Takeaways on navigating integrity in carbon markets: standards, scrutiny, and national implementation

Speakers: Benja Faecks, Expert on Global Carbon Markets, Carbon Market Watch (CMW) and Thuy Tran, Senior Compliance Counsel at Verra

To understand the current state of carbon markets in mid-2026, the session highlighted the profound shift that has occurred over the last four years. In 2021 and 2022, the Voluntary Carbon Market (VCM) was booming, reaching a transaction volume of USD 2 billion. However, 2023 brought a sharp market contraction after watchdogs, NGOs, and investigative journalists exposed systemic over-crediting, inflated baselines, and human rights vulnerabilities in project areas, causing corporate buyers to retreat over greenwashing concerns.

Today, the ecosystem is entering a phase of active rebuilding. Article 6 is operationalized, with host countries actively authorizing trades. Compliance frameworks like CORSIA are completing their voluntary phases, and independent supply- and demand-side initiatives such as the ICVCM and VCMI are establishing rigorous quality benchmarks to restore investor trust.

As carbon markets continue to evolve, integrity has become one of the defining issues for governments, project developers, standards bodies, civil society and corporate buyers alike.

• Integrity cannot be achieved through standards alone

Carbon market integrity is often associated with robust methodologies, monitoring and verification. However, the discussion highlighted that technical standards alone cannot prevent corruption or abuse. Weak institutions, opaque decision-making, conflicts of interest and inadequate oversight can undermine even well-designed projects. Strengthening governance therefore needs to be seen as an integral part of ensuring credible climate outcomes, rather than as a separate compliance exercise.

• Governance risks should be treated like any other project risk

A key shift in emerging carbon market standards is the recognition that governance risks should be systematically identified, assessed and managed throughout the project cycle. Rather than relying on fixed compliance requirements, practitioners are increasingly expected to adopt a risk-based approach that considers how corruption, illegal activities or financial crime could affect project implementation and outcomes. This represents a move from reactive compliance towards proactive risk management.

• Context matters more than ever

Governance risks are highly context-specific. Carbon market projects operate across jurisdictions with varying institutional capacity, legal frameworks and levels of corruption risk. At the same time, local and Indigenous communities rarely speak with a single, monolithic voice. Internal governance structures are intricate, and internal divisions can sometimes be leveraged through illicit inducements. As a result, practitioners cannot rely on generic safeguards alone. Effective due diligence requires understanding local governance dynamics, engaging stakeholders meaningfully and adapting mitigation measures as conditions change. A context-sensitive approach is likely to become increasingly important as Article 6 implementation expands into diverse national settings.

• Transparency remains the first line of defence

Many integrity risks stem from information gaps. Transparent project documentation, accessible grievance mechanisms and meaningful stakeholder participation not only improve accountability but also create opportunities to identify and address risks before they escalate. The discussion reinforced that transparency should be viewed as a preventative governance measure rather than simply a reporting requirement.

• Stronger safeguards will only be effective if they can be implemented

Verra's updated VCS Version 5 introduces new governance safeguards covering areas such as anti-corruption, anti-money laundering and illegal activities, alongside practical tools to support implementation. While these developments represent an important step forward, speakers also acknowledged that implementation remains the critical challenge. Validation and Verification Bodies (VVBs) are historically accredited for technical and carbon-accounting competence, not for identifying financial crime, land-tenure disputes, or bribery. Standard-setters are beginning to formulate targeted governance training for these auditors, but limited auditing capacity, uneven technical expertise and resource constraints may limit the effectiveness of stronger standards unless investment in institutional and professional capacity keeps pace.

• Integrity is a shared responsibility

A recurring theme throughout the webinar was that maintaining integrity cannot rest with standards bodies alone. Governments establish enabling regulatory frameworks, project developers are responsible for implementing safeguards, auditors provide assurance, while civil society plays an essential role in independent oversight and accountability. Building trust in carbon markets will therefore depend not only on stronger rules but also on greater collaboration across these actors.

• Looking ahead

The evolution of carbon markets reflects a broader shift in thinking: integrity is increasingly understood as a governance challenge as much as a technical one. For practitioners, this means embedding governance considerations into every stage of project design and implementation, rather than treating them as an additional reporting requirement. As carbon markets continue to mature, projects that integrate transparency, accountability and adaptive risk management from the outset are likely to be better positioned to deliver both credible climate outcomes and public confidence.

Useful resources

Program notice with links to the templates and guidance for Verified Carbon Standard (VCS) Program Version 5

Towards Inclusive Governance for Forest Carbon Markets project

The recording of the July 1st presentations is available here: