In more detail
The draft guidance outlines the role of carbon credits in corporate decarbonisation planning and offers a structured framework for businesses to evaluate and use carbon credits. It is based on Singapore's International Carbon Credit Framework, which sets out seven principles to assess the environmental integrity of a carbon credit:
- Not double-counted – The emissions reductions or removals must not be counted more than once.
- Additional – The certified emissions reductions or removals must exceed any emissions reduction or removals required by law or any regulatory requirement of the host country.
- Real – The reductions or removals must have been quantified based on a realistic, defensible and conservative estimate of the emissions that would have occurred in a business-as-usual scenario.
- Quantified and verified – The emissions reductions or removals must have been calculated in a manner that is conservative and transparent, and verified by an accredited, independent third party.
- Permanent – The emissions reductions or removals must not be reversible.
- Do no net harm – The project must not violate any applicable laws, regulatory requirements or international obligations.
- No leakage – The project must not result in a material increase in emissions elsewhere.
The guidance further encourages companies to prioritise feasible emissions abatement measures before turning to carbon credits, and to manage risks by evaluating credit quality at a portfolio level. It recommends the use of project labels, third-party ratings, and insurance, where appropriate, and calls for transparent disclosure of carbon credit usage — including credit type and volume, project location, purpose of use, and relevant registries.
This initiative forms part of Singapore's broader efforts to foster a high-integrity carbon market ecosystem and to build confidence in the voluntary use of carbon credits in line with global standards.
Key takeaways
The draft guidance provides practical direction for companies seeking to use carbon credits responsibly as part of their broader net-zero commitments.
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The MTI press release and draft guidance are available here: https://www.mti.gov.sg/Newsroom/Press-Releases/2025/06/Building-Confidence-In-Carbon-Markets
Feedback may be submitted here: go.gov.sg/vcmguidance
For further information and to discuss what this development might mean for you, please get in touch with your usual Baker McKenzie contact.
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