Rewards Distribution Policy
Version 1.0 (Ratified on Jan 22, 2024)
This document identifies Carrot’s policy for distributing rewards among waste supply chain participants, determined by category, from Recycling Credits (TRC) and Carbon Credit (TCC) sales. The primary goal of the Rewards Distribution Policy is to designate rewards in a manner that encourages maximum participation in the network and helps to grow recycling and reuse rates rapidly in each geography. The Rewards Distribution Policy have been established by the Carrot Foundation in consultation with market participants, advisors, and data scientists. In time, these decisions will be transferred to local communities. For a deeper analysis, we invite participants to read the section in the white paper titled Distribution Model.
Participant Key
Waste Generator = G
Bin Custodian = B
Hauler(s) = H
Processor(s) = P
Recycler = R (All recyclers are also Ps)
Community Impact Pool = CP (formerly NGOs)
Ecosystem Builders = E
I = Network Integrator (Data Provider for Supply Chain Tracking and Circular Activities)
A = Methodology Author
D = Methodology Developer and Distributor
N = Carrot Network
[Note: Carrot Network covers costs related to homologation, audits, verification, certification, issuance of credits, registry, and data processing. Administrative costs of similar carbon credit projects range between 30-50% for project development and certification, not factoring in additional costs incurred by the buyers (of the credit) who conducts their own verification activities. Such costs can represent 200-300% of the cost of each credit, meaning that proceeds from the sale of credits can represent less than ⅕ of the total cost of a credit. Carrot's dMRV (digital Measurement, Reporting and Verification) solution delivers a transparent trusted solution that is low-cost returns as much value as possible to the market participants who are performing important environmental work in the field. At scale, Network fees can be reduced significantly distributing even more value to participants.]
Rewards Distribution Discounts
Supply Chain Digitization Incentive Mechanism: a standard discount of 25% in rewards will be applied to all logistics and service providers (Recyclers, Processors, and Haulers) when the Waste Generator is not identified. The discount is for all waste types and all geographies, serving as an incentive mechanism for further supply chain digitization. More information can be found at Waste Generator Not Identified and Reaching the Source of Waste Creation.
Reward Discounts for Waste Generators
To preserve ecosystem credibility and ensure coherence between Carrot's value proposition and the implementation of its redistribution policy, Carrot applies a standard 50% discount on rewards allocated to Waste Generators under two specific scenarios. This policy serves a dual purpose: (i) maintaining consistent governance and participant eligibility standards; and (ii) calibrating economic incentives in proportion to the participant's level of operational adherence and organizational profile—without undermining the ecosystem's attractiveness to actors that generate meaningful waste volumes and can accelerate demand for high-performing recycling and/or composting services.
Waste Generators without completed onboarding Waste Generators that have not yet completed the onboarding process will receive a 50% discount on rewards. This discount ensures uniform application of the policy while formalization and registration verification remain pending, and it functions as an incentive mechanism to drive onboarding completion. In practical terms, the rule reinforces the principle that full reward redistribution depends on minimum eligibility and traceability conditions within the network, ensuring transparency, governance, and predictability for all ecosystem stakeholders.
Large Businesses after onboarding Waste Generators that have completed onboarding will receive a 50% discount on rewards if they qualify as Large Businesses, based on the criteria defined below. Applying this discount to large waste generators is intended to mitigate potential perception asymmetries among credit buyers, particularly where reputational discomfort may arise from seeing rewards flow to large organizations. At the same time, the discount preserves a meaningful economic incentive for large generators to participate in the ecosystem and—most importantly—to contract and sustain high-performing recycling and/or composting services, thereby expanding traced volumes, strengthening data quality, and enhancing certified environmental impact.
Allocation of discounted amounts:
Community Impact Pool Discounted reward amounts, in both scenarios described above, do not remain idle and are not automatically returned to the participant. Instead, these amounts are directed to the Community Impact Pool through a digital wallet, initially under the stewardship of the Carrot Foundation, with the purpose of reinforcing socio-environmental impact generation in the territory where the recycling took place. Over time, Carrot's objective is to evolve this model toward a decentralized and open governance structure, such that the Community Impact Pool is ultimately curated and managed by the Community.
The Community Impact Pool (CP) is a collective fund established to amplify Carrot's socio-environmental impact and strengthen the development of the circular economy in a regenerative and inclusive manner. It functions as a grants fund to support environmental, social, and innovation projects aligned with regenerative economy principles and with the ecosystem's integrity and impact guidelines. Initiatives may be proposed by nonprofits, local communities, environmental collectives, impact startups, and/or members of the ecosystem itself. The fund consolidates value that, under network governance rules, is not distributed directly to supply chain participants, including (but not limited to): (i) redemptions not executed within the required timeframe; (ii) incomplete onboarding; and (iii) specific rules applicable to large waste generators, such as the discount arising from Large Business classification. In this way, the Community Impact Pool functions as a "value recirculation" mechanism: it transforms operational gaps or eligibility constraints into active funding for initiatives that expand systemic capacity for recycling, innovation, and climate justice.
Governance: resource allocation must follow transparent criteria, supported by participation mechanisms and progressive evolution toward a more decentralized and open governance model.
Large Business Classification
For Waste Generators that have completed onboarding, Large Business status is determined based on the following criteria:
General Threshold: Waste Generators that record more than USD $4 million in revenues in the prior calendar year are classified as Large Businesses.
Temporal application note (non-retroactivity): Credits already issued with discounts will not be retroactively changed. Only new credits generated after onboarding completion will use the verified Large Business status applicable to the relevant period.
REWARDS DISTRIBUTION BY WASTE TYPE
Note that percentages distributed to Ecosystem participants have not been determined yet, as discussions are ongoing with Participants in order to determine the optimal distribution for this stage of market development.
ORGANICS
Composting of Mixed Organic Waste
Distribution: G (30%), H (10%), P (10%), R (20%), I (8%), A (1%), D (1%), and N (20%)
[Note: The Waste Generator typically bears the high cost of contracting composting services (known as pay-as-you-throw), which often competes with free street pickup from traditional waste-to-landfill management systems. Composters R) sometimes also perform hauling services.]
Composting of Sludge from Waste Treatment Plants
Distribution: G (25%), H (5%), P (10%), R (30%), I (8%), A (1%), D (1%), and N (20%)
Composting of Tobacco Industry Residues:
Distribution: G (25%), H (5%), P (10%), R (30%), I (8%), A (1%), D (1%), and N (20%)
PAPER & CARDBOARD
Paper & Cardboard Recycling
Distribution: G (20%), H (20%), P (15%), R (15%), I (8%), A (1%), D (1%), and N (20%)
[Note: Paper & Cardboard typically have well established supply chains.)
METALS
Aluminum
Distribution: G (20%), H (20%), P (15%), R (15%), I (8%), A (1%), D (1%), and N (20%)
Steel
Distribution: G (20%), H (20%), P (15%), R (15%), I (8%), A (1%), D (1%), and N (20%)
GLASS
Cullet Recycled at a Bottling Plant
Distribution: G (25%), H (10%), P (20%), R (15%), I (8%), A (1%), D (1%), and N (20%)
[Note: Waste Generators usually do not have to pay much for dedicated glass pickup.] Glass recyclers benefit greatly from increased cullet volumes, both in terms of pricing and energy efficiency within furnaces. Haulers and Processors usually need to invest heavily in bins and truck infrastructure and resale value of materials is typically low.]
PLASTICS
PET Recycling
Distribution: G (25%), H (15%), P (15%), R (15%), I (8%), A (1%), D (1%), and N (20%)
Last updated