SBTi adds further confusion over offsets

LONDON – The Science Based Target initiative (SBTi) has added further confusion to an initial statement made earlier this month where it said member businesses would be allowed to use carbon offsets to mitigate scope 3 emissions. That statement met with a huge backlash and has since been ‘clarified’ by the SBTi which claimed there was a misunderstanding.

However a new op-ed published in Reuters by María Mendiluce, CEO, We Mean Business Coalition and SBTi board member, and Mandy Rambharos, vice president, Global Climate Cooperation, Environmental Defense Fund suggests the need for SBTi to consider changing its approach is all about money.

They state: “The recent statement from the board of the Science Based Targets initiative (SBTi) that it will consider recognsing environmental attribute certificates, including carbon credits, for abatement purposes in tackling value chain emissions, marks a significant milestone in the global battle against climate change. This is a bold step that will help accelerate corporate climate action around the world.

“The world faces a stark reality: thousands of companies have now made commitments to cut their emissions in half by 2030 and reach net zero by 2050. Yet the money hasn’t followed. While the number of companies committed to SBTi targets increased by more than 500 per cent from 2018 to 2023, annual corporate climate finance increased only 5 per cent during this same period, from US$183 billion, opens new tab to US$192bn.

“This disconnect is further reflected by the fact that fewer than half of S&P 500 companies reporting to CDP are on track to meet their stated climate targets.

“While global climate investment totaled over US$1 trillion in 2023, more than $5 trillion will be needed annually by 2030 if we are to reach net zero by 2050, according to the IMF.

“Of this, roughly US$2 trillion annually is needed for emerging and developing countries to enable the deployment of clean technologies and foster a just and equitable transition that promotes socio-economic development.”

The full statement can be viewed here and essentially continues in the same, rambling manner and failing to address the critical issue of renewable energy in supply chains – and the lack of willingness of SBTi members to fund it. This is the nub here.

The key lines come at the end, where they say: “SBTi has committed to publish, by July 2024, a draft analysis of how different tools – for example, sustainable aviation fuel, zero-emissions freight or carbon credits – can be used responsibly, with the right guardrails and limits.”

This brings us back to the key question of whether or not the SBTi will allow carbon offsetting to be used by its members (talk of sustainable aviation fuel and zero-emissions freight is a complete distraction).

This issue will rumble on and on. Apparel suppliers we have spoken to are furious that brands are unwilling to fund the shift to renewable energy in supply chains which would help decouple growth from CO2 emissions, to some degree.

We expect that behind the scenes, the SBTi has already committed to using carbon offsetting. It would not have risked the recent negative publicity otherwise. The next few months could get very interesting.