Feb 15, 2022 - Energy & Environment

Regulators pushed to examine corporate offset use

Animated gif of a finger pointing the earth to the center of the screen

Illustration: Sarah Grillo/Axios

Environmentalists are pressing financial regulators to look skeptically at companies' use of carbon offsets to help meet their climate pledges.

Driving the news: In a public comment docket posted by the Office of the Comptroller of the Currency about draft guidelines for how large banks should handle climate risk, the Center for American Progress said OCC should deter banks from using offsets to meet their public emissions pledges.

Zoom in: The comments from CAP, an advocacy group with close ties to Democrats, cite concern about offsets' effectiveness, which in turn creates jeopardy for banks.

  • "Regulators with jurisdiction over carbon markets may bring enforcement actions against sellers of offsets for fraud, severely limiting the supply and increasing the price of legitimate offsets," CAP writes.
  • CAP also writes that if banks rely on offsets, OCC should ensure "efforts are in place to substantiate" that they spur carbon dioxide removal.

Catch up fast: Separately, some environmentalists want the Securities and Exchange Commission to require detailed disclosures about companies' reliance on emissions offsets to meet climate targets.

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