Dubbed a “first-of-its-kind” intiative, the goverment-led alliance will focus on boosting demand for high-integrity credits among corporates in a bid to close the US$1.3 trillion climate finance gap without adding to the global debt burden. It aims to mobilise up to US$250 billion to support the decarbonisation of emerging markets and developing economies by 2050, according to a press release from Singapore’s National Climate Change Secretariat (NCCS).
The group plans to release a common set of principles for the corporate use of offsets by COP30, which will be held in Brazil later this year. The VCM has faced a fragmented landscape of policies and standards, with over 15 carbon crediting standards covering more than 100 active methodologies. Last week, Singapore published a draft guide for firms intending to use carbon offsets to cut their emissions voluntarily. The UK also released its draft guidance on the voluntary use of offsets in April.
At the launch of the coalition, Ravi Menon, Singapore’s ambassador for climate action and one of its co-chairs clarified that “the intent of the shared principles is to ensure consistency but not uniformity.”
“Individual countries may choose to issue more detailed guidance to suit their national circumstances but taking care to ensure alignment internationally,” he said.
Calling carbon credits “a proven but underused climate tool”, NCCS stated that the shared guardrails would “give businesses the confidence and incentives they need” to participate in the VCM.
The coalition is chaired by Ali Mohamed, Kenya’s special climate envoy and Rachel Kyte, the UK’s special representative for climate. France and Panama are among its founding members, while Peru has endorsed the coalition’s mission. In the coming months, the alliance will be expanding to include more buyer and supplier countries.
The group is also backed by international business councils, the International Chamber of Commerce and the World Business Council for Sustainable Development. The Integrity Council for the Voluntary Carbon Market (ICVCM), an international governance body, will also work with the coalition to support alignment with its existing frameworks for the supply side of the market.
“Singapore will play a meaningful role in catalysing the development of the VCM as a financial and services hub, and through our investments in impactful decarbonisation projects globally,” said Grace Fu, the republic’s minister for sustainability and the environment and minister-in-charge of trade relations.
The city-state has clarified that credits voluntarily purchased by corporates would not count towards Singapore’s climate targets. This is in contrast to the country’s compliance scheme, where the republic’s biggest polluters can only use credits from carbon projects in the seven host countries that Singapore has negotiated bilateral agreements with to date to offset up to 5 per cent of their taxable emissions each year.
The VCM has shrunk by over 60 per cent from its 2021 highs, following investigations exposing poor quality credits and fraudulent carbon projects. The rollback of United States’ climate commitments has also sparked concerns that companies might be pressing pause on their emissions reduction goals, putting a further dent in the demand for voluntary credits.
While voluntary credit demand has softened in 2025 across the big four registries, the quality of credits issued and retired have shown signs of steady improvement as buyers move away from lower quality avoidance credits generated from REDD+ forest protection and renewables development projects.
As more jurisdictions, including those in Southeast Asia, introduce their own compliance schemes, many – including the head of the world’s largest carbon credit certifier Verra – also expect the compliance markets to converge with the VCM in the coming years.
About The Author
