After employees criticized the proposal as enabling corporate greenwashing, earlier this month Science Based Targets initiative (SBTi), a corporate climate action advocacy group, rolled back a recommendation that would enable expanded carbon offset usage.

The original guidelines proposed by SBTi in January broadened the advised usage of carbon offsets as a tool to abate corporate Scope 3 emissions in its Corporate Net-Zero Standard. Carbon offsets are certificates-for-purchase tied to efforts to reduce atmospheric carbon dioxide, e.g., reforestation and regenerative agriculture.

“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,” the organization said in an April 9 statement.

Some staffers at SBTi condemned the decision as not backed by science, according to an internal letter obtained by the Guardian. The statement, which was sent to management, criticized the recommendation as in line with “a greenwashing platform where decisions are unduly influenced by lobbyists.” It also called for the resignation of SBTi’s CEO.

In response, the organization released a clarification statement declaring “no change has been made to SBTi current standards” and that any future recommendations related to carbon offsets “will be informed by evidence.” It also announced the upcoming publication of a paper and draft proposal about potential changes to Scope 3 recommendations in July.

What is SBTi, and how does it work?

Launched in 2014 prior to the Paris Agreement, Science Based Targets initiative was founded by the United Nations and several climate-action groups. Its mission is to outlay science-based targets, tools and guidance for corporations to reduce greenhouse gas emissions. The group is comprised of environmental experts from SBTi’s founding groups: CDP, UN Global Compact, World Resources Institute and World Wildlife Fund. The We Mean Business Coalition, a nonprofit dedicated to a net zero transition, also staffs SBTi.

SBTi targets corporations as responsible actors for mitigating climate change. On its website, companies can pledge to “set a target” and engage with SBTi to develop, validate, communicate and disclose their path to emission reductions. SBTi also publishes a Corporate Net-Zero Standard, which it updates regularly, that details short- and long-term science-based targets, mitigation pathways and related processes.

What are Scope 1, 2 & 3 emissions?

Greenhouse gas emissions are sectioned into three categories based on their source. Scope 1 refers to direct emissions from company-owned sources, such as factories and vehicles. Looking more broadly at energy use, Scope 2 relates to the electricity, heating and cooling purchased by a company. And Scope 3 – which are related to SBTi’s policy change (and subsequent reversal) – looks at a company’s supply chain and miscellaneous effects. Given the broadness of Scope 3 emissions, they are typically the most difficult to combat, making the jobs of climate guidance groups like SBTi all the more important.

What’s the scale of SBTi’s impact in companies worldwide?

SBTi is a globally recognized watchdog of corporate climate-action responsibility, releasing the first Corporate Net-Zero Standard worldwide in 2021. As of this March, the organization quantified that 7,826 companies have taken action with SBTi to reduce their climate impact. Additionally, 5,231 companies have developed science-based targets and 3,121 have net zero commitments, according to the SBTi website. SBTi also maintains a searchable database of participant companies.

How involved is SBTi in the promo industry?

Multiple suppliers and distributors use SBTi’s framework to develop their climate-action standards, often formally submitting their plans to the organization for validation. HanesBrands (asi/59528) and Top 40 supplier Gildan (asi/56842) have set near-term targets of reducing emissions by 1.5 degrees Celsius and well below 2 degrees Celsius, respectively. The parent company of Lapine (asi/249352), adm group, submitted a plan to SBTi to halve its emissions by the end of the decade. Promo’s second-largest distributor, HALO Branded Solutions (asi/356000), committed to SBTi’s Net Zero emissions target last year.

What are some of the possible consequences of SBTi’s backtracking on carbon offsets?

Given the difficulty inherent in the broadness of Scope 3 emissions, carbon offsets have historically provided a more feasible alternative to direct reduction of emissions. But the carbon-offset market has received plenty of criticism in recent years, after numerous charges of fraud, “phantom credits” and misleading or ineffective efforts.

Still, proponents of carbon offsets say they can be a valid way to reach net zero when paired with internal emission-reduction efforts. “It’s a market, and there are high-quality carbon offsets and then there are low-quality ones,” said Andy Keller, CEO of ChicoBag (asi/44811) and a member of the Promo for the Planet Advisory Board. “The key thing is to do your homework and shop wisely.”

Based on thousands of ongoing projects, Morgan Stanley estimated last year that the carbon-offsets market will grow 50-fold from $2 billion in 2022 to $100 billion by the end of the decade. Given SBTi’s hesitancy on carbon offsets’ efficacy in ensuring corporate responsibility for climate change, this could disrupt the industry and shift companies toward more direct measures of reduction.

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