LONDON, June 24 (Reuters) - Britain, Kenya and Singapore

have launched a coalition aimed at encouraging companies to buy

carbon credits by setting out a set of guidelines for buyers, a

move carbon market experts say is the strongest show of policy

support yet for such markets.

Carbon market advocates have spent decades trying to

establish a market for buying and selling credits, which

companies can purchase to offset their emissions. But despite

nations finally agreeing on a U.N.-backed system at COP29 in

Baku, corporate buyers remain reticent.

Britain, France, Kenya, Singapore and Panama on Tuesday set

out their intention to agree a basic set of principles for

businesses by COP30 in Brazil in November, to stimulate demand

for a product that could channel billions of dollars of climate

finance to countries in need.

Ravi Menon, Singapore's Ambassador for Climate Action, one

of the coalition's first signatories, said carbon markets are a

critical lever to unlock climate action, but buyers lack trust

in the market following evidence of malpractice at some

projects.

"The challenge is on the demand side, corporates have become

more unwilling to buy credits [because of] risks of

greenwashing," he said.

In the absence of government regulation or taxation, Bill

Winters, CEO of Standard Chartered ( SCBFF ), said companies need

a reason to "do the right thing."

"Our owners are no longer agitating for us to get involved

in anything that doesn't make money," he said. "We need to

reestablish the virtuous circle that doesn't work today."

Rules for how companies can use carbon credits are not well

established with the primary arbiter for corporate climate

action still consulting on how they can be used.

"Standard-setting bodies have done a very good job, but

there's nothing like government," said Menon.

The total number of credits used by buyers each year has

remained at about 160 million since 2021, according to data

provider Abatable, though the number of buyers has fallen.

Kerry McCarthy, Britain's climate minister, said the

coalition aims to issue "strong signals on use of carbon credits

by businesses."