Voluntary Carbon Markets - A Way To Challenge Global Climate Inequality
Climate change disproportionately impacts lower-income regions of the world, entrenching various inequalities, limiting the economic growth and development needed to mitigate and adapt to increasingly frequent climate impacts.
To sustainably reach a greener future, the global community is increasingly seeing the importance of carbon offsetting as a tool for prevention, mitigation, and adaptation. As a result, demand for high-quality carbon offsets is very likely to continue to grow, and with it - revenue to those often most affected by climate inequality.
Carbon markets - particularly the voluntary market, create market mechanisms through which nature and technology-based solutions receive funding they otherwise would not have. This then provides skilled work and income, particularly in the rural regions of low-income and developing economies, while also allowing organisations to make robust, science-backed claims of carbon neutrality.
From a macroeconomic perspective, these markets create financial instruments with which high emissions can be disincentivised, either in tandem with legal requirements, or through voluntary responsible stewardship.
From a more holistic perspective, the financialisation of carbon within these markets and indeed within regulatory frameworks creates the impetus for organisations to channel capital to many global projects which either directly or indirectly address climate inequality.
At Carbon Neutral Britain, we facilitate the measurement, reporting, and offsetting of organisations' carbon emissions via internationally recognised corporate carbon accounting standards, allowing organisations of all sizes to work steadily towards Carbon Neutrality, and beyond towards Net Zero.
By ensuring companies have the necessary tools and insights to achieve their climate ambitions, our clients are able to challenge and address global climate inequality as part of their broader sustainability journey.
What are carbon markets?
The ‘Carbon Economy’ is a set of global and national financial mechanisms and instruments which facilitate the financialisation of carbon dioxide (CO2). At its core, financialisation in the context of CO2 is the process by which a simple tiny black molecule is integrated within a financial system, thus creating carbon markets.
The 1997 Kyoto Protocol outlined an international treaty, committing developed economies to the reduction of greenhouse gas (GHG) emissions. When we talk about CO2, it’s important to understand that, while the gas itself is a potent GHG, it is also at the same time a metric for many other GHGs.
Several individual gases (and categories of gases) have a heating effect when released into the atmosphere. The Kyoto Protocol sets out 7 of these, which occur most often as a result of anthropogenic activity. These gases have varying effects on the atmosphere, referred to as their Global Warming Potential (GWP), quantified in relation to CO2, as shown below.
It is for this reason that within the Carbon Accounting world, carbon is referred to as Carbon Dioxide Equivalent (CO2e).
With this context in mind, carbon economies around the world are comprised of mandatory and voluntary carbon markets, each of which with their own benefits and challenges, and ways of addressing climate inequality.
The Mandatory Carbon Market
Within mandatory carbon markets, CO2e-based financial instruments take the form of ‘allowances’, whereby a regulatory body sets the annual limit on total carbon emissions within its jurisdiction/territory, and issues these emissions allowances to its most polluting sectors, such as industrial manufacturing and power generation. Organisations are then faced with a choice: reduce emissions to become equal to or lower than their allocated allowance, or purchase additional allowances to cover excess emissions.
Each year, the regulatory body reduces the overall quantity of allowances in line with Carbon Neutrality and Net Zero targets, forcing the price of these allowances to increase, thereby creating a market mechanism in which it becomes more cost-effective and financially sustainable for organisations to reduce their emissions (and sell their unused allowances) rather than continue purchasing these increasingly expensive instruments. Examples of these bodies include both the EU and UK Emissions Trading Systems (ETSs).
The Voluntary Carbon Market
The voluntary market operates differently. Within this, ‘Carbon Credits’ are created through ‘Projects’ around the world, where people work to either remove, reduce, or avoid, CO2e emissions. For every one metric tonne of CO2e (1 tCO2e) removed, one credit may be created and sold. These credits work similarly to traditional physical (and more modern digital blockchain) based assets, in that their existence must be directly tied to a singular removal, avoidance, or reduction of 1 tCO2e per credit, with duplication or artificial creation being largely impossible.
These credits are a key part of reaching Carbon Neutrality, which encompasses entities on track to reach a 50% reduction in overall emissions by 2030 from their baseline year, while offsetting any remaining emissions. Net Zero, on the other hand, is the reduction of all ‘avoidable’ emissions to zero by 2050, with any residual emissions being offset.
With the growth of this market, as with any financial market, the existence of ‘junk’ credits must also be factored into offsetting decisions. Junk credits are any credits which have not been properly verified and validated, particularly those which overpromise and underdeliver on their climate impact. Some examples of this include offsetting claims from tree planting, without direct calculation, verification, and third-party assurance. While planting trees is an important facet of biodiversity conservation and indeed can sequester carbon, only forestry projects that have completed these vital assurances, are able to generate carbon credits.
How can Carbon Credits address climate Inequality?
The International Science Council defines climate Inequality as the process in which:
Vulnerable communities, often those with lower incomes, limited access to resources, and marginalised social positions, are disproportionately exposed to the adverse effects of climate change. (ISC, 2024).
In practice, such adverse effects can include abnormal seasonal weather and temperatures, drought, flooding, soil erosion, sea level rise and acidification, among countless others. With 2.15 billion people alone living in near-coastal zones (Reimann et al., 2023), many of whom rely heavily on local ecosystems for work and livelihoods, it is clear that—at the current stage of climate change—mitigation is key to addressing both current and future impacts.
Crucially, a robust and developed economy—one that provides ample income for local regions and revenue for governments—is central to enabling long-term, sustainable responses to the crisis. The challenge lies in how to build such economies, particularly in lower-income and climate-vulnerable regions.
At present, developed economies and international organisations, such as the WTO and World Bank, use financial instruments including (but not limited to) debt relief and restructuring, loans and aid grants, and insurance partnerships, to fund prevention, mitigation, and adaptation strategies in developing economies. These approaches have been and continue to be important. They provide or free up revenue and resources for national and regional governments and NGOs to respond to climate change.
However, critics argue that these models risk creating systems of dependence, where lower-income economies rely on the goodwill and priorities of other governments. Goodwill, however, is not guaranteed. Therefore, building a skilled and diverse workforce, alongside a strong industrial base and service economy, is a more pragmatic and resilient long-term goal.
Carbon markets offer one such pathway, providing reliable sources of work and income to otherwise underdeveloped regions and communities. Carbon credits, in particular, are a fundamental tool in this process. They meet a growing global demand for reliable, high-quality, and affordable offsetting during the transition away from fossil fuels, and in doing so, generate the kinds of revenue needed for communities to fund their own adaptation and mitigation efforts.
At the heart of the issue is capital. Without it, the impacts of climate change are far greater, and recovery takes far longer, leaving many regions trapped in a cycle where they are increasingly unable to respond to one crisis after another. The voluntary carbon market directly addresses this by facilitating the transfer of capital from companies, organisations, and individuals seeking to take accountability for their environmental impact, to those with the capabilities to remove/sequester, reduce, or avoid emissions.
Ultimately, the path to growth is there. Those most disadvantaged by climate inequality are often those with the greatest potential to develop local knowledge, skills, and resources into robust, sustainable businesses that not only tackle global climate challenges, but also generate local revenue, create jobs, and strengthen resilience from the ground up.
Purchasing and Retiring Carbon Credits
Common Concerns Surrounding Offsetting
With such a broad range of benefits in mind, organisations looking to make purchases of, and invest in, carbon credits, as well as players within the broader global community and the media, often, justifiably, discuss the verifiability and reliability of the voluntary carbon market.
From the beginning, organisations should bear in mind that much of the narrative against the voluntary market is propagated by parties who are hostile to offsetting. Actors who directly benefit from business models which contribute towards climate change, and those funded through lobby groups, often use examples of ‘junk’ carbon to discredit the entire market, as was seen similarly with the Tobacco industry in the last century.
While junk carbon does exist, knowledge of its existence paradoxically is a sign of a healthy and highly regulated market, as our awareness of it demonstrates that the checks and balances designed to flush out fraudulent business activities are working, as one would also expect with any traditional financial market.
Ultimately, discrediting the entire voluntary carbon market is illogical - organisations wouldn’t avoid the entire stock market simply because a small proportion of listed companies have in the past oversold their offering or misled investors. In fact, such enterprises often become economically unviable, specifically because the checks and balances within those markets help investors know what to avoid. The voluntary market mirrors many of those checks and balances, and navigating this area responsibly and with due diligence is key, as with any other market.
To ensure validity and the stability within the market, good quality credits - and the projects which create them - must be verified by a recognised global body. The three most reputable and effective are the United Nations CER (Certified Emission Reductions), Verra, and the Gold Standard. Between these three organisations, and a number of smaller, private equity style projects (typically in the Carbon Capture and Storage space), the carbon market can be utilised as a tool to facilitate large-scale offsetting. This offsetting allows for accurate and transparent claims of carbon neutrality, when paired with measurement of emissions via the corporate standards, which we at CNB conduct all carbon measurement via.
Robust and Reliable Offsetting with CNB
Similar to organisations procuring high-quality financial assets in their sector, Carbon Neutral Britain only obtain credits from projects that have been audited and approved via the previously mentioned United Nations CER, Verra, or Gold Standard Mechanisms. As the three largest and most regulated carbon offsetting standards in the world, they ensure that the measurements and tonnes of CO2e offset are accurate and verified (with public audits available for each project).
CNB then selects projects based on the 'secondary' benefits of these credits, such as helping to provide education, employment, clean water, energy, or those which have a positive impact on local wildlife and ecology (for nature-based projects). By doing this, CNB is able to ensure that all projects align with the United Nations Sustainable Development Goals (SDGs).
Before a project’s credits are then used to certify any of our clients or partners as Carbon Neutral, all projects are independently validated in-house, and due diligence on the audits is completed via the applicable corporate standard using a 6 tiered review process, with only a select number of high impact projects making it through to market.
Finalist projects are then included within our project portfolios. Because credits can vary in price from single to quadruple digits, offsetting via portfolios allows organisations of any size, who may not be able to afford to support some of the most expensive projects, to contribute towards a number of different projects around the world.
Through this, our clients are part of the Carbon Neutral Britain movement, joining us in the UK's global fight against climate inequality.
Conclusion
Voluntary carbon markets are not a silver bullet, but are a vital tool in the broader fight against global climate inequality.
By redirecting capital towards high-impact, verifiable projects in the regions most affected by climate change, these markets help lay the foundations for long-term economic growth, community resilience, and environmental restoration.
When implemented with integrity, transparency, and rigour, carbon credits can do more than offset emissions - they can help rebalance the scales of global climate responsibility, empowering those on the front lines to lead the transition to a more equitable and sustainable future.
References
Gold Standard (no date) Gold Standard for the Global Goals. Available at: https://www.goldstandard.org (Accessed: 3 July 2025).
ICVCM (2024) Core Carbon Principles and Assessment Framework. Integrity Council for the Voluntary Carbon Market. Available at: https://icvcm.org (Accessed: 3 July 2025).
International Science Council (2024) Climate inequality: The stark realities and the road to equitable solutions. Available at: https://council.science/blog/climate-inequality-the-stark-realities-and-the-road-to-equitable-solutions (Accessed: 3 July 2025).
IPCC (2022) Climate Change 2022: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge: Cambridge University Press. Available at: https://www.ipcc.ch/report/ar6/wg2/ (Accessed: 3 July 2025).
Reimann, L., Vafeidis, A.T. and Honsel, L.E. (2023) ‘Population development as a driver of coastal risk: Current trends and future pathways’, Cambridge Prisms: Coastal Futures, 1, p. e14. doi:10.1017/cft.2023.13
Trove Research (2022) Market Integrity: Trends in the Voluntary Carbon Market. Available at: https://trove-research.com/reports (Accessed: 3 July 2025).
UNFCCC (no date) Clean Development Mechanism (CDM) – Certified Emission Reductions. Available at: https://unfccc.int (Accessed: 3 July 2025).
Verra (no date) Verified Carbon Standard (VCS) Program. Available at: https://verra.org (Accessed: 3 July 2025).
World Bank (2023) State and Trends of Carbon Pricing 2023. Washington, DC: World Bank Group. Available at: https://openknowledge.worldbank.org/handle/10986/39887 (Accessed: 3 July 2025).
Written by Peter Westbury, Sustainability Consultant.
Carbon Neutral Britain (2025).
