‘Existential crisis’ at SBTi inflames rift over future of net-zero organization

A controversial and vague new Science Based Targets initiative policy that would let corporations count carbon offsets toward Scope 3 emissions reductions surprised the climate community when it was announced April 9 — including the organization’s own staff, who claim the situation has “damaged the trust of critical stakeholders.”

A letter circulated by “a majority” of SBTi staff criticized the plan and the way it was disclosed, saying it “undermined” the organization’s governance procedures. The board does not hold sole decision-making authority over SBTi frameworks. Neither SBTi staff, nor the SBTI Technical Council, which is responsible for reviewing and approving SBTI standards and documentation, were consulted about the decision, according to the letter.

“We call upon our partners in the ecosystem to support our efforts in holding those responsible accountable,” SBTi staff said. 

The letter was signed by representatives of the SBTi’s impact, accountability and services, research, technical development, communications and operations teams. Another letter sent to the board called for the resignations of board members and the CEO, according to reports.

SBTi was contacted for comment on this evolving situation.

Stunning shift on carbon offsets

At the center of the controversy is the board’s stunning April 9 statement, which says companies will be able to use “environmental attribute certificates” to abate certain Scope 3 emissions. That includes emissions tied to a company’s supply chain and use by customers. That’s a reversal of the organization’s current stance, which does not allow for the use of carbon offsets for short-term and middle-term targets; for net zero, they can only be included to offset residual emissions.

This statement could lead to a critical change to the way in which companies set decarbonization targets,” said Paul Schreiber, senior policy advisor of research NGO Reclaim Finance and a member of the SBTi Technical Advisory Group. “It should not have been made without consulting the very groups and bodies that were set up to ensure the scientific integrity of the SBTi. If it is not retracted by the Board then I cannot continue to work with the Technical Advisory Group. I will not be part of a standard-setting process that is a potential cover for a greenwashing operation.”

SBTi had been under pressure to reconsider that position, given the complexity of accounting for the impact of emissions outside a company’s direct control.

The SBTi board didn’t say what, exactly, would be eligible under the new abatement policy. The statement said “guardrails” for the policy will be published for consultation in July. It’s unlikely that SBTi would allow companies to offset all of their Scope 3 emissions via credits, said a source close to the situation who spoke upon condition of anonymity.

“There is a camp of people that want it to be a free-for-all, and that companies should be able to offset all of their emissions. But this is true of only a few companies,” the source said.

“It is difficult to make meaningful, traceable reductions in Scope 3,” said John Willard, principal sustainability expert at Quantis Consulting. Some companies “will welcome this as a way to deploy capital in a way that helps them start to get reduction credit. On the flip side, direct inside-the-value chain reductions are still the primary means of abatement.”

Corporate interests welcomed the forthcoming change, saying it would help convince more companies to finance initiatives that can help mitigate climate change. 

“The voice of business on this issue is clear,” said Maria Mendiluce, CEO of We Mean Business Coalition. “Companies value SBTi and are committed to delivering on their emissions reductions targets but need greater clarity on 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.”

SBTi at a crossroads

The protest comes as SBTi struggles to set its course for the future, after becoming an independent entity. The organization is setting up a separate validation arm to speed up the validation process for science-based targets. It has also been considering an overhaul of the “Corporate Net Zero Standard,” which has become the de facto framework for companies seeking credibility for their carbon elimination plans.

The public criticism could spark meaningful change within SBTi, said Bill Baue, senior director of consulting firm r3.0 and a frequent critic of the organization. “My hope is that [SBTi] will see this as an existential crisis and radically strengthen its ethical commitments, its due process and commit to the most rigorous climate action possible,” Baue said.

So far, 800 companies have had their net-zero strategies validated by SBTi. Two thousand more have committed to setting them in the future.

Update: This story was amended April 12 to add the statement from Paul Schreiber.