Britain, Kenya and Singapore join hands to encourage firms to buy carbon credits

London — Britain, Kenya and Singapore have launched a coalition aimed at encouraging companies to buy carbon credits by setting out a set of guidelines for buyers, a move carbon market experts say is the strongest show of policy support yet for such markets.

Carbon market advocates have spent decades trying to establish a market for buying and selling credits, which companies can purchase to offset their emissions. But despite nations finally agreeing on a UN-backed system at COP29 in Baku, corporate buyers remain reticent.

Britain, France, Kenya, Singapore and Panama on Tuesday set out their intention to agree a basic set of principles for businesses by COP30 in Brazil in November, to stimulate demand for a product that could channel billions of dollars of climate finance to countries in need.

Ravi Menon, Singapore’s ambassador for climate action, one of the coalition’s first signatories, said carbon markets are a critical lever to unlock climate action, but buyers lack trust in the market after evidence of malpractice at some projects.

“The challenge is on the demand side, corporates have become more unwilling to buy credits [because of] risks of greenwashing,” he said.

In the absence of government regulation or taxation, Bill Winters, CEO of Standard Chartered, said companies need a reason to “do the right thing.”

“Our owners are no longer agitating for us to get involved in anything that doesn’t make money,” he said. “We need to re-establish the virtuous circle that doesn’t work today.”

Rules for how companies can use carbon credits are not well established with the primary arbiter for corporate climate action still consulting on how they can be used.

“Standard-setting bodies have done a very good job, but there’s nothing like government,” said Menon.

The total number of credits used by buyers each year has remained at about 160-million since 2021, according to data provider Abatable, though the number of buyers has fallen.

Kerry McCarthy, Britain’s climate minister, said the coalition aims to issue “strong signals on use of carbon credits by businesses.”

Reuters