Oakdene Hollins position on the use of carbon offsets after SBTi announcement

Carbon offsets have become a popular mechanism for companies to claim they are achieving net-zero emissions. The Science-Based Targets initiative (SBTi) has set clear rules for utilising carbon offsetting as a strategy to achieve net-zero targets. In its current form, SBTi recognises that while emissions reductions should be the primary focus, some residual emissions may be challenging to eliminate. Specifically, in C11 (criteria 11 carbon credits) of the SBTi Criteria and Recommendations document version 5, March 2024, SBTi states:

The use of carbon credits must not be counted as emission reductions toward the progress of companies’ near-term science-based targets. Carbon credits may only be considered to be an option for neutralizing residual emissions (see the SBTi Corporate Net-Zero Standard Criteria C28) or to finance additional climate mitigation beyond their science-based emission reduction targets (see the SBTi Corporate Net-Zero Standard Criteria R9).

where, C28 of the Corporate Net-Zero Standard Criteria states:

Companies shall remove carbon from the atmosphere and permanently store it to counterbalance the impact of any unabated emissions that remain once companies have achieved their long-term science-based target, and for subsequent years thereafter. The neutralization of unabated emissions applies to both the emissions reduction target boundary and to any unabated emissions that have been excluded from the GHG inventory

Whilst no changes have yet been made to the current SBTi standards, SBTi has decided to extend their use of environmental attribute certificates related to Scope 3 emissions beyond the current limits. A draft of the proposed changes will be detailed in a document released in July 2024.

For us at Oakdene Hollins, this raises questions to the effectiveness of such offsets if they simply allow companies to avoid making substantial changes to their business practices. While carbon offsets may have a role to play in reducing the most challenging to eliminate emissions, they should not be relied upon for achieving true net-zero. Allowing companies to continue business as usual while relying solely on offsets runs the risk of perpetuating unsustainable practices. Companies must prioritise substantial emission reductions within their own operations and supply chains before turning to offsets. Relying too heavily on offsets without making meaningful changes to business practices may ultimately undermine the goal of achieving a sustainable, low-carbon economy.

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