On 9 November 2022 at COP27 in Sharm El-Sheikh, Egypt, the UN Sustainable Stock Exchanges initiative (UN SSE) launched a Market Monitor on Voluntary Carbon Markets (VCMs) and announced the formation of a new Advisory Group for Carbon Markets.

The announcement was made during a panel discussion convened by the International Organization of Securities Commissions (IOSCO) to discuss the role for governments and the regulatory community in scaling up voluntary carbon markets.  IOSCO released two reports on carbon markets at the event, in a keynote speech by Jean-Paul Servais, IOSCO Chairman.

Other panellists included the Integrity Council for Voluntary Carbon Markets (ICVCM), the Voluntary Carbon Markets Integrity initiative (VCMI), Sweden Finanzinspektionen (FI), the UN Framework Convention on Climate Change (UNFCCC) and the Glasgow Financial Alliance for Net Zero (GFANZ). 

During her remarks on the panel, Ms Corli le Roux, Senior Specialist at the UN SSE, noted that carbon markets offer huge potential to advance efforts to accelerate critically-needed climate action and that exchanges can play a supportive role:

“Through their unique positioning in the capital markets, exchanges may be able to facilitate capacity building and stakeholder collaboration and contribute to policy discussions. The advanced work of many exchanges in promoting greater transparency and disclosure on ESG, as well as efforts to support green finance, will serve as a useful backdrop to such efforts,” said Ms. le Roux.

Over the last 6 months, the UN SSE has engaged in informal discussions with a range of organisations from Partner Exchanges, regulators and other organisations who are active in the VCM environment. This has resulted in the creation of a workstream that will explore the role of exchanges in relation to carbon markets.

To help launch the SSE’s new workstream, the Market Monitor covers some basic questions and answers on VCMs. In the coming months, led by the new SSE Advisory Group on Carbon Markets, the UN SSE will work on developing further thought leadership and guidance for exchanges who are already active in the carbon market environment or exploring options for involvement.

Commenting on some of the complexities faced by VCMs, le Roux observed during the IOSCO panel that “It is well established that exchanges can enhance price discovery and liquidity in other asset classes, and they may be able to support these aspects of voluntary carbon trading as well. This may further achieve the scaling needed for VCMs to facilitate capital raising opportunities for the ultimate realisation of emission reductions.”

If you are interested to learn more about the VCM workstream or to join the Advisory Group please reach out to [email protected].