The Voluntary Carbon Market (VCM) is an essential mechanism for companies seeking to achieve ambitious climate goals. But how can corporate buyers ensure that the credits they purchase have the promised impact? Understanding carbon credit quality and risk is crucial for making an informed decision. Fortunately, there are a number of recent developments that can help companies de-risk their voluntary carbon credit purchase while achieving net zero goals. In a webinar titled “A New Paradigm for Managing Risk and Quality in the Voluntary Carbon Markets,” several VCM experts discussed this topic.

The panel included:

• 📚Wes French, VP of Climate Solutions at Cloverly
• 📚Ross Sheil, GM for EMEA & APAC at Cloverly
• 📚Neil Hacker, Research & Partnerships at Isometric
• 📚Teresa Hartmann, Chief Ratings Officer at BeZero Carbon
• 📚Chris Slater, Founder & CEO at Oka | The Carbon Insurance Company^TM

They shared valuable insights and strategies on how companies can effectively assess and manage carbon credit quality and risk as part of their decarbonization journey.

Watch the webinar: A New Paradigm for Managing Risk & Quality in the Voluntary Carbon Market.

5 key insights from the discussion

The state of the VCM today resembles commerce in the 1990s, before a rush of tools and commercial infrastructure brought us into the eCommerce age. Carbon buyers and suppliers rely on traditional back-office procurement flows to close deals. Brokers play an active role in the market and credit sellers continue to manage their inventory in spreadsheets. There remains a lack of efficiency and visibility on both sides of the market. This is evident in how inventory availability is managed across various sales channels, how pricing trends are understood, and how tabs are kept on future issuance and delivery.

Managing complex credit inventories, relying on spreadsheets, and lacking a central source of truth are just a few of the challenges that carbon credit suppliers, sellers, and project developers face. These challenges often result in increased time spent on administrative tasks, limiting their ability to scale their impact and grow their business.

Carbon credit suppliers need that time to focus on developing their technology and scaling their operations. And they need access to demand channels to find interested buyers ready to take action.

Understanding the needs of carbon credit suppliers

To understand the current needs and pain points facing carbon credit suppliers, sellers, and project developers today, Cloverly conducted in-depth interviews with suppliers across the VCM. The research revealed several universal challenges and needs that can be broadly categorized into three main areas:

1 - Inventory management

Carbon credit suppliers and project developers grapple with the complexities of managing their credit inventories. Many are using spreadsheets, accounting software, and file sharing with registries to track their inventory through the full lifecycle of a carbon credit. Common needs we heard include:

• Resource planning with flexible ways of organizing credits to balance overselling and underselling. Flexibility is critical given suppliers have different ways of organizing their carbon inventory in terms of forecasting, issuance, and tracking considerations.
• Organization level inventory management to quote and sell credits from different projects interchangeably.
• Integrations with registries to stay on top of the credit’s full life cycle.
• Forward inventory tracking since many suppliers have little spot inventory remaining and are shifting to managing pre-purchases and offtake agreements.

“We need to track what we are pre-selling and to be able to manage that inventory and plan the delivery dates - basically our commitments and delivery. Working with Cloverly, we're able to do this as well as map out our projections of what credits will be online when, or our forecasted capacity.” 

Octavia Carbon, Direct Air Capture and Storage in Africa

2- Omnichannel distribution: Deal tracking, order fulfillment and delivery controls

Carbon credit suppliers need to ensure that their inventory always provides an accurate representation of what's available. In addition to inventory management, this entails comprehensive tracking of all deal components, including allocations for quotes, sales, and reserved inventory, as well as monitoring time horizons for each allocation. Some carbon credit sellers prioritize allocating credits for forwards/offtakes based on share of issuance rather than fixed credit amounts. However, the nuances of deal-specific aspects, such as tracking payment terms and contract assistance, vary widely and are highly customized. Finally, some suppliers also expressed an interest in pricing intelligence to help them set rates in a rapidly evolving, competitive market.

“We work with grocers of all sizes to develop credits, which involves multiple aggregated projects rather than one big project. We used to spend a lot of time keeping track of credit distribution and managing the issuance process. However, with the inventory management tools in Catalyst, we've significantly improved our efficiency. We can now more quickly identify which clients generated specific credits and efficiently manage the revenue from credit sales, saving us a considerable amount of time.” 

Therm, Refrigerant Carbon Credits™

3- Unlocking demand 

Commercializing carbon credits and unlocking demand is a complex process that involves multiple stakeholders. Unlike the compliance markets, the VCM is not underpinned by consistent regulatory frameworks and controls, which contributes to several challenges for carbon credit suppliers, sellers, and project developers. One is a lack of standardization as carbon credit standards, measurements, and verifications vary widely across different registries and verification bodies. Moreover, without regulatory caps, pricing can be highly volatile, influenced by market sentiment and supply-demand dynamics. Additional hurdles include:

• Unpredictable supply: Oversupply of certain types of carbon credits at times can depress prices, making it less attractive for new projects. Also, some projects, particularly nature-based ones, can face supply risks from natural disasters.
• Cost: The high upfront costs of projects, coupled with the long-term realization of returns and expensive verification processes, create financial barriers.
• Scalability: Smaller scale projects, especially community-based ones, may struggle to scale and compete with larger, more established projects. Suppliers need access to robust demand and direct buyers who can provide the large upfront purchases needed to scale.
• Market awareness and demand: Buyers may not be aware of the benefits of carbon credits or how to integrate them into their sustainability strategies. This, combined with the fact that buying is voluntary, leads to sporadic demand influenced by economic conditions, public sentiment, and corporate priorities. 

These challenges are compounded by scalability issues for smaller, community-based projects and the absence of streamlined deal frameworks that make it difficult for suppliers to consistently unlock demand. Effective solutions must address these issues to facilitate the growth of the VCM.

Many other suppliers shared their input with us, including Anew Climate, CarbonCure, Glanris, InPlanet, Sitos, and more. The insights and feedback we gathered from these conversations were vital inputs to the development of Cloverly Catalyst.

Unveiling Cloverly Catalyst: Streamlining carbon credit operations

Cloverly Catalyst is a game-changing platform that was crafted to address these unique pain points and needs of carbon credit suppliers. It offers a comprehensive set of solutions to streamline their operations and maximize their commercial success, so they can focus more on scaling impact. Let’s explore what sets Cloverly Catalyst apart:

Simple inventory management

Cloverly Catalyst offers an unparalleled view of your carbon credit inventory, including historical and projected volumes, in a unified dashboard. Carbon credit suppliers can easily track and manage their spot, forward, and long-term offtake inventory. Best-in-class tools offer real-time insights into credits available for sale, quoted, sold, and retired. By centralizing carbon credits inventory into a single pane of view, Cloverly Catalyst ensures that suppliers have an accurate picture of their available inventory at all times.

Omnichannel distribution and sales management

Purpose-built for the complexities of managing carbon credits across different channels and delivery mechanisms, Cloverly Catalyst empowers suppliers to take full control of their sales. It offers centralized inventory management, real-time synchronization across channels, robust sales tools, and an easy content management system.  Carbon credit suppliers can list, adjust, and manage inventory across multiple marketplaces and platforms. For example, they can update project descriptions, imagery, and key information in one place and push updates out to all channels instantaneously. This saves time, ensuring that suppliers can quickly and efficiently respond to requests and provide potential buyers with the necessary details about their projects. And, unlike some competitors that limit suppliers to their own ecosystem, Cloverly Catalyst champions flexibility, enabling suppliers to tap into multiple platforms and channels to maximize their reach. Finally, with a single pane view into real-time, actionable market insights, suppliers will be well-equipped to compete in a dynamic, evolving market.

Unlocking demand

In the rapidly changing landscape of the VCM, suppliers need a partner who can help them unlock demand. Cloverly Catalyst also offers these solutions to help suppliers open new avenues for direct and indirect sales: 

Direct sales with Cloverly Storefront: Suppliers previously limited to traditional back-office deals and paper contracts can now cater to buyers regardless of their purchase size. A turnkey, no-code solution that’s easily integrated with existing systems, Cloverly Storefront offers a digital, branded buying experience for your customers. Carbon credit suppliers can showcase their own credits exclusively or include projects from Cloverly’s extensive portfolio of high-quality projects. Suppliers can list individual projects or create themed portfolios to provide their customers with diverse options. It’s an invaluable tool for channel sales or selling your credits directly to targeted customers. And, with inventory and sales centrally managed in Catalyst, buyers can access your current inventory anytime, anywhere, encouraging recurring sales. Cloverly Storefront also provides real-time sales and buyers analytics, enabling suppliers to make data-driven decisions.

Indirect sales expansion through marketplaces: In addition to direct sales, Cloverly also enables suppliers to tap into indirect demand through Cloverly’s marketplace and other buyer channels such as the Salesforce Net Zero marketplace. Carbon credit suppliers can list spot and forward credits across various channels, exposing their credits to a wide range of buyers, including Cloverly’s network of 300+ enterprise buyers. For suppliers, this is like having an expanded sales team at no additional cost.

Cloverly Catalyst: Transforming carbon credit operations

Cloverly Catalyst is much more than a platform – it’s an essential element for facilitating a thriving VCM. By removing administrative burdens, it allows carbon credit suppliers, sellers, and project developers to focus on scaling their impacts. Catalyst puts suppliers in the driver’s seat with several distinct features:

• Flexibility and control: Catalyst is designed to empower suppliers, giving you the reins to your commercial operations. Drive sales across time zones, project types, and delivery milestones, all powered by state-of-the-art digital infrastructure.
• Open distribution strategy: Unlike other platforms that restrict you to their ecosystem, Cloverly embraces an open approach. We believe in democratizing demand for suppliers, offering diverse sales tools and custom solutions to ensure maximum reach for your credits.
• Seamless direct and indirect sales integration: Our white-labeled storefronts and easy access to multiple marketplaces, make the most of both direct and indirect sales channels. Plus, our API supports programmatic sales for expanded sales channels.
• Automatic payments and reporting: Suppliers can rely on the platform's secure and compliant payment infrastructure to handle transactions seamlessly. Comprehensive reporting capabilities allow suppliers to track and analyze their sales across channels and gain valuable insights into their business performance.
• Strategic partnership opportunities: Unlock partnerships that can scale your impact exponentially with assistance from the Cloverly sales team to broker multi-year offtake agreements, paving the way for long-term collaboration and growth.

As we look forward to a future of accelerated climate action, industry-leading tools like Cloverly Catalyst will play an indispensable role in propelling us toward a more sustainable, carbon-neutral world. By streamlining carbon credit inventory management, sales, and distribution, Cloverly Catalyst makes the path from credit creation to sale smoother, more efficient, and ultimately more impactful. 

Request a demo of our supplier software today to see how easy it is to manage your inventory, pricing, content, distribution, and more from one place.

You can also contact us to offer your credits for sale on the Cloverly Marketplace.

About the author:

Wes French, VP of Climate Solutions at Cloverly, is a passionate advocate for climate action. He has deep expertise in the Voluntary Carbon Market and 10+ years leading software product development, partnerships, and strategy across various organizations, including Google. He specializes in helping startups and enterprises scale their operations with market defining technology and is committed to applying his skills toward building a more sustainable future.