Fast reading:
- The current voluntary carbon market (‘VCM’) is littered with examples of projects that are not up to scratch – with a broad disparity between stated aims and actual outcomes.
- Buyers of carbon credits need to have full transparency around what they are buying and what the long-term impacts are likely to be.
- For the UK’s VCM to develop in a credible way with the trust of investors, the quality and integrity of the buyers of credits is arguably almost as important as the quality of the projects. The current market is far too buyer-friendly and strewn with false claims, irresponsible off-setters that are not on Paris-aligned decarbonisation journeys, and project owners and developers ceding control of the entire future supply of carbon credits from their respective projects in return for upfront payments.
- A new UK Nature Impact strategy set to be launched by Federated Hermes and Finance Earth aims to take a new approach in partnership with some of the UK’s largest environmental NGOs and landowners, with firm scientific foundations, genuine look-through into underlying assets, ‘ex-post’ sale of credits and rigorous eligibility criteria for buyers of environmental credits.
- The strategy will be the first in the UK to invest on a fully diversified basis across the full spectrum of land, river, coastal and marine ‘nature-based solutions’.
The carbon credit conundrum: A new approach
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