Why the SBTi must abandon its offsetting proposal

The SBTi Board's proposal to allowing carbon offsetting to achieve climate objectives is ineffective and dangerous, writes Alain Grandjean

Ten years after its creation, the Science-based targets initiative (SBTi) has validated the climate objectives of over 4,000 companies, establishing itself as a key label for climate commitment. However, on 9 April, this year, the organisation's Board of Trustees announced its intention to authorise the use of "Environmental Attribute Certificates", including carbon credits, to achieve Scope 3 emissions reduction targets.

This announcement has sparked indignation among many climate action players, insofar as it negates the SBTi's raison d'être, tarnishes the credibility of companies that have complied with it, and dangerously delays the collective action needed for the ecological transition.

That is why we, the signatories of this letter and seasoned practitioners of SBTi standards, call on the organisation to abandon this development. The letter was signed by 378 people, some of whom are listed below.

More specifically, we condemn the authorisation of "Environmental Attribute Certificates" in this context for two main reasons: it is contrary to the scientific consensus and ineffective, harmful even, to the climate cause.

The SBTi Board's proposal is contrary to the scientific consensus, which invalidates the offsetting approach consisting of using carbon credits to achieve emission reduction targets (see for example IPCC, WGIII, chapter 7, which shows that the potential for sequestration is limited and does not enable the offsetting of all current emissions).

Whether the credits are aimed at avoiding or sequestering emissions, they put different physical realities on the same level, by comparing actual induced emissions with emissions potentially avoided or potentially captured in a different timeframe and geography.

In order to contribute to global carbon neutrality at the right level, a company must act in three simultaneous but separate ways: by reducing its own emissions to a minimum, by helping others to reduce their emissions (by marketing low- carbon solutions or financing other stakeholders' low-carbon projects) and by contributing to the net creation of carbon sinks within and outside its value chain.

"The SBTi Board's proposal is contrary to the scientific consensus, which invalidates the offsetting approach consisting of using carbon credits to achieve emission reduction targets"

Stepping away from the offsetting approach, carbon credits can be useful instruments for contributing to the financing of low-carbon projects. Some reporting frameworks, such as the Net Zero Initiative, have sought to offer an alternative to offsetting that is compatible with these requirements.

What's more, the SBTi Board's proposal is ineffective and even harmful to the climate cause, for at least four reasons:

• Firstly, it perpetuates the illusion that climate change is a challenge that can be met with little effort, by means of a few financial transactions, and in isolation from the other players in the economy. It obscures the fact that the effort associated with scope 3 actually requires collaboration between the stakeholders in a value chain, in order to radically transform it. This collaboration is essential to overcome the barriers to action that exist today.
• Secondly, it does not encourage companies to rethink their business models to limit their dependence on greenhouse gases. Suggesting that the climate crisis can be solved by buying carbon credits hides the risks and opportunities created by the transition towards a low-carbon economy (new regulations, markets, technologies, etc.).
• Thirdly, this decision sends out the wrong signals regarding the channelling of financial flows, by allowing companies that have bought carbon credits to be judged by investors in the same light as those that have undertaken a profound transformation of their value chains.
• Lastly, it encourages the purchase of less expensive, low-quality carbon credits. Companies may focus all their attention on optimising a single indicator (induced emissions minus carbon credits). This in turn runs the risk of favouring the development of many cheaper but less viable projects at the expense of more expensive but higher quality projects that need financing.

It is therefore in the name of scientific rigour and effective climate action that we call on SBTi Board to abandon this proposal.

We encourage the organisation to open a collective debate on the mechanisms for reducing Scope 3 emissions and contributing to carbon neutrality, which require greater ambition, pragmatism and practical experience.

Alain Grandjean is a co-founder Carbone 4.