Green Finance: The Blockchain Advantage
With a keen interest in low-carbon finance, Dr Bo Bai has 22 years of experience in the finance industry with a focus on green financing. As a Co-Founder and Executive Chairman of MVGX, he has propelled the company to be the first exchange to adopt blockchain, allowing for compulsory carbon disclosure through its trademarked Carbon Neutrality Token (CNT®) for issuers and investors. MVGX is a leading green fintech group that has partnered with big names in the industry, such as one of ASEAN’s leading bank, OCBC, and Indonesia Stock Exchange (IDX).
He firmly believes in the collaboration between tech and green sector, where innovation can be driven, mutually benefitting both sectors. In this exclusive Q&A with Fintech Connect Asia, he dives into the industry’s hot topic, blockchain, and how it can be used to ensure a higher level of transparency and accountability for carbon reporting, while ensuring that the assets are carbon neutral.
Please tell us a bit about yourself and your journey to become Chairman & Founder at MVGX
Despite my years of experience in the green tech industry, my roots were initially in physics and finance. However, in making the switch to finance, I became more involved in the early days of impact investing in clean technology and renewable energy, through private equity roles I took on at Warburg Pincus, First Reserve Corporation, and Goldman Sachs.
I eventually went on to establish my own green impact private equity firm, Asia Green Fund to bring sustainable investments to leading institutions and enterprises driving the transition to a low-carbon economy in China and ASEAN. Today, Asia Green Fund proudly manages over US$2 billion in assets under management.
When it comes to addressing climate change, sustainable finance is one part — the other is actually having the right infrastructure, technology, and solutions to support companies and governments. Ultimately, this is the very raison d’etre for
which leverages cutting-edge technologies to enable greater trust, transparency, and accountability to deliver real climate impact.
What are some of the challenges when implementing blockchain to support decarbonisation?
In spite of the myriad of technologies existing today, it might surprise people to know that a lot of carbon measurement done today still relies on traditional analogue methods for tracking and accounting. Not only is this incredibly inefficient, but it also means that such efforts are prone to significant inaccuracies and human error. Despite the fact that the Paris Agreement saw the UN’s recognition of blockchain as a legitimate tool to ensure greater transparency in carbon reporting, uptake has been slow. Coupled with the relative nascency of the technology, misconceptions of the technology and the overall skills gap required for implementation are core barriers that limit its widespread use.
While there are early signs of blockchain adoption within the carbon sector — MVGX being a leading example — it only plays a niche role in the broader landscape. Especially with the green and tech sectors acting in siloes, there is little opportunity for the exchange of vital skills and knowledge to strengthen either industry.
How is blockchain an opportunity for climate action despite its role in environmental degradation? How is MVGX leveraging blockchain for its decarbonisation efforts?
Everything we do as human beings has a resulting impact on the environment. From the songs and videos you play on streaming platforms to the amount of time you spend charging your smartphone, every technology has a carbon footprint — and blockchain is no different. A lot of the criticism around the environmental impact of blockchain stems from a very limited understanding of the technical distinctions between different networks.
For example, Ethereum, arguably the world’s most popular and widely-used smart contract platform transitioned from Proof-of-Work to Proof-of-Stake for its consensus model — this means that the computational power required to run the network has been significantly reduced and as such, so has its resulting power expenditure and carbon footprint. By transitioning to PoS, it reduced its total carbon footprint by 99.992%.
As a Carbon Software-as-a-Service (SaaS) company, aiming to empower corporations, governments, and institutions at every stage of their decarbonisation journey, MVGX has incorporated blockchain within its line of products. Under our new subsidiary, MVGX Tech, we recently launched Carbon Connect Suite, a holistic end-to-end suite of Carbon SaaS products, spanning carbon measurement, reporting, and verification; decarbonisation rating; carbon credit development and issuance; carbon credit listing and registry; and carbon credit trading infrastructure. Powered by its proprietary blockchain-enabled technologies, including its Non-Fungible Digital Twin (NFDT®) and Digital Carbon Credit (CNT®) which enhance transparency and traceability in carbon disclosures, we’re propelling the private and public sectors to meet global sustainability commitments. Covering all three scopes of emissions, the Carbon Connect Suite enables companies to have a better understanding of where they are in meeting their sustainability targets and how to best optimise them.
What are some concrete ways to leverage the power of blockchain for climate action?
The adoption of blockchain is strengthened by partnerships and education. Cross-industry partnerships between the green and tech sectors can help promote the exchange of ideas and innovation. Beyond that, it is mutually beneficial to either sector — where embedding cutting-edge blockchain technology can drive integrity, accountability, trust and transparency within the carbon sector; and at the same time, shape the sustainability agenda in the fintech space.
Furthermore, partnerships between the public and private sectors can engender a greater understanding of the promises of blockchain. The public sector can harness the knowledge of blockchain from industry leaders and mould policies that can better support and shape the carbon industry. Additionally, the private sector can also facilitate continuous upskilling of today’s workforce, keeping workers adept in new technologies such as blockchain and building the next generation of thinkers and leaders.
What are 2 key things you find most valuable being a part of Fintech Connect Asia?
Connection and collaboration are two valuable aspects of being part of Fintech Connect Asia. The Summit is also a great opportunity for the community to come together to exchange ideas and innovation. Being able to listen, learn and debate with some of the brightest minds in the industry is crucial to mapping the future of fintech. Beyond that, some of the best innovations are born from collaboration — so, the opportunity to meet other like-minded innovators and thought leaders is paramount to pushing the frontier of fintech, creating better and brighter solutions to solve today’s pain points.