By GenZero, Eng and Co. LLC and PwC Singapore, in partnership with the Singapore Sustainable Finance Association (SSFA)
Clearer legal and accounting treatment of verified carbon credits (VCCs) can help reduce fragmentation, support financing, improve confidence, and strengthen the foundations for market growth.
Future growth of the voluntary carbon market (VCM) will depend not just on climate ambition, but on strong foundations. Currently, the market is held back by legal uncertainty, fragmented treatment across jurisdictions, uneven demand, limited secondary market development, and ongoing integrity concerns.
This paper builds upon an earlier paper written by GenZero and Allen & Gledhill which set out the case for treating VCCs as intangible property under Singapore law. It takes that analysis further by examining how legal and accounting clarity can support carbon financing and growth of the VCM.
Drawing on interviews with different market players, the paper brings together a cross-industry view of the main obstacles to scaling the VCM and financing carbon projects. These stakeholders include financial institutions, project developers, exchanges, investors, insurers, traders, and members of the SSFA carbon financing workstream.
Key findings
- Clear legal categorisation of VCCs as intangible property would support market activity
Legal clarity is not just a technical issue. It affects whether VCCs can be financed efficiently, traded more easily, insured properly, and used with greater confidence across the market. - Cross-border harmonisation matters
Because the carbon market is international, different legal treatments across jurisdictions create ambiguity on which laws apply. Greater alignment on legal and accounting treatment would help reduce friction and support scale. - Reporting and decision-useful disclosures can be strengthened. Enhanced transparency through reporting under IFRS S2 could help investors and other stakeholders further understand the value and risks relating to VCCs.
This points to two priorities for carbon markets to scale: clarifying the legal status of VCCs and reducing cross-border legal uncertainty.
