Shell retired 9.9 million carbon credits. Volkswagen retired 9.6 million. Chevron, 6 million. These three corporations alone have offset more emissions than some nations produce in a year. Yet beneath the gleaming sustainability reports and net-zero pledges lies a troubling reality: the voluntary carbon market has become a mechanism for corporate greenwashing, not climate action.
A comprehensive University of Oxford study released in October 2025 examined 25 years of carbon offset evidence and reached a damning conclusion: offsets have “almost everything failed” to deliver meaningful climate benefits. Simultaneously, investigations by The Guardian, Die Zeit, and SourceMaterial revealed that over 90 percent of rainforest offset credits issued by Verra, the world’s largest offset verifier, are “phantom credits”—credits representing emissions reductions that never actually occurred.
This is how the world’s largest corporations have attempted to purchase their way to net-zero: through a system so compromised that the vast majority of their claimed climate progress appears to be a fiction.
The Architecture of Illusion
The carbon offset market operates on a deceptively simple premise. A company emitting 100 tons of carbon dioxide can purchase carbon credits—each representing one ton of avoided or removed emissions elsewhere—and retire them against its emissions footprint. This allows companies to claim net-zero status without reducing their own operational emissions. In theory, this creates capital for developing nations to fund climate projects. In practice, it has created perverse incentives that reward the largest offset certifiers for approving questionable credits regardless of their actual climate value.
Verra, which dominates the voluntary carbon market, verifies projects and takes a cut: 10 cents per credit verified. The mathematical reality is stark. The more credits verified, the more revenue Verra generates. This inverted incentive structure explains much of what followed.
In a landmark investigation published in January 2023, The Guardian and partner outlets revealed the scope of the fraud. They examined Verra’s rainforest offset credits in detail and found that 94 percent of rainforest credits had no genuine climate benefit whatsoever. More striking still: the underlying threat to forests had been overestimated by approximately 400 percent. Projects that claimed to prevent deforestation were often in areas where deforestation was not imminent or where harvesting rates were already declining.
Consider the Kariba hydroelectric project in Zimbabwe, which Verra approved. The project claimed to have generated 22 million tons of fraudulent emission reductions—credits purchased by corporations worldwide under the assumption that African hydroelectric development was being funded through carbon finance. Instead, the reductions were entirely fabricated, phantom tonnage on spreadsheets that bore no relationship to atmospheric carbon.
The developer of the Kariba project was South Pole, a carbon credit supplier. Such conflicts of interest are embedded throughout the industry. Companies profit from issuing credits, verifiers profit from approving them, and corporations profit from buying them cheap and retiring them as evidence of climate action. Everyone in the chain benefits except the climate.
Where the Money Goes
When major corporations sourced their carbon credits, they did not randomly select projects. An analysis of the 20 largest companies purchasing offsets revealed a pattern: 16 of these firms sourced their credits from the cheapest quintile of the market, acquiring tons at prices ranging from $0.98 to $5.39 per credit. These bargain-basement prices are not coincidental. They correlate precisely with the credits most likely to lack genuine climate value.
A corporation can purchase phantom credits at $1.50 per ton, retire them against a million tons of annual emissions, and immediately claim it has achieved net-zero operations. The public relations value is incalculable. The climate benefit is zero.
This dynamic has been amplified by the structure of the broader Kyoto Protocol system, which preceded the voluntary market. Analysis of Clean Development Mechanism projects, which issued similar credits, found that 85 percent of approved projects were “unlikely to be additional”—meaning the projects would have been built regardless of carbon finance, rendering the credits meaningless by definition.
The Verra leadership understood these vulnerabilities well. Yet the organization continued issuing credits at scale. Only after comprehensive external investigations in 2023 did David Antonioli, Verra’s CEO, resign. His departure came too late to prevent billions in worthless credits from entering the market.
The Market Collapse and What Remains
The voluntary carbon market peaked at $2 billion in 2021. By 2024, it had contracted to $1.7–$2.1 billion annually. This decline reflects growing awareness of the market’s dysfunction, though it remains substantial enough to allow corporations to claim climate progress without delivering it.
Meanwhile, the world’s energy giants have openly abandoned the carbon offset strategy in favor of a simpler one: continued fossil fuel expansion. BP, having pledged net-zero commitments reliant on offsets, slashed its renewable energy investment by 70 percent in 2025 while increasing fossil fuel investment by 20 percent. This divergence—committing to net-zero while dramatically increasing carbon-producing operations—is possible only because carbon offsets exist to bridge the gap.
This is the essential logic of the carbon offset system. It decouples climate commitments from climate action. A corporation can increase emissions, purchase cheap credits verified by an incentive-corrupted system, and emerge with an enhanced climate reputation. The investor relations team benefits. The executives’ climate bonuses are paid. The board celebrates a net-zero achievement. The atmosphere absorbs additional carbon.
For the climate, nothing has changed. For the corporation’s balance sheet and public image, everything has improved.
The Accountability Void
Regulators have been slow to address these failures. The Securities and Exchange Commission has proposed climate disclosure rules, but they do not adequately distinguish between genuine emissions reductions and purchased offsets. Investors routinely cannot determine how much of a corporation’s net-zero claim rests on actual operational changes versus carbon credit retirement.
The International Carbon Offsetting and Standards bodies have proposed reforms, but implementation remains fragmented. Companies can select among multiple standards, each with different rigor levels, creating an incentive to migrate toward the laxest standards when exposed.
For shareholders and stakeholders evaluating corporate climate claims, the message is clear: net-zero achieved primarily through offsets should be treated with profound skepticism. A company achieving net-zero through emissions reduction, renewable investment, and operational change has delivered genuine climate progress. A company achieving net-zero primarily through offset retirement has purchased a climate-neutral label while maintaining or accelerating its fossil fuel footprint.
The Oxford study’s conclusion—that offsets have “almost everything failed”—will likely reshape how investors evaluate these corporate claims. The question is whether that recognition comes quickly enough to prevent another decade of phantom climate progress masquerading as corporate responsibility.
For now, the carbon offset shell game continues. Shell, Volkswagen, Chevron, BP, and countless others retire millions of tons of questionable credits annually. And the world’s largest corporations continue to claim net-zero status while the planet’s carbon dioxide concentration reaches new highs.