Towards Inclusive Governance for Forest Carbon Markets

Carbon markets are an increasingly prominent approach to addressing climate change and forest loss. However, they are consistently undermined by critical challenges including environmental integrity issues and corrupt practices. The lack of inclusive anti-corruption safeguards in national and global carbon credit frameworks is a key driver of these shortcomings and contributes to a widespread lack of trust. This gap also exacerbates corruption, erodes market integrity, and harms forest-dependent communities.

The main drivers behind the problem are:

• Poor understanding of corruption risks
• Weak national and cross-border networks
• Weak accountability and oversight mechanisms
• Regulatory and enforcement gaps

The consequences of the problem are:

• Oligarchy, conflict of interest, and nepotism in carbon project management
• Exploitation of forest-dependent communities affected by carbon credit projects
• Non-inclusive policy-making
• Empty carbon credits that greenwash activities and channel illicit funds

As a result of this project, carbon market certifiers, regulators, standard-setting bodies, private operators, civil society organisations (CSOs), and local communities in Cameroon, Ghana, Indonesia and Papua New Guinea will be better equipped to mitigate corruption risks in carbon markets and help strengthen carbon credit frameworks.

Carbon markets promise a cost-efficient pathway for forest protection and climate action. However, analysis highlights that they lack basic anti-corruption safeguards, undermining trust and effectiveness.

In 2023, the Guardian reported that 78 per cent of a sample of major offset projects were ‘likely junk or worthless’. This has resulted in a widespread erosion of trust in a voluntary system meant to channel climate finance and support forest-dependent communities.

Corruption has weakened both the supply and demand sides of carbon markets. Limited robust anti-corruption safeguards, gaps in knowledge about corruption risks, and weak cross-border networks hinder inclusive, sustainable, and transparent forest governance.

Meanwhile, regulatory gaps allow national and transnational corruption networks to exploit carbon markets and forest-dependent communities. Carbon credit projects fail to deliver real environmental benefits, producing "hot air" credits that greenwash emissions reductions or channel illicit funds under the guise of climate action.

Because carbon markets are transnational - issued in one country, certified in another, and often purchased in a third - corruption risks are also transnational, with potentially massive repercussions. For instance, in October 2024, a prominent carbon credit developer, CQC Impact Investors LLC, was accused of fraudulently obtaining tens of millions of dollars in carbon credits and securing investments exceeding USD 100M, undetected due to inadequate anti-corruption safeguards.

Validation and Verification Bodies (VVBs) which assess and approve carbon projects, are often under-trained in anti-corruption measures and often face conflicts of interest with project implementers or corrupt officials, putting vulnerable populations at risk.

Through this project, partners will map corruption entry points and risk typologies based on evidence from global and country- level analysis in four forest-producing countries: Indonesia, Papua New Guinea, Ghana, and Cameroon.

Existing efforts tend to focus either on institutional strengthening or the carbon markets integrity. This project uniquely combines both approaches, targeting state issuers and certifiers, to achieve vertical impact along the carbon chain and horizontal influence across jurisdictions.

We will generate evidence by developing:

• Global, gender-sensitive risk-mitigation guidelines to prevent carbon market corruption.

• Country-specific risk assessments in four countries: Cameroon, Ghana, Indonesia and Papua New Guinea, with a focus on vulnerable populations

Based on this evidence, we will mobilise stakeholders in the four countries to raise awareness of carbon market corruption and promote risk mitigation strategies and guidelines by:

• Launching national awareness campaigns

• Establishing national advocacy networks

• Advocating for national policy and regulatory reform

Through digital innovation, we will adapt an end-to-end carbon market monitoring platform to Cameroon’s emerging carbon sector and pilot it on a current carbon project.

Finally, we will lead global advocacy and international mobilisation to ensure robust anti-corruption safeguards are shared and integrated into global carbon market governance. This will include:

• Working with international certification bodies to address weaknesses in global standards

• Establishing technical partnerships with international organisations

• Sharing and advocating for global anti-corruption reforms in carbon markets