Firms warned of "surge" in green fraud
PwC report claims fraud protection measures around green projects remain “relatively weak” and must be addressed
The emerging green economy is being targeted by a “surge” in fraud as organised criminals seek to take advantage of environmental sectors that have yet to deploy adequate due diligence and fraud prevention measures.
That is the stark warning in a new report from consultancy giant PwC, which claims the recent cyber attacks on the EU emissions trading scheme are part of a wider trend that has seen criminal groups deliberately target green projects and financial mechanisms.
“We are seeing a surge in frauds with a green element,” said report co-author Jonathan Holmes. “Often this is down to a lack of mature information security policies and controls.”
The report, entitled How to assess your green fraud risk, highlights how in addition to the recent cyber attacks on EU carbon registries – which saw an estimated €45m (£38m) of carbon credits stolen and resulted in carbon spot trading being temporarily suspended – about 6.5 million credits with an estimated value of €84m have been involved in carbon fraud in the past two years.
Moreover, police agency Europol last year estimated carousel fraud losses to European treasuries to be as much as €5bn, while there are ongoing reports of bribery and double-counting in the carbon offset market, with one incident last year culminating in officials and executives related to a forestry project in Liberia being accused of fraud.
Speaking to BusinessGreen, Holmes said many firms were guilty of failing to implement basic due diligence and information security measures when investing in green projects.
“Because there is an ideal involved, people can brush over the standard due diligence that you would do when working with any normal supplier,” he explained. “It is basically a case of making sure you know your supplier and have good information security measures in place.”
Holmes rejected that emerging green markets were inherently vulnerable to fraud, noting that there are still frequent incidences in established markets such as retail banking. But he warned that businesses had to step up measures to stop fraud becoming more prevalent in what is an expanding market.
“The report aims to give people a healthy scepticism,” he explained. “Don’t be skeptical about doing green projects, but it pays to always be a bit sceptical about who you are doing the project with.”
The emerging green economy is being targeted by a “surge” in fraud as organised criminals seek to take advantage of environmental sectors that have yet to deploy adequate due diligence and fraud prevention measures.
That is the stark warning in a new report from consultancy giant PwC, which claims the recent cyber attacks on the EU emissions trading scheme are part of a wider trend that has seen criminal groups deliberately target green projects and financial mechanisms.
“We are seeing a surge in frauds with a green element,” said report co-author Jonathan Holmes. “Often this is down to a lack of mature information security policies and controls.”
The report, entitled How to assess your green fraud risk, highlights how in addition to the recent cyber attacks on EU carbon registries – which saw an estimated €45m (£38m) of carbon credits stolen and resulted in carbon spot trading being temporarily suspended – about 6.5 million credits with an estimated value of €84m have been involved in carbon fraud in the past two years.
Moreover, police agency Europol last year estimated carousel fraud losses to European treasuries to be as much as €5bn, while there are ongoing reports of bribery and double-counting in the carbon offset market, with one incident last year culminating in officials and executives related to a forestry project in Liberia being accused of fraud.
Speaking to BusinessGreen, Holmes said many firms were guilty of failing to implement basic due diligence and information security measures when investing in green projects.
“Because there is an ideal involved, people can brush over the standard due diligence that you would do when working with any normal supplier,” he explained. “It is basically a case of making sure you know your supplier and have good information security measures in place.”
Holmes rejected that emerging green markets were inherently vulnerable to fraud, noting that there are still frequent incidences in established markets such as retail banking. But he warned that businesses had to step up measures to stop fraud becoming more prevalent in what is an expanding market.
“The report aims to give people a healthy scepticism,” he explained. “Don’t be skeptical about doing green projects, but it pays to always be a bit sceptical about who you are doing the project with.”
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