As the world gears up for the next pivotal round of climate negotiations at COP29 in Azerbaijan, the collective aim remains clear: achieving net-zero emissions by 2050 and maintaining global temperature rise below 2°C above pre-industrial levels.
In this context, Resonance is closely monitoring developments within the voluntary carbon markets (VCMs) — a dynamic and essential area for delivering on this urgent agenda.
VCMs hold a dual role at COP. On one side, they are central to the ongoing Article 6 negotiations which tackle technical challenges around methodologies and regulations for global voluntary markets. On the other, COP provides a platform for showcasing VCM progress, reinforcing financial and structural support, fostering partnerships and innovation, and strengthening corporate climate action. Resonance’s research and partnership efforts are dedicated to supporting the sustainable growth of VCMs, with a focus on expanding their credibility, integrity, and impact.
A Primer on Carbon Markets
Carbon markets are broadly divided into compliance markets and VCMs. Compliance markets are regulated by government frameworks, while VCMs provide businesses with the flexibility to voluntarily purchase credits to offset their emissions. This flexibility enables unrestricted, cross-border market collaboration between private sector and stakeholders, generating and contributing crucial financing towards climate goals and advancing the global agenda.
The project-based structure of VCMs, in particular, allows corporations — including airlines, tech firms, financial institutions, and others — to align their climate commitments with tangible actions. This approach not only provides an opportunity to display leadership in sustainability but, when done right, also contributes to the economic and social development of local and regional communities, often in the Global South.
The VCM ecosystem comprises multiple stakeholders, including verification and validation standards bodies like Verra and Gold Standard, project developers who issue credits, brokers who facilitate transactions, corporate buyers who offset emissions, and respective communities and local governments. Each player’s role is essential to maintaining the integrity and growth of this market.
The Role of Carbon Markets in the Global Climate Agenda
VCMs have gained significant attention for their potential to drive global climate goals through private sector engagement. Their importance lies in several key areas. First, VCMs align private sector interests with climate action, ensuring corporate sustainability strategies support overarching climate objectives. Second, VCMs encourage innovation in nature-based solutions, including REDD+ (Reducing Emissions from Deforestation and Forest Degradation) and ARR (Afforestation, Reforestation, and Revegetation) projects, which deliver meaningful environmental outcomes.
Furthermore, and most importantly, when implemented with the right expertise and robust monitoring, VCMs create notable social and development impacts. These benefits can extend to local communities through economic development opportunities, training, employment, financial security, and additional ecological co-benefits — such as biodiversity conservation — that bolster community resilience.
Key Considerations for Conducting Due Diligence in the VCMs
For those navigating the VCM landscape — whether aiming to identify high-quality carbon developers or seize impactful partnership opportunities — due diligence and landscape analysis are critical not only from a commercial perspective, but also from an impact-driven approach, particularly in sectors like Agriculture, Forestry, and Other Land Use (AFOLU).
Resonance recommends that evaluations prioritize transparency in policies, methodological rigor, risk assessment frameworks, reputational considerations, and the integrity of engagements with governments, communities, and buyers. To go beyond addressing common REDD+ criticisms, we recommend including screens for social implications and potential elite capture of benefits. Due diligence should also cover Free, Prior, and Informed Consent (FPIC) practices and responsible land management with Indigenous Peoples and Local Communities (IPLCs).
This comprehensive approach builds partnerships aligned with strategic goals, ensuring that projects adhere to rigorous standards and uphold integrity. It positions buyers or investors to engage confidently with credible developers in VCM, fostering partnerships that meet high carbon project standards and align with long-term shared visions.
A Call for Integrity and Collaboration
The success of VCMs relies on the collective effort of all stakeholders — buyers, project developers, standards bodies, and intermediaries. Resonance is committed to supporting these efforts by advising clients, fostering impactful partnerships, and advancing the knowledge needed to strengthen the landscape of voluntary carbon markets.
As the voluntary carbon markets grow, ensuring both impact and credibility is essential. COP29 presents an exciting opportunity to renew commitments and build collaborations that accelerate existing progress to advance global climate action.
