Many offset projects are located in developing economies where, more often than not, the costs associated with the successful operation of a carbon offset project are considerably less than the potential costs if the offset were based in a developed country. Offset projects are installations with commercial purposes, and as any other standard business operations, they have an immediate impact on the indigenous people in those areas. In fact, offset projects might feel even more pressured to cater to the needs of local communities than any other businesses out there, because when your underlying business model is based on caring for the environment, it makes even more sense to care for those living in it.

Third-party regulatory bodies that evaluate and certify voluntary emission reductions (VERs) produced by carbon offsets have come to recognize the importance of ethical and integrative treatment of communities in the developing countries that host such projects. Many, however, still focus heavily, as they should, on the emission reduction capacity in their evaluation requirements and view the sustainability of local communities as potential by-product of the offset activities. They leave little room for examining the roles and interests of local stakeholders in the grand scheme of things. Thus, VER carbon standards sometimes fail to comprehend the significance of these stakeholders in the success, or even failure, of the offset project.

For example, the success of Reducing Emissions from Deforestation and Forest Degradation (REDD) offset projects depends heavily on the sustainability of local communities in the protected forestry areas. The survival and economic sustainability of these people are the underlying reason why acres and acres of tropical trees are being cut down for timber and vast areas of lands are being repurposed for agricultural practices. So in order for a REDD offset to successfully fulfill its mission, it must center its efforts on the underlying issue that caused deforestation in the first place.

One recently launched VER carbon standard in particular is out to make community sustainability the focus of carbon credit offsets seeking verification. Socialcarbon is the brainchild of the Ecologica Institute, a Brazilian NGO focusing on climate change. Established in 1998 and functioning alongside other VER carbon standards like the Verified Carbon Standard (VCS), Socialcarbon evaluates and certifies carbon offsets based on the sustainability of six key pillars, one of them being the project’s efforts toward social sustainability. The social VER carbon standard identifies itself as a “complementary (add-on) standard for co-benefits” and does not have criteria, such as conditionality, measuring the offsets’ effectiveness in emissions reductions. That’s why carbon offsetting projects should apply for Socialcarbon while also seeking verification from other VER carbon standards that include criteria for real, additional and permanent emission reductions.

Socialstandard uses a Sustainable Livelihood Approach (SLA) methodology, assessing new developments and installations based on their contribution to the livelihood of local communities. The VER carbon standard uses methodology that also takes into account the human resources available to the project — skills, knowledge, work capacity and good health of people – and if they are strategically utilized. One of the projects, which recently received Socialcarbon credits, is a river hydro project on the island of Sumatra in Indonesia. The offset is designed and managed in such a way that, in addition to providing zero-carbon energy in the isolated area, it will also use revenue from the Socialcarbon credits sale to provide free medical treatment for locals people in nearby villages. The project will also donate thread and electricity to the local tradition of weaving, which is a significant source of income for women in the region.

Adding such social benefits to their operations, and getting formally recognized for the efforts by VER carbon standards, can be a major advantage for carbon offsets when competing for market share on the voluntary carbon market. Attaching such a social co-benefit to their VCS or Gold Standard VERs can justify increased carbon credit value and, subsequently, higher return on investment. Social-certified carbon offsets may also enjoy more affinity by potential investors and carbon credit buyers.