Why carbon credits quality now matters more than quantity

As we head into Q4 of 2025, our expert Karolien Casaer-Diez zooms in on the transformational shift in the global carbon market:

The global carbon market is maturing, but into what?

You may have noticed lots of buzz in the news over the past few months about the carbon market. Governments, integrity frameworks and standards are stepping up their game. Regulated carbon markets like Emission Trading Systems are expanding in volume and scope across the globe. The voluntary carbon market is increasingly being designed to meet compliance-level standards. We’re seeing this ‘flight to quality’ as people look for carbon credits that meet these standards.

But what does ‘flight to quality’ actually mean?

Well, buyers are becoming more sophisticated and increasingly demanding high-integrity credits. They want to deliver true climate impact for people and the planet.

Governing bodies like the Integrity Council for the Voluntary Carbon Market (ICVCM) and UN-backed frameworks like the Paris Agreement Crediting Mechanism (PACM) are raising the bar and pushing the market to follow suit, by assessing carbon programmes against Core Carbon Principles and developing rigorous standards for international cooperation, respectively.

The market is fundamentally changing in focus, from quantity to quality. Projects are incorporating more demanding requirements for design, monitoring, reporting and verification, and are issuing smaller volumes of credits as a result. Less volume means prices for high-integrity credits are rising.

What does this all mean for your business?

Decarbonising comes first. The days of simply offsetting to achieve carbon neutrality are over. Businesses are expected to do more and actually prove it.

You need to do the hard work, and you can use high-integrity credits to address those persistent, unavoidable emissions. You might want to lock in supply of high integrity credits now, given the rising prices. Having a solid strategy in place is a critical distinction that separates companies that are serious about making a climate impact.

When you boil it all down, the market has sent a clear message: credible climate action is no longer just about ticking a box - this is where the real work begins. Companies prioritising a genuine reduction strategy and investing in high-integrity credits are showing that results, not rhetoric, lead the way.

About the author: Karolien is South Pole's Global Senior Director for Compliance Markets. She defines the strategy on compliance markets, including Article 6, CORSIA, domestic carbon markets and other environmental certificates. With 20 years of experience in climate finance, development finance, and carbon markets, Karolien has built a career at the intersection of policy, investment, and sustainability.

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Short on time? Here are 5 must-read articles to keep up with in the climate industry.

1. Reuters - Why Climate Week NYC matters this year more than ever

Climate Week NYC has taken on added significance this year as policymakers, business leaders, and activists converge to assess progress toward global climate goals. With pressure mounting ahead of COP30, the event is spotlighting the widening gap between national pledges and the action required to limit warming to 1.5 °C. Major themes include climate finance, corporate accountability, and the accelerating transition to clean energy, underscoring New York’s role as a staging ground for high-stakes climate diplomacy.

2. TIME - The World Is Doubling Down on Climate Business—With or Without the U.S.

A TIME analysis highlights how global momentum for climate-aligned business is accelerating regardless of U.S. federal leadership. From Europe’s sweeping climate policies to Asia’s push for renewables and carbon markets, international markets are increasingly embedding sustainability into trade and investment decisions. The piece argues that U.S. companies risk losing competitiveness if they fail to align with these shifts, as investors, regulators, and supply chains move toward a low-carbon global economy.

3. Reuters - BHP leads global steelmakers group to study Asian carbon capture hubs

Mining giant BHP is spearheading a consortium of steelmakers to evaluate the potential for regional carbon capture and storage (CCS) hubs across Asia. The initiative reflects growing industry recognition that decarbonising steel—a sector responsible for 7% of global emissions—will require shared infrastructure and investment. By pooling resources, the group aims to accelerate deployment of CCS technology, though questions remain around financing, regulation, and whether the approach can scale quickly enough to meet climate targets.

4. MSN - Global forests store vast carbon wealth but credit systems undervalue their true potential, study finds

A new study reveals that global forests hold significantly more carbon than current crediting frameworks recognise, raising concerns that existing systems undervalue their climate mitigation potential. Researchers warn that methodologies often overlook biodiversity, ecosystem services, and permanence, limiting incentives for forest protection. By failing to fully capture forests’ role as carbon sinks, markets may be underpricing one of the most cost-effective tools for meeting Paris Agreement goals. Calls are growing for reform to strengthen integrity and ensure fair value.

5. Politico - EU vows to deliver delayed 2035 climate target before COP30

The European Union has pledged to finalise its 2035 climate milestone ahead of COP30, seeking to restore credibility after delays in setting binding targets. Policymakers emphasise that aligning the bloc’s climate framework with long-term neutrality goals is critical for investor confidence and global leadership. While divisions remain among member states over ambition and enforcement, the EU insists it will close gaps in legislation and deliver a plan that positions Europe as a frontrunner in climate action.