By Chris Lang
Carbon Market is a timber company, registered in France in May 2009. The company imports timber from Bolivia, Brazil, Peru, Cameroon, the Democratic Republic of Congo, and Gabon.
On 24 June 2019, the director of Carbon Market, Philippe Aghoyan, received a formal notice from the Prefect of the Burgundy-Franche-Comté region. The notice informed him that his company was in breach of Regulation (EU) No 995/2010 of the European Parliament and of the Council of 20 October 2010, otherwise known as the EU Timber Regulation (EUTR).
Aghoyan was ordered to set up a system of due diligence, as required under the EUTR.
On its website the European Commission explains that the three key elements of the “due diligence system” are:
- Information: The operator must have access to information describing the timber and timber products, country of harvest, species, quantity, details of the supplier and information on compliance with national legislation.
- Risk assessment: The operator should assess the risk of illegal timber in his supply chain, based on the information identified above and taking into account criteria set out in the regulation.
- Risk mitigation: When the assessment shows that there is a risk of illegal timber in the supply chain, that risk can be mitigated by requiring additional information and verification from the supplier.
The formal notice to Aghoyan repeats this information.
EUTR in action. Faster than a speeding snail
But the June 2019 formal notice wasn’t the first time that Carbon Market had been warned about the need for due diligence. Here’s a timeline:
On 6 June 2018, the Departmental Director of the Territories of Jura (DDT) wrote to Aghoyan detailing the requirement for due diligence. This was followed up by two telephone calls from the environmental inspector in charge of control, first with Aghoyan, then with the General Manager of the company, Erwan Jacq. (That’s Jacq on the right, from his LinkedIn account.)
On 13 July 2018, the DDT sent an email to Aghoyan attaching EUTR documents and the requirements for companies importing timber from outside the European Union.
On 14 September 2018, Jacq sent a draft Due Diligence System that failed to mention the phrase “risk analysis” for the countries involved, and for the reliability of the supplier. It also failed to mention possible risk mitigation measures.
On 24 September 2018, the DDT asked Carbon Market to complete its due diligence procedure, and to provide details of timber imported from Brazil in 2017. Carbon Market did not reply.
On 12 April 2019, the DDT sent a report of administrative failure, due to the incomplete draft Due Diligence System that the company produced in September 2018.
On 13 May 2019, Carbon Market sent the DDT the company’s 2017-2018 register of purchases for its imports from Bolivia, Brazil, Peru, Congo, Gabon, and Cameroon. It also sent a document titled “Detailed risk analysis and actions”.
On 24 June 2019, the DDT sent Carbon Market a formal notice pointing out that the company was in breach of the EUTR for the following reasons:
- the company has not set up a procedure to assess the risk of importing illegal timber according to a rigorous and documented methodology, for both the country-related risk and the supplier-related risk,
- the company also does not present a risk mitigation procedure, when it imports from countries at high risk of illegal deforestation,
- the purchasing register is incomplete, not mentioning the name of the producer of origin when Carbon Market buys from an intermediary, not mentioning the country of harvest, the region of harvest, the name of the concession, also not mentioning the documents attesting to the legality of the harvest.
The formal notice required Carbon Market to produce a complete Due Diligence System within one month. Failure to do so could result in “one or more administrative measures and sanctions”, that could include fines or suspension of activity.
On 26 September 2019 the DDT notified Aghoyan of a fine that was “likely to be imposed on him”.
On 2 October 2019, Aghoyan sent an email to the DDT with a contract signed on 27 September 2019 with the company Bureau Veritas to carry out an audit on all of Carbon Market’s suppliers. The DDT notes that this “may make it possible to secure future imports, but is not a System of Due Diligence for past imports”.
On 18 October 2019, the DDT fined Carbon Market the grand total of . . . €5,000.
In 2018, the company’s revenue was €5,137,200.
One of the companies that Carbon Market imported timber from is Industrie Forestière du Congo (IFCO). In a March 2019 report, “Buyers Beware”, Global Witness documents how the company is in breach of forest laws in the Democratic Republic of Congo (DRC).
Global Witness investigated IFCO’s logging operations in its Baulu concession. The concession covers 278,602 hectares in the province of Tshuapa. Global Witness found that IFCO was logging outside the concession boundaries, and continued logging while suspended for failing to pay required taxes, respect social agreements with local communities and abide by labour laws.
Global Witness’ report includes satellite images from 11 March 2018 (left) and 20 April 2018 (right) showing the expansion of logging roads during a period when the authorities had suspended IFCO’s operations:
In October 2018, according to Global Witness, 104 cubic metres of Padouk sawn timber was exported from the Democratic Republic of Congo – the buyer was Carbon Market.
Carbon Market’s carbon credits
As well as selling timber, as the name suggests, Carbon Market also sells carbon credits. In fact the company’s website is all about carbon offsets, with no mention of the timber trading side of the business.
The company’s website features quotations from Albert Einstein, Mark Twain, philosopher Étienne de La Boétie, and science fiction writer Bernard Werber. And this from Winston Churchill: “If you don’t take change by the hand, it will take you by the throat.”
Carbon Market explains that,
Many standards appear on this new market. Carbon Market shares its expertise by selecting three standards for their safety, their traceability and their social and environmental requirements.
Carbon Market also offers for the voluntary compensation market pre-CDM and pre-VER credits. These credits are issued when the CDM and VER projects are set up: between the start of the project and its registration.
Carbon Market selects and verifies that all the credits purchased have obtained one of the four labels and that the emission reductions are real.
Carbon Market has its own “Bilan Carbon®” (carbon balance) method to calculate companies’ carbon footprints. Having calculated the carbon footprint, Carbon Market then sells the carbon credits to the gullible company.
The website includes this image, suggesting that it sources carbon credits from projects in Mexico, Brazil, Indonesia and somewhere in Africa (the marker covers parts of Cameroon, Nigeria, Chad, Central African Republic, Equatorial Guinea, and the Democratic Republic of Congo):
Clicking on “Examples of projects” takes us to a page where Carbon Market tells us that it selects projects that include “Forest and Land Use: Afforestation, reforestation, planting.” But only two projects are actually named on the website: a wind farm in Taiwan, and a hydropower dam in Honduras.
While the website doesn’t give the name of the project, Carbon Market tells us that it’s a 4 MW dam, and the standard used is VCS (Verified Carbon Standard). A search on the VCS registry reveals four hydropower projects in Honduras, one of which is a 4 MW dam: the Babilonia Hydroelectric Project.
It’s an unfortunate choice of project, to say the least.
In a 2004 paper about the project, Mark Bonta of Delta State University in the USA writes,
Carlos Flores, a peasant farmer, was murdered by the armed guards of the private Honduran hydroelectric company Energisa that in 2000 had been awarded a 30-year environmental license by the government of President Carlos Flores Facussé to construct the $4-million, 4.4-megawatt Proyecto Hidroeléctrico Babilonia (PHB). Energisa received its environmental license, and later congressional approval, despite the fact that the PHB would be located within the Sierra de Agalta National Park, despite widespread local disapproval, and despite heavy criticism of its environmental impact statement by independent experts, including this author. In essence, the PHB was slated to be built despite massive protests over its violations of socioenvironmental rights enshrined in numerous national laws. The PHB, in the words of one proponent, simply ‘had to be built.’ Why?
Neither the opposition to the dam, nor the murder of Carlos Flores, is mentioned in TÜV NORD’s 2016 Validation Report of the Babilonia Hydroelectric Project.