(Photo: iStock)
Most companies purchasing carbon credits have not been made net-zero pledges approved by SBTi. According to MSCI Carbon Markets, over the past decade, only 13% of companies using carbon credits have set long-term carbon reduction targets. The report further analyzes that relaxing the restrictions on carbon credit usage could increase the willingness of companies to set science-based carbon reduction targets.
The report points out that using carbon credits to reduce the cost of achieving climate goals can make the Science Based Targets initiative (SBTi) more acceptable to companies. The researcher expects an additional 1,000 companies to set ambitious carbon reduction targets.
In April, SBTi announced its intention to open a pathway for companies to use carbon credit offset indirect emission, which raised concerns about greenwashing but was also seen by many experts as beneficial for the carbon market.
MSCI's analysis suggests that if SBTi relaxes its rules, carbon credit demand could increase by 640 million, more than doubling from 2023, and associated project spending could increase by an additional $19 billion.
Guy Turner, head of the Carbon Markets division, told Responsible Investor that offsetting indirect carbon emissions in a more flexible way would be welcomed by companies because Scope 3 emissions reductions present a dilemma for them. In theory, companies can choose suppliers and products based on carbon emissions data, but in practice, this is much more challenging than imagined.
Meanwhile, the controversy over SBTi's intention to change its stance on carbon credit offsetting continues. The organization received a complaint from its Science and Technology Advisory Committee again on April 29.
The Financial Times reported that the complaint requests that SBTi submit a report to the Charity Commission for England and Wales acknowledging the serious damage to its reputation caused by this incident. SBTi was recognized charity status by the commission in January, giving it the opportunity to undertake organizational reforms and expand its operations.
According to SBTi's regulations, changes to carbon credit usage standards can only be made after strict processes involving internal experts and external consultants. Therefore, some members of the advisory committee have requested an internal investigation by SBTi and a retraction of the initial statement.
