Scope 3 emissions reductions and carbon credits

The Carbon Trust acknowledges the challenges businesses face in their journey to reduce Scope 3 emissions, not only from a data gathering and tracking perspective, but also the difficulties faced in influencing their extended and global value chains. However, we firmly believe that businesses should continue to prioritise emissions mitigation activities, exploring all possible decarbonisation routes throughout the value chain, including through investment in innovation and engagement with peers and value chain partners.

22 April 2024

International best practice on the use of carbon credits for companies to achieve Net Zero has converged on the importance of using them as part of 'beyond value chain mitigation' (or wider corporate contributions to climate projects). Crucially, best practice advises against relying on climate credits to achieve near or long-term emissions reduction targets within the value chain.

We welcome the clarification issued by the SBTi on 12 April 2024 with regards to their original announcement on 9 April 2024, indicating that any changes to SBTi's standards will be delayed until July, when a draft proposal will be issued, following consultations with relevant stakeholders.

Aleyn Smith-Gillespie, Director at the Carbon Trust, explains:

"The role and effectiveness of carbon offsets in addressing the challenge of value chain emissions is highly contested and the use of Environmental Attribute Certificates, which may include offsets, is still the subject of research by the SBTi itself. This work should be allowed to conclude before informing any changes to the SBTi Net Zero Standard."

"The SBTi is right to recognise that there is still 'healthy debate' on the use of Environmental Attribute Certificates, with their incorporation as a route for Scope 3 emissions reduction a decision that should not be taken lightly. We welcome the dialogue and are prepared to contribute our expertise towards it."

For carbon credits, including offsets, to have a role, they need to guarantee good outcomes.

Carbon offset credits can be effective when robust governance processes are followed to ensure their additionality and permanence and to protect against double counting or carbon leakage. However, the voluntary carbon market is not currently governed by such robust processes, and carbon credits therefore cannot guarantee the depth and scale of emissions mitigation urgently required. Further important considerations will also need to be agreed on how to assess the true cost of carbon, as current pricing may not be a true reflection of the real cost and availability of carbon credits globally.

The Carbon Trust has endorsed and followed this approach by introducing new initiatives that help businesses to support climate action beyond their value chains, for instance through protecting forests and other carbon sinks, and supporting the development of carbon removals projects. However, these are not a substitute for the rapid and deep reduction of a company's own value chain emissions, with guidance and support widely available to understand and reduce their Scope 3 footprint.