Follow the Science-Based Targets, And the Offsets May Come

Companies that rely mainly on carbon offsets to build their sustainability profiles may be facing trouble ahead. The Science-Based Targets initiative is making the case for direct action on carbon management, and more business leaders are joining the movement. Those left behind may find themselves at risk of reputational damage unless they do their homework and approach carbon offsets with caution.

Science-Based Targets: Follow the money

The Science-Based Targets initiative launched in 2015 as a means to steer the massive resources of private capital toward effective climate solutions that are based on science. SBTi provides companies with the tools to set net-zero carbon emission goals for their own operations and take effective steps toward reaching those goals. 

“Science-based targets show companies and financial institutions how much and how quickly they need to reduce their greenhouse gas (GHG) emissions to prevent the worst effects of climate change,” SBTi explains.

The organization’s ability to muster financial firepower has been growing. It launched in partnership with business and environmental organizations including the United Nations Global Compact, CDP (formerly the Carbon Disclosure Project), WRI (World Resources Institute) and WWF (the World Wide Fund for Nature). The We Mean Business Coalition also signed its members on to the initiative. And in 2021, SBTi closed out its net-zero Business Ambition for 1.5°C campaign after recruiting 1,000 companies.

Members of the campaign now represent more than $23 trillion in market capitalization, topping the entire GDP of the United States, according to SBTi.

By the end of last year, membership climbed to more than 4,000 companies accounting for more than 33 percent of the market capitalization of the entire global economy. The number includes those committed to setting targets as well as those that have already started the process.

What a difference the U.S. makes

Another indication of the growing influence of the Science-Based Targets initiative came on August 3 when the U.S. branch of the global organization Ad Net Zero updated its recruiting numbers.

The Ad Net Zero parent organization formed in the U.K in 2020 with the goal of shifting consumer behavior, as well as helping the advertising industry reduce its carbon footprint. Last June, the organization announced that its members are required to commit to net-zero targets through the SBTi or a comparable alternative, such as the U.N. Race to Zero or The Climate Pledge.

The U.S. branch launched in February 2023 under a partnership with 18 leading industry organizations, including the American Association of Advertising Agencies (4A’s), the Association of National Advertisers and Interactive Advertising Bureau. 

The addition of a branch in the U.S. had a significant impact on the global reach of Ad Net Zero. As described by the U.S. branch, the global organization now covers a market that accounts for 45 percent of all advertising expenditures, with the U.S. market alone accounting for 40 percent.

In its latest update, Ad Net Zero U.S. listed brands and advertisers including Molson Coors, Uber, 51toCarbonZero, Acceptable Ads Committee, Brand Safety Institute, BSV Digital Displays, GMR, Integral Ad Science, LoopMe, woman- and LGBT-owned The Mixx, Murphy Cobb and Scope3 among its most recent members. The firm ThanksToYou also recently joined as its first member focusing on the Latin America market.

The power of collaboration

Of course, it is easy for companies to sign on to various pledges and letters of support to advocate for climate action. Following up with actual action steps is the hard part. But collaboration can help companies pool their resources and share best practices.

The companies that sign on to the Ad Net Zero organization are leveraging collaboration to maximize their effectiveness. In addition to insisting on concrete action steps consistent with science-based targets, Ad Net Zero draws on the diverse resources of its members and partners to provide industry-specific training and guidance.

The U.S. branch, for example, reports that its 70-strong membership includes global-level supporters and agency holding company subsidiaries. Together, the 70 members represent “a spectrum of companies across the advertising ecosystem, from brands and agencies to production, advertising technology and media.”

To the extent that the U.S. advertising industry of the 20th century steered consumer behavior toward carbon intensity, perhaps the 21st-century advertising model will become equally effective in the opposite direction.

The signs are pointing in the right direction. The global Ad Net Zero organization has partnered on education, measurement and training initiatives with other organizations including the World Advertising Federation’s Global Alliance for Responsible Media and the U.K. nonprofit carbon calculator AdGreen. In addition, experienced members like Meta and Accenture are combining their expertise and communications resources.

Ad Net Zero also notes that eight of the 10 biggest advertising agencies in the world are members, along with three of the biggest brand advertisers. The top three companies in the ad tech sector are also represented. In 2021, these three companies alone serviced 74 percent of online ad spending, as well as 47 percent of all advertising dollars.

“All for None” and the potential power of carbon offsets

As befits the creative resources at its disposal, the global Ad Net Zero organization adopted the clever slogan, "All for None.” By evoking the capability of each individual to make a difference in collaborative action toward net zero, that message can resonate with individual consumers as well as business leaders.

The consumer angle could offer a way forward for carbon offsets, which have increasingly come under fire for promising more than they can deliver.

In January, for example, The Guardian reported on an investigation into the leading voluntary carbon offset standard Verra, in which the news organization concluded: “Forest carbon offsets approved by the world’s leading certifier and used by Disney, Shell, Gucci and other big corporations are largely worthless and could make global heating worse.”

In May, CNBC reported on an analysis of almost 300 global carbon offset projects, accounting for 11 percent of all carbon credits sold to date. The analysis was undertaken by researchers at the Berkeley Carbon Trading Project. “Major registries in the carbon offset market are systematically over-crediting projects and delivering dubious carbon offsets, allowing some companies to claim more climate benefits than deserved,” wrote Emma Newburger of CNBC in summary. 

Still, global groups like the World Economic Forum continue to support carbon offsets, and the availability of new data could improve transparency and reliability. However, WEF also cautions that carbon accounting is “fiendishly complex.”

Companies seeking to reduce their carbon footprints are best advised to join the Science-Based Targets initiative or a comparable organization. SBTi, for example, requires companies to take direct action within their own operations and value chains, without relying on offsets.

On the other hand, SBTi does not entirely exclude carbon offsets. “Offsets are only considered to be an option for companies wanting to finance additional emission reductions beyond their science-based targets (SBT) or net-zero targets,” the organization explains.

That leaves the door open for consumer engagement. Deloitte is among the analysts expecting more companies to use point-of-purchase offsets to promote their brands, with the help of apps and other user-friendly technologies.

“Several categories of consumer spending, including food, transportation and entertainment, could easily incorporate an option to purchase carbon offsets,” Deloitte noted in a July report.

In that regard, the creative talent of the advertising industry could provide a loud, meaningful counterbalance to the torrent of Republican-led attacks on ESG (environmental, social and governance) business principles.

Red flags about carbon offsets abound, but with sufficient transparency, reliability and user-friendliness, they could become an important way to stimulate individual action on climate change and help motivate consumers to adjust their purchasing habits to prioritize sustainability and circularity. 

Image credits: Markus Spiske/Unsplash