Necessary Remedies to SBTi’s Betrayal of the Public Trust

An Open Letter to Science Based Targets Initiative Rightsholders

16 February 2022

Dear Science Based Targets initiative Rightsholders,

I write this Open Letter to you on the One-Year Anniversary of my submission of a (still unresolved!!) Formal Complaint to the Executive Board of the Science Based Targets initiative (SBTi), which has emerged as a self-proclaimedde facto standard”. As such, SBTi operates for the common good, and derives its power and legitimacy from the public trust, both of which rest on the foundation of a commitment to truth and transparency.

Unfortunately, the current leadership of SBTi has established a persistent pattern of reckless disregard for truth and transparency, thus jeopardizing its legitimacy as a de facto standard deserving of the public trust. Indeed, our trust — the public trust — cannot be simply claimed; it must be earned, through a robust commitment to continually acting in integrity. SBTi’s pattern (which I document in the Formal Complaint and more extensively in the follow-up Memorandum a month later, and further document in this Open Letter) is to claim that it is acting in integrity, while actively refusing to provide transparent evidence substantiating the truth of such claims. In fact, the existing evidence proves the falsehood of SBTi’s claims, and SBTi regularly breaks off communications before answering to this evidence, or obfuscates the issue to distract attention to its accountability lapses, thereby treating itself as “beyond reproach.”

SBTi Betrays the Public Trust, Treats its Rightsholders as “Suckers”

In this sense, SBTi is asking us — its rightsholders — to continue to extend our public trust, despite its flagrant flouting of the foundational principles of truth and transparency. To apply a term employed by 2009 Nobel Economics Laureate Elinor Ostrom in her seminal 1990 book Governing the Commons: The Evolution of Institutions for Collective Action (which I would encourage SBTi leaders to read), SBTi is treating us — its rightsholders — as “suckers.” However, a widening gap between trust and truth cannot persist — “the forces tear loose from the axis,” as Robert Hunter puts it.

I invite you, SBTi’s rightsholders, to join me in inviting SBTi’s leadership back into integrity with these principles of truth and transparency and thereby remedy its betrayal of the public trust. Who are SBTi rightsholders? Essentially, anyone whose rights are impacted by SBTi, which triggers a duty for SBTi to respect these rights.

Rightsholders clearly include: companies who rely on SBTi to act in integrity with its namesake (ie climate science) in setting standards for science-based targets; investors who rely on the scientific basis of the GHG emissions targets set by companies in their portfolios, which are often “universal” and thus subject to cross-cutting impacts amongst holdings that often span the economy; funders who rely on SBTi to act in integrity with science and its mission, to name just a few. (As an aside, corporates, investors, and many others have reached out to me to express concern about the issues I address in the Formal Complaint and Memorandum, but oddly, none of SBTi’s funders — including the Bezos Earth Fund, IKEA Foundation, and Laudes Foundation — have reached out to inquire about this Complaint.)

Perhaps most importantly, SBTi rightsholders include all living beings who rely on the earth’s climate regulation system to operate within safe bounds, a necessary precondition to support their wellbeing. So in this sense, every one of you reading this Open Letter is an SBTi rightsholder, and SBTi has duties and obligations to respect your right to a healthy climate.

Returning to the question of supporting SBTi’s return to integrity with truth and transparency, I include at the end of this Open Letter a list of necessary remedies, as a preemptive antidote to SBTi’s pattern of underdelivering on promises. If, however, SBTi’s leadership insists on continuing to betray the public trust, then we, its rightsholders, must insist on replacing this derelict leadership, or else revoke its license to operate.

Formal standards derive their license to operate from standards bodies that require rigorous due process; de facto standards derive their license to operate informally, from the trust of their rightsholders. Accordingly, standards bodies can revoke the license to operate of formal standards through formal processes; in contrast, the informal nature of de facto standards means that revoking their license to operate is an informal and intangible process that accrues organically — until it reaches a tipping point.

SBTi License to Operate: FT Shifts from Uncritical Praise to Scathing Critique

I would suggest that SBTi’s license to operate has shifted dramatically over the past half year. A leading indicator is how SBTi is represented in the media. In July 2021, SBTi posted a blog touted itself as the “most reputable climate mitigation initiative in the corporate sector,” linking the first two quoted words (most reputable) to a May 2021 Financial Times article uncritically extolling the virtues of SBTi. Fast forward to February 2022, when the Financial Times published a scathing critique of SBTi.

Ironically, the February 2022 FT piece quotes SBTi from the previous (May 2021) FT piece to demonstrate the conflict of interests baked into the DNA of SBTi’s target validation process, where SBTi serves as both standard setter and target validator (or “judge and jury” as former Global Reporting Initiative COO Ralph Thurm characterized it). The February 2022 FT piece states:

“Most standard setters use third parties to verify compliance with their rules. However, Alberto Carrillo Pineda, co-founder of the SBTi, told the Financial Times that its in-house model ‘allows us to grow the team as the number of companies joining grows’.”

(The irony is seeded by the fact that the May 2021 FT piece quoted SBTi without commenting on its apparent admission that SBTi’s business model is predicated on a conflict of interests — the fact that the writer didn’t pick up on this is a testament to the persuasive power of SBTi rhetoric.)

Conflicts of Interest: Unsubstantiated Claims of Innocence Vs Evidence of Guilt

When the FT asked SBTi about this conflict of interests, the initiative demonstrated the unsubstantiated claim tactic perfectly: “Pineda said the system was ‘robust’ and did not constitute a conflict,” states the FT piece. The logic here is that the claim creates the reality it asserts.

But the evidence reveals that this claim is simply untrue — SBTi knows very well that this system constitutes a conflict of interests: two of its executives admitted as much in the April 2019 Technical Advisory Group call, when I stated:

“I have voiced in the past the concern that the fee and validation by the standards setter does step into tricky territory, when you’re setting the standard and assuring it, that that can be perceived as a red flag.”

“I understand that,” said one SBTi executive, directly undermining the subsequent claim (in the February 2022 FT piece) that the validation process does not constitute a conflict. Another SBTi executive further stated that I made a “valid point that this isn’t best practice to have these functions sitting so closely together” and added that SBTi intended to start “outsourcing” to third party validators “later this fall.”

Broken Promises = Predatory Delay

Fall of 2019, that is, which is now fading in the rearview mirror, exemplifying yet another SBTi pattern: promise future action to stave off pressure, then quietly fail to deliver on that promise. Whether this is purposeful or not is immaterial at this point; it has evolved into a default strategy. This broken promise tactic is a form of predatory delay, the strategy employed when one understands that one is wrong, but seeks to postpone the day of reckoning as long as possible, milking the residual benefits in the meanwhile. To understand this dynamic, just follow the money.

In its response to the February 2022 FT piece (which noted that SBTi doubled the validation fee from $4,950 to $9,500 as of this month), SBTi acknowledged that it conducted more than 500 validations in 2021, and expects to conduct more than 700 in 2022. That translates to ~$2.5m in revenue in 2021, jumping to ~$6.65m this year. Apparently, the financial value of retaining this cash cow trumps the ethical value of resolving this conflict of interests.

As if to hammer the last nail in the coffin of SBTi’s claim that its validation process doesn’t constitute a conflict, the NewClimate Institute and Carbon Market Watch released a report entitled Corporate Climate Responsibility Monitor 2022: Assessing the Transparency and Integrity of Companies’ Emission Reduction and Net-Zero Targets (there’s that term “integrity” again!). The report states that:

“…standard-setting initiatives face a challenging task, and potential conflict of interest, if performing the role of both defining the standard as well as assessing companies against their own criteria and guidelines.” [see the below figure]

Source: Corporate Climate Responsibility Monitor 2022

Intertwining Conflicts of Interest: Validations & Methodology Recommendations

This leads us to the second, intertwining conflict of interests baked into SBTi’s DNA at the point: self-dealing as methodology creator and standard setter. I’ll spare you from rehashing this problem, which I lay out in excruciating detail in my Formal Complaint and follow-up Memorandum. What I will discuss here is the development over the past year, substantiating my contention that SBTi knowingly relied on misrepresentation and deception in justifying its decision in early 2018 to shift to a method recommendation regime that exclusively recommended methods created by SBTi partners (the Absolute Contraction Approach, or ACA, and the Sectoral Decarbonization Approach, or SDA), and recommend against methods created independent of SBTi.

As a reminder, SBTi gave three justifications for its new recommendation regime in 2018; to qualify for validation, a method must:

  • “ensure the 2°C carbon budget is conserved”;
  • “be updated with recent data.”

As I demonstrate (again, in excruciating detail) in my Memorandum, the Center for Sustainable Organizations Context-Based Carbon Metric — the method that literally invented the practice of science-based target setting in the first place (in 2006) — has always readily met all of these criteria. Yet SBTi has contended since 2018 that the CSO method does not meet these criteria, despite the fact that the mountain of evidence I produce in the Formal Complaint and Memorandum proves this claim to be utterly false.

Please Produce Your Evidence, SBTi

I had engaged privately with SBTi for years, asking them for documentation of the analysis they relied upon to determine the ineligibility of the CSO method in early 2018. SBTi has never produced the evidence that would substantiate their claims. I encourage all SBTi rightsholders to request this information from SBTi; this will help validate the conclusion I have already come to: that this information does not exist, or if it does, it does not support the claim SBTi has been making. If I’m wrong on either count, SBTi’s refusal to share this information for years on end still demonstrates its lack of transparency. Either way, SBTi falls short on truth or transparency — but the evidence strongly suggests both.

I submitted the Formal Complaint in February 2021 in the immediate wake of the publication of the Bjørn et al scientific study that independently substantiated my claims, and “went public” with the Complaint because my years of respectful private engagement yielded no results (other than empty promises and unanswered emails.) Bjørn et al were similarly confounded by the SBTi recommendation regime — it says something significant when a disciplined scientific assessment can’t make heads or tails of a standard setter’s rationale. Here’s what Bjørn et al had to say:

“The SBTi currently recommends ACA and SDA over the other methods (SBTi 2020c). As mentioned (Section 1), the reasoning behind this recommendation is not entirely clear, but emission imbalance appears to play a role. However, our results indicate that concerns over emission imbalance should favour the CSO and SDA methods, rather than ACA and SDA (Figure 3g).”

They later state: “Given these pros and cons of individual methods, the SBTi should be transparent about the reasons underlying its method recommendations.”

So here we have a scientific assessment that finds SBTi running afoul on the transparency front — and on the truth front: CSO clearly ensures that the carbon budget is conserved (at 1.5C no less) (bullet point 2 above). CSO also clearly complies with bullet point 3 above (see item 2b in my Memorandum for documentation.) So that leaves bullet point 1 above — here again, the evidence makes it abundantly clear that the CSO method “ensure[s] that global emissions are reduced in absolute terms in the long term.”

SBTi “Comes Clean” with its “Shadow Reasoning”

In direct exchanges with the SBTi Executive Board over the past year (that included multiple instances of emails going unanswered for weeks and even months, requiring up to 5 reminder messages before responses), SBTi finally “came clean” that there was a “shadow reasoning” for the abrupt and dramatic shift in the recommendation regime:

“due to the reputational risks implied, the decision to discontinue the validation of economic intensity targets was made as soon as the team conducting validations identified that such targets were projecting a substantial increase in emissions. This was then formalised in the annual update of the target validation criteria, which is the process in which the TAG [Technical Advisory Group] is formally consulted.” [emphasis added]

I will get to dismantling the first bit on reputational risk and the last bit on formally consulting the TAG. But first, we need to clarify the mechanics of thresholds & allocations, which SBTi either doesn’t understand, or willfully chooses to ignore — either way, it’s arguably SBTi’s core fatal flaw.

A Necessary Understanding of Thresholds & Allocations Mechanics

Using a pie as a metaphor, thresholds determine the relative size of the pie (and if it’s growing or shrinking), while allocations determine the size of slices for all those sharing the pie. When applying this metaphor to climate change, the size of the pie (ie the threshold, namely the trajectory of emissions that fits the carbon budget) has turned the corner to where it’s only shrinking. So methods that apply thresholds & allocations correctly will always experience a shrinking pie overall (ie a contracting carbon budget). Within this shrinking pie, the size of slices can vary dynamically, with some slices getting bigger and others getting smaller (corresponding to real-world dynamic growth and contraction of companies that is happening all the time), all while the overall size of the pie continues to shrink.

While all methods within the SBTi purview are subject to these dynamics (which are dictated by math and physics that reflect empirical reality), only some of the methods consciously account for these dynamics, by using an approach called “mass balancing.” For example, SBTi’s ACA doesn’t apply mass balancing, instead treating companies as static objects that never change. (The ACA pie also contracts in a straight line, defying the logic of all climate science scenarios that follow sigmoidal curves for the contracting carbon budget — in this sense, ACA is not a science-based method at all.) CSO, on the other hand, applies mass balancing, aligning its method with the “facts on the ground,” as it were — namely, a shrinking carbon budget and companies that dynamically grow and shrink. (The CSO method also applies a “snap” function, where it annually rebalances based on real-world changes to the global economy, for example.)

SBTi is absolutely right that CSO allows for emissions increases, in instances where individual company growth rates outstrip overall carbon budget contraction rates. Mathematically speaking, this is a predictable (and essentially necessary) outcome in a very limited (by definition) set of instances. CSO recognizes this, and acknowledges it transparently.

By the same token, the fact that ACA treats companies as static entities likewise results in predictable (and essentially necessary) emissions increases, but SBTi hides this dynamic “under the hood.” Here’s how it works: Company A sets its target via ACA, then it sells off a bunch of its emissions intensive assets, but retains its emissions allowance. It is effectively a much smaller company that retains the emissions entitlements of a much larger company, thus allowing it to fill up those entitlements with greater emissions. Meanwhile, Company B just bought Company A’s emissions intensive assets before setting its target via ACA, so now these real-world emissions also get the SBTi stamp of approval as ACA compliant, while the net sum result is increased overall emissions (because ACA doesn’t apply a mass balance to the carbon budget).

I trust you understand the problem with this approach: essentially, SBTi has punished CSO for aligning with the science and the real world, while rewarding ACA for failing to align with the science and the real world. Emissions increases can occur under both approaches, but only CSO assures that such near-term increases still comply with the contracting carbon budget, while ACA allows for emissions increases that contravene the carbon budget.

In a response email, SBTi summarized:

“We concluded that the formulation of targets expressed in economic intensity metrics did not provide a robust enough basis for the SBTi to confirm that such targets would be consistent with the level of decarbonisation needed to meet the global climate goals.”

As I demonstrate above, this explanation amounts to what Sigmund Freud and Carl Jung called “projection,” whereby one casts one’s own shortcomings onto another, despite the fact that this other does not exhibit those shortcomings. The irony is thick, and is the most logical explanation why SBTi has never produced any evidence of the data and analysis upon which it based this decision, which is arguably the most consequential in its short life. In contrast, CSO clearly demonstrates that targets set using its metric “would be consistent with the level of decarbonisation needed to meet the global climate goals.”

SBTi continued:

“This is relevant for the first two criteria [in the bullet pointed list above — absolute emissions reductions in the long term and conservation of the carbon budget]. We identified as a safeguard, validating that such targets lead to a reduction in emissions on an absolute basis at a pace that is consistent with global decarbonisation efforts needed to meet the global climate goals. This was the change that was introduced to the criteria.”

The irony further thickens here, as CSO produces targets that align quite precisely with the global decarbonization pathway of the most stringent climate science scenarios, while ACA results in targets that fail to align with any specific climate science scenarios, and also fails to align with the carbon budget. This much is crystal clear from Bjørn et al. Again, it appears that SBTi is enacting projection here, resulting in disqualification of the very method (CSO) that precisely performs the necessary task, while qualifying the very methods that fail to perform this task.

So, these two quotation paragraphs above represent yet another instance where SBTi believes its claims manifest their own reality, instead of recognizing that claims derive their legitimacy by aligning with facts and evidence. Such magical thinking is anathema to an institution based in science.

Externalizing Reputation Risk While Flouting the Science

Allow me to now return to the question of “reputational risk,” which SBTI admitted was the real “shadow” reason (ie the reason SBTi refused to admit publicly) why SBTi disqualified CSO. Reputational risk is a political calculation, not a scientific criterion. SBTi calculated that it could shield itself from reputational risk by externalizing this risk onto CSO’s reputation through active and conscious misrepresentation of the CSO method (as I describe above).

SBTi’s original Response Letter to the Formal Complaint asserted a claim that “Neither the SBTi nor its partner organisations derive any benefits from the use of either the Absolute Contraction Approach or the Sectoral Decarbonisation Approach.” This claim is both untrue (SBTi pocketed $37m from the Bezos Earth Fund, IKEA Foundation and Laudes Foundation in November 2021 largely on the basis of its Net Zero Standard, which is predicated on ACA and SDA) and also deceptive, as it elides the flip side of benefit — namely, the detriment SBTi’s erroneous decision perpetrated onto CSO, and, more importantly, onto all SBTi rightsholders, who are now stuck with demonstrably inferior methods, and deprived of a demonstrably superior method. Yet more evidence of SBTi betraying the public trust through its persistent pattern of reckless disregard for truth and transparency.

Technical Advisory Group = “Fig Leaf”

I also promised to return to the question of SBTi formally consulting the Technical Advisory Group (TAG) about its decision to implement a new recommendation regime that exclusively recommended SBTi methods and barred independent methods. I served on the TAG from the initiative’s inception until late 2020, and I don’t recall SBTi ever “formally consulting” the TAG on the target validation criteria. I would welcome SBTi producing evidence of this occurring, but in the absence of such evidence, we must assume that this simply did not happen. But it is even more important to note that all consultation of the TAG was merely advisory, meaning SBTi has always been free to ignore any and all input. The TAG has no power to formally challenge or overturn an SBTi decision. I believe the most accurate description of the TAG came from a former member who, upon stepping down from it due to a professional transition, characterized the Technical Advisory Group as a “fig leaf.”

2C → 1.5C → Net Zero: Shifting Standards Hide Structural Weaknesses

Over its short lifespan, SBTi has introduced a number of different standards — one aligned to 2C, another aligned to 1.5C, and a third aligned to Net Zero — which raises the question: Why such proliferation? The shift from 2C to 1.5C is clearly legitimate, in response to the publication of the IPCC Special Report on Global Warming of 1.5°C (SR15). However, it is inexplicable why SBTi concurrently introduced a short-term timeframe (5–15 years) as its scope.

While SBTi rationalized that this window aligns with time horizons for corporate target setting, the initiative remained silent on the fact that this artificial limitation has no basis in the climate science. Scenarios from the climate science community (from SRES to RCP to SSP) cover long timeframes, through the turn of the century (2100) and beyond. The most credible climate science scenarios call for shifting from net positive emissions in the near term, to net zero at some future point (that differs from scenario to scenario), to net negative emissions (ie sequestration) in the longer term.

One of the most prominent differences between SBTi’s 1.5C Standard and its Net Zero Standard is the timeframe: the former applies the 5–15 year window, while the latter takes a much more long-term perspective. Given that IPCC SR15 certainly does not limit its scenarios to such near-term consideration, it is unclear why SBTi would introduce this arbitrary time horizon (scientifically speaking).

Indeed, the CSO method aligned with the most stringent SSP scenario (SSP1–1.9 that aligns with a 1.345C temperature rise) immediately upon the release of the SR15 SSP datasets. Accordingly, the CSO method could obviously cover this near-term time window, but it also covered the longer term horizon of the underlying scenario.

And there’s the rub. By arbitrarily focusing on this shorter time horizon, SBTi highlighted what it perceived to be a shortcoming of the CSO method. (We have already established that this shortcoming was untrue, merely a SBTi “projection”.) This enabled SBTi to (illegitimately) justify its exclusion of CSO (on baseless grounds), and thereafter launch the Net Zero Standard that re-introduced the longer time horizon (that CSO covered all along.) It is certainly conceivable that SBTi introduced this shorter timeframe with the explicit intention of delegitimizing the CSO method. While this assertion is unprovable (absent voluntary admission by SBTi), it certainly makes more sense than the official SBTi line, which requires us to accept SBTi’s conscious departure from the scientific timeline. So our interpretive choice pits conscious manipulation by SBTi against conscious abandonment of science by SBTi.

Necessary Remedies

The UN Guiding Principles for Business & Human Rights (UNGPs) advances a framework predicated on a triptych of imperative actions: Protect, Respect, Remedy. I contend that it is SBTi’s duty, if it wishes to retain the public trust and license to operate from its rightsholders, to remedy the fatal flaws I have identified here, and in my Memorandum, and in my original Formal Complaint. While I believe there are many other necessary remedies, I propose here a triptych of necessary remedies, to focus attention on resolving SBTI’s most egregious flaws.

  • Remove Conflicts of Interest
  • Establish a Formal Grievance Mechanism / Ombuds Function

Reinstate the CSO Method to Qualify for Validation

While I have called for this simple solution all along as an ethical obligation due to the illegitimacy of the original disqualification, this appeal has taken on greater urgency since the CSO added another climate science scenario to its metric. Integrating this scenario, the Climate Equity Reference Calculator — Low Energy Demand (CERC-LED-OECD), “makes it possible to set targets and assess performance against equity-sensitive, burden-sharing criteria for OECD countries, which are more demanding than those defined for emitters in other parts of the world,” according to CSO.

By applying this “equity tilt,” the CSO metric (using the CERC-LED-OECD scenario) achieves net zero by 2027 for OECD regions, clearly transcending the current level of ambition of SBTi’s methods. Simultaneously, this approach supports decarbonization in non-OECD regions through financial support from OECD regions (in delivery of the Paris Agreement commitment that has until now remained elusive.)

“For organizations domiciled or operating in such ‘first world’ OECD nations, this may be important because of the growing expectation that companies located in such places should bear a greater share of the burden to mitigate emissions than their counterparts in other, less-developed areas,” CSO continues.

Indeed, the very high profile Hague District Court case that decided against Shell in May 2021, called out SBTi explicitly for lacking an equity-seeking mechanism in section 4.4.35:

“Despite this broad consensus, few targets explicitly operationalize equity by providing differentiated guidance on net zero targets to different actors. In one case, a global network of actors calculated their aggregate carbon budget and then allocated individual targets according to level of development and expected future growth in population (C40). In another case, the global carbon budget is divided into sectoral allocation which are then apportioned to individual companies based on their emissions footprint (SBTi). Others have suggested that cumulative emissions form the basis of equity considerations (Vale). How to effectively operationalize equity considerations remains an open question for the climate action community.” [emphasis added]

CSO adds: “Importantly, the CERC-LED-OECD scenario is also grounded in the precautionary principle in the sense that it does not rely on, or assume, the existence of carbon dioxide removal (CDR) solutions in the future, such as Bioenergy with Carbon Capture and Storage (BECCS) technologies. In other words, the CERC-LED-OECD scenario is both equity-sensitive and CDR/BECCS-free.”

While it is ostensibly a simple matter to remove the ban on CSO, and explicitly add CSO to the recommended methods list that qualify for validation, SBTi has refused to enact this simple solution for four years now. In the meantime, SBTi’s standards infrastructure has solidified in the absence of CSO, so it may prove challenging to reverse engineer this method into the framework.

That said, it is so clearly an imperative to resolve this problem, that SBTi should be well incentivized to make it happen. Not only would it curtail the reputational risk that SBTi is currently suffering due to the governance shortcomings that this ban exemplifies, but also, approving the CSO metric will up the level of ambition of SBTi validated targets. This is a significant win for the environment and society, as well as for SBTi and its rightsholders.

While I personally consider this a decision no-brainer, I recognize the historical reality of SBTi’s irrational refusal to approve this method, and therefore am prepared for the possibility that SBTi will simply entrench, despite logic. If this is the outcome, the silver lining is that the UNRISD Sustainable Development Performance Indicators (SDPIs) recommend use of CSO (on the strength of the Bjørn et al findings), so this provides target setters an alternative option (with the UN imprimatur) just in case SBTi remains obstinate.

Remove Conflicts of Interest

Nobody with an ethical compass takes seriously SBTi’s claims that the dual intertwining conflicts of interest are not inherently embedded in its status as standard setter and validator, and as method creator and standard setter — these claims simply do not pass the sniff test. The fact that SBTi makes these claims, without making good faith engagement with the counter evidence, further discredits these claims. SBTi would risk solidifying the perception of its actions as arrogant if it were to leave these conflicts of interest unresolved.

There is a complementary risk that SBTi seeks purportedly “independent” assessment of these conflicts of interest that end up delivering a clean “bill of health”. In other words, SBTi could leverage conflicts of interest in an attempt to absolve itself of the charge of conflicts of interest.

Accordingly, all SBTi rightsholders who care about the integrity of this institution and believe in the actuality of these conflicts of interest are duty-bound to make our opinions known to SBTi, to discourage the perpetuation of this fatally flawed governance structure.

Establish a Formal Grievance Mechanism / Ombuds Function

You can imagine my surprise (and consternation) when I read in the February 2022 FT piece that SBTi “conceded, however, that an unpublished review of [SBTi] by Deloitte in 2020 had flagged governance concerns, including the lack of a formal grievance mechanism.” Wait, what?!?

The fact that SBTi never mentioned this review, its findings of governance concerns, and its recommendation of the need for a formal grievance mechanism over the entire year of our engagement is simply unconscionable, given that I explicitly called out this very lack of a formal grievance mechanism, and called for independent investigation, adjudication, and resolution.

The fact that SBTi has failed to take any of these three steps (nvestigation, adjudication, and resolution) over the past year is simply unacceptable, particularly given that SBTi’s Response Letter adopted a disrespectfully dismissive tone about the legitimacy of my Complaint.

SBTi’s failure to address my Formal Complaint with the urgency it warrants, while in possession of a secret report legitimizing my concerns, amounts to pernicious gaslighting. What do you all, SBTi’s rightsholders, think about SBTi withholding this vitally important information from you? Do you see how this entrenches SBTi’s persistent pattern of reckless disregard for truth and transparency?

I have requested a copy of this review from the SBTi Executive Board, and have not yet heard back with a response. However, the FT piece and SBTi’s response to it mentions yet another review of SBTi’s “technical governance” that SBTi is keeping tight-lipped on.

Questions abound: Why the secrecy? Who is this “consultancy”? Will SBTi make public the findings of the previous Deloitte review, and this current review, so that SBTi rightsholders can scrutinize the independence and robustness of these reviews and their findings — and assess the degree to which SBTi actually implements the recommendations? (To see what’s happening in a very similar situation with the World Trade Organization, please see here.) What if the recommendations fall short of what’s necessary to shift SBTi into integrity? Will the formal complaint mechanism (if instituted) apply retroactively to my Complaint? And if it does, how much more time will it take to reach an agreeable outcome (with SBTi’s fatal flaws persisting in the meanwhile)?

In her field research on collective governance of common pool resources (CPRs) that earned her the Nobel Prize in Economics, Elinor Ostrom identified a set of “Core Design Principles” (CDPs) that she ultimately generalized to apply to group interactions more broadly. The sixth CDP is: “Conflict resolution mechanisms. It must be possible to resolve conflicts quickly and in ways that are perceived as fair by members of the group.”

Clearly, a formal grievance mechanism that can conduct independent investigation, adjudication, and resolution is necessary, but it is by no means guaranteed that this will be the outcome. After all, SBTi states in its response to the FT piece that its goal is to foster “the evolution of our technical governance and decision-making processes to adhere to best-in-class models used by sustainability standards” — but the existing and emerging sustainability standards (GRI, SASB, IIRC, ISSB, etc…) all have clear shortcomings in their due process (see here for more on this.) None of these institutions have a formal grievance mechanism or an ombuds function.

Taking a glass-half-full perspective, SBTi has the opportunity to raise the bar and establish a robust governance structure that operates proactively with integrity, committed to truth and transparency. I certainly hope for this outcome, which will require SBTi to deprogram its entrenched patterns of dysfunction, denial, and delay. Ultimately, I believe that SBTi is destined to live up to the potential of the seed of an idea planted a decade ago at the Ceres Conference when WRI’s Janet Ranganathan and I chatted over a wine and a beer about the shortcomings of the Greenhouse Gas Protocol that WRI stewards as Secretariat.

In that instance, WRI acted with humility and care to conceive of a solution. I hold a candle that SBTi can shed its limiting habits and rise to the opportunity to fulfill its potential as an exemplary institution playing a key role in navigating the climate emergency to steer humanity from the brink of extinction to a new dawn of resilience and regeneration.

Peace,
Bill

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Catalyzing systems change toward thrivance. Co-Founder http://r3–0.org/ http://SustyContext.org http://currnt.com/ https://www.cchange.net/

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