Addressing scandals and greenwashing in carbon offset markets: A framework for reform

Abstract

Voluntary carbon markets (VCMs) are becoming increasingly central to corporate climate strategies and global emissions reduction efforts. However, recent carbon scandals and greenwashing controversies have exposed major integrity gaps. This review synthesizes evidence from academic research, regulatory reports, and case studies to analyze systemic weaknesses—such as fraudulent crediting, inflated baselines, lack of additionality, and unverifiable climate claims—that undermine the credibility and effectiveness of carbon offsetting. Poor governance, inadequate monitoring and verification (MRV), and limited accountability have triggered reputational and financial risks, diminishing trust in VCMs as legitimate climate finance mechanisms. To address these shortcomings, we propose a six-pillar reform framework comprising (1) transparency, (2) verification integrity, (3) accountability, (4) environmental and social safeguards, (5) smart technologies, and (6) strategic alignment with global goals. The framework is grounded in practical tools, including blockchain-enabled registries, AI-assisted MRV, rights-based standards, and legal mechanisms to improve credit quality and stakeholder confidence. We also evaluate emerging regulatory instruments—such as Article 6 of the Paris Agreement—and integrity initiatives aimed at harmonizing rules and preventing abuse. Drawing from real-world REDD + projects, we assess how digital innovations can support permanence, additionality, and leakage prevention, while also recognizing their limitations without institutional enforcement. Aligning carbon market reforms with broader sustainability and equity objectives can enhance co-benefits—such as biodiversity protection, air quality improvement, and community resilience—while supporting net-zero transitions and strengthening the legitimacy of post-2025 climate finance systems.