ACMF Voluntary Carbon Market Development Plan and Guidance Released to Support Decarbonisation Financing

On 3 November 2025, the ASEAN Capital Markets Forum (“ACMF“) released the ACMF Voluntary Carbon Market Development Plan (“Development Plan“) to support decarbonisation financing through voluntary carbon markets (“VCMs“).

The ACMF has identified scaling VCMs as a key initiative under its Action Plan 2026–2030, specifically within Strategic Thrust 2: Building a Sustainable and Resilient ASEAN, seeking to integrate sustainability and resilience into financial systems. The development of high-integrity VCMs is a central priority for the Association of Southeast Asian Nation’s (“ASEAN“) sustainability agenda and climate finance mobilisation.

Acknowledging the growing importance of VCMs, ACMF, through the Sustainable Finance Working Group and in collaboration with the Economic Research Institute for ASEAN and East Asia, developed the ACMF Voluntary Carbon Market Development Plan and the ASEAN Voluntary Carbon Market Guidance (“Guidance“). This development follows an earlier 2024 Study on a High-Quality Voluntary Carbon Market for ASEAN, which examined the role of VCMs in supporting ASEAN’s transition to a low-carbon economy, and is anchored on the International Organization of Securities Commissions’ (“IOSCO“) 2024 Final Report on Voluntary Carbon Markets that outlined 21 good practices for market integrity.

Singapore has also published a voluntary carbon market guidance on 28 October 2025 to guide companies on how to determine a high-quality carbon credit and how to voluntarily use carbon credits as part of a credible decarbonisation plan, which was open for public consultation earlier in July. Please refer to our July 2025 Legal Update titled “Feedback Sought for Draft Voluntary Carbon Market Guidance by 20 July 2025” and October 2025 NewsBytes article titled “Available Government Initiatives and Grants to Develop Carbon Market in Singapore” for the published guidance.

What are VCMs

VCM refers to a market-based mechanism through which certified carbon credits, representing 1 tonne of CO₂ equivalent reduced or removed, are voluntarily traded to finance climate mitigation projects. These transactions allow purchasing entities to offset their emissions and meet voluntary climate action commitments, rather than compliance requirements under national, regional, or international carbon reduction regimes. The credits covered under this definition are issued by independent, non-governmental standards bodies.

 With regarding to the supply and demand dynamics of ASEAN’s VCM:

1. On the supply side, ASEAN hosts a significant number of carbon projects, with nature-based solutions contributing most credits to date, and renewable energy and industrial projects emerging as additional sources.
2. On the demand side, most credits generated in ASEAN are currently purchased and retired by entities outside the region, highlighting the need to expand domestic demand and align credit use with ASEAN’s decarbonisation pathways.

Role of Carbon Pricing

The Development Plan studies the role of carbon pricing, particularly VCMs, in ASEAN. It reviews carbon credit activities and examines the readiness of ASEAN’s VCM ecosystem across four variables: 

1. market structure and liquidity (primary and secondary market);
2. policy stability and predictability;
3. market reach; and
4. economic viability and longevity.

Based on these, ASEAN Member States are grouped into advanced, emerging, and developing categories, reflecting varying levels of VCM activity and infrastructure.

Key Features of the Guidance

The primary users and buyers targeted by this guidance are corporations, as they represent the main drivers of voluntary carbon credit demand.

The Guidance sets out principles and criteria tailored to the regional context, whilst aligned with international standards to ensure interoperability. It comprises four key segments in line with IOSCO (2024):

1. Regulatory frameworks;
2. Primary market issuance;
3. Secondary market trading; and
4. Use, disclosure of use, and retirement of carbon credit.

Key Considerations for Implementation

The Guidance emphasises the dual role of VCMs in ASEAN’s decarbonisation progress:

1. enabling cost-effective solutions for emissions mitigation, especially in hard-to-abate sectors; and
2. generating new revenue streams for clean technologies and renewable energy.

Establishing a robust, interoperable, and high-integrity VCM requires greater alignment with national priorities and simultaneous harmonisation within ASEAN, from registry-level data to sustainable finance frameworks. It also requires the development of an inclusive and transparent governance framework clarifying roles and responsibilities, addressing critical knowledge gaps that could empower intermediaries to enhance trust and efficiency while safeguarding the rights and benefits-sharing of Indigenous People and Local Communities. Such efforts will ensure inclusive participation from diverse stakeholders and lay the foundation for linking ASEAN with global carbon markets. It also outlines the key limitations encountered in the study, including data gaps and methodological constraints, while proposing various approaches that future studies could use to address these key limitations, such as improving data definitions and methodological rigour.

Singapore enterprises participating in the carbon market or utilising voluntary carbon credits as part of their climate governance framework can tap on our environmental, social, and governance (ESG) legal fee subsidy for environmental and climate related legal advisory under the Sustainability Legal Catalyst Programme with Enterprise Singapore. Terms and conditions apply. You can reach out to us at [email protected].

Click on the following link for more information:

• ACMF Voluntary Carbon Market Development Plan (available on the ACMF website at theacmf.org)