Voluntary carbon markets (VCMs) offer an important market mechanism that allows firms to efficiently abate their emissions. By utilizing the VCM, firms can buy voluntary carbon credits (VCCs) from carbon projects that have a lower marginal cost of abatement, allowing firms to decarbonize more efficiently.
This efficiency may lead to firms decarbonizing their operations more quickly and further than they would otherwise do on a voluntary basis.
One of the main obstacles in delivering the lowest cost abatement through VCCs and liquid, transparent VCMs is the perceived risk of greenwashing and its associated reputational and regulatory risks.
This paper: (1) provides an overview of VCCs; (2) explains greenwashing; (3) describes the origin, causes and risks of nature- and technology-based VCC methodologies at both the credit and system level; (4) discusses the effects of greenwashing on primary and secondary carbon markets; (5) highlights market reforms to minimize the risk of greenwashing (both regulatory and industry-led efforts); and (6) provides recommendations.
Click on the PDF to read the paper in full.
Documents (1) for Navigating the Risks of Greenwashing in the Voluntary Carbon Market
Latest
DTF Tokyo: JFSA Remarks
On October 23, Kei-Ichiro Inaba, deputy commissioner for international affairs at the Financial Services Agency, Government of Japan (JFSA), delivered keynote remarks at the ISDA Derivatives Trading Forum in Tokyo. Click here to read the speech.
ISDA Launches RFP for Trade Eligibility Solution
ISDA has launched a request for proposal (RFP) for the development of a trade reporting eligibility tool for use alongside the ISDA Digital Regulatory Reporting (DRR) solution. The eligibility tool is intended to provide analysis on whether a derivatives transaction...
Joint Response to ETS Review
On November 2, ISDA and the Association for Financial Markets in Europe submitted a joint statement on the European Commission’s call for feedback on the review of the EU Emissions Trading System (ETS). The response highlights the importance of a...
Updated OTC Derivatives Compliance Calendar
ISDA has updated its global calendar of compliance deadlines and regulatory dates for the over-the-counter (OTC) derivatives space.