SBTi To Issue More Guidance On Carbon Credits For Scope 3 Emissions

SBTi To Issue More Guidance On Carbon Credits For Scope 3 Emissions - Carbon Herald

Earlier this year, the Science Based Targets initiative (SBTi) announced a major update to its key Net-Zero Standard, which would include clearer guidance on how companies can address their Scope 3 emissions, which are those generated in their value chain but outside their direct control.

SBTi has been gathering feedback from a wide range of stakeholders over the past six months. 

While acknowledging ongoing debate, they recognize that carbon credits, when used properly, can be a valuable tool in tackling climate change.

As a result, SBTi is expanding the use of carbon credits for Scope 3 emissions to establish specific rules, limitations, and verification methods to ensure these credits contribute to real emissions reductions. 

Relevant: SBTi Releases Two Reports To Support Beyond Value Chain Mitigation

Given the complexity of this issue, SBTi will collaborate with other organizations and stakeholders to develop a robust framework for Scope 3, including the responsible use of carbon credits in setting net-zero targets.  

SBTi won’t be directly evaluating the quality of individual carbon credits. Other organizations are better suited for that task. However, SBTI will ensure clear communication of their requirements to all credit validators.

Ultimately, SBTi sees this change as a way to accelerate progress towards a low-carbon future.  Companies can use carbon credits for temporary offsets while they invest in long-term solutions to eliminate emissions entirely through innovation and new technologies.

A draft of the new rules and limitations for using carbon credits in Scope 3 targets is expected by July 2024. This will follow consultations with all relevant stakeholders.

Relevant: Finds Just 0.5% Of Companies With SBTi Targets Have Bought Durable Carbon Removal

Teresa Hartmann, Chief Ratings Officer at carbon credits rating agency BeZero Carbon, commented on the news: 

“The SBTi’s announcement to update its guidance on carbon credit use for Scope 3 emissions represents a significant step forward in scaling carbon markets and climate action. Unlocking demand for quality credits, and acknowledging the role of independent project-level assessments, are vital steps to accelerate a transition to 1.5°C.”

“The market is showing promising initial signs of coalescing around common approaches to create real impact to slow global warming This move helps deliver emissions reductions that are on the table today. For companies that aren’t currently able to meet their Scope 3 reduction targets, the flexibility to use credits will represent an opportunity to continue engaging with climate action meaningfully, and fund practicable climate solutions within the critical next decade,” Hartmann said.

Ana Haurie, CEO and co-founder of Respira, one of the most prominent carbon finance companies also commented by saying: “The SBTi’s recognition of the role carbon credits have to play in helping companies address scope 3 emissions is a landmark moment – both for the market and for Global Net Zero efforts more broadly. Previously, the misinterpretation and lack of clarity of SBTi guidance had caused confusion for companies which were keen to compensate for unavoidable emissions, but were worried that investing in the voluntary carbon market would lead to accusations of not doing the right thing.

It’s also extremely encouraging to see the VCMI pledge to work with the SBTi on supporting businesses with their net zero transitions. Overall, these developments should be seen as a huge vote of confidence from the scientific community in the power of the carbon market to help more businesses accelerate timelines towards ambitious sustainability targets. At the moment, 81% of companies are taking no action on their emissions, but many more should now feel incentivised to use high quality carbon credits as part of long-term decarbonisation strategies.

It’s worth emphasising that investing in carbon markets does not come at the expense of reducing supply chain emissions – it is vital that businesses do both to make meaningful progress towards net zero targets at the pace needed.”

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