The article in the url below announces the launch of a carbon credit ratings agency that will evaluate carbon credits in a similar way that Moody’s and Standard and Poor’s in the US rate debt (Issues: Finance, p180; Loans, p188):
“The agency, run by the IdeaCarbon group of which Lord Stern is vice-chairman, said it would offer investors a guide to the quality of credits and the likelihood that they would be delivered.”
The agency, launched by Nicholas Stern (who authored the Stern climate change reports), emerged largely in response to concerns about the potential for abuse regarding the quality of the projects that generate carbon credits. In particular, concerns center on the credibility of claims by both buyers and sellers of the credits about the environmental benefits being delivered:
“Recent studies have confirmed findings by the Financial Times last year that suggested as many as half of the carbon credits promised under the Kyoto protocol would fail to materialise.”
One problem with the proposed carbon credit rating agency is that its business model is structured in the same was as the debt rating agencies in the US. As a result, there is an apparent conflict of interest with the agency being paid by those organizations and projects that it is supposed to be evaluating:
“Sellers of carbon credits would have to pay to have their products rated, while buyers would also pay to gain access to the ratings.”
The virtues and problems associated with carbon trading schemes and the carbon credits that underwrite them are covered in a longer article that appeared recently in Fast Company magazine:
http://www.fastcompany.com/magazine/127/carbon-boom.html
Take care
Dave
Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther
Stern launches carbon credit ratings agency
By Fiona Harvey
920 words
24 June 2008
Financial Times
London Ed1
18
http://www.ft.com/cms/s/0/897fc1b4-4219-11dd-a5e8-0000779fd2ac.html
