Bursa Malaysia Berhad to Launch Voluntary Carbon Market Exchange Later This Year

Bursa Malaysia Berhad  ("Bursa Malaysia" or the "Exchange") will be launching the Voluntary Carbon Market ("VCM") exchange later this year. A voluntary carbon market exchange enables companies to purchase voluntary carbon credits from climate friendly projects and solutions. 

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 naturebased 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.

By year end, a supply of carbon credits is to be sold by way of auction to interested buyers. 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. In addition, it will help provide clear price signals to support the development of domestic carbon credit projects. 

"Stakeholder engagement is key in facilitating greater understanding among industry players to enable their participation in the VCM Exchange, and in order to meet ESG requirements required by parties such as lending institutions," said Datuk Muhamad Umar Swift, Chief Executive Officer of Bursa Malaysia. "With 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 their carbon footprint."

"We believe that the VCM exchange can serve as an important lever in realising Malaysia's net zero greenhouse gas ("GHG") emissions aspiration, as well as supporting the private sector's voluntary climate commitments and decarbonisation journey," added Datuk Muhamad Umar Swift. "The VCM will act as a catalyst, encouraging investments in high-quality offsetting projects that can generate positive environmental and societal benefits."