Verra’s Carbon Standard 5.0: Integrity Through Rights and Benefit-Sharing?
/Verra’s latest update to its Verified Carbon Standard marks a clear attempt to restore trust in voluntary carbon markets by introducing stronger rules on carbon rights and benefit-sharing. But will these changes deliver genuine transformation, or merely reduce the most visible forms of abuse in carbon projects? SDSG Carbon Fellow Bennett Jarvis examines whether the new standard meaningfully shifts power toward communities, or simply places guardrails around a flawed model.
By Bennett Jarvis
A ranger working in the Kasigau Corridor, Kenya, as part of a REDD+ carbon offset program (credit: Geoff Livingston via Flickr, CC BY-NC-SA 2.0).
The following blog covers the technical elements of Verra’s updated standard. For a more introductory overview of the voluntary carbon market and Verra’s role therein, listen to this interview with the author.
Edited by Anthony Bosco
Music credit: “Our Reality” By Ketsa via Free Music Archive, CC BY 4.0
In December 2025, carbon offset certifier Verra released the fifth version of its Verified Carbon Standard (VCS 5.0). Carbon market participants across the board were pleased to find that the new standard delivered on much of its promises.
This much-anticipated update makes major changes to the accessibility of program information, digitalization of the standard body’s activities, and implementation of market mechanisms like insurance for dealing with non-permanence risks. These are all part of broader efforts across the industry to cut costs, increase operational efficiency, foster a more mature market structure, and streamline communications between various market actors as they prepare (or at least hope) for interoperability across global carbon markets.
What headlines have underscored though are the revisions VCS 5.0 made on the integrity front; a set of issues ranging from financial transparency to benefit-sharing and community consultation practices, that actors across the market view as in dire need of improvement to increase demand, cement market credibility, and, potentially, drive ever more finance into nature through enhanced nature-based projects.
Verra touted the updates as heralding a “stronger focus on people and communities”, the culmination of Verra’s lessons learned over recent years, and the “systematic strengthening of the foundations of the carbon market”. Some have called the update a “big win for communities” and “a major step towards carbon justice”. We’ll return to that claim after analyzing aspects of the new VCS 5.0.
The two key changes to VCS 5.0 on these fronts concern i) the right to operate and rights to carbon removals (i.e. carbon credits) and reductions (Section 3.6); and ii) standards around benefit sharing with communities hosting nature-based carbon offset projects (Section 3.17).
If rigorously implemented, VCS 5.0 could reduce the severity and frequency of persistent abuses that have plagued Verra-certified nature-based carbon projects and better protect the rights of project-affected populations, particularly Indigenous Peoples (IPs) and customary tenure holders. However, despite progress, the standard is still too weak on critical issues impacting the rights and benefits of communities.
The right to operate vs the right to own carbon credits
In the past, carbon project developers held implied rights to reductions and removals through their operations. In other words, if a project developer received some form of operating permit from the authorities in the jurisdiction where the project was taking place, Verra assumed the developer had the rights to own and trade carbon credits by virtue of the operational license.
We highlighted why this is problematic in a policy report published last year; there are numerous carbon project developers that have claimed the rights to nature-based carbon credits that in actuality should belong to the communities that hold tenure over the land, forests or peatlands in question. The right to operate vs the right to ownership of carbon credits have now been separated in VCS 5.0 and must be clearly demonstrated by project developers.
The new Verra standard states:
"The right to reductions and removals might derive directly from the right to operate, from land or resource rights, or be governed by a specific regulation in the jurisdiction” (Section 3.6). This is the section which now recognizes that the right to operate and the right to permits are distinct;
"Where the project may affect land or resource rights, project proponents must also conduct an analysis of such rights to identify any customary rights, overlapping claims or competing claims, and violent conflicts in the project area, and to determine whether additional measures are needed to secure the right to operate and the right to reductions and removals" (Section 3.6).
Though somewhat (unhelpfully) vague, this section requires at least some scrutiny of how project developers obtain the right to operate and the right to carbon credits. We however maintain our belief that carbon ownership should be linked to the tenure of the underlying carbon-stocking asset – land, forest, peat, etc. In other words, if a community owns the land, they own the carbon too;
The land and resource rights in question constitute competing rights "regardless of whether the claims are recognized or fully formalized under the national legal framework" (VCS Program Definitions 5.0, pages 14 and 24).
This is an important safeguard because, as we pointed out in our policy report from last year, many national legal frameworks fail to formally recognize customary land and resource tenure rights of rural communities and IPs according to best practice standards like the Food and Agriculture Organization of the United Nations’ Voluntary Guidelines on the Responsible Governance of Tenure.
Based on Verra’s own definitions, project proponents must now substantiate their legal right to carbon credits through an analysis of relevant laws and regulations and by furnishing evidence of the Free, Prior, and Informed Consent (FPIC) of rights holders prior to the project’s start date, including customary rights holders. These are notable improvements compared to previous iterations of the VCS.
Benefit-sharing
Customary land and resource tenure holders also saw promising changes to Verra’s updated benefit-sharing framework. In the past, benefit-sharing agreements (BSAs) – the agreements negotiated between local communities and the carbon project developer – were nominally required in the event that projects potentially impacted individual private property rights. In VCS 5.0, BSAs are now required “[w]here a project affects land or resource rights holders or there are customary rights holders or IPs present in the project area” (Section 3.17.12).
The BSA must now be designed in collaboration with these rights holders before the project start date, and VCS 5.0 now designates these rights holders as “participants” in benefit-sharing mechanisms who will receive information on projected revenues and costs associated with the project. Once the project is operating, communities that are parties to a BSA will also receive annual updates on project operating costs and gross or projected revenues (Section 3.17.12-14).
VCS 5.0 also lists activities that cannot be included as shared benefits such as goods associated with implementing project activities, infrastructure necessary for the project, mitigation measures for safeguards, and project workers' salaries (Section 3.17.15). The logic at work there is that goods and services essential to the project’s implementation do not constitute enhanced benefits subject to negotiations.
Lastly, the terms of BSAs must now be made public within the larger Project Implementation Agreement, “unless the customary rights holders and IPs want it kept private” (Section 3.17.17).
Though the updates to BSAs in VCS 5.0 constitute real progress in many respects, there is still much room for improvement. First, most BSAs are “negotiated” by representatives of communities that have little to no access to technical or legal counsel during negotiations.
Though project developers are required to provide preliminary information about the project, its context, and applicable laws to local stakeholders, the new standard does not require that communities benefit from legal counsel. This raises serious concerns about how project proponents will handle the information and capacity gaps that continue to plague carbon projects.
Secondly, we continue to find the lack of substantive baseline standards for the design of BSAs in VCS 5.0 seriously problematic. The few BSAs available in the public domain only provide for community benefits once carbon offset projects are profitable. The profit-sharing approach creates huge risks for communities that often commit to abandoning (carbon-emitting) livelihood activities in exchange for a share of project profits. In these situations, the welfare of communities is vulnerable to the whims of the volatile voluntary carbon market and the accounting practices of the project developer.
VCS 5.0 does state that benefit-sharing mechanisms must "account for potential changes in benefits (e.g., a decrease in gross revenue caused by carbon credit price fluctuations)" but provides no real guidance on what accounting for this looks like (Section 3.17.14(5)).
Equitable BSAs must abandon the profit-sharing approach and rather guarantee multiple revenue streams (royalties, land rents, in-kind benefits, and profits for example) for communities, no matter project outcomes. There is already a model for this under the Paris Agreement’s Article 6.8 non-market approaches (NMAs).
Third, though the new requirement that BSAs be publicly disclosed is encouraging, the opt-out for rightsholders that want BSAs “kept private” is ripe for further abuse, by both project developers and co-opted community elites that may choose private gain over the public interest.
Carbon justice achieved or carbon exploitation averted?
Does VCS 5.0 achieve “carbon justice” for communities? We struggle to say yes for (at least) two reasons:
Though the new VCS does successfully address many real issues related to community rights and market integrity, there are still substantial gaps in the standard, as we highlighted above. At best, VCS 5.0 will reduce the frequency and severity of rights abuses caused by nature-based offsets in the voluntary market. We fail to see a fundamental market transformation;
Critics have long argued that the practice of carbon offsetting itself is a distraction (subscription-based article) from decarbonization of the global economy and promotion of climate justice. Past decades have witnessed growing scientific evidence that carbon offsets fail to reduce global warming because of persistent structural issues.
This evidence has been all the more stark for nature-based offsets, which are non-permanent or temporary carbon removals in most cases, and thus ineffective for ‘offsetting’ real fossil fuel emissions.
It’s for these reasons that SDSG, and others, are calling for IPs and local communities to instead receive financing from NMAs, which will likely produce better carbon biosequestration results and respect human rights compared to pure market-driven approaches.
To sum it up, greater carbon exploitation has been partially averted by VCS 5.0, but carbon justice may still be a long way off.
