Showcase project by the world’s biggest carbon trader actually resulted in more carbon emissions
For years, South Pole – the world’s most influential climate consultancy – sold essentially concocted emission rights to hundreds of companies, including Gucci, Volkswagen and energy supplier Greenchoice. As a result, part of the climate achievements of many prestigious companies exist only on paper. Said carbon credits generated tens of millions of euros for South Pole. The company is in crisis: employees want the error to be acknowledged, while management is sweeping it under the rug.
For years, the Kariba forest protection project in Zimbabwe has been the showpiece of South Pole, the world’s most influential climate consultancy. Using this project, big companies like Gucci, Volkswagen, McKinsey and Dutch energy company Greenchoice tried to offset their carbon emissions. Between 2011 and 2021, South Pole sold 27 million tonnes of carbon credits more than the project actually produced. That’s comparable to almost seven times the annual emissions of the entire city of Amsterdam. According to internal documents, this resulted in millions of euros in extra revenue for South Pole.
The Kariba project emitted more CO2 than it conserved. Ultimately, South Pole exacerbated the climate crisis
South Pole concluded in June 2022 that it had seriously overestimated the offset rights it sold through Kariba. The company did not notify big clients like Volkswagen and Greenchoice. This error partly undermines the green claims of these companies: they thought that they had offset their emissions by buying South Pole’s carbon credits, but those are now found to be largely worthless.
Because of the overestimation, the Kariba project emitted more CO2 than it conserved. Ultimately, South Pole thus exacerbated the climate crisis.
In addition, South Pole told clients that it retained at most a quarter of the revenues from the Kariba project, with the balance going to local communities in Zimbabwe. But numbers that South Pole shared with Follow the Money show that South Pole in fact pocketed almost twice as much.
About the investigation
Follow the Money found out about the problems with South Pole’s Kariba project through internal documents, a recording of an internal crisis meeting and conversations with sources around South Pole.
The findings add to publications by The Guardian and Die Zeit, who revealed last week that more than 90 per cent of all carbon offsets from forest projects by Verra, the international standard that certified the Kariba project, are ‘worthless’.
Responses by Volkswagen and Greenchoice
Follow the Money presented these findings to South Pole’s leading clients. They reacted with astonishment. Greenchoice (by far the biggest buyer of Kariba credits) said it had acted ‘in good faith’ and wants to conduct ‘further investigations’. Volkswagen was also kept in the dark. The car manufacturer says it wants to start its own carbon compensation projects in order to ‘be[come] independent from external providers’. Gucci and McKinsey did not respond to Follow the Money’s questions.
South Pole’s response
South Pole acknowledges the overestimation, but refutes to Follow the Money that this has led to a negative climate impact. The company expects to close the 27-million-ton CO2 gap by issuing new carbon credits at a slower rate.
According to South Pole, the extra revenue the company booked and did not share with the Zimbabwean community did not arise from malicious intent. The Kariba project was on the verge of collapse six years ago, and South Pole ‘saved’ it by buying large quantities of carbon credits. This was not a ‘speculative investment’ but a ‘risk’ that turned into a ‘exceptional windfall’ six years later.
After Follow the Money confronted South Pole with its findings, the company stated that it will soon publish all relevant financial results of the Kariba project.
About South Pole
By 2022, Swiss-based South Pole became the world’s leading climate consultancy and largest trader in the voluntary carbon market. Several prominent international investors took minority stakes in the company for millions last year. The ‘unicorn’ – an unlisted company worth at least a billion dollars – scours the world for projects to offset greenhouse gas emissions, for example, by protecting a forest in Zimbabwe or investing in solar parks in Chile.
Investments in projects like Kariba generate carbon offset credits for South Pole. Companies that buy these credits can then inform their customers that they can hit the roads emission-free (Porsche), drink ‘carbon neutral’ coffee (Nespresso), or contribute to ‘preserving crucial ecosystems’ (Gucci). And similarly, Dutch energy company Greenchoice thought it would be providing thousands of Dutch households with ‘sustainable gas’.
The Zimbabwe project is very important for South Pole, which would probably have ended up in the red last year if not for the Kariba revenues.
About the Kariba project
The Kariba project, one of the world’s biggest forest protection projects, covers a forested area of almost 790 thousand hectares in Zimbabwe. By protecting that forest, through investments in sustainable agriculture and improved livelihoods, the project avoids carbon emissions that can be sold.
The future of the Kariba project now hangs in the balance. South Pole’s own estimates indicate that it could take ten to fifteen years to plug the hole caused by the over-issued carbon credits. Until then, it is highly likely that no new Kariba credits can be sold, jeopardising the financial survival of the project in Zimbabwe – and thus the income flow on which the local community has become dependent.