Arguments for balanced corporate climate protection management: avoidance and compensation

Nick Marshall is Vice-Chair of the Project Developer Forum and co-founder and director of TASC, a carbon project developer.

The argument that carbon credits are merely a free pass is simple and incorrect: the climate crisis requires that we use all the means at our disposal.

The Board of Trustees of the Science Based Targets Initiative sparked controversy on April 9 when it proposed allowing companies to use “environmental certificates,” including voluntary carbon credits, to meet their Scope 3 targets for reducing greenhouse gas emissions.

At a time when the carbon offset market is experiencing significant volatility, the extension of the SBTi could lead to thousands more global companies using carbon credits to offset their Scope 3 emissions, representing a potentially transformative moment for the market.

Unfortunately, not everyone sees it that way. SBTi staff immediately contradicted the board’s announcement, claiming they had not been consulted in the decision-making process and that the proposals would undermine their previous approach. Further criticism followed, with several French NGOs and commentators condemning the decision as a setback for the climate movement.

Although the proposals continue to face criticism from some quarters, there is also growing support for the extension. Supporters include a group of ten West African states and prominent international NGOs – including Conservation International, Environmental Defense Fund, Fauna & Flora and The Nature Conservancy – who have written a letter to the SBTi calling for the offsets to be included in companies’ greenhouse gas accounting.

A volatile environment

This ongoing debate comes against a backdrop of volatility in the voluntary carbon market, with several high-profile companies recently distancing themselves from offsetting.

Some, such as telecommunications company Telstra and airline EasyJet, are moving away from the practice. Others, such as fashion retailer H&M, are actively opposing it, arguing that they would rather focus on directly reducing greenhouse gas emissions within their value chains.

While focusing on direct emissions reductions is commendable, this is not an either/or choice: to address the climate crisis, we must use all the tools at our disposal. It is counterproductive for polluters to ignore their unabated emissions until they can claim to have eliminated their emissions at some point in the future – if that is even possible.

Most companies have and will have emissions in their value chains that simply cannot be reduced in a meaningful timeframe. Adopting a strategy that combines reduction and offsetting not only makes sense, but I believe is necessary to achieve net zero emissions now.

This dual approach is feasible today. A comprehensive net zero strategy should include provisions to gradually eliminate the need for offsetting as internal emissions reduction actions progress. But it must also recognise and commit to offsetting emissions that cannot be immediately reduced during strategy implementation. This means that companies will need to participate in the voluntary carbon market in the short term.

Critics often argue that companies that buy emissions permits are simply buying a free pass rather than facing the challenge of reducing their emissions. This view is simplistic and incorrect.

Studies have shown that companies that participate in offsetting reduce their internal emissions more than those that do not. This logic makes sense: by putting a price on greenhouse gas emissions, these companies actually create a financial incentive to reduce them.

From a carbon project developer’s perspective, the rejection of corporate use of carbon credits deprives developing countries of important climate finance from beneficial projects – precisely when it is needed most. This is why West African countries turned to the SBTi.

Wishful thinking

The voluntary carbon market has been marred by criticism regarding the integrity of the certificates. While there are indeed areas that can be improved – such as accounting methodologies, monitoring approaches and profit sharing – the oft-repeated criticism often overlooks the ongoing evolution of the market.

Best practices are increasingly being integrated into the infrastructure. Significant progress has been made through the digitization of monitoring approaches, the introduction of regulations for individual host countries and the recent approval of initial methodologies by the Integrity Council on Voluntary Carbon Markets.

Many supporters of the SBTi extension proposal argue for the introduction of “guard rails” to ensure the integrity of the emission credits issued.

The scientific consensus says we cannot afford to wait for companies to address their emissions holistically. It is wishful thinking to expect a complete elimination of greenhouse gas emissions in the short to medium term. The carbon market offers a flexible approach that allows companies to reach net zero status today. For this reason, offsetting should be part of every company’s net zero strategy, seen as “planned obsolescence” – a temporary measure rather than a permanent solution.

This reasoning supports the SBTi Board of Trustees’ decision to allow voluntary carbon credits for the short-term achievement of corporate Scope 3 greenhouse gas emission reduction targets. It is a pragmatic approach that balances immediate action with long-term goals. Ironically, one of my personal KPIs as an emissions project developer is to eventually make my job redundant – a testament to the ultimate goal of eliminating the need for offsets entirely.