Author’s Note: This Sustainability Dialogue guest essay was completed as part of the ClimateCAP Fellowship, a program of the ClimateCAP Initiative led by Duke University’s Fuqua School of Business and supported by the Hearst Foundations. It reflects original research, startup analysis, and strategic insights aimed at advancing investment perspectives on MRV and nature-based climate solutions. View the original post here.
Monitoring, Reporting, and Verification (MRV) systems are the backbone of credible climate action. They provide the data integrity necessary to ensure that climate projects deliver measurable results, investors deploy capital confidently, and governments design effective policy.
Yet, despite their centrality, MRVs remain underinvested, fragmented, and often treated as cost centers rather than innovation engines. Investors describe MRV as “a critical enabler” of climate finance, but not yet a “standalone venture-scale market.” Others have compared it to accounting: essential for transparency, but rarely a direct profit center. MRV providers are emerging not only as verification engines but as critical gatekeepers of climate finance integrity.
MRVs are essential to validate climate claims, unlock finance, and track real progress across emissions reduction, carbon removal, biodiversity, and adaptation. As sustainable development projects grow (evidenced by record fiscal revenues of $104 billion from carbon taxes and emissions trading systems in 2023) the fundamental challenge remains verifying that claimed greenhouse gas (GHG) emission reductions and removals are genuine.
However, an often-overlooked challenge within the MRV landscape is bias inherent in its business models. Many MRV startups operate under consulting-like frameworks, providing bespoke measurement and verification services to project developers, registries, or corporate clients who also serve as their payers. This structure creates an incentive to keep clients satisfied rather than strictly objective, especially when renewals or future contracts depend on positive project outcomes.
As one expert noted, “If I’m getting paid per ton verified and the buyer pays me more for more tons, I’m incentivized to say more happened.” This “soft verification” dynamic echoes the early accounting industry, where auditors were paid directly by the companies they reviewed, raising similar conflicts of interest until stronger oversight emerged. Decoupling verification from client satisfaction will be essential to ensure credibility and independence in climate markets.
In this piece, I illustrate why MRV matters, where current tools fall short, and where investors may find both opportunities and pitfalls.
Why MRV Matters
MRV is not a new concept. For decades, governments and NGOs have tracked deforestation, water use, and pollution through monitoring frameworks. What’s new is the scale of private capital now depending on reliable impact data.
Today, trillions of dollars are projected to flow into climate solutions by 2030. Carbon credits, biodiversity offsets, and resilience bonds all rely on one common foundation: the ability to prove impact. As one investor put it: “If you can’t measure it, you can’t monetize it. And if you can’t verify it, no one will trust it.”
MRV isn’t just about data integrity; it’s about market legitimacy.
The Trust Deficit
The voluntary carbon market illustrates the risks of weak MRV. Many credits today are based on counterfactuals: “What would have happened without this project?” These assumptions are nearly impossible to prove, creating room for manipulation and erosion of trust. Investigations into inflated or “phantom” credits have damaged the credibility of entire markets. Even well-meaning projects face skepticism, with analysis suggesting that more than 90% of certain rainforest offset credits did not represent genuine carbon reductions.
One investor summarized: “Verification can’t fix a broken foundation. If someone says he’ll cut down all his trees unless someone pays him not to, that’s not a credible system.” The problem is systemic: flawed baselines, inconsistent methodologies, and a lack of third-party oversight. Even when standards like Verra or Gold Standard exist, thresholds vary widely.
Bias and Business Models
MRV’s credibility challenge is not just technical—it’s economic.
Most MRV providers get paid by the same project developers or buyers whose claims they verify. When payments are structured per ton of carbon verified, the incentive tilts toward inflation. A project that “verifies” more tons creates more revenue for everyone involved.
As one former MRV executive explained, “The supplier and MRV provider get together and decide how much has happened, and we alone control that narrative. That’s why third-party auditors exist, to remove that conflict.”
The bias problem runs deep:
- Verification dependence: When MRV companies rely on repeat contracts from clients, they risk “friendly verification”
- Per-ton pricing: Incentivizes over-reporting
Vertical integration: Tech providers that both generate and verify data blur accountability
This is why third-party verification is critical. The structure mirrors organic food certification: the farmer doesn’t get to call their own apple organic. Instead, data flows from the producer to a standards body (e.g., Gold Standard, Puro Earth), which hires independent auditors to confirm results. In many cases, there are three layers of verification: the project developer, the MRV provider, and the external verifier.
Still, bias persists even among standards bodies. Verra and Gold Standard, for example, often differ in thresholds and rigor. As one investor said, “It would be much better to have a unified standard, but even the top certifiers can’t agree on the same definition of additionality.”
Until MRV incentives are restructured, e.g., flat fees independent of project outcomes, pooled public funding for verification, or compliance-based mandates, the bias problem will continue to erode trust.
Not All MRV Is Created Equal
The feasibility and economic rationale for MRV vary dramatically by sector. In methane abatement, for example, it is technically infeasible to measure emissions directly across tens of millions of free-ranging cattle. Instead, companies may rely on small-scale studies, accepting a trade-off between cost and precision. This debate (between direct measurement and modeled estimation) is one of the most contested in MRV. For practical and financial reasons, extrapolation will likely remain acceptable for many sectors.
By contrast, ocean-based MRV is still an open field. “There’s a lot more opportunity for innovation in oceans than on land,” one investor noted. “Land-based MRV is often a solved problem, but the ocean side, carbon alkalinity, enhanced weathering, is not.” These areas require novel measurement systems such as eDNA sensors, autonomous monitoring, and Internet of Underwater Things (IoUT) networks to establish durable, scalable verification protocols.
Fragmented Landscape and Integration Challenges
The MRV ecosystem remains fragmented:
- Niche startups (soil carbon, satellites, biodiversity sensors) focus narrowly.
- Large incumbents (Oracle, SAP) offer costly, enterprise-grade tools ill-suited for emerging markets.
- Standards bodies and NGOs define frameworks, but adoption is inconsistent.
The result is an inefficient patchwork of tools and systems, where companies struggle to stitch together disparate solutions into something coherent. What’s missing is a unified platform—one that integrates best-in-class technologies into a scalable, standardized MRV infrastructure. As one investor put it, “The technology exists. The problem is integration, incentives, and adoption.”
Consider engineered carbon dioxide removal (CDR) methods like Enhanced Rock Weathering (ERW) and Ocean Alkalinity Enhancement (OAE). These approaches are defined by their pursuit of high permanence, demanding MRV protocols that can track durability over decades. Effective MRV systems for such technologies must rigorously capture every stage of the removal process to ensure that net carbon reductions are truly additional, verifiable, and durable.
By embedding MRV at the core of their value proposition, companies can not only differentiate themselves but also build credibility with buyers, investors, and regulators. As another investor summarized, “For this to be a serious market, it has to be compliance-driven. Voluntary efforts will never be enough.”
Accountability and Regulation
Voluntary markets alone won’t create enough demand for MRV. The real engine is compliance. The IMO is launching a global cap-and-trade system for shipping, CORSIA requires airlines to offset emissions growth with approved credits, and the Paris Agreement (Article 13) mandates transparent, comparable MRV across national commitments. Add in standards like TNFD, VCMI, ICVCM and the rollout of national registries and the direction of travel is clear: verifiable metrics are no longer optional.
To rebuild trust, next-gen projects like enhanced weathering and ocean alkalinity are going MRV-first, and buyers such as Stripe, Microsoft, and Frontier won’t pre-purchase credits without radical transparency. Beyond carbon, biodiversity is quickly becoming the “next carbon,” but the lack of consistent data is the bottleneck. That’s where TNFD frameworks push MRV platforms to turn ecosystem complexity into boardroom-ready insights.
And it doesn’t stop at carbon markets. Insurance and risk modeling are being rewired by MRV, with real-time data to price risk and reduce premiums. On the compliance side, Article 6.4 of the Paris Agreement helps international carbon markets and sets a high bar that spills over into the voluntary side. For credits that meet this standard, the upside is big: compliance eligibility and long-term value.
The chart makes one thing clear: carbon removal is no longer just about technology. Every pathway, from direct ocean capture to biochar, enhanced weathering, and bio-oil, is now racing to align with credible MRV and crediting standards. Bodies like Puro, Verra, Gold Standard, and emerging players such as Isometric are setting the benchmarks that determine which solutions gain traction. Without alignment to a recognized standard, even the most promising technology risks becoming stranded. But integration within these frameworks can unlock institutional capital, market trust, and scalability.
The ecosystem is converging quickly: what once lived in proprietary silos is now being standardized to enable trust, liquidity, and investor confidence. For startups, the message is clear: success lies not only in the tech itself, but in owning the pathway into standards.
Pathways for MRV to Scale
For MRV to evolve from fragmented point solutions into scalable infrastructure, several factors must align:
- Regulatory mandates enforcing verified data.
- Market standardization for comparability across projects.
- Integration platforms that combine specialized tools with enterprise usability.
- Incentive realignment through public or pooled funding models.
- Community validation incorporating local data and knowledge to increase legitimacy.
Key Challenges & How to Navigate Them
MRV’s potential is massive, but progress depends on execution. Here’s where the challenges sit and where the upside lives:
- High cost for small projects → Digital MRV platforms (AI, drone, satellite) can reduce cost/time of ERC issuance by >50%
- Data fragmentation & lack of standards → Open protocols & API-first architectures offer integration and defensibility
- Limited investor appetite → Chicken-and-egg problem, but early bets (like Sylvera’s $57M Series B) show proof of scale
- Difficulty measuring complex natural systems → Hyperspectral imaging, AI, and sensor fusion are rapidly improving data quality
- Lack of demand-side literacy → Educating buyers (corporates, insurers, governments) is key; trusted MRV = trust in carbon markets
Frontier Climate illustrates both the promise and complexity of embedding MRV within nascent carbon removal markets. By aggregating demand from major corporates like Stripe, Google, and Shopify, Frontier is effectively seeding the market for early-stage removal technologies, signaling willingness to pay for verified permanent carbon removal. Yet, the initiative highlights persistent MRV challenges: supply-side verification uncertainty, technology immaturity, and the difficulty of establishing standardized baselines across diverse removal pathways such as direct air capture, enhanced rock weathering, and ocean alkalinity enhancement. Frontier mitigates these risks through a layered verification model: they pre-qualify suppliers, integrate third-party standards, and require rigorous monitoring and reporting before credit issuance. This approach demonstrates how MRV can be operationalized to reduce bias, enforce accountability, and provide confidence to buyers, while also signaling the limits of early markets. For investors and startups, Frontier underscores that success depends not only on the underlying technology but on structuring MRV-driven contracts and protocols.
Investing in Measurement Is Investing in Impact
The climate transition isn’t just a story of the next, breakthrough innovation; it’s a story of trust. Investors, governments, and communities must believe that projects deliver what they promise. Measurement, Reporting, and Verification (MRV) provides that foundation.
The logic is simple:
- What gets measured gets funded
- What gets verified gets trusted
- And what gets trusted gets scaled
MRV technologies are the trust layer of climate finance. As capital inflows rise and scrutiny intensifies, investors who understand and back verification infrastructure will be best positioned to shape the future of climate markets. MRV is both a climate imperative and an investment arbitrage: undervalued, essential, and rapidly maturing.
Investment Opportunity Areas
MRV forms a layered ecosystem with multiple high-leverage entry points:
- Core MRV Infrastructure: Satellite analytics (e.g., Chloris, Earthshot, Space Intelligence, Kanop), digital compliance platforms (Cecil, Carbonfuture), and blockchain verification layers (dClimate, Toucan) provide the backbone for trustworthy climate data
- Embedded MRV in Vertical Climate Tech: Startups such as Planboo (biochar), Terradot (enhanced weathering), Carbonfuture (DAC), and Carbon to Sea / Ebb Carbon (ocean alkalinity) integrate MRV directly into their products, creating defensible moats and recurring revenue through data, insurance, and certification streams
- Ocean-Based MRV: Autonomous vehicles, eDNA sensors, and IoUT networks (Ocean Vital Signs Network, Vycarb) are emerging as critical enablers for validating marine carbon removal at scale.
- Data Aggregators & Marketplaces: Platforms like Sylvera and FLINTpro transform fragmented datasets into actionable ratings and certification layers, turning raw measurements into investable intelligence
Across these layers, MRV is not a cost: it’s a force multiplier. Every dollar invested in MRV infrastructure amplifies capital efficiency, market confidence, and climate impact.
An example of a recent model with MRVs is the biochar carbon removal agreement between Exomad Green and Microsoft, tracked end-to-end by Carbonfuture’s digital MRV platform. In this deal, biochar produced from sustainably sourced forestry residues is measured, reported, and verified digitally before credits are issued under the Puro.earth methodology and sold to Microsoft. The structure illustrates the layered verification ecosystem MRV enables: the project developer generates the removal, the MRV provider captures and validates data, and a third-party auditor confirms compliance with standards. The success here is attributed to a couple of factors. First, embedding MRV directly into the value chain creates defensible data moats that reduce verification risk. Second, digital tracking platforms like Carbonfuture can cut costs, improve auditability, and increase transparency. Finally, the deal demonstrates how MRV is not just a reporting tool, but a competitive differentiator.
Embedded MRV as a Competitive Moat
Embedded MRV systems offer a dual advantage:
- Automated, high-quality monitoring that validates environmental claims, and
- A defensible technological moat that enables climate solutions to scale responsibly and profitably.
In increasingly commoditized markets like biochar, enhanced rock weathering, and ocean CDR, differentiation is everything. Startups that bake proprietary MRV directly into their products, like Terradot, stand out by proving verifiability and durability. This creates customer stickiness and unlocks recurring revenue through data subscriptions, insurance products, and credit certifications.
Embedded MRV also accelerates scalability. By leveraging AI, sensors, and satellites for real-time analytics, these systems reduce reliance on expensive third-party audits and enable modular, decentralized deployment across sectors such as regenerative agriculture, mangrove restoration, and direct air capture. The result: faster project validation, earlier monetization, and higher capital efficiency.
However, while embedded MRV can create defensible moats, investors sometimes perceive MRV-generated credits as a nice-to-have rather than a core revenue driver. In other words, MRV’s value is often seen as complementary to the primary business, not a standalone engine of profits. For startups, this implies a risk: devoting significant resources to building embedded MRV without clear, seamless integration may be viewed as unnecessary overhead, particularly in the near term when regulatory frameworks and market mindsets are still evolving. Success depends on making MRV systems easy to deploy, cost-effective, and fully aligned with existing business operations.
What Gets Measured Gets Funded
Investors should prioritize companies that:
- Capture real-time data via sensors, drones, or satellites.
- Integrate with recognized crediting standards (e.g., Verra, Puro, CarbonPlan).
- Own proprietary protocols or differentiated data pipelines.
- Offer MRV-as-a-Service to project developers.
- Combine hardware + software, particularly in ocean or nature-based MRV.
- Use MRV to de-risk financing (e.g., through lower insurance premiums or green bond eligibility)
As carbon markets, biodiversity credits, and adaptation finance mature, embedded MRV can be the differentiator between credible climate solutions and noise. Startups that over-invest in MRV infrastructure without seamless integration risk being seen as inefficient or distracted from their core business. For MRV to truly create value, it must align with existing operations, so that verification becomes a natural enabler of growth rather than an overhead burden. VCs who view MRV not as backend infrastructure but as a core feature of scalable climate solutions will hold a lasting first-mover advantage.