Global disclosure standards, such as those developed by the International Sustainability Standards Board, require companies to disclose absolute emissions reduction data. Companies also disclose and set targets for net emissions, which take into account carbon credits used to offset emissions. This is because reducing all emissions solely through their own measures can be technically and financially challenging. Companies can purchase carbon credits from third-party carbon projects.
While carbon markets are expected to grow over time, the quality of carbon credits varies, and concerns remain―particularly regarding voluntary carbon credits issued through private sector initiatives. Without proper guidelines and regulations, companies risk engaging in greenwashing.
Promoting the interoperability of carbon credits and markets is essential in Asia not only to attract private sector funds into the region but also to reduce costs associated with the development, verification, validation, issuance, and tracking of carbon credits.
As companies become more aware of the importance of meeting emissions reduction targets, understanding the characteristics, types, existing guidelines, and treatment of carbon credits under key international disclosure frameworks is becoming increasingly crucial.