Greenwashing and Carbon Credit

Greenwashing and Carbon Credit

Greenwashing and Carbon Credit

The topic talks about the effect of Greenwashing and Carbon Credit which is related to daily current affairs for the UPSC examination.

Relevance for prelims: Greenwashing and Carbon Credit

Relevance For Mains: The Challenges of Greenwashing and the Impact on the Carbon Market

In News: The RBI Deputy Governor has emphasized the importance of a formal definition of green finance along with the requirement that regulated firms examine financial risks related to the climate.

About Greenwashing 

  • American environmentalist and researcher Jay Westerveld coined the phrase “greenwashing” in 1986.
  • There is a lot of “greenwashing” going on in many environmental endeavors.
  • Developed nations are frequently charged with “greenwashing” their regular corporate investments in poor nations by emphasizing the cash flows’ positive effects on the environment, sometimes with scant evidence.
  • It is the practice of businesses and governments portraying a wide range of activities as being environmentally benign, as something that would result in emissions being avoided or reduced.
  • Many of these assertions are unsubstantiated, false, or questionable.
  • They do nothing to combat climate change, but they do help to improve the organization’s reputation.
  • Numerous global companies have been accused of it, including Coca-Cola and oil tycoons Shell and BP.

Impact of greenwashing

Greenwashing creates a misleading impression of the progress being made in combating climate change, driving the globe closer to catastrophe and rewarding irresponsible behavior.

Major concerns

  • There are so many potential methods and items that could reduce emissions that it is almost difficult to track and confirm them all.
  • The institutions, procedures, and methods for measuring, reporting, developing standards, examining claims, and awarding certificates are still being established.
  • Many new businesses have emerged, claiming to be experts in various fields and offering their skills for a price. Many of these organizations are weak and lacking in ethics, but businesses continue to utilize them because it makes them look good.


Impact of Greenwashing on carbon credit


  • Under the Kyoto Protocol, nations like India and Brazil acquired significant amounts of carbon credits, and they desired to transfer these credits to the new market established by the Paris Agreement.
  • Many industrialized nations disagreed, stating the certificates lacked credibility and did not adequately reflect pollution reductions.
  • One of the most contentious carbon offsets comes from forests.

On Informal Markets

  • Credits are now offered for a variety of actions, including planting certain crops, growing trees, and installing energy-saving machinery in corporate buildings.
  • Credits for such actions are frequently accredited by unauthorized third-party businesses and sold to others.
  • Due to their double counting and lack of integrity, these transactions have been flagged.

Carbon Credit

  • The term “carbon credit” (also known as “carbon offset”) refers to a credit for greenhouse gas emissions that have been reduced or eliminated from the atmosphere as a result of an emission reduction project. Governments, businesses, or private individuals can use carbon credits to make up for the emissions they produce elsewhere.
  • Those that find it difficult to cut emissions can still operate, albeit at a higher cost.
  • The “cap-and-trade” concept, which was employed to lower sulfur emissions in the 1990s, serves as the foundation for carbon credits.
  • One metric ton of carbon dioxide, or in certain markets, carbon dioxide equivalent gases, is equal to one carbon credit (CO2-eq).

UPSC previous years question:

Question: Regarding “carbon credits”, which one of the following statements is not correct? (2011)

(a) The carbon credit system was ratified in conjunction with the Kyoto Protocol

(b) Carbon credits are awarded to countries or groups that have reduced greenhouse gases below their emission quota

(c) The goal of the carbon credit system is to limit the increase in carbon dioxide emission

(d) Carbon credits are traded at a price fixed from time to time by the United Nations Environment Program.

Ans: (d)


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Daily Current Affairs for UPSC

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