Study warns of growing "green fraud" risk

Wherever there is commercial opportunity, criminality soon follows.

That is the somewhat dispiriting conclusion to be drawn from the annual fraud risk report from consultancy PricewaterhouseCoopers (PwC), which will warn later today that the emerging low-carbon economy is facing a growing threat from fraudsters.

"Just because it's green, does not mean it's all good," said Jon Williams, partner, head of sustainability and climate change at PwC. "That is the advice for companies in one of the newest areas of business to be targeted by fraudsters: the low-carbon and sustainability economy."

The report highlighted the VAT carousel frauds which have affected the European emissions trading scheme in recent months and are estimated by authorities to have already cost EU treasuries over €5bn.

It also noted that with the global carbon market valued at $125bn last year and expected to expand significantly, there are growing opportunities for criminals to engage in fraudulent activities.

Carbon-offset schemes are similarly likely to prove fertile territory for fraudsters, with the report warning that offsetting deals that are either poorly structured or wilfully fraudulent could increasingly expose firms to " reputational damage and even criminal liability".

The study also warned that green frauds are unlikely to be confined to the carbon markets, noting that all new industries are attractive to potential fraudsters who can relatively easily "overstate claims of the efficacy, and hence value, of new green technology developments".