Companies Get Green Light To Use Offsets For Supply Chain Emissions

By Reuters
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Companies Get Green Light To Use Offsets For Supply Chain Emissions

A leading judge of corporate climate action plans said it will allow companies to use carbon credits to offset their supply chain pollution despite concerns it could see emissions rise, a move that should see demand for offsets grow.

Selling credits from wind farms and other projects to a company so it can offset pollution is seen as a way to help move money to climate-friendly projects, although some are concerned it could lead to companies carrying on business as usual.

Late Tuesday, the non-profit Science-based Targets initiative (SBTi), seen as the gold standard arbiter of company plans, said it would allow the so-called Scope 3 emissions to be offset subject to as yet undefined 'guardrails and thresholds'.

SBTi had previously not allowed offsets in case it dissuaded boards from actually cutting, but many have struggled to align their plans with the world's climate goal amid weak government action, still nascent technical fixes and high costs.

By allowing companies to use offsets, it is hoped they will be able to secure market and investor support for more ambitious action, helping reduce their cost of capital and driving more money into climate-friendly projects.


Over time, as the policy and technical hurdles dissipate, the hope is the offsets are not needed, or can at least be reduced.

'Revision Of The Scope 3 Framework'

'Considering the scope and the complexity of this topic, the SBTi will consult and strive to reach the necessary cooperation agreements with other relevant initiatives as well as a broader set of stakeholders on the revision of the scope 3 framework, including the responsible use of environmental attribute certificates in target setting,' a statement from the SBTi board of trustees said.

The decision is in line with a move by the Voluntary Carbon Markets Initiative to expand the use of high-quality carbon credits, yet a source with direct knowledge of the matter said the decision could result in zero emissions reductions by 2035.

María Mendiluce, chief executive of the We Mean Business Coalition and a board trustee of SBTi, said the "the voice of business on this issue is clear" and would help companies invest more in cutting emissions from their value chains.

Teresa Hartmann, chief ratings officer at BeZero Carbon, which rates carbon credits, said the move was "a significant step forward in scaling carbon markets and climate action... within the critical next decade."

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