Asean today stands at a climate crossroads.Asean today stands at a climate crossroads. Governments are pledging bold nationally determined contributions (NDCs) under the Paris Agreement, while corporations across the region are racing to declare net-zero strategies.
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A significant tension is emerging in Southeast Asia between governments and corporations over who owns the carbon claim for emission reductions. Both entities are making ambitious climate pledges—governments through Nationally Determined Contributions (NDCs) and companies through frameworks like Science Based Targets. However, when a single action, such as a solar farm in Malaysia, is counted towards both a national pledge and a corporate ESG report, it leads to double-counting. This fundamental fault line undermines the credibility of both national and corporate climate claims, risking reputational damage and reduced access to crucial climate finance.
The risk is most acute with cross-border renewable energy certificates (RECs), where a company in one country buys credits from a green project in another, and both nations claim the reduction. To resolve this, the region can adopt the principle of Corresponding Adjustments (CAs) from Article 6 of the Paris Agreement. This ensures that when an emission reduction is traded internationally, the host country deducts it from its national inventory, preventing double counting and preserving integrity. Furthermore, clear rules and standardised claim language are needed to distinguish between different types of claims and prevent greenwashing.
For ASEAN, a region highly vulnerable to climate change yet with rapidly growing energy demand, resolving this issue is critical. Without credible accounting, the region risks losing the billions in private investment needed for its energy transition. By establishing clear rules, applying CAs to RECs, and ensuring transparency, ASEAN can build the trust required to attract finance, protect the value of national pledges, and allow corporations to make verifiable claims, thereby accelerating a credible and funded shift to a cleaner economy.
