H&M Urges SBTi to Prioritize Direct Emissions Reductions Over Carbon Offsets

Fashion and design brand H&M Group has raised concerns about the Science Based Targets initiative’s (SBTi) proposal to include environmental attribute certificates (EACs), particularly offsets through voluntary carbon markets (VCM), in its standard for corporate net zero target setting. H&M’s Head of Sustainability, Leyla Ertur, expressed these concerns in a letter to the SBTi Board of Trustees, emphasizing the need for absolute emissions reduction within corporate value chains.

The letter follows SBTi’s April announcement regarding the potential use of EACs in its upcoming update to the Corporate Net Zero Standard. Founded in 2015, SBTi aims to make science-based environmental target setting a standard practice for corporations, launching its Corporate Net-Zero Standard in 2021 to help companies achieve net zero emissions.

Scope 3 emissions, which occur in areas outside a company’s direct control such as supply chains, represent the majority of most companies’ emissions, often exceeding 90% of total emissions. Measuring and managing these emissions is challenging but crucial.

The decision to allow EACs could significantly impact energy attribute certificate markets like carbon credits, extending their use by thousands of companies worldwide. The number of companies with validated science-based climate targets has more than doubled over the past year, reaching 4,204 by the end of 2023. SBTi is scaling up to meet the rising demand for corporate decarbonization standards and target validation services.

In the letter, H&M warns that the inclusion of EACs could weaken corporate climate commitments and reduce the incentive for real decarbonization efforts within value chains. H&M argues that relying on cheaper VCM credits could deter investment in and innovation for decarbonization. The company suggests that SBTi should instead focus on developing science-based targets for beyond value chain mitigation, which would be a more suitable area for VCMs or offsets.

Ertur emphasized that SBTi has set a high standard for corporate climate ambition and expressed hope that the organization would maintain its commitment to science-based target setting. “We look forward to seeing how the organization navigates this complex issue and hope it will continue to uphold its commitment to science-based target setting,” she said.