SBTi staff demand CEO resignation over plans to extend carbon credit use for Scope 3 emissions

Concern and confusion cited by staff at the Science Based Targets initiative, while carbon market companies back Scope 3 changes

Plans by the non-profit Science Based Targets initiative to recognise carbon credits as a way to abate Scope 3 emissions has caused unrest within the organisation, with staff calling for the resignation of its chief executive Luiz Amaral, along with the board of trustees.

In what is being considered a significant pivot in the initiative’s attitude, the SBTi has said it will accept the use of carbon credits to abate Scope 3 emissions, produced by assets outside an organisation’s ownership or control and that make up the bulk of emissions for some industries, including financial services.

“When properly supported by policies, standards and procedures based on scientific evidence, the use of environmental attribute certificates for abatement purposes on Scope 3 emissions could function as an additional tool to tackle climate change,” the SBTi said in an announcement on April 9.

The organisation has said it will consult on the change, set guardrails to protect the integrity of the carbon credits, and will not validate the quality of the credits itself. The SBTi plans to publish a first draft of its rules by July 2024.

The decision has, nonetheless, triggered a backlash from its own employees, as well as non-profits including Carbon Market Watch and the NewClimate Institute.

Staff demand CEO and board resignation

A letter from staff in response to the SBTi’s announcement, seen by Sustainable Views, says that the decision has “caused concern, confusion and damaged the trust of critical stakeholders”. 

It attacks the fact the announcement was presented as an SBTi decision when it was made by the board, “undermining ongoing work by SBTi staff to make recommendations around the considered use” of carbon credits.

The SBTi’s protocol “does not give the board sole decision-making authority to decide that [carbon credits] may be used in this way under SBTi standards”, the letter says. “Carbon credits are not permitted for emissions reductions, according to the [SBTi’s] corporate net zero standard nor the financial institutions guidance.”  

What has now become the leading standard globally for decarbonisation and net zero target setting excluded the possibility for corporates to use carbon credits against a portion of their carbon footprint

A separate internal letter sent by staff to the board and the CEO, which has been seen by Sustainable Views, calls for the resignation of the SBTI’s staff, its board of trustees and an immediate withdrawal of the statement, suggesting it was “issued prematurely and without rigorous scientific analysis or appropriate consultation with relevant stakeholders”.

“Regrettably, the actions of the CEO and the board have resulted in significant harm to our organisation’s reputation and viability,” it continues, citing “concerns received from advisory groups’ members, the departure of a prominent technical advisory group member, journalist inquiries, significant confusion about the implications for using our current standards, and harmful disruptions to the work and well-being of staff” as proof of this harm.

“It is fair to say that relationships with many of our key stakeholders and allies are in danger of long-term and irreversible damage,” the letter concludes.

‘An illegitimate takeover’

There is growing scrutiny surrounding companies’ use of carbon credits, in particular to manage Scope 3 emissions, and the SBTi’s decision has taken the market by surprise.

“What has now become the leading standard globally for decarbonisation and net zero target setting excluded the possibility for corporates to use carbon credits against a portion of their carbon footprint,” wrote consultancy KPMG carbon pricing expert Leo Mongendre on LinkedIn. 

“Despite the mounting pressure following a series of reports and surveys conducted by [voluntary carbon market] stakeholders and market intelligence entities advocating for a reconsideration on this issue, the SBTi held its position against the use of carbon credits in corporates’ decarbonisation strategies. Up until now,” Mongendre continued

The SBTi’s announcement was made on the same day Carbon Market Watch and the NewClimate Institute released a report warning of the risk of companies’ Scope 3 targets being undermined by a separate standard, issued by the Voluntary Carbon Markets Integrity Initiative, which works to improve standards on the supply side of the VCM. 

The non-profits cautioned that the VCMI’s “Scope 3 flexibility claim”, which would allow businesses to bridge the gap between their emissions and their targets with carbon credits, would “nullify” many large companies’ Scope 3 emissions commitments. They and other non-profits, including Greenpeace, sent joint letters to the VCMI, the SBTi and the Greenhouse Gas Protocol urging against allowing companies to use credits to offset a portion of their Scope 3 emissions.

We understand that the SBTi’s board of trustees have taken a unilateral decision with no scientific basis, and no backing from SBTi’s own technical council and standards development team. They have been bypassed in the process

In response to the SBTi’s announcement, Carbon Market Watch expert Gilles Dufrasne wrote on the CMW website that the SBTi “appears to have buckled to pressure from carbon market players and corporate interests”, in a decision that increases “the risk that corporations can appear to be improving their climate performance on paper while actually spewing out more greenhouse gases into the atmosphere”. 

The SBTi’s statement “looks like an illegitimate takeover”, wrote NewClimate Institute expert Thomas Day on LinkedIn. “We understand that the SBTi’s board of trustees have taken a unilateral decision with no scientific basis, and no backing from SBTi’s own technical council and standards development team. They have been bypassed in the process.

“The offsetting mechanism being forced on SBTi would completely nullify the already insufficient Scope 3 commitments of most companies, reversing years of incremental progress that SBTi and its member companies have fought so hard to achieve,” said Day. 

Buyers still need to meet standards

The announcement, however, has won the support of a number of carbon market companies.

“Direct support from one of the most influential voices in corporate decarbonisation will enable even more organisations to make science-based net zero commitments right now, and achieve real climate impact, including through the use of high-quality carbon credits,” said Ben Rattenbury, vice-president of policy at carbon data provider Sylvera, in a statement.

“Given that quality will not be actively managed under SBTi, buyers will still have to take appropriate steps to set out and execute a high-quality credit procurement strategy that will withstand claims standards, such as VCMI, and increasing regulatory standards,” he continued.

Teresa Hartmann, chief ratings officer at carbon ratings agency BeZero Carbon, said in a statement that the announcement “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.”

The SBTi has been contacted for comment.