On April 9, the Board of Trustees of the Science Based Targets initiative (SBTi), a climate action organization that has validated corporate decarbonization targets for more than 4,200 companies to-date, issued a statement announcing that environmental attribute certificates (EACs), including carbon credits generated by voluntary carbon projects, may be used to abate Scope 3 greenhouse gas (GHG) emissions. It is possible to view the Board’s statement, unprecedented for SBTi, as recognition of the practical challenges associated with achieving Scope 3 emissions abatement without utilizing EACs. Yet, the statement also drew swift criticism from some stakeholders and observers, who argue that it represents a departure from SBTi’s science-based approach to corporate climate action. 

Following the criticism, on April 11, “the overwhelming majority” of SBTi’s staff, which felt “compelled to issue multiple clarifications” of the Board’s statement, published a remarkable public response.  Thereafter, on April 12, the Board supplemented its April 9 statement to clarify that no changes to the SBTi standards had been finalized. However, the Board’s statement and staff’s response show that interested stakeholders will have opportunities to provide SBTi with critical input regarding the use of EACs in Scope 3 emissions abatement that could have a material effect on any related revisions to the SBTi standards.  

Board’s Statement and Staff’s Response

While acknowledging the “ongoing healthy debate on the subject matter,” the Board’s statement highlights that SBTi has carried out a “wide consultation effort” on the use of EACs in Scope 3 emissions abatement over the past six months, and that staff had delivered to the Board a summary of the results of SBTi’s Call for Evidence, issued last September.  Though the Board apparently felt it had seen sufficient evidence in that summary to confirm that EACs may play a role in Scope 3 emissions abatement, the Board’s statement adds that such use of EACs must be supported by “policies, standards and procedures based on scientific evidence,” noting that the development of “specific guardrails and thresholds” and rules respecting the “principles of mitigation hierarchy” remained.

In its response, SBTI’s staff highlights its deep concern about the “content of the statement and the process by which it was developed and released,” as the response asserts that staff was neither informed nor consulted by the Board. The three clarifications of the Board’s statement distinctly listed in the staff’s response are summarized below.

  • Staff’s Commitment: Staff remains committed to developing quality, science-based standards through rigorous research, clear governance and public consultation, and the aim of such standards has been to incentivize the reduction of GHG emissions according to the mitigation hierarchy.
  • SBTi’s Operating Procedures: The Board “undermined” SBTi’s operating procedures and governance process with its April 9 statement, highlighting that SBTi’s Technical Council, the sole body with the power to approve SBTi standards, had not yet issued the requisite findings on the subject.
  • Scope 3 Framework Changes: While the Technical Department provided a summary of the Call for Evidence results to the Board, staff has not yet completed analysis and synthesis of all submissions. Along with public consultation, this analysis will inform potential revisions to SBTi standards.
  • The Board’s April 12 clarification statement, while confirming that no changes to the current SBTi standards have been made, added that any such changes, including revisions providing for use of EACs for Scope 3 emissions abatement, will be conducted according to SBTi’s previously-approved Standard Operating Procedure.

Opportunities for Stakeholder Involvement

The Board’s original statement notes that a first draft of “rules, thresholds, and guardrails” for the potential use of EACs for Scope 3 emissions abatement will be issued by July, following consultations with “all relevant stakeholders.”  However, the clarification statement states that a “discussion paper with a draft proposal from SBTi about potential changes to Scope 3” will be published in July, without mention of any prior stakeholder consultation.  The clarification statement adds that the discussion paper will “feed into the standard draft,” which appears to refer to draft revisions to SBTi standards, work that the Board’s original statement calls a “2024 priority” for SBTi.

Companies that wish to use or validate EACs for Scope 3 emissions management or interested parties that oppose such uses may seek to provide input to SBTi prior to the July publication of the discussion paper.  In addition, given the importance of public consultation highlighted by the Board and staff SBTi may solicit public comments regarding the discussion paper after publication, giving all interested parties the opportunity to provide input even prior to the public consultation period for any proposed revisions to SBTi standards. 

Jonathan Wright

Jonathan Wright is a member of the firm’s Energy Industry Group, and counsels industry clients on a diverse range of transactional and regulatory matters. Mr. Wright counsels developers, investors and lenders in the development and financing of energy infrastructure assets, as well as…

Jonathan Wright is a member of the firm’s Energy Industry Group, and counsels industry clients on a diverse range of transactional and regulatory matters. Mr. Wright counsels developers, investors and lenders in the development and financing of energy infrastructure assets, as well as mergers and acquisitions, with a particular focus on renewable generation and battery storage facilities.

Mr. Wright also counsels clients on electric and natural gas matters before the Federal Energy Regulatory Commission, where he previously served as an Attorney-Advisor in the Office of the General Counsel. He specializes in matters involving electric generation interconnection, wholesale electric market design and participation, mergers and acquisitions involving jurisdictional assets, and natural gas pipeline rate proposals.