Ten days ago, REDD-Monitor wrote about a UK-based company called Enviro Associates, after the BBC had secretly filmed a director of the company, Luke Ryan, making “misleading” claims about the amount of money to be made by investing in carbon credits.
Paul Seakens is a director of Enviro Associates. He is also director of a company called Carbon Neutral Investments Limited, which provides clearing and settlement services for companies (including Enviro Associates) that sell over the counter carbon credits. REDD-Monitor sent Paul Seakens some questions, but he did not reply within one week as requested. On 6 December 2012, REDD-Monitor received an email from Seakens, who apologised for the delayed response and explained that, “your original email hit our spam folders but after reading your article we located it”.
At the end of Seakens’ email are the following logos:
Carbon Neutral Investments is a member of the London Stock Exchange. But a note on the Exchange’s website points out that “The firm does not have direct access to the Exchange’s markets.”
Carbon Neutral Investments claims to buy only Verified Carbon Standard certified carbon credits – hence the VCS logo.
Carbon Neutral Investments is on the Financial Services Authority register, but the FSA does not regulate carbon credits. The small print at the end of Seakens’ email explains that,
CNI only supplies Spot Carbon Credits and these are not categorised as an “Investment Product” under the Financial Services and Markets Act 2000. They are therefore not a regulated product and any customers purchasing Spot Carbon Credits for investment or corporate social responsibility purposes should be aware that neither the Financial Services Compensation Scheme (FSCS) nor the Financial Ombudsman Scheme (FOS) apply to the transaction or to any monies paid to CNI for the purchase of VCS VER Spot Carbon Credits. Spot Carbon Credits are not tradable on the London Stock Exchange and customers should be aware there is little or no liquidity and it may not be possible to sell the VCS VER Spot Carbon Credits without suffering a loss of some or all of the capital invested.
There’s also a link to Carbon Neutral Investments’ “Company Disclaimer/Risk Warning” at the end of Seakens’ email. Unfortunately, the link is an old one:
Carbon Neutral Investment’s current “carbon risk warning” is available here.
Below are REDD-Monitor’s questions (20 November 2012) followed by Seakens’ answers (6 December 2012):
REDD-Monitor: Please describe briefly what your company does and how many people are employed there.
Paul Seakens: Please refer to our website at www.cn-investments.com which contains the information you require. The company employs about fifteen people.
REDD-Monitor: I understand that CNI provides clearing and settlement services for companies selling over the counter carbon credits. Please explain what these services involve and why such a service is necessary.
Paul Seakens: The services involve CNI in providing settlement and custody services for firms engaged in buying and selling on the spot carbon market. This involves us in acting as a settlement agent for members of our clearing systems by settling the cash element of the transactions and holding the credits in nominee for both parties. Why is any service necessary? There was a demand for the service and we had the capability to fulfil the demand.
REDD-Monitor: One of the companies on CNI’s list of companies for which CNI provides clearing and settlement services is Enviro Associates. You are a director of Enviro Associates and of CNI. You are also a director of AGT Investments Ltd., the company that buys Enviro Associates’ carbon credits. Isn’t there a conflict of interest here?
Paul Seakens: You point out in your article that CNI has had six names. If you had paid closer attention you may have noticed AGT Investments Limited was one of those. The reference on the Enviro website was incorrect and has now been removed.
REDD-Monitor: CNI is on the Financial Services Authority register. The register for CNI includes a Notice that states: “Unable to hold client money.” Could you please explain what this means and how CNI provides financial services without holding client money.
Paul Seakens: The reference to client money on the FSA is a constant source of unnecessary consternation. The FSA definition of client money is very narrow and CNI does not “hold” client monies. Funds received by CNI are not client monies in that definition of the phrase but only monies paid in settlement of transactions. In any event the spot carbon market is unregulated and not subject to FSA rules so therefore the reference to client monies does not in any event apply.
REDD-Monitor: According to Enviro Associates, AGT Investments Ltd. buys only VCS certified carbon credits. But what proof does CNI (or AGT Investments Ltd. or Enviro Associates) give to people who buy the carbon credits to show that this is in fact true?
Paul Seakens: In common with many financial products there is no certificate issued, the entitlement being held electronically in exactly the same way as if you purchased a FTSE100 share and the broker held the shares in CREST on behalf of the client. All purchasers receive log-in details for our systems and can login and view/download a statement of their holdings.
REDD-Monitor: Could you please explain exactly what CNI did to make Vodafone Mclaren Mercedes the world’s first carbon neutral Formula 1 team. According to CNI’s brochure, “Vodafone Mclaren Mercedes worked alongside CNI to select projects that would prove to be not only ideologically relevant to their core business, but also ethically viable.” Which projects were selected to supply the carbon credits to make Vodafone Mclaren Mercedes “carbon neutral”?
Paul Seakens: The contract we have with Vodafone Maclaren Mercedes precludes us from divulging this information. Suffice to say that credits were selected which met with the clients requirements and which were selected for the additional socio-economic benefits they delivered over and above the CO2 removal they achieved.