Firms buying carbon credits to offset greenhouse gasses are being urged to thoroughly audit the initiatives they invest in after experts warned some carbon offsetting schemes may be guilty of fraudulent practices.
According to several climate change experts - interviewed in an article on carbon credits for last Saturday's Guardian - there are growing concerns about the environmental impact of carbon offsetting programmes and the credibility of some carbon offset firms.
Carbon offsetting schemes are an increasingly popular means of firms neutralising the carbon they produce by investing in projects that cut carbon elsewhere. The projects tend to involve either the planting of trees that will then convert CO2 back into Oxygen or investment in renewable energy or energy efficiency schemes that ensure that fossil fuels that would otherwise have been used to generate power are no longer burnt.
High profile firms such as Sky and HSBC have invested heavily in these initiatives as they attempt to go carbon neutral and it is estimated that the carbon offset business will be worth £60m globally this year with sales expected to top £300m within three years.
But concerns about this business model appear to be growing as fast as the market itself.
These concerns are explained in depth in the Guardian article, but they centre on two areas, firstly the scientific benefits of offsetting and secondly the sharp practices undertaken by some of the carbon offset firms.
The scientific concern is that planting more trees is a high risk way of reducing the level of CO2 in the atmosphere. The calculations about how much carbon will be saved through tree planting programmes are based on the trees lasting 100 years, which as anyone who has seen a forest fire knows is a precarious assumption.
As Kevin Anderson, a scientist with the Tyndall Centre for Climate Change Research, told the Guardian: "Even if the trees do survive, if we have climate change and a 2C or 3C temperature rise, then how do we know those trees are not going to die early and break down into methane and actually make the situation worse."
Most business executives interested in carbon offset schemes will happily leave this debate to scientists to resolve, but the concern they cannot ignore is that they may be being taken for a ride.
Suspect operations are not named in the article, but several experts claim there are instances where the same carbon credit - representing a tonne of saved carbon - has been sold several times over. There are also concerns that calculations used to work out if a tonne of carbon has genuinely been saved are unreliable, with some critics suggesting credits are being sold on the basis of projects that may have gone ahead anyway.
Francis Sullivan, a carbon offset expert who recently worked with HSBC on its carbon neutral programme, is quoted as saying that he is sure some people are buying offsets that are not credible. While Mark Kenber of lobbyists the Climate Group, argued the current situation was "a cowboy market".
Even Mike Mason, the founder of Climate Care, one of the largest carbon offset firms in the UK, admitted in the article that while his company follows stringent internal standards the lack of an international register of carbon credits meant he could not guarantee "someone is not defrauding us".
Legislators are moving to tackle the problem and NGO The Climate Group is currently working on an international set of voluntary standards.
But in the meantime firms investing in carbon offsets should be concerned. One of the driving factors behind any decision to go carbon neutral is the good public and staff relations it generates, but the discovery that the investment may not be doing much good would instantly torpedo this key benefit. There is no doubt investigative journalists are even now snooping around the carbon offset investments of some high profile UK firms in the hope of a front page splash uncovering malpractice.
So what can firms investing or planning to invest in carbon offsets do?
The first step is to not panic. Carbon offsetting has its critics and there is no doubt some of the criticism is justified, but there is no need to throw the baby out with the bathwater and halt investments. Offsetting should of course be undertaken alongside a comprehensive programme to cut carbon emissions, but, where this is not practical, well run offsetting projects are the next best thing a company can do to help limit its environmental footprint.
However, executives also need to realise that investing in such a youthful unregulated market means there is a real risk they could be being fleeced and they need to mitigate that risk. That means following basic business best practices and regularly and thoroughly auditing offset programmes.
Simply seeking reassurances from the carbon offset firms is not sufficient - a fraudster is not about to own up just because you've asked a few astute questions. Instead firms should recruit independent experts to assess the entire project at frequent intervals and ensure they are getting what they pay for. No company would invest in a major IT outsourcing project, for example, without regularly checking the quality of the service it is getting and there is not reason carbon offset investments should be any different.
Speaking to GBN, Jim Peacock of The CarbonNeutral Company said firms should carry out due diligence into the carbon offsetting organisations they work with. He explained that firms should look closely at the assumptions used to calculate emissions; how they verify the projects they are investing in do offset carbon and whether they have a paper trail proving this; and the individual projects that are being invested in as different projects often adhere to different criteria.
He added that The CarbonNeutral Group encourages its customers to carry out thorough due diligence and that it uses independent scientific advisors from The Edinburgh Centre for Carbon Management to calculate emissions; works with The Climate Group to verify the credibility of its projects; and employs KPMG to undertake a yearly audit on its entire operations.
Undertaking such thorough due diligence will add to the cost of going carbon neutral, but if the decision has been made to take this step then it is essential that it is done properly or all the PR benefits associated with carbon neutral announcements are at risk of vanishing into thin air.
UK insurers will be called upon next month by the Prudential Market Authority to stress test their business against a range of climate and transition risks
As ClientEarth warns too many councils have missed deadlines to submit air quality plans, government confirms fresh support from its Clean Bus Technology Fund
Environment Agency chair Emma Howard Boyd's speech at the European Bank for Reconstruction and Development - in full
Britain has its first new deep coal mine in decades - a result of pretending climate change isn't political
Rebecca Willis argues the controversial decision to approve a new coal mine in the UK is symptomatic of a wider political failure