The International Swaps and Derivatives Association (ISDA) and law firm Linklaters have co-published a report addressing greenwashing risk in the voluntary carbon markets (VCMs). Perceived greenwashing and associated reputational and regulatory risks are among the main obstacles to delivering the lowest cost abatement through verified carbon credits (VCCs) and liquid transparent VCMs, according to the report. Recommendations included improving third-party oversight and monitoring in respect to the due diligence being done on VCCs, protocol quality, rating programmes and advisors. VCMs are viewed as an important market mechanism allowing firms to efficiently abate their emissions, giving them an opportunity to reduce their carbon footprint further on a voluntary basis with the funding available to them. The report provided an overview of VCCs, which are produced when a project or activity removes or reduces greenhouse gas emissions. It also explains the concept of ‘greenwashing’ and its effects on primary and secondary carbon markets, and outlined regulatory and industry-led efforts to minimise risk around it.
