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Payments to protect forests, to shut down coal plants or to roll out less-polluting cookstoves are all good things for the planet — but they should not form the basis of a company’s climate plans, the Science Based Targets initiative (SBTi) confirmed this week.
The funders, board, staff, experts and signatories of the influential non-profit had been absorbed since last April in a debate over the role of carbon credits in climate trajectories.
Below, I look at how the top voluntary climate standard-setter has clarified its position on how companies should hit net zero — one chief executive and 11 months later.
SBTi changes course on carbon credits
In a draft standard published this week, SBTi stuck firm to the idea that companies that wish to set science-aligned net zero targets, which include H&M, Salesforce and AstraZeneca, should cut their carbon footprints by rethinking their own business models and supply chains.
The decision comes after a vociferous backlash against a suggestion by SBTi’s board last year that carbon credits could play a major role in corporate climate transition plans.
SBTi has now doubled down on its requirement that companies’ climate plans should align with the Paris agreement “stretch” target to limit warming to 1.5C above preindustrial levels, without over-reliance on offsets.
“The temporary breach of the 1.5C global warming threshold in 2024 and growing impact of climate change underscore the critical importance of accelerating efforts to phase out greenhouse gas (GHG) emissions from our economy,” the draft said.
Kaya Axelsson is a research and policy fellow at the University of Oxford, who was consulted on elements of the new standard as part of SBTi’s technical advisory group. “There was a lot of concern from companies about how they were going to meet emission reduction targets,” she said. The standard-setter has met some of these concerns through more specificity, including by sharing more granular guidance on transition plans, accounting and interim targets, she said.
SBTi also proposed more flexibility in tackling emissions from suppliers, including by allowing companies to focus on the most polluting ones.
It also suggested companies could set targets for investing in carbon removals — meant to lock CO₂ away for hundreds of years at least — and confirmed that credits issued on the basis of these removals could be used to offset some of the most hard to tackle emissions.
Caroline Ott, carbon markets director at the carbon removal company Climeworks, said she expected the draft to “mobilise new demand” in the carbon removal market.
Advocates for projects that cut or avoid CO₂ emissions rather than removing them from the atmosphere were, however, disappointed that SBTi did not create more incentives to buy a broader pool of credits.
Earlier backlash had already knocked the carbon credit market. When, for instance, HSBC last month pushed back its target for hitting net zero in its own operations by 20 years, it cited a reluctance to “rely heavily” on offsets, “taking into account latest best practice”.
Guy Turner, managing director of MSCI carbon markets, said SBTi had “laudable aims”, but questioned whether 1.5C-aligned climate trajectories were “realistic” without more investment in carbon credits. “Many firms are struggling to meet their near-term climate targets.”
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