ESG news in Europe

Carbon credits have long been seen as a way to offset emissions, but they may not be a viable solution. After months of debate, the Science Based Target Initiative (SBTi) officially recognized, in July 2024, the inherent limitations of relying on carbon credits.

Although numerous surveys and scientific studies had already underlined the system’s flaws, the SBTi announced in April 2024 that carbon offsets could still be used to meet Scope 3 targets, which cover indirect emissions, often the largest part of a company’s carbon footprint. This decision sparked intense debate and drew widespread criticism both internally and externally.

In a report published on July 30, 2024, SBTi experts emphasized that carbon credits fail to address emissions effectively and could undermine global climate goals if relied upon within the value chain. The report stresses the need for a shift toward direct decarbonization strategies.

Why it matters

From 2025, companies will no longer be able to depend on carbon credits to achieve their carbon reduction goals. A new Corporate Net-Zero benchmark is expected to introduce stricter measures, compelling companies to focus on reducing emissions at the source.

“Direct decarbonization must remain the priority for corporate climate action.” Alberto Carrillo Pineda, SBTi’s Technical Director