The influence of Amazon and Bezos’ fund on the carbon credit market raises the alarm

The influence of Amazon and Jeff Bezos’ $10 billion philanthropic group over the carbon credit market is raising alarm bells in a growing battle over how Big Tech and corporate groups try to meet tough climate goals.

The Bezos Earth Fund is among the biggest funders of the Science Based Targets initiative, a world-renowned body relied on by groups like Apple and H&M to set voluntary standards and strict limits on the use of carbon credits to offset emissions.

Separately, Amazon is expanding its own voluntary employment initiative, signed by more than 500 companies including Uber, IBM and Microsoft, which could offer an alternative way to meet climate goals and which has no limit on the use of carbon credits.

SBTi is also in the midst of rethinking its compensation approach, a decision that could prove crucial for Big Tech groups at a time when artificial intelligence is resulting in a jump in emissions caused by higher use of data centers.

Experts and campaigners have grown concerned about the potential of Amazon and the Bezos fund, of which Bezos and his fiancee Lauren Sánchez are chairman and vice-chairman, to influence SBTi, which has control over whether many corporate groups can reach a credible “net zero.” label.

A person close to Amazon said it was a “completely different” company to Bezos’s fund: “We operate independently of each other.”

But a former SBTi staff member raised concerns about the perceived influence of the Bezos fund on climate standards in a complaint in July to Britain’s charity commission. The fund also funded the organizations that employ three SBTi board members.

The Charity Commission last week planned to advise SBTi, a UK-registered charity, on how to improve its governance, including on conflicts of interest, according to correspondence seen by the Financial Times.

The Bezos Earth Fund said it “looks forward to reading the findings of the UK Charity Commission”. SBTi said: “We have clear governance processes in place, including a conflict of interest declaration, and we continue to take proactive steps to improve these mechanisms.”

Grant-making organizations with current or historical ties to big business, such as Bloomberg Philanthropies, the Ikea Foundation, or the Rockefeller Foundation, are the financial bedrock of climate standard-setting and campaign space. Google and its philanthropic arm have also funded bodies in this space.

But the battle over SBTi’s future could prove crucial to corporate efforts to meet climate goals. Some companies have become frustrated with SBTi restrictions on using credits for only 10% of emissions. Over the past year, Amazon and Microsoft have been among the hundreds of companies removed from its list of groups that have taken steps ambitious enough to achieve “net zero.”

The Bezos Fund is also a supporter of the largest carbon accounting standard: the Greenhouse Gas Protocol, which is also in the process of reconsidering its approach to offsetting.

A prospectus posted earlier this week for the Climate and Nature Finance Collaborative, which the Bezos fund co-founded, sought a staff member who could build strategies “in support of the voluntary carbon market,” worth about $1 billion. dollars.

Amazon is also seen promoting alternatives to SBTi standards. Companies that choose to sign the climate pledge must promise to reach “net zero” by 2040, “in line” with the goals of the 2015 Paris Climate Agreement, but they can choose exactly how much this means reducing their own emissions versus purchasing offsets. Amazon also last year helped create a marketplace label, Abacus, to test the quality of carbon credits.

“If big polluters like Amazon want to get to net zero as cheaply as possible, they might have an incentive to create a situation where offsets are seen as credible,” said Holger Hoffman-Riem, a member of the technical advisory group of SBTI, and a consultant to the Swiss non-profit organization Go For Impact.

“And if Bezos is funding so much of the climate standards space, then Amazon could be in a position to influence decisions in that space.”

Buying credits is typically much cheaper than cutting emissions in the supply chain, making them a tool of choice for some CEOs as they face pressure to deliver on climate promises to shareholders.

Carbon credits represent one ton of CO₂ removed or saved, for example when trees are protected or when coal is replaced by renewable energy, but their benefits are difficult to quantify. Energy credits are meant to represent new renewable energy and are used in a similar way to offset emissions.

SBTi staff have expressed concern about a “Hydra” of carbon and energy credit lobbyists at climate policy meetings. A person close to the Bezos fund responded to this criticism: “They can’t stand the fact that they no longer have carte blanche to set the rules. . . Welcome to a grown-up world of standards.”

Amazon is the only company to have funded SBTI’s core business, although it is no longer a current financial backer. Lafarge, ArcelorMittal, Danone and Ikea have funded specific projects.

In an intervention two and a half years ago, the head of the fund, Andrew Steer, asked the SBTi board and management to meet with a group of large companies listed in the US: Amazon, Netflix, General Motors and Johnson Controls.

Steer expressed companies’ frustration with SBTi’s “lack of flexibility”, including its rules limiting the use of carbon credits, according to a 2022 email seen by the FT and first reported by Die Zeit.

A meeting with the SBTi leadership and board would go a long way toward “showing that kind of respect” and could head off a push to establish an alternative standards-setting body, Steer wrote. He referred to the “large financial injection” made by the Bezos fund to help the standards setter.

SBTi said its engagement with companies globally was “entirely appropriate”.

Two years later, in March, the Bezos fund argued for a reduction in SBTi rules on carbon credits at a meeting it had called, the FT previously reported. A person close to the fund said credits were not on the agenda and the fund did not promote the use of credits at the meeting.

Shortly after, the SBTi board said it would allow the use of carbon credits at scale. He was later forced to return after the move prompted staff complaints. Its chief executive Luiz Amaral resigned in July, citing “personal reasons”. Amaral joined SBTi in 2022 after working under Steer at another climate group.

“Everything we do at the Bezos Earth Fund is done solely for the benefit of the public good,” the fund said. Steer’s email “only demonstrates that we care about delivering crucial information to our beneficiaries in support of their success.”

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