"Auditors can’t save carbon offsets", 10 July 2025

"The theory behind carbon offset projects is appealing: Instead of an organization cutting its own emissions, it can fund lower-cost carbon-reducing projects elsewhere to “offset” its emissions. The reality has been less encouraging. Most carbon offset projects that have been closely scrutinized—including projects for forest protection, renewable energy, and methane-reducing methods of rice cultivation—have greatly exaggerated their climate benefits. More than 80% of issued credits might not reflect real emission reductions. This has alarmed potential offset purchasers and stalled carbon offset markets. Efforts to resuscitate the beleaguered offset market tout third-party auditing as “essential” to ensuring credit integrity. That reliance is misplaced.

Reliable assurance that a project’s declared ton of carbon savings equates to a real ton of emissions removed, reduced, or avoided is crucial. Yet extensive research from many contexts shows that auditors selected and paid by audited organizations often produce results skewed toward those entities’ interests. A field experiment in India, for example, found that air and water pollution auditors who were randomly assigned and paid from a central fund reported emissions at levels 50 to 70% higher than auditors selected and paid by audited firms...

Despite many claims today that auditing is vital to assuring carbon credit integrity, auditors have been required all along and have failed to prevent substantial credit overclaiming. It is rarely acknowledged that all of the credit overclaiming projects that have stirred so much controversy were ratified by third-party auditors under the same auditor selection and payment system that offset advocates rely on today. Auditor-approved projects have ignored registries’ directives to be conservative and have instead chosen methods and assumptions that produce more credits. For example, an auditor agreed that a forest preservation project had a zero fire risk rating despite the auditor’s direct observation of unattended fires throughout the project site.This weakness cannot be attributed to just a few auditors. In a recent report, we share findings from a review of 95 projects that sold carbon reduction credits and were registered with Verra, the largest voluntary carbon credit registry. These projects followed the usual protocol: Developers claimed a number of credits, auditors reviewed and signed off, then the registry reviewed submissions and decided on the number of credits to issue. We selected these projects because they were later found by the registry or by peer-reviewed research to have substantially overclaimed credits. Of the 33 Verra-certified auditors at the end of 2024, 21 performed one or more audits done of these problematic projects, indicating that criticism should be directed not at individual auditors as much as the structure of the system that fosters these outcomes.

The offset system does little to counteract these outcomes because all key market participants benefit from inflated claims about carbon credits. Project developers prefer more credits to fewer. Nearly all registries in voluntary markets depend on revenues from issuing credits, so it isn’t in their interest to insist on sufficient levels of auditor rigor that would reduce credits awarded. Auditors seek business in a market where there is competitive advantage to being a reliable endorser of developers’ claims. Although ongoing efforts to modify methodologies can help, they won’t eliminate subjective judgments underlying these credits that introduce the opportunity for bias. Some registries have taken steps that they claim will bring about greater auditor accountability, but these don’t address the foundational problem: Auditors are unlikely to stay in business if they disapprove credits at the high rates that research suggests would be appropriate today.

Auditing’s weaknesses are too often ignored when advocates of more expansive offset markets tout auditors as a guarantor of credit integrity. Mounting pressure to boost demand for offsets, especially to address value chain emissions, will put additional pressure on the current auditing structure, which has failed to prevent serous credit integrity problems at present market levels. Given the high planetary stakes in carbon policy choices being made now, it is past time to recognize that third-party auditors selected and paid by the audited organizations are not the bulwark for credit integrity they are claimed to be."