On 30 July, the SBTi released four highly anticipated technical papers as part of its revision process to the SBTi Corporate Net-Zero Standard and specifically its approach to scope 3 emissions. This is an early step in the review of the Corporate Net-Zero Standard; guidance remains unchanged until the process is complete.
Sheri Hickok, CEO at Climate Impact Partners, shares her insights on the update.
Look beyond the headlines:
"Despite what may be presented in the headlines, as we delve into the details, there is a clear picture emerging for the role of carbon credits in the SBTi’s Corporate Net-Zero Standard. Key discussions remain around insetting, neutralizing residual emissions, and Beyond Value Chain Mitigation (BVCM).
The focus on BVCM is important and we are aligned with this. It pushes companies to become true climate leaders, demonstrating the type of ambition we need to see to tackle the climate and biodiversity crises. Many of our clients have been doing this for years, channelling finance to projects that create impact beyond their own value chains. The SBTi is now putting a framework around this.
One of the clear and important objectives of BVCM is for companies to take responsibility for as yet unabated Scope 3 emissions as they work towards ambitious reduction targets. We encourage SBTi to take BVCM to the next level and make it a requirement as opposed to a recommendation – increasing the flow of finance needed to meet near term targets.
At the same time, we need to recognize companies for leading in this way. As the SBTi takes the next year to formalize its guidance, the VCMI’s scope 3 flexibility claim is also under consultation offering a great way for companies to be recognized for their climate leadership.
We do not align with the SBTi’s definition of offsetting used throughout these papers. It states that offsetting is the use of carbon credits instead of internal abatement. This is not the principle that we, nor our clients, follow. Data shows that companies buying carbon credits are decarbonizing at twice the rate of those that are not – setting an internal carbon price helps to accelerate decarbonization. If the SBTi applied this principle, the outcomes of this paper may have looked very different.
We will be responding to the consultation with our recommendations. Critically we need to ensure that instead of layering complexity and narrowing options for companies, that they have access to a range of solutions to help meet their targets."
Learn more about BVCM by watching our recent webinar with Deloitte: BVCM - what it is and why it matters.
We do not align with SBTi’s definition of offsetting used throughout these papers. It states that offsetting is the use of carbon credits instead of internal abatement. This is not the principle that we, nor our clients, follow. Data shows that companies buying carbon credits are decarbonizing at twice the rate of those that are not – setting an internal carbon price helps to accelerate decarbonization. If the SBTi applied this principle the outcomes of this paper may have looked very different.
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