FMSB Publishes Spotlight Review on Voluntary Carbon Markets
Posted by Colin Lambert. Last updated: October 3, 2022
The Financial Markets Standards Board (FMSB) has published a spotlight review of Voluntary Carbon Markets (VCMs) to assist “the steep learning curve facing newer entrants to the market”.
FMSB says VCMs are one of the fastest growing markets in recent years, and are seen as a vital tool in the race to Net Zero by 2050. As voluntary carbon credits transition rapidly to the mainstream, FMSB’s report calls for market participants to “consciously evaluate” the VCM’s evolution against its environmental aims. The report also highlights gaps in the current market ecosystem that may help in its transition into a mature asset class.
In addition, the review notes the crucial role of education in fair and effective wholesale markets and also features a holistic overview of the history, evolution, and current status of the VCM and associated initiatives.
“As the world grows increasingly conscious of the drastic need to reduce its emissions, Voluntary Carbon Markets can be seen as part of the solution, driving capital towards projects designed to decrease and even remove carbon from the atmosphere,” says FMSB CEO Myles McGuinness. “With significant international progress made on integrity initiatives on both the supply- and demand-side, it is now time for practitioners to ensure these markets develop in the right way.
“Integrity of and transparency related to market data are integral to transitioning Voluntary Carbon Markets from niche to mainstream,” he continues. “We hope this overview can prompt market participants to address the design questions facing Voluntary Carbon Markets, ensuring they develop as fair and effective markets capable of scaling to manage the inflow of expected capital.”
Chris Leeds, head of carbon markets development at Standard Chartered adds, “Market standardisation and maturation are important next steps in the development of the Voluntary Carbon Market and its aims of directing capital to projects which will drive much-needed climate action and would not happen without additional financial support. FMSB’s report highlights important considerations for practitioners as they move forward to scale this market.”