LONDON: When the biggest funders and promoters of the US$2bil carbon offsets market assembled in London last month, the gathering was billed as a series of technical discussions on subjects such as emissions accounting.
But, at least to some attendees, there also appeared to be another motive: to make a case for why the Science Based Targets initiative (STBi), the biggest and most-respected verifier of corporate climate targets, is the primary impediment to the growth of a market that advocates deem critical in the fight against climate change.
In a world full of greenwashing, SBTi has become a broadly recognised gold standard in emissions accountability because of its strict criteria for net-zero plans.
It currently limits how corporations can use offsets – credits that companies can buy to ostensibly cancel out their pollution – to achieve their green targets.
The issue is one of the most divisive among climate experts. Powerful proponents including former US climate envoy John Kerry argue they’re needed to shift money into important sustainability projects, while critics said it’s almost impossible to verify the true impact of the instruments and that they allow buyers to avoid making other hard changes.
The meetings last month were hosted by the Bezos Earth Fund, a supporter of growing the voluntary carbon market and one of two main funders of SBTi, as well as the Children’s Investment Fund Foundation (CIFF).
Bloomberg Philanthropies, the philanthropic organisation of Michael Bloomberg, founder and majority owner of Bloomberg LP, is a project-specific funder of SBTi.
They were held in a workspace in London’s Clerkenwell district. Initially, nonprofits who want to maintain firm standards for corporate net-zero goals weren’t invited, though they were later added to the guest list, according to people familiar with the event.
Two SBTi representatives were present and faced a barrage of implicit and direct requests to relax their position on carbon offsets from senior leaders of prominent carbon market standards and lobbying groups, the people said.
Less than a month later, on April 9, SBTi announced an about-face on offsets that caught even its staff off guard: The group would loosen its rules for how companies can use carbon credits to reduce their reported emissions.
That would lead to a boon for the carbon offsets market, which has recently been rocked by turbulence. BloombergNEF projects that such a change could help annual demand soar to US$1.1 trillion in 2050.
Companies will retire billions of credits each year to offset their emissions.
In a statement, a Bezos Earth Fund spokeswoman said that, while they provide funding to SBTi, “we do not make decisions for them, we do not sit on their board, and we weren’t involved” in the April 9 announcement.
She said that space was limited in the meeting room and they accommodated as many participants as possible. “We remain dedicated to ensuring that any use of high integrity market mechanisms is subject to stringent guardrails, limits and rules so that any use of high integrity carbon credits enhances rather than undermines the integrity of corporate climate targets,” she added.
CIFF officials confirmed in a written statement that it co-convened the London meeting to address urgent issues of climate accounting and target-setting. A spokesperson added that any decision to introduce greater “flexibility” on offsets “should be based on the science and technical analysis.”
While SBTi had previously sought to limit the use of carbon credits to offset residual emissions, or those that can’t be cut through other means, the organisation said it now plans to expand its rules.
This would allow companies to use environmental certificates, including carbon credits, to help offset the climate footprint of their supply chains, otherwise known as “Scope 3” emissions.
The move outraged staff members at SBTi, who called on the group’s chief executive officer and board members to resign in an April 10 letter. The employees argued that the board violated SBTi rules and procedures by making this decision unilaterally, rather than relying on guidance from the staff or the SBTi’s independent technical council, which wasn’t informed or consulted.
On April 12, SBTi added a clarification to its previous statement, emphasising that “no change has been made to SBTi current standards,” and that any shifts to its rules will go through all of its standard procedures. The group has not responded to calls seeking comment.
The unfolding controversy carries major implications for climate action and the pursuit of a lower-carbon future.
SBTi not only demands that companies set ambitious climate targets, it also takes action if corporations fail to follow through. The organisation has removed hundreds of companies, including Amazon.com Inc, from its list of companies taking action on climate goals.
Scope 3 emissions can be especially challenging. Automakers purchase parts from hundreds of suppliers, retailers procure their goods from thousands of smaller companies, food giants purchase ingredients from thousands of farms.
The climate impact of growing these crops or making these widgets all contribute to a company’s Scope 3 emissions.
Many corporate giants have been slow to tackle these Scope 3 emissions. A recent report from the Transformers Foundation, for instance, found that clothing brands weren’t doing enough to incentivise or finance greenhouse-gas reductions. — Bloomberg
