SBTi: Carbon Credits & Scope 3 Emissions “Reevaluation”
Science Based Targets initiative (SBTi) trustees are currently in the process of gathering stakeholders and others to revise the use of carbon credits to abate Scope 3 emissions alongside other abatement tools, a bullish case for the voluntary carbon market respectively.
Over the years, the SBTi has doubled down against the use of carbon credits as part of the Corporate Net-Zero Standard. This new development, if reached, could change the carbon credit markets for the better.
The reevaluation will allow certificates for Scope 3 emissions abatement and grant entities ways to accelerate value chain decarbonization.
In turn, allowing time for entities to innovate while still abating emissions along the way. In addition, improving technology to eliminate carbon emissions at their source.
Scope 3 emissions, which cover indirect emissions from a company’s value chain, have long been a bone of contention, even with the recent U.S. Securities and Exchange Commission (SEC) Final rule on climate-related disclosures. This bold step by SBTi will not only serve as a solution for entities who find it challenging to meet sustainability efforts but rather a massive development for the fight against climate change, and communities where voluntary carbon credit developers are driving change.
SBTi has carried out a wide consultative effort on this subject in the past six months and reported to the Board a summary of the call for evidence survey results, a statement from the “SBTi Board of Trustees” in the press release today.
In a recent report by SBTi titled “Business Ambition for 1.5 Celsius Campaign,” 53.6% of companies noted that ‘scope 3 is too much of a challenge in meeting net-zero targets’, followed by uncertainty surrounding future technological advancements being quite significant at 52.7% (Chart 1). This is in conjunction with scope 3 emissions being 21% of the reason why companies are not setting targets within the allotted commitment time frame (Chart 2).
Looking ahead, SBTi will engage with stakeholders in setting up guardrails and thresholds along with rules for the valid use of verified carbon credits as a tool and not limited in the abatement of Scope 3 emissions while ensuring the use compliments rather than replaces, direct emission reduction efforts.
SBTi plans to deliver the first draft of basic rules, thresholds, and guardrails for the potential use of carbon credits for Scope 3 abatement purposes by July 2024.
This leadership and bold step mark a significant step towards a more sustainable and diligent road for corporate climate action framework.
Currently, the SBTi dashboard holds a total of 8,278 companies registered, with 5,137 companies’ targets approved.