SEC Staff Consulted With Green Financial Firm Accused Of Selling ‘Fictitious’ Carbon Credits

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A Daily Caller News Foundation investigation revealed that officials from the U.S. Securities and Exchange Commission met with representatives of a Swiss climate consulting firm. They were under investigation for allegedly selling “fictitious carbon credits”.

According to a SEC memorandum, SEC officials met with South Pole representatives in January 2022 in order to discuss how the SEC could estimate the cost companies would have to include data about their greenhouse gas emissions into their financial disclosures. According to Follow the Money, the company is an international powerhouse that has clients like Gucci and Volkswagen. They may have sold carbon credits worth millions of dollars on the promise of environmental protection efforts.

According to South Pole’s website, it manages the world’s largest portfolio carbon projects. This allows companies to offset greenhouse gas emissions by investing into projects that reduce carbon emission elsewhere. It also allows them to reach carbon emissions targets without having to change their business model. Follow the Money reported that the firm sold credit credits based on the Kariba Forest Protection project in Zimbabwe. However, the company may not have generated the full amount of greenhouse gas offsets it claimed.

In a March 2022 proposed regulation by the SEC, South Pole was mentioned several times. This regulation would require companies to report climate-related information as a source of the estimated compliance costs for companies. South Pole published a blog post in January 2023 that offered advice to companies on how to understand the proposed rules. It noted that the rules were based on “well-established” recommendations from the Task Force on Climate Related financial Disclosures (TFCD).

The DCNF previously investigated whether members of the Task Force for Climate Related Disclosures had close business and personal connections to members of the U.S. Treasury Department as well as Michael Bloomberg, a major Democratic donor.

According to FTM, South Pole’s credits were based on an estimation of the extent of deforestation that would occur if it did not take steps to preserve a forest. The company discovered in June 2022, however, that it had underestimated the rate of deforestation and had issued credits for 27 million tons of greenhouse gases that it didn’t prevent.

Kariba credits generated 10% of the 246.8 million euros (232 million euros) in revenue South Pole reported in 2022. FTM reported.

In a February press release, the company claimed that Verra independently verified its project and that any updates to the model were routine parts of Kariba’s “built-in self correcting mechanism” that ensures that credits issued relate to actualized carbon offsets. Verra is being accused of not converting 90% of its rainforest offset credits into actual carbon reductions. This claim was rejected by the company following a joint investigation conducted by The Guardian in Britain, Die Zeit in Germany, and SourceMaterial, a non-profit investigative journalism outlet.

“We welcome scrutiny of VCM and take it seriously. In the same press release, the company stated that it does not accept misleading or exaggerated reporting. “We strongly reject misleading statements about ‘over-issuances’ of carbon credits verified from our flagship climate action project, the Kariba REDD+ tree protection project.

According to Follow the Money, although Kariba credits were stopped by the company in November 2022 and a sale of more than half a million euros to EY in September 2022, it still sold Kariba credits to the accounting firm months later. Christian Dannecker, the co-founder of the company, was reported to be unable to answer a question about the reality of the carbon offsets in the company’s credit.

The SEC declined comment on this article.

South Pole did not respond immediately to a DCNF request.