents suggest no solid evidence of how effective carbon offsetting is. The Synthesis report prioritises the existing solutions, including nature-based projects, renewable energy and clean cookstoves. The report stated that only 12-33% of carbon credits delivered their intended climate benefits to corporate buyers.
Issues raised with offsetting include over-crediting, supplying too many credits for a project, and investing in emissions reductions which would have occurred anyway. One study found that cookstove projects typically provide six times more credits than they should. The SBTi further highlights that while there are efforts to enhance market strength, it remains to see how issues like leakage and additionality can be tackled.
How can companies respond to these findings?
The SBTi suggests how companies can approach offsetting as part of a broader climate strategy, incorporating Scopes 1, 2 and 3 emissions. No structured decision has been made, so companies looking to follow the latest measures would still follow the Net-Zero Standard. The SBTi provides five possible steps to follow:
- Measure and publicly disclose value chain emissions, including Scope 3.
- Determine and prioritise emissions sources with the most significant climate impact (existing and future).
- Define targets supported by policies and interventions aimed at reducing these emissions.
- Create a structured action plan and take responsibility for other emission sources aside from the immediate priorities.
- Measure and highlight how effective the interventions are in place.
The SBTi guidance on offsetting for Beyond Value Chain Mitigation (BVCM) remains the same. BVCM refers to corporate investment in nature or energy projects without including the benefits in sustainability accounting, which is typically achieved by supporting a local community.
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