Presenting a united front to advance carbon markets

Panelists at the ASEAN Green Shift Forum share how ASEAN has the potential to become a global hub for carbon markets.

3 November 2025

7 mins

Corporate & investment bankingSustainable and transition finance

ASEAN has the potential to become a global hub for carbon markets and is poised to supply high-quality credits to international buyers – but only if regional standards are harmonised and fragmented initiatives brought into alignment, said panelists at the ASEAN Green Shift Forum, organised by the ASEAN Business Advisory Council Malaysia and Standard Chartered.

The region has seen countries move in different directions – Singapore with its carbon tax and Climate Impact X (CIX) platform; Malaysia with Bursa Malaysia’s voluntary carbon exchange; and an upcoming carbon tax with Vietnam and the Philippines.

There is also a proliferation of both international and domestic standards, which are being developed alongside global standards such as Verra, which underscores the need for coordination in the region, said Lucy Palairet, director of carbon markets development at Standard Chartered.

Saurabh Joshi, head of origination and strategic partnerships at CIX, said “ASEAN has a lot of potential to be a hub for carbon markets and high quality supply, but it’s critical for [the region] to work together. Without coordination, we risk ending up with a patchwork of fragmented markets that limits efficiency and scale.”

“Countries are developing the carbon market at their own pace, each with different standards and rules. While it’s encouraging to see this progress, the real opportunity lies in harmonising these efforts and building a more connected, liquid ASEAN carbon market.”

This is where the ASEAN Common Carbon Framework (ACCF) comes in. It aims to harmonise standards and establish credibility, which ensures that ASEAN credits are recognised as high quality in global markets.

In this regard, the ACCF was designed to address common regional challenges – mismatches in supply and demand, limited liquidity and uncertainty around financing – that no country can solve alone, said Renard Siew, president of the Malaysia Carbon Market Association and group head of corporate sustainability at Yinson Bhd.

All this is crucial because buyers must have the confidence in the quality and integrity of the credits they purchase, said Palairet. The ACCF can provide this assurance by harmonising standards and establishing credibility. Such a framework would also benefit corporations by improving their understanding of what they are buying while making carbon credits more “bankable”.

“You need this minimum standard of regulation across the standards [because] ASEAN is going to provide a huge amount of the supply of carbon credits. And a lot of the buyers are going to be international buyers. So, these international buyers need to know what they’re buying. They need to understand the integrity of these carbon credits,” said Standard Chartered’s Palairet. Standard Chartered co-leads the Carbon Markets Workstream under the Singapore Sustainable Finance Association.

“Regulation surely needs to come in to bring it all together so that corporations are more educated about what they’re buying, but it also makes it more bankable. Banks can come in. It increases liquidity and price transparency, which in turn will increase financing in the market.”

Palairet added that a lot of work remains to be done regarding the legal nature of carbon credits, which will influence how they are accounted for. “Regulation needs to come in to get that clarity, price transparency and liquidity into the market,” she said.

Siew says the ACCF was designed to address common regional challenges – mismatches in supply and demand, limited liquidity and uncertainty around financing — that no country can solve alone.

Palairet says a lot of work remains to be done regarding the legal nature of carbon credits, which will influence how they are accounted for, whether as financial instruments, assets or other classifications.

Chen says harmonising national carbon standards through mutual recognition of methodologies could fast-track carbon projects, connect carbon markets, and help balance supply and demand.

Joshi says it is critical for the region to work together because, without coordination, there will be intense competition. Different countries are developing carbon markets at their own pace, each with its own standards, rules and regulations.

The role the ACCF plays

The ACCF, which MCMA’s Siew describes as the “big, bold, beautiful framework”, is built on three pillars: aligning supply and demand through mutual recognition of methodologies, closing financing gaps to attract both buyers and project developers, and preparing the region for the transition from voluntary to compliance market.

“The first pillar is supply and demand and, within that, there are a lot of uncertainties, issues, methodologies and standards that have evolved. We are very familiar with Verra, the international standards that dominate 70 per cent to 80 per cent of carbon credits being generated. But, at the same time, in Thailand, for example, there is the Thailand Voluntary Emission Reduction (T-VER) programme. The key question is: How can we reduce fragmentation in a way that allows us to bring stakeholders together, identify the gaps and gradually move towards speaking a more unified language on this front? Then there’s the financing aspect: How do we attract potential buyers or project proponents, and at what stage in a project’s life cycle are they willing to come in and take on risk? Currently, many of our Asian and regional markets operate largely on a voluntary basis. But what happens when compliance markets kick in?” he said.

For Joshi, exchanges such as CIX can bring the policies, rules, regulations and guidelines that are developed by the ACCF into the real world and into practice. This is done by providing price transparency, standardised contracts and trusted venues for trade, which reduces transaction costs, builds confidence among participants and encourages financing from banks and intermediaries.

Dr Wei-nee Chen, head of carbon markets at Bursa Malaysia, said: “In an ideal world, we would have one ASEAN carbon standard and one ASEAN carbon market. In reality, however, every country wants to have something in its home ground”. We’re not expecting a single ASEAN carbon standard to emerge, but if we can harmonise existing national carbon standards through mutual recognition of methodologies that can fast-track the development of carbon projects and establish interoperability among carbon markets, that would help address supply and demand. This is, in essence, what the core tenets of the ACCF are all about.”

Preparing corporations for carbon pricing

Ultimately, carbon markets play a critical role in achieving net zero. “At the end of the day, it’s not just about going out to the market, buying credits and offsetting emissions. You need to have a credible net zero transition plan — and that’s where the carbon market fits into the bigger picture,” said Siew.

This comes as banks report growing interest and inquiries from clients, driven by both domestic and international regulations, including the European Union’s Carbon Border Adjustment Mechanism (CBAM) for exporters, noted Palairet.

“On a broader scale, many corporations have set interim targets for 2030, which is only five years away. There’s now a sense of urgency,” she said. “Companies are realising, ‘I’ve set these targets, so what does that actually look like in practice.”

Yinson, which has a long-term goal to achieve net zero emissions across all scopes by 2050, has implemented an internal carbon pricing mechanism that “very closely resembles how a carbon tax would work”, said Siew.

To support companies in managing their Scope 1 to Scope 3 emissions data and to facilitate sustainability disclosures in accordance to the National Sustainability Reporting Framework (NSRF), Bursa Malaysia introduced the Centralised Sustainability Intelligence Solution — a purpose-built tool to address market needs.

In addition, the Bursa Carbon Exchange (BCX) offers corporations exposure to how voluntary carbon markets function, helping them better understand and engage with carbon trading mechanisms.