The Annual World Economic Forum (WEF) Meeting in Davos, which took place 20-24 January 2025, gathered leaders from government, business, civil society, and academia to address critical global issues and set future priorities. Discussions took place amid heightened global tensions, economic uncertainty, and the growing urgency of climate action, which bear significant implications for the voluntary carbon market (VCM).
The Environment Nature-Based Solutions
At Davos 2025, extreme weather events, biodiversity loss, and ecosystem collapse were highlighted as top global risks, which reinforced the interconnected nature of climate and biodiversity challenges. Nature-based solutions (NBS) received some spotlight as a tool to address these growing concerns, due to their ability to provide emissions benefits while protecting biodiversity and providing other co-benefits. A second-day announcement of the USD 1.5 billion “Race to Belém” initiative, which aims to protect the Amazon rainforest through Jurisdictional Reducing Emissions from Deforestation and Forest Degradation (JREDD+) credits, is an example of how these priorities could continue to drive supply and demand for NBS credits in the VCM.
Discussions highlighted the role of the Taskforce on Nature-related Financial Disclosures (TNFD), which saw the release of new sector-specific guidance during the meeting. This guidance can help organizations identify, assess, and report nature-related risks and opportunities, which is essential for advancing transparency and standardization in nature-based projects. By integrating biodiversity and equity considerations, NBS projects address corporate demand for credits with verified co-benefits, reflecting their essential role in sustainable climate strategies. Going forward, discussions around integrating nature markets with carbon markets could be emphasized further as advances are made to address challenges in the nascent biodiversity market.
The Double-Edged Sword of Technology
Technology was, of course, a key topic during Davos, and it was touted as a critical tool for combating climate change. While there is immense potential for technology to combat climate change, its development could create more problems if guardrails continue to be stripped. For example, the intensifying AI arms race, seen recently through DeepSeek’s recent disruption of the tech landscape, could accelerate AI infrastructure development for US-based companies. Some firms, such as Elon Musk’s xAI, could have an outsized impact on emissions intensity in powering data centers due to their use of fossil fuels, leading to increased consequences from technological development.
Geopolitical Recession
A “geopolitical recession” refers to global instability caused by fractured alliances, nationalism, and weakened multilateral cooperation. At Davos 2025, leaders warned that declining global collaboration threatens progress on critical issues like climate change. For the VCM, this instability could pose a significant challenge due to the collective nature of climate impacts and action. Fragmented relations may slow the standardization of carbon markets under Article 6 of the Paris Agreement, while trade disputes and protectionism could disrupt project supply chains for emissions reduction or removal strategies. On the demand side, geopolitical uncertainty could deter corporate investment in international carbon credits, but increase interest in regional credits as businesses seek to reduce exposure to global risks.
As the global dialogue around sustainability advances, the VCM remains a critical tool for meeting climate goals, adapting to regulatory shifts, and fostering meaningful impact. The next gathering in Davos is scheduled for 19-23 January, and until then, Bonn 2025 and COP30 will be major events that shape discussions for next year’s meeting and the future of the VCM.