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New studies indicate SBTi will still exclude offsets for Scope 3 emissions

The reports preview SBTi’s upcoming update to the Net Zero Standard. Read More

A stock photograph of a stack of documents
The new reports give little indication that SBTi is likely to more flexibility to companies looking for ways to keep up. Source: Stokkete via Shutterstock

On July 30 the Science Based Targets initiative (SBTi) released two reports in anticipation of its 2025 update to its Corporate Net-Zero Standard. Although the documents contain no statements about or draft proposals for next year’s update will actually contain, they signal two likely outcomes relevant to carbon credits: 

  • It appears unlikely that SBTi staff will include carbon offsetting in its Net-Zero Standard update next year. 
  • SBTi is looking to strengthen incentives to mitigate ongoing, unabated emissions, including through carbon credit retirement. 

While addressing present-day emissions makes sense, this update is likely to be irrelevant if companies are not able to meet the Standard’s existing requirements.

The reports also underscore that SBTi’s Net-Zero Standard prioritizes corporate emissions accountability, not accelerating climate impact. As many companies struggle to meet the existing Standard, this week’s reports give little indication that SBTi staff plan to provide more flexibility to companies seeking to keep up. 

Offsetting for Scope 3 targets seems to be out

The first of this week’s reports reviews evidence submitted by industry groups, and environmental and conservation organizations related to corporate use of emission reduction carbon credits in response to SBTi’s call for evidence on environmental attribute certificates (EACs). The second discusses possible changes to Scope 3 target setting in the 2025 Standard update. 

The bulk of the submitted evidence suggests that current emission reduction carbon credits do not fully deliver on their intended outcomes, the authors write, and that there could be risks to corporate use of carbon credits for offsetting, including hindering industry decarbonization and reducing overall climate finance. 

Again, the reports give no indication that SBTi’s stance on the use of carbon credits for achieving Scope targets is up for reconsideration. 

Neither report mentions the Board’s April statement that SBTi had “decided to extend [the use of EACs] for the purpose of abatement of Scope 3 related emissions beyond the current limits.” Carbon credits are one form of EAC, along with sustainable aviation fuel credits, energy attribute certificates and more.

It’s unclear what’s behind the course change on offsets, but based on this week’s reports, it would be surprising if SBTi staff submit to the Board a revised Net-Zero Standard that includes carbon credits as an additional tool for Scope 3 abatement. 

More teeth coming for ongoing emissions 

The second report included one scenario exploring adding new incentives for companies to mitigate ongoing unabated emissions. Although SBTi has encouraged companies to address their ongoing, unabated emissions via Beyond Value Chain Mitigation (BVCM), it’s not a requirement of the current Net-Zero Standard. 

As in the rest of this report, the statements in this section are very soft (for example, the authors stick with language about incentives, not requirements), making it difficult to understand what changes, if any, the authors are suggesting. 

Regardless of whether next year’s standard update includes language about carbon credits, adding additional components — whether required or just more strongly encouraged — to the current standard may be irrelevant if companies are unable to meet the existing standard. 

Will companies give up on SBTi? 

In the absence of strong government climate policy, most of the levers available for accelerating global decarbonization rely on companies voluntarily taking action. In recent years, SBTi’s Net-Zero Standard has been the most popular and well-respected of the voluntary corporate climate action standards. 

But it’s proving difficult for many climate-ambitious companies to meet the current Net-Zero Standard, which requires reducing emissions in supply chains that are often out of their direct control. 

This week’s reports emphasize that SBTi is unlikely to enable tools that reach beyond corporate operations, such as offsetting, to provide new options for companies seeking to keep up. 

“If companies aren’t on track for or miss their targets, they’re not going to shut down parts of their business, or voluntarily stop company growth to meet them, or give up their competitive advantage… they’re just going to miss their targets. Setting companies up to fail from the outset is not a recipe for scaled up voluntary action,” wrote Alexia Kelly, managing director for the Carbon Policy and Markets Initiative at the High Tide Foundation and former director of net zero and nature at Netflix, in a LinkedIn post this week. 

While I hope companies will rise to the challenge that SBTi has issued, I believe it’s more likely that in the coming years we’ll see more companies withdraw from the program — or just never sign up. 

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