Voluntary carbon markets: potential for social entrepreneurship?

Purpose Carbon offsets gained attention about 15 years ago, with numerous providers emerging under regulated and voluntary regimes. However, due to a lack of technical literacy among some market participants, no common quality or certification structure existed, leading to concerns over “worthless” credits. This paper critically assesses the voluntary carbon market’s evolution, aiming to identify top providers and evaluate them based on six criteria: project quality, additionality, certifications, single ownership, price transparency and social entrepreneurship. The last criteria are new research criteria since the purpose of this study is to determine how many projects are aimed at social entrepreneurship. Design/methodology/approach This study examines factors determining top carbon offset providers, with a focus on the role of social entrepreneurship. We ranked 73 providers based on criteria like project quality, additionality, certifications and social entrepreneurship. Our analysis found that project quality and certification were key differentiators, while social entrepreneurship had the lowest score. Despite many providers engaging in sustainable projects, few were women- or minority-owned. This study highlights the effectiveness of current criteria and key focus areas within the carbon offset sector. Findings Our results show that top carbon offset providers are distinguished by project quality, certifications and standardizations. While most focus on sustainable projects, there is little emphasis on women- and minority-owned initiatives. Social entrepreneurship is only correlated with project quality and price transparency, not with other factors like additionality or certifications. Top providers excel in project quality, additionality, certifications, single ownership and price transparency but not in social entrepreneurship. Probit regression analysis highlights project quality, additionality, price transparency and social entrepreneurship as the most important criteria, with social entrepreneurship scoring the lowest. Research limitations/implications Because the study was based on a web search, our team could only research carbon offset providers that had operational websites and that were in English. Hence, our study did not include those ventures that do not have a web presence or whose webpages are in other languages. Practical implications This paper can be used by individuals or organizations that are looking into carbon neutrality to understand the risks and misinformation in the market. We hope this study will provide background and guidance to social entrepreneurs and policy makers in the space of social entrepreneurship. Indeed, though there are examples of corporations purchasing carbon assets in the media, most of these are large-scale projects. Social implications In our survey, we included a question asking respondents to explore whether carbon offset providers’ projects were social ventures. If they were, respondents classified these projects into four categories: women entrepreneurship, minority entrepreneurship, sustainable entrepreneurship or development entrepreneurship. The goal was to determine if providers focus on social projects, such as those owned by women or minorities or projects within the sustainable or development spheres. Originality/value Our study is one of the first to link social entrepreneurship to the area of carbon offsets. To our knowledge, no prior study has linked these two domains of research. Given that these markets are largely unregulated, users must grasp how they function and be aware of concerns such as the lack of standardization and the risk of double-counting permits.