Navigating Commercial Advisory in the VCM



Navigating Commercial Advisory in the VCM

By Jared Andreatta and Brad Handler


May 16, 2024

Carbon offset credits offered through the Voluntary Carbon Market (VCM) are not easy to evaluate. The credits are issued based on dozens of different climate mitigation activities in dozens of countries and using varied protocols/methodologies, which in turn, do not always have consistent requirements for reporting. This complexity abuts the now well-documented concerns that have arisen about the integrity of carbon credits.

The combination has created space for commercial advisory services. Advisory firms act in ways that resemble “traditional” financial services, i.e. that deal in equity and debt issuance. Broadly, such advisory firms facilitate discovery of investment (buying) opportunities, perform due diligence on credits, and support transactions. As is also the case in financial services/advisory, these carbon advisory firms take different forms. They provide varying breadth of services, including having different levels of expertise and specialization in projects. They also assume varying levels of risk, ranging from pure advisory regarding credits to market making and underwriting.

This paper introduces categories for different carbon commercial advisory firms. In such categorization, it intends to assist buyers select what type of carbon advisory services they need, based on, among other things, their strategic focus and internal resources to perform evaluation. Note that this paper focuses only on this Commercial Advisory function; it does not address other services offered by other actors in the VCM such as rating agencies and standard setters/registries.


The VCM is actually comprised of many marketplaces that transact in carbon offset credits. The credits are generated, or issued, based on a climate mitigation activity that either avoids the emission of Carbon Dioxide (CO2) into the atmosphere or reduces the amount of CO2 in the atmosphere. One credit is issued to represent one ton of CO2-equivalent of avoidance or removal. Offsets can be used by companies (and individuals) to supplement their own, “organic” carbon emission reduction efforts.

The climate mitigation impact may be standardized, but the activities that claim such impact are incredibly varied. Although the majority of projects related to forest preservation (around 25% of the credits issued in 2023 by volume, according to the UC Berkeley Goldman School of Public Policy), there are dozens of activity categories and projects from all over the globe. As such, a prospective buyer must consider what type of projects best align with their financial and sustainability objectives. Furthermore, the assumptions behind credit issuance are unique to each project and reporting practice and methods are not standardized (a function in part of being voluntary, i.e., unregulated, markets), although standard setters’ (e.g., Gold Standard, Verra) requirements to mandate meaningful transparency. Thus, vetting these projects is complex and can be time consuming; in short it is challenging for buyers to identify and assess/perform due diligence on various offset credits.

A separate challenge is that developers of offset credits (i.e., the entity responsible for the climate mitigation activity), face financial challenges. They must absorb the costs of establishing the project and achieving mitigation impact for some time before they can have the results verified and credits issued. Thus developers are interested in selling those issued credits as quickly as possible to sustain their operations.

Approximately 70% of offset credit transactions occur bilaterally, with the balance executed through exchanges (leading exchanges include CBL, run by Xpansiv, and ACX). This weighting to bilateral transactions appears to reflect inertia to some degree — the largest offset exchange trading platforms only started operations in 2020 — but the significant amount of bespoke diligence required, and the absence of a regulated market structure likely have an impact as well.


To address these challenges, numerous companies offer commercial and financial advisory services to both carbon credit developers and buyers, ranging from transactional guidance and help with execution to comprehensive investment strategies and portfolio management. It is worth noting that some of these advisory firms also provide technical advisory services to developers; this technical advisory helps inform these commercial advisors regarding specific project attributes and project conditions more generally. These advisory companies can be segmented into the following general categories:

Marketers primarily facilitate credit sales for carbon project developers. Generally working with only a few developers, marketers’ services include finding and fostering relationships with credit buyers, representing the project developers with in-depth knowledge of their credit offset offerings, and handling sales agreements and other aspects of offset transactions.

Brokers facilitate transactions between credit buyers and sellers, acting on behalf of buyers. Brokers tend to have a much wider “lens” than marketers (i.e. have insight into far more offset credits and the VCM overall). As such, brokers’ services for buyers include credit portfolio strategy development, carbon market advisory and intelligence, and specific offset credit due diligence.

Portfolio Aggregators (PAs) construct and manage portfolios for their clients (offset buyers). This streamlines buyers’ process of building an offset portfolio. PAs vet and perform due diligence on offset credits and then buy (underwrite) offset credits to put into either clients or their own portfolios; if the latter, portions of these portfolios (or individual projects) are then resold to clients.

Investors seek financial returns by providing risk capital to developers, providing funding support to develop their projects. Investors provide this capital in exchange for a stake in the project — generally in the form of a forward agreement for credits to be issued over time at negotiated (and presumed discounted) prices. Investors also often provide technical advisory and help the developers monitor the project performance throughout its life. Investors’ scope tends to be narrow as they are seed investors on a select number of projects.

Figure 1 summarizes the service offerings by commercial advisor type. Figure 2 offers perspective on the positioning of the advisors on two parameters: (1) their breadth of focus (i.e., how many carbon offset projects) and (2) how much risk they assume (and by extension how much they are helping to address or mitigate risk for their clients). Figure 3 provides a table of sample companies within this sector and categorizes them based on their roles. A more detailed review of each of the four types of commercial advisory company follows.

It is worth noting that it is common for companies engaging in this space to “fit” in more than one category; there can easily be overlap, particularly between Brokers and Portfolio Aggregators. Furthermore, many companies offering these services also provide other services, such as technical advisory for developers, which are not addressed herein.















Figure 1: VCM Service Providers














Figure 2: Carbon Commercial Advisory Firms Relative Risk Taking and Portfolio Breadth

















Figure 3: VCM Advisory Company Categorizations


Carbon marketing firms, or marketers, serve project developers, bringing their credits to market and sourcing buyers. Marketers concentrate their attention on a small number of project developers (and some only work with a single developer). This focus allows them to develop deep domain expertise in those developers’ climate mitigation projects, which they use to help sell the credit offsets issued from those projects. Marketers also tend to work with a small number of buyers, which helps the marketer understand if its projects are suitable given the buyers’ offset portfolio strategy and preferences, thus expediting the sale of issued carbon credits. Marketers also handle sales agreements and transactions, streamlining the process for developers.

Marketers are helpful for developers seeking market exposure and for buyers who have an established offset strategy and know what types of offsets they are interested in.

Example: Everland Earth

Everland Earth is a carbon credit marketing company that works with three not-for-profit carbon developers: the Wildlife Conservation Society, Wildlife Works, and Wildlife Alliance. Everland provides exclusive marketing for the project portfolio owned by these developers. Everland’s partner developers’ expertise lies in reducing emissions from deforestation and forest degradation (REDD+) projects. Everland uses its deep understanding of REDD+ benefits and of its developer’s projects to educate buyers about the benefits of REDD+ projects in general and the specific credits it is representing. Thus, Everland provides a benefit to developers, which receive financing for project monitoring and new project development through the sale of their offset credits, and buyers, who can get detailed insight into these carbon credits.

Everland packages its marketing through its “Forest Plan”, which encompasses 75 projects from the three developers that will produce an estimated 800 million carbon credits available for public purchase.





















Figure 4: Services Provided by Marketers


Brokers act as intermediaries between credit buyers and project developers. These companies are responsible for facilitating transactions and negotiations between both parties. Their clients are primarily buyers, but they also maintain relationships with project developers. Some brokers host marketplaces designed for high-volume credit transactions. Some also engage in Portfolio Aggregation (see next group), selling credits from their own proprietary portfolio of credits.

Brokers provide numerous services to clients in support of credit transactions. They conduct due diligence and risk analysis on the quality of the credits and the reputability of the developer. They offer advisory services related to the VCM, akin to how financial brokers might seek to inform clients about the status of and opportunities in financial markets, to aid clients in decision-making. They can also handle transaction facilitation, ranging from long-term agreements to one-time purchases, on behalf of their clients.

Brokers are useful for offset credit buyers that believe they can benefit from a wider array of services than those offered by Marketers. Brokers’ knowledge of a wider breadth of offset credits and developers can be useful for a buyer in formulating an offset purchasing strategy, e.g., to develop a targeted mix of the kinds of credits to purchase. Brokers can also be helpful in assessing market supply/demand dynamics, for example to help buyers gauge timing for their purchases, and in facilitating individual transactions.

Brokers lack the in-depth knowledge of specific credits offered by Marketers; brokers’ history, resources and relationships with developers give them some perspective on credit quality, but buyers may be more likely to need other resources (e.g., credit rating agencies) to supplement brokers’ credit quality assessments.

Example: ClearBlue Markets

ClearBlue Markets consults with buyers interested in adding credits to their sustainability portfolio and hosts a marketplace offering a broad selection of credits. Before adding credits to its marketplace, ClearBlue conducts due diligence and vets the projects/developers. ClearBlue offers services for buyers, such as market intelligence, policy and regulatory monitoring, and overall market outlook assessments.  It also provides full advisory services to clients for compliance, offset advisory, and transaction assistance. ClearBlue also offers developer support by providing them with technical project support and credit commercialization.


























Figure 5: Services Provided by Brokers

Portfolio Aggregators

Like Brokers, portfolio aggregators (PAs) assist clients with portfolio construction and management. PAs use market knowledge to assist their clients with meeting their financial and sustainability goals and they conduct due diligence research and risk analysis to ensure quality of developer’s credits. Unlike brokers, however, PAs perform much more targeted assessments of selected individual offset credits. The PAs ultimately purchase some of these credits — in some cases using clients’ funds and, in some cases, taking the underwriting risk, (i.e. purchasing them and reselling them to clients) — and offer either a prepared, proprietary portfolio (e.g., a fractional share of the PAs’ portfolio) or customized portfolios to meet individual client needs.

PAs thus save buyers time and resources, as researching carbon markets and constructing a portfolio from scratch is a time-consuming process, while helping them manage portfolio risk. Further, PAs’ assessments should be more thorough than the analysis performed by brokers, if for no other reason than PAs conduct it on fewer projects and may take underwriting risk when they purchase the credits. And PAs may help their clients optimize the financial efficiency of their purchased credits if/as PAs can leverage their market insight to buy credits during periods when pricing is lower.

Portfolio aggregators are a suitable choice for buyers looking for more active management of their sustainability portfolio. Credit buyers who have an idea of what they want in terms of the type of offset credits but seek assistance in managing risk and researching and sourcing credits may benefit from PA services.

It should be noted that the PA model includes select opportunities in public investment funds. For example, on the London Stock Exchange, which allowed such vehicles starting in 2022, there is at least one mutual fund, Foresight Sustainable Forestry, that has invested in carbon offset projects.

Example: Respira

Respira is an asset manager that seeks to connect private investment capital to project developers trying to mobilize their credits. Respira vets developers and their projects to assess credit quality, with the intention of adding to credit transparency and credibility. Respira then receives funds from its clients looking to purchase voluntary carbon credits. Respira uses these funds to purchase credits from a collection of developers with whom it works. It purchases credits from a wide array of projects to promote portfolio diversification. Respira uses long-term offtake agreements to provide steady revenue to developers and price-assured credits for its clients.





















Figure 6: Services Provided by Portfolio Aggregators


Investors use their own funds or raise funds from their clients to provide project developers with seed funding. In return, Investors earn a stake of the credits produced by the project or earn access to the credits at a discounted rate in the future. The funds allow for large-scale carbon investments and project mobilization. Investors often also provide technical support to developers throughout the project’s life, such as risk analysis and continuous monitoring.

As with any investment, there are significant risks to be assessed before investing. Projects may not produce as many credits as forecast, and credit issuance can be delayed for a variety of reasons. Investors must thus undertake thorough risk analysis to mitigate any damage to investment value and bear a higher degree of risk than other peers in this sector.

The value of Investors for credit buyers is active involvement throughout project development (which presumably helps to mitigate development risks) and the enhanced opportunity to earn a financial return. Buyers seeking a long-term stake for a continuous stream of credits, whether it is for financial returns or sustainability impact, may benefit from working with an Investor, although the model is best suited for clients (buyers) who are willing to bear risk. Additionally, for project developers, Investors and their model provide funding to kickstart their projects.

Example: Terra Global’s Terra Bella NBS Carbon Pool

Terra Global is a multi-disciplinary carbon advisory company that offers services to both buyers and developers. It has an investment arm known as the Terra Bella NBS Carbon Pool. Terra Global raises funds from other private investors for the Carbon Pool to invest in jurisdictional-level REDD+ programs. The Pool provides “risk capital” to developers seeking funding to begin implementation of its projects — after they have met their investment criteria. Upon credit issuance, Terra Global and its investors are granted access to the credits at a discounted price. The investors can elect to keep and retire their credits or have Terra Global sell/trade the credits on their behalf. Terra Global is currently trying to raise $300 million in risk capital to invest in budding carbon projects.
























Figure 7: Services Provided by Investors


The carbon offset commercial advisory sector facilitates carbon credit issuance, mobilization, and transactions. These companies provide services that find, guide, evaluate (risk) and assemble portfolios for prospective credit buyers. To varying degrees, they save buyers time and resources; provide them with risk mitigation by assessing credit integrity and market conditions (which can, for example, influence the timing of credit purchases); and create investment opportunities. In the process, carbon offset commercial advisors foster market volume and liquidity and contribute to the overall climate mitigation and other (e.g., support for Sustainable Development Goals) impact of the VCM.

Commercial Advisory is just one part of a VCM ecosystem seeking to improve transparency and raise confidence in carbon offset credits. Other actors include credit rating agencies (such as Sylvera and BeZero); insurance providers (e.g., Kita, Oka and Howden, which offer carbon credit insurance protecting against both non-delivery and reversals); and marketplaces/exchanges (which provide information on offset credit characteristics).

As the recent turmoil in the VCM has made clear, the commercial advisory sector cannot on its own meaningfully raise market quality/integrity standards. Instead, the push towards quality must be fostered across the VCM ecosystem, and presumably will be guided by the upcoming assessments (of programs and methodologies) made by the Integrity Council of the Voluntary Carbon Market (ICVCM). Nevertheless, this commercial advisory space should continue to be necessary to help credit buyers navigate the universe of offset credits as they seek to build portfolios to offset their residual emissions.



Jared Andreatta
MS, Mineral and Energy Economics and Applied Mathematics and Statistics, Colorado School of Mines

Jared is a current student in the MS in Mineral and Energy Economics and MS in Applied Mathematics and Statistics. Before Mines, Jared earned a BA in Economics with a minor in Mathematics from Colorado State University. He is interested in power and energy commodity markets, as well as novel machine/deep learning applications to the energy industry.

Brad Handler
Payne Institute Program Manager, Sustainable Finance Lab, and Researcher

Brad Handler is a researcher and heads the Payne Institute’s Sustainable Finance Lab. He is also the Principal and Founder of Energy Transition Research LLC. He has recently had articles published in the Financial Times, Washington Post,, Petroleum Economist, Transition Economist, WorldOil, POWER Magazine, The Conversation and The Hill. Brad is a former Wall Street Equity Research Analyst with 20 years’ experience covering the Oilfield Services & Drilling (OFS) sector at firms including Jefferies and Credit Suisse. He has an M.B.A from the Kellogg School of Management at Northwestern University and a B.A. in Economics from Johns Hopkins University.


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