Who is a trustworthy carbon offset buyer?

Carbon offsets are becoming increasingly sought after on a voluntary basis by companies seeking to implement their sustainability pledges and individuals wanting to reduce their carbon footprints.[1], [2] In reforestation, carbon offsets are verified certificates issued for the sequestration of greenhouse gases achieved by planting or regenerating trees and forests. These can be sold to offset the greenhouse gas emissions of individuals or companies. This can therefore potentially put an economic value on the reforestation efforts of rural communities.

In the cacophony of voices speaking about carbon markets, those of rural and agricultural communities, particularly in the global South, risk being left out. Carbon markets and verified offsets may present an important additional revenue stream for smallholder farming communities.

However, even if communities can be part of this global market for offsets, it is hard for them to know who they are selling to. A number of questions arise: Is the buyer selling the community-generated offsets at a huge profit? Are offsets used to support greenwashing by environmentally destructive companies? How can communities assess whether the terms they are being offered are good deals?

Currently, it can be hard or impossible to tell. An investigation[3] by Unearthed found that some brokers are making large and unfair margins at the expense of local communities. Investigative journalists[4] and researchers[5] (including here at ITF)[6] have raised related concerns about the impacts of carbon markets on livelihoods and human rights, and ultimately on climate change.

These and other questions were discussed in a workshop held by the International Tree Foundation on the 5th of October when representatives from a number of organisations came together to explore the question: How can those involved in community reforestation know who are trustworthy carbon offset buyers?

During the workshop we heard that while rigour on the supply of carbon credits has improved, more work is needed to improve the transparency of those who are buying carbon offsets, particularly the middlemen. If communities choose to sell carbon credits, they need a fair deal from companies that they can trust. Some of the points raised included:

1.  Using land to generate globally tradeable carbon offsets is similar to using land to grow a cash crop – there are inherent risks of exploitation from large global companies for both.

2. Buyers/investors should act like partners, providing more than just payments. This would help communities access carbon markets on better terms.

3. More work is needed to maximise the proportion of revenues that go back to local communities, especially when intermediaries like brokers and retailers are involved in the process.

4. Closing information gaps remains essential but challenging. Too often, project developers can’t know if they are getting the best deal. Project developers in the Blue Carbon sector have shown it is possible to set out certain requirements from buyers.

5. The experience of Taking Root and others shows that forging trust-based relationships with vetted buyers is possible, and moreover that it can lower the transaction costs of navigating carbon markets in a way that is both beneficial for communities and ethically sound.

6. If actors on the supply-side work together they may have some leverage with buyers. They should define what a ‘good’ buyer looks like, and work towards higher standards for buyers.

With increasing demand for carbon credits, there is an urgency to turn the spotlight onto buyers and investors. Our hope is that by working together we can raise the bar in terms of accountability and transparency of carbon buyers to promote a more ethical carbon sector and one that minimises the potential harms and maximises the benefits for smallholder farming communities.

For more information or to be involved, please contact Antoine Vandenborre

[1] C. Blaufelder, C. Levy, P. Mannion, D. Pinner, A Blueprint for Scaling Voluntary Carbon Markets to Meet the Climate Challenge, McKinsey, 2021.

[2] C. Streck, How voluntary carbon markets can drive climate ambition. Journal of Energy & Natural Resources Law, 2021, 39(3):367-74.

[3] How middlemen carbon brokers take a cut from money meant to help offset emissions, Unearthed, May 2022.

[4] Carbon offsets used by major airlines based on flawed system, The Guardian, May 2022.

[5] Call for a more sustainable carbon market; Compensate, 2021.

[6] A. Vandenborre, Navigating the Risks of Voluntary Carbon Markets for Community-led Forest Restoration, International Tree Foundation, 2022. Available on request