How 80 NGOs are jeopardising global climate progress

In a recent Bloomberg article, “Market for Carbon Credits Faces Fresh Blow as Offsets Slammed,” we saw a coalition of over 80 nonprofits belittle the use of carbon offsets, arguing that they undermine genuine net-zero actions and delay the necessary reduction of greenhouse gas emissions. As a leading player in the voluntary carbon market (VCM), we at ClimateTrade would like to challenge this one-sided portrayal and the sweeping criticisms we have to face constantly, as it levies against a system designed to support climate action.

The voluntary carbon market is, as its name suggests, voluntary. It exists for companies that want to go beyond regulatory requirements to mitigate their environmental impact. The market provides a mechanism for these companies to invest in projects that reduce or remove carbon from the atmosphere, particularly in areas where direct emission reductions are not feasible. To dismiss the entire system as counterproductive ignores the significant positive impact it has had and continues to have.

We are tired of the critics, and the industry as a whole shares this sentiment. The VCM is continually evolving to offer better transparency, accountability, and environmental outcomes. While it is true that not all projects have been perfect, the majority of companies participating in the VCM are genuinely committed to reducing their carbon footprint and generate a positive impact. It is unfair and counterproductive to paint the entire market with the same brush due to the actions of a few outliers.

The VCM is a catalyst for change in a world of slow policy

We know by now that nature restoration is crucial, and while government initiatives such as the recently announced Nature Restoration Law are steps in the right direction, they are often insufficient and slow to materialise. Private sector funding through the VCM is vital for the timely and effective care and restoration of our natural world. Additionally, on top of avoiding and reducing emissions, the VCM generates employment and sustainable growth in communities, contributing to other Sustainable Development Goals (SDGs). Without the VCM, many environmental projects that rely on these funds would struggle to get off the ground. The concept of additionality is also fundamental here, some of these projects would simply not exist without the funding provided by the issuance and sale of carbon credits.?

The constant media scrutiny and criticism are creating a culture of caution among companies. This was recently highlighted by a Lloyds Bank report on credible transitions to net zero. Executives fear the reputational backlash from potential greenwashing accusations, which hinders ambitious climate targets. (53% citing the need to be realistic and 43% fearing reputational backlash from greenwashing scandals.) This cautious approach is a consequence of the relentless negative spotlight on the VCM, deterring companies from making bold commitments to sustainability.

Building trust and transparency within the VCM?

Leading frameworks and organisations like the Science Based Targets initiative (SBTi), the Integrity Council for the Voluntary Carbon Market (ICVCM), and the Voluntary Carbon Markets Integrity Initiative (VCMI) are raising the bar for the VCM. Their focus is on ensuring effective carbon credit utilisation and verifiable environmental impact from projects. Sharing their commitment to transparency and accountability, ClimateTrade leverages blockchain technology. Every transaction on our platform is traceable and verifiable, helping to build trust in the projects we support. To further strengthen transparency and prevent mis-selling of carbon credits, ClimateTrade is also actively integrating directly with registries.?

What’s better, a world without the carbon market??

Let's imagine for a moment a world without a carbon market. Without the option to purchase carbon credits, companies would likely continue to claim they are supporting the environment through vague promises and superficial actions, much like what was historically done. This scenario would mark a return to the very foundations of greenwashing, where businesses could make unsubstantiated claims about their environmental efforts without any tangible proof or accountability. In this context, how can a market that strives to add integrity and transparency to a universal problem be subjected to such intense media scrutiny? Moreover, the VCM is currently the only mechanism that actively absorbs existing emissions, addressing the urgent need to tackle the massive amounts of carbon already in the atmosphere. Would the absence of the VCM lead to greater environmental responsibility, or would it simply allow businesses to revert to unchecked polluting practices under the guise of empty promises??

A very important point here is that those who are taking action in terms of decarbonization, the ones with Science-Based Targets (SBTs) validated by the "gold standard" in corporate climate targets, are just a drop in the ocean. Eight thousand companies are nothing in comparison to the millions of large to very large companies globally, and even those setting SBTs validated by the Science Based Targets initiative (SBTi) can't guarantee they will achieve them. As we have seen, major banks and financial institutions have withdrawn from the SBTi-Financial Institutions (SBTi-FI) and are trying to figure out a new model within the Net-Zero Banking Alliance (NZBA), very few of those large companies with SBTs are on track to actually meet them. Likewise, and talking about the SBTi's own Net Zero Standard, it is impossible to get and stay at net zero without the use of the VCM. This reality stands behind the importance of the VCM and the role it plays in supporting genuine climate action and maintaining progress toward global decarbonization goals.

Dismantling the VCM would cripple our chances of closing the 1.5°C gap

The VCM is not the sole solution to climate change, but it is a viable and necessary part of the broader strategy to mitigate global emissions. Critics must recognize the value it provides and engage constructively to help improve it, rather than seeking to dismantle it entirely. They must seriously consider the impact their words are having on real climate action. Critics are often found in wealthy countries with significant funding and targeting the wrong adversaries, criticising companies that are at the forefront of combating the climate and biodiversity crises, instead of directing their efforts towards those who are inactive and silent.

What they are doing jeopardises the funding required for the urgent action we need—funds crucial for most NGOs in the Global South, indigenous communities, small farmers, ranchers, landowner communities, and local or national authorities in areas where critical virgin ecosystems must urgently be protected, as they desperately depend on this support.

Dismantling the VCM would create a significant gap in our efforts. So let's shift the conversation. Instead of focusing solely on critique, let's work together to strengthen the VCM, promoting transparency and ensuring real environmental impact.? At ClimateTrade, we're committed to doing just that. The VCM is currently our best option according to the science underpinning the Paris Agreement and the UN Climate Change IPCC our sole hope if we are to limit warming to 1.5 degrees Celsius and achieve net zero emissions by 2050. We must find a way to overcome these obstacles and work together to avoid catastrophic consequences altogether.?