Bursa Malaysia Launches First Shariah-Compliant Carbon Exchange In The World

Bursa Malaysia Bhd today launched Malaysia’s pioneer voluntary carbon market (VCM) with the introduction of the Bursa Carbon Exchange (BCX).

Chairman Tan Sri Abdul Wahid Omar said BCX is operated by Bursa Malaysia and is the first Shariah-compliant carbon exchange in the world, diversifying the product universe for the environmental, social and governance (ESG) and Shariah-compliant products.

The VCM is critical to assist the world in meeting the 1.5-degree Celsius pathway and accelerating the transition to a lower-carbon future.

The launch of BCX is momentous as it will play a significant role in supporting the nation and the world’s VCM ecosystem, he said at the launch of BCX, which was officiated by Natural Resources, Environment and Climate Change Minister Nik Nazmi Nik Ahmad.

The objective of the BCX is to enable companies to trade voluntary carbon credits from climate-friendly projects and solutions, with the aim to offset their emission footprint and meet climate goals.

The BCX will also support Malaysia’s ambition to achieve its target of net zero greenhouse gas (GHG) emissions by 2050, while accelerating corporate Malaysia’s pivot towards a green economy and meeting global demands for a sustainable supply chain.

Meanwhile, Bursa Malaysia chief executive officer Datuk Muhamad Umar Swift said the BCX will make carbon trading a more inclusive ecosystem, allowing more market participants to engage with clients looking for ESG as well as Shariah-compliant related solutions.

Therefore, I would strongly urge all market participants to join us in this journey, he said.

The VCM allows carbon emitters to offset their emissions by purchasing carbon credits emitted by projects that remove or reduce GHGs from the atmosphere.

Muhamad Umar said the BCX rules, auction terms and conditions, online module and operational processes have been finalised, and the projects permitted to be traded include nature-based solutions or technology-based solutions, which result in avoidance, reduction or removal of GHG emissions.

The first trades will be conducted via an auction which will facilitate price discovery for the new standardised carbon credit products listed on the BCX. The first trade via auction is expected to commence in March 2023.

Both buyers and suppliers would be able to transact high-quality carbon credits and use them to offset their existing climate impact alongside their other internal carbon reduction initiatives, added Muhamad Umar.

Interested project developers and project proponents are invited to submit their interest to supply carbon credits for the auction, as well as for the BCX.

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