Human activities such as fossil fuel combustion and deforestation, have led to an increase in Greenhouse Gas (GHG) emissions that exacerbate climate change and global warming. This has a significant impact on the Earth's temperature, extreme weather and ecosystem balance. To tackle this problem, international agreements such as the Kyoto Protocol and Paris Agreement are designed to reduce GHG emissions. Indonesia, as a country that ratified the Paris Agreement, committed to reducing emissions through its Enhanced Nationally Determined Contribution (ENDC), with one of the main strategies being carbon trading. In 2023, Indonesia launched IDXCarbon as a carbon exchange platform, expected to boost carbon unit transactions and help achieve emission reduction targets. This study aims to analyze the causes of the low effectiveness of carbon trading in Indonesia and evaluate companies' efforts to reduce GHG emissions. This research aims to analyze the causes of the low effectiveness of carbon trading in Indonesia and evaluate companies' efforts to reduce GHG emissions. The research method used is empirical normative research with secondary data obtained through literature study and supported by primary data obtained through observation. The data analysis used is qualitative data with inductive method. The result of the research found is that Indonesia's carbon trading is divided into two, namely emission trading and GHG emission offsets. Emissions trading is a trade carried out by businesses that have an emission ceiling, while GHG emission offsets are GHG emission reductions through a carbon project. Currently, carbon trading is mandatory for the energy sector - the power generation sub-sector, particularly coal power plants as the largest emitting sector in Indonesia. While other sectors can implement carbon trading voluntarily. However, this obligation has not been followed by strict sanction arrangements such as fines, but only administrative sanctions which are considered not effective enough to force business actors to carry out their obligations. Therefore, there is a need for additional regulation of fines. In addition, based on President Joko Widodo's statement at the inauguration of IDXCarbon, it was stated that the potential of Indonesia's carbon trading through the carbon exchange could reach 3 trillion rupiah. However, despite the huge economic potential of carbon trading, its implementation is still suboptimal, as evidenced by the low frequency of transactions and limited market participation. In addition, carbon trading has not yet become the main choice for listed companies in Indonesia as a form of decarbonization, but only as an additional option to reduce their GHG emissions.