Carbon credits are a key instrument in the global effort to combat climate change. Representing a permit to emit one metric ton of carbon dioxide or an equivalent amount of another greenhouse gas, carbon credits are used to offset emissions and promote more sustainable practices. By investing in carbon credit programs, businesses and individuals can support projects that reduce, remove, or avoid greenhouse gas emissions—such as renewable energy, reforestation, and energy efficiency initiatives. As environmental regulations tighten and climate awareness grows, carbon credits have become an essential tool for achieving carbon neutrality and fostering a greener, low-carbon economy.
1.Carbon Credits
Recognised as a transferable and tradable asset, carbon credits can be traded directly between parties or through designated exchanges, provided that transactions are registered with the TGO.
The credits can be used to offset ETS obligations, creating incentives for private investment in emission reduction projects and strengthening Thailand’s voluntary carbon market.
The proposed measures will significantly impact high-emission sectors such as energy, manufacturing and heavy import industries. Regulated business operators should proactively prepare for these regulatory compliance measures to minimize disruption. While compliance obligations will increase operating costs, the Draft CCA also opens up new avenues for:
access to financial support from the Climate Change Fund for businesses engaged in reducing greenhouse gas emissions or developing climate-resilient technologies; and the expansion of green finance and voluntary carbon markets.
As the global carbon market rapidly expands, carbon credits have evolved beyond an environmental issue into a strategic arena for both corporate investment and international diplomacy. For Taiwanese companies, where domestic carbon trading is still in its infancy and the policy framework under construction, developing carbon credit projects abroad may offer a forward-looking strategic pathway.
This report explores successful carbon diplomacy models in Japan, Singapore, and selected ASEAN countries, outlining practical opportunities and insights for Taiwanese businesses interested in entering the international carbon space.
2. The role and importance of ESG in sustainable development
ESG actively contributes to the formation, construction and promotion of sustainable strategies related to the environment and social issues of enterprises. In recent years, thanks to the efforts of State agencies in promulgating policies and establishing criteria related to ESG, ESG has become an important criterion for investors and the financial market. Enterprises with strong ESG strategies often attract investment and are highly appreciated in the market, which promotes the growth and stability of stocks and brand value, creating a competitive advantage in the financial market. Therefore, it can be said that ESG plays an important role, helping stakeholders understand how enterprises manage risks and take advantage of opportunities in all three aspects of environment, society and management.
2.1. For the environment
In the period of climate change and increasing requirements for sustainable development, enterprises that meet both of the above criteria are enterprises with the ability to develop steadily and take control in the future, especially in environmental issues. At the United Nations Climate Change Summit 2021 (COP26), Vietnam made important commitments to respond to the challenge of climate change. This commitment associated with action was once again strongly affirmed internationally at the recent COP27. In an effort to create ESG policies, the Vietnamese Government is shaping guidelines for enterprises in achieving ESG-related goals, while promoting sustainable development. For environmental issues, ESG sets out criteria for assessing the level of energy use in business operations through climate, pollution, waste and resource use.
Banks have recently set targets related to reducing carbon emissions, investing in renewable energy projects and promoting pioneering in building a financial system with environmental responsibility. The contract between Asia Commercial Joint Stock Bank (ACB) and DHL to reduce 100% of carbon emissions in international express delivery, estimated to cut up to 14 tons of CO2 emissions within 12 months, is a typical example of commitment to effectively implementing ESG. Last year, ACB also saved 215 tons of paper through digitalization of processes, replacing 32 tons of plastic with environmentally friendly materials; ACB also neutralized 181 tons of CO2 by using recycled carpet materials. Nam A Commercial Joint Stock Bank aims to be carbon neutral and build a comprehensive ecosystem for sustainable development. In credit granting, banks focus on and prioritize businesses that practice ESG; Prioritizing credit for manufacturing industries using renewable energy, clean energy, etc. To reduce environmental waste as well as implement sustainable development towards users, Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) encourages customers to use electronic payment services instead of using cards. Since July 2023, Vietcombank has exempted fees for electronic card opening and online transactions, and adjusted fees for physical cards. Banks have also focused on using easily recyclable materials in card issuance, to reduce waste and costs (Minh Phuong, 2023).
The combination of digitalization and greening is one of the clear impacts of ESG in the banking industry, creating the concept of green banking with some characteristics such as: Prioritizing lending or investing in projects that assess environmental risks, paying attention to social goals, sustainable development goals and green development; monitoring and guiding customer projects to minimize environmental pollution (Minh Phuong, 2023).
2.2. For society
The social role of ESG focuses on labor relations, customer relations and business models. Through ESG, businesses can define strategies to support the community and society as well as responsibilities to employees. This includes ensuring employee rights, creating a positive, diverse, fair and inclusive working environment. At the same time, businesses can also support social projects such as education, health and community development. These efforts help build a positive reputation for businesses in the community.
The latest data from the Edelman Trust Barometer report (2023) shows that up to 60% of consumers perceive how businesses treat employees and customers as influencing their trust in the brand, which in turn directly affects their purchasing decisions. The number of customers who are likely to like a brand if that brand is committed to taking actions related to human issues such as: Improving access to health care, ending racism, promoting gender equality, employee diversity… is from 3.5 to 7 times higher than customers with less tendency.