A watchdog for corporate climate commitments is cracking down on carbon credits

A major watchdog for corporate sustainability is warning that carbon offset credits are a risky tactic for tackling climate change. The nonprofit organization had faced pressure to soften its stance on carbon credits, which many companies promote as a way to deal with pollution. This week’s findings seem to refute that effort.

Plenty of brands have tried to sell themselves as climate-friendly, but consumers struggle to know whether those companies are actually having a positive impact. That’s where the Science Based Targets initiative (SBTi) steps in, developing standards for climate goals and assessing companies based on those guidelines.

The SBTi is in the process of updating its standards, which could have a big impact on the thousands of companies that have sought to legitimize their sustainability claims through the organization. It released a report this week synthesizing the evidence it has collected on how useful carbon credits purchased by companies are in fighting climate change. Many of them are outright “ineffective,” the report indicates.

“There could be clear risks to corporate use of carbon credits for the purpose of offsetting,” the report says. These credits might actually hinder efforts to slash greenhouse gas pollution — the exact opposite of what corporate climate commitments are supposed to achieve.

Carbon credits are supposed to represent tons of planet-heating carbon dioxide pollution either avoided or drawn back down and sequestered. They might be tied to renewable energy projects or other initiatives to prevent deforestation or plant trees that take in and store oxygen, for example. Companies purchase these credits to try to cancel out the impact their own pollution has on the climate.

That allows companies to claim that they’re carbon neutral, even if they’re still pumping out greenhouse gas emissions. But the carbon accounting often doesn’t add up in the real world. Carbon credits have become so popular and cheap that the market has been flooded with faulty credits from poorly designed projects that often overestimate the amount of carbon dioxide they avoid or trap. It’s difficult to measure how much carbon a forest holds, for instance, and its trees need to stay standing for 100 years or more to keep that CO2 from being released back into the atmosphere.

The SBTi report is based on more than 100 unique pieces of evidence the organization reviewed and assessed for their relevance and potential bias. That includes research papers, case studies, regulatory analysis, and other kinds of evidence it solicited last year. The group says its findings only apply to the evidence it reviewed, but the report falls in line with a growing number of investigations and academic research that cast doubt on carbon credits.

The results of SBTi’s review are all the more important considering the organization reportedly faced a mutiny this year over its stance on carbon credits. In the past, the SBTi hasn’t allowed companies to substitute emissions reductions with carbon offset credits. There was an uproar when the group’s board of trustees released a statement in April suggesting that the SBTi might suddenly start to allow a company to offset pollution stemming from its supply chain and the use of its products.

The commotion that followed included staff reportedly trying to oust board members and SBTi’s chief executive. At least one of SBTi’s scientific advisers resigned in protest, and its CEO stepped down in July “for personal reasons.” The SBTi clarified the board’s April statement by saying that it hadn’t yet made any changes on carbon credits and that it would need to follow the organization’s protocol for updating standards.

“Today’s announcement marks a key step in the revision process for the Corporate Net-Zero Standard,” interim CEO Sue Jenny Ehr said in a July 30th statement. The SBTi says it’ll have a draft of its revised guidelines ready for public comment by the end of the year.

Environmental groups say the analysis the SBTi released this week shows why carbon credits shouldn’t play any role in companies’ sustainability plans moving forward. “The SBTi should retract its plan to allow offsets in corporate climate targets, or it risks becoming a tool for precisely this kind of greenwashing,” Jill McArdle, international corporate campaigner at Beyond Fossil Fuels, said in a press release.