Not Just Technical — It’s Cultural
Why Due Diligence in the Carbon Economy Must Extend Beyond Models
Investment in the UK’s carbon and nature markets has grown significantly in recent years, driven by corporate net zero targets, ESG reporting obligations, and increasing interest in land-based climate solutions. However, a significant proportion of these projects underperform not due to errors in technical assumptions, but because of delivery failure — a function of governance, operational capacity, and stakeholder misalignment[^1][^2].
Robust due diligence in this context must go beyond engineering feasibility or compliance with schemes such as the Woodland Carbon Code or Peatland Code[^3][^4]. While these frameworks set important standards for monitoring, reporting and verification (MRV), they do not guarantee project durability, risk management, or effective long-term stewardship.
Emerging evidence suggests that many UK-based carbon projects are being delivered by consortia lacking proven long-term operational capability[^5]. In some cases, delivery partners are newly incorporated organisations with minimal governance infrastructure or financial reserves. In others, project management is distributed across informal partnerships, leaving accountability diffuse and exit strategies unclear[^6].
These governance weaknesses are especially acute in voluntary carbon markets, where scrutiny is lighter and contractual design is often templated or improvised[^7]. Moreover, the increasing role of natural capital investment vehicles — many backed by private equity or philanthropic blends — adds complexity around fiduciary responsibility, profit distribution, and long-term land use commitments[^8].
Independent due diligence must therefore incorporate:
An evaluation of delivery track records (beyond marketing materials)
Contractual analysis of risk allocation and enforcement
Review of governance structures, funding durability, and scenario stress-testing
Cultural alignment with landowners’ values and long-term objectives
These elements are rarely visible in project pitch decks but are determinative in whether outcomes are achieved. In the context of climate transition, delivery failure not only results in financial underperformance, but reputational risk and potential non-compliance with disclosure regulations under ISSB-aligned reporting regimes[^9].
For landowners, estates, boards and capital allocators, the question is not only “What is the carbon yield?” but also:
“Who is truly responsible for delivery — and can they execute across decades?”
References
[^1]: UK Climate Change Committee (2020). Land Use: Policies for a Net Zero UK. https://www.theccc.org.uk/publication/land-use-policies-for-a-net-zero-uk/
[^2]: Green Finance Institute (2023). UK Nature Market Framework. https://www.greenfinanceinstitute.co.uk/programmes/nature/uk-nature-markets-framework/
[^3]: Woodland Carbon Code Statistics. https://woodlandcarboncode.org.uk/statistics
[^4]: IUCN UK Peatland Code. https://www.iucn-uk-peatlandprogramme.org/peatland-code
[^5]: DEFRA (2022). Voluntary Carbon Markets and Offsetting Report. https://www.gov.uk/government/publications/voluntary-carbon-markets-and-offsetting
[^6]: Chatham House (2023). The Integrity of Carbon Offsets. https://www.chathamhouse.org/2023/06/integrity-carbon-offsets
[^7]: Oxford Smith School (2020). The Oxford Principles for Net Zero Aligned Carbon Offsetting. https://www.smithschool.ox.ac.uk/publications/oxford-principles-carbon-offsetting
[^8]: Nature Finance (2023). Natural Capital Investment Readiness. https://www.naturefinance.net
[^9]: International Sustainability Standards Board (ISSB). https://www.ifrs.org/groups/international-sustainability-standards-board/