How Do We Rebuild Trust in the Voluntary Carbon Market?

Having recently worked with one of the biggest agribusinesses looking to leverage the agricultural carbon credit market, we’ve been looking into issues of transparency, credibility, and reform in the Voluntary Carbon Market (VCM).

The situation was starkly brought to the fore in June of this year, a group of leading scientists issued a stark ultimatum to the carbon credit industry: reform or go out of business. This call for change comes in the wake of a tumultuous year for the VCM, marked by several high-profile scandals. Among these was the revelation that over 90% of rainforest carbon offsets certified by the world’s largest certifier, Verra, were deemed ineffective and could potentially exacerbate global warming.

Such exposés create a daunting environment for companies worldwide striving to meet their net-zero targets balanced against reputational risks and potential accusations of ‘greenwashing’ and ‘climate washing’.

The VCM holds substantial promise for financing a sustainable transformation across key sectors – including energy and agriculture – and delivering socio-economic benefits to local communities. Implemented correctly, carbon credit projects spanning reforestation, regenerative agriculture, and peatland restoration, can drive significant positive change in communities worldwide – not just removing carbon from the atmosphere; but also enhancing air and water quality, providing wildlife habitats, and improving the livelihoods of landowners.

These nature-based climate solutions are essential to mitigating climate change. The World Economic Forum estimates such approaches could contribute up to one-third of the emissions reductions necessary to meet the Paris Agreement goals. Yet the promise of these projects is undermined by significant challenges related to trust, transparency, and permanency.

The carbon offsetting industry faces a critical juncture. Scientists have underscored the urgent need for reform to avoid obsolescence. High-profile setbacks, including ineffective REDD+ projects and misrepresented carbon capture figures, have severely eroded confidence in the market. Some actors have exploited loopholes and manipulated the market, sometimes causing harm to the environment and communities reliant on it - undermining trust and resulting in underutilization of this valuable tool.

Despite these challenges, there is hope. According to a Berkeley Study, 70% of nature-based carbon credits generated by the four major registries have come from the four solutions with the highest scientific confidence, suggesting that investment is now flowing into projects with solid foundations. The focus now should be on refining project implementation and restoring trust. Transparency and rigorous standards are essential to rebuilding credibility.

Recent efforts to address these issues, strengthen credibility, and boost participation in the carbon credits market are encouraging. The Voluntary Carbon Markets Integrity Initiative (VCMI) has introduced new guidelines to ensure high-integrity pathways for carbon credit transactions, emphasising rigorous measurement, reporting, and verification to prevent greenwashing and guarantee genuine climate impact. More robust regulatory measures are also on the horizon. The U.S. Commodity Futures Trading Commission has proposed standardising carbon credit derivatives to enhance transparency and integrity. Similarly, the Biden administration’s Voluntary Carbon Markets Joint Policy Statement outlines principles for improved measurement and accountability.

Technology is playing a pivotal role in this transformation. Earth observation platforms utilising satellite imagery and machine learning are revolutionising how we monitor and verify carbon sequestration. These technologies provide real-time, accurate data on forest conservation and carbon removal, addressing many concerns about the efficacy of carbon credits.

At SFA, our collaboration with the aforementioned ag-tech provider on an agricultural carbon credit programme demonstrated the value of leveraging communication to bridge the gap between complex scientific concepts and public understanding, thereby fostering transparency and accountability. Through sharing scientific case studies, farmer testimonies, producing an impact report supported by reliable data, and engaging with stakeholders, we were able to educate audiences worldwide on the potential of regenerative agricultural projects and support the expansion of this climate-positive solution.

The VCM is essential for boosting our climate mitigation efforts, yet a lack of confidence is limiting its potential to benefit the planet. Trust is not built overnight; it is a gradual process that demands ongoing commitment. Restoring credibility in the VCM hinges on several key factors: adhering to rigorous scientific standards, enhancing transparency, ensuring clear and compelling communication, and implementing effective regulation. By embracing these approaches, the VCM move on from its checkered past, gain stronger support from both corporations and the public, and emerge as a more dependable and impactful tool for achieving global climate goals.

?

?

?

?

?