Mario Tama/Getty Images
Months ago, Passport highlighted the extent to which the issue of climate change had gone "mainstream," with both Lehman Brothers and UBS investment banks publishing reports on the topic. Other major financial players, such as HSBC and GE, are betting that going green can bring in the greenbacks. Not to be outdone, Morgan Stanley has created a carbon bank "to assist clients seeking to become carbon neutral."
Here's how it works. Morgan Stanley will work with emissions data certifier Det Norske Veritas (DNV) to offer clients a system through which they can buy and sell carbon credits as well as purchase offsets. The credits and offsets can then be verified and certified—"all in accordance with the highest international standards," according to Simon Greenshields, the global head of power, power fuels, and carbon trading at Morgan Stanley.
I'm skeptical. Even the highest international standards are notoriously low, while offset schemes are famously flawed and so far ineffective in producing real reductions in greenhouse gas emissions. Morgan Stanley will rely on the monitoring standards of the Greenhouse Gas Protocol Initiative, the greenhouse gas accounting framework used by the European Union's Emissions Trading Scheme. Yes, the scheme that's "widely acknowledged as a failure because governments set the cap above real emissions levels and issued too many permits." Further, the carbon bank, via DNV, will provide clients with "carbon zero" certificates. That's the same DNV that the British House of Commons Environmental Audit Committee found to have questionable accounting practices in projects in Thailand and Brazil (pdf - see pgs 108-117).
True, David Yarnold, Executive Vice President of Environmental Defense, has hailed the idea and praised Morgan Stanley for "supporting a significant, credible and responsible expansion of the carbon market itself." But it's interesting that in January, Environmental Defense hired 20-year Morgan Stanley veteran Jon Anda as its New Environmental Markets Network president. Is this really the most objective assessment?
It's refreshing that the private sector is taking an active interest in climate change. But there are certainly strong reasons to question some of these initiatives. Especially when there are a whole lot of people getting rich out of carbon trading and offset projects, while many more must—by the very structure of the system—remain poor.
Read More
