IOSCO is the the global standard setter for securities markets regulation. SEC from United States, CVM from Brazil, AMF from France and SEBI from India are members, like securities regulators from most of the other countries and stock exchanges.
Late last year IOSCO put out for comments two papers: Voluntary Carbon Markets (VCM, para discussão) and Compliance Carbon Markets (para consulta) .
In the VCM, entities buy carbon credits to offset some or all of their own carbon emissions. These carbon credits are issued in relation to climate change mitigation projects, either through carbon removals and through emissions reductions – for example, by investing in renewable energy or planting trees.
To generate carbon credits, carbon removal projects will need to be certified by a standard body such as Gold Standard or Verra. After that, the certification standard body will issue credits and add the credits to a registry. The issued credits may be purchased, traded, and sold to buyers, either over the counter (OTC) through brokers or through exchanges, in either primary or secondary markets.
To scale up the full potential of VCM, helping to mitigate climate change, IOSCO has undertaken a fact-finding exercise with exchanges, market intermediaries, academics, market participants and standard setters, from different geographies, as well as IOSCO members.
Many of the concerns raised about VCM relate to three different perspectives of market integrity :
concerns at project level, regarding the environmental integrity of the carbon credits;
issues relating to the characteristics of the trading environment in which these credits are transferred from one party to another, and the behavior of market participants in doing so.
issues regarding the overall communication around the use of carbon credits by buyers as it could be misleading and therefore leading to a risk of greenwashing.
To participate, answers to the consultation questions and comments for both documents may be submitted on or before 10 February 2023. More details on the documents themselves, the two links above.
