Revisions to the Science-Based Target Initiatives Corporate Net-Zero Standard will allow for an increased role for carbon credits in corporate net zero strategies.
Established in 2015, the Science Based Targets initiative (SBTi) promotes science-based environmental target setting as a common practice for companies. Its approach aims to enable businesses to define greenhouse gas (GHG) emission reduction targets which are aligned with limiting global warming and achieving net zero emissions by 2050 or sooner.
The SBTi, who partners with organisations like CDP, the UN Global Compact, and WWF, launched its first framework in 2021, the Corporate Net-Zero Standard. The guidelines offer businesses with clear principles for setting net zero commitments and will validate those which fit within the rules.
Read next: What is the SBTi Net-Zero Standard
Currently, the SBTi database holds over 8,200 net zero pledges, with more than half (5,137) validated by their framework. But the platform is growing at a pace, the number of companies with validated science-based climate targets more than doubled over the past year.
Leading companies with validated SBTi targets include The Royal Mint (the UK’s official coin maker), DuPont, and ASDA. But companies may have their net zero targets removed from the platform. This can occur when a previously established commitment expires, as happened with a retail giant, Amazon last year.
One ongoing challenge for businesses in setting realistic emissions targets is Scope 3. These emissions originate from a company’s value chain but are outside their direct operational control, such as those produced by suppliers or customers during product use or disposal. While Scope 3 emissions can be difficult to influence, they often represent over 90% of a company’s total footprint.
Businesses have adopted various approaches to manage Scope 3 emissions. Some invest in initiatives that educate and support suppliers in reducing their own emissions. Others utilise offset programs, like carbon credits, to account for these indirect emissions by investing in emission reduction projects elsewhere.
Read next: Five effective steps to engage and influence suppliers for Scope 3 reduction
While offset programs offer a means to address Scope 3 emissions, some view them with scepticism, suggesting they can be used as a substitute for genuine reduction efforts within a company’s own operations.
Despite this, it appears the SBTi is now inclined to allow them as part of its validation process. Publishing an update on its website, the validator said:
“While recognising that there is an ongoing healthy debate on the subject matter, SBTi recognises that, when properly supported by policies, standards and procedures based on scientific evidence, the use of environmental attribute certificates for abatement purposes on Scope 3 emissions could function as an additional tool to tackle climate change.
“Consequently, SBTi has decided to extend their use for the purpose of abatement of Scope 3 related emissions beyond the current limits.”
One point of potential concern is the SBTi’s decision not to validate the effectiveness of these methods themselves. The SBTi’s reasoning is that, “other entities are better positioned to deal with this activity.” Instead, the SBTI will focus on providing clear guidelines (demand-side guardrails and rules) for validating entities to utilise.
It’s important to note that the SBTi has restricted the use of these certificates to Scope 3 emissions only. Companies will still be required to implement significant decarbonisation strategies for their Scope 1 and 2 emissions (direct and indirect emissions from their own operations).
The SBTi aims to release a draft document outlining the basic rules, thresholds, and limitations for using environmental attribute certificates by July 2024.
