- A recent study reviewed 95 flawed carbon credit projects registered under Verra, the world’s largest voluntary carbon credit registry, and found signs of systematic flaws with the auditing process.
- These issues suggest that carbon credits often fail to accurately represent actual emission reductions, thereby undermining global climate mitigation efforts.
- The findings further erode trust in the carbon market, with specialists warning that its entire credibility relies on independent verifiers; “The voluntary carbon market is broken,” an expert said.
When questions arise about the integrity of carbon credits, project developers often point to one key safeguard: independent auditors who validate their credit claims. However, new research from the University of Pennsylvania Carey Law School suggests these auditors may not be as independent as they appear — a systemic problem that could be compromising carbon projects.
The study, published on the Social Science Research Network, examined 95 projects registered with Verra, the world’s largest voluntary carbon credit registry. These projects were deliberately selected because they had been previously flagged for overstating credits. The researchers found not only had these projects been initially verified by auditors, but two-thirds of the Verra-accredited auditors who worked on them failed to identify the flaws.
“This is evidence of a structural problem with the auditing program,” said Cynthia Giles, former senior advisor of the U.S. environmental agency, EPA, under President Joe Biden and co-author of the study. “No auditor can provide a truly independent, unbiased assessment. The point is not to blame auditors — the system itself makes independent reviews impossible.”
Globally, there are hundreds of validation and verification bodies (VVBs), auditing firms specializing in carbon offset initiatives. Among the largest are European companies SGS, DNV (Det Norske Veritas) and Bureau Veritas, which employ auditors with expertise in forestry, carbon accounting and climate science.
Project developers hire them to validate projects at every stage, from planning through monitoring. To secure certification from registries like Verra, which lends credibility to their projects, auditors must also have accreditation from these registries.
Giles argues there’s a conflict of interest in this process. Since auditors are getting paid by developers, they might interpret evidence in favor of their clients, even if that’s not a conscious decision. “It is potentially fatal for an auditor to say that a project is not worth the number of credits that the developer wants. It could strain that professional relationship.”
Registry organizations face a similar conflict of interest. Verra earns fees based on the number of carbon credits a project registers. The more credits claimed, the more revenue the company generates. “The entire system is structured to maximize the number of credits. The developer, the auditor, the registries and the buyers all benefit when there are more credits. Everybody has the same interest,” Giles told Mongabay.
The author also emphasizes that carbon crediting projects are inherently complex, which makes the auditor’s work subjective. “In a single audit, I counted over 100 judgments made by auditors to determine the total number of credits,” she said. “You simply cannot expect third-party auditors to be the sole guarantors of credit integrity.”
In response to the University of Pennsylvania Law School paper, a Verra spokesperson told Mongabay that the study’s conclusions are “problematic” because they rely on sources and studies that “do not list the auditing system as the fundamental problem.”
The spokesperson also defended Verra’s record of holding auditors accountable. “Verra has proven its willingness to act against auditors and projects when needed,” the statement reads (read the complete answer here). “Verra has already suspended four VVBs involved in rice projects when their performance fell short, underscoring that the system identifies and addresses problems with real consequences.”
The company also highlighted that it has implemented new measures to prevent similar issues in the future. In 2024, the organization launched a performance monitoring program (PMP) that features a scorecard system to evaluate auditors on their consistency, accuracy and adherence to standards. The company had already published a formal response to the research on its website.
Broken trust
Isa Muller, an expert on global carbon markets at Carbon Market Watch, said the paper deals another blow to a market struggling to regain credibility. “The carbon credit market relies on a lot of trust,” Muller told Mongabay. “Trust in the standards, trust in the verifiers, trust in the intermediaries. If you can’t depend on the independence of verifiers, the whole thing comes crashing down.”
She hopes the research will draw more attention to auditing, often overlooked but crucial to the functioning of the carbon credit system. “Auditors are the gatekeepers of carbon credits,” Muller said. “They ensure that projects meet all requirements before credits are issued. That’s a big responsibility on their shoulders.”
Muller said she believes auditing problems could be addressed through structural reforms. The responsibility lies with the registries like Verra, she said, which set the rules, methodologies and standards for carbon credit projects under the Verified Carbon Standard (VCS).
A 2024 report by the carbon credit ratings firm Renoster titled Fixing Verra proposed several reforms to reduce auditing bias. One recommendation was to establish a pool of independent verifiers, selected at random to work on global projects. The system would be modeled on the U.S. judicial system, in which judges are randomly selected to trial cases.
The report also recommended shifting the auditor’s focus from validating carbon credits to actively identifying problems. One way to achieve this would be to have auditors paid from a global fund rather than directly by project developers. The report further suggests providing verifiers with bonuses for detecting instances of overclaimed credits.
As a direct response to these suggestions last year, Verra stated it would be “complicated” to assign audits randomly. In case the auditors are not from the region, “this alone could result in the audit costing two times more.” The company indicated it would not be implementing the proposed changes to its auditing structure.
Deeper issues
Researcher Benedict S. Probst sees the problems with auditors as just the tip of the iceberg. “The voluntary carbon market is broken,” he told Mongabay. Probst leads the Net Zero Lab, a research group at the Max Planck Institute for Innovation and Competition in Munich, Germany. “Even if you fix the audits, you still often have flawed methodologies..”
Probst was the lead author of a 2024 article published in Nature Communications, which reviewed 2,346 carbon mitigation projects worldwide. These projects accounted for 20% of all carbon credits issued to date — nearly 1 billion tons of CO2. The researchers estimated that more than 84% of the credits issued did not reflect real emission reductions.
Other studies have similarly pointed to the disparity between promised carbon credits and actual reductions in emissions. A June 2025 report by Corporate Accountability analyzed 43 of the largest carbon offset projects in 2024 and found that over 47.7 million carbon credits were unlikely to deliver the promised emissions reductions — roughly 23% of all credits retired in the voluntary carbon market last year.
“These problems are so systemic and far-reaching that the entire system needs fundamental reform,” Probst said. “Otherwise, it won’t meaningfully contribute to climate change mitigation. The first step is to exclude project types that are clearly ineffective. Then comes addressing methodology, auditing and permanence issues.”
For the researcher, it is also crucial to address the other side of carbon offsetting projects — the corporate buyers. Many are declaring carbon neutrality based on purchasing credits while continuing to burn fossil fuels. “If companies are not changing their business models more fundamentally, then these carbon credits are definitely not having the impact they claim — to put it mildly.”
Carbon credit projects, particularly those from the REDD+ framework (the U.N. system for reducing emissions by protecting forests in less industrialized countries), have been the subject of intense scrutiny. One study published in 2024 found that projects often fail to include Indigenous peoples, who have a crucial role in tackling deforestation. An investigation conducted by Mongabay and The New Humanitarian has uncovered that the U.N.’s claim of carbon neutrality by acquiring carbon credits is compromised by various projects that have environmental concerns. Last year, investigations by Mongabay revealed timber laundering through REDD+ projects and partnerships with sawmill owners with a long history of environmental fines in the Brazilian Amazon.
Banner image: Environmental agents use satellite imagery analyses and on-site inspections to identify the flow of illegal wood, such as this seizure from the Cachoeira Seca Indigenous Territory, using timber credits. Image by IBAMA via Wikimedia Commons (CC BY-SA 2.0).
Corrections (9-9-2025): A previous version of this article stated that two-thirds of the Verra-accredited auditors who worked on the projects failed to identify the flaws, according to the study. They were actually involved in signing off on the projects. The story also identified Cynthia Giles as a former senior advisor of the EPA under President Obama, but she acted in that role under Biden. Finally, the story also stated that companies generate more revenue as more carbon credits are approved in the projects, but they generate more revenue as more credits are claimed. The piece was corrected.
Top brands buy Amazon carbon credits from suspected timber laundering scam
Citations:
Coglianese, C., & Giles, C. (2025). Third-party auditing cannot guarantee carbon offset credibility. doi:10.2139/ssrn.5345783
Probst, B. S., Toetzke, M., Kontoleon, A., Díaz Anadón, L., Minx, J. C., Haya, B. K., … Hoffmann, V. H. (2024). Systematic assessment of the achieved emission reductions of carbon crediting projects. Nature Communications, 15(1). doi:10.1038/s41467-024-53645-z
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