Greenwashing is a problem that is becoming increasingly relevant in the contemporary world. As good practices in ESG (an acronym for Environmental, Social and Governance), sustainability and environmentally friendly policies gain traction, this practice is also becoming a threat. All companies in the world must be aware of and understand the risks associated with this term. Environmentally friendly practices are truly important, but they can be distorted and even disguised for marketing purposes. In Brazil alone, around 60% of the public says they seek and prefer products that are sustainable, and it is with this segment of the market in mind that greenwashing is practiced.

What is Greenwashing and How Does it Affect the Carbon Credit Market?

Considered a tactic, greenwashing aims to take advantage of the sustainability theme to increase sales. The term is used to describe companies that claim to be environmentally friendly, but do not actually practice good sustainable practices or focus on ESG. In general, greenwashing can occur at different levels and in different degrees of depth – so it is difficult to understand the practice and how it actually works. It is necessary to take into account several elements and then have a more complete perspective of what this propaganda is.

Different levels of greenwashing

It is essential to be aware that there are different types of greenwashing, which range from manipulation and exaggerated marketing to serious cases of fraud and crime. Regardless of the degree, as long as it is related to the company’s marketing or profitability, the practice can be considered greenwashing.

The history of greenwashing and its origins

The term greenwashing was first used in New Scientist magazine, specifically in an article in the mid-1990s. The term is a combination of the words green and wash, a literal translation of “greenwashing”, and was applied to several cases of false marketing related to the tourism industry. Since then, there have been several cases as serious as these. There have even been certain cases of fraud, often criminal, in which reports and documents that supposedly ensured good sustainable policies were falsified.

How Tokenization Can Play a Role in Combating Greenwashing

In this scenario, tokenization plays an important role in the sustainability of a company and in reducing greenwashing. One of the best known is carbon credits, a financial asset used to reward companies that have managed to reduce their carbon emissions, one of the most common pollutants in the atmosphere. These carbon credits can be sold by companies that significantly exceed their pollutant reduction quota. Companies can tokenize this asset, making it more liquid and even enabling its sale on several other platforms. When tokenized, assets can be sold more easily and securely. See other points and how tokenization can combat greenwashing.

Security and protection for assets

One of the great benefits of tokenization is protection, especially because it uses blockchain technology, the same principle that protects major cryptos such as the Ethereum ETF and the world’s most famous digital currency, the Bitcoin ETF. Tokenized assets are more protected, are difficult to defraud, and can be monitored. Our platforms, such as Whitelabel BLOCKBR and other services, are important ways to ensure that the tokenization of carbon credit assets will be more secure. In addition, BLOCKBR works with electronic documentation and signatures, which make the entire process even more reliable. Among all our security measures, we include:

• Use of blockchain;
• Traceability;
• Electronic documents;
• Fraud protection.

This is one of the great advantages that tokenized funds bring to the carbon credit market, and it reduces the practice of greenwashing. Trading assets safely and with all the protections offered by BLOCKBR is essential to combat not only greenwashing, but also other scams and frauds.

Regulatory compliance

Regulatory compliance is one of the most important aspects of tokenization for BLOCKBR. Our Whitelabel platform, for example, was created in full compliance with the CVM – Securities Compliance – and other regulatory standards in Brazil for the sale and trading of tokens. We also offer BBR Stations, a product focused on risk analysis to allow our clients to make a better choice of tokenized assets. Relying on our services is very important to protect your investments from greenwashing practices and to have greater security in your transactions.

Carbon Credits and the Need for Real Monitoring

Monitoring carbon credits is very important, as it is one of the ways to prevent fraud and greenwashing. In fact, blockchain, the technology used for digital assets, is very useful for monitoring any type of token and asset that was created based on this resource. The traceability of blockchain is one of the reasons why tokenization is such an interesting resource and sought after by investment advisors. Real monitoring makes it easier to ensure the credibility of carbon credits, and even to find frauds that have already been committed. This traceability can make it possible to get to the source of the fraud and, therefore, combat this type of practice.

How Investors Can Avoid Greenwashing in the Carbon Credit Market

Investors looking to enter the carbon credit market should be concerned about greenwashing. The tokenized carbon credit market is an excellent way to find safe, secure, and highly liquid assets, and BLOCKBR provides this service to both issuers and investors. Our investor dashboard makes it easy to buy your assets. However, in addition to convenience, we also offer protection and a series of elements that make the transaction safer. With our Whitelabel platform and other services, you can equip yourself with several BLOCKBR tools that protect your transaction. Greenwashing, regardless of the degree to which it is applied, is a harmful practice that harms the carbon credit market, whether tokenized or not. The advantage of the asset tokenization carried out by BLOCKBR with a focus on carbon credit is that we offer relevant services and protections for your transaction.

Migrate to tokenization with BLOCKBR infrastructure, Access Funding with BLOCKBR Plugged-in Investment Advisors.

The unlocking of the capital market, giving access to new types and structures of investments through tokens, is bringing a universe of opportunities every day. Blockchain technology is an environment of high security and transparency, as well as being a backdrop for the creation of new operating models.

To understand which tokenization model and infrastructure you can use in your operations, you just need to understand the opportunities you can take on, whether as a structurer, originator or distributor/investor.

Become an investment advisor for digital assets (structured tokens) through BLOCKBR. You can also be an asset structurer and use our entire risk analysis, legal, technological and commercial infrastructure for distribution with Station or, if you prefer, just raise tokens by investing in your operations or RWA assets. Count on us.