SBTi urges companies to cut emissions directly

The Science Based Targets initiative (SBTi) has issued new guidance on how companies should approach their climate goals. The organization advises businesses to focus on cutting their own greenhouse gas emissions instead of relying on carbon credits. The SBTi, a key player in establishing climate standards, has responded to criticism from companies regarding its previous suggestions that carbon credits could significantly contribute to corporate climate strategies. In a draft standard released this week, SBTi stressed that companies should align their net-zero targets with the Paris Agreement's goal of limiting global warming to 1.5 degrees Celsius, without overusing offsets. This change comes in light of growing concerns about climate change and its impacts, particularly after the temporary breach of the 1.5-degree threshold in 2024. Experts believe this emphasizes the need for businesses to rethink their operations and supply chains to reduce emissions. Kaya Axelsson, a researcher at Oxford University, noted that companies had expressed worry over meeting their targets. The new guidelines provide more detailed advice, helping firms understand what is required for effective transition plans. SBTi also allowed some flexibility for businesses tackling emissions from their suppliers. Companies can now prioritize the most polluting suppliers and are encouraged to invest in carbon removal initiatives. However, some advocates were disappointed that the new guidance did not create more incentives for purchasing a wider range of carbon credits. The carbon credit market has already faced challenges due to earlier criticisms. For instance, HSBC delayed its net-zero target due to concerns about relying too much on offsets. Analysts question whether significant progress is possible towards the 1.5-degree target without increased investment in carbon credits, as many firms find it tough to meet their climate goals.