September 23, 2022
Arnold Hui is the Head of Policy Research and Carbon Governance at Carbonbase where he focuses on bridging the gap between innovation and financing to create scalable and sustainable climate change solutions. Arnold began his career at the Hong Kong Monetary Authority, one of the major central banks in Asia. During his tenure of 16 years, he rose to become Director of ESG and led the formulation of ESG policy and roadmap for Hong Kong’s US$500+ bn Exchange Fund. His experiences also included portfolio risk management, FX trading, and corporate developments. Arnold received a BA and MA degree in Economics from the University of Southern California. NFTMetta.com co-founders Allen Cheng and Tsering Namgyal spoke to Arnold Hui about his mission of tackling the climate change with NFTs.
Q: You’re launching a new token called CRED which will service ESG oriented investors and corporations globally. Can you explain what CRED is and how it works?
A: CRED, which stands for carbon removal dollar, is launched by my company Carbonbase is a carbon negative token in the Web3 space. It is used for retiring cabin offsets. You can only get CRED by supporting climate friendly project listed on our protocol such as reforestation in amazon. It means that when more people are using CRED to make transaction in the Web3 space, it helps the carbon emission on a global scale.
CRED is also used in our NFT marketplace to support like-minded NFT designers and events. We only do this to help promote awareness to the climate change issues. We also work with some corporations in Hong Kong right now to use CRED as a reward for their staff and also some of their clients for the engagement program. We reward them with CRED for taking ESG classes or when they take some initiatives to reduce their personal carbon footprint. We hope this reward ecosystem can make the fight against climate change fun and cool.
Q. Can you explain why the world needs a new token like CRED?
A: Because with many tokens you have heard of so many complaints about the gas fees and polluting the environment but our token is built on Polygon, which is built on Ethereum. Gas fee is really low and it creates very little pollution into the ecosystem. Actually, what we are doing right now is to offset the emission we generate from a transaction itself on top of the carbon offset I mentioned and why do we need this token right now.
Because I know everyone can feel the heat in this summer right now – climate change affects everyone in the world right now with more frequent natural disasters and shortage of food. Indeed, the United Nations found that climate-related disaster surged five-fold over the past fifty years and it is hurting the poor countries more. The World Bank estimate the climate change may push another 132 million people into extreme poverty by 2030 therefore the stakeholders in the world right now including governments, corporations and individuals need to take actions. That’s why CRED is designed to empower individuals like you and me to take part in this fight against climate change.
Q. CRED is being launched by Carbonbase. Would you kindly introduce Carbonbase and how it is helping companies worldwide trace, track, trade and offset carbon emissions?
A: Carbonbase actually was founded two years ago in 2019 right after the outbreak of COVID actually. Carbon emission tracking is like our core business. We are building something like an accounting system using “software as a service” to help different industries to manage their carbon footprint. One of our most notable clients is a shipping company in Hong Kong. We help them calculate their Scope 1, 2, and 3 emissions and the tricky part is we need to consider the ownership structure of each vessel to help them to formulate their carbon management solutions together with our clients and advise them how to organically reduce their carbon emission first.
But many of our clients have a very ESG mandate. Carbon reduction alone is not satisfactory for their boards. They will also set net zero targets so we will help them achieve their net zero target goals by buying carbon offset through our assisting platforms. As noted previously we now also try to include CRED into this program. We allow those corporate to achieve their carbon reduction goals together with their clients and their employees. So, we want to build not only the carbon reduction activities by the corporate themselves but also engage their client and their customers as well as their staff to also take part in the exercise.
Q. You joined Carbonbase a while back from Hong Kong’s central bank, the Hong Kong Monetary Authority, where you formulated ESG investment policies at the HKMA’s USD500 billion Exchange Fund. Can you talk about your 16 years of experience at HKMA and how you steered the fund towards ESG investments?
A: So actually, I joined the HKMA sixteen years ago. I joined it three days after my graduation ceremony. During my time there, I got the chance to rotate in various major functions including banking policy, monitoring the HK dollar peg, amongst other duties. But I spent most of my time in the management of the exchange fund. I oversaw their ESG policy together with my boss.
It was a collective exercise. What we did was back in 2017 our senior management began to pay a lot of attention to the ESG initiative worldwide. Actually, we are at the forefront compared to other Asian peers. We began to look into different protocols and then we signed up as supporters of the Task Force on Climate-Related Financial Disclosures (TCFD) and we also became member of the United Nations for Principles for Responsible Investment (UNPRI). So, we take a lot of effort to try to ensure that everyone is on the same page, from the board to front desk people to our mid-office and the back-end staff.
It is not an easy time because you have to have a lot of engagement with everyone because you know when it comes to ESG investments that may affect their investment performance. So, you have to lay out a very clear roadmap and ensure there is a proper alignment of interest and then also to educate. I think education is really important to let the front desk or the board members understand what is at stake.
I was more like a coordinator to facilitate the communication and then use all our collective efforts to make this possible and make this happen, and I’m still very proud of my team to be able to deliver this.
Q. Finally, why did you leave HKMA for Carbonbase, a venture firm? Was it because you felt you could make bigger impact advising ESG investors globally?
A: Maybe this is a mid-life crisis because I’m turning forty this year but to be honest I think is I have been with the HKMA for sixteen years as I mentioned and I’m really grateful for whatever I learned, the experience and everything that I gained there. However, I just see there’s a limitation for a big institution in the ESG space because at the end of the day a company or a big institution we all talk about our mandate or our mission. Because the HKMA has a clear mandate which is to maintain the financial stability of Hong Kong and ESG is not the part of their larger mandate. I would say when it comes to ESG, usually it is quite secondary, and not the core function of the HKMA.
That is why I am really inspired by Carbonbase because its core mission is to fight climate change because at this part of my life I really want to contribute to the world and to make some changes to help the world to be a better place. With my experience learned in the past sixteen years that’s why I am willing to step out of my comfort zone to see whether I can work with my teammates at Carbonbase to make some revolutionary changes, I would say. You can say I’m a dreamer but I think at this age and then at this part of my career I want to do something different and do something so that I won’t regret in the future.