The Casualties of Inequitable Decarbonization

At the end of July, the Science Based Targets initiative (SBTi) — currently the world’s leading arbiter of corporate climate targets — released a long-awaited update on guidance for how companies can achieve Scope 3 emissions reductions. Scope 3 emissions are the indirect emissions that sit upstream and downstream in a company’s value chain. They can comprise 75 percent or more of a corporation’s total climate footprint.

Earlier this year, SBTi ignited an initial firestorm with its controversial announcement affirming the value of environmental attribute certificates (EACs) — such as carbon credits and sustainable aviation fuel certificates — and signaling an expanded role for them in corporations' decarbonization toolbox. Then came an abrupt about-face in SBTi’s end-of-July communications, which suggests a newfound skepticism around EACs, potentially disallowing climate investments made outside a company’s value chain from counting toward that organization’s carbon footprint.

This skepticism arises from three primary drivers. First, the definitions of what’s “in” versus what’s “out” when it comes to companies’ Scope 3 supply chain boundary, relegating projects like clean cookstoves and forest conservation to the category of "not my problem."

Next, the concern that avoided emissions and carbon offset projects don’t deliver the climate benefits they claim to, in which rightful attention paid to some lackluster projects has dampened the voluntary carbon market’s enthusiasm for entire classes of emissions-reducing projects.

And the disregard for the equally important human social and economic non-climate benefits that climate projects deliver, precisely at a time when we’re seeing corporations value so-called co-benefits more than ever.

The prospect is frightening for reasons few are talking about. If SBTi stays the course of its recent pivot, it could wipe out a vital incentive for desperately needed climate finance to flow from Global North corporations to Global South nations, projects, and people on the front lines of climate change. Millions of lives — and gigatons of avoided carbon emissions — hang in the balance, as London-based SBTi potentially turns its back on equitable decarbonization.

For example, every year, energy poverty kills an estimated 3.2 million people worldwide from smoke inhalation due to daily cooking on heavily polluting wood and charcoal stoves, according to the World Health Organization. That’s more than the total annual deaths attributed to HIV, malaria and tuberculosis combined. Those same toxic biomass fuels contribute about the same amount of climate pollution every year as the global aviation industry.

These are the very real people — and equally real carbon emissions — at stake in SBTi’s seemingly esoteric decisions regarding EACs and corporations’ value chain emissions. Yet across the 100 pages of SBTi’s new Scope 3 discussion paper, the Global South, emerging economies, developing countries, and climate justice are mentioned exactly zero times. On this front, SBTi could very well find itself on the wrong side of history. 

Equitable decarbonization and climate finance are both a moral imperative and a pragmatic issue of achieving global climate targets. The Global South’s inclusion in overall decarbonization efforts is necessary to achieve global net zero emissions. To succeed, climate investment in Global South economies needs to reach anywhere from $1 trillion, to $2 trillion or even $3 trillion annually. However, both investment and global emissions-reductions trends are seriously lagging.

Only 25 percent of global climate investment flows to Global South countries currently, and almost none of that is to least developed countries. The multilateral Global Environment Facility — the world’s largest funder of climate change response in developing countries globally — in its most-recent funding replenishment cycle saw pledges totaling just $5.3 billion for the four-year period spanning 2022 to 2026. That works out to $1.33 billion per year, a scant 1/100th of the at least $1 trillion annually that’s needed.

Against this backdrop, SBTi’s pending ultimate decision about companies’ Scope 3 emissions and which climate investments they can “count” against their inventories holds particular gravitas and perverse irony. The people of the Global South are customers of Global North companies. They consume Nestle and Unilever and use Google, Meta, Samsung and Apple to communicate. And herein lies the avoidable tragedy.

As the rules-maker, SBTi is currently hurtling toward a value system of Global North voluntary corporate decarbonization that tells companies to tackle the embodied emissions of the cell phones in Ugandan homes, while ignoring the deadly pollution from the smoky cookstoves in those same homes. It is a value system that cares about reducing the emissions of a copper mine in the Democratic Republic of the Congo that supplies Big Tech far more than it cares about saving a ton of emissions from deadly indoor air pollution in the home of a miner that works in and lives next door to that mine. 

SBTi is relegating investments into solutions such as clean electric cookstoves as “beyond-value-chain mitigation” and disallowing these investments from counting toward corporations’ net zero emissions bottom line. SBTi “encourages” companies to pursue these investments, but that’s a hollow endorsement. The history of corporate climate investments consistently reinforces that companies invest in what they can get credit for. It’s naive to suggest that companies will rush to voluntary investments they can’t get credit for, especially when such investments go above and beyond the already-voluntary rules of the SBTi net zero standard itself.

Those of us working to scale anti-poverty decarbonization projects in Africa see this dynamic playing out every day among the corporate sustainability professionals we talk to. The electric cookstoves we make available need huge subsidies to be accessible and affordable for the low-income households where emissions reductions also save real human lives. But when we approach companies to invest in promising projects, the typical response we get to these requests is, “It’s almost impossible to spend money on impact I can’t count.” Sometimes, the response is even more direct, “SBTi doesn’t sanction it.”

Some 2.3 billion people rely on toxic biomass fuels to cook each day. Every electric cookstove — made possible with would-be climate finance from Global North companies — could eliminate toxic indoor air pollution by removing wood fuels from daily cooking needs, preventing avoidable premature deaths. Measured through the lens of climate action, the potential is nearly 1 gigatonne of emissions reductions annually. 

Corporate work to achieve global net zero need not be an either/or dichotomy. We are not forced to choose between social impact and climate justice for the Global South on one hand and decarbonization of predominantly Global North companies on the other. Investments in solutions like electric cooking for the Global South are also investments in cost-effective climate action and decarbonization for all. This is true equitable decarbonization, yet current sources of voluntary climate finance are drying up.

If those with ideological aversions to companies claiming impact from beyond-value-chain mitigation investments successfully persuade SBTi to disallow such investments from counting toward corporate net zero calculations, it will further choke off a major source of funding that supports projects that benefit those most vulnerable to climate, poverty and health risks.

The world wouldn’t dare pull an about-face on aviation decarbonization nor on efforts to eradicate deadly diseases such as malaria. Yet, the world of voluntary decarbonization is being given rules that turn climate finance more and more away from an emissions problem and a human crisis that’s of the same magnitude: dirty cooking fuels. In doing so, SBTi is taking projects like electric cookstoves for the most-vulnerable people off the table of corporate climate investments. Imagine instead if corporations were encouraged to value human lives as much as they valued adherence to a dictate from the Global North on where exactly a supply chain starts and stops. We could get closer to global net zero, and save more lives, with the same level of investment. 

Equitable decarbonization is possible. This is the time for the world to embrace that ethos. SBTi can lead on this front, but only if it writes rules that incentivize companies to make more climate investments that help tackle pervasive Global South challenges.