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The oversight group that has become the arbiter of corporate climate plans is to be split into two, as it grapples to maintain credibility while dealing with the surge of companies seeking its stamp of approval.
The Science Based Targets initiative (SBTi) will become a standalone UK company that will examine and validate corporate net zero emission plans, a service for which it charges fees. A separate non-profit group will set the standards for those plans, with a structure to be put into place by year end.
Originally a partnership of a handful of non-profit organisations, including an UN initiative, CDP, the World Resources Institute and WWF, the body grew rapidly after it launched ahead of the 2015 Paris accord.
But it was forced to review its own governance practices following a formal complaint last year about potential conflicts of interest, based on concerns that it was setting the criteria for net zero targets while also charging companies to validate their targets.
The new chair of the SBTi board of trustees will be Francesco Starace, former chief executive of Enel, the Italian state-controlled utility company, who was on the board of the UN Global Compact corporate initiative.
The chief executive of biotech company Novozymes, Ester Baiget, and Iván Duque, the former president of Colombia who has since been involved in carbon markets initiatives, were also named as board trustees.
Starace said the changes were necessary to meet growing demand for net zero verification. But he acknowledged that the previous structure had a “weak spot” with the group being paid to verify company plans while also setting the standards.
Outside of the original founders, funding has come from the Bezos Earth Fund and the Ikea Foundation, as well as the philanthropic arms of Bloomberg, Laudes and the Rockefeller Foundation for specific projects. In 2022, it reported about a third of its income also came from validation service fees.
Since the Paris Agreement, where almost 200 countries agreed to keep temperatures well below 2C and ideally to 1.5C, companies have been under increasing pressure to cut their greenhouse gas emissions.
In the absence of any regulatory authority, SBTi has become one of the most influential advisers on climate change to companies and investors and the gold standard for corporate net zero plans. It has validated the plans of about 3,400 companies and institutions since it was established.
Although the group said it validated 87 per cent more companies in 2022 than the previous year, Starace said the company will “need to hire more people” and make better use of technology to meet rising demand.
The number of companies publishing targets this year had more than doubled from the previous year, and it aims to sign off plans for 10,000 companies by 2025.
At the same time, it will face the challenge of companies weakening or restating their previously verified pledges. Oil and gas companies are among those that have shifted their targets, for example, including Shell and BP.
But the SBTi does not check the accuracy of the emissions data reported by companies, and does not require the data to be verified by a third party.
Starace said the SBTi’s job was to ensure a company “has committed to a creditor target in a credible manner.”
“We are not the police of this system. We are guaranteeing that their promise is realistic and does not contravene the laws of science,” he said.