Climate issues: Emissions rise from a coal power plant in the United States. Developments surrounding SBTi have raised serious questions about greenwashing. — AP
LONDON: The world’s largest verifier of corporate climate goals risks lasting reputational damage unless it works quickly to address a string of missteps, according to the council of technical experts advising it.
The group in question is the Science Based Targets initiative (SBTi), which has been embroiled in controversy since April, when it appeared to encourage a dramatic increase in the use of carbon credits to offset greenhouse-gas emissions.
The move was interpreted by markets as a “de facto immediate change” to existing standards, “which would be a breach of the approved SBTi procedures”, the Technical Council of scientists and academics tasked with monitoring SBTi’s work wrote in a June 20 letter seen by Bloomberg.
“If this damage is not addressed and corrected over time, it will limit the effectiveness of the organisation and the ability of SBTi to drive the corporate climate action required to limit warming in line with science,” according to the letter, which is marked confidential.
SBTi’s fateful announcement in April triggered a wave of criticism from climate scientists and non-profits, who cited greenwashing concerns. The group has since sought to clarify its stance and earlier last week its chief executive officer said he will step down “for personal reasons”.
But unless SBTi takes further steps to resurrect its credibility, its unique role as a global standard setter for corporate climate plans may be permanently undermined, the Technical Council wrote.
Though little known outside a circle of climate professionals, SBTi has played a crucial role in getting corporations across the globe to commit to credible emissions trajectories.
The group has so far validated the climate plans of more than 5,000 companies including Apple Inc and Volkswagen AG and is used by institutional investors and policymakers to assess carbon dioxide targets.
In light of the latest controversy, however, SBTi should now be subject to an external review to uncover why it adopted a position on carbon credits that hadn’t been cleared with the Technical Council or discussed with staff, according to the June 20 letter.
Francesco Starace, chair of SBTi’s board, and Kornelis Blok, chair of the Technical Council, said in emailed statements that the two groups are in regular contact and have had productive discussions since the letter was sent.
They both stressed their continued commitment to SBTi’s mission of driving global decarbonisation.
The developments surrounding SBTi have raised serious questions about the extent to which companies should rely on carbon credits, a market that BloombergNEF estimates has the potential to grow from its current US$2bil value to over US$1 trillion by mid-century.
SBTi said on April 9 that carbon credits and other financial products used for offsetting “could function as an additional tool to tackle climate change”. Such products could be applied to so-called Scope 3 emissions, which often make up the lion’s share of a company’s carbon footprint, SBTi said.
The initial statement, which SBTi was subsequently forced to clarify, drew instant praise from market participants keen to trade and invest in carbon credits. The climate group has said it plans to publish its assessment of the effectiveness of carbon offsets in corporate climate targets as well as its “initial thinking” about potential changes around Scope 3 target setting.
The update, expected this month, has the potential to send renewed tremors through the offsets market.
In its letter, the Technical Council proposed that the board be subject to greater transparency, including publishing the minutes of meetings, agendas, codes of conduct and terms of reference on its website.
The board should also establish and publish procedures for monitoring risks associated with external influences, it said.
Immediately after SBTi’s April statement, staff called on the board and chief executive to resign, and for the statement to be withdrawn and corrected.
The Technical Council stopped short of proposing SBTi’s board or management be replaced, but said steps should be taken to rebuild trust between SBTi’s leadership and staff.
The Technical Council was established last year as an independent deliberation and technical decision-making body.
It’s supposed to review and approve technical documentation and resources developed by SBTi, including target-setting methods, standards and guidance. — Bloomberg
