(Corrects attribution in penultimate paragraph to McKinsey)

By Simon Jessop

LONDON (Reuters) -Staff at the Science Based Targets initiative (SBTi) on Wednesday called for the ouster of the global nonprofit's chief executive and the reversal of a plan to allow companies to use carbon credits to offset greenhouse gas emissions from their value chain.

The staff accused SBTi's leadership of acting without a sound scientific basis, throwing the group - whose role as the leading arbiter of how companies set climate targets exerts heavy influence over much of the corporate world - into turmoil.

In a letter to the SBTi's board of trustees and CEO seen by Reuters, the staff criticised a decision made a day earlier to allow the use of offsets for so-called Scope 3 emissions, subject to undefined "guardrails and thresholds."

Selling credits from wind farms and other activities to a company so it can offset pollution is seen as a way to help move money to climate-friendly projects. Some critics worry this could let companies off the hook when it comes to reducing emissions, and the SBTi had previously rejected the use of such offsets.

"As staff representing SBTi on a daily basis, we demand immediate action to mitigate the grave reputational damage caused by the actions of the Board," the letter said.

Beyond the CEO's resignation, the letter also called for board members who supported the policy shift on offsets to resign. It also asked for a withdrawal of the new policy.

Signed by staff from "the Target Validation Team, Target Operations Team, the Technical Department, Communications, Impact and IT, and multiple department heads", the group said it stood ready to take "further action," without elaborating.

Members of the board could not immediately be reached for comment after normal business hours.

The turnaround had earlier sparked anger among members of the SBTi's technical advisory group, which was meant to have a say on such issues but which was left blindsided by the news.

"None of us were informed. It just came out of the blue," said Stephan Singer, senior adviser at the nonprofit Climate Action Network, who said he had resigned over the issue.

Another, Doreen Stabinksy, professor of global environmental politics at College of the Atlantic, called the posting of the move on the SBTi website "a major shock" that left staff "reeling." She added: "This isn't a science-based decision."

Proponents of the move, including some companies, say many find it difficult to align their plans with the world's climate goals amid weak government action, still-nascent technical fixes and high costs.

Letting them use offsets would secure market and investor support for more ambitious action, helping reduce their cost of capital and driving more money into climate-friendly projects, they added.

"The voice of business on this issue is clear," said María Mendiluce, chief executive of the We Mean Business Coalition and a board trustee of SBTi, which by end-2022 had validated 2,079 company targets. A further 2,151 firms had committed to set targets.

"Companies value SBTi and are committed to delivering on their emissions reductions targets, but need greater clarity and flexibility in how to navigate Scope 3 emissions. This change empowers companies to bring more innovation and investment into cutting emissions from their value chains."

SBTi said it acknowledged the complexity of the issue and would "consult and strive to reach the necessary cooperation agreements with other relevant initiatives as well as a broader set of stakeholders."

The decision by SBTi brings it into line with a move by the Voluntary Carbon Markets Initiative to expand the use of high-quality carbon credits, and carbon trading association IETA, which plans to launch new guidelines on quality credits.

It follows a slide in demand for credits from companies during 2023 - down 6% in the first half, data from BloombergNEF showed - after several cut credit purchases amid concern about the quality of certain projects.

Worth around $2 billion in 2021, the market could pass $50 billion by 2030, McKinsey has said.

Teresa Hartmann, chief ratings officer at BeZero Carbon, which rates carbon credits, said SBTi's move was "a significant step forward in scaling carbon markets and climate action ... within the critical next decade".