Increasingly, businesses are seeking long-term carbon offset supply via investment in the supply chains through being either the primary offtaker for a carbon project or taking equity investment or project ownership in projects. The focus on this method of sourcing through the supply chain (referred to as carbon 'insetting') can help facilitate control over emission reductions and thereby ultimately the credibility of the net zero, or other carbon, commitments of the business.
We are also seeing increased M&A activity in this space as private capital providers, such as infrastructure funds and private equity, look to invest in the carbon markets value chain in businesses which derive contracted revenue from performing services (for example consultancy, project development, agency and/or brokerage) and/or selling carbon credits.
Momentum has been building on the formal development of the Voluntary Carbon Market (VCM) structures and, in particular, building on improvements to the quality and integrity of carbon credits and offsetting claims, and this work will continue through the Integrity Council for the Voluntary Carbon Market (on the sellside) and the Voluntary Carbon Markets Integrity Initiative (on the buy-side).
Meanwhile, pressure is intensifying on businesses making net zero or other carbon claims which rely to any extent on offsets, to clarify and justify that reliance.