The Corporate Climate Watch document considers carbon offsets to be largely ineffective. By Reuters

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LONDON (Reuters) – A member of the influential Corporate Climate Action Group, which has announced plans for boards to allow companies to offset greenhouse gas emissions from their supply chains through carbon credits, has now found that such offsets are largely ineffective. A confidential preliminary draft reviewed by Reuters revealed. .

At issue is the growth of the voluntary carbon offset market, which is still in its infancy. Although it’s used by some of the world’s largest companies, including Microsoft (NASDAQ:), Salesforce (NYSE:), and Amazon.com (NASDAQ:), the market is still small at about $2 billion.

The Science-Based Targets Initiative (SBTi), a UN-backed non-profit that audits companies’ emissions reduction plans, sparked a revolt among employees last month by declaring its intention to allow the use of carbon credits before completing a study.

Since then, the SBTi board has issued a clarification that it has yet to change its policy and that any decisions will be “informed by the evidence.”

The findings in the SBTi staff document seen by Reuters have not been reported before. It is based on a review of evidence in scientific papers and other submissions from stakeholders participating in the consultation.

The findings will be subject to further analysis and review, including by the Scientific Advisory Group, a panel of climate scientists from around the world. If maintained, this would represent a major obstacle for SBTi’s board to adopt carbon offsets as part of the company’s emissions reduction plan.

Many SBTi financial backers, including the Bezos Earth Fund, are pushing for adoption, as is former U.S. climate envoy John Kerry. They argue that offsets are needed to spur greater investment in clean energy and meet global commitments to reduce carbon emissions to zero on a net basis by 2050.

A SBTi spokesperson said the study into carbon offsets had not been completed and it would be incorrect to say there were interim results at this stage.

A spokesperson said: “We will make the results public once the analysis has been completed. Until then, we will not be able to comment on the evidence submitted.”

“Higher quality empirical and observational evidence suggests that some or most emissions reduction credits are not effective in delivering emissions reductions,” the document reviewed by Reuters said.

The draft cites examples of carbon credits failing to deliver the climate benefits they claim. For example, one scientific paper it reviewed found no significant evidence that projects in the Brazilian Amazon had mitigated forest loss.

The draft states that staff reviewed evidence that some plans sell more carbon credits than the project can deliver or overstate the emissions reductions achieved.

Quality Management

Supporters say selling credits from carbon offset projects to companies to help them offset pollution could help shift money to climate-friendly projects. Critics question the quality of the offsets and worry they could make it harder for companies to reduce their emissions.

The non-profit organization tasked with managing the quality of carbon offsets is the Integrity Council for Voluntary Carbon Markets. Efforts have been made to expand the list of approved credit-generating projects.

The United States said last month it was preparing to release guidance on the use of carbon offsets inside and outside government to build confidence in the market and ensure credits reflect actual emissions reductions. The European Union (EU) is studying where to introduce voluntary carbon credits into its already operational carbon allowance system.

Last December, the United Nations’ COP28 climate talks failed to strike a deal on new rules that would allow the launch of a central system for countries and companies to offset their carbon emissions and initiate offset transactions.