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.
Most businesses that decide to act on their net-zero targets reach the same point of friction. Buying carbon credits has meant tracking down brokers, sitting through sales calls, and requesting a quote just to learn a price, sometimes with limited proof of what you are buying.
The earnings calls that quietly reframed climate from sustainability question to operating risk.
Three earnings calls in the last 18 months tell the story without any help from a press release.
Hershey, May 2024: cocoa price exposure compresses margin, and the company attributes part of the cost shock to West African weather. Olam, July 2024: coffee climate exposure quantified in the annual report. JBS, January 2025: supply chain climate disclosures expanded materially in response to investor pressure and regulatory expectation. None of these companies issued the announcement as climate news. They issued it as financial news. The climate-linked supply chain risk did not arrive with a sustainability framing; it arrived as a P&L line.
You are probably reading this article because you suspect the same thing is happening to your business. This piece walks through what is showing up on which earnings calls, how procurement and finance leaders are quantifying the exposure, and what serious corporates are doing about it before the regulator asks.
Where climate risk has already appeared in earnings
The pattern is consistent across resource-intensive sectors. A weather event compresses supply, the price spikes, the cost flows through the income statement, and the analyst on the call asks whether the event is anomalous or structural. Increasingly, the honest answer is the second one.
Cocoa is the cleanest example. The 2023 to 2024 West African harvest fell sharply on the back of erratic rainfall and disease. Cocoa futures more than tripled. Companies with concentrated West African sourcing absorbed the cost; companies with diversified sourcing absorbed less. The exposure was not climate as ESG topic. It was climate as cost of goods.
Coffee follows the same pattern. Brazilian and Vietnamese harvests have moved on weather more sharply across the last several seasons. Roasters with long-tenor supplier relationships and origin diversification have managed the volatility; roasters with spot-market exposure have not. Wheat, sugar, palm oil, beef: the same dynamic in different commodities, a pattern the IPCC AR6 Working Group II report projects will intensify across agricultural systems through mid-century.
What this means: climate risk is no longer a footnote in the 10-K. It is a line item the CFO has to explain on the call.
The three commodity exposures that hit margin first
For most companies with material Scope 3 exposure, three exposures dominate the near-term P&L risk.
- Concentrated single-origin sourcing in a climate-vulnerable region. If your tier-one supply for any material commodity sits in one geography, you have a concentration risk that climate amplifies. Diversification across origins is the obvious hedge, but it takes years to build and requires relationships you cannot acquire by tender.
- Supplier financial fragility under climate stress. Smallholder farmers, who supply a large share of the global cocoa, coffee, and palm oil market, do not carry the balance sheets to absorb yield shocks. When yields collapse, they exit. When they exit, your supply base shrinks, and the surviving suppliers raise prices. The risk is structural, not cyclical.
- Logistics and storage exposure to extreme weather. Hurricane disruptions to Gulf shipping, drought-driven Panama Canal restrictions, flooding in European inland waterways: each of these has moved input costs in the last three years, a pattern documented in Munich Re’s natural catastrophe data. The exposure shows up as a one-quarter event in the financial press but accumulates over time on the cost line.
TCFD and ISSB disclosure changes
The disclosure architecture has now caught up with the risk. The Task Force on Climate-related Financial Disclosures, whose recommendations are now embedded in the ISSB’s IFRS S2 climate standard, requires companies to disclose climate-related risks across physical and transition categories, with quantification where possible.
For physical risk specifically (the climate-linked supply chain risk you are reading about), the disclosure must address both acute exposures (extreme weather events) and chronic exposures (gradual changes in temperature, precipitation, and growing seasons). The disclosure must address the time horizon over which the risk is material, the parts of the value chain exposed, and the financial impact under different scenarios.
The CSRD imposes similar requirements under European law, with double materiality (both financial and impact materiality) embedded in the assessment. The practical effect: your auditors and your investor relations team now need a defensible answer to the climate-linked supply chain risk question, and the answer needs to be quantified.
What procurement and finance can do now
Three actions matter near-term.
Map your exposure. Most companies do not have a clear view of which tier-one and tier-two suppliers sit in which climate-vulnerable geographies. Without the map, you cannot quantify the risk, and without the quantification, you cannot disclose it credibly. The map is the foundation, and World Resources Institute climate risk research provides useful public tooling to start.
Diversify and deepen, in that order. Diversification across origins reduces concentration risk, but the deeper move is to invest in the resilience of the suppliers you already have. Regenerative practices, agroforestry, soil health interventions: these reduce yield volatility under climate stress and protect your input cost trajectory.
Embed the climate spend inside procurement, not outside it. Treating climate risk as a sustainability cost line subordinates it to the ESG budget. Treating it as a procurement and resilience investment puts it in the budget that matters, which is the cost-of-goods budget that the CFO defends quarterly.
Nature-based supply chain investments are the asset class designed for exactly this purpose. They sit inside the value chain, they reduce climate-linked supply risk, they generate verifiable Scope 3 reductions, and they produce the documentation an auditor and a regulator can both test.
If you are quantifying climate-linked supply chain risk in advance of the next earnings cycle or the next disclosure period, the carbon and sustainability experts at Carbon Credit Capital can help you map your exposure and structure a Dual-Value Model response that addresses reduction, resilience, and disclosure-readiness in a single program. Schedule a consultation.
More and more small and medium-sized businesses are hearing the same question from their larger customers: What is your carbon footprint? That question now travels down entire supply chains, and it arrives next to tender requirements, certification criteria, and rising customer expectations.
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