The London Stock Exchange announced the launch of its voluntary carbon market (VCM), with the publication of the final admission and disclosure standards for VCM designation.
According to the exchange, the announcement marks the establishment of the first public markets capital raising solution for the voluntary carbon market, aimed at directing finance to climate mitigation projects that provide carbon credits, providing market access to investors and corporates, while applying public market regulation and disclosure obligations.
Demand for carbon offset projects that counteract the release of greenhouse gases, and related credits, is expected to increase significantly over the next several years, as companies and businesses increasingly launch net zero ambitions, and turn to offsets as a bridge to their own absolute emissions reduction efforts, or to balance difficult to avoid emissions.
While corporate demand for carbon credits grows, however, the development of the market faces barriers, including the need for access to capital at scale for the development of new climate projects worldwide, and for primary market access to a long-term supply of high-quality carbon credits for corporates and investors.
The London Stock Exchange initially announced its intention to establish a VCM marketplace in November 2021. The new market is now open to closed ended investment funds and operating companies admitted or seeking admission to trading on the London Stock Exchange’s markets. Funds or companies may now raise capital from investors through an IPO, with the capital directed into climate mitigation projects, including reforestation or carbon capture.
Julia Hoggett, CEO of the London Stock Exchange, said:
“Our goal is to facilitate the financing of projects that are focused on climate change mitigation. Today’s publication of our admission and disclosure standards marks the launch of the first public markets solution to help raise capital for the voluntary carbon market.
“It paves the way for capital at scale to be channelled into a range of climate change mitigation projects, while providing corporates and other investors with net zero commitments with the ability to access a diverse supply of high-quality carbon credits.”