‘The whole institution is boiling’: Revolt inside a key climate target group

Welcome back.

In today’s newsletter we dive into this week’s dramatic staff rebellion inside the Science-Based Targets initiative, arguably the world’s most influential body when it comes to corporate climate action. The outcry followed a sudden statement from the board that changed SBTi’s position on offsetting emissions. As I explain below, the biggest problem here is not the substance of that decision, but how it was made.

Also today, we reveal the new head of the Global Energy Alliance for People and Planet, another initiative that counts the Bezos Earth Fund as a main backer. GEAPP faces a tough challenge to drive growth in “blended finance”, which has been struggling to take off.

Thanks for reading, and have a great weekend.

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EMISSIONS OFFSETS

Internal backlash shakes SBTi

Since its foundation in 2015, the Science-Based Targets initiative has established itself as the key global standard-setting body for corporate climate targets. This week, an ill-judged statement from its board of trustees has put that hard-won reputation at risk — not least among SBTi’s own staff.

The announcement, posted on SBTi’s website late on Tuesday, declared a major change to the body’s policy on the use of carbon offsets and other “environmental attribute certificates” (EACs).

SBTi has long said that, under its system for approving corporate targets, companies cannot use such instruments to cancel out their “scope 3” emissions (from their supply chains and the use of their products). This week the board said it had decided to allow the use of the voluntary carbon markets and other EACs “for the purpose of abatement of scope 3 related emissions beyond the current limits”.

The announcement drew an extraordinary backlash within the organisation, including an internal letter calling for the board members who supported the statement to resign, along with chief executive Luiz Amaral. SBTi’s nine-person board is chaired by Francesco Starace of private equity firm EQT, with other trustees including former Colombian president Iván Duque and Ani Dasgupta, head of the World Resources Institute.

Yesterday, I spoke or exchanged messages with 12 SBTi staff members, all of whom told me — on condition of anonymity — that they and most colleagues were unhappy about the board’s announcement. (Two others responded to me without disclosing their opinions; none of those I approached said they supported the board’s statement.) “The whole institution is boiling right now,” one staff member said.

This episode gives three reasons to worry about SBTi’s credibility. The first relates to the substance of the announcement. The voluntary carbon markets have been dogged by a wave of scandals around their integrity. There are well-founded concerns that the climate impact of many projects has been overstated, and appetite among corporate purchasers has plunged as a result.

So while market participants have been keen for SBTi to loosen its guidance around offsets, others see this week’s announcement as a dilution of the scientific rigour that is central to SBTi’s stated mission.

“This does undermine their credibility,” Gilles Dufrasne, policy lead at the non-profit Carbon Market Watch, told me. “It gives companies a way out of their responsibilities, allows them not to reduce their emissions themselves.”

Others will disagree with Dufrasne, hoping that SBTi can find new ways to allow companies to use environmental credits without undermining the incentive to cut emissions.

But the second and most important problem concerns the way in which the board’s decision was made. SBTi’s technical team is in the middle of a study of companies’ use of environmental credits, reviewing a large volume of submissions made in a recent open consultation. SBTi staff members say that, by pre-empting the technical team, the board’s announcement has blatantly violated internal protocol — and the transparent, methodical approach to standard setting that is supposedly the organisation’s raison d’être.

SBTi’s communications team did not respond to a request for comment.

The third reason for concern relates to the influence of SBTi’s funders — in particular the $10bn Bezos Earth Fund, established by Amazon tycoon Jeff Bezos, which SBTi describes as one of two “core” funders alongside the Ikea Foundation.

In her FT news story yesterday, Kenza Bryan revealed that SBTi’s sudden announcement came after a two-day meeting last month in London, which was co-ordinated by the Bezos fund. The foundation argued at the meeting in favour of companies using offsets, according to attendees and people familiar with the matter.

The fund told the FT it didn’t “make decisions” with SBTi and had no involvement in the board’s statement this week.

While the Bezos Earth Fund is run separately from Amazon, it’s worth noting that the tech giant was among over 100 companies that were removed last year from SBTi’s “dashboard” of participating companies, after failing to submit revised climate targets. (Amazon said that changes to SBTi’s methodology had made it “difficult for us to submit in a meaningful and accurate way”.)

SBTi has been filling a gap left by governments’ failure to act. To some, this episode will look like new evidence of non-governmental organisations’ inability to achieve the levels of governance and accountability needed to police global corporate climate action, and of the dire need for new laws and regulations to force progress.

Meanwhile, though, SBTi has an important role to play, and it now needs to act quickly. Its reputation hinges on the perception that its decisions are based on rigorous, science-based research — not made privately and unilaterally by its nine board members.

The board can protect that reputation by retracting its latest statement and allowing SBTi’s technical team to complete their work on environmental credits without preordaining the outcome. It should also consider what steps it needs to take to regain the confidence of SBTi staff, which has clearly been damaged.

“The professionalism of my colleagues is beyond dispute,” one SBTi staff member told me. “This is a leadership issue.”

climate finance

A new boss at GEAPP

We’ve previously written on the Global Energy Alliance for People and Planet, which aims to use large-scale philanthropic capital to catalyse — or “crowd in”, in financial jargon — investment from multilateral institutions and private-sector investors.

Today it’s announcing a new chief executive: Woochong Um, hitherto managing director-general at the Asian Development Bank, with a focus on the institution’s sustainable development agenda. “Crowding in the private sector is the only way to go from billions to trillions,” he told me, referring to the outlook for green energy investment in developing nations.

GEAPP’s philanthropic backers — which include the Rockefeller Foundation, the Bezos Earth Fund and the Ikea Foundation — will be hoping that Um’s multilateral development bank experience will help them to deepen collaboration with MDBs to expand blended finance, which uses concessional financing to help projects attract private-sector investment.

Blended capital flows fell to a 10-year low in 2022, according to the most recent estimates by research group Convergence.

Smart read

The US Environmental Protection Agency is set to face a wave of legal challenges to its latest crackdown on pollution, Aime Williams reports from Washington.

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