With the climate crisis at the forefront of many people’s minds, the Voluntary Carbon Market (VCM) has become a crucial tool for companies seeking to offset their carbon emissions and contribute to a more sustainable future. This comprehensive guide aims to provide a thorough understanding of how the VCM operates, the urgent need for an efficient carbon market, and insights into how new technologies are transforming emissions trading. Below we unpack the mechanics of the voluntary carbon market, its potential for addressing the environmental challenges facing the world today, and the changes necessary to make that a reality.

What is the Voluntary Carbon Market?

The Voluntary Carbon Market (VCM) is a market where organisations can voluntarily purchase carbon credits to offset their greenhouse gas emissions. It operates on the principle of carbon neutrality (also known as a state of net-zero carbon dioxide emissions) and provides companies and individual actors with the opportunity to invest in projects that reduce or remove carbon emissions.

The VCM operates separately from mandatory compliance markets, such as the cap-and-trade systems implemented by governments. Participation in the voluntary market is based on voluntary actions and commitments to environmental sustainability.

“Becoming carbon neutral is a key goal for organisations concerned with sustainability and playing their part in addressing the climate crisis. By being carbon neutral you are essentially ensuring that your business doesn’t cause an increase in the amount of carbon in the atmosphere.”
How Does the Carbon Market Work?

The voluntary carbon market operates through a series of steps that involve the creation, certification, and trading of carbon credits or offsets. Carbon credits are a useful way to measure and trade in greenhouse gas (GHG) reductions. Each carbon credit represents one tonne of GHG emission reductions or removals from the atmosphere.1 By voluntarily purchasing carbon credits, companies actively reduce their carbon footprint and are supported in reaching net-zero emissions.

1. What are carbon markets and why are they important? climatepromise.undp.org