Singapore’s carbon offset trading platform, which would be among the first to be backed by a public stock exchange, is attracting some of the world’s largest tech corporations including the US-based tech giants Google, Microsoft and Amazon.
According to Herry Cho, Singapore Exchange’s head of sustainability and sustainable finance, the firms may use Climate Impact X (CIX) as they strive to meet “ambitious” targets to become net-zero emitters. Ride-hailing firm Grab has also expressed interest in the trading venue that’s set to be launched this year, she said.
Companies with net-zero or even net-negative ambitions are quickly realizing that “negotiating one-on-one with their small sustainability teams” to find the best projects “is completely unrealistic and is draining their manpower,” Ms. Cho said.
Singapore-based Grab said the company supports carbon offset programs that reduce emissions and provide economic uplift to communities. “Having greater transparency and assurance will help us achieve that promise to our consumers and key stakeholders. We look forward to more details when CIX is launched,” a spokesperson said.
Reducing carbon footprint
Private companies are coming under increasing pressure to reduce their carbon footprint to support goals under the Paris Agreement, and are looking for ways to cancel greenhouse gas emissions that can’t immediately be slashed. Last week, Singapore announced a pilot project to encourage more companies to buy certificates for offsets, even as quality control remains a concern globally.
Climate experts have warned that validating cheap offsets that don’t actually remove carbon dioxide could give companies a way to claim they’re carbon free without undertaking costly work to reduce planet-warming emissions which results in greater pollution overall. Even respected environmental groups like the Nature Conservancy have come under fire for selling offsets that protect forests no longer in danger of being torn down.
Several private markets have emerged to trade carbon credits, such as the Carbon Trade Exchange in London, though Singapore is among the first to offer trading of carbon offsets backed by a public stock exchange. Unlike carbon credits, which give the holder the right to emit carbon, carbon offsets are projects. from forests to solar power, that balance the use of fossil fuels.
Tech companies lead the way
While not among the world’s biggest carbon emitters, tech companies have a sizable footprint thanks to energy-intensive data centers. As of April, out of the 10 largest US companies by market value, only four had announced plans to reduce emissions to net zero by 2050 and all of them are tech firms.
Google last year said its net carbon footprint over its lifetime was zero, while Microsoft aims to be carbon negative by 2030. Large corporations are mostly worried about the quality and scale of their offsets and projects they back, Ms. Cho said.
CIX will host an exchange for carbon offsets trading as well as a marketplace of nature conservancy projects such as forests, wetlands or mangroves that companies can support. It will create a rating system for participants based on existing sustainability measures such as the Gold Standard and will also use satellites, artificial intelligence and blockchain technology to verify the integrity of projects.
The platform will operate at the scale of a startup initially, and is hiring at least 20 people across areas such as tech, operations, legal and sales. It is also backed by Singapore investor Temasek Holdings and commercial bank Standard Chartered.