The Conflicted Role of Auditors in Carbon Markets

Auditors are billed as carbon market watchdogs. But conflicts of interest may undermine their credibility.

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The voluntary carbon market is poised for rapid growth, with airlines soon required to use offsets for international flights and pressure building on other industries to follow suit. But recent studies show many offsets fail to deliver real climate benefits, raising doubts about their credibility.

Independent offset auditors are promoted as the guarantors of trust, yet their role is shaped by systemic conflicts of interest that make true accountability difficult. Former EPA enforcement chief Cynthia Giles and Penn Law’s Cary Coglianese explore the flaws at the heart of offset auditing—and what they could mean for the future of the offset industry.

Cynthia Giles was the senate-confirmed head of EPA’s enforcement office all eight years of the Obama administration. She wrote a book about making environmental rules more effective, titled Next Generation Compliance: Environmental Regulation for the Modern Era, published by Oxford University Press. During the Biden administration she worked on climate regulations as a senior advisor in the Air office.

Cary Coglianese is the Edward B. Shils Professor of Law and Professor of Political Science at the University of Pennsylvania Carey Law School, where he is also the founding director of the Penn Program on Regulation. He has taught and studied environmental and regulatory law and policy for more than thirty years, and is a member of the advisory committee for the university’s Penn Climate initiative as well as the Water Center at Penn.

Related Content:

The Crisis of Confidence in Voluntary Carbon Offsets https://kleinmanenergy.upenn.edu/commentary/podcast/the-crisis-of-confidence-in-voluntary-carbon-offsets/

Has Europe’s Emissions Trading Scheme Taken Away a Country’s Ability to Reduce Emissions? https://kleinmanenergy.upenn.edu/research/publications/has-europes-emissions-trading-scheme-taken-away-a-countrys-ability-to-reduce-emissions/

Third-Party Auditing Cannot Guarantee Carbon Offset Credibility https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5345783 

Auditors Cannot Save Carbon Offsets https://www.science.org/doi/10.1126/science.ady4864 

Energy Policy Now is produced by The Kleinman Center for Energy Policy at the University of Pennsylvania. For all things energy policy, visit kleinmanenergy.upenn.edu.

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