Carbon credits are a very 21st century investment. A credit (or off-set) allows the holder to emit 1 tonne of carbon dioxide. This is done by funding investments in “green” projects that allow for carbon dioxide to be reduce, such as forestry growth. This reduces the carbon footprint of the credit holder, improving their image and allowing them to potentially be classed as carbon neutral.
In theory, this has many benefits. Companies, or individuals, can help fund ecological projects all over the world, and help preserve or even develop forests which may otherwise be under threat from deforestation. It all sounds too good to be true and sadly, this was often the case.
The “credit” is a tradeable asset and this is how a worryingly high number of people have been targeted by scammers. This most modern of investments has been subject to some of the most old fashioned forms of mis-selling. Cold calling on a huge scale has blighted this industry, with several people receiving prison sentences for their part in convincing hundreds of people to part with huge amounts of money. Often, they convinced people to transfer their money to a SIPP, which would be invested in carbon credits. This was so serious and wide spread the Financial Conduct Authority felt it necessary to issue a warning about the scams.
These people would then take a huge chunk of the investment as a commission. Often, the carbon credit would be worthless. Salesman would convince potential investors that they could buy these credits for a very low price now, and their value would increase massively in the following months. This was not the case at all, with the investments becoming valueless. This is also not a scam reserved for the UK, with massive carbon emissions trading scams also happening on the continent.
This alone is awful, however there has also been follow up scams targeting desperate people trying to sell their credits. Customers have been approach by companies offering to sell their credits for them, and all it takes is a small upfront fee to cover expenses. Naturally, the company then disappears into the night with the customer’s payment in their pocket, and the customer has then lost out again. These companies essentially trade on the desperation of individuals caught out once already by buying these credits, and could even potentially be linked to companies or individuals who sold in the first place.
Going forward, the imminent cold calling ban should hopefully lead to much less of these kind of scams occurring, but until then there is still the threat of people, and their pensions being targeted. Indeed, it may not be the case that scammer will be deterred and will press on with the same kind of tactics anyway, seeing it as worth the risk. If you are contacted regarding investments such as these by a cold caller, don’t entertain the call. A legitimate business opportunity wouldn’t need to target people in this way. If you have something like carbon credits, if contacted about selling these always be exceptionally wary of someone asking for upfront payments. This is almost certainly a scam.
Also, it is vital to remember that if your investment in carbon credits is part of a SIPP, it is possible that you may be able to claim your investment back. There are ombudsman decisions showing that individuals who invested in carbon credits will potentially be compensated if they claim. Do not write this money off as lost, it will be always be worth trying to recover where possible
