With only five years remaining to meet the 2030 climate goals outlined by the Paris Agreement, carbon credits have emerged as a powerful tool to mobilise private capital. Despite their potential, carbon markets today are at a standstill. They remain stalled in a cycle of mutual hesitation; companies are waiting for clearer policy signals, while governments hold back, hoping for more proactive corporate commitment.
At the recent workshop on Southeast Asia’s Green Economy 2025 Report,[1] hosted by the American Chamber of Commerce in Singapore, stakeholders across sectors came together to discuss how to make carbon credit markets functional and scalable. One message resonated strongly: while the ambition is there, the necessary alignment across regulation, market structures, and commercial incentives is still missing.
The need for alignment: regulation, markets, and value
In regulated compliance markets, companies often find it difficult to justify investing in carbon credits when there are no clear regulatory incentives or waiver frameworks in place. Governments, meanwhile, are reluctant to roll out ambitious policy schemes without visible corporate demand. This “chicken-and-egg” dilemma is a core reason why progress remains limited.
To shift from intention to action, regulatory frameworks must evolve to include mechanisms such as policy waivers that lower the risks of early participation. Market rules must also be consistent and predictable, particularly when it comes to credit verification, permanence, and additionality. And above all, carbon credits need to create real commercial value, allowing companies to see them not as compliance costs, but as strategic assets aligned with their sustainability and business goals.
The missing voice: farmers as carbon credit contributors
While the conversation often centres on market design and regulation, a critical voice is frequently overlooked: the suppliers of carbon credits, particularly farmers. On the supply side, agriculture plays a crucial role in the carbon credit ecosystem. Farmers are at the frontlines of land stewardship, curbing illegal deforestation and adopting practices like afforestation, reforestation, and sustainable farming practices. These actions are not only vital for preserving ecosystems and biodiversity but also form the backbone of nature-based carbon sinks that generate tradable carbon credits.
However, the current structure of the carbon market fails to support these suppliers adequately. Carbon accounting processes are often highly technical, making it difficult for farmers to understand how their actions translate into carbon credits or to anticipate the potential returns. On top of that, costly and complicated auditing requirements create significant barriers for smallholders and farmers to participate meaningfully in the market. Most challenging of all, carbon revenue is uncertain and long-term, while the financial gains from deforestation are immediate and tangible.
As a result, farmers face a troubling trade-off: adopt sustainable farming practices with substantial upfront investment and potentially earn a return years down the line, or choose short-term profit through deforestation and business-as-usual. If we expect to rely on carbon markets to deliver real climate impact, we must build systems that reward, rather than penalise, those making sustainable choices.
What needs to change?
To create carbon markets that are both equitable and effective, we need an ecosystem that is inclusive, transparent, and aligned with real-world incentives. Standardised and science-based methodologies will help reduce confusion and boost credibility. Certification processes must be streamlined so that participation is feasible for smallholders. Platforms such as cooperatives or aggregators can lower transaction costs and make entry more accessible.
Equally important is the need to de-risk the participation for suppliers. This can be done through mechanisms like upfront financing, insurance schemes, or minimum price guarantees – tools that allow farmers to confidently commit to sustainable practices. And most importantly, we must engage them not just as recipients of policy, but as active partners in shaping the future of carbon markets.
Shared action, real impact
Carbon markets hold enormous promise. But to realise their potential, we must go beyond high-level ambition and tackle the practical gaps on the ground. That means building trust, aligning incentives, and lowering barriers for the farmers who are safeguarding the forests that sustain us all. Sustainability cannot succeed in silos. It must be built through shared action, shared value, and shared voice.
At Access Partnership, we offer deep expertise at the intersection of sustainability, climate policy, and green finance – spanning sectors and themes globally. Our work includes identifying opportunities for businesses to lead on sustainability in APAC, charting pathways to a low-carbon future, and advocating for pricing environmental externalities to better reflect true social costs. We’ve also explored nature-based and climate-smart agricultural solutions in Southeast Asia and examined how emerging technologies can drive more sustainable outcomes globally.
If your organisation is navigating the evolving economic and regulatory landscape in these areas, we’d be glad to connect and explore how we can support your goals. Please reach out to Dr. Cathy Wu at [email protected] or Cheng Wei, Swee at [email protected].
References
[1] Hardcastle, et al. (2025), “Southeast Asia’s Green Economy 2025 Report”. Available at: https://www.bain.com/insights/southeast-asias-green-economy-2025/
