The luxury fashion maker Gucci has been in the spotlight recently over using carbon credits to hit its carbon goals -- an offshoot of a Guardian story that said it has quit working with a company issuing those offsets.
"Gucci has had a carbon neutral goal since 2018 and no announcement has recently been made regarding any changes to this," the company's corporate communications said in an email. "We remain consistent with this, as well as our wider sustainability commitments and approach: measuring, avoiding, reducing and, only as a last resort, compensating for any residual emissions, while simultaneously investing in regenerative agriculture - as per our nature positive approach, which was announced in 2021.
"We review our environmental claims periodically and, where suitable, update them to ensure continuous compliance with the latest scientific research and global regulatory frameworks," the company said.
Companies vowed to hit net zero by buying carbon-friendly fuels and deploying energy-efficient technologies. But that only gets them so far. To finish the job, they buy carbon credits – monies to foster more renewable energy production or save the tropical rainforests, which are natural CO2 vacuums. But the trees must be worth more alive than dead – or used for farming or timbering.
Enter carbon credits: The voluntary carbon market has come under much heat from the mainstream press. Generally, the claim is that the underwriters of the credits overstate their effectiveness, and companies buy credits instead of reducing their emissions. As for Gucci – owned by Kering – its website maintained it was carbon neutral in 2019.
The World Economic Forum has called for more transparency to give corporations the confidence they need. As for Gucci, it bought its carbon credits from South Pole, which is based in Switzerland, and gets a cut of the carbon credit transactions. Follow the Money alleges that South Pole – the world’s largest seller of carbon credits – exaggerates the number of trees it saves, causing major companies to spread such falsehoods to their customers and shareholders. "Gucci is no longer working with South Pole."
South Pole's cash cow is a mega-project in Zimbabwe called Kariba. According to Bloomberg, most of the $109 million invested in Kariba’s rainforests has gone to South Pole and its partner, Carbon Green Investments.
“At Gucci, we are regularly reviewing our environmental claims to uphold the best science-based standards, as well as align with the global regulatory framework,” it told the Guardian, which investigated the voluntary carbon market for 9 months. “Since setting our carbon neutral goal in 2018, our strategy has evolved progressively and now encompasses a nature-positive approach, including protecting and restoring biodiversity, investing in regenerative agriculture and supporting local communities.”
The airliners easyJet and Jet Blue have quit offsetting carbon emissions. But other major corporations say they will continue to do so, including Apple and Shell, which has set aside $450 million, says the Guardian.
As for South Pole, it says the voluntary carbon market is scaling up climate finance and channeling it to places that traditional financing wouldn't otherwise reach. Kariba project follows established methodologies and has a “self-correcting mechanism to ensure that issued credits equate to actual rates of deforestation.
“Each carbon credit from Kariba's first 10-year crediting period is legitimate, and fully validated and verified under Verra,” it says. Verra sets the standards. However, the Guardian targeted Verra, saying at least 90% of its credits were “worthless” – a claim Verra calls bogus. In May, Verra’s Chief Executive David Antonioli resigned.
Those who set standards for or market carbon credits say they prevent deforestation, provide jobs, and build schools and hospitals. Indeed, Verra, which has issued a billion carbon credits since 2009 worth about $2 billion, says it enables carbon finance to reduce atmospheric carbon.
The denunciation has slowed the voluntary carbon market. Xpansiv reports that brokers traded 9 million tons of project-based forestry projects in the first quarter of 2023 compared to 47 million tons in the first quarter of 2022.
The fundamental problem is the need for more oversight. Brokers will match landowners and companies, which get pictures of rainforests — ones not used for farming or timbering. But they won’t get photos of uprooted trees. The Wall Street Journal points to Peru, where little money went to locals, and most went to “traders, registries, raters, governments, and investors.”
What's next? Rainforest nations need an estimated $100 billion to ensure the survival of their lands. The carbon markets will raise some of that money. But the trading system must be transparent and trustworthy. To that end, Verra and the voluntary carbon market will reinvent themselves. Meanwhile, at COP27 in Egypt last November, the global community affirmed the right of national governments to issue carbon credits to corporations.
