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The carbon credit conundrum: a new approach – Federated Hermes

The goal of linking verifiable carbon mitigation and nature restoration with a financial return has long been the holy grail for climate-aware investors.

Posted on Sep 11, 2023

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... 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 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.
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