Compliance carbon market

    ESG & Governance

    A carbon market created by law, in which covered companies must hold allowances or credits for their emissions.

    Examples include the EU ETS, China's national ETS and India's CCTS. Participation is mandatory for covered entities, and failing to comply brings penalties. According to the World Bank, carbon pricing instruments, including compliance markets and carbon taxes, covered just over 29% of global emissions in 2026.

    Related terms