The Sabah State Legislative Assembly has passed the landmark Sabah Climate Change and Carbon Governance Enactment 2025, aimed at regulating carbon activities and aligning with global climate policies. The law establishes a two-tier system, with the Sabah Climate Action Council as the policy body and a director to oversee carbon governance and emissions regulation.

Key features include mandatory greenhouse gas reporting, recognition and registration of carbon rights, and certified issuance of carbon credits, along with levies and royalties. The Bill emphasizes indigenous community involvement, requiring consultation and benefit-sharing for carbon projects on native customary land.

It also introduces the Sabah Climate Registry and Inventory Centre and a Climate Fund to support climate action. Sabah, a net carbon sink, aims to balance environmental protection with economic growth while addressing its vulnerability to climate impacts like floods and erosion.