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
ISDA AGM Studio: Emmanuel Geinoz and Eleanor Kelly
Five jurisdictions went live with revised derivatives reporting rules in 2024, with more to follow in 2025 and beyond, putting reporting teams under extreme pressure to implement accurately and on time to avoid regulatory penalties. Emmanuel Geinoz, market infrastructure and...
ISDA AGM Studio: Tyler Wellensiek, Stephen Berger
The first phase of the Securities and Exchange Commission’s Treasury clearing mandate will come into effect in December 2026 – a requirement that will have a significant impact on both US and non-US market participants. Tyler Wellensiek, ISDA board member...
ISDA AGM Studio: Jacques Vigner, BNP Paribas
Jacques Vigner, ISDA board member and chief strategic oversight officer for global markets at BNP Paribas, speaks with Mark Gheerbrant, global head of risk and capital at ISDA, on the key obstacles to a consistent, risk-appropriate capital framework and how to...
ISDA AGM Studio: Future Leaders in Derivatives
Following publication of the latest whitepaper from the ISDA Future Leaders in Derivatives (IFLD) program, Collateral and Liquidity Efficiency in the Derivatives Market: Navigating Risk in a Fragile Ecosystem, Joel Clark talks to IFLD participants Koen Ottenheijm, senior treasury and...