The world’s leading watchdog for corporate climate goals said companies may use carbon credits to reduce the full scope of their emissions, in a decision that’s likely to galvanize a controversial corner of climate finance.
- SBTi says its decision follows months of consultation
- The voluntary carbon market has struggled amid controversies
The world’s leading watchdog for corporate climate goals said companies may use carbon credits to reduce the full scope of their emissions, in a decision that’s likely to galvanize a controversial corner of climate finance.
The United Nations-backed Science Based Targets initiative said it will allow the use of credits to cut emissions from value chains, otherwise known as Scope 3, according to a statement on its website.
The decision comes as the market struggles to right itself after revelations of projects that failed to deliver on projected emission cuts. At the same time, the finance industry is positioning itself to reap the monetary benefits of a growing market for carbon offsets.
SBTi said its decision was motivated by the need to address climate change, and promised to develop “specific guardrails and thresholds” to ensure proper use of credits.
“While recognizing that there is an ongoing healthy debate on the subject matter, SBTi recognizes that, 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,” SBTi said.
The decision marks a departure from SBTi’s previous guidance, which generally limited the use of credits to residual emissions, or those that cannot be cut through other means. The organization says its revised guidelines follow a “wide consultation” over the past six months.
SBTi isn’t planning to validate the quality of carbon credits, it said. Instead, it will give organizations that validate credits “clear access” to the rules that it will establish around the credits’ use.
Investors are increasingly demanding validation of emission-cutting plans by SBTi, which is a voluntary program. More than 5,000 companies and financial institutions have had their plans approved, with the number roughly doubling each year, according to SBTi.
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