Investing in Carbon Projects: What You Need to Know in 2025

As we begin 2025, the urgency to combat climate change has never been more pressing.

With the climate crisis reaching a tipping point, we all have an important responsibility—and opportunity—to take meaningful action. One avenue through which companies can demonstrate strong leadership and have a real and permanent impact on the global climate is the voluntary carbon market (VCM).

Engaging in the VCM has the potential to drive real, immediate climate action now, particularly in the absence of comprehensive global regulation.

Now is the right time to invest in carbon projects through the purchase of carbon credits, as the VCM has dramatically evolved to meet the challenges of climate change, and organizations like Verra are at the forefront of this transformation.

The need for climate action is more urgent than ever. Extreme weather events, melting polar ice caps, and rising sea levels are just some of the indicators that we need to urgently address to mitigate the worst effects of climate change.

The VCM is designed to enable climate action now. With the lack of comprehensive global regulation, carbon credits offer an immediate and flexible solution for offsetting the impact of greenhouse gas (GHG) emissions.

For corporations, purchasing carbon credits offers a pragmatic way to engage in this market and contribute to climate mitigation efforts while fulfilling environmental, social, and governance (ESG) obligations. But beyond the moral imperative, purchasing carbon credits also makes good business sense.

First, buying carbon credits allows companies to demonstrate climate leadership. Consumers, investors, and stakeholders are increasingly expecting corporations to step up in the face of the climate crisis. In buying high-quality, high-impact carbon credits, companies can show that they are committed to taking concrete steps toward reducing their carbon footprints.

Evidence shows that high-quality carbon projects, which are financed through the sale of carbon credits, yield substantial climate impact. For instance, a peer-reviewed study (external) published in Nature Climate Change affirmed that Reducing Emissions from Deforestation and Forest Degradation (REDD) projects are scientifically robust and highly credible pathways for climate action, aligning with conclusions from multiple other studies (Guizar-Coutiño et al. 2022; Mitchard et al. 2023; Buma et al. 2024). In their 2022 analysis of over 40 REDD+ projects, Guizar-Coutiño et al. demonstrated that within the first five years, deforestation in project areas dropped by 47%, while forest degradation rates fell by 58%. These results underscore the effectiveness of incentivizing forest conservation through voluntary, site-based efforts in the form of REDD projects.

Second, purchasing carbon credits can help accelerate companies’ decarbonization efforts. According to 2023 data from Trove, firms buying carbon credits decarbonize at twice the pace of those that do not. This proactive approach not only supports corporate ESG commitments but also correlates with stronger financial performance. Additionally, per Climate Impact Partners, companies that reported year-over-year emission reductions saw average earnings exceed those of their Fortune Global 500 peers by nearly $1 billion. This highlights how integrating carbon credits into a broader sustainability strategy benefits both the planet and the bottom line.

Including the purchase of carbon credits in their overall climate strategy allows corporations to meet their sustainability goals while governments around the world continue to negotiate long-term regulatory frameworks. By engaging in the VCM, companies also support a vital stopgap that facilitates the flow of climate finance to projects that reduce or remove carbon from the atmosphere.

Companies’ engagement in the VCM is a robust way of advancing climate action because the VCM is ever evolving to meet the challenges of climate change and because a variety of organizations in the market support its continuous development while also facilitating its quality and integrity.

Standards programs: In the VCM, standards programs provide the rules and requirements as well as the carbon accounting methodologies for generating and verifying carbon credits. With the backing of standards programs like Verra, the market is moving toward greater transparency, trust, and rigor. As a standards setter, Verra regularly updates its rules, requirements, and methodologies to incorporate new technologies and scientific findings as well as the latest best practices. These updates also continuously strengthen environmental and social safeguards.

This is not a solitary effort. Other standards organizations, such as Gold Standard, play a critical role in generating high-integrity carbon credits. Both Verra and Gold Standard also work to develop programs that incorporate sustainable development and community co-benefits, ensuring that the climate action they catalyze goes beyond carbon reduction to improve the lives of vulnerable communities. Together, these standards create a robust ecosystem where climate solutions are not only measurable but also equitable.

Governance: Overarching bodies like the Integrity Council for the Voluntary Carbon Market (ICVCM) have evolved to provide a global benchmark for all high-integrity carbon credits. The ICVCM’s Core Carbon Principles (CCPs) identify carbon credits that reflect extreme rigor, accountability, and transparency and meet the highest standards of integrity.

By establishing global benchmarks for both standards programs and carbon accounting methodologies, the ICVCM is helping to create a more standardized VCM that can be trusted by investors, corporates, and the public alike.

In addition to standards programs and governance bodies, a robust network of actors across the voluntary carbon market is working to strengthen the market’s infrastructure and credibility.

Project proponents: Project proponents are the driving force behind the voluntary carbon market, embodying its heart and spirit. These dedicated individuals and organizations are at the forefront of bold climate action, committing to the hard work of designing and implementing projects that not only reduce carbon emissions but also drive meaningful environmental and social benefits. By embracing Verra’s robust methodologies and upholding the highest standards of accountability and rigor, project proponents ensure the credibility and integrity of carbon credits. Their innovative projects breathe life into the market, demonstrating the transformative power of science, ingenuity, and community engagement. Without their tireless efforts, the voluntary carbon market would not exist. They are the heartbeat of the VCM, inspiring collective action toward a more sustainable future.

Validation/verification bodies (VVBs): VVBs are third-party, independent auditors who confirm that projects meet the requirements of a given standards program and a specific methodology. They conduct thorough assessments to ensure that a project’s climate impacts are real and permanent, which bolsters a buyer’s confidence in the integrity of every credit issued.

Ratings agencies: Ratings agencies like Sylvera and BeZero play a critical role by performing additional evaluations of carbon projects, providing investors and buyers with additional insights to consider in their decision-making processes.

Advance market commitments (AMCs): AMCs like Symbiosis and the LEAF Coalition are supporting the efforts of Fortune 500 companies to integrate the purchase of high-quality carbon credits into their ESG strategies. Leading corporations that join these groups make large-scale commitments to purchasing specific types of high-quality carbon credits, driving demand and bringing corporate sustainability efforts to a global scale. By leveraging the VCM, these organizations are making significant progress in reducing their carbon footprints while also setting an example for responsible corporate leadership in the climate crisis.

Intermediaries and trading platforms: Intermediaries (brokers, traders, etc.) and other platforms (e.g., exchanges) that facilitate carbon credit transactions are modernizing the ways in which carbon credits are traded, making the market more efficient. These platforms are enhancing access, transparency, and reliability, ensuring that both buyers and sellers can engage in the market with ease and confidence.

This dynamic ecosystem, in which every participant takes their role seriously, contributes to a VCM that is more reliable, transparent, and impactful than ever before. As these organizations continue to innovate and raise the bar for quality, they are further strengthening the VCM as a cornerstone for global climate solutions. In doing so, these organizations are also strengthening the ability of companies that engage in the VCM to lead in the fight against climate change.

Verra is the undisputed leader in the VCM, and its Verified Carbon Standard (VCS) Program is recognized as one of the most rigorous and high-integrity greenhouse gas programs in the world. As the climate crisis has intensified, Verra has continuously evolved the VCS Program and its methodologies to meet the demands of the planet and to support companies that seek to help preserve this planet for future generations.

One of Verra’s most significant advancements is its investment in innovative nature-based carbon accounting methodologies (such as those for forest conservation and ecosystem restoration). These methodologies, which offer cost-effective approaches to reducing emissions, also require climate finance to scale.

Verra’s work in this space has been recognized by the Integrity Council for the Voluntary Carbon Market, which has approved the VCS Program and several VCS methodologies, including the revolutionary REDD methodology (VM0048) and the Jurisdictional and Nested REDD Framework, as meeting the criteria of the CCP assessment framework.

A standout example of Verra’s leadership in this space is its development of a transformational REDD methodology and the jurisdictional data needed to operationalize it. This methodology represents one of the most robust approaches to forest conservation ever developed, combining a rigorous accounting approach and the investment of over $10 million in data acquisition and development to meet the urgent need for scaling up climate finance for projects that halt the loss of precious forest land.

Moreover, Verra’s recent collaboration with an Amazon-led working group to launch the ABACUS label demonstrates Verra’s important work in advancing innovation and quality in the VCM. The ABACUS label identifies high-integrity credits from ecosystem restoration and reforestation projects, signaling to buyers of these credits that their purchases are impactful and trustworthy.

Verra’s industrial and energy-related approaches are equally impressive, offering a comprehensive suite of methodologies that reduce emissions while contributing to sustainable development in vital sectors. Verra’s new carbon capture and storage methodology (VM0049), for instance, provides a flexible framework for high-quality carbon removal projects. Other methodologies, such as those for the early retirement of coal-fired power plants and the use of improved cookstoves, incorporate essential sustainable development components, ensuring that the projects using them drive real, long-lasting climate impact while improving the lives of local communities.

In addition to its methodological innovations, Verra is also taking steps that are designed to help scale up the operational capacity of the VCM through the development and continuous improvement of critically important digital tools

Historically, one of the key barriers to the VCM reaching its full potential has been the administrative burden of validating, certifying, and verifying credits, and tracking both projects and credits. To address this, Verra has invested heavily in building the digital infrastructure necessary to support these functions—creating the foundation for the market’s growth and impact.

The Verra Project Hub, for example, is a user-friendly platform that streamlines the registration and management of projects within Verra’s standards programs. This tool enables project proponents to easily navigate Verra’s registration and verification processes and helps them to register projects efficiently. The platform also helps make information about the projects and the process transparently available.

The Verra Registry is a cornerstone for the implementation of Verra’s standards programs, offering a transparent and secure platform to track the issuance, ownership, transactions, and retirement of all credits issued by Verra, including from Verra’s VCS Program. The registry provides the critical infrastructure that ensures market participants have access to accurate, up-to-date information about projects in any of Verra’s standards programs, which in turn fosters greater trust and accountability in the VCM as a whole. It is no surprise that Verra’s registry has won Environmental Finance’s prestigious award for Best Registry Provider for four consecutive years, a testament to its reliability, transparency, and commitment to operational excellence. By maintaining the highest standards of functionality and user accessibility and providing a tool for the public tracking of the issuance, ownership, transactions, and retirement of all carbon credits issued by Verra’s programs, the Verra Registry continues to set the benchmark for quality in the VCM.

Verra’s digital monitoring, reporting, and verification (dMRV) tools represent another significant step in furthering the market’s evolution. These state-of-the-art tools enable transparent tracking of project impacts, ensuring that every carbon credit issued is backed by real, measurable climate benefits.

Verra’s digital innovations are critical for scaling up the VCM as a whole, demonstrating ways to meet the growing demand for high-quality carbon credits. By making it easier to certify, monitor, and track projects, Verra is helping to build the infrastructure for a more efficient and transparent market—one that can accommodate the efforts of corporations looking to offset their emissions.

Verra’s leadership extends beyond its standards programs, methodologies, and registry. The organization has also been instrumental in supporting the development of domestic compliance markets around the world. In many countries, Verra has worked with national governments and other key stakeholders to build and expand these carbon markets by sharing its deep expertise.

Verra has also been supporting countries in their efforts to achieve their climate goals under the Paris Agreement. With the passing of Article 6.2 at COP29 in Baku, countries are now able to utilize independent crediting programs (ICPs) to achieve these goals. Together with the Singapore government and Gold Standard, Verra has developed a protocol to support countries in their use of Article 6 to achieve their Nationally Determined Contributions (NDCs). This protocol will enable countries to mobilize private-sector finance to meet and exceed their NDCs.

Verra’s forthcoming Scope 3 Standard Program further broadens the reach of the VCM. This program builds on the work of the VCS Program by adapting its methodologies for quantifying emission reductions resulting from interventions in corporate supply chains. By unlocking large-scale investment in supply chain climate action, the program has the potential to drive significant climate impact across industries, from manufacturing to transportation to retail.

The VCM has reached a pivotal moment. While the market has faced its share of challenges, organizations like Verra have taken decisive action to strengthen the VCM’s integrity, scale its operations, and broaden its reach. Through innovations in standards and methodologies, investments in digital innovations and large-scale data acquisition, collaboration with governments across the world, and more, Verra is working to support a VCM that delivers real, lasting climate impact.

For corporations, the message is clear: the time to invest in carbon projects is now. By doing so, companies can demonstrate climate leadership, meet their ESG goals, and contribute to the global fight against climate change. The VCM offers a pragmatic, real-world solution in a crisis where time is of the essence.

As we confront the climate emergency, we must dive into what Environmental Defense Fund’s Executive Director Amanda Leland has called the “messy middle”—the space between idealistic aspirations and practical decisions that drive progress in the real world. The “middle” doesn’t represent compromise or half measures. It represents the difficult but necessary choices that balance scientific rigor, human needs, and economic realities. While these choices are never free of risk, they lead to sustainable, durable progress. We can’t afford to wait for perfect solutions. Instead, we must focus on moving forward by embracing initiatives like the ever-strengthening VCM, which may not be perfect but allows for immediate and impactful climate action.

The VCM’s pragmatic approach, which aligns climate action with key economic incentives, helps ensure that the market makes continuous progress year after year, much like compound interest. This approach acknowledges the urgency of the crisis as well as the need for credible, measurable outcomes. The VCM, led by organizations like Verra, represents this bridge between what we must achieve and what we can do today.

Together, we can build an even stronger, more resilient voluntary carbon market—one that delivers even more real climate impact now and continues to pave the way for a sustainable future for all. With every investment made, every credit issued, every farmer incentivized, every species protected, and every Sustainable Development Goal supported, we are not just mitigating a global crisis—we are laying the foundation for a future that is viable for generations to come.