Rethinking carbon credits according to international climate and human rights obligations

Carbon credits have been widely promoted as tools expected to support cost-effective climate mitigation for major emitting countries, while mobilizing additional finance – as much as $250 billion by 2030¹ – and technology for climate action and sustainable development in climate-vulnerable countries. However, growing evidence indicates that carbon credits are not serving these purposes,² because they’re facing persistent, and in some cases structural, challenges which allow routine circumvention of even well-designed rules, despite more than two decades of reforms.³ More and more studies are pointing to the underlying market-based logic as inherently incentivizing low-quality, low-price credits and overcrediting, thereby creating conditions conducive to greenwashing and fraud. The result is not only the absence of the promised mitigation outcome but an increase in atmospheric greenhouse gas emissions in the context of worsening climate change.

1. https://www.worldbank.org/en/news/feature/2022/05/17/what-you-need-to-know-about-article-6-of-the-paris-agreement. ↩
2. https://www.nature.com/articles/s41467-024-53645-z and https://www.nature.com/articles/s41558-025-02517-5. ↩
3. https://www.annualreviews.org/content/journals/10.1146/annurev-environ-112823-064813 and https://papers.ssrn.com/sol3/papers.cfm?abstract_id=7145338. ↩

Moreover, carbon credits may be used to enable continued fossil fuel dependence, contributing to compounding and intergenerational human rights harm of the fossil fuel life cycle, as well as further climate harm in terms of greenhouse gas emissions and degraded carbon sinks (A/HRC/59/42, A/HRC/62/44 and general comment No. 26 (2022) of the Committee on Economic, Social and Cultural Rights). Despite improvements in methodologies, there is still insufficient evidence as to whether carbon credits are capable of effectively contributing to fulfilling States’ international obligations to prevent significant climate harm, in line with best available science, and protect everyone’s human right to a healthy environment, as well as the other international obligations clarified in the advisory opinion of the International Court of Justice on the obligations of States in respect of climate change.

Carbon credits also continue to raise questions about intergenerational and intragenerational equity. Serious concerns have arisen as to whether they distract from States’ historic responsibilities, as well as reproduce historical inequalities by placing disproportionate burdens on communities that are least responsible for climate change, aggravating multiple dimensions of poverty in relation to food security, tenure, cultural practices and resilience. In other words, there are concerns about perpetuating economic models that are premised on even wider economic inequality rather than supporting structural economic transformation.⁴

4. https://www.neep-poverty.org/wp-content/uploads/2026/06/The-Roadmap-for-Eradicating-Poverty-Beyond-Growth.pdf. ↩

Meanwhile, a clear pattern of repeated human rights violations across projects and territories is affecting Indigenous Peoples, peasants and other rural communities, with compounded impacts on women and intersectional discrimination for other community members. These patterns should be linked back to deeper structural failures of carbon credits and placed in a broader context of compounding human rights harm arising from worsening climate change, displacement, food insecurity and widening economic inequality due to unprecedented corporate power concentration and land accumulation (A/80/213 and A/HRC/61/51). Thus, these human rights violations should be understood for their systemic implications vis-à-vis States’ obligations to prioritize legal protection and financial support for small-scale food systems as a climate mitigation measure that supports the defossilization and detoxification of food systems to the benefit of everyone’s human rights to a healthy environment, health and food (A/HRC/62/44).

Considering the growing likelihood of crossing the 1.5°C global temperature limit⁵ which was identified by the International Court of Justice as central to States’ climate obligations, it is imperative to assess whether the inadequacies of carbon markets can be addressed through technical adjustments under the Paris Agreement and stronger regulation. Persistent harm to the environment and to human rights across different kinds of projects over time, however, is often acknowledged and addressed only after being exposed through external investigations, media reporting or civil society scrutiny, rather than through proactive oversight or preventive mechanisms. This points to underlying issues that would not only require safeguards and governance that are fully aligned with international human rights law but also a reconsideration of structural design and underlying assumptions.

5. https://www.nature.com/articles/s41558-026-02589-x. ↩

This is particularly challenging due to the extreme complexity of carbon credits and the limited transparency of international, national and local debates and initiatives, which raise a distinct but related set of human rights concerns (A/79/176). It is essential to focus attention on the climate-harming actors who are benefiting directly or indirectly from carbon credits, and the implications for those attempting to implement mitigation activities in good faith while facing a maze of adverse structural drivers. Ultimately, if carbon credits – structurally or in specific, foreseeable situations – fail to mitigate climate change, they contribute to the compounding human rights harm associated with climate change globally. Therefore, States’ reliance on carbon credits may be inconsistent with their international obligations.

Building on earlier human rights analyses (A/77/226, A/HRC/54/31 and A/HRC/62/42), submissions, consultations with a variety of experts and human rights holders, and independent research,⁶ the Special Rapporteur on the promotion and protection of human rights in the context of climate change, in the present report, assesses evidence on carbon credits in the light of States’ international obligations as clarified by the advisory opinion of the International Court of Justice, with a focus on everyone’s human right to a healthy environment.

6. https://www.ohchr.org/en/calls-for-input/2026/call-input-transforming-food-systems-protect-human-rights-and-prevent-climate. In addition, four annexes are linked to the present report – annexes I (methodology), II (additional considerations from the evidence), III (case studies) and IV (relevant practices) – and will be made available at https://www.ohchr.org/en/documents/thematic-reports/a81217-rethinking-carbon-credits-according-international-climate-and. ↩

Carbon markets can be separated into two types: carbon credit markets and carbon permit markets. The former reward emissions mitigation, whereas permit markets disincentivize emissions. The latter is exemplified by the European Union emissions trading scheme, in which a prescribed annual constraint on greenhouse gas emissions leads to the issuance of an equivalent number of permits to the market: regulated entities must acquire and surrender permits equivalent to their annual emissions. Similar allowance-based cap-and-trade markets are growing in different countries and regions, encountering challenges distinct from those facing credit markets, such as questions as to whether carbon pricing can achieve decarbonization at the required scale.⁷

7. https://doi.org/10.1088/1748-9326/abdae9. ↩

In the present report, the Special Rapporteur focuses on carbon credit markets, whereby carbon crediting mechanisms (government agencies, international organizations or private entities) certify “reductions” (estimated greenhouse gas emissions that did not happen) or “removals” (estimated greenhouse gas emissions that were absorbed). They are represented in tradable units known as carbon credits, each accounting for one ton of carbon dioxide (CO2) equivalent. Activities that “reduce” emissions relative to a baseline scenario include the following: avoided deforestation, renewable energy development, energy-efficient cookstoves, methane capture from landfills and the destruction of high-warming-potential ozone-depleting substances. Activities that “remove” emissions, in turn, are expected to actively extract greenhouse gases already present in the atmosphere, through nature-based solutions (enhancing natural carbon sinks, such as forests, soils and the ocean) and technology-based solutions, such as bioenergy with carbon capture and storage, and direct air capture with geological storage.

Carbon credits are issued by a crediting mechanism to the proponent of a climate mitigation project that follows a prescribed methodology and is registered with the crediting mechanism. The proponent is typically responsible for monitoring, reporting and procuring third-party verification of the activity’s abatement, in respect of which credits are issued to that proponent.

Most carbon credit markets are “voluntary”, in the sense that the credits are traded and used in the absence of an obligation or binding commitment on the part of those buying and using them. Nevertheless, carbon credit markets can also be classed as “compliance” markets, in which the credits (although they may be produced voluntarily) can be used to comply with a legal obligation or binding commitment.⁸

8. The text of paragraphs 8 to 11 has been drawn from https://doi.org/10.1787/500198e1-en and https://papers.ssrn.com/sol3/papers.cfm?abstract_id=7145338. ↩

Carbon credits can serve different purposes. Whether used for voluntary or compliance purposes, they can be used as offsets, on the assumption that mitigation represented by the credit counteracts the climate impact of the emissions caused elsewhere by the buyer. Some carbon credits are linked to carbon pricing, a public policy oriented to create a price in the economy for the use of fossil fuels. They can be used to comply with domestic carbon pricing obligations or to reduce the impacts on the economy of a carbon tax, an emissions trading scheme, an emissions compensation scheme (such as the Carbon Offsetting and Reduction Scheme for International Aviation) or targets under nationally determined contributions. Their prices are linked to the compliance prices in each market in which they are traded, and only partially to their environmental integrity.

When they are used for voluntary offsetting by an individual, corporation or other entity without a legal obligation to reduce greenhouse gas emissions, carbon credits serve to lower the cost of meeting voluntary individual or corporate pledges, such as “net zero” or “carbon neutrality”. The underlying premise is that corporations will transition to cleaner or lower-emissions production in order to avoid paying for credits and thereby reduce costs, while investing in the meantime in preserving carbon sinks or supporting the transition to cleaner technologies. Further, carbon credits can also be retired as a contribution to mitigation without any carbon-neutrality claim. In both these cases, they are expected to function as a channel for finance, although such flows do not integrate the definition of “climate finance” contained in the United Nations Framework Convention on Climate Change.⁹

9. https://climatepromise.undp.org/news-and-stories/what-are-carbon-markets-and-why-are-they-important. ↩

Several experts tend to downplay the relevance of the now well-documented flaws of voluntary carbon markets, focusing instead on the opportunities to craft appropriate regulation for compliance markets. This is because voluntary carbon markets are much smaller economically than compliance markets ($1 billion per year compared with $100 billion per year).¹⁰ That said, in the present report, the Special Rapporteur examines the extent to which voluntary carbon markets “could undermine” the approaches taken under the United Nations Framework Convention on Climate Change¹¹ because:
(a) There is some degree of overlap between voluntary and compliance markets, and it is necessary to clarify to what extent the well-known problems of the former are being effectively prevented from affecting the latter;
(b) Voluntary carbon markets provide indications of inherent structural issues that also affect highly regulated compliance markets, and that cannot be fixed through regulation;¹²
(c) Voluntary carbon markets are creating human rights concerns (for instance, in relation to land accumulation) that should be taken into account in designing and monitoring the effectiveness of compliance markets from a comprehensive perspective of climate mitigation and human rights protection.

10. https://www.worldbank.org/en/publication/state-and-trends-of-carbon-pricing. ↩
11. https://www.annualreviews.org/docserver/fulltext/energy/50/1/annurev-environ-112823-064813.pdf?expires=1783893282&id=id&accname=guest&checksum=916C9C5B25711A95E874FB8494DFE277. ↩
12. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=7145338. ↩

The Paris Agreement uses the design elements of both voluntary and compliance markets, with the aim of supporting the implementation of nationally determined contributions and raising ambition.¹³ Based on the experience with the market-based mechanisms under the Kyoto Protocol to the United Nations Framework Convention on Climate Change,¹⁴ the Paris Agreement established two tracks for the creation of credits called internationally transferred mitigation outcomes, which will then join a centralized registry to be counted against the achievement of nationally determined contributions as part of a compliance scheme.

13. https://ssrn.com/abstract=6463698. ↩
14. https://unfccc.int/sites/default/files/resource/UNFCCC_CDM_report_2018.pdf. ↩

Participating States determine the modalities for transfers of internationally transferred mitigation outcomes through bilateral or multilateral agreements. These country-to-country agreements are expected to: promote sustainable development and ensure environmental integrity and transparency; avoid double-counting; and be consistent with guidance adopted by the Conference of the Parties serving as the Meeting of the Parties to the Paris Agreement and authorized by participating Parties. States have significant flexibility in recognizing different types of credits as internationally transferred mitigation outcomes, as long as all credits have a corresponding adjustment (subtraction from achievements under nationally determined contributions) by the host country to prevent the double-counting of emissions reductions among buyer and seller countries. In other words, internationally transferred mitigation outcomes are “only as robust as” the nationally determined contributions that underpin them.¹⁵ Parties may agree to convert credits generated under voluntary standards into internationally transferred mitigation outcomes and transfer them, they can create a specific bilateral scheme, or they can use credits certified under article 6.4.

15. https://www.nature.com/articles/s41558-025-02517-5. ↩

Because of this flexibility, host countries negotiating fairer conditions or stricter safeguards may find themselves at a competitive disadvantage against countries willing to sell credits at half the price or without additional safeguards. Buyers can favour lower prices over fair terms, turning equity and long-term monitoring into a cost burden rather than a prerequisite.¹⁶

16. https://carbonmarketwatch.org/publications/by-the-book-how-effective-are-article-6-carbon-market-rules. ↩

The decentralized structure of article 6.2 requires only that participating countries report how they avoid negative impacts. No independent grievance mechanism is required. A United Nations technical review team operates under a restricted mandate, without the power to question the social or environmental integrity of reviewed activities. Many bilateral agreements concluded under this framework are not publicly disclosed, preventing public scrutiny of potential human rights impacts. Remedies available to negatively affected communities are determined by varying national legal frameworks, which sometimes lack clarity on the legal nature of credits and their legal protection,¹⁷ and varying enforcement capacities.¹⁸

17. https://ssrn.com/abstract=6463698. ↩
18. https://legalresponse.org/resource/human-and-environmental-rights-under-the-paris-agreements-carbon-markets. ↩

The International Organization of Securities Commissions identifies the fragmentation of registries and the lack of standardization in verification processes as compounding factors that obscure accountability across the credit value chain.¹⁹ Civil society cautions against ongoing uncertainties related to actual performance of projects and the measurement of carbon flows, with many credits reported to grossly exaggerate their climate impact or fail to achieve their stated objectives.²⁰

19. https://www.iosco.org/library/pubdocs/pdf/IOSCOPD774.pdf. ↩
20. https://carbonmarketwatch.org/publications/by-the-book-how-effective-are-article-6-carbon-market-rules. ↩

A centralized crediting mechanism has been created to generate internationally transferred mitigation outcomes from activities undertaken by all Parties to the Paris Agreement, comprising a global supervisory body²¹ to oversee methodologies and credit issuance, an appeal and grievance procedure and a sustainable development tool.

21. Conference of the Parties serving as the meeting of the Parties to the Paris Agreement decision 3/CMA.3 (2021). ↩

The integration of the mechanism’s rules into national administrative law creates unprecedented challenges, particularly with respect to requirements regarding environmental impact assessments and public consultations beyond project participants. Further, it appears that host countries are not obliged to take into account the comments submitted during global stakeholder consultations.‍²² These uncertainties create concerns with respect to human rights obligations related to public participation and environmental impact assessments (A/80/187) as part of States’ climate obligations as clarified by the International Court of Justice.

22. https://ssrn.com/abstract=6463698. ↩

The sustainable development tool has been found to function primarily as a project risk management instrument, with weaker guarantees on human rights than other international voluntary market standards. It does not establish thresholds that would prevent the implementation of harmful projects but rather relies on national legal frameworks to define the scope of protection available to communities, whether or not they are aligned with international human rights standards.²³

23. https://www.ohchr.org/sites/default/files/documents/issues/climatechange/unfccc/ohchr-inputs-sb11-agm-sd-tool.pdf and https://carbonmarketwatch.org/publications/submission-to-the-article-6-4-supervisory-body-on-the-sustainable-development-tool. ↩

The grievance process permits the acceptance of communications only in official languages of the United Nations. English is the exclusive working language of the process, which limits accessibility for many affected communities. The process carries a cost of $30,000, unless a fee waiver is granted at the supervisory body’s discretion, which is a concern for vulnerable groups. Eligibility criteria are narrow, limited to individuals or groups with substantial geographical presence who suffer direct adverse effects. The recommendations are not binding and do not extend to monetary compensation. The process presents several inconsistences with international human rights standards and lacks guarantees of independence from the supervisory body.²⁴

24. https://www.ohchr.org/sites/default/files/documents/issues/climatechange/unfccc/ohchr-inputs-sb11-agm-sd-tool.pdf. ↩

A substantial body of research has highlighted serious concerns about the mitigation potential of carbon credits,²⁵ which have tended to be addressed through adjustment in methodologies on “environmental integrity”, including on the following: additionality; permanence; leakage; conservative accounting; monitoring, reporting and verification; avoidance of double-counting; consistency with the 1.5°C temperature goal; and avoidance of lock-in. However, it is necessary to clarify whether carbon credit markets are aligned with the best available science and if they are delaying defossilization (A/HRC/59/42), as a structural failure to achieve mitigation would run counter to the stringent due diligence obligation of States to prevent significant climate harm and protect the right to a healthy environment. To that end, the Special Rapporteur, in the present report, focuses on structural design and assumptions underpinning mitigation effectiveness in relation to the incentive structure around carbon credits, the implications of their sheer complexity and fragmentation²⁶ and fallacies in the equivalence of different emissions.

25. https://www.frontiersin.org/journals/forests-and-global-change/articles/10.3389/ffgc.2023.958879/full. ↩
26. https://doi.org/10.1787/500198e1-en. ↩

Carbon credits are premised on the assumption that assigning a monetary value to emissions internalizes costs and creates incentives for actors to reduce harm,²⁷ as well as that the use of offsets is limited to residual emissions and that carbon pricing reflects real ecological scarcity. High-integrity activities, however, tend to generate fewer credits than low-integrity ones since they apply more conservative baselines and stringent environmental and human rights safeguards, placing them at a competitive disadvantage against the use of abundant, cheaper low-integrity supply,²⁸ even if the latter carries legal and reputational risks.

27. https://dukespace.lib.duke.edu/server/api/core/bitstreams/613e0b3e-2874-403b-b7a7-a812523c2786/content. ↩
28. https://www.oecd.org/content/dam/oecd/en/publications/reports/2025/06/exploring-governments-efforts-to-shape-carbon-credit-markets_dac6ff0f/0bafe9af-en.pdf and https://unctad.org/publication/role-voluntary-carbon-markets-global-climate-action. ↩

Carbon credit markets are largely confined to a relatively small community of operators, project developers, government officials, negotiators, academics and technical experts, whose financial incentives are aligned with the issuance and sale of credits that systematically favour volume over environmental integrity. Methodologies used to estimate emissions reductions are often developed by the same organizations that apply them to generate credits, while project developers benefit financially from maximizing credit issuance. Auditors are hired and paid by developers and depend on registry approval to operate, while standard-setting bodies are themselves financially reliant on per-credit issuance fees. Together, these dynamics embed overcrediting.²⁹ The market-driven nature of the system is also likely to discourage the disclosure of irregularities or underperformance, as reputational risks could undermine demand for credits.³⁰ Even verification bodies under article 6.4 are chosen and paid directly by project developers, generating a risk that evaluations will be less rigorous to secure future business.³¹

29. https://www.science.org/doi/10.1126/science.ady4864. ↩
30. https://carbonmarketwatch.org/publications/by-the-book-how-effective-are-article-6-carbon-market-rules. ↩
31. https://doi.org/10.1787/500198e1-en. ↩

In addition, in fragmented markets, there is no guarantee that credits represent only “residual emissions” – the emissions remaining after the maximum feasible deep emissions reductions³² – in the absence of a global binding limit on the quantity of emissions to be addressed through carbon markets, as opposed to direct emissions reductions.³³ Complex, fragmented markets create an incentive structure under which countries and project developers are encouraged to seek certifiers that minimize costs and maximize credit volumes. Buyers cannot effectively distinguish between high-quality and low-quality credits due to information asymmetry vis-à-vis different project developers generating credits at varying prices and verification and validation activities being carried out by non-State accredited entities selected within the system. Further, buyers may prioritize compliance with their obligations or fulfil their voluntary climate claims at the lowest possible cost. Even regulators have an incentive to increase the supply of low-quality credits, because “low credit supply is taken as a sign of scheme failure”.³⁴

32. https://one.oecd.org/document/ENV/WKP(2024)14/en/pdf. ↩
33. https://www.sciencedirect.com/science/article/pii/S2590332224001994. ↩
34. Andrew Macintosh and Don Butler, “The unsafe safeguard mechanism: how carbon credits could blow up Australia’s main climate policy”, The Conversation (9 November 2023). ↩

Uncertainty also reduces willingness to pay and systematically favours cheaper, lower-quality credits. Diverging government integrity frameworks increase market friction, complicate oversight and reduce the potential for markets to channel revenues towards developing countries.³⁵ The proliferation of activities, interests and integrity guides overwhelms policymakers, who are exposed to demands they often do not fully understand, while skill sets and knowledge at the national level related to managing carbon credits are still being developed.³⁶ The absence of standardized issuance and certification approaches results in higher transaction costs that exclude less-resourced actors from market benefits.³⁷

35. https://www.oecd.org/content/dam/oecd/en/publications/reports/2025/06/exploring-governments-efforts-to-shape-carbon-credit-markets_dac6ff0f/0bafe9af-en.pdf. ↩
36. https://climatepromise.undp.org/sites/default/files/research_report_document/High-Integrity%20Carbon%20Markets%20Initiative%20-%20Final.pdf. ↩
37. https://unctad.org/publication/role-voluntary-carbon-markets-global-climate-action. ↩

Carbon credits are premised on accounting fictions, namely the reduction of diverse ecosystems and heterogeneous industrial processes to a single metric expressed in tons of CO2 equivalent, despite qualitative differences between carbon types and storage timescales.³⁸ This is contestable on the basis of the best available science, which underpins States’ due diligence obligations as clarified by the International Court of Justice.

38. https://www.haujournal.org/index.php/hau/article/view/hau3.1.006; https://papers.ssrn.com/sol3/papers.cfm?abstract_id=7145338; Julián Trujillo Guerrero, “Créditos de carbono, derechos humanos y efectividad climática: un análisis de sus contradicciones estructurales” (forthcoming). ↩

Increasingly, the impacts of climate change itself, such as extreme weather events and wildfires, can reverse carbon storage and eliminate mitigation benefits. In addition, the capacity of natural land and ocean carbon sinks to absorb CO2 is weakening in some regions.‍³⁹ These issues are usually addressed under methodologies related to “permanence” for removal activities. However, independent studies have documented that the actual risk of carbon loss is more than 10 times higher than assumed by project methodologies when these natural vulnerabilities are considered, and that assurance mechanisms, such as permanence buffers created by project certifiers, are insufficient given the magnitude of the risks.⁴⁰

39. https://www.nature.com/articles/s41467-024-47872-7 and https://arxiv.org/pdf/2407.12447. ↩
40. https://gspp.berkeley.edu/assets/uploads/page/Quality-Assessment-of-REDD+-Carbon-Crediting.pdf. ↩

Equivalence does not take into account differences and uncertainties that relate to when and where a ton of CO2 was not emitted in comparison to a ton that was emitted.⁴¹ This obscures diversity in nature-climate interactions, as well different human interactions with the nature-climate nexus, thereby undermining the distinction between “dangerous anthropogenic interference with the climate system”, which is the central object of the international climate regime (United Nations Framework Convention on Climate Change, art. 2), and intergenerational relations of care, particularly based on local knowledge and Indigenous science. These issues tend to be addressed as part of methodologies on “leakage” (when emissions avoided in a project area are shifted elsewhere, with the result that the climate mitigation outcome is reduced or cancelled). Leakage accounting is challenging, however, because it is context-specific and lacks a solid scientific basis,‍⁴² with ex ante models underestimating the socioeconomic and territorial factors that drive ecosystem degradation.⁴³

41. https://www.thecornerhouse.org.uk/sites/thecornerhouse.org.uk/files/IgnoranceFinal.pdf. ↩
42. https://www.sciencedirect.com/science/article/abs/pii/S0301479717307338. ↩
43. https://www.ipcc.ch/report/ar6/wg3/downloads/report/IPCC_AR6_WGIII_FullReport.pdf. ↩

Experts consulted in the preparation of the present report confirmed that carbon credits usually focus on a narrow notion of environmental integrity, without taking into account biodiversity, toxic pollution, or soil and ocean health. Nature-based approaches have reportedly caused harm to the environment, with monoculture of non-native species negatively affecting local ecosystems, and the use of agrochemicals leading to toxic pollution, further damaging the soil, water, and plant and animal life.⁴⁴ Such approaches thus degraded carbon stocks and undermined mitigation outcomes, while having a negative impact on the human rights of Indigenous Peoples and peasants, and their intergenerational knowledge systems.⁴⁵

44. https://www.wrm.org.uy//wp-content/uploads/2020/12/WEB_EN_What-could-be-wrong-about-planting-trees_corrected.pdf and https://doi.org/10.1016/bs.af2s.2024.07.008. ↩
45. Submission by Ritu Dhingra. ↩

Further discrepancies encompass the overestimation of the timespan between climate mitigation and positive impacts on the climate system, and misalignments with the carbon cycle (the flow of carbon in the atmosphere, as well as in terrestrial and aquatic ecosystems). As a result, carbon credits may represent only a slowed rate of emissions increase, not emissions mitigation.⁴⁶

46. https://ssrn.com/abstract=6463698. ↩

Three quarters of the top 50 companies that use carbon credits are major fossil fuel producers and car manufacturers.⁴⁷ The Special Rapporteur on the Right to Food documented that Shell’s investment in offset projects entrenches corporate control over land (A/HRC/60/33 and A/HRC/61/51). The use of carbon offsets to portray fossil fuels as “clean” or “carbon neutral” contributes to mitigation deterrence⁴⁸ and disinformation. A United Nations high-level expert group decided that non-State actors cannot claim to be “net zero” while continuing to build or invest in new fossil fuel supplies.⁴⁹

47. https://interactive.carbonbrief.org/carbon-offsets-2023/companies.html. ↩
48. https://www.cambridge.org/core/journals/global-sustainability/article/towards-a-cultural-political-economy-of-mitigation-deterrence-by-negative-emissions-technologies-nets/88A11CE744D7D8B5A53B86AB23299D28. ↩
49. https://www.un.org/sites/un2.un.org/files/high-level_expert_group_n7b.pdf. ↩

These concerns relate both to technology-based and nature-based carbon credits. Regarding the latter, reductions in forest carbon emissions to offset fossil fuel emissions effectively transfer carbon from permanent storage to a short-duration carbon cycle, where it is at risk of release into the atmosphere. The capacity of the land to remove and store CO2 from the atmosphere is strictly limited and “minuscule” compared with the stock of fossil fuels that could yet be burned.⁵⁰ Further, the disparity is great between the immediate release of fossil fuel emissions and the much slower and highly uncertain absorption of biological carbon.⁵¹ On the whole, fossil fuel emissions are not offset by land-based emissions sequestration on a one-to-one ratio.⁵²

50. https://www.nature.com/articles/nclimate1804. ↩
51. https://onlinelibrary.wiley.com/doi/full/10.1111/reel.12452 ↩
52. https://www.nature.com/articles/nclimate1804. ↩

Regarding technology-based credits, the mitigation potential of negative emissions technologies is frequently overestimated because technologies are currently not deployable at scale.⁵³ They are also extremely costly and energy-intensive.⁵⁴ In addition, the “technical and economic failure of large-scale carbon capture and storage pilot projects has led to 78 per cent being cancelled or postponed over a 30-year period”.⁵⁵ The Integrity Council for the Voluntary Carbon Market established in 2024 that certain fossil fuel-linked categories are ineligible for the high-integrity label, including activities that directly increase fossil fuel extraction, such as carbon capture and storage used for enhanced oil recovery, unabated coal-fired electricity generation and conventional fossil fuel transport activities.⁵⁶ On the other hand, under article 6.4, the requirement to consider competing resource uses in assessing leakage does not apply to fossil fuel expansion,⁵⁷ contrary to the best available science.⁵⁸

53. https://www.ipcc.ch/report/ar6/wg3/figures/summary-for-policymakers/figure-spm-7. ↩
54. https://doi.org/10.1039/D5SU00162E and https://doi.org/10.1088/1748-9326/aabf9b. ↩
55. https://www.sciencedirect.com/science/article/pii/S2214629625004487?via%3Dihub. ↩
56. https://icvcm.org/wp-content/uploads/2024/02/CCP-Book-V1.1-FINAL-LowRes-15May24.pdf. ↩
57. United Nations Framework Convention on Climate Change document A6.4-STAN-METH-005, para. 13. ↩
58. https://ssrn.com/abstract=6463698. ↩

As the International Court of Justice has indicated, expansion, production, consumption and subsidies related to fossil fuels may be internationally wrongful conduct attributable to the State concerned. From an international human rights perspective, States should prevent the foreseeable, severe and intergenerational human rights impacts of the fossil fuel life cycle by prioritizing defossilization measures domestically and through international cooperation (A/HRC/59/42). States should thus abstain from carbon credits that allow continued reliance on fossil fuels.

Additionality is a requirement, particularly for avoidance activities, to ensure that the financial resources generated by carbon credits are driving additional climate action, rather than mitigation that may be triggered by market prices, ongoing technological improvements, existing legislation or nationally determined contributions in the host country. Relevant methodologies are based on hypothetical scenarios estimating what would have occurred in the absence of the project. They can never be objectively verified through empirical means, because they are based on a subjective baseline, thereby creating transparency and accountability challenges as project promoters and developers enjoy significant discretion in making these calculations.⁵⁹

59. Trujillo Guerrero, “Créditos de carbono”. ↩

More fundamentally, however, the requirement of additionality should be looked at anew in the light of the International Court of Justice clarification that all States have binding obligations to ensure an adequate contribution to the 1.5°C temperature limit and pursue their highest possible ambition in their nationally determined contributions, as well as enact legislation that is aligned with their stringent due diligence to prevent significant harm to the climate system.

In theory, additionality should strategically direct carbon credits towards “high-hanging fruit”, namely activities with comparatively high mitigation costs or significant implementation barriers that have not yet been incorporated into domestic legal frameworks because they are out of reach of a country’s current levels of ambition.⁶⁰ Corresponding adjustments create incentives for host countries to offer only higher-cost mitigation activities to international credit buyers.⁶¹ In practice, however, additionality may operate as a perverse incentive that rewards regulatory weakness and discourages the progressive strengthening of nationally determined contributions and national legislation: the stronger a country’s domestic regulatory framework, the narrower the space for generating “additional” tradable credits.⁶² Countries with nationally determined contributions close to their business-as-usual trajectory can sell internationally transferred mitigation outcomes with minimal risk to their own compliance. The financial logic of the market compounds this problem. Since internationally transferred mitigation outcomes typically command higher prices than credits without a corresponding adjustment, countries face a financial disincentive to increase their ambition with regard to nationally determined contributions, as more stringent targets would reduce the surplus reductions available for sale and therefore their potential revenues.⁶³ Competitive dynamics structurally favour weaker regulatory frameworks. Buyers seeking internationally transferred mitigation outcomes may inadvertently favour countries with less ambitious nationally determined contributions, as these offer a larger supply of cheap credits with low risk of non-compliance for the selling country. This has been considered a risk of “normative leakage”,⁶⁴ a methodological rather than a structural issue.

60. https://doi.org/10.1787/500198e1-en. ↩
61. https://www.nature.org/content/dam/tnc/nature/en/documents/Article-6-Implementation.pdf. ↩
62. https://carbonmarketwatch.org/publications/by-the-book-how-effective-are-article-6-carbon-market-rules. ↩
63. https://doi.org/10.1787/500198e1-en and https://doi.org/10.1787/500198e1-en. ↩
64. https://www.iisd.org/system/files/2024-12/carbon-leakage-toolkit.pdf. ↩

Countries in need of immediate investment may face pressure to authorize credits without long-term strategies and adequate legislation and frameworks in place, subsequently encountering the challenge of financing costlier reductions on their own. Some of the common regulatory gaps in developing countries include: the absence of a legal definition of and status for internationally transferred mitigation outcomes; the lack of a corresponding adjustment framework; unresolved questions over carbon ownership; inadequate infrastructure for authorizing and tracking carbon credits; and/or insufficient clarity on how international transactions relate to domestic emissions trading schemes.⁶⁵ Many developing countries lack sufficiently detailed greenhouse gas inventories, which may result in accounting errors that penalize domestic mitigation efforts when corresponding adjustments are applied to reductions not adequately reflected in initial inventories. Least developed countries and small island developing States face significantly greater challenges than other nations in implementing article 6, given limited fiscal and technical capacities,⁶⁶ and are thus allowed to participate in centralized reviews collectively to facilitate compliance.⁶⁷ Long-term commitments also constrain adaptive policy space, if baselines are not regularly updated to reflect new domestic policies and measures: a country risks crediting and transferring outcomes it should already have achieved by law, resulting in overselling that further reduces its future policy room.⁶⁸ Debates ahead of the twenty-ninth session of the Conference of the Parties to the United Nations Framework Convention on Climate Change also reflected tensions between seller countries seeking the flexibility to revoke or amend previously granted authorizations in order to protect their national ambitions, and buyer countries and investors concerned that such revocability would undermine legal certainty in the market.⁶⁹ There can also be risks related to investor-State dispute settlements for host countries that update their legislation to increase their ambition in climate mitigation, thereby devaluing foreign investments to better protect the right to a healthy environment (A/78/168).

65. https://ssrn.com/abstract=6437219. ↩
66. https://www.energypolicy.columbia.edu/publications/how-to-fully-operationalize-article-6-of-the-paris-agreement. ↩
67. https://unfccc.int/sites/default/files/resource/Article_6.2_Reference_Manual.pdf. ↩
68. https://goldstandard.cdn.prismic.io/goldstandard/e157f993-ce2c-4b61-b3d2-2580eb6ef55f_additionality_under_article_6.2_of_the_paris_agreement.pdf. ↩
69. https://www.nature.org/content/dam/tnc/nature/en/documents/Article-6-Implementation.pdf. ↩

Lack of transparency is a recurrent concern. Formal and substantive limitations to access to information in relation to project documentation and underlying assumptions prevent scrutiny by both technical experts and the public, undermining the rights to information, science, participation in decision-making, access to justice and a healthy environment (A/79/176). These information gaps also shield corporate buyers and intermediaries from scrutiny, limiting the ability of regulators and enforcement officers to effectively control private actors, which is a key component of the stringent due diligence of State climate obligations clarified by the International Court of Justice. Cumulatively, lack of transparency is also a structural barrier to democratic processes to assess whether the maximum available resources are effectively devoted to climate measures that provide the strongest guarantee of preventing foreseeable environmental and human rights harm (A/79/176 and general comment No. 27 (2025) of the Committee on Economic, Social and Cultural Rights).

At the global level, decision-making under article 6 of the Paris Agreement has proceeded with protracted negotiations over civil society access, with critiques pointing to insufficient openness in consultations, limited visibility of negotiating texts and the adoption of significant decisions without substantive public deliberation.⁷⁰ These compounded transparency deficits contribute to systemic informational asymmetries that undermine the right of access to information for all, weakening opportunities for accountability and rights protection across international carbon crediting mechanisms.

70. https://www.ecosystemmarketplace.com/publications/state-of-the-voluntary-carbon-market-report-2023. ↩

Overall, evidence of the mitigation effectiveness of carbon credits remains unclear.⁷¹ States could be in violation of their obligations to prevent significant environmental harm by relying on, or allowing companies to use, carbon credits the effectiveness of which has not been scientifically demonstrated. States should urgently adopt corrective measures, including suspending authorizations and excluding certain types of credits from meeting national targets when there is robust evidence of systematic ineffectiveness.⁷²

71. Submissions by Chisomejé Rural Women Rising Project and La Vía Campesina. ↩
72. Trujillo Guerrero, “Créditos de carbono”. ↩

Generating finance for climate action is part of the basic rationale for carbon credits: they are justified on the basis that they can deliver cost-effective mitigation while mobilizing additional resources for climate action and sustainable development. The twenty-ninth session of the Conference of the Parties to the United Nations Framework Convention on Climate Change clarified, however, that the new collective quantified goal on climate finance did not recognize carbon-credit revenue as climate finance under article 9 of the Paris Agreement.⁷³ It is thus crucial to differentiate carbon credits from developed States’ binding obligations to provide finance, technology and capacity-building to developing countries due to their international environmental and human rights obligations as clarified by the International Court of Justice, including the obligation to provide maximum available resources to protecting human rights in the context of climate change, considering current food security and energy sovereignty concerns.⁷⁴ The financial scarcity narrative, however, has led to the growing emphasis on the role of private finance in filling the estimated finance gap for climate action through carbon credits.⁷⁵ One study found, however, that for each United States dollar of public money deployed to mobilize private capital, only $0.25 of private investment was catalysed.⁷⁶

73. https://unfccc.int/sites/default/files/resource/NCQG.pdf. ↩
74. Submission by the Sri Lanka Institute of Political Economy to the Office of the United Nations High Commissioner for Human Rights (OHCHR). ↩
75. Submission by Forest Peoples Programme to OHCHR. ↩
76. https://link.springer.com/article/10.1007/s44177-025-00084-0. ↩

Carbon credit prices vary widely and can be highly volatile depending on project type, location, verification standard and end use, as well as inconsistencies in market valuations. Market prices bear little relation, however, with the actual funds that reach host States and communities. The United Nations Conference on Trade and Development (UNCTAD) indicates that carbon credits fail to deliver significant additional financing to least developed countries due to a structural weakness in the high costs of developing, monitoring, reporting, verifying and registering credits, which absorb much of the value a project generates.⁷⁷ In 2023, the market value generated by carbon credits in least developed countries was $403 million, representing only 1.3 per cent of foreign direct investment and 1.1 per cent of net ODA received by least developed countries, and was significantly lower than the commercial value generated through subsequent transactions.⁷⁸

77. https://unctad.org/system/files/official-document/diae2025d5_en.pdf. ↩
78. https://unctad.org/system/files/official-document/ldc2024_en.pdf. ↩

At the international level, an assessment is thus needed of the allocation of technical and legal efforts and public finance to the development of an extensive infrastructure for international carbon crediting that has dubious contributions to mitigation, rather than to the direct financing of mitigation or adaptation activities.

Carbon markets are also expected to contribute to providing other means of implementation, notably technology. UNCTAD, however, points to a concerning lack of evidence that technology transfer in the context of carbon offsets extends beyond “hardware” to include skills development or management systems. In addition, most enterprises in least developed countries cannot afford high upfront capital costs, limiting the large-scale adoption of transferred technologies. UNCTAD thus warns that national authorities must balance foreign partners’ priority of exporting their own technology against national structural transformation goals, avoiding lock-in to technologies that do not favour long-term development.⁷⁹ Developed States may thus be in violation of their international duty of technological cooperation in a manner that is proportionate to the highest possible ambition of developing countries, in accordance with the International Court of Justice clarifications.

79. Ibid. ↩

As carbon credits are expected to quadruple within the next seven years,⁸⁰ these shortcomings in international cooperation should be evaluated against accelerating climate change and the insufficient progress in global negotiations on climate finance and on mitigation. For example, the 2023 United Arab Emirates Declaration on Sustainable Agriculture, Resilient Food Systems, and Climate Action focused on market-based approaches, while avoiding commitments on structural reforms and fossil fuels phase-out.⁸¹ In addition, at its most recent session, in 2025, the Conference of the Parties to the United Nations Framework Convention on Climate Change did not take long-awaited decisions on fossil fuel phase-out or food systems (A/HRC/62/44).

80. www.fian.org/files/is/htdocs/wp11102127_GNIAANVR7U/www/files/Lords_Land_Fian_20250602_fin.pdf. ↩
81. https://www.tralac.org/blog/article/16257-cultivating-change-at-cop28-the-declaration-on-sustainable-agriculture-resilient-food-systems-and-climate-action.html. ↩

These observations support the growing body of academic literature arguing that international carbon crediting mechanisms represent neocolonialism.⁸² Major emitting States meet their climate commitments at lower cost through market transactions, while mitigation burdens and associated social and environmental risks may be placed onto less powerful States that are most affected by climate change, least responsible for it and heavily reliant on international finance to be able to participate in carbon credit markets.⁸³

82. https://ueaeprints.uea.ac.uk/id/eprint/100090/1/climate-13-00158-v2.pdf and https://www.jstor.org/stable/jj.21995486. ↩
83. https://www.sciencedirect.com/science/article/pii/S2950138525000105?via%3Dihub. ↩

Neocolonialism is also reflected in the distribution of benefits from carbon credits, which are mainly for operators in developed States. In effect, the technical complexity of monitoring, reporting and verification, certification, and registration systematically favours professionals with capital and expertise concentrated in developed countries.⁸⁴ This situation also puts into question whether a stronger focus on more safeguards – adding additional layers of regulatory complexity – would further widen this gap.⁸⁵

84. https://unctad.org/publication/role-voluntary-carbon-markets-global-climate-action. ↩
85. https://journals.co.za/doi/10.10520/ejc-nagenda_v2023_n91_a5. ↩

Serious concerns about intergenerational equity arise from the fact that carbon credits overlook historical responsibility while falling short of ensuring effective mitigation, as well as the fact that carbon credit projects typically last much less than the average lifetime of CO2 emitted into the atmosphere (about 120 years).⁸⁶ Such concerns can also be linked to growing concentrations of wealth and corporate power, resulting in widening economic inequality, and the diversion political attention, public finance and institutional capacity away from social protection, mitigation, adaptation and responses to loss and damage.⁸⁷ Well-founded concerns about neocolonialism and intergenerational and intragenerational equity increasingly arise also in relation to repeated patterns of localized human rights violations, as discussed below.⁸⁸ The International Court of Justice clarified that all States must pay due regard to the long-term implications of climate action, including the human rights of children and future generations (general comment No. 26 (2023) of the Committee on the Rights of the Child).

86. https://www.fian.org/files/is/htdocs/wp11102127_GNIAANVR7U/www/files/Coffee_Carbon_Markets_20240624_abfin(2).pdf. ↩
87. https://www.neep-poverty.org/wp-content/uploads/2026/06/The-Roadmap-for-Eradicating-Poverty-Beyond-Growth.pdf. ↩
88. https://www.thelancet.com/journals/lanplh/article/PIIS2542-5196(25)00086-5/fulltext. ↩

The systemic failures of carbon credits described above have a direct impact on human rights on the ground, with grave human rights violations being extensively documented at the project and local levels (annex III).⁸⁹ In particular, displacement, dispossession and restrictions on the use of traditional territories disrupt Indigenous Peoples’ and peasants’ knowledge and food systems, jeopardizing food security while creating new forms of economic and fossil fuel dependency.⁹⁰ Reports and judicial cases indicate that the following are frequently disregarded: environmental impact assessments; public consultations; free, prior and informed consent; and fair and equitable benefit-sharing.⁹¹ Even when these processes take place, they are often inadequate vis-à-vis cultural and territorial integrity and fail to respect opposition grounded in self-determination.⁹² Even when safeguards are improved, they are often poorly implemented, due to prevailing tick-box approaches and a lack of human rights expertise among operators.

89. See footnote 6. ↩
90. A/HRC/55/37; submission by the International Indian Treaty Council; Trujillo Guerrero, “Créditos de carbono”; and https://doi.org/10.1016/j.jrurstud.2014.06.002. ↩
91. https://interactive.carbonbrief.org/carbon-offsets-2023/mapped.html. ↩
92. https://www.hrw.org/news/2024/02/28/cambodia-carbon-offsetting-project-violates-indigenous-groups-rights. ↩

The Special Rapporteur on the Rights of Indigenous Peoples thus called for a moratorium on carbon credits until existing and future crediting and certification schemes were explicitly required to comply with international human rights standards (A/HRC/54/31). The Working Group on the rights of peasants and other people working in rural areas warned about heightened risk arising from carbon credits in the context of unprecedented land accumulation (A/HRC/60/33),⁹³ particularly in relation to the following: blue carbon credits that may lead to restricted access to marine territories and resources for artisanal fishers, and negative impacts of marine carbon dioxide removals beyond testing areas;⁹⁴ and “climate-smart” practices, which increase the risks that smallholder farmers will become dependent on corporate proprietary software, technologies and inputs, undermining agroecological practices and knowledge systems.⁹⁵

93. Submissions by FIAN Belgium, FIAN International, Fastenaktion and Native Amazon Operation. ↩
94. Submissions by the Pacific Community, the Food and Agriculture Organization of the United Nations (FAO), Instituto Linha D’Água and FIAN International. ↩
95. Submissions by Just Food Transition Network and Eurogroup for Animals and its member organizations. ↩

These human rights impacts have gendered dimensions. Women face structural barriers in accessing benefits and compensation from carbon credit projects due to unequal participation and inequitable natural resource tenure, with meaningful positive impacts concentrated in household device projects. Women and girls also face disproportionate livelihood disruption in the context of relocations.⁹⁶ In addition, carbon credits erode traditional governance. Even when the appearance of respecting Indigenous Peoples’ self-determination and peasants’ autonomy is maintained, actual decision-making power is transferred to external actors (developers, financial intermediaries and government agencies) who have predetermined project design.⁹⁷ In some instances, these projects can also create an environment conducive to exploitation by non-State armed groups.⁹⁸

96. https://doi.org/10.1093/sp/jxaf014. ↩
97. Trujillo Guerrero, “Créditos de carbono”; and Colombia, Constitutional Court, sentence T-248 (2024). ↩
98. Colombia, Ombudsman’s Office, early warning No. 007-24 (18 March 2024). ↩

It is imperative to understand these violations of Indigenous Peoples’ and peasants’ human rights as cumulative, adding to those already arising from intergenerational extractive activities, exclusionary conservation and climate interventions (including those related to renewables and energy transition minerals),⁹⁹ further degrading ecosystems vital to their survival, cultural identity and livelihoods. This is also a “double burden” placed on Indigenous Peoples, as they are not only among those most affected by climate change, but also expected to bear the negative impacts of the results of mitigation efforts.

99. A/70/301, A/80/188, A/HRC/24/41, A/HRC/36/46 and A/HRC/54/31. ↩

Lack of or inadequate access to remedies, which is frequent across international carbon crediting mechanisms and remains a specific concern under the Paris Agreement,¹⁰⁰ also undermines the identification of foreseeable impacts and lessons learned that can contribute to the prevention of similar human rights violations locally and effective climate mitigation globally.

100. https://www.ohchr.org/en/statements-and-speeches/2022/11/cop27-urgent-need-respect-human-rights-all-climate-change-action. ↩

From a systemic perspective, violations of Indigenous Peoples’ and peasants’ human rights represent disregard for Indigenous science and local knowledge in developing climate solutions that are aligned with the interconnectedness of planetary health and the human right of all to a healthy environment. Paradoxically, carbon credits focus on changing the behaviour of peoples and communities who are most affected by climate change and least responsible for it, instead of addressing the dominant commercial drivers of climate harm. The most paradigmatic case is large-scale agrifood businesses, which are driving deforestation and soil degradation and expanding fossil fuel and fossil-based chemical dependency, while undermining Indigenous Peoples’ and peasants’ knowledge systems and practices (A/HRC/62/44). Nature- or technology-based carbon credits that divert attention and delay the defossilization of food systems are thus undermining the human rights of Indigenous Peoples, peasants and rural women, as well as the human rights to a healthy environment, development, health and food of present and future generations.

The above analysis confirms that carbon credits tend to benefit disproportionately businesses that are most responsible for climate harm, rather than States and communities on the front line of climate change. Evidence on the links between land accumulation, financial speculation, greenwashing and fraud, and corporate power concentration in international carbon crediting mechanisms, points to an acute need to ensure corporate accountability.

Carbon credits contribute to competition for land with other uses, such as food production, biodiversity conservation and ecosystem services, as well as renewables development.¹⁰¹ The World Bank warned that unclear land ownership combined with carbon offset value can incentivize “green land-grabbing”, particularly in customary tenure contexts.¹⁰² According to FAO, one in four carbon offsets undermines customary land tenure and lacks transparency on financial terms and proper community consultation or free, prior and informed consent, leading to unresolved land conflicts and environmental harm.¹⁰³ Heightened concern surrounds the fact that these land grabs may appear to be formally legitimized under the Paris Agreement.¹⁰⁴

101. https://www.ipcc.ch/site/assets/uploads/2019/11/SRCCL-Full-Report-Compiled-191128.pdf ↩
102. https://blogs.worldbank.org/en/developmenttalk/carbon-credits-and--green-land-grabbing---guarding-against-the-p. ↩
103. https://openknowledge.fao.org/items/10293134-009e-416b-876b-84158530c89d. ↩
104. Submission by GRAIN. ↩

Such competition is occurring in an unprecedented global context of land accumulation and concentration of corporate power, of which carbon credits are a part. The Working Group on the rights of peasants and other people working in rural areas reported that global carbon offset markets “reached $414 billion in 2023, with projections up to $1.8 trillion by 2030, representing roughly 20 per cent of all large-scale land acquisitions”. They noted that Blue Carbon (a company based in the United Arab Emirates), which focuses on carbon projects in Africa, and Shell (a fossil fuel company based in the United Kingdom of Great Britain and Northern Ireland), which has growing involvement in carbon offset markets, are among the top landowners in the world (A/HRC/61/51). For instance, Blue Carbon secured agreements for carbon offset projects spanning over 24.5 million hectares across Liberia (up to 10 per cent of national landmass over a 30-year tenure¹⁰⁵), the United Republic of Tanzania (8 per cent of national landmass), Zambia and Zimbabwe (about 20 per cent of national landmass¹⁰⁶) (A/HRC/60/33). The most affected region, in terms of land area, is Africa.¹⁰⁷

105. https://journals.co.za/doi/10.10520/ejc-nagenda_v2023_n91_a5. ↩
106. https://e360.yale.edu/features/al-maktoum-uae-dubai-africa-carbon-credits. ↩
107. Submission by GRAIN. ↩

Because the claimed benefits of land-based carbon offsets depend on carbon storage over time, many projects are designed to operate over exceptionally long time horizons, often spanning several decades. Decisions taken today concerning land allocation, resource control and ecosystem management may bind future generations to restrictive arrangements that limit access to land, livelihoods and cultural practices, with limited opportunities for review or withdrawal, risking entrenching intergenerational patterns of exploitation and dispossession.¹⁰⁸ Restricted access to information for the general public and for oversight or social monitoring bodies undermines democratic control of initiatives, affecting everyone’s human rights to a healthy environment, participation in decision-making and access to justice, particularly when contracts are governed by private law and subject to commercial arbitration.¹⁰⁹

108. Submission by Jamma Conservation and Communities; and https://www.climatecasechart.com/documents/request-for-an-advisory-opinion-on-the-human-rights-obligations-of-african-states-in-addressing-the-climate-crisis-other_d201. ↩
109. Trujillo Guerrero, “Créditos de carbono” and https://doi.org/10.17528/CIFOR/006705. ↩

It is thus essential for all States to closely monitor and curb land accumulation by carbon credit operators, both to prevent localized gross violations of human rights (including the rights to housing, food, water, health, education, work, security of the person, cultural and religious rights, and freedom of movement)¹¹⁰ and in terms of cumulative impacts on the human rights to a healthy environment, health, food and water of present and future generations.

110. https://www.ohchr.org/en/special-procedures/sr-housing/forced-evictions. ↩

UNCTAD cautioned about a speculative dynamic across intermediaries and secondary markets in the circulation of carbon credits as financial assets, increasing the distance between the original mitigation activity and the ultimate buyer. This further dilutes the distribution of benefits to host communities and the accountability of intermediaries with no direct stake in climate or human rights outcomes.¹¹¹ This also means that carbon credit market participants occupy multiple, conflicting roles: operators may hold proprietary interests in the same credits they trade, while market intelligence providers may offer advice on credits in which they hold investments.¹¹²

111. https://unctad.org/publication/role-voluntary-carbon-markets-global-climate-action. ↩
112. https://doi.org/10.1787/500198e1-en. ↩

These dynamics are compounded by lack of transparency.¹¹³ In 2023, 9 out of 10 intermediaries did not disclose fees or profit margins.¹¹⁴ The identity of the final user was disclosed for only 55 per cent of retired credits, meaning that nearly half of all market activity could not be attributed to an identifiable buyer with a verifiable climate purpose.¹¹⁵ Investigations by journalists and non-governmental organizations reveal that developers and brokers make huge margins, ranging from between 85 and 95 per cent to up to seven times the purchase price.¹¹⁶ Commentators have pointed to the standardized data infrastructure that is normally present in other financial markets, where price discovery and transparency depend on reliable, machine-readable data.¹¹⁷

113. https://www.energypolicy.columbia.edu/wp-content/uploads/2025/12/COP-30-PCCM-CGEP_EventSummary_120125-2.pdf and https://www.iosco.org/library/pubdocs/pdf/IOSCOPD774.pdf. ↩
114. https://unctad.org/system/files/official-document/ldc2024en.pdf. ↩
115. https://www.oecd.org/content/dam/oecd/en/publications/reports/2025/06/exploring-governments-efforts-to-shape-carbon-credit-markets_dac6ff0f/0bafe9af-en.pdf. ↩
116. https://unearthed.greenpeace.org/2022/05/02/carbon-offsetting-market-climate. ↩
117. https://www.energypolicy.columbia.edu/wp-content/uploads/2025/12/COP-30-PCCM-CGEP_EventSummary_120125-2.pdf. ↩

Fossil fuel, aviation and car-making companies are the main buyers of carbon credits.¹¹⁸ Tesla earned a record $2.8 billion in 2024 from selling carbon offsets to car manufacturers.¹¹⁹ Growing evidence points to carbon credits creating an enabling environment for greenwashing (projects that are compliant with deficient methods, which leads to the issuance of low-integrity, high-risk credits) and even fraudulent conduct¹²⁰ (projects that are not compliant with methods, whether deficient or not). A total of 87 per cent of the carbon credits retired by the top 20 companies between 2020 and 2023 carry a high risk of failing to deliver real reductions.¹²¹

118. https://carbonmarketwatch.org/2025/02/12/behind-the-green-curtain-big-oil-and-the-voluntary-carbon-market. ↩
119. https://carboncredits.com/tesla-hits-record-high-sales-from-carbon-credits-at-1-79b/ and https://www.politico.com/news/2025/01/18/musk-tesla-climate-credits-trump-00198794. ↩
120. Submission by Just Food Transition Network and https://dx.doi.org/10.1038/nclimate2772. ↩
121. https://doi.org/10.1038/s41467-024-51151-w. ↩

Governments are increasingly restricting the use of carbon neutrality claims¹²² and/or demanding more rigour and transparency in companies’ emissions reduction reports.‍¹²³ The need to impose these quantitative limits and strict recognition requirements is itself a signal of a structural distrust of the environmental integrity of carbon credits, while there is an increasing risk of further fragmentation if each jurisdiction develops its own detailed filters without international coordination.¹²⁴ Meanwhile, national litigation over carbon neutrality claims is growing (annex III).¹²⁵

122. Directive (EU) 2024/825 of the European Parliament and of the Council of 28 February 2024 amending Directives 2005/29/EC and 2011/83/EU as regards empowering consumers for the green transition through better protection against unfair practices and through better information. ↩
123. https://repository.nls.ac.in/cgi/viewcontent.cgi?article=1287&context=ijclp. ↩
124. https://doi.org/10.1787/500198e1-en. ↩
125. See footnote 6. ↩

There is also evidence of growing corporate power concentration in relation to “carbon aggregators”, large developers that use their accumulated knowledge from multiple projects to navigate the complexity of carbon credit markets. These “carbon aggregators” are increasingly integrating vertically with major buyers such as fossil fuel companies. As a result, fossil fuel companies that own carbon credit projects are able to buy carbon credits directly, as well as indirectly through carbon aggregators in which they are significant shareholders.¹²⁶

126. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=7145338. ↩

There is also evidence pointing to major investments in carbon-removal credits by Microsoft, Amazon and Google,¹²⁷ and growing direct engagement in international climate governance.¹²⁸ States should scrutinize these investments in the light of the role of these companies in spreading climate disinformation in favour of fossil fuel interests (A/HRC/59/42) and undermining civic engagement (A/HRC/62/45), expanding data centres with little transparency on their energy, water, mineral and land use (A/80/188 and A/HRC/60/30) and generally being part of the fossil fuel-based economy, including in relation to large-scale food systems and the military-industrial complex (A/HRC/62/44).

127. Kenza Bryan and Jana Tauschinski, “Microsoft throws its weight in carbon removals market”, Financial Times, 4 September 2025. ↩
128. https://influencemap.org/insight/Inside-Industry-Lobbying-Attempts-to-Water-Down-Paris-Agreement-Article-6-4-37762. ↩

In particular, conflict of interest should be addressed, taking into account that one of the main challenges for carbon credit markets is information security and data interoperability.¹²⁹ Meanwhile, necessary data are needed for the explicit integration of artificial intelligence in mitigation scenarios,¹³⁰ in the context of a globalized data economy characterized by the concentration of power among a few large companies that capture most of the economic benefits arising from data use.¹³¹ In the context of a community-led project, for instance, Microsoft played a triple role: provider of the cloud underlying the carbon crediting platform; buyer of carbon credits through that same platform; and a key player in the provision of digital infrastructure and services in the rural areas. Smallholder farmers leading the project, however, lacked information on what data were collected (personal and farm data, relevant considering the intrinsic connection of their knowledge systems and agricultural practices) and how they were used and would be used in the future, with risks of profiling, surveillance and loss of effective control over farming practices and territories, including for future generations.¹³²

129. https://openknowledge.worldbank.org/entities/publication/e6e0abbf-cbde-4b3a-82e6-8c4249cf0b46. ↩
130. https://assets-eu.researchsquare.com/files/rs-8582166/v1_covered_24669d97-6d16-4a50-9b39-1ac8d1d0e5f1.pdf?c=1772113633. ↩
131. https://www.fian.org/files/is/htdocs/wp11102127_GNIAANVR7U/www/files/Coffee_Carbon_Markets_20240624_abfin(2).pdf. ↩
132. Ibid. ↩

While some shortcomings of carbon credits have been addressed through incremental improvements to methodologies and governance over 20 years, there are inherent structural faults in carbon credit markets that do not align with the best available science and with international climate and human rights obligations. This can amount to “a form of ‘predatory delay’ for which we simply don’t have the time” in an increasingly likely overshoot scenario.¹³³

133. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=7145338. ↩

These structural defects of carbon credit markets are misaligned with the advisory opinion of the International Court of Justice on the obligations of States in respect of climate change, notably with regard to States’ stringent due diligence obligations to:
(a) Prevent significant environmental and climate harm in accordance with the best available science and the precautionary principle;
(b) Align nationally determined contributions with the 1.5°C temperature limit and the highest possible ambition in domestic climate action;
(c) Enact effective domestic legislation in accordance with international obligations on climate, biodiversity, and ocean and land degradation, and ensure corporate accountability;
(d) Protect international human rights law, including the human right to a healthy environment.

Specifically, these structural misalignments undermine:
(a) Everyone’s human right to a healthy environment, including the substantive protection of interconnected life-supporting systems, access to information, participation in decision-making, and access to justice and effective remedies, with long-term implications for children’s and future generations’ human rights;
(b) Democratic processes to assess whether maximum available resources are effectively devoted to climate measures that provide the strongest guarantee of preventing foreseeable environmental and human rights harm;
(c) The effective prevention of foreseeable gross violations of the human rights, including with regard to housing, food, water, health, education, work, cultural rights and freedom of movement) of Indigenous Peoples, peasants and other rural communities, with compounded impacts on women and intersectional discrimination for other community members, and cumulative impacts on the right of all to a healthy environment.

Given the erga omnes nature of States’ climate obligations, any State may challenge the regulatory frameworks of other States that permit the trading of ineffective or speculative carbon credits, without needing to demonstrate specific harm to its own territory or population.¹³⁴

134. Trujillo Guerrero, “Créditos de carbono”. ↩

Accordingly, States, individually and as part of international cooperation, and all United Nations agencies involved in international carbon crediting mechanisms should urgently ascertain:
(a) Which States are engaging in carbon markets without having taken all the means at their disposal to protect the climate system in accordance with their responsibilities, capabilities and maximum available resources, notably with regard to nationally determined contributions that are not aligned to the 1.5°C temperature limit and do not reflect the highest possible ambition;
(b) How much public finance has been invested in preparedness for and the development of carbon markets, and how much private finance has been mobilized, comparing it with public climate finance in the light of the obligation to provide maximum available resources to the protection of human rights in the context of climate change, including with regard to adaptation, loss and damage, social protection and universal basic services as part of the just transition;
(c) To what extent carbon credit markets systematically fail to deliver effective climate change mitigation, to the detriment of everyone’s human right to a healthy environment;
(d) Which specific categories of projects and sets of circumstances support continued fossil fuel reliance;
(e) Under which specific conditions specific categories of projects (aiming at “high-hanging fruit”) can provide sufficient guarantees of ensuring effective protection of the climate system, biodiversity, soil, the ocean and human rights in accordance with the advisory opinion of the International Court of Justice.

These assessments should be also undertaken urgently under the Convention on Biological Diversity and any other international framework that may consider any crediting mechanisms that may undermine State obligations to protect the climate system, the environment and human rights.

Individually and as part of international cooperation, States should:
(a) Prioritize deep emissions reductions, notably the defossilization of energy and food systems, in line with their highest possible ambition, before establishing a limit on the share and a minimum price for emissions reductions that could be purchased and achieved abroad, or sold and transferred abroad, via internationally transferred mitigation outcomes;
(b) Prohibit the purchase of low-cost, low-integrity carbon credits;
(c) Discontinue categories of carbon credit schemes that perpetuate systematic failures to ensure mitigation, defossilization in energy and food systems, or protection of the human rights of Indigenous Peoples, peasants, and rural communities and workers, including women, children and future generations;
(d) Use all available legal means to ensure transparency, assess cumulative impacts on the human rights of present and future generations, and address speculation, market abuse, land accumulation and conflicts of interest in carbon credit markets;
(e) Establish corporate liability for human rights violations, including extraterritorial ones, that encompasses all actors in the carbon crediting value chain.

Project developers, intermediaries and any other businesses investing, providing services related to, or buying credits in the context of carbon markets (standard setters on both the demand and supply sides, carbon crediting programmes, registry operators, trading platforms, marketplaces, financial institutions, data and analytics providers, technology firms, validation and verification bodies, legal and consulting firms, multilateral organizations, and regulatory authorities¹³⁵) should:
(a) Prioritize direct emissions reductions within their own operations and value chains over reliance on carbon offsets;
(b) Refrain from engaging in carbon credits that support continued fossil fuel dependency, delay defossilization or lead to foreseeable human rights violations in the short, medium and long-term, or ineffective climate mitigation outcomes;
(c) Refrain from exercising undue influence on local, national and international decision-making processes;
(d) Ensure timely, effective and culturally appropriate access to information;
(e) Ensure a separation between financial incentives from certification and from issuance functions (such as fixed-fee, licensing or volume-neutral models), as well as the coherence and enforceability of governance arrangements.

135. https://openknowledge.worldbank.org/entities/publication/e6e0abbf-cbde-4b3a-82e6-8c4249cf0b46. ↩

In exploring how to further develop transparent, democratic and more effective regulation of carbon credits, States and experts must consider the global trend of regression of domestic environmental and human rights law, as well as corporate power accumulation, including due to unprecedented market power concentration across fossil fuel, chemical, large-scale food and beverage, and technology companies, and land accumulation. In addition, regulation should consider the priority climate mitigation action identified in previous reports: decentralized wind and solar renewables, and defossilized and detoxified small-scale food systems that simultaneously advance mitigation, adaptation and responses to loss and damage, poverty reduction, biodiversity protection and self-determination (A/HRC/59/42, A/HRC/62/44 and A/80/188). This approach also enhances security and autonomy for States in the current geopolitical context of fuel and food price crises.

Critiques of neocolonialism should be engaged with substantively, with historically high-emitting States exploring the potential of carbon credits not only to respond to the highest possible ambition of developing countries but also to provide climate reparations (such as support for defossilization, combined with reconstruction of infrastructure and ecosystem restoration that are integrated in decentralized renewables and agroecology). This could help with regard to reclaiming space in economies to develop regenerative development models that are based on local priorities, Indigenous science and peasants’ knowledge, and could result in the sharing of learning with urban communities and supply chains that are also on a defossilization path (A/80/188 and A/HRC/62/44).

Projects that could offer sufficient scientific, legal and economic guarantees to support holistic approaches to agroecology, decentralized renewable energy, adaptation, ecosystem restoration and climate reparations should prioritize initiatives led by Indigenous People, peasants and women.¹³⁶ To that end, full compliance with international human rights obligations and specific human rights expertise must be embedded in the rules and practices of all involved in carbon markets, subject to participatory strategic environmental assessments and environmental impact assessments; free, prior and informed consent and meaningful consultations; and fair and equitable benefit-sharing that is shaped by their autonomous leadership, knowledge systems and life projects (A/80/188, paras. 65–67). All the specific conditions identified by the Special Rapporteur on the rights of Indigenous Peoples to ensure the protection of Indigenous Peoples’ human rights in carbon credit markets should be fulfilled (A/HRC/54/31). In addition, access to information about the technologies that are used, how they function, how they are developed and how decisions are made within technological systems, as well as the right to refuse the sharing of data, should be guaranteed.

136. https://www.bcafn.ca/sites/default/files/docs/reports-presentations/BCAFN-Carbon%20Offset%20Discussion%20Paper_Feb%202022_%20Web_0.pdf and submission by Proforest. ↩

The secretariat of the United Nations Framework Convention on Climate Change, the United Nations Development Programme, the United Nations Environment Programme, FAO and other United Nations agencies, as well as multilateral development banks and bilateral development finance institutions, should support States and business entities in implementing the recommendations of the present report, acting in accordance with the advisory opinion of the International Court of Justice.