More voluntary carbon offset firms are listing in Canada. Some environmentalists aren't sold

A small stock exchange in Toronto has become a global hub for companies trading in voluntary carbon offsets and more growth is expected, raising questions about the effectiveness of the new investments for fighting climate change. 

The Cboe Canada exchange has become the "most public venue" in North America for companies selling voluntary carbon offsets to list their shares and raise capital, a senior executive said.

"I have not seen any other exchanges pushing that agenda [of voluntary carbon offsets] the same way we have," Erik Sloane, chief revenue officer for the Cboe Canada exchange, said in an interview. "We are certainly the most public and transparent about it at this stage."

The exchange lists the shares of about half a dozen voluntary carbon offset trading firms, said Sloane, who expects that "could easily double" in the next 18 months, as investor interest in the emerging sector grows. 

While more companies trading in paper representing carbon emissions are setting up in Toronto, many environmentalists aren't convinced the buying and selling of voluntary offsets will do much to reduce climate change. Some say growth in the sector could actually make the problem worse.

"For companies [buying voluntary offsets] it appears they are doing something environmentally worthwhile but there is this risk of greenwashing," said Stefan Pauer, a former European Commission official whose work included tracking the impacts of voluntary offsets. He concluded they did little to help the planet. 

"Using offsets is likely detrimental for reducing climate change, as they help prevent meaningful government action," Pauer, who now works for the think-tank Clean Energy Canada, said in an interview. 

Businesses investing in voluntary carbon offsets say the tool is one of many for combating climate change, and putting a price on pollution can help address the problem while funnelling more money to conservation projects. 

Regardless of their impact, interest in voluntary offsets is increasing as firms sell complex new financial instruments amid the climate crisis.

Morgan Stanley, an investment bank, expects the global market for voluntary carbon offsets will surge from $2 billion US in 2020 to more than $250 billion US by 2050. 

The Wall Street Journal newspaper called the wave of carbon offset companies listing in Toronto a "new Canadian gold rush."

Voluntary carbon offsets are supposed to represent emissions of climate changing carbon dioxide that have been removed from the atmosphere by projects such as planting trees, preserving rainforests or switching to more environmentally friendly cooking methods. 

Companies or individuals can purchase these voluntary offsets to compensate for their own pollution. For instance, if someone wants to make up for the climate changing carbon dioxide released by flying to Europe, they can buy voluntary offsets.

The same is true for large corporations looking to burnish their green credentials; big energy, technology and consumer products firms often buy the offsets to highlight in their sustainability reports, Justin Cochrane, the founder and CEO of Toronto-listed Carbon Streaming Corporation, said in an interview.