Anew Ventures II, LLC v. Terra Global Investment Management, LLC

An investor in a pooled fund to generate carbon credits alleged that the defendants, who operated the pool, “had cultivated a reputation as a leading adviser and developer of nature-based carbon projects across the global south,” and had pitched the pool in 2022 as “a vehicle to ‘buy into’ its advanced pipeline of dozens of prospective carbon credit projects, including at least half a dozen projects that credibly stood to generate credits shortly following an investment.” The investor alleged that the majority of the projects in the pipeline were REDD+ forestry projects across South America, Africa, and Southeast Asia. The investor further alleged that in early 2023 “media exposés and studies” revealed that many carbon credit projects, and especially REDD+ projects similar to those in the pool’s pipeline, “over-credited emissions reductions or failed to deliver meaningful climate benefits,” leading to “large-scale retroactive cancellations” of Verified Emission Reduction and/or Removal Units (VERR Units) associated with the projects. The investor alleged that the voluntary carbon market had corrected and shifted so that consumer demand was now concentrated not on “traditional” REDD+ VERR Units from projects such as those pursued by the defendants to “high-integrity, more measurable, removal-based, and co-benefit-rich VERR Units that are backed by state-of-the-art verification technology.” The investor contended that “the pool has failed,” alleging that it “has not generated even one carbon credit, and is far from doing so,” “has purported to enter only one project, and the pipeline is in shambles.” The investor asserted that the defendants failed to act as a “reasonable and prudent operator” as required by the agreement and were in material breach of their duties, justifying the investor’s termination of the agreement. The investor filed its lawsuit in Delaware Superior Court after the defendants rejected the termination and asserted their entitlement to cure and demanded payment of $30 million. The investor sought a declaratory judgment that its termination of the agreement was effective and that it had no further obligations and that the defendants breached the agreement and owed damages to the investor. The operators moved to dismiss the Superior Court action on May 20, 2025, asserting that an arbitration clause covered the investor’s claims, and then <a href="https://climatecasechart.com/case/anew-ventures-ii-llc-v-terra-global-investment-management-llc/">sought</a> emergency arbitration on July 3, 2025 while the motion to dismiss was pending.