Romain Pison, CEO of NoviCarbon – an entrepreneur and decarbonization expert known for his work in ESG and green infrastructure.
The voluntary carbon market (VCM) has grown into a cornerstone of global climate action, channeling billions of dollars into projects that reduce or remove greenhouse gas emissions. Yet, as its significance has expanded, so have doubts about its reliability. Criticisms of greenwashing, concerns about low-quality carbon credits and a lack of transparency threaten to undermine its potential.
For the VCM to play a credible role in decarbonization for corporates and businesses, trust must be its foundation. Drawing on my experience in sustainable infrastructure, decarbonization strategies and ESG leadership, I’ll be highlighting key challenges facing the VCM and how businesses and corporations can take practical measures to invest in the VCM and the future of their companies.
The Stakes: Why Trust In The VCM Matters
At its best, the VCM enables corporations to offset unavoidable emissions while supporting critical projects like reforestation, renewable energy deployment and biodiversity conservation.
However, the market’s rapid growth has brought scrutiny. Some companies use carbon credits as a license to continue unsustainable practices, undermining genuine efforts to reduce emissions. Additionally, not all carbon credits represent tangible, verifiable benefits. Weak methodologies and inadequate oversight have allowed questionable credits to persist. And stakeholders often struggle to trace how their investments translate into measurable environmental outcomes.
The result is a market caught in a tug-of-war between its promise and its pitfalls, and businesses are often left with more questions and concerns than clear answers and solutions. For the VCM to scale as a credible decarbonization mechanism, I believe that we must actively build trust through transparency, accountability and demonstrated impact.
Building Trust: Three Pillars Of A Credible Carbon Market
1. Adopt rigorous standards.
Standards like the Core Carbon Principles (CCPs) provide a foundation for credibility by emphasizing key attributes such as:
• Additionality: Ensuring projects would not occur without carbon credit funding.
• Third-Party Verification: Relying on independent assessments to validate impact.
For instance, the Gold Standard and Verra frameworks require projects to meet stringent criteria. Yet inconsistent adoption of these principles can undermine market confidence. Companies can take actionable steps by prioritizing carbon credits certified by recognized, high-quality standards; incorporating third-party verification into their procurement processes to ensure reliability; and regularly auditing their carbon credit portfolios to align with evolving benchmarks.
From my experience managing infrastructure portfolios across 40+ markets at the World Bank, I’ve seen that governance frameworks are more than technical necessities—they are trust-building tools. When businesses integrate robust standards into their operations, they can not only mitigate risk but also inspire confidence among stakeholders.
2. Leverage technology for transparency.
Emerging technologies can revolutionize how the VCM operates. For instance, by creating an immutable ledger, blockchain can help ensure that every transaction, from issuance to retirement, is traceable. Buyers can confirm that credits are unique and effective. AI monitoring is another technology to consider, as machine-learning algorithms can analyze real-time data from carbon projects, identifying inconsistencies or underperformance early.
Organizations like Toucan and KlimaDAO are already leveraging blockchain to track the lifecycle of carbon credits. A 2023 report by the World Economic Forum highlights how blockchain solutions are improving transparency in carbon markets. Business leaders can support these innovations by:
• Investing in and using platforms that integrate blockchain for real-time credit tracking.
• Partnering with technology providers to develop custom solutions that enhance project monitoring.
• Advocating for industry-wide adoption of transparent digital tools to set a new standard for accountability.
3. Foster multi-stakeholder collaboration.
The VCM does not exist in isolation; it intersects with corporations, governments, investors and NGOs. Corporations can help facilitate effective collaboration by embedding voluntary offsets within their broader emissions reduction strategies rather than using them as substitutes for meaningful change. Here are a few ways you can amplify impact:
• Align offsets with broader strategies. Carbon credits should complement emissions reduction efforts, not replace them. Integrating offsets into comprehensive ESG frameworks can help you ensure meaningful decarbonization.
• Engage in collaborative initiatives. For example, programs like the LEAF Coalition mobilize corporate funding for large-scale conservation projects. A Reuters report highlighted LEAF’s success in protecting millions of acres of tropical forests, showcasing the power of collective action.
• Demonstrating climate leadership. Microsoft has committed to becoming carbon negative by 2030, pairing high-quality carbon credits with deep operational emissions cuts. This approach sets a benchmark for others in the market.
• Leverage innovative financing. Mechanisms like green bonds and performance-linked loans are unlocking new capital for carbon projects. In emerging markets, where traditional funding is scarce, these instruments could provide scalable solutions for financing high-impact initiatives.
The Path Forward: A Call To Action
The voluntary carbon market stands at a critical juncture. I believe that now is the time for business leaders to act decisively and shape the future of their companies. Here are a few steps you can take to help build a sustainable and trustworthy VCM:
• Adopt Standards: Ensure your company’s carbon credit investments meet rigorous benchmarks like the Core Carbon Principles.
• Leverage Technology: Integrate blockchain and AI tools to enhance transparency and accountability across your operations.
• Collaborate: Partner with governments, NGOs, and other corporations to align offsets with comprehensive climate strategies.
As someone deeply committed to advancing sustainable infrastructure and combating climate change, I believe the VCM, through the businesses that are carbon credit buyers, must evolve beyond a transactional marketplace. It should become a collaborative ecosystem—one where financial investments from businesses translate into measurable, lasting climate benefits for our ecosystems and our economies.
