The main regulator for corporate sustainability has warned that carbon offset credits are a dangerous strategy to combat climate change. The nonprofit has faced pressure to soften its stance on carbon credits, which many companies promote as a way to combat pollution. This week’s findings appear to refute that effort.
Many brands try to promote themselves as climate-friendly, but it’s hard for consumers to know whether these companies are actually having a positive impact. This is where the Science-Based Targets Initiative (SBTi) comes in, setting standards for climate targets and evaluating companies against those guidelines.
SBTi is updating its standards, which could have a significant impact on the thousands of companies seeking to legitimize their sustainability claims through the organization. The company released a report this week synthesizing the evidence it has gathered on how useful carbon credits purchased by companies are in combating climate change. The report noted that many of these measures were completely “ineffective.”
“There can be clear risks to companies using carbon credits for offsets.”
“There may be clear risks in using carbon credits for offsets by companies,” the report states. These credits may actually hinder efforts to cut greenhouse gas pollution – the exact opposite of the intended goal of corporate climate commitments.
Carbon credits are supposed to represent avoiding or reducing and sequestering large amounts of the carbon dioxide pollution that heats the planet. For example, they might be related to renewable energy projects or other measures to prevent deforestation or plant trees that absorb and store oxygen. Companies buy these credits to eliminate the climate impact of their own pollution.
This allows companies to claim to be carbon neutral even though they are still emitting greenhouse gases. But carbon accounting often doesn’t hold up in the real world. Carbon credits have become so popular and cheap that the market is flooded with false credits from poorly designed projects that often overestimate the amount of carbon dioxide they avoid or capture. For example, it’s difficult to measure the carbon content of a forest, and the trees in a forest need to remain intact for 100 years or more to prevent carbon dioxide from being released back into the atmosphere.
The SBTi report is based on more than 100 unique pieces of evidence that the organization reviewed and assessed for relevance and potential bias. These include research papers, case studies, regulatory analyses, and other types of evidence solicited last year. The group said its findings only apply to the evidence it reviewed, but the report is in line with a growing number of surveys and academic studies that have raised questions about carbon credits.
The outcome of the review is particularly important as the SBTi reportedly faced a mutiny this year over its stance on carbon credits. In the past, SBTi did not allow companies to replace emission reductions with carbon offset credits. The group’s board caused an uproar in April when it issued a statement suggesting SBTi might suddenly start allowing a company to offset pollution from its supply chain and the use of its products.
The ensuing turmoil reportedly included staff attempts to oust board members and the SBTi chief executive. At least one of SBTi’s scientific advisers resigned in protest, and its chief executive resigned in July “for personal reasons.” Clarifying the board’s April statement, SBTi said it had not made any changes to the amount of carbon credits and would need to follow the organization’s standard update protocol.
“Today’s announcement marks a critical step in the process of revising the corporate net-zero standard,” interim chief executive Sue Jenny Ehr said in a July 30 statement. SBTi said it will have revised draft guidance ready for public comment by the end of the year.
Environmental groups say analysis released by SBTi this week shows why carbon credits should play no role in companies’ future sustainability plans. Jill McArdle, international corporate campaigner at Beyond Fossil Fuels, said in a press release: “SBTi should withdraw its plans to allow offsets against corporate climate targets, otherwise it risks becoming a vehicle for this greenwashing.
