Transparency International US: Conflicts of interest in carbon markets are “pervasive”

“It’s as if the students are designing their own assignments and grading their own papers.”

A recent report by Transparency International US takes a careful look at the conflicts of interest in carbon markets. The report finds that,

In the absence of strong, independent decision-making and meaningful public oversight, carbon markets have developed in ways that consistently fail to deliver tangible, additional, or permanent emissions reductions.

The report is titled, “Offsetting Accountability: Conflicted Governance in the Voluntary Carbon Market” and can be downloaded here. Stefanie Ostfeld is the lead author of the report.

Carbon markets have allowed corporations, particularly in the extractive sector, “to signal climate ambition without altering their core business models”.

The report notes that attempts to address the failures of carbon trading, such as the Integrity Council for the Voluntary Carbon Market” are heavily influenced by conflicted actors as well as the oil and gas industry. Big Polluters have a vested interest in maintaining carbon trading in order to avoid carrying out the structural changes that are urgently necessary to address the climate crisis.

The report states that,

At its core, the VCM suffers from deep structural conflicts of interest. Credit issuers, auditors, and project developers all rely on one another for revenue. This financial interdependence creates strong incentives to prioritize the volume of credits over their environmental integrity.

The report specifically focuses on Washington DC-based carbon certification company Verra. The report finds that conflicts of interest “incentivize inflation of offset estimates” and “the process for selecting project auditors increases the risk of compromising their independence”.

In a press release about the report, Gary Kalman, Executive Director of Transparency International US, comments that,

“Some of the project developers, seeking maximum value for their work, also sit on the Boards of Directors of the standard setters. It’s as if the students are designing their own assignments and grading their own papers.”

Carbon markets “now appear to serve more as unregulated platforms for performative carbon trading than science-based and accountable mechanisms for reducing carbon”, the report states.

Verra

Verra’s Verified Carbon Standard accounts for the majority of carbon credits issued globally. Verra was set up in 2007 by the International Emissions Trading Association, the World Economic Forum, the World Business Council for Sustainable Development, and the Climate Group.

All of these group “had strong ties to entities in high-emitting sectors”, Transparency International US notes.

Understanding Verra’s industry-driven origins is key to understanding how it operates today. It reflects a broader trend: in the absence of government coordination, the private sector may step in to create frameworks that align with its own interests.

The vast majority of Verra’s revenue comes from a commission charged on every carbon credit issued. “This creates a clear financial incentive to approve more credits,” Transparency International US points out.

Project developers hire and pay auditors to verify compliance with Verra’s standards. The auditors are accredited by Verra and pay registration fees. Another layer of financial dependency.

Verra’s Board of Directors and advisory committees include representatives from project developers, buyers of carbon credits, and other carbon traders. In 2024, for example, a representative of Volkswagen was on the VCS Program Advisory Group. Volkswagen is the seventh largest buyer of carbon credits.

Transparency International US notes that,

This overlap introduces an institutional bias toward decisions that sustain credit issuance volumes and market growth, even when questions about offset integrity persist. It also undermines public trust in the market’s ability to serve as a neutral gatekeeper for climate claims.

Transparency International US describes Verra’s methodologies as “a race to the bottom”. But an even bigger problem is the way the methodologies are implemented. A 2023 study found that,

The worst instances of over-crediting and poor safeguarding from VCS REDD+ projects registered under previous methodologies were not from the written requirements themselves but from their poor implementation by developers and poor verification by auditors in practice.

The report includes examples of some of the worst Verra projects, including the following three:

• The Kariba REDD project in Zimbabwe massively overestimated the number of carbon credits the project could generate. Eventually, in September 2025, Verra acknowledged that it had issued more than 15 million fake carbon credits to the Kariba project. And Verra has no meaningful mechanism to claw these carbon credits back.

• C-Quest Capital fraudulently issued tens of millions of carbon credits from cook stove projects in Africa. C-Quest’s CEO, Kenneth Newcombe faces criminal charges for his role in this massive carbon credit fraud. Newcombe was a key player in the development of carbon markets while he worked at the World Bank. C-Quest played a key role in developing Verra’s cook stove methodology, which the company used on its own projects. Newcombe was also on Verra’s board.

• The Southern Cardamom REDD project in Cambodia is a brutal example of fortress conservation, as revealed in several media reports and a 2024 report by Human Rights Watch. The project developer, Wildlife Alliance, failed to carry out a process of free, prior and informed consent with local communities. Consultation started in August 2017, 31 months after the project started. Human Rights Watch revealed human rights abuses, including forced evictions and loss of Indigenous livelihoods.