Big tech in talks with new SGX-backed carbon offset trading platform in S'pore

An Amazon spokesman said the firm supports the sustainability efforts of customers such as DBS Group Holdings. PHOTO: REUTERS

SINGAPORE (BLOOMBERG) - Some of the world's largest technology corporations - from Google to Microsoft and Amazon - are in talks with a new carbon offset trading platform in Singapore that would be among the first to be backed by a public stock exchange.

The tech giants may use Climate Impact X (CIX) as they strive to meet "ambitious" targets to become net-zero emitters, Ms Herry Cho, Singapore Exchange's (SGX) head of sustainability and sustainable finance said in an interview.

Ride-hailing firm Grab has also expressed interest in the trading venue that is set to be launched this year, she said.

Companies with net-zero or even net-negative ambitions are quickly realising 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.

An Amazon spokesman said the firm supports the sustainability efforts of customers such as DBS Group Holdings, which is also backing CIX.

Amazon has no plans to purchase offsets in the region at the moment. Microsoft and Google declined to comment.

Grab support

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," a spokesman said. "We look forward to more details when CIX is launched."

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 cannot immediately be slashed.

Singapore last week 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 do not actually remove carbon dioxide could give companies a way to claim they are carbon-free without undertaking costly work to reduce planet-warming emissions - resulting 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 bourse.

Unlike carbon credits, which give the holder the right to emit carbon, carbon offsets are projects - from forests to solar power - that counterbalance the use of fossil fuels.

While not among the world's biggest carbon emitters, tech companies have a sizeable footprint thanks to energy-intensive data centres. As at last month, of the 10 largest American companies by market value, only four had announced plans to reduce emissions to net zero by 2050 - all of them 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. The new platform is also backed by Singapore's investment company Temasek and commercial bank Standard Chartered.

Verify projects

CIX will create a rating system for participants based on existing sustainability gauges such as the Gold Standard and will also use satellites, artificial intelligence and blockchain technology to verify the integrity of projects. The aim is to trade products such as futures and other derivatives on the exchange, said Mr Lee Beng Hong, SGX's head of fixed income, currencies and commodities.

The platform will operate at the scale of a start-up initially, and is hiring at least 20 people across areas such as tech, operations, legal and sales.

SGX is helping the CIX management "set up the exchange's infrastructure and marketplace" together with the other partners, Mr Lee added.

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