SBTi Sparks Debate on Role of Carbon Credits in Corporate Net-Zero Strategies

The Science Based Targets initiative (SBTi) has proposed including carbon credits in corporate net-zero strategies, igniting a discussion on the role of offsets in achieving climate targets. The announcement has exposed tensions within the environmental movement as companies and organizations wrestle with the best ways to reduce their carbon footprint and meet their climate commitments.

The SBTi stated that it will recognize the responsible use of carbon credits and other environmental attribute certificates towards a portion of Scope 3 emissions for achieving net-zero targets. Proponents argue that this decision could give companies much-needed flexibility on their net-zero paths, ultimately accelerating climate action. However, critics fear it could allow companies to maintain business as usual or delay other emissions reduction steps.

Why this matters: The debate surrounding the SBTi's proposal highlights the challenges in balancing the urgency of climate action with the need for robust and credible emissions reduction strategies. The outcome of this discussion could have significant implications for the voluntary carbon market and the pace of corporate climate action.

Recent research suggests that companies participating in voluntary carbon markets are leading in measures of robust climate action, accountability, and ambition. Recognizing the use of high-integrity carbon credits could substantially boost corporate climate investments and accelerate climate action. The voluntary carbon market also has the potential to fill a significant portion of the funding gap for nature-based solutions, which require $542 billion per year by 2030 and $737 billion by 2050.

However, the SBTi's announcement triggered a swift backlash from some staff members, who called for the CEO's resignation, arguing that the decision was made without following the organization's standard operating procedures. "The announcement was the first stage of an exploratory process and did not represent a departure from the SBTi's standard operating procedures," said Luiz Amaral, CEO of the SBTi, acknowledging the concerns raised.

The ongoing uncertainty around SBTi's position has dampened the mood in the voluntary carbon market in the short term. Some industry sources expressed concerns that even if the decision is upheld, it may be perceived as tainted due to the internal disagreement. Nevertheless, research by Bloomberg New Energy Finance suggests that if the SBTi proposal goes forward, the voluntary carbon market can expect a significant boost in demand, regardless of the reports on dissent within the organization.

Key Takeaways

• SBTi proposes allowing carbon credits in corporate net-zero strategies, sparking debate.
• Proponents argue it provides flexibility, critics fear it delays emissions cuts.
• Research shows voluntary carbon markets boost corporate climate action and investment.
• SBTi's announcement triggered backlash from staff, CEO acknowledges concerns.
• If approved, SBTi proposal could significantly boost voluntary carbon market demand.