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
Joint Response to EC on Market Risk Delegated Act
ISDA and the Association for Financial Markets in Europe (AFME) have responded to the European Commission’s (EC) consultation on the draft legal text of the upcoming market risk delegated act. The associations welcome the ongoing efforts to address the implementation...
ISDA/ASIFMA/GFXD Letter to RBI on INR-Denominated FX Derivatives Reporting
On March 9, 2026, ISDA, ASIFMA, and GFXD submitted a joint letter to the Reserve Bank of India (RBI) in response to the RBI’s Reporting Instructions for Authorised Dealer (AD) Category – I Banks draft directions to mandate the reporting...
IRD Trading Activity FY 2025 and Q4 2025
This report analyzes interest rate derivatives (IRD) trading activity reported in Europe. The analysis is based on transactions publicly reported by 30 European approved publication arrangements (APAs) and trading venues (TVs). Key highlights for the full year 2025 include: European...
A Financial Markets Revolution
Every financial center has its own unique features, but it was particularly fitting that ISDA’s recent Annual General Meeting (AGM) was held in Boston – not only a global hub for asset management and insurance, but also a city that...