Sustainable Switch: Climate watchdog SBTi deems carbon offsets ineffective

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Are carbon offsets effective? The Science-based Targets initiative (SBTi), a U.N.-backed nonprofit, thinks they’re not. Staff at the SBTi, an influential corporate climate action group whose board announced a plan to allow companies to offset greenhouse gas emissions from their supply chain with carbon credits, has now found such offsets are largely ineffective, a confidential preliminary draft reviewed by Reuters shows. At stake is the growth of the still nascent market for voluntary carbon offsets. While they are used by some of the world's biggest companies, including Microsoft, Salesforce and Amazon.com, the size of the market remains small, around $2 billion.

‘Ineffective in delivering emissions reductions’ An SBTi spokesperson said its research on carbon offsets has not been completed and that it would be incorrect to state that there are even interim findings at this stage. "Once we have completed the analysis, we will make the results available publicly. Until that point we will not be able to comment on the submitted evidence," the spokesperson said. The document reviewed by Reuters states that "higher quality empirical and observational evidence suggests that some or most emission reduction credits are ineffective in delivering emissions reductions." It cites cases where carbon credits have failed to deliver the climate benefits they tout. It says, for example, that one scientific paper it reviewed found no significant evidence that projects in the Brazilian Amazon have mitigated forest loss. The draft states that the staff also reviewed evidence showing some schemes sell more carbon credits than the projects can deliver on, or exaggerate the emission reductions they achieve.

‘Informed by the evidence’ The SBTi, which audits the emission reduction plans of companies, triggered a revolt among staff last month by declaring its intention to allow use of carbon credits prior to concluding its research on them. Since then, the SBTi's board of trustees has issued a clarification to state it had not yet changed its policy and that any decisions would be "informed by the evidence". The findings in the SBTi staff document seen by Reuters have not been previously reported. They are based on a review of evidence in scientific papers and other submissions by interested parties in a consultation. The findings are subject to further analysis and review, including from the Scientific Advisory Group, a panel comprising climate scientists from around the world. If upheld, they would represent a major obstacle to SBTi's board of trustees adopting carbon offsets as part of companies' emission reduction plans.

Investment in clean energy Many of the SBTi's financial backers, including the Bezos Earth Fund, are pushing for adoption, as is former U.S. climate envoy John Kerry. They argue offsets are needed to spur more investment in clean energy and meet a global pledge to reduce emissions to zero on a net basis by 2050. Proponents say selling credits from carbon offset projects to companies so they can offset pollution can help move money to climate-friendly projects. Critics question the quality of the offsets and worry this could let companies off the hook when it comes to reducing emissions.

Talking Points

In Conversation

Reacting to the SBTi statement on the use of environmental attribute certificates, Ben Rattenbury, vice president of policy at carbon data provider Sylvera, said: “Carbon credits have a crucial role to play in the private sector’s ability to accelerate the global transition to net zero, serving as an established and scalable tool to channel finance to effective climate solutions. “SBTi's announcement is potentially a very big deal for the carbon markets. Direct support from one of the most influential voices in corporate decarbonisation will enable even more organizations to make science-based net zero commitments right now, and achieve real climate impact, including through the use of high quality carbon credits. “Given that quality will not be actively managed under SBTI, buyers will still have to take appropriate steps to set out and execute a high-quality credit procurement strategy that will withstand claims standards, such as VCMI, and increasing regulatory standards. “The world can’t afford this transition without carbon credits, so it’s very encouraging to see SBTi open the door for companies to be able to use them for a proportion of their scope 3 emissions reductions targets - while respecting the mitigation hierarchy.”

ESG Lens

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ESG Spotlight

Gold neck discs, a sword, a royal chair and dozens of other treasures looted during British colonial rule went on show in Ghana this week for the first time since their historic return. People traveled from across the West African country to see the repatriated plunder in the city of Kumasi, the seat of Asante King Otumfuo Osei Tutu II, known as the Asantehene. "The items that came back are virtually the soul of the people of Asante," the monarch said at the exhibition, which marks his silver jubilee. The gold regalia was looted during Britain's 1821-1957 colonization of what is now Ghana, much of it taken during violent battles with the Asante kingdom and placed in museums. London's British and Victoria & Albert museums, and the Fowler Museum at the University of California, sent the artifacts back earlier this year - part of a growing move by Western institutions to re-examine colonial legacies.

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