The International Swaps and Derivatives Association (ISDA) published opening remarks by Chief Executive Officer Scott O’Malia from an event in Brussels on EU 2040 carbon removals and international credits, arguing that the rapid expansion of artificial intelligence and associated energy demand is increasing the need for mature, globally consistent carbon markets. The speech restated ISDA’s policy and market-structure priorities for scaling voluntary carbon markets and linked them to current EU initiatives on sustainable finance and carbon border measures. ISDA reiterated four building blocks for a functional global voluntary carbon market: a consistent definition of a tonne of carbon, independent science-based verification and audit of credits, a robust legal framework with standardized documentation and product definitions, and a liquid forward market supported by a globally consistent regulatory framework. The remarks welcomed EU efforts to simplify sustainable finance rules, including the Sustainability Omnibus package, and noted the Council’s adoption of rules aimed at simplifying and lowering compliance costs under the Carbon Border Adjustment Mechanism. O’Malia also pointed to the European Commission’s July proposal for a limited role for high-quality international credits from 2036, capped at an amount equivalent to 3% of the European Union’s 1990 net emissions, with an impact assessment expected next year. On legal and documentation work, ISDA said it expects the International Institute for the Unification of Private Law to publish guidance by the end of the year on standards relevant to bankruptcy treatment, the exchange of security and protection of holders’ rights, and that ISDA will advocate for jurisdictions to incorporate the resulting principles. ISDA also said it is in the final stages of a further update to the 2022 ISDA Verified Carbon Credit Transactions Definitions to incorporate standards from the Carbon Offsetting and Reduction Scheme for International Aviation.
ISDA 2025-09-29
International Swaps and Derivatives Association sets out carbon market priorities and nears update to carbon credit trading definitions
ISDA stressed the need for mature, globally consistent carbon markets amid rising AI energy demands, highlighting four key components for a functional global voluntary carbon market. ISDA welcomed EU efforts to simplify sustainable finance rules and noted the European Commission's proposal for limited international credits from 2036, while advancing legal frameworks and documentation standards for carbon credit transactions.