Interconnectivity among Asian carbon markets offers substantial potential to facilitate cross- border cooperation and regional integration. Integration could be achieved through establishing unified rules, enabling trading interconnections, sharing data, providing mutual assistance in capacity building and ensuring interoperability with international standards. Initiatives such as the ASEAN Common Carbon Framework (ACCF) and Japan’s Joint Crediting Mechanism (JCM) are pioneering in their alignment of rules, data sharing and capacity building. Such collaboration could enhance the effectiveness of regional carbon markets and drive collective progress towards low- carbon development. For businesses, carbon markets are strategic tools that can accelerate their low-carbon transformation and boost their competitiveness. Corporations can integrate carbon markets into decarbonization strategies to optimize emissions reduction pathways, aligning with Asia’s evolving regulatory frameworks. This includes operational emissions reduction via structured roadmaps, value chain decarbonization through supplier collaboration, and strategic carbon credit portfolio design to balance short- and long-term objectives. The growth of carbon markets also fuels demand for low-carbon technologies and services (including carbon removals), unlocking significant commercial opportunities for new business growth opportunities. Engaging in ecosystem collaboration and aligning with regional policy dynamics further enables corporations to enhance efficiency, manage compliance and strengthen their position in Asia’s low-carbon transition. Carbon markets encourage innovation in low- carbon technologies and services. Carbon markets foster advancements in renewable energy projects (e.g. grid-connected solar thermal power, offshore wind), forestry carbon sinks (e.g. afforestation, mangrove restoration) and industrial energy efficiency improvements (e.g. energy-saving in highway tunnel lighting systems). Digital technologies such as blockchain and privacy computing are increasingly applied to enhance the authenticity and security of carbon data management, supporting more efficient measurement, reporting and verification (MRV) systems. Innovations also extend to market mechanisms and methodologies, such as diversified carbon credit portfolios balancing nature-based solutions (NbS) and technology-based solutions (TbS). These innovations create new growth avenues and position corporations as key contributors to the low-carbon ecosystem. To harness the full potential of carbon markets, it is essential to create an efficient and transparent market ecosystem. Policy-makers should enhance domestic frameworks by clarifying rules and building robust data infrastructure for transparency. They can activate liquidity by expanding market coverage to more sectors, engaging in multilateral cooperation to attract international demand and supporting high-quality carbon credit projects. Expanding carbon financial products will boost vitality, while prioritizing international dialogue for mutual recognition of standards paves the way for global interconnectivity. Corporations should participate in policy development to align rules with industry needs and collaborate with stakeholders on sector-specific methodological standards, enhancing carbon accounting credibility. Partnering with financial institutions and service providers can innovate carbon asset models, broadening revenue streams and injecting liquidity. Collective capacity building through training and technology sharing will also elevate market maturity. Collaborative mechanisms among stakeholders can further enhance the effectiveness of carbon markets and maximize their potential for driving sustainable economic growth. Asia’s Carbon Markets: Strategic Imperatives for Corporations 5

Asia's Carbon Markets Strategic Imperatives for Corporations 2025