Fraud in carbon offset programs: Threats to market credibility and climate integrity

Abstract

Carbon offset programs are central to global strategies for mitigating greenhouse gas emissions, yet growing evidence suggests that fraud undermines their environmental, social, and economic effectiveness. This study investigates the most common fraudulent practices in international carbon trading, focusing on overstatement of offsets, double counting, phantom projects, misclassification of emission reductions, and resale of expired or previously claimed credits. Using a qualitative desk-based literature review of peer-reviewed studies, policy reports, and investigative journalism, the research identifies how these fraud types distort carbon markets, mislead investors, and impede genuine emissions reductions. The findings reveal that fraudulent practices have systemic impacts on the triple bottom line: economic losses for investors, erosion of stakeholder trust, and failure to achieve real environmental benefits. The study underscores that structural weaknesses in project verification, registry governance, and regulatory oversight facilitate these practices. To restore market integrity, the research recommends robust verification protocols, transparent baselines, registry interoperability, and adherence to international standards such as the Core Carbon Principles. This work contributes to understanding how fraud in carbon offset programs threatens the credibility of climate finance mechanisms and highlights strategies to strengthen accountability and environmental integrity in carbon markets.

Keywords: {'name': 'Fraud'}, {'name': 'Carbon Trading Industry'}, {'name': 'Carbon Offset Programs'}, {'name': 'Carbon Credits'}, {'name': 'Net Zero'}

Authors & affiliations

Beatah Sibanda
School of Accounting Sciences, North-West University, Potchefstroom, Republic of South Africa

Banele Dlamini
School of Accounting Sciences, North-West University, Potchefstroom, Republic of South Africa

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