Below is ICROA’s Response to FT Article: “Surge of investment into carbon credits creates boom time for brokers” by Camilla Hodgson published on 2 May 2022. As a founding member of ICROA, EcoAct is committed to robust science-aligned climate action. We believe that nature-based solutions are one of many vital tools for tackling the climate crisis.
ICROA would like to express its respect and support for the work of the Financial Times and Unearthed/Greenpeace in reporting on important climate issues and echo the concerns of many climate activists around the world in demanding a faster pace of emissions reductions by companies and governments.
ICROA promotes transparency and welcomes more scrutiny in the carbon market. The voluntary carbon market provides an effective market-based mechanism to enable the flow of vital funds to environmental projects around the world. It also plays a critical role in achieving our global climate goals of halving global emissions by 2030 and achieving net-zero by 2050. Crediting mechanisms form an integral part of the Paris Agreement and can be a strong and flexible ally in reducing emissions at the least cost, playing an essential part in driving the large-scale transition required to avoid catastrophic climate change.
ICROA’s mission is to ensure the highest environmental integrity and quality in the voluntary carbon market. ICROA’s Code of Best Practice is continuously updated to reflect any significant changes in the market and raise the bar for the quality and environmental integrity of carbon management services. We support all market participants to be fairly compensated for their contribution however we advise against aggressive speculation in carbon markets. Inflated prices can lead to a dampening of demand for carbon credits reducing financing of emission reductions. Furthermore, models that ensure finance goes back into the hands of project developers and local communities that have made the project possible need to be encouraged and rewarded. It is in all our interest to ensure that project developers receive the funding to thrive and scale – that is a critical part of a functioning, meaningful voluntary carbon market that can contribute to achieving global climate goals.
We believe that there needs to be fair and balanced fact-based reporting on carbon markets to support and foster further transparency. FT’s article “Surge of investment into carbon credits creates boom time for brokers” raises concerns about carbon credits’ price transparency and implies that carbon credit retailers are profiteering at the expense of project developers. Many of the assumptions made in this article are misinformed and ignore the true rationale behind credit pricing.
The article makes broad assumptions about emission reduction projects and carbon pricing. The author provides a view based on a single example, which has not been fully substantiated. Moreover, the assumptions made in the article that there is an imbalance of power between brokers and project developers are false and create a negative perception of the role of intermediaries in providing companies with high-quality carbon credits, and helping to finance new projects. Unfortunately, an invitation to engage with ICROA, which represents both project developers and carbon credit retailers was also declined.
FT’s article is based on questionable assumptions and an incomplete view of the carbon market pricing mechanism. We believe the article’s conclusions are misleading for a variety of reasons and should be clarified:
We value constructive criticism and are open to feedback as this enables us to constantly improve and raise the standards for quality, integrity, and transparency. However, we also think that unbalanced reporting on carbon credits could have a negative impact, not just on credit retailers, climate consultancies, and project developers, but ultimately and more worryingly, on the local communities and the ecosystems that depend on them.
Communications Director, ICROA
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