World’s leading referee on corporate net-zero targets faces controversy over carbon credits

  • SBTi releases scenarios for carbon credits despite finding little evidence they work
  • Carbon credits may be used in supply chain emissions reductions, offsetting residual emissions, or mitigating emissions outside the supply chain
  • SBTi calls for more research on effectiveness of carbon credits
  • Controversy surrounding carbon credits continues as SBTi plans to release draft standard by end of year
  • SBTi aims for new standard to take effect in 2025

The Science Based Targets initiative (SBTi) has released scenarios for the use of carbon credits, despite finding little evidence that they work effectively. The organization, which validates climate targets for over 5000 companies, is at the forefront of a global debate on their legitimacy in corporate climate commitments. SBTi’s Chief Technical Officer Alberto Carrillo Pineda said the outputs are crucial to developing a more sophisticated approach to scope 3 emissions. However, the scenarios won’t necessarily be included in the updated net-zero standard expected next year. The SBTi has called for further research on carbon credits and plans to release a draft version of its new standard by the end of this year, aiming for it to take effect in 2025.

Factuality Level: 8
Factuality Justification: The article provides accurate information about the Science Based Targets initiative’s review of carbon credits and their potential uses in corporate climate commitments, while also mentioning concerns and controversies surrounding their effectiveness. It presents different scenarios for using carbon credits and quotes from the organization’s representatives. However, it could have provided more details on the specific types of studies or evidence that suggest they are ineffective.
Noise Level: 4
Noise Justification: While the article provides some useful information about the Science Based Targets initiative’s review of carbon credits, it also includes some repetitive information and relies on a few news reports for evidence without providing concrete data or examples to support its claims. It could benefit from more in-depth analysis and exploration of the consequences of decisions on those who bear the risks.
Public Companies: H&M (HMB)
Key People: Alberto Carrillo Pineda (SBTi’s chief technical officer), Luiz Amaral (SBTi Chief Executive)

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Financial Relevance: Yes
Financial Markets Impacted: Companies
Financial Rating Justification: The article discusses the Science Based Targets initiative’s review of carbon credits and their potential use in corporate climate commitments, which can impact companies’ emissions reduction strategies and investments in sustainability efforts. This could affect the financial decisions and performance of companies that rely on carbon credits for meeting their net-zero targets.
Presence Of Extreme Event: No
Nature Of Extreme Event: Other
Impact Rating Of The Extreme Event: Minor
Extreme Rating Justification: There is no extreme event mentioned in the article, but the discussion on carbon credits and their effectiveness raises concerns about environmental issues and corporate climate commitments. The impact seems to be minor as it mainly focuses on research and policy updates rather than causing direct harm or destruction.

Reported publicly: www.wsj.com