Over the weekend there was news that a company called SGS was suspended by the United Nations from its role as an auditor of carbon offset projects. SGS had been appointed by the UN to check that offsetting projects were being set up properly and reduced greenhouse gas emissions. The UN did a spot check and found a number of discrepancies at the company. It's not the first time this has happened - a similar company called DNV was suspended last year for failing to carry out it's job properly. These companies play a vital role in the the formal carbon offsetting system - they provide the assurance that projects actually exist and are delivering environmental benefits. In such a complex market this type of assurance is crucial - otherwise buyers' money can disappear into the network of middle men, consultants and brokers.

While the system can be tightened up to some extent, the concept of funding environmental projects by selling carbon credits is tricky because it depends on a complex network of intermediaries and advisers. In the best scenario, this network carries a heavy administrative burden. In the worst scenario, parts of the network can fail to do their job or even act fraudulently.

Fortunately, there are better ways to approach carbon offsetting. Retirement of EU Emission Allowances does not rely on project consultants and auditors - it simply reduces the amount of carbon dioxide that can be released by European industry. It creates long-term behavioural change and ultimately reduces our dependence on fossil fuels, moving us more swiftly to a low carbon economy.  It won't solve climate change alone, but making sure your money does something worthwhile and your business isn't exposed to the risk of this sort of controversy is a good place to start.

Here's the full Sunday Times article if you want a read http://business.timesonline...esources/article6832259.ece

I'd be interested to hear people's reactions - does this make offsetting less attractive to you?  If you've already offset do you think it damages your reputation?  Does it make you think twice about using project-based offsetting in the future?