Carbon market in check: why livestock farming needs to start with data, not credits

Equipe ESGpec
May 6
5 min read

The provocation came directly in an article published by AgFunder News, “What's next for carbon markets? Maturity signals or 'medieval indulgences',” by Jennifer Marston, in April 2026: are carbon markets finally maturing or are they still functioning as a kind of modern medieval indulgence, where one pays to ease their conscience without actually confronting the problem?

The question is uncomfortable, but extremely necessary.

In recent years, the carbon market has gained prominence as a tool to finance the climate transition, especially in sectors that are extensive in their representation compared to anthropogenic sources of emissions, such as agriculture. At the same time, criticism has also grown regarding the quality, credibility, and effectiveness of some of the credits traded in the voluntary market.

More than debating whether carbon has value, the question has become: how do we ensure that this value is real?

Especially in dairy farming, where pressure to reduce emissions is growing rapidly, understanding this difference is no longer optional.

The problem lies in trust.

The carbon market was born with a simple original proposition: to direct financial resources to activities that effectively reduce or remove greenhouse gas emissions. In theory, those who emit more can finance reductions elsewhere. In practice, however, the discussion has become much more complex.

Critics point out that many credits have significant structural weaknesses: overestimated reductions, lack of additionality, risks of future reversal, double counting, emissions leakage, and low capacity for independent verification.

The AgFunder article itself highlights that these problems have continued to polarize the industry for over 25 years, with critics describing parts of the market more as a "smokescreen" than a real solution.

Ultimately, all these problems boil down to a single word: trust. Without trust, credit loses value. Without traceability, promises become mere marketing. Without consistent data, sustainability becomes mere rhetoric.

Critics describe parts of the market more as a "smokescreen" than a real climate solution, in a debate that has polarized the sector for over 25 years. Without traceability, the promise becomes mere marketing. Without consistent data, sustainability becomes mere rhetoric.

The market began to tighten.

This tightening of restrictions is already appearing among the largest global buyers.

Microsoft, currently the world's largest buyer of carbon credits, was projected to account for approximately 90% to 96% of global carbon removal credit purchases in 2025, according to various market analyses. When news emerged that the company was pausing some new acquisitions, the entire industry reacted.

Microsoft's Chief Sustainability Officer, Melanie Nakagawa, stated that the program has not been terminated, but that the company may adjust the pace and volume of purchases while refining its sustainability strategy. According to her, this represents discipline, not a reduction in climate ambition.

The message was clear: it's not enough to buy credits; quality must be proven. This doesn't mean the end of the carbon market; it's probably an indication of its maturity. This maturation involves more consistent criteria, more serious auditing, and much less tolerance for easy solutions.

In livestock farming, the risk is wanting to start from the end.

In the dairy sector, conversations about sustainability often jump straight to the question: "Can my farm sell carbon credits?"

The question makes sense, but it almost always comes too early. Before talking about credit, we need to talk about diagnosis. Before monetization comes measurement. Before compensation comes reduction. The correct logic doesn't start with what can be sold. It starts within the farm gate, understanding the sources of emissions (enteric fermentation, manure management, fertilization, energy and fuel consumption) and ways to reduce emission intensity (productivity per animal, feed efficiency, diet quality, pasture management, and animal welfare). Before knowing these parameters for the farm individually, any climate promise becomes speculation.

The market itself is already migrating from offsetting to insetting.

This movement is already happening among large companies that depend on agricultural supply chains and are beginning to review their climate strategies.

Before moving on, an important distinction should be made:

Offsetting is when a company offsets its emissions by financing carbon reductions or removals outside of its own operations, such as purchasing reforestation credits, forest conservation, or carbon capture in other regions.

In contrast, insetting occurs within the value chain itself. Instead of offsetting externally, the company invests in reducing emissions from its own suppliers, producers, and production partners.

In practice, while offsetting buys compensation, insetting builds transformation.

A relevant example is Horizon Organic, a major organic dairy brand in the United States, heavily dependent on the dairy chain and embedded in the food sector through the production and marketing of dairy products. The company abandoned its former goal of becoming "carbon positive," heavily reliant on offsetting, and adopted a strategy based on insetting, through the decarbonization of its own production chain.

The company's leadership was straightforward. In an interview with AgFunder News, Jennifer Smith, director of sustainability at Horizon Organic, stated: "I didn't want to just write checks for offsets that weren't as meaningful as using those same resources to work with our producers."

The phrase perfectly summarizes the shift in mindset that is beginning to gain traction in the market. Instead of offsetting emissions outside of operations, the focus is shifting to the structural transformation of the supply chain itself, investing directly in producers, traceability, and genuine emission reductions. Less climate indulgence and more responsibility, transparency, and verifiable results.

In practice, offsetting buys compensation. Insetting builds transformation.

The real climate asset is in the data.

Perhaps this is the main point that is still poorly understood in agriculture: the greatest value is not in credit. It is in the ability to prove it.

Food companies, dairy companies, and large buyers of raw materials are increasingly pressured by Scope 3 requirements, precisely because most emissions are not in the industrial process, but rather in the supply chain.

In many sectors, Scope 3 carbon can represent between 65% and 95% of the final product's carbon footprint, making it the most difficult part to monitor and reduce. This is where livestock farming changes position. It ceases to be merely part of the problem and becomes a strategic part of the solution.

Those who can measure, improve faster. Those who can track, negotiate better. Those who can prove, access markets and credit first.

The future will not belong to those who promise the most. It will belong to those who prove it best.

In the future, it is likely that the carbon market will increasingly move away from accepting generic narratives and begin to demand consistency, historical data, comparability, and governance.

In practice, this means that a producer who knows the carbon footprint of their product, understands their main emission points, and can demonstrate progress over time is much better prepared than one who simply sought an opportunity to generate credits to sell.

Credit will likely come last. But the foundation, the beginning, will always be the same: reliable data. Perhaps this is the main reflection of this moment. The sustainability of livestock farming will not be built on modern indulgences. It will be built on management, transparency, and well-founded technical decisions.

Credit may come later. But the foundation will always be the same: reliable, standardized, and transparent data.

What we read to write this article