@ green | November-December. 2025

� Carbon offsets are essential— not optional— for Malaysia to achieve its net-zero and NDC targets, given current limitations in green technologies and the urgency of the climate timeline.

For example, if a company buys carbon credit units to offset its carbon emissions, it risks being labelled a greenwasher.

IMPLICATION OF NET ZERO

Malaysia is committed to net-zero emissions by 2050 and to a Nationally Determined Contribution( NDC) of a 45 per cent reduction in carbon emissions by 2030 to combat global warming, which has increasingly been labelled a Climate Emergency.

It is unclear whether, without an asset transformation( investors buying carbon credits as if they were acquiring shares on Bursa Malaysia), Malaysia can achieve its climate goals through carbon trading.

Worldwide, net zero requires carbon

� A just transition requires making affordable carbonreduction tools accessible to MSMEs, which form nearly 90 per cent of Malaysia’ s business landscape and are critical to supply chain decarbonisation.

BY:

DR BEN ONG( PHD) CHAIRMAN & FOUNDER MALAYSIAN ASSOCIATION OF PUBLIC ADVOCACY FOR NATURE( MAPAN)

� Credible carbon markets strengthen ESG legitimacy, enabling large corporations and SMEs to reduce residual emissions and unlock financing, tenders, and sustainability advantages.

offsetting( purchasing carbon units to offset carbon emissions), which is possibly the only viable solution to mitigate the harm of temperature rise to humanity and the economy, given the state of green technologies and the time available to cap rising sea levels and the worsening weather catastrophes.

JUST TRANSITION

In environmental, social and governance( ESG) terms, every business is equal, regardless of size. The sole difference is that larger organisations emit more carbon because they produce more goods or services.

Therefore, the application of " Just Transition " is to ensure that smaller companies with smaller carbon footprints also contribute to carbon reductions.

Literally, lower-cost alternatives must be made accessible to micro, small, and medium enterprises( MSMEs) so that no one is left behind.

In Malaysia and worldwide, close to 90 per cent of enterprises are small businesses. In the supply chain( shipping, forwarding, customs clearance, transportation, warehousing, value-added services, and last-mile delivery), micro businesses dominated the subcontracting and outsourcing landscape.

RESIDUE CARBON

Even in the case of electric vehicles( EVs), there are unmitigated carbon emissions, as most of the power supply from Tenaga Nasional Berhad is not entirely from renewable energy sources.

Due to timing differences, there will always be a variance between carbon emissions for a particular period of time and the amount of carbon reductions arising from saving, avoidance, or removal.

Thus, the issue of residual carbon, because carbon accounting reflects yearly financial statements that end with a definite reporting cutoff.

TIME CONSIDERATION

Without the mechanism of carbon trading, no nation can guarantee meeting the decarbonisation programmes. Part of the solution to global warming and, hence, logical climate action is carbon offsets, especially when such offsets are voluntary and not enforced under a carbon tax regime( like in Singapore).

Taking cognisance of the timing gaps between non-cost-prohibitive technological improvements and the economic costs of decarbonisation, carbon credits provided a systematic carbon-reduction pathway for the globe, which is worsening in respect of food safety, security, and availability.

CARBON CREDIT UNITS

To start with, saleable carbon credit units must be credible under the world ' s various standards. Not perfect as yet, these frameworks of Verra, Gold Standard, etc., are refining as the market for carbon trading matures.

Worth mentioning is the Bursa Carbon Exchange( BCX) of Malaysia, presently the world ' s only Shariah-compliant carbon trading platform, which trades credible carbon credit units generated from various technological sources.

The scenarios of " Substance Over Form " and " Practice Over Theory " should be heeded, as price-competitive carbon units are the last resort for smaller enterprises on their decarbonisation journey.

ON THE GROUND

MAPAN is perhaps the only ESG NGO promoting carbon offsets. Through a company of one of our founding members, MAPAN has sold a number of renewable energy certificates( RECs) to public-listed companies( PLCs) and small & medium enterprises( SMEs).

For the PLCs, they procured RECs to offset fossil-based electricity and the unavoidable Scope 2 emissions, as required by their multinational clients.

The SMEs who grabbed our REC supported by BCX secured a few new tenders and were offered cheaper interest-free green loans by their bankers, who were surprised by the forward-looking sustainability mindsets of smaller businesses.- @ green