Carbon credits are gaining attention in Malaysia as businesses face increasing pressure around ESG, carbon reporting, and climate commitments.
Many companies ask:
Are carbon credits relevant in Malaysia now—or are they only a future concern?
The short answer: Yes, they already matter—just not in the way many businesses expect.
Carbon credits are:
Market-based instruments representing verified emission reductions
Typically equal to 1 tonne of CO₂ equivalent (CO₂e)
Generated through approved emission reduction or removal projects
Carbon credits are used to:
Offset unavoidable emissions
Support climate mitigation projects
Complement emission reduction strategies
A project reduces or removes greenhouse gas emissions
Emission reductions are verified by recognized standards
Verified reductions are issued as carbon credits
Companies purchase credits to offset part of their emissions
Carbon credits are:
Tradable
Measurable
Auditable
Although Malaysia does not have a mandatory carbon trading system yet:
Carbon credit frameworks are developing
Voluntary carbon markets are expanding
Corporate demand is rising
Carbon credits already matter through:
ESG reporting
Supply chain expectations
Sustainability commitments
Carbon credits are often referenced in:
ESG disclosures
Sustainability reports
Climate transition plans
Businesses use credits to:
Demonstrate climate responsibility
Support net-zero strategies
Multinationals and large buyers:
Request emission data
Expect carbon reduction plans
Accept carbon credits as part of transition strategies
SMEs may be asked to:
Explain carbon offset strategies
Disclose use of credits
Carbon credits can help businesses:
Understand carbon pricing mechanisms
Prepare for future carbon taxes or trading systems
Reduce transition risks
Early exposure builds:
Internal carbon management capability
Strategic flexibility
Carbon credits also matter for:
Renewable energy projects
Waste-to-energy initiatives
Methane capture and efficiency projects
These projects can:
Generate additional revenue
Improve project feasibility
Attract sustainability-linked financing
Voluntary or market-driven
Reward emission reduction
Used to offset emissions
Mandatory government charge
Penalizes emissions
Focuses on cost pressure
In Malaysia:
Carbon credits are developing first
Carbon tax discussions are ongoing
❌ Carbon credits are only for large corporations
❌ SMEs do not need to care
❌ Buying credits replaces emission reduction
✅ SMEs are part of carbon-sensitive supply chains
✅ Credits complement—not replace—reduction efforts
✅ Early awareness reduces future compliance risks
Understand your main emission sources
Focus on reducing emissions first
Evaluate when offsets are appropriate
Use verified and credible credits
Align carbon credits with ESG strategy
Relevant ISO standards include:
ISO 14064 – Greenhouse Gas Accounting
ISO 14067 – Product Carbon Footprint
ISO 14001 – Environmental Management System
These standards help businesses:
Quantify emissions
Improve transparency
Support credible carbon claims
No. Carbon credits:
Are a supporting tool
Do not eliminate emission responsibility
Must be part of a broader strategy
Strong ESG focuses on:
Emission reduction
Energy efficiency
Operational improvements
Carbon credits already matter in Malaysia—not because they are mandatory, but because business expectations are changing.
For Malaysian businesses, understanding carbon credits early helps:
Strengthen ESG positioning
Prepare for future regulations
Make informed sustainability decisions
The real advantage lies in using carbon credits wisely—not reactively.
Indonesia