US Congressional committee to hold hearing on SBTi

Accusations by Republicans of links to foreign governments and anti-fossil fuel bias coincide with announcement by the SBTi of separation of standard-setting and validation arms.

A US Congressional committee is due to hold a hearing next week over a draft law that would make the Science Based Targets initiative (SBTi) the sole verifier of climate targets among suppliers to the US government.

SBTi’s climate target certification programme is already the most prominent of its kind, and could become the de facto industry standard as corporates face increasingly strict climate disclosure and target-setting regulatory requirements.

An example of that is a draft acquisition regulation introduced by the Biden administration last year, which would require large US federal contractors to disclose their carbon emissions and set climate targets that can only be certified by SBTi.

The rule would apply to companies that receive government contracts worth more than $7.5 million. No deadline has been set for the draft rule’s entry into force – however, a report on the proposal is due to be submitted by the government’s procurement advisory body by mid-October.

The appointment of SBTi has raised red flags among Republican lawmakers, including those on Congress’s Committee on Science, Space and Technology, which is carrying out an investigation on the appointment of SBTi.

Letters sent by the Republican-led committee to government officials as part of its investigation have highlighted various concerns raised in recent years over SBTi’s governance and methodology.

These include claims made by academics over alleged shortcomings in the methodologies chosen by SBTi and “potential self-dealing and conflicts of interest”. The SBTi’s decision to enforce its own standards has also attracted criticism in a market where sustainability standard-setters commonly use third parties to verify compliance.

The committee has also complained about SBTi’s supposed links to foreign governments through the group’s association with the UN Global Compact, and an alleged “bias against the fossil fuel industry”.

Asked to comment on the allegations, a spokesperson for SBTi said: “We are committed to working with all actors in the ecosystem – including duty bearers – to reduce global greenhouse gas emissions. Government proposals are a matter for governments to address.”

The hearing, on Wednesday 20 September, will be conducted by the investigations and oversight arm of the house science committee. Additional details on witness testimonies and the session’s objectives are due to be published ahead of the hearing.

Democrats on the committee have indicated to Responsible Investor that the investigation is a partisan effort led by its Republican majority.

They have framed it as the latest instance of a rise in anti-ESG sentiment within the Republican party, which has seen state and federal lawmakers attempt to rein in investor and corporate action on climate change and other sustainability topics.

The hearing notice, which was made public yesterday, coincided with SBTi announcing an internal overhaul that will separate its validation service from its standard-setting division to “safeguard impartiality”, in line with “recognised best practice for assurance bodies”.

Both entities will initially “remain closely linked”.

The move would help the organisation more easily “upscale” to meet growing demand for science-based targets, SBTi said.

The announcement also noted the appointment of former Enel CEO Francesco Starace as board chair, and biotech company Novozymes CEO Ester Baiget and former president of Colombia Iván Duque as trustees.

The SBTi is a partnership between WWF, CDP, World Resources Institute (WRI), the UN Global Compact and the We Mean Business Coalition. It was recently incorporated in the UK and has submitted an application to become a charity.