The Science Based Targets initiative (SBTi) Board of Trustees clarified that “no changes have been made to SBTi current standards,” following a sharp internal backlash to its recent announcement of plans to update its standard for corporate net zero target setting by extending the use of environmental attribute certificates (EACs), such as emissions reduction credits, to help address Scope 3 emissions.

The clarification follows reports of letters from SBTi staff responding to the board’s announcement, indicating that staff were “deeply concerned” about the statement, and reportedly calling for the resignation of the CEO and board members.

The SBTi was founded in 2015 with the goal to establish science-based environmental target setting as a standard corporate practice. The organizations’ key functions include defining and promoting best practice in emissions reductions and net-zero targets in line with climate science, providing technical assistance to companies who set science-based targets, and providing companies with independent assessment and validation of their emissions reduction targets.

The organization’s announcement followed the launch of a call for evidence last year regarding the use of energy attribute certificates in its planned update of the SBTi’s Corporate Net Zero Standard, used to assess and certify companies’ decarbonization commitments to achieve net zero emissions and to act as a blueprint for companies’ science-based climate target setting. The initial standard, issued in 2021, did not permit carbon credits for emissions reduction.

In its announcement last week, the SBTi board said that the use of energy attribute certificates under the revised standard would be limited to abatement of Scope 3 emission, adding that the standard would include “specific guardrails and thresholds as well as the rules to be applied for these certificates.”

Scope 3 emissions, which originate in companies’ value chains, including the supply chain or use of products, typically make up the vast majority of most companies’ emissions impact, often accounting for more than 90% of emissions overall, but they are also the most difficult to measure and manage, occurring in areas outside of companies’ direct control.

While the use of offsetting practices to account for emissions that are more challenging to eliminate forms part of most companies’ net zero plans, some companies’ climate pledges are coming under increasing scrutiny for relying too heavily on offsetting schemes rather than on actual emissions reductions. A recent study of high-emitting companies by climate-focused non-profits NewClimate Institute and Carbon Market Watch, for example, found that the companies plan to offset between 23% and 45% of their combined emission footprint, and that the amount of land-use related offsets included in corporate climate strategies would significantly outstrip the global availability of such assets. Additionally, carbon offsetting markets faces a series of challenges, however, with participants often unable to differentiate between high and low quality projects with insufficient or inconsistent data to assess the effectiveness of projects.

In a letter by SBTi staff seen by ESG Today, concerns were raised about the board’s statement, as well as the process behind its development, including claims that the decision undermined the organization’s Standard Operating Procedures, coming “as a decision made by the SBTi rather than a position of the board.” The letter added that “the SBTi’s standards will not change until we have completed the necessary research, consultation, and governance steps — all specified within SBTi procedures,” and expressed “regret that this statement has caused concern, confusion, and damaged the trust of critical stakeholders.” In another letter, not seen by ESG Today, but reported by media outlets including Reuters and The Guardian, staff said that it would work against allowing the SBTi to “become a greenwashing platform,” and called for the resignation of the CEO and board member supporting the new policy.

In its clarification, the SBTi board stated that “any use of EACs for Scope 3 will be informed by evidence,” and that it plans to issue a discussion paper in July about the potential changes, prior to the drafting phase of the updated standard. The board also confirmed that any changes to the standard will be done according to the organization’s Standard Operating Procedure.

In a statement issued following the clarification, environmental organization WWF, one of the founders of the SBTi, while stating that “offsets cannot be a substitute for reducing emissions from company operations, products, and value chains,” also left room for some use of carbon credits, but “limited in its application to address a small percentage of residual emissions,” and backed by “increased accountability and pursued as part of a holistic and scientifically defined reduction pathway.”

The WWF statement added:

“Updated guidance should also address the very real concerns regarding the poor track record of offsets in delivering real emissions reductions and driving market transformation.”