LONDON (Reuters) - Staff at an influential corporate climate action group whose board announced a plan to allow companies to offset greenhouse gas emissions from their supply chain with carbon credits has now found such offsets are largely ineffective, a confidential preliminary draft reviewed by Reuters shows.

At stake is the growth of the still nascent market for voluntary carbon offsets. While they are used by some of the world's biggest companies, including Microsoft ( MSFT ), Salesforce ( CRM ) and Amazon.com ( AMZN ), the size of the market remains small at around $2 billion.

The Science-based Targets initiative (SBTi), a U.N.-backed nonprofit that audits the emission reduction plans of companies, triggered a revolt among staff last month by declaring its intention to allow use of carbon credits prior to concluding its research on them.

Since then, the SBTi's board of trustees has issued a clarification to state it had not yet changed its policy and that any decisions would be "informed by the evidence".

The findings in the SBTi staff document seen by Reuters have not been previously reported. They are based on a review of evidence in scientific papers and other submissions by interested parties in a consultation.

The findings are subject to further analysis and review, including from the Scientific Advisory Group, a panel comprising climate scientists from around the world. If upheld, they would represent a major obstacle to SBTi's board of trustees adopting carbon offsets as part of companies' emission reduction plans.

Many of the SBTi's financial backers, including the Bezos Earth Fund, are pushing for adoption, as is former U.S. climate envoy John Kerry. They argue offsets are needed to spur more investment in clean energy and meet a global pledge to reduce emissions to zero on a net basis by 2050.

An SBTi spokesperson said its research on carbon offsets has not been completed and that it would be incorrect to state that there are even interim findings at this stage.

"Once we have completed the analysis, we will make the results available publicly. Until that point we will not be able to comment on the submitted evidence," the spokesperson said.

The document reviewed by Reuters states that "higher quality empirical and observational evidence suggests that some or most emission reduction credits are ineffective in delivering emissions reductions."

The draft cites cases where carbon credits have failed to deliver the climate benefits they tout. It states, for example, that one scientific paper it reviewed found no significant evidence that projects in the Brazilian Amazon have mitigated forest loss.

The draft states the staff also reviewed evidence showing some schemes sell more carbon credits than the projects can deliver on, or exaggerate the emission reductions they achieve.

POLICING THE QUALITY

Proponents say selling credits from carbon offset projects to companies so they can offset pollution can help move money to climate-friendly projects. Critics question the quality of the offsets and worry this could let companies off the hook when it comes to reducing emissions.

The nonprofit tasked with policing the quality of carbon offsets is the Integrity Council for Voluntary Carbon Markets. It has been seeking to expand its list of approved credit generation projects.

The U.S. said last month it is preparing to unveil guidelines for use of carbon offsets inside and outside of government to build confidence in the market and ensure credits reflect real emissions cuts. The European Union is studying where to introduce voluntary carbon credits into a carbon allowance scheme it already runs.

The United Nations' COP28 climate talks failed in December to seal a deal on new rules which would allow the launch of a central system for countries and companies to begin offsetting their carbon emissions and trading those offsets.