Despite the role voluntary carbon markets are meant to play in financing climate action, the exact amount of money reaching climate projects and local communities is shrouded in mystery, while nine out of 10 intermediaries do not disclose their fees or profit margins, a new study commissioned by Carbon Market Watch reveals.

The role of intermediaries in the voluntary carbon market is increasingly coming under scrutiny. Rightly so. Last week, an investigation found that SouthPole was making millions of dollars off the back of low-quality credits that it is brokering. A few months ago, a similar piece highlighted several examples of intermediaries selling carbon credits at massive mark-ups.

And today, Carbon Market Watch has published a report which revealed that 90% of the intermediaries investigated do not disclose the exact fees they charged and/or the profit margins they made during the sale of carbon credits on the voluntary carbon market (VCM).

The extreme opacity surrounding the financial transactions involving carbon credits is very troubling because it deprives us of insight into whether voluntary carbon markets are succeeding in their declared mission of financing climate action and makes it impossible to quantify the true amount of profiteering and speculation on the part of brokers, exchanges, online resellers and the emerging craze for crypto carbon trading.

This needs to change. Buyers have been inexplicably lenient on requiring more transparency from their intermediaries. They should ask better questions to make informed purchasing decisions (see here our checklist for buyers). Project owners have so far resisted calls of increased financial transparency, yet providing information about their earnings per credit would allow buyers to target projects where the gap between what they pay and what the project owner receives is the smallest. This will ultimately benefit the project owners, by strengthening their bargaining power with intermediaries.