A peer-reviewed study published in the Annual Review of Environment and Resources in 2025 — led by climate scientist Joseph Romm and drawing on more than ten years of data — found that most carbon offset programs have shown limited evidence of delivering the level of additional, permanent emissions reductions originally claimed. The core challenge is additionality: whether the emissions reduction would have happened anyway without the offset project. Multiple studies suggest additionality concerns affect a substantial share of the voluntary carbon market, and the question has moved from academic debate to regulatory and legal scrutiny. Despite billions spent on voluntary carbon credits, global carbon dioxide levels hit a record 424 parts per million in 2024, according to the World Meteorological Organization.
The credibility crisis in voluntary carbon markets (VCMs) is not a recent discovery. A 2023 investigation by The Guardian, conducted with academic researchers and the journalism nonprofit SourceMaterial, found that a large share of rainforest carbon offsets approved by Verra — one of the world's largest certifiers — were essentially worthless, with many protected forests never genuinely under threat. Verra disputed both the methodology and conclusions of the investigation, arguing the analysis mischaracterized how avoided deforestation projects are evaluated. The reputational damage to the broader offset market was significant regardless. Several market analyses have estimated that a significant share of offset projects may overstate emissions reductions, a pattern the industry is still working to address.
The Systemic Problems That Are Structural, Not Incidental
Research published in ScienceDirect in 2025 synthesized evidence from academic studies, regulatory reports, and case studies to map the integrity gaps in voluntary carbon markets. The review identified systemic weaknesses including fraudulent crediting, inflated baselines, lack of additionality, and unverifiable climate claims — problems arising from poor governance, inadequate monitoring and verification, and limited accountability across the project lifecycle. The research describes these as systemic failures, not outlier events driven by a small number of bad actors.
The permanence problem compounds the additionality problem. Many offset projects aim to sequester carbon for decades or longer through approaches such as reforestation or soil carbon. The assumed storage period can be reversed by wildfire, disease, or land-use change. While some registries maintain buffer pools intended to address reversals, wildfire and land-use change events have raised serious questions about whether those safeguards are sufficient under worsening climate conditions. A forest project credited for 30 years of carbon storage that is degraded by wildfire a decade later tests those mechanisms in ways the original project design did not anticipate. The carbon is effectively gone while the claim often remains on the balance sheet. Leakage creates a third layer of complexity: protecting one forest often shifts logging activity to another region, moving emissions rather than reducing them.
Where Corporate Liability Sits in This Market
Companies that have publicly claimed carbon neutrality or net-zero status on the basis of offset purchases are now operating in a markedly more contested regulatory and legal environment. The UK's Competition and Markets Authority, the EU's Green Claims Directive, and the Federal Trade Commission's ongoing review and proposed updates to the Green Guides all create frameworks under which unsubstantiated offset-based climate claims carry legal exposure. The question regulators and plaintiffs are increasingly asking is not whether the company bought the offsets, but whether the offsets represent real, additional, permanent, and verified emissions reductions. In most cases, the answer is harder to defend than the original claim suggested.
BloombergNEF analysts estimate that a more credible voluntary carbon market — smaller, more selective, with higher verification standards — could reach $30 billion annually by 2035. The Integrity Council for the Voluntary Carbon Market's (ICVCM) Core Carbon Principles are emerging as the industry's best attempt at a credibility floor: not all providers' portfolios currently meet the threshold, but the market is moving toward it. For companies whose net-zero strategies are built on offset purchases that predate the ICVCM framework, the question is whether those credits would survive scrutiny under the standard that is now being adopted as the baseline.
Not All Offsets Are Under the Same Level of Scrutiny
It is worth being precise about where the credibility gap is most acute. Engineered carbon removals — direct air capture, biochar, enhanced weathering — and newer high-integrity methodologies are increasingly being treated as a separate category from earlier generations of avoided-deforestation and loosely verified forestry projects. The Integrity Council for the Voluntary Carbon Market's (ICVCM) Core Carbon Principles are designed to draw exactly that line: projects that meet the threshold are positioned differently in the market than those that do not, and the gap in pricing reflects it. For companies building forward-looking offset strategies, the distinction between credit categories matters more now than it did when the market lacked a credibility floor.
What Finance and Sustainability Leaders Need to Reassess
Carbon offset purchases are being incorporated into financial disclosures, investor presentations, and regulatory filings in ways that treat them as equivalent to direct emissions reductions. They are not equivalent — and the accounting frameworks are beginning to reflect that distinction more clearly. The Science Based Targets initiative (SBTi) has moved to limit the role of offsets in meeting near-term science-based targets, requiring companies to prioritize genuine emissions reductions in their own operations and value chains. Companies whose decarbonization roadmaps rely heavily on offset purchases to bridge the gap between current emissions and stated targets are carrying a credibility risk that grows with every tightening of verification standards.
