Carbon credit integrity
Growing doubt over the real emissions reductions sold as voluntary carbon credits, after revelations that most credits from some forestry projects reduced nothing at all.
January 2023, The Guardian, Die Zeit and SourceMaterial: across the forestry projects examined, more than 90 percent of the avoided-deforestation credits certified by Verra, the leading certifier on the voluntary market, likely corresponded to no real reduction at all. The flaw lay in the baseline, the deforestation that would have happened without the project, which the methodologies overstated. A voluntary credit lets a company offset part of its emissions by funding a project meant to avoid or sequester them elsewhere; if the reference scenario is inflated, the credit is worthless. Several companies, insurers among them, had publicized carbon neutrality resting partly on these credits, and within weeks the marketing line turned into a clear greenwashing exposure. The sector answered with the Integrity Council for the Voluntary Carbon Market, which published its Core Carbon Principles in 2023 to separate high-quality credits from the rest. Since then, an insurer citing credits in its climate communications documents their traceability and verification far more tightly than before, and the D&O underwriter of an issuer looks closely at what its annual report says about neutrality.
In January 2023, an investigation by The Guardian, Die Zeit and SourceMaterial found that more than 90 percent of the avoided-deforestation credits Verra had certified for the forestry projects examined likely corresponded to no real emissions reduction at all. Confidence in the voluntary carbon market took the hit.
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