A new report by Carbon Market Watch has raised concerns over a lack of transparency and accountability within the unregulated voluntary carbon market caused by the unavailability of important project documents from the four biggest carbon crediting standards.
Our investigation covered Voluntary Carbon Standard (VCS), Gold Standard (GS), American Carbon Registry (ACR) and Climate Action Reserve (CAR). The research puzzled through project design documents, validation reports, monitoring reports and verification reports of 140 projects discovering significant shortcomings. Across the full sample, a total of 444 project documents were missing.
These project documents are detailed records that explain the ins and outs of projects containing virtually all information regarding a project’s climate, environmental and social impact. Around 340 of those are monitoring reports which CAR does not require to be made publicly available, and ACR has only required their availability for reporting periods since July, 1st 2023 (which applies to none of the projects in the research sample). The remaining 100 are documents which are supposed to be available as per the programme’s rules, but in reality are not. Their absence generates doubt over the reliability and integrity of a project’s carbon credits, potentially leading to a decline in trust and confidence in the market.
Lost in the maze
The report attributes the shortcomings to two main reasons: some standards do not make it a requirement for all key documents to be publicly available on their registry; and in other cases, standards fail to effectively implement their existing rules with some performing worse than others.
More specifically across the full sample, 7.9% of projects lacked a publicly available project design document, 14.3% were without a validation report and 14% were missing at least one verification report. Furthermore, the report also discovered that numerous documents were incorrectly labelled, duplicated, or placed in the wrong category (e.g. a monitoring report labelled as a validation report).
When key documentation is missing from registries it creates uncertainty about the legitimacy of emission reductions or removals claimed by a project. This uncertainty leaves external reviewers and stakeholders such as investors, intermediaries and buyers questioning the accuracy and credibility of carbon credits, and possibly hindering the transfer of finance to projects in need of funding.
Rating agencies, the organisations that assess and rate the quality of carbon credits, pointed out similar inconsistencies and limitations as those identified in our report. They do however acknowledge that standards are making efforts to address the issues raised, signalling a commitment to improvement.
Raising standards
Rectifying these shortcomings is fundamental if standards are going to meet the transparency criteria set out by the Integrity Council for the Voluntary Carbon Market (ICVCM), standards should mandate the public availability of all project documentation.
Maintaining up-to-date information, establishing clearer communication channels, strengthening quality assurance and control processes, defining consistent naming conventions, and conducting regular audits of project document listing pages are steps that should be taken to raise (standards of the) standards.
