NIE 2023 | Singapore MVGX Zhang Yixiang: Fintech, Accelerating the Construction of a 'Digital Carbon Reduction' Platform

Zhang Yixiang pointed out that under the background of 'dual carbon,' carbon reduction has become a new challenge faced by many industries. Most leading companies have already made energy conservation and carbon reduction a long-term goal for their development. Even non-leading brands, as long as they are part of the supply chain systems of these enterprises, will ultimately face the requirement to provide carbon footprints. Currently, overseas capital markets have successively required listed companies to disclose ESG reports. Therefore, carbon reduction has become a new test for the development of many companies, especially manufacturing enterprises.

Zhang Yixiang stated that the prerequisite for an enterprise to reduce carbon emissions is to clearly inventory its carbon footprint at both organizational and product levels. The challenge in this task lies in not increasing costs too much while inventorying the company's carbon footprint, that is, how to balance energy conservation and carbon reduction with cost management of the company. One solution is to save operating costs through energy conservation and carbon reduction, thereby offsetting the investment in building a carbon accounting system.

Digitalization is the foundation for enterprises to reduce carbon emissions. A carbon ERP system refers to the integration of an enterprise's existing ERP system with a carbon management platform, enabling direct access to required data from the ERP system, and then generating a carbon footprint inventory report based on this data. The current common model is to hire consulting companies to help with carbon inventory, followed by obtaining carbon verification certifications from third-party certification bodies, with the entire process mainly involving manual operations. In the future, the market expects the emergence of a robust carbon inventory ERP system that can help small and medium-sized enterprises reduce the costs of carbon management.

Zhang Yixiang introduced that the end-to-end carbon management and carbon trading digital platform independently developed by MVGX Technology Company includes a Carbon Management System (CMS), Carbon Rating System, Carbon Credit Development System, Carbon Credit Registration System, and Carbon Credit Trading System. It provides various solutions to customers such as enterprises, governments, and institutions, including platform development, solutions, ESG, CBAM and ISSB consulting, multiple cloud hosting options, on-site implementation by customers, and technical support.

Among these, the application scenario of enterprise carbon management systems (CMS) is the most extensive, including three major modules: carbon footprint (CF), carbon credit (CC), and carbon neutrality (CN) management. The Carbon Rating System is an important supplement to carbon management systems. The carbon rating needs of enterprises include the rating of the enterprise's decarbonization process (Decarbonization Rating), the quality rating of carbon neutrality (Carbon Neutrality Quality Rating), and the carbon credit rating (Carbon Credit Rating). Projects that generate carbon credits include the construction of wind farms, centralized photovoltaics, and forest carbon sinks. The Carbon Credit Rating System provides an important basis for MVGX Technology Company's subsequent carbon credit development system, carbon credit registration system, and carbon credit trading system.

Zhang Yixiang believes that when constructing a digital carbon management and trading platform, the following issues should be given priority consideration.

The first is the integrity of carbon management and trading platforms. The platform should adopt ISO international standards (ISO14064-1/ISO14067 Carbon Footprint Standards and PAS2060 Carbon Neutrality (CN) Standards), rather than using standards developed by individual industries or regions. This will enable the carbon footprints of our enterprises and products to gain widespread recognition.

Secondly, carbon trading often involves security issues related to platform customer data and transaction data. This is because carbon trading has a very strong financial nature, and therefore, carbon trading places high technical demands on the trading system, requiring the adoption of proprietary blockchain technology: to make transactions transparent, tamper-proof, and traceable. It should also be able to conduct technical tracking and ensure the completeness and compliance of the carbon credit formation process, as well as the verification of carbon footprint and carbon neutrality. Carbon trading platforms are also required to adopt high-tech solutions to avoid double counting and reusing.

Thirdly, carbon management platforms should also pay attention to their inclusiveness. For enterprises of different industries and scales, it is necessary to consider their ability to bear additional costs. For developing countries, we need to support their governments at all levels in protecting and improving 'carbon sovereignty' and 'carbon autonomy', valuing and protecting the carbon credits generated domestically to ensure the 'carbon emission rights' required for subsequent economic development.

Finally, carbon trading platforms need to pay special attention to their compliance. Especially when involving cross-border carbon trading, it is necessary to be mindful of related regulations such as 'anti-money laundering' and a series of complex issues related to cross-border foreign exchange management controls. When building digital carbon management and trading platforms, financial technology means should be utilized to ensure that carbon trading operates within a regulatory and compliant environment.

Green finance enables enterprises to reduce their financing costs while achieving carbon neutrality, enhancing their reputation, fulfilling ESG responsibilities, and more. 'Whether it's green business or carbon management, it's not just a cost for the enterprise. As long as it's operated properly, it can help us reduce costs and even generate benefits,' said Zhang Yixiang.

The company was established in Singapore in 2018 and is a licensed financial holding company authorized and regulated by the Monetary Authority of Singapore. It has been awarded the first place in the 2022 Singapore FinTech Awards.

The MVGX Group has four subsidiaries. Among them, MVGX Technology Company provides carbon management and carbon trading tools, including carbon footprint inventory, carbon neutrality process rating, carbon credit management and trading platforms; MVGX Green Exchange focuses on voluntary carbon emission reduction/carbon credit trading markets, as well as the secondary market issuance, trading, and custody of green asset-backed securities (ABS). It holds financial licenses as an 'Approved Market Operator (RMO)' and 'Capital Market Service Provider (CMS)' authorized and regulated by MAS; MetaComp Payment and Wealth Company holds a 'High-Level Payment Institution (MPI)' license issued by MAS, capable of handling high-value and complex payment services such as cross-border payments; Green Capital is a private equity fund in Asia focusing on green impact investment, with a particular emphasis on equity investments in outstanding growth enterprises driven by green technology.