Bursa Malaysia to launch VCM exchange

The exchange will be launched later this year and will list standard carbon credit products


BURSA Malaysia Bhd will be launching its Voluntary Carbon Market (VCM) Exchange as part of the local bourse’s efforts to facilitate the growth of a voluntary carbon market in Malaysia.

In a statement today, Bursa Malaysia said the exchange will be launch later this year and will list standard carbon credit products. These products will be derived from nature-based solutions and technologies that reduce or remove carbon emissions.

“Through a rules-based VCM exchange, Bursa Malaysia will aggregate carbon credits that share similar traits and fundamentals, with vintages from 2016 onwards.

“Additionally, the exchange will also label products to differentiate between carbon credits sourced in Malaysia and globally,” Bursa Malaysia said in the statement.

The exchange operator added that by the end of the year, a supply of carbon credits is to be sold by way of auction to interested buyers.

“The auction will enable price discovery for the new standardised carbon credit products that will be listed on the exchange. 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,” Bursa Malaysia said.

Bursa Malaysia added that to ensure the high integrity of carbon credits offered through the exchange, they will be adopting the Verified Carbon Standard, or better known as Verra.

“Verra is a widely recognised standard in VCM, accounting for nearly 70% of voluntary carbon credit issuances globally.

“Verra has developed transparent, credible and robust methodologies covering a wide array of climate-friendly activities such as nature-based projects, methane avoidance or capture, 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,” Bursa Malaysia said.

According to Bursa Malaysia, they have signed a memorandum of understanding with Verra in May 2022, which focuses on capacity building.

Bursa Malaysia CEO Datuk Muhamad Umar Swift said the exchange has been and continues to engage with various stakeholders towards the development of a carbon market with the aim of ensuring robust participation from various stakeholder groups representing potential issuers, project developers, corporate buyers, such as manufacturers, agricultural companies, financial institutions, as well as validation and verification bodies, government agencies and others.

“Stakeholder engagement is key in facilitating greater understanding among industry players to enable their participation in the VCM exchange and to meet ESG requirements required by parties such as lending institutions.

“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 VCM to reduce their carbon footprint,” he said

He added that they believed that the exchange can serve as an important lever in realising Malaysia’s net zero greenhouse gas emissions aspiration, as well as supporting the private sector’s voluntary climate commitments and decarbonisation journey.

“The VCM exchange will act as a catalyst, encouraging investments in high-quality offset projects that can generate positive environmental and societal benefits,” he concluded.

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 in the medium and long-term period.