Advocating a sustainable environment with modern technologies
Creating a sustainable environment is on the agenda of every organization today. While most companies do this as part of their corporate social responsibility efforts, there has been an increase in organizations that are advocating sustainability in the products and services they develop and offer as well.
For example, almost all the big tech companies are advocating sustainable environment programs and reducing their carbon emissions. This includes reducing the use of environmentally harmful materials for their products and recycling old products. A few mobile phone companies have also decided to not include phone chargers when selling their products so that users can use their older ones.
In Asia, Allinfra, a Hong-Kong based company is answering the call to action against rising CO2 emissions through climate tech solutions. Allinfra’s product Allinfra Climate focuses on using technology to revolutionize the way climate-relevant data is collected, stored, used, and monetized by institutions, corporates, and governments.
Allinfra is helping organizations to calculate their carbon footprint to offset and meet their net-zero goals and use technology to create the most advanced, provenanced, and trusted digital environmental financial products such as renewable energy certificates and emission reductions.
Allinfra’s climate data tools are being integrated to allow for ongoing verification of assets under green financing, allowing issuers, lenders, investors, and rating agencies to have a highly provenanced and common understanding of how assets are tracking concerning environmental goals.
Tech Wire Asia caught up with Bill Kentrup, the co-founder and head of origination of Allinfra to understand how organizations are approaching the goal of reducing their carbon emissions and creating a sustainable environment with modern technology.
Are organizations really sincere in their approach to reducing carbon emissions or are they doing it because they are forced to by environmental regulations?
We see corporations setting decarbonization goals and taking action with an increasing degree of buy-in that the average temperature of Earth is increasing, which is driving notable shifts in climate patterns that are large, dangerous, and hard to manage or adjust for, and indeed that this represents a real risk to corporations and humanity at large. That’s not to say the buy-in is universal, but I would say this view is so much more widely shared than it was 20 years ago, or even 2 years ago.
Whilst the above is more of an “existential” view, what tends to drive corporate strategies and action is the management of “carbon risk” and unlocking “carbon opportunity”. So I would say there’s a fair degree of sincerity as to the need to decarbonize, though, in the short term, the action certainly tends to factor in financial and other business health metrics.
How technology is playing a role in allowing for more cost-effective and reliable data to underpin environmental finance (equity, debt, or hybrid), financial services (e.g. ratings, accounting), and environmental financial products such as renewable energy certificates or emission reductions?
Whether for climate-related finance or products or reporting and ratings, the market is inherently data-driven, ie. achieving, evidencing, and being rewarded for emission reductions is very different from delivering and being paid for a cargo of soybean, just for example.
You might say that carbon-related data together with methodologies that convert data into impact, is akin to the fiber, protein, and other nutrients of that soybean. Hence, climate policy and markets cannot function without systems in place to track and report data. In fact, one of the few legally binding aspects of the Paris Agreements is the periodic reporting on carbon from each signatory of the Agreements.
Historically, the process for collecting that data and relating it to environmental products and services was quite manual. However, with technology currently available, this market can function with greater efficiency, reduced risk, and greater optionality.
For example, our end-to-end environmental solutions platform, Allinfra Climate, helps institutions achieve their sustainability goals in many different ways—from carbon accounting to verifying data for green bonds to creating, trading, or retiring digital renewable energy certificates and emissions reductions.
But the most essential feature of our technology is the ability to capture verifiable, auditable data directly from assets. Without that accurate underlying data, organizations will struggle to track, verify, articulate, and ultimately benefit from their decarbonization achievements.
Why technology can and is helping to accelerate our climate goals?
Following on from above, the historic process of gathering data that relates to environmental products and services was very expensive and with lengthy and unpredictable timelines. Because many compliance carbon markets and also corporate reporting takes place in annual cycles, this often sets the stage for many governments and corporates needing to “settle their carbon books” around the same time of year, and this has often led to very painful bottlenecks in getting carbon audits or verifications done, sometimes with penalties or liquidated damages on the other side of a delayed verification.
Put another way, what would often take 6 months and cost many tens of thousands of US dollars can now be achieved almost instantaneously at significantly lower cost with greater certainty and unprecedented optionality (ie. the final product is not just a static report and a single product issuance, but rather a live and growing pool of data that is networked into financial markets & professional services).
Any time you take a meaningful component of a financial market and make it cheaper, with reduced risk and more versatility, you tend to accelerate that market. When you accelerate the carbon market, you accelerate positive climate impact. Also, any time a transition toward environmental improvement gets “imposed” on the industry, the more manageable and predictable that transition is, the less the industrial push-back tends to be. This has played out over the past 30 or so years across many emissions-related markets (not just carbon).
What is the limitation surrounding corporate sustainability strategies, why they need to be improved, and what role digitization and technology can play?
Given that there’s been a recent and concerted wave of corporations articulating broad decarbonization goals, a major challenge for management, staff and other stakeholders of those corporations is to work out — what exactly do those goals mean, ie. where should we start, what can we do internally, where do we need external help, and how are we doing relative to their peers.
More specifically, how can we set up a system that measures carbon, identifies areas where we can achieve immediate and/or scalable reductions, map out longer-term carbon transition strategies, and incentivize operational business units to identify and achieve targets that are aligned with the group’s decarbonization goals. Complex stuff.
How do we measure, price, and incentivize carbon reductions?
Technology can’t necessarily determine the measures that should be taken in light of the full range of considerations a corporation must make, but technology can certainly help them:
- Measure what’s happening across assets
- Track the carbon impact realized through various changes in operations or deployment of new technology
- Create legally transferable instruments that carry with them rights to current and future emission reductions
- Package carbon-relevant data for select parties that can help improve the cost of funding, eg. for ratings agencies and financiers.
Having confidence and capability around the above helps as corporations weigh a range of factors and ultimately take action.
Are local organizations taking sustainability less seriously in Asia compared to large international MNCs?
Historically, the answer to this is yes, but there’s been a rapid growth in Asia of corporates taking the sustainable environment topic very seriously. Perhaps with countries like Japan and Korea taking early action and China moving at scale and pace, corporates with exposure to these markets have had the lights switch-on in a big way – highly cognisant of very real and very consequential risk and opportunity. Most countries in Asia have accelerated domestic policies relating to decarbonization. It’s getting quite “real” and fewer and fewer corporates are taking it casually.
How Allinfra is supporting other companies in Asia to create trusted and verifiable sustainability data?
We have several clients where we’re helping them put their best foot forward concerning carbon-relevant data who have assets in the power sector, commercial and industrial properties, transport, and agriculture. As an example of an interesting use case, we have a renewable energy client with operating assets and where their financiers have contractual rights to the “environmental benefits” (eg. carbon credits, renewable certificates, or other sustainable environment products) from those assets.
Whilst those rights have been commercially agreed upon, they require a system in place to quantify the magnitude of that environmental benefit and record the transfer of that benefit from operators to lenders. Allinfra Climate, which is our solution for environmental data and products, is designed precisely to allow for low cost, high frequency, and permanent digital matching of renewable power production with consumption — or, in this case, quantifying and transferring environmental benefits from an asset to a financier.
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