Lake Kariba scene with some islands in Matusadona National Park, Zimbabwe.

Lake Kariba scene with some islands in Matusadona National Park, Zimbabwe. © ANP, Koos van der Lende / Africa Medi

The world’s largest carbon trader is wrestling with painful facts about its business model

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Renat Heuberger


South Pole
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South Pole, the Swiss climate consultancy and carbon trader, is experiencing rough seas after Follow the Money revealed that for a long time the company sold carbon credits which were nearly worthless. CEO Renat Heuberger, who is one of the company’s founders, dismissed the story as ‘false information’. In an extensive interview with investigative outlet Argos, Heuberger defended the company’s actions. We’re examining his statements.

In late February, Renat Heuberger, the CEO of South Pole, a climate consultancy and carbon trading firm, fielded yet another phone call from a journalist with critical questions. The 46-year-old Swiss CEO, who helped found South Pole, had been defending the company to the media for weeks on end. It all began in late January, when Follow the Money revealed that South Pole’s flagship carbon offsetting project had far fewer benefits for the climate than claimed. 

According to its own analyses, over 60 per cent of the carbon credits that South Pole created with its Kariba forest protection project in Zimbabwe, only existed on paper. This means that 27 million tonnes of CO2 – comparable to seven times the annual emissions of a city the size of Amsterdam – have never been properly compensated, and were in fact largely released into the atmosphere.

After the company discovered its grave error in the summer of 2022, it continued to sell emission rights to major clients

As a result, the climate performance of South Pole clients who purchased these carbon credits suffered a severe blow. Even though the company discovered its grave error in the summer of 2022, it continued to sell emission rights to major clients like the McKinsey and EY consulting firms.

Follow the Money’s article offended Heuberger, who says he has been working to protect the climate since the 1990s. In an interview with Argos, he said: ‘Much of what Follow the Money has written has been taken extremely out of context, while some of it – there’s no other way to put it – is simply lies.’

Heuberger founded South Pole in 2006, together with seven friends from university. The consultancy wanted to support countries in the Global South with carbon offsetting. In a promotional video showing him hiking in the Swiss Alps, Heuberger says that they want to ‘guarantee’ that people in developing countries ‘who have not contributed much to climate change are also benefiting from the solution’.

In 2002, Heuberger and his friends came up with the idea of helping companies compensate for their CO2 emissions elsewhere, when they attended a climate conference in Costa Rica. ‘The pitching of a sustainable business idea was the prerequisite for our participation,’ Heuberger said in 2017. They decided they would try to offset the conference’s climate impact and ‘then calculated the emissions and tried to get the participants attending to compensate for them’.

This idea became the foundation of South Pole. ‘There was at the time the opportunity to work in research or administration, or go to an NGO. But I wanted an entrepreneurial solution to climate change.ʼ Thus, South Pole began selling carbon credits that companies could use to offset their greenhouse gas emissions.

On paper, Heuberger and his co-founders have become multimillionaires

For the past few years, the trade in carbon emission rights has been booming. The startup has evolved into the voluntary carbon market’s main player. In 2022 alone, telecom company Swisscom, software developer Salesforce, the Singapore state company Temasek and even Lightrock – an impact investment firm with ties to the Liechtenstein royal family – invested millions in South Pole. In the same year, the company became a ‘unicorn’, the nickname given to an unlisted company with an estimated market value of over one billion dollars.

Within a two-year span, the value of a South Pole share rose from around 20 euros to 680 according to reports. On paper, Heuberger and his co-founders have become multimillionaires.

But in early 2023, Follow the Money discovered that the success that South Pole claims to have been having in recent years is partially based on thin air. For years, Heuberger’s company sold largely fictitious emission rights to hundreds of businesses, including Gucci, the Dutch energy company Greenchoice, and the McKinsey and EY consulting firms.

South Pole’s controversial claims

When South Pole discovered that it had wildly overestimated the carbon emissions it was compensating, management tried to brush off the criticism of its own staff. This was revealed by internal documents, a recording of an internal crisis meeting and conversations with sources in or close to South Pole. Staff questions were left partially or entirely unanswered, resulting in discontent, and causing a number of employees to leave the company since late 2022.

The problems emerged when South Pole decided to thoroughly evaluate its flagship project, the Kariba REDD+ project in Zimbabwe, where efforts began in 2011 to protect 790 thousand hectares from deforestation. Unfortunately, 63 per cent of the carbon credits that the project supposedly generated are in fact nonexistent, since less deforestation took place than expected.

South Pole also pocketed nearly 20 million euros extra, without sharing this with the Zimbabwean communities that should also have profited. Moreover, South Pole was unable to guarantee that the other funds promised to the Zimbabweans had actually benefited either the project or the local communities. South Pole cannot do so because it is not fully informed about how its partner CGI, based in tax haven Guernsey, spent the project funds.

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Follow the Money’s findings were published just after the British daily The Guardian and German weekly Die Zeit broke stories on scientific research indicating that tropical forest carbon offsetting projects rarely meet their objectives, with potentially over 90 per cent of them not delivering on promised emissions reductions. Their and our revelations caused quite a stir. Major South Pole clients, including Volkswagen, Greenchoice and Groenbalans, announced they would be investigating the carbon credits they had purchased, while rating agency BeZero placed the Kariba project on a ‘watch list’.

Meanwhile, the price of this type of carbon credit began to drop in early February, shortly after Follow the Money published its story, finally bottoming out at around 150 eurocents per tonne of CO2. According to market analysts at S&P Global and Bloomberg, this is partially due to the media criticism. South Pole felt obliged to announce the preliminary suspension of further sales of carbon rights related to the Kariba project.

Doubling down

Instead of heeding the criticism from so many quarters – from scientists, civil society organisations and his own staff – Heuberger went on the counterattack, doubling down on his claims. When Argos investigative journalist Huub Jaspers wanted to address the topic in a radio broadcast, Heuberger was eager to be interviewed. He hoped to lay waste to the ‘disinformation’ he felt was being spread about his company. ‘I’m happy to have the opportunity today to shed light on what really went on in Kariba,’ Heuberger said in this interview.

Heuberger continued to claim to Argos that the Kariba project ‘is one of the most successful forest conservation projects in the world’, one which had never experienced any problems until Follow the Money levelled its criticism. ‘We are surprised and disappointed that such strongly concentrated false information can be published in this day and age. It’s not primarily about us. The real problem is that these false accusations undercut forest conservation.’

Social media are another arena where Heuberger takes the opportunity to discredit journalists and ‘so-called scientists’: ‘I honestly wonder: Who is financing these attacks? Cui bono???’

With his company having made roughly 50 million euros from the Kariba project, an analysis of Heuberger’s primary claims reveals that he often plays fast and loose with the truth.

1: Heuberger wrongly claims that there was just one critical employee

According to Heuberger, Follow the Money’s article is based on just one frustrated employee who was fired and ‘had to leave our company in December’. ‘He took revenge by intentionally spreading disinformation to the media,’ Heuberger says.

The article itself shows this statement to be false: Follow the Money spoke with multiple sources, was able to consult internal South Pole documents and had a recording of an internal crisis meeting. The dissatisfaction and doubts regarding the Kariba project are widespread among staff, and cannot be ascribed to a lone disgruntled employee.

2: South Pole did indeed sell overvalued carbon credits

Heuberger claims that no mistakes were made on the Kariba project and therefore no excess amount of carbon credits were sold. ‘Twelve years ago, we did predict that we would be able to offset 40 million tonnes of CO2. Since we only sold 23 million CO2 tonnes, nothing has gone wrong at all. Compare it to a farm: if you thought you would be able to produce 40 million tonnes of rice twelve years ago, and in fact only end up selling 23 million tonnes, there’s nothing special about that. That’s quite usual.’

At least 8 million tonnes of fictitious carbon credits were sold

Once again, Heuberger is twisting the truth. Why? Because, according to South Pole, between 2011 and 2021 the project generated 42 million tonnes worth of carbon credits (including a buffer). Internal calculations showed that 27 million tonnes of these were overestimated, so South Pole actually only generated 15 million tonnes of carbon credits. Despite this, it sold credits worth 23 million tonnes. This means that at least 8 million tonnes of fictitious carbon credits were sold.

South Pole also claims that this 27 million tonne difference can be rectified in the future with new carbon offsets. However, according to company estimates, it could take ten to fifteen years before the difference is made up. This ‘solution’ also assumes that deforestation will continue to be a threat in coming years, making forest conservation by South Pole necessary. Another issue is that, in this period, the flow of funds to the Zimbabwean population could also largely dry up.

3: South Pole received nearly 50 per cent of the revenue, not 25 per cent

Heuberger continues to claim that South Pole is ‘very transparent’ about the division of the Kariba project revenues. We get 25 per cent of the revenue. [...] The rest goes to the project.’

However, when pressed by Follow the Money in January, South Pole acknowledged that it received at least 18 million euros over and above its 25 per cent commission fee. The company did so by purchasing carbon credits for a few euros and then reselling them to clients for a price in double figures years later, up to twenty times more. Internal South Pole documents show that this meant that the company pocketed nearly half of the total project revenue instead of 25 per cent.

Heuberger explains this away by comparing it to buying a house. ‘If I buy a house from you which doubles in value in the next six years, I wouldn’t share that profit with you, would I?’ he asked the Argos journalist. He then decided to compare carbon credits to bitcoins: ‘Suppose you bought bitcoins in 2012 and held on to them for seven years. Of course you’ll be making money. It [the purchase of Kariba certificates] was a high-risk investment and I find it insulting that Follow the Money passes this off as some kind of trick.’

However, Heuberger did ultimately admit that none of this extra revenue ended up with the Zimbabwean communities.

4: Heuberger was aware of the facts for months

Argos asked why South Pole shared such a range of sometimes conflicting information with Follow the Money. For example, it claimed that 40 million euros went to Zimbabwe. When Follow the Money pointed out that this was at odds with the internal information that it was privy to, South Pole adjusted the figure to 57 million. According to Heuberger, South Pole had not anticipated this being asked and did not have the right figures to hand. ‘It took us completely by surprise.’

This seems highly unlikely. Internal South Pole documents show that the company was aware, at least since the summer of 2022, that overestimates plagued the Kariba project. South Pole even organised a crisis meeting where staff could ask critical questions, including ones about the project revenues. Follow the Money contacted South Pole in mid-January to share its findings. Thus, prior to Follow the Money’s queries, the company was well aware of the problems.

5: Heuberger says he works with ‘serious partners’ on ‘good projects’, but can’t guarantee this

According to Heuberger, South Pole works with ’all partners, all technologies, in all countries, if we feel that a project is a good one that involves serious partners and really promotes climate protection’.

Yet there were clear signals that the local project developer CGI (based in the tax haven Guernsey), which manages the funds for the local Zimbabwean population, had credibility issues. In July 2022, it failed a due diligence assessment conducted by South Pole: not all expenditures could be properly checked. This internal investigation had nothing to do with quality control but was conducted because South Pole intended to strengthen its ties with CGI by investing in the company.

Follow the Money again requested a response from Heuberger. He referred us to previous answers

When Argos asked Heuberger whether similar due diligence had been conducted at the beginning of or during their relationship, he could not confirm this. As a result, it is far from certain that all of the funds intended for the local communities actually ended up with them. ‘Of course I can’t guarantee that,’ Heuberger told Argos. ‘We’re not CGI, we’re South Pole, and CGI is our partner.’

While researching this article, Follow the Money again requested a response from Heuberger. Why does he claim to be surprised by the extent of the overestimation, despite his being aware of it for months? Can he refute the information published by Follow the Money that he publicly labelled ‘false’? And is it true that the Zimbabwean community has been deprived by South Pole?

Heuberger and South Pole decided not to respond to our questions, instead referring to their earlier official responses to our investigation. In these statements, the company continues to fully support its claims about the quality of the carbon credits it has sold. South Pole’s official statements can be found here and here.

Translation: David Raats