Carbon credits: should we still believe in them?

A new analysis from the ESG Lab at the Louis Bachelier Institute

At a time when the voluntary carbon market is experiencing a profound crisis of confidence, a central question is facing sustainable finance: can carbon credits still play a credible role in the climate transition?

Long criticized for their lack of transparency and limited effects, these compensation mechanisms are now under review. In some sectors such as AFOLU (Agriculture, Forestry and Other Land Uses), where emissions are diffuse and complex to measure, carbon credits could remain useful, provided they are based on solid scientific foundations, transparent governance and rigorous verification standards.

In France, the Low-Carbon Label illustrates this evolution: it marks the transition from a logic of low-cost compensation to a model based on credibility, traceability and trust. This transformation reflects a broader shift in sustainable finance, where reliability and environmental integrity are now replacing price as a true measure of value.

In this new analysis, the ESG Lab at the Louis Bachelier Institute looks at the paradoxes of the AFOLU sector, the economic and methodological limits of carbon markets, as well as new regulatory guidelines in Europe. The study invites us to rethink the place of carbon credits, no longer as a substitute for decarbonization, but as a complementary instrument that can contribute, under certain conditions, to a credible and measurable low-carbon transition.

Read the full article: Carbon Credits: Still Worth a Second Look?

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