Managing risk as the voluntary carbon market evolves
Nick Osborne, Vice President, Global Carbon and Environmental Products Trading at Shell, explores why managing uncertainty, rather than eliminating it, is becoming increasingly important as organisations navigate the voluntary carbon market.
Nick Osborne, Vice President, Global Carbon and Environmental Products Trading at Shell
Nick has over 25 years of experience at Shell, with a trading career spanning since 2000 across gasoline, chemicals and related products. He led the global ethanol business from 2006 to 2012, scaling it from a single trader operation into a global team.
Three key takeaways
- Manage uncertainty, don't wait for perfect clarity. The goal is not to eliminate risk entirely, but to build the capability and confidence to make informed decisions as markets evolve.
- A successful carbon credit strategy starts with clear objectives. Organisations should define what they want to achieve before selecting projects or relying on ratings alone.
- Portfolio thinking and strong governance help manage risk. Diversifying carbon credit purchases and establishing clear decision-making processes can help organisations navigate an evolving market.
Over the past few years, I've watched the conversation around the VCM change dramatically. Not long ago, many buyers were focused on finding the cheapest credits available. The conversations I have today, are very different. Organisations want to better understand quality, delivery and reputational risk, and how carbon credit procurement can fit into their long-term climate strategy.
The market has been under intense scrutiny. Weaknesses have rightly been exposed, expectations around integrity have risen, and buyers have become much more discerning. That has made participation more demanding, but it's also made the market stronger and has driven improvements in standards, transparency, and due diligence.
This scrutiny, and how VCM participants are responding, have accelerated the market's evolution. Recent data highlights a flight to quality.
Buyers are pivoting to quality credits — with retirements of top-rated carbon credits (BeZero-rated A or above) more than doubling as a share of the market from 2022 to 2025, according to recent BeZero analysis.
This is also reflected in pricing. The same analysis shows that, for reforestation projects, going up one rating band increases the average price by about 87%.
Ratings are also bringing greater transparency and benchmarking to the market. The emergence of the Integrity Council for the VCM's Core Carbon Principles (CCP) as a recognised quality benchmark further underscores the limited supply of high-quality credits: BeZero estimated that by early 2026, only 3% of credits in the market had met the CCP standard.
These shifts signal that the market is advancing, but that there continues to be room for improvement.
If the VCM is to direct more finance to impactful projects, its evolution cannot be used to justify inaction. The real challenge for today's buyers is to manage risk at a choice of organisational, portfolio, and even project level, making informed decisions around risks and costs as the market develops.
Uncertainty is part of every market
One of the reasons I find the debate around carbon markets interesting is that we sometimes treat uncertainty as though it is unique to this market. It isn't.
Every (commodity) market involves making decisions with imperfect and incomplete information. Prices fluctuate, regulations change, and supply evolves. Businesses routinely navigate these uncertainties because waiting for complete certainty is rarely practical.
What makes the VCM unique is that uncertainty extends beyond financial and operational considerations. Buyers have to navigate evolving integrity expectations, governance requirements, and reputational risks.
Success is not about eliminating uncertainty.
It is about building confidence and capability, and working with trusted advisors to manage it effectively.
Start with your objectives, not just the ratings
Carbon credits are not a substitute for reducing emissions, but for many organisations they can form part of a broader climate strategy alongside efforts to avoid and reduce emissions.
Nick Osborne, Vice President, Global Carbon and Environmental Products Trading at Shell“With that in mind, one of the questions I'm asked most is 'which carbon credits are best?'. My answer is usually, that this is the wrong place to start and a perhaps more useful question is: 'what are we trying to achieve?'.”
Every organisation has different priorities. Some are looking to maximise climate impact. Others place greater emphasis on biodiversity, community outcomes, or long-term supply security. Some want exposure to innovative project types, while others prioritise cost certainty or lowest reputational risk.
They are all legitimate objectives, but they will not always lead you towards the same purchasing decisions.
That's why I see independent ratings and assessments as an important input rather than the only answer. They improve transparency and help buyers to better understand project quality and risk. But no ratings agency can define what success looks like for your organisation; that requires a clear strategy.
The same applies to some of the assumptions that still shape conversations around carbon markets. It's unhelpful (and often wrong) to assume that newer credits are automatically better than older ones, or that removals should be preferable to avoidance projects.
In the same vein, nature-based and technology-based solutions both have their own benefits. What matters is understanding why you're buying a particular project, and the embedded risks and rewards, rather than following whichever narrative dominates the market at that moment.
Build resilience through portfolio thinking
Once objectives are clear, the conversation naturally shifts from individual projects to portfolios. This is how I think organisations should approach carbon procurement. Building a portfolio across project types, geographies, methodologies, and vintages is key to managing risk in a market that will continue to evolve.
Longer-term procurement arrangements, including structured offtake agreements, can also play an important role. Alongside helping buyers to plan for future supply needs, they can provide developers with greater confidence to finance new projects.
As competition grows for higher-integrity credits, including those expected to meet emerging integrity frameworks, taking a longer-term view may provide organisations with greater flexibility than relying solely on spot purchases.
At Shell, we work with organisations across sectors that are navigating these decisions, from first-time buyers exploring participation in the VCM, to experienced participants managing increasingly complex portfolios.
Insights into voluntary carbon market trends
This research whitepaper explores what drives demand, how businesses choose and procure carbon credits, and why credibility and impact are critical to building effective carbon credit strategies.
The biggest challenge is often internal
Some of the most significant barriers to effective carbon credit procurement often aren't in the market itself, but inside organisations.
Sustainability teams, procurement, finance, and senior leadership may all support the same climate ambitions but view risk, value, and timing through different lenses.
Without clear governance, it's easy for organisations to get caught in analysis rather than to make progress. The organisations navigating the market best are those that establish clear procurement principles, define decision-making processes, and build internal capacity to act strategically and decisively in a complex market.
They also make the internal risk and reward balance crystal clear.
Managing uncertainty with confidence
The VCM is not standing still. The organisations best placed to participate will not necessarily be those waiting for every uncertainty to be resolved.
They will be those that define what matters most, build procurement strategies around those objectives, strengthen internal governance, leverage external inputs and develop the capability to make informed decisions.
As the market continues to mature, the importance of trusted partners that can help organisations navigate complexity and evolving market dynamics will only grow.
Building this capacity will support long-term demand signals that don't just help organisations to meet their own climate objectives, but also give project developers the confidence to invest in the next generation of high-quality projects, strengthening the market as a whole.
Markets mature because organisations choose to participate. If we want a more transparent, higher-integrity VCM tomorrow, organisations need to engage today with clear objectives, robust governance, and the confidence to act.
The market won't wait for certainty, and nor should it.
A kitchen full of cooks: Harmonising the carbon market
Nick Osborne explains how stronger standards and data quality can help the voluntary carbon market build trust and scale.
What this could mean for corporates
As the voluntary carbon market continues to mature:
- Don't wait for perfect clarity before developing a carbon credit strategy.
- Start with your objectives before deciding which credits to buy.
- Focus on managing risk rather than eliminating it.
- Use multiple sources of information to support informed decision-making.
A version of this article was originally published on Quantum Commodity Intelligence’s website on 7 July 2026, and was repurposed for publication on Shell’s Insights Hub on August 2026.
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Date of publication: September, 2026
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