Zimbabwe Carbon Credit Scandal Rocks Big Brands Like Gucci, Nestlé And Volkswagen 

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After a two-year probe, the world’s biggest certifier of carbon offsets has dropped a climate-sized bombshell: most of the carbon credits from Zimbabwe’s Kariba forest project – the same ones used by Volkswagen, Gucci, Nestlé and McKinsey & Co. to brag about being “carbon neutral” – didn’t actually help the atmosphere.

In plain English? Those shiny claims of being good and green were bogus.

Carbon markets, already struggling after losing more than two-thirds of their value since 2021, just took another major blow to their credibility.

“This is a big deal,” said Grayson Badgley, a research scientist at Carbon Plan, via Bloomberg. “I haven’t seen an investigation like this before.”

You can say that again.

The probe by Verra – the nonprofit that dishes out more than half the world’s carbon credits – zoomed in on Kariba, a supposedly heroic project that pledged to save a forest the size of Puerto Rico. Over the years, Kariba became a darling of the carbon market, generating nearly 22 million tons worth of “emission reductions.” That’s half of Switzerland’s yearly climate footprint, except it turns out, most of it didn’t exist.

Verra launched the investigation after experts accused Kariba of wildly inflating its numbers. When the dust settled, the results were brutal: Verra found that about two-thirds of Kariba’s climate benefits were fictitious. Ouch.

For some reason, Verra isn’t saying exactly how it reached that number as its analysis is “confidential.” Meanwhile, the so-called climate savings are evaporating into thin air.

Verra’s report hasn’t solved much. Instead, it’s unleashed a fresh storm of finger-pointing, accountability dodging, and “no comment” statements from corporate buyers.

“It’s a far cry from accountability after two years of inaction,” said Jonathan Crook of Carbon Market Watch.

Verra insists it’s “working to fix” the Kariba mess and has beefed up oversight, training, and rules for future projects. “Safeguarding environmental integrity is at the core of our work,” said a Verra spokesperson. That’s a lovely sentiment, but with an atmospheric shortfall of 12.5 million tons, talk is cheap.

Verra wants the project’s owner, Carbon Green Investments (CGI), to cough up enough to make good. That would cost about $35 million at today’s prices. CGI, based in Guernsey, has gone quiet, saying only it will “continue working toward resolutions that uphold the highest standards.”

Most of Kariba’s big-name clients are now ducking for cover. Gucci didn’t respond, McKinsey declined to comment, and Nestlé said its goals don’t “rely on offsets.” Volkswagen, meanwhile, appears to think it’s off the hook.

A VW spokesperson said Verra’s decision means “the status of retired units… will not change and no action is required.” So much for climate responsibility.

Here’s how the maths went sideways: Kariba’s developers claimed the forest would have been wiped out without offset cash. However, deforestation in nearby areas barely budged, meaning the project massively overstated the danger and the savings.

Things truly blew up in 2023 when The New Yorker published a damning exposé revealing that project funds were distributed in an “untraceable” and allegedly illegal way. Verra suspended Kariba, South Pole (the Swiss firm that helped run it) fled the scene, and the clean-up began.

Verra has now begged credit holders to cancel their worthless credits voluntarily. South Pole ditched 2.5 million of them, but CGI still owes roughly 12.5 million tons of emissions, and there’s no backup plan if they don’t pay.

Verra does have something called a “buffer pool,” meant to cover disasters like forest fires. But apparently, fraudulently inflated projects don’t qualify. When pressed on what happens if CGI doesn’t settle up, Verra punted: “We’re taking this one step at a time, and don’t think it’s helpful to engage in hypotheticals,” said the spokesperson.

And this isn’t the first time. Last year, Verra cancelled 37 rice projects in China that had issued millions of bogus credits. Shell was one of the buyers, and guess what? The atmosphere is still missing three million tons of promised climate benefits.

“Building trust in the market means more than just saying, ‘We’ll do better from now on,’” said Benja Faecks of Carbon Market Watch.

“Trust is earned when participants know that problems of the past aren’t ignored but addressed.”

Right now, the only thing getting offset in this story is accountability.

[Source: Bloomberg via News24]