Navigating the Voluntary Carbon Market: Foundational Guidance for Private Markets
The Initiative Climat International (iCI), a PRI-supported initiative, and Anthesis have launched a comprehensive guidance document on the Voluntary Carbon Market (VCM), helping private market participants navigate this evolving landscape and achieve net-zero goals.
The guidance provides an in-depth examination of the VCM, offering practical insights into responsible carbon credit procurement and opportunities to invest in innovative technological and nature-based solutions. As the VCM gains prominence, private markets are increasingly recognising its potential to complement robust emissions reduction strategies.
Key Insights from the Guidance
- Private Markets Activity: The inaugral 2024 iCI VCM survey revealed nearly half of private market professionals are purchasing carbon credits, with 58% planning to increase their involvement in the coming year.
- Understanding the VCM: Additionally, the survey highlighted 75% of iCI members have an average to below-average understanding of the VCM. The guidance aims to simplify the complexities of the VCM, offering clear routes to engagement without introducing a new standard.
- Carbon Credits and Climate Mitigation: High-quality carbon credits, when aligned with science-based emissions targets, can support the global transition to net-zero while delivering significant environmental and social co-benefits.
- Market Growth: According to research by MSCI, The VCM, valued at approximately US $1.4 billion in 2024, is projected to grow to between US $7 billion and US $35 billion by 2030, and US $45 to US $250 billion by 2050.
- Investment Opportunities: The document outlines three key pathways for private market investors to engage with the VCM:
- Investing in VCM companies
- Direct investment in carbon projects
- Investing in carbon funds
- Nature-Based Investments: Beyond carbon credits, the guidance emphasises the growing interest in nature-focused investments, including nature-based solutions and nature tech. These approaches deliver financial returns whilst addressing pressing environmental and climate challenges.
A Responsible Approach to Carbon Credit Procurement
The guidance includes a seven-step procurement process, offering private markets a framework to ensure responsible and effective engagement with the VCM. By aligning carbon credit purchases with a science-based reduction strategy, private market participants can strengthen their climate mitigation efforts while addressing the supply-demand gap for high-quality carbon credits.
