LUIZ ANTONIO GOMES, MSc, MBA’s Post

Reaction 🚨 SBTi’s plans for the net-zero standard revision may offer a promising way past the disruptive offsetting dispute After months of polarised wrangling over the potential role of offsetting for corporate climate targets, the Science Based Targets initiative (SBTi) has published two new papers which shed light on the future direction of its standards. Some positive developments we set out in our reaction blog: 1️⃣ The Scope 3 Discussion Paper sets out a framework to encourage and enable companies to focus more on critical emission sources through transition-specific alignment targets, ruling out the use of carbon credits towards emission targets or as compensation for target shortfalls. 2️⃣ The Carbon Credit Synthesis Report clearly points out the ineffectiveness of allowing carbon credits to meet corporate climate targets. Reasons for caution: ⚠ The details of implementation and communication will matter. We need watertight rules on how to identify the most critical emission sources and transitions to be covered by alignment targets. ⚠ The value of these initiatives will ultimately depend on the extent to which they are protected from undue influence and pressure. Read our full reaction 🔗 https://lnkd.in/ekhUT9Ug #carboncredits #netzero #offsetting

We are back with our monthly recap on the carbon market for July 🌟 Key highlights for July include: 📜 Science Based Targets initiative (SBTi) released publications regarding Scope 3 emissions and the use of carbon credits but emphasizes that no decisions will be made until the end of 2025. Many were disappointed at the lack of clarity and firm guidance from the organization. 🤨 📢 Over 80 NGOs released a joint statement criticizing companies and countries using carbon offsets as part of their climate strategy, which also saw top carbon market practitioners responding to the statement and defending the market. 🎤 VCMI announced a public consultation on the development of its proposed Scope 3 Claim, which provides a mechanism for companies to address Scope 3 greenhouse gas emissions they cannot reduce directly. ☘ Verra introduced ABACUS, a new market label that indicates exceptional quality for carbon credits generated from ecosystem restoration and reforestation projects, supported by buyers including the Symbiosis Coalition. 📚 Gold Standard released a new edition of their climate framework that guides organizations in making substantial contributions to global net zero efforts, especially regarding adaptation, scope 3, and unabated emissions. Check out NetaCarbon's full blog post to stay up-to-date on the latest in the dynamic world of carbon markets! #NetaCarbon #CarbonMarket #SBTi #Scope3 #ClimateTech #CarbonCredit

"Companies with more ambitious targets progress less than others, except when the ambitious targets are approved by the Science Based Targets initiative" This peer-reviewed article from The Journal of Cleaner Production finds that SBTi validation is positively associated with companies' progress on emission reduction targets.* Setting ambitious goals isn't enough; they need to be credible and actionable. For companies aiming to set science-based targets, this research emphasizes the need for a robust approach to target-setting that prioritizes transparency, realistic ambition, and ongoing evaluation of progress. It also stresses the importance of third-party validation to ensure credibility and accountability. 👉 Read the full article here: https://lnkd.in/eiAP72W2 *This study presents an explanatory analysis of 120 determinants applied to 4,341 climate mitigation targets (scope 1 and 2 emissions) of 2,975 companies. #sciencebasedtargets #netzero

The reason we're way behind where we need to be on climate isn't due to a lack of promises, its due to a lack of action. That's why it's fantastic to see this independent research showing that, unlike many other types of pledges, those who set science-based targets with #SBTi demonstrate real progress towards their climate goals. And we're already looking at what more we can do to boost target-setting accountability in the future. Watch this space.... #ClimateChange #ClimateAction

Is SBTi changing its stance on carbon credits and Scope 3 targets? What you should know:    The Science-Based Targets initiative (SBTi) issued an important update this week. The United Nations-backed organization’s judgments confer credibility on corporations’ net zero plans, and SBTi has become somewhat of a de facto regulator – and, occasionally, a controversial one. In April and May, SBTi gave updates about its plans for the Net Zero standard that seemed to endorse wider use of carbon credits. After a torrent of criticism and reports of internal discord, SBTi’s board issued a clarification that the standards had not changed, and the group’s CEO, Luiz Amaral, published a blog outlining the science-based approach to standard development and welcoming debate on the topic. However, in June, Amaral resigned, citing personal reasons.     SBTI’s latest and much-anticipated statement, issued to share findings and stimulate discussion, was released on July 30. It included two publications: 1) a discussion paper on Scope 3 (supply chain) emissions target setting, and 2) an assessment of submitted evidence on how effective carbon credits are for corporate climate targets.    In light of this update, will carbon credits likely be permitted to offset supply-chain (Scope 3) emissions, or not? Has SBTi reversed its April guidance, which seemed to be favorable to wider use of carbon credits? (Its official position is that carbon credits “do not count as reductions toward meeting near-term or long-term science-based targets.”)    The Climate Board has prepared a Q&A that aims to answer common queries about SBTi’s progress this year. We’ve also included a summary of the two July 30 reports.    TCB’s view is that SBTi’s latest update takes a much more critical view and cautionary approach to the use of carbon credits than their earlier announcement led many to believe. Of the five scenarios that SBTi outlines for the use of EACs to address value chain emissions, only one presents a significant departure from SBTi’s current stance on carbon credits. However, even this scenario would limit the use of carbon credits to those deriving from emission abatement within a company’s value chain.     Furthermore, SBTi’s summary on the effectiveness of carbon credits was decidedly critical, though the organization’s lack of strong conclusions and call for additional research leaves room for the organization to maneuver before the final guidance is released. Still, one phrase jumps out: “carbon credits are ineffective in delivering their intended mitigation outcomes,” according to much of the evidence SBTi assembled.    Given that carbon offsets remain so controversial, it is likely that stakeholder feedback will continue to influence SBTi’s ultimate draft Corporate Net Zero Standard when it is released later this year.     TCB members can read our Q&A and summary of the SBTi report here: https://lnkd.in/ebsj-75p

[COMMENTARY] NewClimate's Silke Mooldijk wrote a commentary piece for Climate Home News on the threat to companies' emissions reduction goals from the SBTi Board's proposal to allow offsetting for scope 3, which would weaken already lax rules. ( 🔗 https://lnkd.in/ety2HRJn) Our 2024 Corporate Climate Responsibility Monitor (CCRM) shows: emissions reduction commitments of major global corporates are falling short of what's needed. Surprisingly, most of these companies received validation from the SBTi for their targets to be aligned with the 1.5ºC warming limit. Why the discrepancy? ⚫ Currently, SBTi’s 2030 target validations often overlook substantial shares of companies’ full value chain emissions, excluding upstream and downstream value chain emissions (scope 3) ⚫ While the SBTi checks whether companies have set a scope 3 target, the initiative does not provide a temperature classification for these scope 3 targets - only for scope 1 and 2 targets ⚫ As a voluntary organisation primarily funded by third parties, the SBTi relies on the voluntary participation of companies. Its methodologies need to accommodate the perspectives of various stakeholders. ⚫ SBTi Board’s statement to allow for offsetting towards scope 3 targets is not grounded in science or due process. Introducing offsetting in the SBTi scope 3 standards could effectively nullify already insufficient targets, reversing years of incremental progress that SBTi and its member companies have fought so hard to achieve. Allowing companies to offset their emissions could also deprive companies’ suppliers, who are often located in the Global South, from much needed financial and technical support for their emissions reduction efforts. Read the full commentary here 🔗 https://lnkd.in/ety2HRJn #sbti #offsetting #commentary #scope3

I've noticed the same trend among my customers. I refer to this as the new 'Warren Buffett Newspaper Test,' a mental framework Warren Buffett uses for ethical decision-making. The concept is simple: when facing a tough decision, imagine how you'd feel if your actions were reported on the front page of a newspaper for everyone to see, including your family, friends, and colleagues. Now, we have the 'SBTi Newspaper Test,' and it's something we all need to embrace for a net zero economy focused on actions.

🚨 New Article Alert! 🚨   The latest Science Based Targets initiative reports have sparked major discussions within the Voluntary Carbon Market (VCM). Our new article examines the content and implications of these reports, the ongoing challenges and opportunities they present. and the future directions for corporate climate strategies.   The SBTi’s reports have been criticized for their extensive length and inconclusive findings, frustrating VCM stakeholders. The ongoing ambiguity within the SBTi's guidance raises concerns about its relevance in leading corporate decarbonization efforts, especially with final guidance delayed until 2025.   Despite these challenges, Analyst Tanay Sawhney explores potential future scenarios for the VCM, including the "Built on Compliance Foundations" scenario where offsets are integrated into regulated carbon pricing mechanisms, and the "Transition to Removals" scenario focusing on carbon dioxide removal (CDR) technologies. As the landscape evolves, clear and decisive guidance will be crucial to harness the full potential of carbon credits and drive meaningful corporate climate action.     🔗 https://lnkd.in/d649cGir #ClimateAction #CarbonMarkets #Sustainability #CorporateResponsibility #NetZero #VCM #SBTi #CDR

While the Science Based Targets initiative reports may have been a letdown for those in the climate credit space, there is some joy in seeing some of our forecasted outcomes coming to life so quickly. Also, it is important to not lose sight of the ongoing efforts for high-integrity climate action. Just yesterday, the The Integrity Council for the Voluntary Carbon Market (ICVCM) rejected methodologies covering renewables for #CCP-eligibility over additionality concerns. A challenging decision, especially since renewable energy offset credits dominate the open volumes in the VCM. However, it was necessary to ensure funding goes to environmental projects that truly need support. Interestingly, this is another prediction from our forecast model that came true! A big thanks to Harry Horner & Urvashi Thakur for seamlessly integrating me into the carbon credit space and for the work we accomplished together in building a robust offset forecast model. Predicting the future of the VCM is no easy feat.

The Science Based Targets initiative has announced that it will extend the use of carbon offsets for the abatement of scope 3 emissions beyond its current limits. The SBTi has come to this decision after recognising that carbon offsets for scope 3 emissions can function as an additional tool to combat climate change, providing that they are supported by proper policies, standards, and procedures based on scientific evidence. This decision is a strong endorsement of the importance of carbon offsets in fighting climate change and will provide the voluntary carbon market with a significant boost by unlocking considerable investment in new projects. https://lnkd.in/eg5Cw6zB