Varnika Chawla, Divya Sethuraman, Tarun Ashok, and Jason Kitts

Interest in the Voluntary Carbon Market (‘VCM’) has grown considerably from participants ranging from private organizations to international corporations and regulatory bodies. Unprecedented anthropogenic climate change has led governments around the world towards action to limit global warming by setting net zero targets and taking steps towards carbon reduction, including through the purchase of carbon credits.

In this paper, we provide a high-level overview of the different nature of carbon markets–compliance versus voluntary. After this differentiation, we focus our discussions on the VCM solely. In Part I, we set the scene and provide background of developments across the Global North and the Global South and the divergent nature thereof. Part II explores the evolving regulatory landscape and voluntary framework in respect of standard setters and new guidance that affects the VCM – again, here we see a divergence between different countries depending on the popularity of supply versus demand. In Part III, we turn our focus to judicial developments on claims that go the heart of the issue and question the integrity of the VCM – we analyse how claims of carbon neutrality may be subject to further disclosure and scrutiny including in respect of the nature of the offsets they rely on. Finally, we conclude that there is still a long way to go in formalising the VCM and scaling it for large-scale impact and provide insights into what can be done to harmonise developments globally.