ESG Fraud: How the Green Revolution Became a Gold Mine for a New Generation of Scammers

[Professor]

Green carding and cyber fraud in the ESG sector (energy, carbon credits, green bonds).​

The boom in green, social, and governance (ESG) investments and regulatory initiatives has created not only new markets but also a parallel universe for high-yield, untraceable cyberfraud. "Green carding" isn't about stealing money from a card to buy goods, but rather a systemic exploitation of trust in "green" initiatives, based on data manipulation, asset forgery, and the circumvention of complex regulatory frameworks. It's a scam for financial analysts, data hackers, and creators of fake realities.

1. Carbon Credits and Certificate Scams​

A carbon credit is a virtual asset that entitles you to emit CO2. It can be stolen, counterfeited, or double-sold.

• Attack vectors:
  • Registry Hacks: Hacking systems such as Verra (VCS), Gold Standard, or national registries. The goal is to create "air" credits from non-existent emission reduction projects or to rewrite the ownership of real credits by stealing them.
  • Fraudulent Projects: The creation of fake "green" projects (e.g., non-existent forest plantations or solar power plants) using falsified geodata, fake verifier reports, and AI-generated images of "objects". Investments are attracted or loans are issued against these projects.
  • Double Counting/Reselling: Selling the same loans to multiple buyers through different, loosely linked ledgers. The cybercriminal acts as a "broker," exploiting vulnerabilities in data synchronization between systems.
  • CEO Fraud (BEC) in Carbon Companies: Spear phishing attacks target employees of credit trading firms with orders to transfer large amounts of credit or cash to the fraudsters' account.

2. Green Bond and ESG Investing Scams​

Green bonds are debt securities whose proceeds go toward environmental projects. Their appeal to investors is based on the credibility of their reporting.

• Attack vectors:
  • Spoofing: Register a shell company with a slick ESG narrative, issue bonds through crypto platforms or poorly regulated exchanges, and raise funds. Then, a rug pull.
  • Data Manipulation: Compromising the systems of issuing companies to falsify reporting data on fund use and environmental impact. Investors see a "successful green project," while the funds have been siphoned off.
  • Attacks on ESG rating agencies: Spear-phishing or ransomware attacks on agencies (MSCI, Sustainalytics) with the aim of changing a company's rating, which will affect the price of its shares and allow profits from derivative financial instruments.
  • Green Carding for Benefits: Stealing credentials from companies eligible for green subsidies or tax breaks to submit fake applications and transfer funds to controlled accounts.

3. Fraud in the energy and smart grid sectors​

The digitalization of the energy sector has opened up new opportunities for data and financial fraud.

• Attack vectors:
  • Smart Meter Hacking: Hacking or remotely influencing smart meters to understate consumption readings (direct theft of services) or, conversely, to inflate readings for neighbors as part of a competitive battle.
  • Energy Trading Platforms: Hacking platforms to manipulate prices or impersonate legitimate participants to steal funds.
  • Green Energy and Guarantees of Origin (GO) Theft: Counterfeiting or theft of certificates certifying that energy is produced from renewable sources. These certificates are valuable and sold separately from the energy itself.

4. "Eco-phishing" and social engineering[​

• Using ESG themes for phishing: Emails purporting to be from a "Green Investment Fund," an "Environmental Regulator," or a well-known NGO offering grants, compensation, or investments. A "processing fee" or "data verification," including bank details, is required.
• Fake crowdfunding platforms for "saving the planet": Websites are created to raise funds for tree planting, animal rescue, and ocean cleanup. The collected cryptocurrency or card payments disappear.

Why is it so effective and dangerous?​

1. Complexity and opacity: ESG markets are technically complex. Verifying whether a forest in Brazil that absorbs CO2 actually exists or is merely a set of fabricated coordinates and documents is extremely difficult and expensive.
2. Regulatory vacuum and greenwashing: Regulators are lagging behind the rapidly growing market. Fraudsters are using trendy ESG rhetoric as cover, lulling investors eager to "do good."
3. High stakes and new assets: The sums at stake are enormous (the carbon credit market is in the hundreds of billions). Digital certificates and credits are ideal, easily transferable virtual assets for theft.
4. The intersection of the cyber and physical worlds: To fake a project, you need not only hackers, but also data scientists, geographers, and engineers to create a plausible legend.

Security and the Future: Blockchain, Auditing, and Paranoia​

The fight against ESG fraud is moving towards stricter checks and the implementation of technologies:

1. Blockchain for Provenance Tracking: Implementing distributed ledgers for carbon credits and green bonds to prevent double counting and counterfeiting.
2. Satellite monitoring and IoT sensors: Using satellite imagery (such as from Planet Labs) and real-time sensors to independently verify project claims (whether a forest has actually been planted, whether a solar farm is operational).
3. Advanced Data Auditing: Using AI to analyze reports for anomalies and inconsistencies.
4. Cybersecurity for Green Energy Infrastructure: Protecting Smart Grids, Trading Platforms, and Registries as Critical Infrastructure.

Conclusion: "Green" soap for laundering reputation and money​

ESG fraud is the pinnacle of modern fraud: it combines financial schemes, cyberattacks, data falsification, and the exploitation of society's noble aspirations.

For fraudsters, it's the perfect environment: high profits, lenient investors (due to a "good cause"), and complex schemes. For society, it's a triple whammy: money is lost, trust in the "green" transition is undermined, and real environmental problems are not addressed.

This type of fraud demonstrates that any new, benevolent, and complex system will first be tested by criminals for profit. "Green" carding is not an eco-friendly crime, but the cynical use of ecology as a cover for good old robbery, dressed in new, digital and virtual guises. The battle for the future of the planet is now being waged not only in fields and labs, but also in server logs, the integrity of blockchains, and the reliability of satellite imagery.