Verra records largest ever loss of more than US$9 million

And Verra’s new CEO fails to address criticisms of Verra and the voluntary carbon market.

Last week, Verra released its financial records for 2023. In 2023, the company made a loss of US$9.3 million. This is Verra’s largest ever financial loss.

In 2022, Verra had a net income of US$6.2 million and revenue of US$32.4 million. In 2023, revenue was down to US$29.8 million, while expenses increased to US$39.1 million.

Verra’s financial records are available on ProPublica’s website. A comparison of Verra’s revenue with its expenses reveals the problem — decreasing revenue and increasing expenses:

Verra’s main source of income is a US$0.20 commission¹ it charges on every carbon credit it certifies. The more carbon credits certified, the more money Verra makes. This is precisely the sort of conflict of interest that a certification organisation should avoid. In Verra’s case, the conflict of interest is baked in.

It’s worth taking a look at the salaries that Verra’s highest paid officers earn — which are also available in the financial filing for 2023:

I don’t really care how much any of these people earn.² The point is that when you’re earning such a comfortable salary, it’s likely to influence how you respond when the company that pays your salary is criticised.

“Ending carbon offset scams”

Here’s a case in point.

In August 2024, the Washington Post wrote an editorial under the headline “The next big climate target: Ending carbon offset scams”. The headline would have been better if the second part read “Ending carbon offsets”.

Instead, the editorial argues that,

For all the current problems, the original concept behind offsets remains a promising one. Preventing deforestation is a much cheaper way of cutting carbon emissions than, say, overhauling industrial processes that need more time and research to decarbonize.

This is one of the fundamental myths behind carbon offsets: That it’s cheaper, quicker, and easier to save an area of rainforest in Brazil, than undertaking the structural changes that are needed by Big Polluters in the global North in order to leave fossil fuels in the ground.

Several decades of REDD has revealed that reducing deforestation is fiendishly complicated. And to address the climate crisis we need to stop burning fossil fuels.

The editorial is particularly surprising given that the Washington Post journalists recently carried out an in-depth, six-month long investigation into the problems with REDD projects in the Brazilian Amazon. The investigation revealed serious problems, particularly with those involving US-businessman Michael Greene.

Several of these project are certified by Verra. In September 2023, Verra suspended some of these projects.

The Washington Post argues that what the voluntary carbon market needs is “uniform verification standards”:

To regain its credibility, the voluntary carbon offset market needs uniform verification standards, thorough vetting of projects and a focus on high-integrity offsets.

Of course, the Clean Development Mechanism had “uniform verification standards”, and it was a disaster from start to finish.

Until recently, Mandy Rambharos worked for the Environmental Defense Fund, an organisation that has consistently promoted carbon trading. Before that she worked for Eskom, South Africa’s largest electricity generating corporation. She is now Verra’s CEO.

Rambharos isn’t interested in any of the fundamental problems that the Washington Post investigation revealed with Verra and the voluntary carbon market.

Instead, in an article for Quantum Commodity Intelligence, responding to the Post editorial, she argues that,

In the global battle against climate change, we are equipped with numerous tools, but none offer the immediacy and broad impact of the VCM.

She makes no mention of the fact that for every carbon offset generated, one tonne of CO₂ from burning fossil fuels is emitted elsewhere.

Rambharos argues that,

Carbon credits aren't a get-out-of-jail-free card to let companies or individuals continue polluting behaviours, as the Post article claims.

She bases this argument on an analysis by Trove Research (now MSCI) which found that “the companies doing the most to cut their own emissions are also the most engaged in purchasing carbon credits”. But Carbon Market Watch has challenged this research writing that it makes “spurious and unsupported claims”.

Carbon offsets: Get-out-of-jail-free cards

A quick look at which companies retired the most carbon credits 2023 reveals that carbon offsets are being used by Big Polluters to legitimise continued pollution.

A report by AlliedOffsets shows that the company that retired the most carbon offsets in 2023 was Shell. The top ten includes four fossil fuel corporations, two car manufacturers, and a transport company, among others.

According to its website, Shell retired 21.8 million carbon credits in 2023. AlliedOffsets puts the figure at 15.7 million. In any case, it is way more than any other company (three or four times as many as Volkswagen, which is second on AlliedOffsets’ list).

Since Wael Sawan was appointed Shell’s CEO in January 2023, the company has “shredded the company’s green strategy”, as Greenpeace puts it, “abandoning planned production cuts and slashing investment and jobs from Shell’s renewables division”.

Shell is buying carbon offsets as get-out-of-jail-free cards, while expanding extraction of ever more oil and gas. And increasing profits.

In 2023, Shell’s emissions increased by 4% and Sawan earned US$9.9 million. In 2024, Shell’s emissions are predicted to increase by 5%.

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1. A previous version of this post stated that “Verra’s main source of income is a US$0.10 commission”. But on 30 March 2023, Verra increased its issuance fee to US$0.20, “to better capture Verra’s costs of reviewing verification and issuance requests”.

2. A previous version of this post stated that because Verra is a non-profit organisation, salaries were tax-free. That was a misunderstanding. Employees in non-profit organisations do pay tax.