LuxCS in Focus Series 5: Is the carbon market greenwashing?

Climate change is an important part of the problems that society needs to face. The increase in temperature, along with issues such as pollution and social inequality, challenge governments and harm people's quality of life.

Economic and social development needs to respect the environment and people's quality of life. There are many organizations in Brazil and around the world that seek solutions for the problems caused by mass industrialization, such as inequality, violence, saturated cities, food scarcity, floods, global warming, etc.

One of the most well-structured proposals to address the climate crisis, resulting from centuries of human predation on the environment, is the carbon market. This market allows the compensation of greenhouse gas (GHG) emissions through projects that reduce or sequester carbon dioxide (CO2) from the atmosphere. Carbon credits can be certified from projects such as reforestation, renewable energy, energy efficiency, waste treatment, among others. The carbon credits generated by the projects can be sold to companies or individuals who want to neutralize their emissions, thus helping to finance the projects and mitigate climate change.

Some critics of the carbon market say that it is just a way for companies to pollute without harming their image, doing greenwashing. Greenwashing is when a company pretends to be environmentally responsible, but it is not. For example, a company that buys carbon credits, but does not care about reducing its environmental impact in other areas, such as water, waste, toxic products, etc. Unfortunately, this kind of situation exists, as do the many other types of corruption that we find in society.

However, it is necessary to recognize that the carbon market, when conducted by individuals and institutions that value integrity and transparency, following the best practices and guided by a solid governance, can bring numerous social and environmental benefits. We, at LuxCS, believe that the carbon credit market is a powerful tool to encourage and finance the transition to a low-carbon economy, which is essential to achieve the goals of the Paris Agreement and avoid the worst scenarios of global warming.

We recognize that carbon credits do not replace the need to reduce emissions at the source, but rather complement the mitigation actions that are possible and feasible in each sector and region. We know that carbon credits do not prevent companies from polluting, but rather create a compensation mechanism that allows companies that cannot yet eliminate their emissions entirely to contribute to projects that reduce or remove GHG from the atmosphere in other parts of the world.

The emission offsets made through the certification and sale of carbon credits, widely move the economy, bringing financial resources from companies to the places most impacted by industrialization and inequality, in addition to generating environmental benefits such as water resource conservation and forest maintenance.

In addition to the environmental and ecosystem benefits, carbon credit certification projects can improve the quality of life in riverside communities and traditional peoples.

For this, carbon credit projects must follow international quality standards that ensure that the emissions were actually reduced, that they will last and that they bring socio-environmental benefits to the region where they are. In addition, carbon credits must be verified by independent entities and registered on reliable platforms, that prevent fraud. Thus, the carbon market can be seen as a way to stimulate the transition to a low-carbon economy, where the environmental costs of production and consumption are paid and compensated, and where social and environmental responsibility is valued and rewarded.

Furthermore, during the period that a carbon credit certification project is active, forest, water and biodiversity conservation is ensured. For example, if a project takes place on a rural property, it must guarantee the preservation of diversity, ecosystem services and carbon stock for decades, and offers an alternative income for the landowner, without aggravating the environmental problem, as would be the case of deforestation and burning. This project can also generate jobs, training, environmental education and improve the quality of life for local communities, who are the most vulnerable to the effects of climate change.

That is why we understand carbon credits as the reflection of a collective and collaborative effort to face the greatest challenge of our generation: the climate crisis and its environmental and social repercussions. LuxCS is proud to be part of this effort and to follow the highest standards of quality and integrity in the certification of carbon credits from the Voluntary Market. Follow the other articles in our LuxCS in Focus series and come to know our notices.