The voluntary carbon market (VCM) is growing quickly as companies and project developers look for new ways to support climate action. Northern Trust recently partnered with the Ecosystem Certification Organisation (ECO). This partnership aims to simplify the management of digital carbon credits and will also make the process more transparent and secure.
A Forest-Friendly Deal Takes Root
Northern Trust, a global wealth and asset management firm, has signed a deal with ECO, a UK-based company. They will manage digital carbon credits that are certified under the Natural Forest Standard (NFS).
Under this deal, Northern Trust will provide recordation, settlement, and custodial services for carbon credit units issued through NFS-certified projects.
The Natural Forest Standard backs big natural forestry projects. These projects help stop deforestation and keep forests healthy. It credits projects for their carbon benefits. It also recognizes their positive effects on biodiversity and local communities.
ECO oversees the NFS by working with project developers from start to finish. That means from project implementation to the issuance of carbon credits.
ECO is outsourcing its recordation and settlement services to Northern Trust. This move aims to boost independence between the standard’s governance and the registry’s operations. This move helps ensure transparency and builds trust in the voluntary carbon market.
How the Natural Forest Standard Works
The NFS’s goal is to support forestry projects in the voluntary carbon market. It focuses on projects that avoid deforestation and degradation in large natural forests. These projects can earn carbon credits. They do this by showing clear benefits for carbon storage, biodiversity, and local communities.
ECO plays a key role in making sure projects using the NFS methodology follow clear and credible processes. It guides developers through every step — from setting up projects to verifying results and issuing credits.
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The credits NFS generated are known as Natural Capital Credits.
Each NCC shows that 1 metric tonne of carbon dioxide equivalent (CO₂e) emissions has been avoided by an NFS project. These projects also help protect wildlife and support local communities in a fair and responsible way.
NCCs are special to the NFS and can only be created through the NFS Crediting Program. Once issued, the credits are recorded in the NFS Registry, where they can be held, traded, or permanently retired.
These credits are valuable in the VCM because they offer more than just carbon reductions. They provide broader environmental and social benefits. This makes them appealing to companies and investors who want to back nature-based solutions.
Northern Trust Steps In: The Digital Backbone
Northern Trust will now handle the back-end services needed to track and manage these credits, which include:
- Recording all issued credits,
- Processing transfers,
- Settling transactions, and
- Providing custodial services for the digital assets.
To do this, Northern Trust will use its Carbon Ecosystem™, a digital platform launched in 2024. The platform supports the full lifecycle of digital voluntary carbon credits — from asset creation and trading to custody and reporting. It runs on Northern Trust Matrix Zenith™, a tool for digital asset services. It handles important tasks like trading, pricing, and reporting for digital assets.
By providing these services, Northern Trust helps ECO focus on its main task: supporting project developers and maintaining the integrity of the Natural Forest Standard.
Victoria Kelly, Director at ECO, said the appointment of Northern Trust will ensure transparency and traceability for all credits issued, noting:
“Appointing The Northern Trust Carbon Ecosystem to administer the Natural Capital Credits will provide full lifecycle management of all digital carbon credits today and in the future, ensuring transparency and traceability for all Natural Capital Credits issued to projects verified under the Natural Forest Standard.”
What This Deal Means for the Voluntary Carbon Market
The VCM allows companies to buy carbon credits to offset their greenhouse gas emissions. In 2024, about 180 million credits were retired or used to offset emissions, as seen in the chart below. Nature-based projects are those in green bars, e.g., REDD+.
As the market grows, buyers and sellers want better safeguards. They need clear governance and trustworthy systems for managing carbon credits.
ECO and Northern Trust are addressing these concerns by separating governance from registry operations. Northern Trust ensures the accurate recording of NFS carbon credit transactions. They also make sure ownership is clearly documented. This builds confidence among market participants and helps the market mature.
Justin Chapman, Group Head of Strategic Partnerships, Digital Assets and Financial Markets at Northern Trust, shared the following insights with the CarbonCredits.com team:
Q: How does Northern Trust’s digital platform, the Carbon Ecosystem, improve transparency and efficiency compared to traditional carbon credit registries?
A: The Northern Trust Carbon Ecosystem provides convenient access for project developers and buyers to connect directly to explore, transact and retire voluntary carbon credits, allowing all actors to know who they are engaging with and for what reason.
Users can manage their carbon credit inventory, while project developers see who bought each credit and its status. Digital records add details like verification date, location, and risk measures (insurance or warranties). This makes it easier to match credits to buyers’ needs and ensures clear, transparent transactions.
Once transaction terms are agreed, a purchase and sale agreement is completed through The Northern Trust Carbon Ecosystem with the movement of carbon credits and cash automatically managed in accordance with the agreement. This increases efficiency while reducing transaction risk as the project developer receives funds just before the credits are delivered to the buyer, through a delivery vs. payment settlement process.
Q: In what ways do you see Northern Trust’s role supporting the growth and credibility of the voluntary carbon market over the next five years?
A: Northern Trust, as a leading global bank and asset servicing provider, applies financial rigor to the voluntary carbon market by providing independent infrastructure, registry, and settlement. As evidenced by our agreement with ECO, separating the role of the standards body from the registry helps remove potential conflicts of interest. The segregation of duties makes for a more efficient, transparent VCM with greater trust and aligns closer to solutions seen in other financial services models.
The Northern Trust Carbon Ecosystem construct has been built for the future, defining a suitable regulatory construct, asset definition and legal framework. Each digital voluntary carbon credit is deemed to be an intangible commodity, hence can be treated as a financial asset, allowing Northern Trust to act as a Designated Custodian of each credit on the ecosystem and provide the opportunity for credits to be considered for potential project financing opportunities.
Northern Trust adds credibility and strength, thanks to its long history in asset servicing. As of March 31, 2025, Northern Trust had $16.9 trillion in assets under custody and administration and $1.6 trillion in assets under management.
Clearing the Path for Future Climate Solutions
The partnership between Northern Trust and ECO is a key move to enhance the VCM’s infrastructure. By combining ECO’s expertise in forestry project standards with Northern Trust’s digital asset management capabilities, the two organizations aim to make carbon credit transactions smoother, safer, and more transparent.
Their teamwork might also inspire other standards groups and service providers in the voluntary carbon market. As companies worldwide look for ways to meet their climate goals, trust and clarity in carbon credit systems will become even more important.
The post Northern Trust and ECO Partner to Simplify Carbon Credit Management appeared first on Carbon Credits.
The accounting differences that decide whether your nature investment shows up in inventory, in BVCM, or nowhere at all.
The question reaches a procurement team about three weeks before the next sustainability committee meeting. Someone has read about insetting. Someone else has just signed off on an offset purchase. The CSO wants to know if the two are interchangeable. The answer is no, and the GHG Protocol Land Sector and Removals Standard is the reason why.
This article walks through what each term means at audit-grade specificity, what the standards actually say about how each gets counted, and how to decide which tool fits which target. The insetting vs offsetting question is one of the most-searched in corporate climate strategy, and one of the most poorly answered. By the end of this piece, you should be able to brief a committee on the difference without notes.
The two definitions, in plain English
Offsetting means buying carbon credits generated outside your value chain and retiring them against your residual emissions. The reduction happens somewhere else, financed by you, and the credit is the receipt.
Insetting means investing in emission reductions or removals inside your own value chain, typically with suppliers, where the reduction is directly linked to the products and services you buy. The reduction happens inside the boundary of your Scope 3 inventory, and the accounting treatment is fundamentally different.
The shorthand from the University of Oxford’s Nature-based Insetting Initiative is useful: insetting is what you do with the supply chain you have; offsetting is what you do with the supply chain you do not have.
What the GHG Protocol Land Sector Standard actually says
The GHG Protocol Land Sector and Removals Standard, finalised in 2024 after a multi-year pilot, sets the rules for how land-based emission reductions and removals enter corporate inventories. The Standard distinguishes between inventory accounting (Scope 1, 2, and 3) and project or intervention accounting (a separate methodology for crediting).
For insetting, the practical implication is that supplier-level interventions, when properly measured and attributed, can reduce your Scope 3 category 1 (purchased goods and services) emissions in your inventory. The reduction is not a credit retired against the inventory; it is a lower inventory number, period.
For offsetting, the credit is retired separately. It can be reported as a contribution toward a net-zero claim under the SBTi Beyond Value Chain Mitigation framework or as part of a VCMI Carbon Integrity claim, but it does not lower the inventory number.
A practical consequence: if your Science Based Target requires a 50% absolute reduction in Scope 3 emissions by 2030, insetting moves you toward the target. Offsetting does not. This single point of difference reshapes the procurement decision.
When insetting counts toward Scope 3 (and when it does not)
Insetting counts toward Scope 3 only when several conditions are met:
- The intervention must occur with an entity in your value chain.
- The emissions reduction or removal must be measured against a defensible baseline.
- The reduction must be attributed to your share of that supplier’s output, not double-counted with other buyers.
- It must follow the inventory accounting rules in the GHG Protocol Land Sector Standard, not the project accounting rules used to generate credits.
The most common failure mode is double counting. If your supplier sells the same reduction as a credit on the voluntary market and also reports it to you as a Scope 3 reduction, the math breaks. The Standard requires you to address this risk, typically by purchasing and retiring the supplier-issued credit as part of your inventory or by contractual provisions that prevent the supplier from selling the reduction twice.
When insetting does not count toward Scope 3: when the intervention sits with a supplier you do not buy from, when the baseline is not defensible, when the attribution is unclear, or when the documentation does not survive audit. Those cases default to Beyond Value Chain Mitigation, which is still useful but operates on a different ledger.
The procurement and supplier engagement question
Insetting is harder than offsetting. That is the unfashionable truth most buyers eventually confront. Offsetting is a transaction; insetting is a relationship.
To run an insetting program, you need supplier mapping precise enough to know which farms or facilities sit at which Scope 3 boundary. You need an engagement model that gets suppliers to participate, which usually requires multi-year commitments and shared economics. You need an MRV architecture that measures the right things and produces audit-ready documentation. And you need a contractual structure that prevents double counting and protects both sides.
The trade-off you receive in return is significant. Reductions count against your inventory rather than your residual. Supplier relationships deepen, which protects sourcing continuity. Yield and quality improvements often follow regenerative interventions, which reduces your input cost over time. And the regulatory file, under CSRD, CSDDD, EUDR, and the SBTi FLAG Guidance, is materially stronger.
Choosing the right tool for the right target
A practical decision rule. If your target is a science-based Scope 3 reduction and you operate in a FLAG sector or source FLAG commodities, insetting is the structurally correct tool. If your target is a net-zero claim that includes neutralising hard-to-abate residual emissions outside your value chain, BVCM via high-integrity offsets is the structurally correct tool. Most companies with material Scope 3 exposure need both, in different proportions, sequenced over time.
The sequencing matters. Insetting takes longer to stand up but produces a permanent reduction in the inventory. Offsetting can be transacted faster but does not change the inventory and now sits under tighter claim restrictions. Treat them as complementary tools with different jobs, not as substitutes. The Accountability Framework Initiative and the IUCN Global Standard for Nature-based Solutions both provide useful guardrails for the insetting side, with biodiversity, human rights, and benefit-sharing requirements that go beyond carbon math.
If you are mapping a Scope 3 reduction roadmap and need to scope which interventions count toward your inventory versus which sit in Beyond Value Chain Mitigation, the carbon and sustainability experts at Carbon Credit Capital can help you structure a nature-based supply chain investment program that fits your FLAG exposure, your target architecture, and your audit horizon. Schedule a consultation.
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