The Science Based Target initiative (SBTi) has started an internal process to hear a complaint over alleged shortcomings in methodology and conflicts of interest, some two and a half years after its submission.
The complaint was filed in February 2021 by Bill Baue, a climate specialist who sat on SBTi’s technical advisory group for six years and later became a vocal critic of the group. Baue’s grievance centres on the two methodologies that SBTi has endorsed to measure net-zero alignment, which were developed by the initiative or its partners.
The complaint cites academic research that claimed that SBTi’s chosen methodologies fell short of the technical standards of alternatives and raised concerns over “potential self-dealing and conflicts of interest”. It separately noted the lack of consultation among SBTi’s technical advisory group over methodology selection.
SBTi’s decision to enforce its own standards has attracted broader criticism in a market where sustainability standard-setters commonly use third parties to verify compliance. Baue’s complaint requested the initiative’s leadership to investigate potential and perceived conflicts of interest, and report their determination.
SBTi was set up in 2015 as a partnership between the UN Global Compact, World Resources Institute, WWF and CDP. It has signed off on more than 3,000 corporate climate targets as the world’s de facto voluntary climate target-setting body, but has also weathered a series of controversies.
In 2020, prominent EU-based think tank 2 Degrees Investing Initiative quit SBTi in a row over what financial institutions should be able to call climate “impact”. It argued that it was wrong to call SBTi’s framework “science-based” without evidence showing that portfolio decarbonisation would contribute to real-world decarbonisation, leading to an impasse.
SBTi’s methods attracted further scrutiny after a study found that some climate targets endorsed by the initiative were “highly contentious” as they incorporate claims such as using solar panel sales to offset emissions, or climate claims by parent companies that did not match those of their subsidiaries.
SBTi said at the time that issues flagged in the study had been solved by updates to its methodology.
The group later faced transparency criticisms over its participation in non-disclosure agreements (NDA) that prevent the naming of companies that have had their climate targets rejected. Similarly, SBTi does not disclose the reasoning behind the approval of corporate targets.
The initiative created a formal grievance mechanism this year with the hiring of compliance director Anita Sheth in March.
SBTi declined to provide details regarding its complaints and appeals process, or comment on Baue’s submission.
“While I’m pleased that SBTi has initiated adjudication of my complaint, I’m quite concerned about the absence of public information regarding its adjudication process,” Baue told Responsible Investor.
“Such information is absolutely necessary for complainants like me to understand whether the adjudication process is independent and to have sufficient agency to engage in the process in an empowered way.”
Separately, 2DII co-founder Jakob Thomä acknowledged that the group’s decision to withdraw from SBTi in 2021 could be perceived in some quarters as “feeding the fire”, rather than as an attempt to strengthen the initiative as was intended.
“I think one issue is that NGOs sometimes feel they are not allowed to make mistakes or ‘show weakness’ given the incredible pressure they are under from corporate interests seeking to undermine ambition,” he said.
“It can be admittedly hard to distinguish public debate as attempts to strengthen something versus attempts to undermine. But making that distinction is key to success, otherwise progress is hard, and SBTi’s overture to Bill is testament to that effect. I hope it will be a constructive process for SBTi just as much as for Bill.”
According to Thomä, the decision to leave came after SBTi rejected a push by 2DII to integrate “rebaselining” within the target-setting framework – a method which could help investors distinguish between portfolio-level decarbonisation resulting from selling off dirty companies, and real-economy decarbonisation.
“We could not square this decision with scientific principles and so we withdrew,” he said.