The Public Defender’s Office of the State of Pará (DPE-PA) initiated a lawsuit in July 2023 against Floyd Promoção e Representação LTDA and other corporate and individual defendants, challenging the legality of Project 981, a carbon credit project certified internationally that generates REDD+ credits through avoided deforestation, sustainable forest management, and increased carbon stocks.

The litigation alleges that the lands designated for Project 981 are public extractivist settlement lands (known as PEAEX) whose possession was legally granted to local traditional communities in the municipality of Portel, Pará. Yet these communities are alleged not to have participated in or consented to the project’s development. The lawsuit claims the project was implemented without state authorisation, prior technical studies, and community consultation, which are required by Brazilian environmental, land rights, and climate legislation.

Alleged governance failures and potential irregularities

The case centres on several alleged governance failures that are said to have facilitated the establishment of Project 981. These include:

• Land grabbing and improper land claims: The defendants allegedly misrepresented land ownership and irregularly registered public lands as part of the project, effectively seizing territory without legal basis or authorization. This practice of appropriating land for projects designed to generate carbon credits has become known as forest carbon grabbing or green land grabbing.

• Lack of state permission: According to the complaint, Project 981 proceeded without formal authorisation from the Government of Pará, indicating possible regulatory oversight failures.

• Absence of community consent: The Public Defender’s Office claims that the project ignored the rights of traditional communities to prior, free, and informed consultation regarding land use affecting their territory - a right protected under Brazilian law and international conventions.

• Certification despite issues: Although certified by an international certification body to issue carbon credits, the project’s fundamental legal and land tenure flaws raise questions and may suggest significant gaps in certification and market due diligence.

These actions mirror broader concerns about governance in carbon markets, where inadequate verification, weak oversight, and market incentives can create opportunities for exploitation and illegal credit generation.

Impact on climate governance and communities

The allegations, if proven, could have significant social and environmental impacts including violations of community rights, particularly that traditional extractivist communities were effectively excluded from decisions and benefits related to projects on their own lands. This creates risks for climate integrity, since carbon credits lacking proper legal authorisation could compromise the credibility of the voluntary carbon market, including the environmental validity of claimed emissions reductions. It could also lead to financial and ethical harm. Crediting climate mitigation outcomes without proper legal grounding can redirect funds from legitimate climate action and harm vulnerable populations whose rights are violated.

Legal accountability and next steps

As of the latest available updates, the lawsuit remains pending in the Pará State Court. The plaintiff seeks recognition of traditional community land rights, suspension and annulment of Project 981, declaration that related decrees are void, orders preventing defendants from entering the lands and compensation (R$ 5,000,000) for collective moral and environmental harm to be allocated to the Eastern Amazon Fund to support socio-environmental initiatives, biodiversity conservation, and land-use planning benefiting traditional communities in the region.

Defendants have filed defenses, contested allegations of land grabbing, and challenged the lawsuit on procedural grounds.

This case illustrates how governance gaps in climate finance and carbon markets may allow actors to pursue projects that lack legal grounding, community consent, and proper oversight, raising concerns about transparency and accountability in climate instruments like carbon credits.

Similar lawsuits filed by the DPE-PA against other alleged illegal carbon credit projects in Pará (e.g., Project 2252, Project 997, Project 2620) may suggest broader systemic issues beyond a single dispute.