The corporate climate targets quality-control body will now allow companies to use carbon credits to reduce their emissions, including the full scope of their emissions, as per the United Nations-backed Science Based Targets initiative. This decision relaxes earlier guidance and has sparked controversy within green finance. The initiative will permit the use of credits to cut emissions from value chains, also known as Scope 3, as stated on its website.
Key Takeaways
- The main quality-control body for corporate climate targets will now allow companies to use carbon credits to reduce their emissions.
- This move relaxes earlier guidance and affects a controversial corner of green finance.
- The United Nations-backed Science Based Targets initiative will permit the use of credits to cut emissions from value chains, also known as Scope 3.
- The initiative's decision was disclosed in a statement on its website on April 9th.
- This decision could have a significant impact on the strategies and practices of companies aiming to reduce their environmental impact.
News Content
The main quality-control body for corporate climate targets has announced a relaxation in its guidelines, allowing companies to use carbon credits to reduce their emissions across all scopes. This move by the United Nations-backed Science Based Targets initiative has sparked controversy in the realm of green finance. The initiative will now permit the use of credits to cut emissions from value chains, also known as Scope 3, as stated on its website.
This decision is expected to have far-reaching implications for companies looking to mitigate their environmental impact, as they can now leverage carbon credits to address their entire emissions scope, embracing a more comprehensive approach to sustainability.
Analysis
The relaxation of guidelines by the United Nations-backed Science Based Targets initiative, allowing the use of carbon credits across all emission scopes, is likely to impact organizations, including those in green finance and sustainability sectors. This decision may lead to increased reliance on carbon credits, potentially impacting their market value. Short-term consequences could include a surge in demand for carbon credits, while long-term effects may involve a shift in corporate sustainability strategies. Stakeholders involved in emission reduction and carbon credit trading, as well as organizations aiming for environmental sustainability, are expected to be influenced by this move.
Do You Know?
- Carbon Credits: Tradable permits that allow a company or organization to emit a certain amount of carbon dioxide or other greenhouse gases, with the goal of reducing overall emissions.
- Scope 3 Emissions: Emissions produced indirectly as a result of an organization's activities, such as those from its supply chain, transportation, and product use.
- Science Based Targets Initiative: A collaboration between CDP, the UN Global Compact, World Resources Institute (WRI), and the World Wide Fund for Nature (WWF), which helps companies set science-based emissions reduction targets.