In an interview with e27, Michael Sheren, President and Chief Strategy Officer of MVGX, explains that there are two actions that we need to take in order to transition to a more sustainable business model, as part of our effort to tackle the impact of climate change.
“The entire global economy needs to transition to a more sustainable business model. That means–at the very least–being able to produce every car, every toaster oven, everything we make, and every service we provide, without using carbon. As you might have known, most countries are still highly dependent on on coal, which is the single largest cause of carbon in the atmosphere. But what is interesting is that, [there are also] mangrove rainforests in the oceans that adsorbs carbon,” he says.
“So, the two biggest things that we need to do in helping move towards sustainable finance, is to find ways of financing substitutes for coal, be it solar, wind, tidal forms of energy, and secondly, provide financing to preserve and protect forests mangroves,” he continues.
But this might lead to an even bigger question: So, how are we going to finance these projects?
To answer that, Sheren gives an example of countries such as Mongolia. “I was talking to them the other day, trying to help them come up with some really interesting ways of financing their transition from coal and wood … they got a perfect topography for wind turbines down there. But where would the financing coming from?”
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Building up a wind turbine facility would certainly be costly, but Mongolia would be able to get support by setting up an arrangement that allows them to help other countries cutting down their carbon emission.
“What we were saying was that, maybe what you can do is build one turbine for your own energy use and build another one that you can run a line down to China and sell them the resulting electricity,” Sheren gives example.
As the former Senior Advisor to the Bank of England and Co-Chair of the G20 Sustainable Finance Study Group (SFSG), Sheren constantly looks for creative ways and structure to make green finance works. It begins by looking at the four areas that are essential to a country’s livelihood–energy, transportation, housing, and agriculture–and the ways we can transform them.
Continuing the discussion regarding financing decarbonisation efforts, Sheren stresses that there is actually a good news. For a start, the money to support the process is available–it is all about getting the coordination amongst countries to apply it in the right places.
“The other great news is that the technology to solve the problems is on the way; it is getting better every day. Imagine if we have COVID-19 with zero vaccines. Well, we got the vaccines for climate change. It does mean a change in the society, but the great news is that the technology is pretty darn good,” Sheren says.
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The role of tech in transition
MVGX describes its services as providing full-service platform for the token economy, including issuance, trading, settlement, custody, connectivity, market data and ESG services.
During the interview, Sheren explains how technology can play a role in advancing the green agenda.
“Our goal has always been about transparency, being able to see what is happening,” he says.
“When I worked in corporate finance for years in the ’80s and ’90s, transparency was the opposite of what they looked for. They tried to keep information as concealed as possible, hoping that buyers would not ask too many questions. Nowadays, the more open you are to demonstrate how green you are, the better price you get. It’s almost like taking the whole concept of 1980s Wall Street and putting it on its head.”
In addition to transparency, speed, and accuracy, MVGX is also open to exploring new ways to do things.
“We’ve spent a lot of time understanding how AI and machine learning can work through large amounts of material; that’s another area that MVGX hopes to be exploiting in the future,” Sheren explains.
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“So, if you’re trying to do a green bond, the amount of information attached that is massive–the due diligence, the data around that–if we were able to digitise that, put those onto smart contracts … we would have our ways of making finance not only more transparent, but also cheaper and faster.”
Recently, MVGX signed a partnership with Indonesia Stock Exchange (IDX) to establish a carbon trading platform in the country–a milestone that Sheren treats “with great pride.” The company is looking forward to do similar partnerships with other countries in the future.
“We’re pushing very hard to bring integrity and transparency into the market … And MVGX is not the only one doing this. Around the world, major organisations, banks, exchanges … we want to remain one of the voices pushing for that over the course of this year.”
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