The Voluntary Carbon Markets are growing at a rapid pace as increasingly more companies look to reduce emissions practices. With a host of voluntary carbon offset credit options and a huge variety of market participants, buying into the markets can be confusing for companies wanting to account for their scoped emissions. Several entities are working to create guidelines for the VCMs as growth accelerates.
MSCI recently stated that the global carbon markets, both compliance and voluntary, are worth a collective $270 billion. The Oil Price Information Service (OPIS), a Dow Jones Company, reported that the VCM’s value as of November 2021 was around $1 billion, with expectations of growing into a $30 billion industry over time.
VCMs have been more complex to invest in as they are markets that are unregulated and have a range of buyers, including governments, corporations, and individuals, all seeking to buy offsets generated from carbon emissions reduction projects (reforestation is a prime example). This can include carbon capture and storage technologies. Offsets are generally verified by independent parties utilizing private standards, and because VCMs are project-based instead of a cap-and-trade system, there is no limit to the allowances they can provide.
“Voluntary carbon markets are growing rapidly and have the potential to accelerate climate action. But businesses, investors, governments, and the public are clamoring for clarity,” the Voluntary Carbon Markets Integrity Initiative wrote in their update on the guidelines they have created for VCMs.
Because of increasing interest by companies and firms, several agencies are working to establish guidelines for companies in best practices when purchasing voluntary carbon credits. The Voluntary Carbon Markets Integrity Initiative has created a Claims Code of Practice that is geared toward helping companies be transparent about their carbon offsets and ensure they align with their business goals of reaching net zero.
The code that VCMI is working on is currently on a practice run through the autumn of this year as companies apply the most recent draft to their practices and give feedback. It was developed through consultation with stakeholders from the public and private sector, governments, Indigenous People’s groups, businesses, and more, with 52