This month a public debate around net-zero methodology showed how opinions can differ on what counts as ‘real’ climate action.

The background: the Science Based Targets initiative is one of the foremost providers of standards for companies to set decarbonisation and net-zero targets aligned with the Paris Agreement. It produces sector-based target-setting standards and validates companies’ pathways, including specific standards for private equity that have seen uptake from a number of firms (EQT, Permira, Hg, Investindustrial and ICG, for example, have all had their decarbonisation pathways validated by SBTi). And many PE portfolio companies use the organisation’s guidelines for their respective industries.

The SBTi’s pre-existing criteria allowed the use of carbon credits only for residual Scope 3 emissions – the hardest-to-abate emissions, not covered by reduction targets.

The controversy: the SBTi’s board of trustees announced plans to loosen these restrictions on the use of carbon credits (SBTi calls them “environmental attribute certificates”) for Scope 3 abatement. The announcement has been widely treated as a declaration that carbon credits are effective in decarbonising the atmosphere, and that companies should be allowed to pay their way to meeting their decarbonisation targets instead of real-world abatement in their supply chains.

The board’s announcement divided stakeholders. Many asset managers celebrated it. Climate Asset Management, for example, argued that the SBTi’s nod of approval could create new demand for carbon offsets and buoy the returns of carbon credit investment strategies. This demand could open up more capital for climate projects, Removall Carbon CEO Jérôme Beilin said. But many climate researchers and advocates have argued that the science behind carbon credits is inconclusive – they may not actually neutralise a company’s carbon footprint.

SBTi staff revolted, the Financial Times reported. A letter signed by “an overwhelming majority of SBTi staff” (although no individuals’ names were included) was published condemning the board’s announcement. The letter noted that the board does not have sole decision-making authority to revise the SBTi’s Scope 3 framework, and that evidence of the efficacy of carbon credits “varied greatly in terms of quality and scientific rigour”. Chief executive Luiz Amaral published a statement last week clarifying that “the SBTi will continue to follow our Standard Operating Procedure for Development of SBTi Standards”. SBTi did not respond to a request for comment prior to publication.

But beyond sparking a furore, the board’s announcement has made little difference. The SBTi’s current standards have not yet been changed, as the board and Amaral clarified, following the staff letter. The SBTi will issue a draft proposal on carbon credits usage in July, which will be open for public consultation.

It is likely that following this consultation, the SBTi will revise its standards to permit carbon offsets under certain criteria and for a small percentage of Scope 3 emissions – effectively widening its classification of ‘hard-to-abate’ emissions, according to two sustainability consultants that have worked with companies to get SBTi validation, both speaking to New Private Markets on condition of anonymity.

That should not be surprising or controversial. Many sustainability organisations revise their guidelines and criteria as new scientific evidence is published and understood.

The real question, however, is what ‘hard-to-abate’ means. The term implies emissions that a company cannot control or abate, but there is no standard definition and it is wide open to interpretation: it could mean the final 5 percent of a company’s Scope 3, or their entire Scope 3.

“Companies do not have full confidence that their value chain partners will decarbonise,” Mark Fischel, carbon product lead at carbon management platform Novata, tells NPM. “They are relying on external actors to enable them to meet their publicly stated emissions targets.”

Companies often have limited control or influence over their suppliers and customers. If companies throughout supply chains do not face regulatory requirements to decarbonise, voluntary Scope 3 decarbonisation standards and frameworks such as the SBTi will not always be effective in forcing change. Threatening to cease doing business with a supplier or customer is not always realistic. In the absence of such regulation, many companies will fall off track from their Scope 3 targets if they do not use offsets.

Questions over the integrity of carbon credits remain critical. But while the measurement of Scope 3 remains unclear and companies’ power to reduce their Scope 3 emissions is variable at best, they should remain part of the picture.