Voluntary carbon markets have shrunk for the first time in at least seven years, as companies including food giant Nestle and fashion house Gucci reduced buying and studies found several forest protection projects did not deliver promised emissions savings.
Preserving forests is crucial to meeting international goals to limit global temperature increases to prevent the most extreme consequences of global warming.
The decline is also bad news for poorer nations that stand to lose if the flow of funds from multinational companies to fund climate mitigation projects slows.
Kenya, for instance, is seeking to become a hub for trading in carbon offsets, which are based on projects such as tree planting to mitigate greenhouse gases a company generates.
Demand for carbon credits is on track to fall in 2023, according to two of the top data providers. The number of credits used by companies fell 6% in the first half of the year, the first dip in at least seven years, data from BloombergNEF shows.
Data from consultancy Ecosystem Marketplace showed a sharper fall of 8% over the same period. Both providers’ data may be updated retroactively as offsets registries are revised.
Gucci did not give financial detail on its carbon offset stake or comment on why it deleted claims from its website earlier this year that it is entirely carbon neutral.
“Gucci is in the process of reviewing its climate strategy and commitments with a view to achieving the most positive overall impact,” a spokesperson for the company said in an emailed statement.
