AkademikerPension’s head of ESG has criticised the Science Based Targets initiative (SBTi) for its updated approach to carbon credits and environmental certificates.
Rikke Berg Jacobsen said she was “concerned and honestly disappointed” by elements of SBTi’s new corporate net zero standard, which was unveiled last week.
The standard replaces the original version, and outlines what companies must do in order to qualify for an official science-based net-zero target.
AkademikerPension is one of several pension funds that use the SBTi standard in its investment research and criteria.
“SBTi targets are one of the most important tools to assess whether the companies we invest in are genuinely on a path toward green transition or merely on their way to a good story,” Berg Jacobsen wrote on LinkedIn.
“When the standard is diluted, we lose a critical navigation tool. And we risk ending up with a portfolio of companies carrying unaddressed transition risk.”
In particular, Berg Jacobsen is concerned about SBTi’s approach to using certificates and credits in lieu of direct decarbonisation for some types of emissions.
For instance, Energy Attribute Certificates generated by green energy projects are accepted as a way to meet Scope 2 and some Scope 3 targets.
SBTi has also introduced an Ongoing Emissions Responsibility (OER) programme, through which it is encouraging businesses to take financial responsibility for their emissions until they can truly decarbonise them.
“When the standard is diluted, we lose a critical navigation tool”
Rikke Berg Jacobsen at AkademikerPension
“The OER is a voluntary scheme that companies can opt into when they set an SBTi target,” explained Caroline Johnstone, an SBTi specialist at Rawstone Consulting.
Firms can choose from three ambition levels, the lowest of which requires them to buy carbon credits representing 1% of their ongoing emissions.
“After five years, if they can demonstrate they bought sufficient credits, and that they’ve tried their best to also decarbonise their direct emissions, they get a badge to acknowledge their additional contribution,” Johnstone said.
From 2035, most large companies will have to join the scheme.
“A voluntary programme with mandatory escalation has a tendency to shape behaviour well before the deadline,” Berg Jacobsen told IPE.
An SBTi spokesperson pointed out that carbon credits used under the OER would not count towards a company’s decarbonisation target — they would be accounted for separately, rather than serving as offsets.
But Berg Jacobsen said the problem remained.
“The accounting may be technically correct, but the fundamental question is whether any of this actually removes CO2 from the atmosphere or drives real emission reductions in the companies we invest in,” she told IPE.
“Credits and certificates move responsibility around. They do not move the needle on actual emissions.
“And when a framework like SBTi starts embedding these instruments more deeply into its structure, we lose confidence in our ability to distinguish companies that are genuinely changing their business models from those that are managing their numbers.”
