Linklaters. "Navigating the Risks of Greenwashing in the Voluntary Carbon Market". ISDA. Accessed May 08, 2024. https://www.isda.org/...

Voluntary carbon markets (VCMs) offer an important market mechanism for firms to efficiently abate their emissions. By utilizing the VCM, they can buy verified carbon credits (VCCs) from carbon projects that have a lower marginal cost of abatement. 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 will: (1) provide an overview of VCCs; (2) explain greenwashing; (3) describe the origin, causes and risks of nature- and technology-based VCC methodologies; (4) discuss the effects of greenwashing on carbon markets; (5) highlight market reforms to minimize the risk of greenwashing; and (6) provide recommendations.

Posted on 08/05/24