The Science-based targets Initiative&nbsp;(SBTi) was founded in 2015 by the World Resources Institute&nbsp;(WRI), the Carbon Disclosure Project&nbsp;(CDP), the United Nations Global Compact and the World Wide Fund for Nature&nbsp;(WWF), with the intent of "develop[ping] standards, tools and guidance which allow companies to set greenhouse gas (GHG) emissions reductions targets in line with what is needed to keep global heating below catastrophic levels and reach net-zero by 2050 at latest."<a class="footnoteLink" href="#footnote-1"><a class="footnoteLink" href="#footnote-1">[1]</a></a> (i.e. 5% reduction in emissions per year).&nbsp;For almost 10 years, this initiative has helped increase the number of climate commitments made by companies, and contribute to bridge the gap between business and science. On April 9th, however, the organization's Board of Trustees&nbsp;&nbsp;issued a statement authorizing the use of "Environmental Attribute Certificates", including carbon credits, to achieve scope 3 carbon footprint reduction targets. The Board's decision is in line with the position of historical offset players such as the Voluntary Carbon Market Initiative&nbsp;(VCMI), with which SBTi recently formed a partnership<a class="footnoteLink" href="#footnote-2">[2]</a>. While the organization's&nbsp;employees and Technical Council&nbsp;have criticized this statement as “undermining [their] government processes”<a class="footnoteLink" href="#footnote-3">[3]</a> , this stance by the board is&nbsp;first and foremost scientifically questionable. Final validation of this intention, which could take place in July, would mark a clear step backwards in the ambition historically carried by the initiative, and would dangerously delay the collective action required for the ecological transition.<h2>Taking the easy way-out</h2>Since its creation in 2015, SBTi has become one of the most well-known climate-related labels: by the end of 2023, it announced that it had approved the targets of over 4,000 companies. So far, its rise to prominence has made the subject more accessible, provided a clear, albeit perfectible, framework, and enabled the setting of emissions reduction in line with climate science. With the targets of many of the pioneering certified companies set for 2025 (and those of the following ones shortly thereafter), compliance with the commitments made is about to be verified. Unfortunately, in most cases, companies seem to be falling short of the mark,&nbsp;despite an already accommodating framework that allows them to set intensity targets<a class="footnoteLink" href="#footnote-4">[4]</a> : of the 56 commitments due in 2025 or earlier, and listed for scope 1+2+3 in SBTi's Monitoring report 2022<a class="footnoteLink" href="#footnote-5">[5]</a>, only 18 (around 30%) have reached more than 70% of their target<a class="footnoteLink" href="#footnote-6">[6]</a>.&nbsp;This finding should have prompted us to reflect on the flaws in the current system, to better assess the credibility of commitments upstream (for example, by making public the resources deployed by the companies in terms of investment and governance), and to realize that, in the face of climate change, failure to question one's business model inevitably leads to marginal/negligible actions.&nbsp;The submission of SBTi targets must come from an in-depth analysis on the company's "business" resilience, from the point of view of both physical risks and transition risks and opportunities (assessments carried out for example by means of prospective scenario analyses respecting planetary boundaries<a class="footnoteLink" href="#footnote-7">[7]</a>). This reflection should enable the company to confirm or rethink its strategy, in order to make its activity and its product and service offers useful in an economy compatible with the planetary boundaries<a class="footnoteLink" href="#footnote-8">[8]</a>,<a class="footnoteLink" href="#footnote-9">[9]</a>. Unfortunately, the SBTi Board, without consulting the opinion of its Technical Council<a class="footnoteLink" href="#footnote-10"><a class="footnoteLink" href="#footnote-10">[10]</a></a>&nbsp;, has preferred to change the rules of the game rather than endorse this statement of truth to its financial backers.<h2>This position runs counter to the scientific consensus and contravenes the fundamental principles of carbon accounting.&nbsp;&nbsp;</h2>The first reason why this option is inconsistent is definitional. The carbon footprint is an inventory of the emissions on which an activity depends to function; however, the purchase of carbon credits in no way affects these dependencies. A company that has purchased carbon credits to "offset" its emissions has not lessened its exposure to emissions-related risks.The other argument is a physical one. Two major families of projects structure the credit market: projects aimed at avoiding emissions, and projects aimed at capturing CO2 from the atmosphere. Neither can "offset" the CO2e accounted for in a carbon footprint:&nbsp;<ul><li>From a physical point of view, a ton of GHG avoided&nbsp;is not equivalent to a ton of GHG emitted: the latter corresponds to a gas currently present in the atmosphere, whereas the former corresponds to a theoretical difference between actual emissions and those that could have taken place. Put another way, the increase in avoided emissions only guarantees that we are doing better than business-as-usual, not that we are actually reducing emissions. Equating an avoidance carbon credit with a scope 3 emission is therefore questionable.</li><li>The use of so-called sequestration&nbsp;carbon credits to compensate&nbsp;is no more acceptable. Let us mention&nbsp;the two main problems:</li><li>First, this is tantamount to equating a ton of CO2 already emitted with expected (and therefore uncertain) CO2 capture, which takes place over several years. In the case of a forestry project, for example, CO2 sequestration takes place over decades of tree growth, not at the time of the credit purchase.</li><li>Second, the potential for carbon sequestration is limited, making it impossible to&nbsp;"offset" all emissions<a class="footnoteLink" href="#footnote-11">[11]</a> . This is why the SBTi's "Net Zero" standard only promotes the "elimination" of corporate emissions once they have been reduced to an incompressible residual level in 2050, at the end of an emissions reduction process of the order of -90% compared to current levels.</li></ul>The deadlock of offsetting, from a physical point of view, has led to a broad consensus among carbon accounting bodies to exclude any fungibility between carbon credits and corporate carbon footprints. All authoritative bodies on climate reporting (UNFCCC, ISO 14064, GHG Protocol...), and more recently the CSRD<a class="footnoteLink" href="#footnote-12">[12]</a> , prohibit the subtraction of carbon credits from emissions. The SBTi, too, until now, had insisted on this point<a class="footnoteLink" href="#footnote-13">[13]</a> . Validating the use of carbon credits to achieve scope 3 reduction targets would therefore constitute a backtracking and a deviation from the SBTi approach. However, incentives to finance decarbonization projects outside the value chain can be implemented without diminishing ambition in terms of emissions reduction or giving in to the logic of offsetting: carbon credits are useful and contribute to the common effort, provided they are conceived as a complement to the action undertaken in one's own value chain&nbsp;(see conclusion).<h2>A choice that would be inefficient and harmful to the climate cause</h2>The use of carbon credits would perpetuate the illusion that a company can get rid of the problem all by itself, using only money&nbsp;. However, one of the main virtues (and the main difficulty) of the famous Scope 3 lies precisely in the need for cooperation that it implies: it enables a company to situate itself in its network of interdependencies, to involve other players beyond itself, through a game of mutual influence. Many companies may still underestimate the scale of the efforts required to reduce Scope 3 emissions: offering ways of getting around the difficulty, by opening up the use of carbon credits, would maintain the illusion of an easy ecological transition, and delay the implementation of transformative actions. However, the real lesson for a company submitting an SBT objective should be the following: greening one’s activity marginally, without actually questioning business-as-usual practices, will not be enough; the ecological crisis calls for a profound rethinking of business models.&nbsp;The direction taken by the Board of Trustees is&nbsp;also counter-productive from the point of view of financial flows, as it sends out the wrong signals and confuses the debate: a high-carbon industry could tomorrow, through the purchase of carbon credits, be considered "aligned with a 2°C trajectory", while a small business specializing in building renovation, that has chosen to invest to develop its business, would be considered less virtuous. Allowing the use of carbon credits would, in short, be tantamount to favoring companies capable of paying a very high price (the very companies for which the transformations required for decarbonization are the most complex) for these modern-day climate indulgences.&nbsp;Allowing emissions reduction through carbon credits is often presented by offset proponents as a great incentive for the financing of offset projects. This stance is debatable as well, as reducing climate performance to a single figure, resulting from the subtraction between emissions and credits, focuses the discussionon the quantity sequestered rather than the quality of projects. The influx of demand for carbon credits runs the risk of encouraging the development of the least costly and lowest-quality projects. The existence of labels, which tends to ensure a minimum level of quality, is not an absolute guarantee<a class="footnoteLink" href="#footnote-14">[14]</a> , and is not sufficient to direct flows towards the best projects (serious governance, consideration of biodiversity, etc.).&nbsp;<h2>Conclusion – How to get out of the crisis created by the announcement of the SBTi Board</h2>Other approaches are possible to meet both the need to decarbonize our activities, and the need to deploy projects to finance the transition. This is what the Net Zero Initiative<a class="footnoteLink" href="#footnote-15">[15]</a> is working on, by proposing a reporting&nbsp;method based on the logic of contribution to the goal of global carbon neutrality, i.e. the idea that a company should take part in a collective effort, rather than seeking to offset its emissions on its own. The framework proposed by the Net Zero Initiative is&nbsp;based on three non-fungible levers of action:&nbsp;<ul><li>reduction of the company’s carbon footprint - pillar A of the standard,</li><li>promotion of low-carbon products (primarily through the company’s own activities, then through carbon credits for avoided emissions) - pillar B,</li><li>contribution to the effort to sequester carbon and preserve and restore biodiversity (in the company’s value chain or via the purchase of carbon credits for sequestered emissions) - pillar C.</li></ul>Because this approach insists on not neglecting any one of these three pillars, it is more robust, fairer, and more effective.&nbsp;<ul><li>Robust&nbsp;because it is in line with the conclusions of the IPCC, which calls on the one hand to reduce emissions (pillar A)<a class="footnoteLink" href="#footnote-16">[16]</a> , and to do so, to review its product and service offering (pillar B)<a class="footnoteLink" href="#footnote-17">[17]</a> , and on the other hand to develop carbon sinks (pillar C)<a class="footnoteLink" href="#footnote-18">[18]</a> .</li><li>Fair, because it recognizes the contribution of organizations that provide innovative solutions for the transition: as a bicycle manufacturer grows its business, it may need to increase its direct emissions in order to decarbonize mobility. The Net Zero Initiative&nbsp;also prioritizes actions within&nbsp;the value chain - the most difficult, but also the most effective - over projects outside the value chain.</li><li>Efficient, because it enables us to map organizations' efforts precisely, and thus 1) encourages them to mobilize all the levers at their disposal; 2) direct financial flows towards the most virtuous.</li></ul>For all these reasons, we feel that this approach, which is still under development, provides some answers to the challenges raised by the crisis facing SBTi. We hope it will provide food for thought in the future.

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<a href="https://sciencebasedtargets.org/about-us#what-we-do">https://sciencebasedtargets.org/about-us#what-we-do</a>

<a href="https://www.greenbiz.com/article/sbti-yes-companies-can-use-carbon-offsets-abate-certain-scope-3-emissions">https://www.greenbiz.com/article/sbti-yes-companies-can-use-carbon-offsets-abate-certain-scope-3-emissions</a>

Employee letter reprinted in Clancy, H. (2024, April 11). Read the leaked protest letter from SBTi staff angry over new carbon offset policy. Greenbiz.&nbsp;<a href="https://www.greenbiz.com/article/read-leaked-protest-letter-sbti-staff-angry-over-new-carbon-offset-policy">https://www.greenbiz.com/article/read-leaked-protest-letter-sbti-staff-angry-over-new-carbon-offset-policy</a>It should be noted that the Board has since made it known that the principles of governance will be respected in the final decision on the terms and conditions of application.

Intensity targets involve reducing emissions per physical unit produced or per €. This option is aimed in particular at fast-growing companies and/or those making the biggest contribution to the transition, but in practice many companies are taking advantage of it.

<a href="https://sciencebasedtargets.org/reports/sbti-monitoring-report-2022">https://sciencebasedtargets.org/reports/sbti-monitoring-report-2022</a>

In other words, they have achieved 70% of the expected reduction in emissions.

See <a href="https://www.carbone4.com/expertises/resilience and https://www.carbone4.com/expertises/innovation/ifinitiative">https://www.carbone4.com/expertises/resilience and https://www.carbone4.com/expertises/innovation/ifinitiative</a>

<a href="https://www.carbone4.com/cp-emlyon-chaire-strategie">https://www.carbone4.com/cp-emlyon-chaire-strategie</a> and <a href="https://www.carbone4.com/webinaire-strategie-entreprise-urgence-climatique and https://www.ifinitiative.com/">https://www.carbone4.com/webinaire-strategie-entreprise-urgence-climatique and https://www.ifinitiative.com/</a>

In the European market, this work will in any case be made necessary by the CSRD, provided it is used as a tool for strategic rethinking and transformation, rather than simply as a regulatory compliance exercise.

Letter reprinted in Clancy, H. (2024, April 11). Read the leaked protest letter from SBTi staff angry over new carbon offset policy. Greenbiz.&nbsp;<a href="https://www.greenbiz.com/article/read-leaked-protest-letter-sbti-staff-angry-over-new-carbon-offset-policy">https://www.greenbiz.com/article/read-leaked-protest-letter-sbti-staff-angry-over-new-carbon-offset-policy</a>

See the March 2024 rules for calculating short-term targets, p. 10: https:<a href="https://sciencebasedtargets.org/resources/files/SBTi-criteria.pdf">//sciencebasedtargets.org/resources/files/SBTi-criteria.pdf</a>

Thomas, P-L. (2023, August 30). Verra, leader in carbon credits, nailed once again.&nbsp;La Croix.&nbsp;<a href="https://www.la-croix.com/Economie/Verra-leader-credits-carbone-nouvelle-fois-epingle-2023-08-30-1201280701">https://www.la-croix.com/Economie/Verra-leader-credits-carbone-nouvelle-fois-epingle-2023-08-30-1201280701</a>

<a href="https://www.net-zero-initiative.com/fr">https://www.net-zero-initiative.com/fr</a>

See the work of Group 1 in particular.

See the work of Group 2 in particular.

See the work of Group 3 in particular.

Why is the SBTi's intention to count carbon credits as emission reductions problematic? A Carbone 4 analysis

The Science Based Targets Initiative is accused of greenwashing.

Juliette is co-director of the Carbone 4 Académie, Carbone 4's training center for professionals.Previously, Juliette was a manager in Carbone 4's consulting teams, co-head of the Mitigation division and contributor to the Finance division. An expert in carbon accounting and decarbonization strategies, Juliette has helped numerous companies and financial players structure their climate governance, long-term strategy and operational action plans.Juliette has led numerous training and seminar facilitation missions for groups of 20 to 100 people (program definition, development of interactive supports, mastery of facilitation techniques such as Open Space Technology, simulations and role-playing, etc.). She was a teacher at Paris Dauphine University for 5 years for the "Green Finance" course delivered to M1 Finance students since 2018.Before joining Carbone 4, Juliette worked for the Think &amp; Do Tank CliMates as Climate Education Officer, where she supervised two projects simulating international climate negotiations, including "Lycéens Franciliens, notre COP21" (100 high school students, 70 teachers) in partnership with the Ile-de-France Region, the Direction Régionale et Interdépartementale de l'Environnement et de l'Energie d'Ile de France and the academies of Créteil, Paris and Versailles.&nbsp;

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Webinar de Carbone 4 et LTIIA&nbsp;: L’éléphant dans la pièce&nbsp;: Défis climatiques et opportunités pour les investisseurs en infrastructures«&nbsp;Les infrastructures existantes représentent déjà 95% de notre budget carbone nous permettant de rester au-dessous de 2ºC de réchauffement global » (Agence internationale de l'énergie).&nbsp;» L'infrastructure est essentielle pour le défi climatique afin de respecter l'engagement international pris par la COP21 de limiter le réchauffement planétaire à bien en dessous de 2 ° C par rapport aux niveaux préindustriels. Dans cette optique, les investisseurs et les gestionnaires d’infrastructure sont confrontés à des défis commerciaux stratégiques, tels que :&nbsp;<ul><li>L’exposition à des actifs immobilisés liés à la transition énergétique&nbsp;(par exemple, dans quelles conditions les aéroports pourraient-ils fonctionner conformément à une trajectoire compatible à 2 ° C ?)&nbsp;</li><li>L’exposition aux conséquences physiques du changement climatique&nbsp;(par exemple, quels sont les coûts financiers des aléas climatiques de plus en plus nombreux pour les actifs routiers ?)&nbsp;</li><li>La compatibilité des actifs avec une trajectoire 2 ° C&nbsp;(par exemple, comment mettre en place des feuilles de route durables pour réduire l’empreinte carbone d’un portefeuille ? Quels critères faut-il utiliser pour sélectionner des actifs durables ?) LTIIA et Carbone 4 vous remercient pour votre participation&nbsp;à ce webinar. Programme&nbsp;: Les présentateurs et les participants à ce webinar ont été&nbsp;invités à s’exprimer sur les sujets suivants&nbsp;:&nbsp;</li><li>Comment les gestionnaires d'actifs peuvent-ils intégrer l'impératif climatique dans leur processus de sélection d'actifs d'infrastructure et leur gestion de portefeuille ? Comment les gestionnaires d'actifs peuvent-ils comparer leurs investissements à une trajectoire compatible à 2 ° C ?</li><li>Comment les gestionnaires d'actifs peuvent-ils effectuer une évaluation du risque de transition énergétique et de la résilience de leur portefeuille ? Comment identifier d'éventuels actifs immobilisés ?</li></ul>Webinar Europe et Amériques&nbsp;: le 11 juin 2019 à 17h à Paris, 16h à Londres et 11h à New-York.&nbsp;<ul><li>Animé par François Bergere, Directeur exécutif, LTIIA</li><li>Juliette Decq, Alexandre Joly, Manager et Consultant senior, Carbone 4</li><li>Ginette Borduas, ESG compliance officer, Meridiam</li><li>James Pass, Directeur général, Guggenheim Partners</li><li>Questions / réponses du public</li></ul>Retrouvez également notre publication : "<a href="http://www.carbone4.com/infrastructures-a-key-asset-category-for-the-climate/?lang=en">Les infrastructures, une classe d'actif au coeur des enjeux climatiques</a>"&nbsp;Visionner le <a href="https://www.youtube.com/watch?v=7IdsxsWEpCo">webinar</a>&nbsp;

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