x Abu Dhabi, UAEThursday 27 July 2017

Green scheme that's often a red herring

Nigel Green, the chief executive of the deVere Group, a financial services firm based in the United Kingdom, has joined a chorus of experts warning investors about the potential risks involved in carbon credits.

Many carbon-credit cold-callers use high-pressure tactics to sell the complex commodity and are now targeting expats in the UAE. Reuters
Many carbon-credit cold-callers use high-pressure tactics to sell the complex commodity and are now targeting expats in the UAE. Reuters

Nigel Green, the chief executive of the deVere Group, a financial services firm based in the United Kingdom, has joined a chorus of experts warning investors about the potential risks involved in carbon credits.

Mr Green says carbon-credit cold-callers, many of them using high-pressure tactics to sell the complex commodity, are now targeting expats in the UAE - and not all of them are genuine.

What are carbon credits?

A carbon credit is a certificate given to companies allowing them the right to emit 1 tonne of carbon dioxide and they can be sold and traded legitimately. They have been viewed as a "growing trend" due to the pressures big companies are under to reduce their carbon footprints.

How do you invest in them?

Most providers sell through the internet. Investors are then encouraged to trade them in the international markets.

What is a scam carbon-credit investment?

It has been discovered some of these certificates are bought by fraudsters and on occasions have been known to be fabricated. They are then sold on at a highly fabricated or inflated price. While there are reputable firms operating in this sector, there are serious and growing concerns that these 'hard to fathom' carbon credits are also being sold by scammers to vulnerable and inexperienced investors, using dubious high-pressure sales techniques. Such firms are approaching these investors and flagging up the supposed "green" and trendy credentials but are playing down, or more often than not, completely 'forgetting' to mention the significant risks for unskilled investors with a small amount of carbon credits.

How do the cold-callers entice investors?

We've become aware people are being cold-called, mailed or emailed out of the blue by firms and individuals inviting them to buy carbon credits. We're also aware people are targeted at exhibitions and seminars and via social-networking sites. The clients who have contacted our advisers to seek a professional opinion tell us they have been told by the scammers of the 'great investment potential' of such an eco-friendly commodity. They're informed of the green targets multinationals, governments and public bodies are being encouraged, if not forced, to reach and they, as investors in carbon credits, could see a 20 per cent return within a year. These consumers are informed this is just the tip of the iceberg in terms of investment as the trend looks set to soar in the years to come.

Why are they targeting the UAE?

While there are still many companies operating this false market in the UK, many have also moved on and are targeting people, particularly expats, in Dubai, Abu Dhabi and Hong Kong. The expat community is being targeted - as it has a large number of high net-worth individuals who are actively looking for investments that could provide a good return. I would urge people to remember Warren Buffett's famous line: 'If it's too good to be true, it usually is.' We believe carbon credits should be avoided as they are not a great potential investment and should only be traded by people who thoroughly understand the market.

What should people do if they receive these calls?

As with any kind of complex trading, people should seek advice from an experienced independent financial adviser before investing. If you feel you've already been conned, you should immediately stop sending money to the company or individuals involved. Similarly, if you've given them your bank account details, tell your bank to cease payments with immediate effect.

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