E89 – The Impulso Podcast – WTF is Carbon Accounting?!

ESG, GSG, and carbon accounting are more than just buzzwords—they are key factors in the transformation of modern businesses.

In this episode of the Impulso Podcast, we dive deep into the intricacies of carbon accounting and its impact on businesses with Sam Hon, founder and CEO of CREX, and Shaolin Zheng, co-founder and CTO at NextBillion.ai.

Key highlights from this episode: 

• Carbon accounting is not just an environmental obligation but a tool for improving business efficiency; 
• Complexities of adopting carbon accounting, misalignment between management goals and operational realities; 
• Future of sustainability practices, and the role of data in driving change.
  

Tune in as we explain what carbon accounting actually is, and how companies are integrating it into their operations while boosting profits.

Also available on Spotify and Apple Podcasts.

Featured materials:
CREX | Linkedin
NextBillion.ai | Linkedin
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E86: Luckin Coffee opens 20,000th store, The Impulso Podcast
E76: Starbucks vs Luckin in China, who is winning?, The Impulso Podcast
E70: Succession – successful tech founders’ dilemma 

[AI-generated transcript]

Jianggan: [00:00:00] Hello welcome to episode 88 of the Impulso Podcast. And of course, those of you who are in East Asian culture, Chinese culture, will know that 88 is a very auspicious number. And for this special occasion, Sabrina decided to go off camera, and she’s standing behind the three cameras.

And you also see that we have done a little bit of change to the setting. We have only one mic for three people. That’s not because we’re frugal, but because that I think there’s a bit of operational improvement that we’re doing, which was you will see the effect in the next episode.

But anyway, so let’s zoom into the topic today. Today I have two founders. And we’re going to talk about the topic of carbon accounting and related issues. So first we have Sam, who is the CEO of CREX and I’ll let him explain what CREX is in a bit. You have Shaolin who appeared in a early episode of the Impulso podcast chewing glass.

And of course that explains the life as a founder. But anyway, today we’re talking about carbon accounting. So Sam, why don’t you give me an introduction about yourself and what you do and why CREX not [00:01:00] T-Rex. 

Sam Hon: I’ll talk about CREX first. Okay. So essentially CREX is You can think of us as a climate tech startup, right?

But we are essentially a team of sustainability experts. So we cover topics or expert areas like carbon accounting, all the way to carbon reduction, net zero, right? Of course, that also covers sustainability. It covers disclosure standards like the IFRS, S1, S2 standards and among other things.

But what, one of the very interesting thing that we do is this the world talks a lot about climate change, right? And what organizations need to do is adopt climate action. 

The adoption is the problem. And this is what we do. 

Yeah, so solving climate change is a scientific problem, but the adoption of climate action is an adoption problem.

And so you need expertise, you need a methodologist coming in, you need a management skills consulting skills, and a whole data platform. And [00:02:00] this is what C REX does. Okay, I didn’t ask the half of what you 

Jianggan: were saying. That’s why I brought Shaolin who is, I need to do this myself. 

Shaolin: Hey, hello. This is Shaolin.

I’m the co founder and CTO of Next Billion. ai. So Next Billion. ai is a company in the logistics industry. So we help logistic company to optimize their day to day operation. So we try to minimize, for example, the total amount of distance. That they need to travel to complete a certain amount of orders, which links us to the environment protection.

So we try to minimize the waste. Because we see so many of them. Based on traffic, you should choose a more optimized. Route and based on all your orders, we help you to decide what is the best way to manage all the work you need to do.

So that’s linked me to Sam. 

Jianggan: So essentially you guys are doing something which serves the same purpose, right? Making the [00:03:00] organization more efficient and reduce carbon footprint along the way, or, how do you see these two objectives aligned? Because we speak to lots of people. Give us like a lot of.

I don’t know, vision about Carbon Accounting. . But but still, I feel that lots of people understand it as is an extra step they need take. Which is a burden. And from what you guys have explained before this show that it actually helps organizers become more efficient.

How do we explain that in the, here, that crystal way? 

Sam Hon: So the first thing when I talk to organizations, the first thing I do is I tell them, you know what? Sustainably right climate action has to go hand in hand with your business It has to align with your business. It has to make sense, right?

 So if it doesn’t then you really have to relook your entire priorities who are your stakeholders and all of that, right? And once that clicks and say, you say it has to make sense. Yeah, it has to make business sense. And yes, a line show me how, then we say, okay, as part of reducing the footprint, I could make your organization a lot more efficient.

Routing is definitely one way. A lot of companies don’t realize that. Okay. Just because [00:04:00] you have a lot of like delivery orders and all, you can actually dispatch differently, taking different routes, different vehicles different carnage, different load factor, the many ways to do this.

And the truth be told is that there’s so much science behind optimization, process optimization in all the different fields, mechanical, electrical, and all that that most companies have not fully I would say exploited, and their working crew normally knows this.

They know there’s a, they can go extra mile and get the optimization, but they could never get that mandate from the management, or they could never get the message, right? So that’s one of the things we, we come in, we say, okay, you can get cost savings, you can get better efficiency, you can get better customer service.

At the same time, you now align with your sustainably goals that your stakeholders have been, driving you. To it. And all of that has to click. Yeah. How do you do that? Give an example, right? Example. Yeah. Okay. So I feel challenge. Oh totally. Yeah. There two parts.

There is the strategy part and there’s the execution [00:05:00] part. Okay? Okay. , I’ll start with the strategy, right? . First question is I ask management, who will be, who are your top five customers? What do they care? And if one of your top five customers have already committed to say science based target initiative, which is the UN gold standard for reducing carbon emissions, right?

Okay. If they care, you should care because they are your customers. Next, who are your top five competitors and what do they care? If they do care, you should care because you’re competing, right? If you are the number two, you want to get a number one or if you’re number one, you’re trying to maintain as number one, you should care.

The next thing is that we should have the top five regions that you’re operating. Who are the regulators and what do they care? So now you look at that whole landscape and say, okay, all right, now that you know what everyone cares, you ask yourself inward, what do you care? Okay, and you also ask your staff, right?

You ask your shareholders, you ask your suppliers, you ask your partners what do you care, right? And then you put the whole, landscape together, you put the whole it’s like a cognitive kind of view, right? The [00:06:00] world view, right? And figure out, okay, this is what the world wants.

You look at yourself, what am I good at? What can I be paid for, right? And what I love to do. You Okay, and you know a little bit like each guy, right? All that together is okay. Should I redefine my mission so that my customers could resonate with what I do in my business at the same time they feel good?

Is, are my customers looking for peace of mind? Why are my customers looking to comply? Are my customers looking to be more efficient? What is it, right? And with most companies that are looking to Financially be more efficient, right? Have cost savings and everything, have the best service possible and all of that.

 And I think that is the strategy part, right? Most companies, when we talk about decarbonization, sustainability strategy, they say, Oh, okay. We set a goal 2030. We have our emissions, 2050, we are done zero. And that’s my strategy. That’s not a strategy. That’s a target. A target is just put into place, right?

Jianggan: [00:07:00] So we can tell that we usually said by what? 

Sam Hon: That’s the thing. Most people just take the default target set by SBTI. SBTI has a target science based target that’s the organization. The actual standard, or so to speak, is called the science based target initiative.

They now have a net zero standard that’s even more curated defined, well defined. So basically it says by 2030, you should reduce your emissions by 45%. Okay. And by 2050 you should go to zero. That’s just a target. That’s like the model answer, right? Yeah. And then under the Paris agreement, 1.5 degrees no more than 1.5 degrees increases most companies take that as strategy.

Of course. Yeah. Yeah. Okay, fine. You wanna align with SBTI? Yeah, no problem. Yeah. Yeah. But that’s just a target. The strategy is how you get there, right? And that’s where they, sometimes try their best, some buy carbon offsets and then say, okay, I’m now carbon neutral and you have regulators and you have NGOs coming in and say, nope, you’re not.

So to get caught, what do you mean when not, [00:08:00] the forest, you just bought a lot of credits for a lot of offsets just put up. So now all the carbon that you so called bought or sequestered, has gone back to the air. What are you going to do about it? Is it sustainability is not my core business.

And that’s when they get caught. How can you say I don’t blame them, right? Because it’s so new, right? Okay. My stakeholders are chasing me to be sustainable. So let me do something. They try their best, right? In fact, they pay money for it and good intentions but it wasn’t well strategized and backfire.

So this is the strategy, 

Jianggan: right? We spoke with a with a fairly large company in the last year, I don’t know what they have for me. Asian based company, very large, like a sustainability team. And they told us very frankly okay, two years ago, we, we’re very simple business people, right?

We create a value for our customers. And two years ago, nobody asked us For, but three years later. And what we do realize is that of course, the regulators Yeah. And care about that, a lot of the markets they’re operating in and the customers start to care a lot as well. And of course there’s the media and stuff, so they said, [00:09:00] oh fine.

So if we have to do it and we believe that it’s the right thing and if everyone wants it, so we’ll do it. And of course the question becomes. What are the next? How do I get there? How do I do it without backfire? 

Sam Hon: The simple answer to that is actually quite straightforward.

Use science based methods and back it with data. This is what all Czech people love. Product it with data, show your progression, show the trend, right? You can model it in using any form of algorithm, heuristics, or statistical methods, right? And then I say, okay, my assumption was based on the data, based on the 

trend.

You can fault me for using the wrong algorithm, but you cannot fault me for trying. 

In that case, right? So that’s the straightforward answer. And also the other way is looking at it from a mentality perspective, 

for example, a real estate company focused a lot on safety. Focusing on safety increases costs because of constriction.

So why do they do it? Because condominium buyers don’t love the fact that during the construction of the condo, someone died on site is bad for [00:10:00] business, especially asians, right? It’s bad for business, bad for reputation. So be it reputation, be it operation excellence, okay. Be it cost savings, be it anything, right?

There’s usually a good how should I say a good amount of alignment with the business That will help the business grow better there is this idea that you cannot grow your business and be sustainable No That is not possible because you haven’t aligned your business with sustainability.

Once you align properly, know your strengths and weaknesses, right? Strategize correctly, right? And ask yourself, which are the consumers? Who are the customers and the stakeholders am I resonating with? And then one example for e commerce, for example, and this is to do with something of logistics as well.

There was this so called experiment done. Most people assume that consumers would love the deliveries to be done a lot earlier. And I give them one more eco friendly option. The delivery will reach you with some delay. It will come later. And guess what? [00:11:00] Some customers actually went for that.

Okay. And knowing that same price Really? Yeah, so there’s a normal price. There’s a normal price and then there is the the fast one Which is way more expensive, right? Yeah, so the normal and the delay is the same price They went for the delayed one because if I don’t need it right now, I don’t need it within a week Come eight days to 12 days Maybe 20 days.

I don’t mind if it’s more eco friendly option because the company could pack more in each, dispatch, right? So they save more And yeah, that’s the thing. Sometimes it’s counterintuitive, 

right? And you just have to know your customers better, know your stakeholders better, and then imagine this.

You have this service and you provide it to them. What is the message you’re telling them? What’s the narrative you tell them that, Hey, I have the options. I have thought it through. Okay. But if you truly need an urgent dispatch in three days, by all means, it was same day delivery by all means, but I have the option, eight to 20 days, which is the eco friendly option. 

So consumers , you told me you wanted a company that is a lot more [00:12:00] responsible. I have the options. Show me the trend, show me data, right? 

Shaolin: You talked about algorithm, right? So in our company, the main product is actually an algorithm that helps the logistic.

Platforms to be able to reduce the total amount of distance or time that their trucks have to drive to deliver the same amount of orders. So because how we compete is, it’s very clear. So usually the customer will share a bunch of historical data with us to see how our algorithm will perform.

If we are performing them what they already have today, then it’s very easy decision for them to make. Now I started to hear more ask from them is to say, help us to. Decide, for example, how many you have contribute to the yeah. And then it. We don’t know how to do that, we can tell you what the total amount of distances.

Reduce the no need to drive anymore, but I don’t [00:13:00] know how to calculate. So do you have the algorithm? So what will be the algorithm. 

Jianggan: Is the company we’re talking about? Correct? 

Sam Hon: That’s right. That is 1 way to do carbon accounting. 

Shaolin: Yeah. 

Sam Hon: So, for example the distance is an office one, the further you travel, right?

The more carbon emissions, right? Then we also all assume diesel at some point, right? Not electricity, 

Shaolin: right? 

Sam Hon: So that’s one. Second what vehicle are we looking at, right? 6 wheeler, 4 wheeler, how many tonnes? 3 tonne, 5 tonne, 8 tonne 7 tonne. So that is another factor. Next question, is your batch in a full load, half load, or is it empty truck?

Okay, this is not what a customer would normally ask for. But when we do carbon accounting, sometimes we consider empty trucks. So we ask our customer, how, what are the chances that your truck returns empty? Because that whole carbon emission is totally wasted. So called wasted, right? It is not worth anything, right?

Because there’s no so called production value. If you deliver a whole 5 ton of goods with a, 7 ton truck, that’s fine, right? [00:14:00] So actually those are some of the the ways to get the how should I say get the emission calculated. Because if we use distance only, then basically the shortest route the least amount of fuel 

is the way to go, right?

The vehicle type, the load factor, and then of course the slope as well adds to complexity. 

Shaolin: It sounds like we should add this as a separate measure. 

Sam Hon: It’s not very far off from what you’re doing. Not very far off at all. Like I said, a lot of the reduction methods are efficiency methods. And then ultimately then, okay.

 The complex one that you may not cover it is when my clients say, Hey, you know what, I want to go EV, right? Forklifts or delivery trucks. I’m going to go full EV. I said no, please don’t do that because your entire fleet, when did you buy all these trucks? And when, do you even own the truck?

If your truck is 60 percent very new, less than five years Okay, please continue use them use routing methods to optimize your trucks No, your routes your fleet, right? The 40 percent is really old great replace them And you do a face by [00:15:00] face you don’t you know because the thing is this If you have say half your fleet or more than half a fleet a really new What are you going to do?

Are you going to scrap them or are you going to sell them? If you’re going to sell them, someone is going to burn diesel with those machines, with those cars, with those trucks. To be used anyway and maybe not as efficient. As efficient exactly. So if you look at the whole life cycle and then say, okay.

Probably this is the plan, right? So this is where we help them build a strategy, right? forklift is actually the number one thing they shift us because forklift is not a very long distance, right? But it’s a daily use when you’re warehousing daily use. So you say, okay, I want to go from diesel to EV, right?

And I know that the forklift is within the warehouse. So the risk of, Out of battery, right? Out of electricity is very low, right? Although that’s a little bit of a mini flag, because if you look into routing and all, once you know your travel patterns, you can incorporate the charging within the travel pattern.

Yeah. So the life cycle of the vehicle is probably something that, we can collaborate on, right? And then the charging as well. [00:16:00] Something that we can follow up on. 

Jianggan: But the life cycle of the vehicle, if you sell it to someone else, you increase, of course, the total carbon footprint, if you look at that, the vehicle per se doesn’t change.

But for you as an organization per se will change, right? Because once you sell it away, it’s not only your responsibility and it doesn’t get into the hottest Right? 

Sam Hon: That was where initially a lot of the organization tried to Get away from like responsibility wise. It’s okay it’s no longer my profile or power plant.

But someone is still burning. So you move it from your scope one, your direct emission to a three emission, because you sold like a product to someone else. Someone else is using your product right now and they’re still burning. So in carbon accounting, there’s this concept called three. Yeah.

 And once you sold something to someone else, technically you’re responsible. For influencing. All right. The construction of the vehicle in this case is what we call embodied carbon, right? That doesn’t change whether, I own it or you own it, right? Now, very interesting thing about vehicles.

If I’m like a [00:17:00] antique car collector, I’m actually saving the environment because I bought the car. I’m not driving it. Interesting, yeah. The car has been on the road for 10, 20 years. Someone drove it for 10, 20 years and I’m buying it right now. I’m putting it in my garage. I’m maintaining it well, but I’m not quite driving it.

Great. Why not? There’s nothing wrong with that. 

Shaolin: Then you encourage the manufacturer to produce even more cars because someone is buying it. 

Sam Hon: Correct. So I agree with you. So that problem has to be tackled with regulations. Yes. So the regulatory will come in to say if you manufacture more fossil fuel or combustion cars, we’re going to tax you more, right?

 So it’s two different sides of the problem, but you’re right. If the regulators don’t step in, it will actually encourage the manufacturers to tax you more. To do more of that. Yeah. 

Shaolin: Yeah. So I have another question that go back to the algorithm thing. Because, so when we are helping for example, to optimize truck route, another factor we are always facing is that a lot of truck [00:18:00] drivers, they are trying to fight with their employer, right?

 The employer sometimes try to track their behavior. They try to. Entire track, they use some device to silence the GPS device so that it can do something without a control. So I imagine in this space. Sometimes it will be hard for you to. Really get the real ground truth.

Jianggan: So I should about that. The fuel consumption thing, I think I’ve been in the e commerce space long enough. I know lots of logistic operators and and many of them would tell you that, look, we know that certain percentage of the fuel that as my PO doesn’t get consumed by my drivers.

It gets sold to third party. Yes. And for a long time I did my I either did my calculation or learned my lesson. So to turn a blind eye on this as long as it doesn’t go to a certain threshold. Yes. And when that sort of situation, I think it’s in a way extension to what Shaolin just mentioned.

When that happens, and it’s, it naturally makes the things a little bit extra blurry. Or is there something to add to [00:19:00] this point? 

Shaolin: To us, it’s a technology thing. So we for example, if you can silence 1 of my GPS 2. Yeah. So you silence the 2 install 3. the 3rd 1 will be.

Hidden deeply. Sure. So we are doing this kind of technology. 

Sam Hon: I agree with that as well. Remember when I started off, I say this is an adoption problem, includes change management friction and organization behavior. I haven’t seen any large fleet except for DHL and UPS type of professional fleets, right?

But I’m talking about like a self delivery or, home fleet, where the drivers follow the instructions to the T. I’ve never seen it before. Because they may take a different route because they want to go for a coffee break, all the human reasons kicks in, right? In the solving the adoption problem, you have to consider some of this and you may have to pick your battles and say, okay, I’m not going to solve this one because I’m going to make sure that if I let the guy take the coffee break, okay, yes, there [00:20:00] are emissions.

But then I could get him to adopt something else which will lower even more emissions and I picked my battles. That’s one thing The second thing is technology, right? I would no use ODB to install the tractor into the truck straight away, right? I would use issue company fleet cards So they top up the if you were using a fleet card so I can know how much to top up and how many liters to top up And then using the phone to track.

So we’ve got multiple data points, right? Knowing that it’s not foolproof, knowing it’s still not foolproof. In fact one example, if one of the clients we had was that exactly that example you talked about, which is because we suddenly started tracking, and we talk about tracking where we try to collect more data points in a area that was never picked up before.

So they may have a starting and the ending, right? So that’s it. Okay. We like to track here. So we add one more. And then we found that someone was selling something. 

Jianggan: You would add one more. What exactly? 

Sam Hon: Measure. Yeah. So from point A point B point in point B, at some point we did one more measurement.[00:21:00] 

They realized it was always at this route that you’ll burn more fuel. So it became obvious, right? Yeah. It became obvious. And then that’s where we stopped. We said, okay, fine. Okay. We’re showing you the numbers, we’re showing you the efficiency, we’re showing you the carbon emissions, and we’re not like, investigators and all, so we stop there, but we show the management, okay, you can decide what you want to do, and in that case they did, and yeah.

They found that the staff was doing something it wasn’t supposed to be doing. 

Jianggan: So what did they do afterwards? I don’t know, but it changed the process though. I think once they know exactly what the problem is, whether they decide to do it, whether they decide not to do it, whether they decide to correct, to use this as a bargaining power or something else, that becomes a business decision.

They’re making informed decisions. Yes. I remember that friend of mine used to be the chief information officer of a large I think one of the largest petrol companies in Latin America, not name which country. And he had this situation that systematically people are stealing oil from the network.

 And he told me [00:22:00] that how complex the thing was right in certain places. Okay. They found it. They decided, okay, we need to go and investigate and solve the problem. Certain places, they said, okay our company security guards and the company executive find it too dangerous. So we employ the police to help us do.

That’s their own company that can do that. Okay. And the place is a place that no, we’re not going to dangerous and they asked for the federal army to go there and he said there was a specific gas station somewhere. The federal army said, no, it’s too dangerous for us. 

Shaolin: Whoa. 

Jianggan: So that kind of solve the complexities of the suppression.

In some places. You have all these issues. It’s not pure algorithm, pure efficiency. It’s soft, but at this makes you more informed so that you can decide what to do about it. Exactly. 

Sam Hon: Exactly. More management. I’m not looking for straightforward solutions. They want visibility. They want data, right?

That’s the first step, right? First step to any form of data transformation or digital transformation. And then they can ask themselves, what’s [00:23:00] the risk that you go back one step more, right? Once you hire risk management, okay. It’s a black box because I cannot measure for some reason.

I cannot mitigate the risk. It’s still there. Can I contain it? What do I do? Is this worth the business? All right, you start looking at that and then you say, okay, maybe it’s not worth the business 

Shaolin: Yeah, what happened? We are actually in an awkward, position so because a lot of the time so for example somebody tried to destroy those technology, destroy your tracker, destroy fake their GPS, right?

And then they will blame us because when their boss try to blame them, they blame us because we provide the technology. They say it’s not us to blame them. To make something is their products is not working. So a lot of the time, it’s very hard for us to, defend ourselves to prove that it’s actually a good technology.

As I said, we need to add more data points to support that. Yeah, our conclusion, 

Jianggan: so maybe add some pant to your partial pen to a device. If someone destroyed [00:24:00] that it’s the pant that this person will be standing.

Sam Hon: The idea is to fully embrace adoption issues, right? Friction, human behavior, change management issues, and technology is one way to do that.

And this is where I think as a company. It’s very interesting because a lot of the deep tech companies, when we talk about decarbonization to provide solutions, right? 

And what Shaolin has mentioned, you provide a solution. And if the organization, not the management, if the organization rejects it, because there’s some form of friction, you now.

Have to, you have to play defensive role, right? Whereas in company accounting or in the way that we do things, we come in as a consultant. Because our platform works like is used by consultants. So we also come in as consultants. So a lot of times we do what we call the baseline assessment, which is sometimes like an audit.

So it helps because you didn’t go bottom of the top bottom. Because top bottom, you go audit mode. I said, okay show me this. No, can I, no, can I sit down with you in the truck for one day? You do [00:25:00] stuff like that. And then you ask your management, what are your goals?

 What do you think was the ideal outcome? And then you look at the, what’s on the ground, what are the records and everything. And we talked to IT and operations and all, and then, so we sometimes can provide insights to solution providers and say, okay, this is how we can connect together.

So let’s use proxy metrics. If you cannot measure directly, you can use proxy metrics and stuff like that. Yeah, it’s very interesting because I studied computer science because I want to avoid all the human related problems. To solve technology, we have to understand humans, which is quite interesting.

 So a lot of the issues that I try to solve for organization in the adoption problem is understanding humans, understanding organization behaviors and setting goals and stuff like that. And I agree, we have to agree on the fact the working level, the crew may not resonate with the management goals.

A lot of time, the CEO has a vision, [00:26:00] right? And he tells everyone, today, from today onwards, we’re gonna do this. The crew will be like, Okay, what does it have to do with me? How do I gain from this? And stuff like that. You’re changing my behavior. So there’s friction, there’s change management issues, right?

Change issues, right? Change resistance. So that has to be communicated to the management, to the CEO as well. Okay. It’s not only about communicating your vision better. You have to show why, apart from rally, why the team has to follow you. And then get the team to, be, if you’re on the same ship, go with the same way, what are the incentives, while the patented, if there’s any needed required because the company will be penalized by regulators, for example, carbon tax coming in and stuff like that. Yeah. So explain all of that properly and then go through a proper change management if need be. And then things will get better. It’s not perfect. But it will get better, it’ll get better especially in this case, for example, if there is a serious issue and it’s a core function of the business to deliver goods and they just cannot optimize that part and [00:27:00] they feel the burden, feel the pain is too much for them, then we actually would recommend an alternative options outsourcing a little bit of that, stuff like that. So there are companies that I know. Use three fleets, two outsourced, one internal, yeah, and then it compare, right? And then you give incentives to the internal team. You can match. Those guys, right? Then first of all, I don’t have to pay the outsourcing company. A lot of those money can be saved and I pay you guys.

 So that’s how we work out the so efficiencies and cost savings is not just, deepening the pockets of a company and potential shareholders. This is also something to do with it goes beyond sustainably, but it’s the human factor. So the key question to management is that.

How much do you want this? 

Jianggan: So in that way, it’s it’s interesting that you felt forced by whether your customers, whether somebody’s on a value chain, up a value chain or regulators for you to actually be, I don’t know, have some kind of content. It’s opportunity for you to leverage this to push for some internal audit [00:28:00] in a way.

Sam Hon: Yeah. Yes. And then of course we don’t position as an audit, call it baseline assessment. And sometimes I’m okay with it. Some companies say, no we think of it, 

So for whatever reason, we will do whatever they’re comfortable with, but we highly recommend they do it. Because like I said before, good intentions, bad execution, right?

 So sometimes you want to reverse that before you get caught it. But again sustainability is not really a we should never use the fear, uncertainty, doubt. In getting the adoption, right? I understand a lot of my, peers are going in with the idea that, oh, if you don’t do this the regulators will chase after you.

You have to comply at some point and you’ll be taxed. And yes, if you do that, the companies will comply and they will stop the compliance. The compliance requirement is just disclosure. No improvement required. It’s just disclosure at the moment. Okay, so I don’t think we want that, we want the company to think properly, and don’t rush into it. Okay, if I [00:29:00] want to do this, and I want this outcome, I think we need a 3 year hit stop. Okay, first three years. We don’t expect much But eventually we’ll reap the rewards and say on the fifth year, for example, right?

I want to do this correctly, right? So they don’t feel forced to do it so and this is the same as the problem we talked about at the working level as well Management, they’re actually the same. So if the working level is part of the solution they tend to adopt it Because they were involved in the solution in the first place In the process, right?

It wasn’t some executive who never drove a truck and say today always you have to do this. That’s tough, right? That’s tough to get a bit of resistance, right? So it’s really finding a narrative. Internally, externally, right? Internally, it could be a, our competitors are doing this.

They have been grabbing all these contracts that we wanted. But is that a fear? Competitiveness, not fear. Okay. Competitiveness. Yeah. But I see what you mean. 

Jianggan: I was recently reading a book called how to [00:30:00] win the information war. And it talks about the British government’s propaganda effort during the war.

And it was very interesting that initially they were using they were doing the radio to the enemy side, try to rally the people to not support their government, which I think today is very relevant in the world right now. But the thing is that they said they used effort to try to get people to write it to a course.

It doesn’t work. They try to instill fear about people. It doesn’t work. And eventually somebody will call the mechanic saying that, Hey, we’ll figure out what these people want to do, which is for their human nature. And we justify this for them. Oh, I see. We justify for them because that’s much easier to match their behavior compared to, you talk about something which is not in nature.

Yep.

Sam Hon: I think a lot of it is if you want change, you need to understand human behavior because if it’s nothing to do with humans and a piece of software, we know it’s easy, right? Upgrading a piece of software is easy. You don’t need human intervention. That’s easy, right? But change your organization, behavior, structures, and [00:31:00] goals and everything.

You have to fully understand. What the company is, the people within your organization, what’s their DNA. And if you ask any CEO, most of the time they will say, yep, I think I know my people. I think the DNA we have is 90 percent of what we want. That’s 10 percent more to go. There’s always a little Delta, right?

 And then you ask yourself, okay, since you have this new goal, new direction, you want to be more sustainable as part of a business, right? Okay. So we need to steer your people to us. That and then therefore you now have the mission to understand the people.

Now you have to revisit who they are, understanding what their current DNA is and figure out what’s the ideas. 

Shaolin: When you talk about human nature, right? So for example, take myself. When we finish this, I go back to my home. I hope my room temperature should be the best that as I want, it’s supposed to be something like 21 Which means I need to either keep my air conditioner running all day.

 So that’s my human nature. [00:32:00] So take into account the price of the electricity in Singapore. So usually I turn them off. That’s also my human nature. In this, the carbon accounting industry, so how human nature is it helping or not helping? 

Sam Hon: Yeah as with all things, sometimes the different requirements, different goals, conflict with each other, And then you don’t get a solution.

Sometimes they just look really challenging, but there is a solution. The three solutions to this example, which is a very common issue that I also face, most of us face. The first thing that we can’t do too much is the insulation. We can’t tell HDB to insulate the walls better. Okay. So that’s all, at least for now out of our reach.

The second one is how we control the HVAC side, which is the heating, cooling portion of it. Yes, we want to save money. 

Okay. We want the room to be cool, right? So we want to be company efficient. We want to be cost efficient. That’s the goal, which is great because you’re not saying I want my room.

[00:33:00] You don’t suddenly go to say, I want to turn on my aircon for a couple of hours. So the first step is to move away from those, goals and go for something very tangible and magical. I want it to be cool. I want to save money. And then you say, okay understand that if this was a factory, right?

Okay. I can use this as an example in a residential to find out why is your home heating up humidity. So humidity is to do with amount of water moisture in the air, right? So if I were you, I would set the air con at about 27 degrees before the sun is fully out. So I regulate my temperature to about 27 degrees.

Once it hits 27 degrees, I switch to dry mode. I remove all the humidity from the room and therefore I can keep The aircon on as long as I can without the compressor going to overdrive because you set it to 24 degrees 25 degrees, right? Especially when you’re back in the home It’s all hot now.

It’s 31 degrees 32 degrees right in indoor, right? And you have to push it down to 22 24 degrees, right to correct compensate, right? You can’t have to over compensate for half an hour one hour, right? And then the [00:34:00] compressor goes in overdrive But if you say 27 degrees, the 20, the closer you are to the outdoor temperature, right?

 The less the compressor has to work. That’s the first point. The second point is how much does it have to work to maintain the degrees, right? That temperature, right? So one of the example, or in fact, a guide I give to my friends is that instead of 27 before, 12 o’clock before like maybe 10 30 11, it’s fine.

Once you feel that the room is Quite where you like it to be switch it to a dry mode And if you don’t want the fan to run too hard put it to one right but just be careful that dry mode With fan set to number one it will condense it within the pipes. So you have to maintain it well. Okay. But that aside, okay.

That aside. Okay. You can maintain a very cooling place for hours and hours in the day. And then at some point, usually by 5 PM, 6 PM, you know what? We turn off the AC and you’ll last for a couple more hours. 

Jianggan: It’s pretty cool. Yeah. That’s interesting. That looks at a household level, but I [00:35:00] think the industrial level, there must be lots of this use case.

Sam Hon: Just yes. Examples. Yes. 

Jianggan: Yes. If you can explore and say that, okay, here I can actually drive more efficiency in my industrial setting. 

Sam Hon: Correct. It is similar to this, right? Similar to this how pipes are designed, where do you lose your heat, where do you lose your electricity, right? So if it’s heat and oil, you’re looking at thermodynamics, right?

If it’s electricity, you can look at wiring, you look at electricity loss, and then we look into mechanical, like a machine has a data sheet that has a certain operating parameters, right? For example, you will vibrate with a certain amount of decibel sounds, if it spikes, if it, operates in a very odd manner out of this operating range all the time, or is that a hundred percent, 80 percent capacity all the time when you know the production unit is a 20 percent rate, something’s wrong, right?

So you need that few pieces of data. You need to know how the operating parameters, you need to have the sensor. On the machinery, you need to know how much you’re producing, right? It’s all data. Once you have that, you draw the graph. The anomaly is very clear. And then we don’t even need to come up with solutions.

We can go to the ground. No, we [00:36:00] saw this, right? And most of the time, the chief engineer, the experts on the ground was like yeah. If that’s the case, that means there was an inefficiency somewhere, right? And either they will choose something or they will call in the, Equal manufacturing

who would have a solution for that the end result, the outcome is with the data, we allow the working crew or the management to make decisions.

And then they optimize the process, optimize the environment and they lower emissions. And, but when we present to Dimash, all the cost savings. 

Jianggan: So basically, all the technology is there and what you need to do is And as well as, how to translate all this different parameters into something more tangible and comparable.

Sam Hon: So there are very few how should I say carbon reduction methods that, or should I say there are very few yeah, carbon reduction methods that is not involving some form of change process. Or efficiency, right?

I think these are all the reduction methods, right? [00:37:00] The first one is obvious. The first one is change of energy source, change to renewable transition. That’s the big one, right? But you may not have the option on hand because of grid. Electricity may not provide that to you. And the next thing you want to do is change your material, right?

A more eco friendly material of a more sustainable material. Like aluminum is a very good example, right? Versus plastic, right? Aluminum is definitely way more recyclable at 90% Versus plastic. Plastic, because collection is a problem. 

Jianggan: Now what does glass, sorry, how does glass fit into this picture?

Sam Hon: Oh, glass. If you have a very high if you use returnable or reusable glass and you have a very high reusable rate, the industrial number that was given to me was what, 25 times. If you reuse glass at 25 times, you can’t break even. But on the ground, we have seen cases that it goes up to 80. It’s a pretty good ROI.

 So now each of this, any of your audience would straight away say, Oh, there are trade offs. Yes. And that’s what we do. Aluminum, you have to bear the smelting process of the first, sorry, [00:38:00] not smelting the rolling process, the mining process of aluminum first time, right?

Then you melt it again for a second time, right? Plastic is a lot lighter to transport, right? Goods, right? But collection is a problem. Therefore, recycling is a problem, right? The mix of plastics. Which is a very common thing because of the nature of plastics, right? Makes it harder to recycle a problem, right?

Glass nearly indestructible. If you know how to design it, you know how to take care of it, right? But it’s heavier, right? To transport, right? So you ask yourself, what’s the distance? Who am I transporting to? What’s the frequency? What kind of goods am I holding? You use the right tools for the right job, right?

. So that’s . 

Shaolin: What kind of glass can reuse 80 times , 

Sam Hon: Coca-Cola, like a soda bottle. You’ll be very surprised when the whole industry move from glass to pet bottle, right? 

Shaolin: Yeah. 

Sam Hon: Plastic, right? Pla plastic, yes. PET, right?

The people who design glass bottles and the science of it, the shape of it, where does the contour happen, which part of the contour should be thicker, and stuff like that. But that’s coming back again. [00:39:00] Because people are now looking at glass and said, okay, you know what glass is easy to recycle because once I collect it, when I’m done, 80 times, I crush it.

I put it back. It’s glass again, especially if it’s a non colored glass, clear glass. So now it’s into the design because if I know how to design a contour and how to design the bottles, such a way that the parts that will knock together is hardened and minimal, I can reuse the glass as long as I can.

Yeah. So that’s one good example. And another example is A more residential home example. If you go to supermarkets, most of the food today is packaged using some form of plastic, aluminum film, plastic, right? Or just plastic. 

Shaolin: Okay. 

Sam Hon: The reason for that is because it’s light and it extends the shelf life, especially plastic with aluminum film.

But it’s nearly at this point in this part of the world, very hard to recycle because it’s hard to split that material back into its original form. Yeah. One of the companies, our Australian companies have done, school has done is that they sell [00:40:00] you. Food and everything in a container you go there you take a craft paper kind of a bag and you use a scooper Whatever you want and wait Now that bag doesn’t last very long and they tell you that if you want it to last longer you buy a jar from them And that jar will last forever so Watson’s has the same idea now you buy the bottles and then you pump your shampoo So going back to the old days in what generation we’re doing 180 degrees U turn back to the old ways of doing things.

This is just way more sustainable. 

Jianggan: And of course, the reason we also see that there’s a very different consumption power of different consumers. So it’s true. So obviously, plastic works in certain places because, just to say that if the fire ever added in Indonesia, if you just bought a glass and you recycle everything.

It just doesn’t make sense. But on the other hand, I realized, when in Singapore, I’m going to, you want to see the glass bottles. I really see those worn out glass bottles but in Bangkok, I see that a lot, right? Yes. So you go to a hotel to give you the water. That the glass has been used for a long time.

You buy the bottle of water from outside. You will [00:41:00] see obviously recycled glass because there’s the rain. Yeah. 

Sam Hon: In Singapore, we probably. I’m not sure, not really sure. Singapore would probably use the, what we call a single use class, which means it’s designed to buy, consume and throw, which is quite a waste, right?

So we’re having glass bottles because the collection is a problem. The collection is recycling. So you need a whole infrastructure, right? So that adoption problem is the same as the same as EB. You need some form of infrastructure before you can adopt. 

So you need a lot of planning. You need to know why you’re doing this, right?

 And so where does reusable glass bottles say, for example, soda, right? Soda drinks come into play. If I deliver to a restaurant, I make five trips, six trips, 10 trips a week. I can do that. The restaurant owner said, yeah, if I get a refund of 5 cents per bottle, I will do this. I will collect for you.

Actually beer bottles is very common. So that’s already that. But you’re right. There are use cases where plastics are [00:42:00] better, right? So the plastics, there’s only two problems to be honest. The first problem with plastic is the microplastics and the meeting, if you put into a landfill, right?

So you have to properly process your waste, right? So it’s about waste management, about recycling, right? The challenge to that is the product must be designed to be recyclable, right? If it’s designed to be recyclable, it’s tough luck, right? The second problem with plastic, and this is more of my personal opinion.

Just my personal opinion is that plastic is a petrochemical byproduct. 

Every kilogram of virgin plastic you use means something was extracted from the ground. from crude oil, which means indirectly, I would assume that the price of plastic indirectly subsidized. crude oil. Oh, not crude oil, diesel, petrol.

If you remove that from the equation, I think petrol and diesel will go up a little bit, which will make the adoption to solar or other renewable energy a lot more fair, right? Level [00:43:00] the playing field a little bit. So that’s the second part of plastic. Now, if I could probably collect the plastic, if I could recycle the plastic, right?

Is plastic good material? Yes. It’s actually a very good material. Plastic is useful for a lot of things. It’s brand light. It’s very malleable. You can shape it. You can recycle it, stuff like that. So it’s really how we design the products and how we recycle the plastics, how we manage that part of the process, which not many companies are very good at.

 And the society as a whole, not very good at just a this is not done by any independent statistics. It’s actually done by. Beverage factories or manufacturers, so to speak. They actually, not even that, it’s actually they are suppliers. Apparently the, if anyone were to see or use a aluminum can, the consumer instinct is to recycle.

If they think it was a plastic bottle, they throw it. No one knows why, I don’t know why. But the plastic is actually recyclable. Yes. So consumer behavior has this, yeah, needs to be educated, needs to, [00:44:00] we need to push them towards, apparently the collection rate for aluminum cans is higher.

Because people know it can be recyclable. Really? Oh, they feel it’s expensive. So I better recycle. It’s important resource, right? Whereas I think, I don’t know, actually, I don’t know why, but that’s one of the things that I insights I got, this is not published by any big statistical folks and stuff like that, because I’m not quite sure if anyone has done the study, but this is coming from suppliers and I felt this is a very interesting insight because there’s nothing to do with the recyclability and. It’s just consumer behavior.

Shaolin: I think when I was a kid, a lot of recyclers near my neighborhood, they will try to collect this. Oh, yes. Yes. But they don’t accept. Things like plastic, right? So that’s when I was educated. You’re right. You’re right. 

Jianggan: You just have to do with it with a cost, right? If someone clicks, 

Shaolin: at the moment, 20, 30 years ago, we try to recycle everything.

We try to get every single set. That’s true. We try to [00:45:00] everything that can be refunded. We will try to push it every single piece of papers, all of this. Some of the glass, like bottle of beer. When you were a kid. Okay. Yeah. Never plastic. So today for me, it’s also, I learned this plastic now 

Sam Hon: can connect the dots, right?

There must be something about aluminum or metal or glass. 

Jianggan: I think you see that even for Shaolin, who presumably is very informed. He doesn’t even know that much that plastic. I didn’t know that either. So I’m not sure. Cool. So when I look at it, I’m not sure whether 

Sam Hon: I want to read up more on this.

If there’s any reports, I want to learn more if it to validate or what I read up, I had to be sure. But those are the stuff that we really need to know consumer behavior, right? If the consumer behavior does not align with the facts, if the science we need to educate. We need to encourage, we need to incentivize, we need to do whatever it takes.

Again, back to the organization that is doing, that has a sustainability at its core, how much do you want this? 

. 

The more you want, the more you want this, the more you need to educate your stakeholders. Your customers. 

Shaolin: [00:46:00] Yeah. 

Jianggan: But then again, so we mentioned, of the very beginning that, okay, how much your supplier want, how much your customers want, how much what do the regular amount and what is stakeholders, and we talk about education is needed.

As long as you have this transparency, you can give it up to say that, okay, the education costs, suppliers should bear this, customers should bear this cost and the manufacturer should bear this cost. And the government should maybe bear this cost. 

Sam Hon: Yes. So you’re right. Once you know what your stakeholders care and where they are in terms of knowledge, And then the Delta is what’s called premise.

As an organization, if I want to educate the different stakeholders different stakeholders require different primers, right? Primer is like really like a crash course, right? Why does it matter to you? What are the facts and what you can do about it and stuff like that? Why does it affect the environment?

Whatever, right? Yeah. So you go with a primer and sometimes it is true. You have to prime your regulators. The number one way to prime regulators is to [00:47:00] share data. They can’t make policies if there’s no data. Simple, right? How can they put an article, passed by parliament or any government in the world to say that you must do this if they don’t have a data to show that it can be done?

They have to be, they have to be in ways, right? We’re not telling them what to do. We’re just showing them data. So I think that’s, even regulators. Yeah.

Shaolin: I think sometimes it’s hard for them to actually have the data. I remember a couple of years ago when the bicycle sharing is very popular in China, right?

The government try to understand how many of them on the street. And the situation is quite funny. When everyone is propaganda to the investor, to the media, they say, we have this amount of bicycles. When they report to the government, they have to share a totally different one. Because government somewhat some of the time do not want them to over overreport?

No to deploy too much too a city. I see. And then the government. Collect data from 10 company, and then you add what they say to the media, very different answer. Finally, , so we work [00:48:00] with some of the consulting company. So they finally, they figure out the technology using Bluetooth, because every single bicycle they have a Bluetooth based their lock is Bluetooth based and government deploy a lot of that, so that we can talk to the bicycle and then they finally get the number.

 It’s again, at the beginning, it’s very hard for them to really. Get the data and then technology plays a role. 

Sam Hon: I totally agree. 

Jianggan: For this. You get exactly where the bikes are, right? You run a bicycle, someone just 

Shaolin: how many bikes there are? No, they pre plant those beacons. So they plan every.

Maybe one is a very 

Sam Hon: good, 

Shaolin: Yeah. And also it’s the interesting technology is that every, actually every single bicycle, they have a protocol when your phone, your, their app talking to their bicycle, there’s a certain type of. Protocol. So the beacon, they deployed the knows how to identify [00:49:00] which brand are this.

And then finally they get a very accurate number, total amount of bicycles, the distributions, and now they can manage it in a very good way. So this the region, you cannot deploy too much. If deployed too much, you have four hours, you need to remove them. Everything now operates quite smooth. 

Sam Hon: In this case, it’s similar in some ways.

The bicycle operators probably don’t want the government to know too much, right? There’s a little bit of a conflict of interest there, right? They want to run a business, right? In today’s world, most corporates, they try not to dis, over disclose. Know that you’re meeting carbon and stuff like that for fearing that the government would text them so we’re in that awkward situation, right?

Yeah But regardless if there’s a way someone can share or the data to regulators to governments It will really help make because in the same right in that case The China government was actually able to manage the situation well, right? So we have to provide the data. 

Jianggan: So for the bicycle case, there’s another complication.

[00:50:00] I have some friends in the bicycle industry. Is that obviously you want to know how many bicycles are produced and shipped, right? You go to the source, right? Go to the manufacturer and say that. Okay. These guys, ordered how many bicycles and it’s shipped to which city, but there’s one challenge is that the local government or the bicycle manufacturer in towns and the government of the bicycle actually are deployed.

They have very different incentives. That’s true. So those are hosting like the bicycle manufacturing plants. They care about local employment. They cover tax. They care about this. So for them, it’s like as many bicycles as possible. Exactly. 

Sam Hon: So in political science or policymaking, like really have to understand. I said it’s human behavior, right? But it’s really alignment of interests, right? Alignment of interests. Once you get that done, more an art than a science. Now I’m supposed to talk about a lot about science and carbon accounting, right? But I keep going back to the point because it’s an adoption problem, right?

The science is there. We have the technology. We have the science, the methodology. We have the right [00:51:00] standards. We have, yeah.

Jianggan: It’s interesting it’s three of us studying computer science in university, and now we’re talking about human beings. Okay, any kind of thoughts there? 

Sam Hon: I think the topic today is carbon accounting, right? And I think maybe I can give, your audience a one on one, right?

What is carbon accounting, right? In general the idea is very straightforward. So you run a business, right? And then you have a number of business activities, right? And each of your business activity will translate to a carbon emission. So the way to calculate that is to take your business activity, multiply by what we call emission factor, and then you get your CO2e carbon dioxide equivalent, right?

Measured in tons or kilograms. So an example of that, I have traveled say, X number of kilometers using X liters of diesel. This is a very easy example, right? So I multiply that by the diesel emission factor, right? If I know the national number, fantastic. If I know the petroleum company that has refined the diesel even better, right?

If not the [00:52:00] UN body IPCC has a global standard for that. And then I multiply by the factors. Now I have your CO2e, right? So you do that for all your business processes, right? And eventually you get to a total number. And then we also put those numbers into three buckets, one, scope two and scope three, right?

Scope one is your direct emission when you burn fuel and stuff like that, you use a diesel generator, for example, right? Your corporate car, all your Refrigerant leaks and stuff like that. And then scope two is your electricity, your utility, right? Anything that you buy energy that you buy from utility, it could be heating, right?

It could be electricity, right? And then scope three is, Everything else, right? Stuff that you import from overseas, you lease a car, for example, you lease a machinery that you have no control over. Someone comes to service you, right? You produce a product and then you sell to someone else.

 This is a big thing for car manufacturers. You design a car and then you Your consumers are now driving the car burning diesel, for example, right? So that’s your scope three because [00:53:00] you influence that as well. For banks there’s something called the finance emissions, which is scope three cat 15 category 15, which is, a large part of what a bank’s company mission is really not the buildings, the paper or the credit card issue.

It’s really the money they lend out to who are you lending to, right? Are you lending to a solar farm manufacturer infrastructure operator, or are you lending to say a, Oil and gas company to open up or drill more oil wells, right? If you’re learning to an oil and gas company that is trying to decarbonize, that’s fine.

That’s not a problem, right? If you know the exact purpose, we call it project financing, right? If you know the exact project, that is fine, right? The category of company does not matter, right? So that’s finance emission and the UN IMF that now, tracking down. Most banks, right?

And then they say, okay, who are you lending to?

Shaolin: So for me, so first is I really appreciate, so Sam, what Sam has shared. So it’s a very informative session for myself. So now I know that we are actually scope one provider. So we help the companies that we. To who [00:54:00] has the need to optimize their logistics, their deliveries. If you have such need, you can come to me and Sam will help me to prove that it’s really efficient.

Jianggan: Yeah, it’s very interesting. I think every time I talk to the both of guys and get more and more clarity about the content and this is obviously you guys know so much noise. Around that. And I do hope that the audience that you get some clarity here as well. And I do think that the two guests are open to any questions that you might have.

Just feel free to reach out. Oh, I think that’s it. Thank you for tuning in to the impulso podcast by Momentum Work. I hope you do like today’s session and do follow like and forward. Yeah. And see you next time. 

Shaolin: Bye.