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Number 1 Seller of U.S. Carbon Offsets Launches Internal Investigation on Data Manipulation

By:
Chris Gaetano
Published Date:
Apr 5, 2021
GettyImages-1205214235-trees-forest

The Nature Conservancy, the number one seller of carbon offsets in the United States, has launched its own internal investigation into allegations that at least some of these financial products are based on risks that don't really exist, thereby inflating sales, Bloomberg reported. The review comes in response to a previous Bloomberg article about the nonprofit organization, which said that it had sold carbon offsets to major financial institutions based on faulty premises. Specifically, the organization is believed to have counted trees that were in no danger of clear cutting as being saved through its own efforts, thus generating carbon offsets that it could then sell to firms including JPMorgan Chase, Disney and BlackRock. These companies then use the offsets to claim large reductions in their own publicly reported emissions.This practice undermines the point of carbon offsets, as "saving" ecosystems in no danger does nothing to reduce the total amount of carbon dioxide in the atmosphere.

The Nature Conservancy is not the only entity accused of doing this practice; in fact, just a few days after its initial report, Bloomberg ran an article about a company that it believes is doing the same thing, Green Trees. Meanwhile, it reports that the National Audobon Society is another culprit, as it has sold carbon offsets linked to a nature preserve that it has been stewarding since the 1970s, and even juiced its value by saying that the trees would have all been cut down if not for the payments.

The incident drives home an issue in sustainability reporting that has received increased attention, namely the lack of mandatory attestation. While many companies do get third-party attestation for their reporting, most are limited-scope engagements that mostly consist of nonspecific conclusions. In contrast, the financial reporting world (while having flaws of its own), not only has a mandatory attestation requirement, but also has uniform standards and principles that bind all public companies, as well as internal control systems that provide an initial check.