From the EMA President: Ethics Are Every Emissions Trader’s Business

The events of the past year may lead some to believe that ethics are a thing of the past. After all, the news has been full of items including the accounting scandals at Enron and WorldCom; the insider trading allegations for Martha Stewart; the conflicted stock analysis and recommendations of Frank Quattrone; and the false price reporting to price indices. Even the emissions trading field has not been untouched, as allegations of commercial fraud come to light in California’s RECLAIM market. It seems a week doesn’t go by without the Wall Street Journal carrying news of another indictment on its front page.

Yet, as we note the passage of the one year anniversary of the Sarbanes-Oxley Act of 2002 which mandated stricter Board oversight and financial reporting controls for firms, there are two observations I would like to make as EMA President: Executive accountability exists in the emissions field and EMA has a strong policy statement of ethics applicable to all members.

Examining the first item in more detail, it is important to note that since the inception of the US Acid Rain Program in 1990, a Designated Representative, usually an officer of a company, has been certifying “under penalty of law” that they have “personally examined” and “that the statements and information are to the best of [their] knowledge and belief true, accurate, and complete.” They made this certification knowing that the penalty for noncompliance could include “the possibility of fine or imprisonment.” So while Congress is to be commended for protecting investors with the passage of Sarbanes-Oxley Act, in reality they have simply afforded investors similar protections that have been applied to the nation’s environment for more than a decade. The certifications under the Acid Rain Program pertain not only to raw data for air emissions, but also cover the ownership and transfer of allowances in the emissions markets.

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