BURSA MALAYSIA TO LAUNCH VOLUNTARY CARBON MARKET EXCHANGE BY YEAR-END

KUALA LUMPUR, Aug 15 (Bernama) -- Bursa Malaysia Bhd will be launching the Voluntary Carbon Market (VCM) exchange by the end of this year, which enables companies to purchase voluntary carbon credits from climate-friendly projects and solutions.

The exchange said in line with the growing awareness of climate action, VCM will play an important role in supporting financing for projects and solutions that reduce, remove or avoid greenhouse gas emissions (GHG).

Participation in the voluntary carbon market would allow companies to offset their carbon emissions footprint and meet their voluntary climate goals, it said in a statement.

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Through Bursa Malaysia’s VCM exchange, both buyers and suppliers will be able to transact high quality carbon credits at transparent prices.

“Bursa Malaysia intends to offer standardised carbon credit products for trading via a rules-based VCM exchange. There will be distinct product categories for carbon credits derived from nature-based solutions and technologies that reduce or remove carbon emissions.

“The VCM exchange will aggregate carbon credits that share similar traits and fundamentals, with vintages 2016 onwards. Additionally, the exchange will also label products to differentiate between carbon credits sourced in Malaysia and globally,” Bursa Malaysia shared.

By year-end, the exchange said a supply of carbon credits is to be sold by way of auction to interested buyers and the auction will enable price discovery for the new standardised carbon credit products that will be listed on the VCM exchange.

It said the clearing price from the auction will establish a baseline demand for carbon credits in Malaysia, which will provide a reference point for secondary trading for market participants.

This will help provide clear price signals to support the development of domestic carbon credit projects whereby to achieve a lower carbon footprint over time, corporates can use these carbon credit products to voluntarily offset their existing climate impact alongside other internal carbon reduction initiatives.

To ensure the high integrity of carbon credits offered through the VCM exchange, Bursa Malaysia will adopt the Verified Carbon Standard or better known as Verra, a widely recognised standard in the voluntary carbon market, accounting for nearly 70 per cent of voluntary carbon credit issuances globally. 

Bursa Malaysia had inked a memorandum of understanding with Verra in May 2022, which focuses on capacity building.

Verra, it said, has developed transparent, credible and robust methodologies covering a wide array of climate-friendly activities such as nature-based projects, sustainable agricultural land management, green mobility and others.

Using Verra standards, carbon credit projects will be subjected to robust assessment that ensures environmental claims are appropriately measured and independently verified, thus preventing greenwashing claims, the exchange said.

Chief executive officer Datuk Muhamad Umar Swift said stakeholder engagement is key in facilitating greater understanding among industry players to enable their participation in the VCM Exchange and to meet environmental, social, and governance (ESG) requirements required by parties such as banks.

“With a better understanding of carbon credit origination and listing processes, stakeholders will be able to develop capacities to be part of the carbon-credit supply chain. This will also help the industry to use the VCM to reduce its carbon footprint.

“We believe that the VCM exchange can serve as an important lever in realising Malaysia’s net zero GHG emissions aspiration, as well as supporting the private sector’s voluntary climate commitments and decarbonisation journey,” he said.

Bursa Malaysia is inviting interested project developers and project proponents to submit their interest in supplying carbon credits for the auction, as well as for the VCM exchange. 

Similarly, corporate buyers who would like to participate in the auction and purchase carbon credits are encouraged to reach out to Bursa Malaysia to register their interest.

Interested parties can email groupsustainability@bursamalaysia.com or access the interest registration forms posted on its website.

-- BERNAMA