The Science Based Targets initiative (SBTi) should now stand aside and let its role as arbiter of corporate climate targets be picked up by others, according to the head of sustainable investing at Allianz Investment Management SE.
Earlier this month the NGO, which verifies corporates’ climate targets, caused an uproar when its board announced that it might allow companies to use carbon offsets to help meet their climate goals.
The statement said the potential use of “environmental attribute certificates” for abating certain emissions would be subject to consultations, but the announcement was enough to trigger a staff revolt, with many employees signing a letter demanding the resignation of the organisation’s chief executive officer and board members and stating that the board of trustees had undermined and ignored SBTi’s agreed Standard Operating Procedures and governance processes.
Since then, the SBTi has issued two statements in a bid to clarify and calm the situation, with its CEO also taking to a blog post to express regret at the “concern and distress” it has caused but also to state a refusal “to avoid a difficult discussion if it could potentially improve our standards to deliver a bigger impact”.
Commenting on a discussion on social media about the SBTi’s move, Udo Riese, head of sustainable investing at Allianz Investment Management SE, said his view was that the NGO had done “a tremendous job” as incubator, but that “now it is time for standard setters, regulation, and financial auditors to bring credible transition plans to scale”.
Riese is also a working track lead for the Net-Zero Asset Owner Alliance, which has said that until 2030 at least, members should not count offsets they’ve purchased – or investments into the technologies that underpin those offsets – towards their portfolio or sector-level climate goals, instead prioritising emissions reductions.
Members are however encouraged to contribute to a liquid and well-regulated carbon removal certificate market in this period to scale future markets rapidly.
‘Balance crucial’
In Finland, Varma is one of few pension investors to have had its climate targets validated by the SBTi. A spokeswoman for the €57.4bn mutual pensions insurance company said “the inclusion of carbon credits in the SBTi framework introduces a new component that, if managed with rigorous oversight and strict criteria, could serve as an additional tool rather than a replacement for direct reductions”.
“We believe that maintaining this balance is crucial to avoid undermining the credibility and effectiveness of the SBTi. As a participant with validated targets, Varma will continue to engage actively with the SBTi, supporting its goals while ensuring that the emphasis on direct reductions remains at the forefront of our sustainability efforts.”
The pensions heavyweight regularly monitors the proportion of its investments that set emission reduction targets in accordance with SBTi standards, and has in the past also asked its fund managers if they set SBTi-aligned targets.
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