The classic approaches to corporate sustainability have failed, as companies have become obsessed with measuring and reducing their carbon footprint and negative environmental impact without thinking about how to do something good for the environment, says Simon JD Schillebeeckx, founder and chief vision officer of greentech start-up Handprint.
As the world races towards net zero by 2050 and private and public companies prepare to meet mandatory climate reporting requirements, there has been a strong focus on decarbonisation efforts, waste management and water management.
While this is extremely important, it is limited in scope in terms of what companies can actually contribute positively to the climate, explains Schillebeeckx, who is also an assistant professor at the Singapore Management University and the founder of Global Mangrove Trust, a non-profit that advocates for financing large-scale mangrove restoration.
Schillebeeckx mentions the concept of “beyond value chain mitigation” (BVCM), a mechanism proposed by the Science Based Targets initiative (SBTi) that posits how companies can accelerate the global net-zero transformation by going above and beyond their Scope 1, 2 and 3 emissions.
In 2021, SBTi proposed a concept for addressing climate protection projects beyond a company’s own value chain by supporting external climate protection projects. In February, SBTi launched a report detailing the current scale of environmental devastation. Millions of people are exposed to extreme temperatures, and in 2022, climate change and La Niña drove overall losses of US$270 billion and insured losses of US$120 billion.
While corporations have embraced corporate social responsibility and philanthropy, the total budgets deployed this way have barely made a dent in global needs, says Schillebeeckx.
See also: EU’s green bonds will avoid bloc’s own ‘gold standard’ rules
He says that companies today are spending about US$150 billion ($202.7 billion) per year on measuring their carbon footprint, and on average, the margin of error is over 50%, citing a report by Boston Consulting Group.
“There is a significant gap in terms of the globally committed levels of climate mitigation and climate finance and what is needed to limit warming to 1.5°C. Estimates suggest that annual mitigation finance needs to surpass US$8.4 trillion per year between 2023 and 2030 and is expected to rise to US$10.4 trillion per year in the following two decades, compared to just US$1.2 trillion a year today,” the SBTi report notes.
Too much emphasis is placed on accounting for emissions, especially when only 100 companies worldwide are responsible for more than 70% of global carbon emissions. This approach to sustainability is, therefore, only “meaningful” for a select few industries, like those in the hard-to-abate sectors such as manufacturing, transportation, mining and energy, argues Schillebeeckx.
See also: Net-Zero Banking Alliance to explore next steps after member defections
“For the vast majority of companies in developed nations, those industries make up less than 25% of gross domestic product (GDP), leaving the entire service, digital and tech industries with very little to do to tackle grand challenges,” he adds.
Therefore, these companies that fall outside of the 100 largest and most pollutive firms may find that funding a BVCM project could unlock opportunities for their business lines. For example, a food and agricultural company that invests in the restoration of landscapes ecologically linked to its supply chain might benefit from supply chain resilience in the long term, which will reduce their risks of rising costs.
The challenge, however, is making a business case for companies to invest in BVCM projects, as most today still find it a “frivolous” investment, says Schillebeeckx.
The ROI of investing in nature projects
Over the last five years, Schillebeeckx and his team at Handprint have been working to prove that these investments into nature can bring about a return on investments (ROI) for a company. The catch, however, is that this ROI may not necessarily be quantified in dollar value.
Handprint, which delivers “impact as a service” to its customers, is backed by the corporate venture capital fund of Singtel, Singtel Innov8. Founded in December 2019, Handprint has raised over US$3 million to date.
The team has identified that consumers and employees today care deeply about the environment and, in turn, are seeking out and working for companies that have a strong environmental track record. The basis of this assumption has led Schillebeeckx and his team to encourage companies to do more for the environment in order to achieve business value.
To stay ahead of Singapore and the region’s corporate and economic trends, click here for Latest Section
First, Schillebeeckx and his team work with a chosen organisation to identify their “North Star” metric, a factor that influences the company’s success. This could be customer satisfaction or transaction volumes, and it does not necessarily amount to a monetary value, he adds.
Then, Handprint uses this “North Star” and identifies a meaningful use case of an impact project that could result in a better improvement of this north star metric.
From left to right: Mathias Boissonot, founder & CEO; Mimi Nguyen, COO; Ryan Merrill, founder & chief impact officer; Simon JD Schillebeeckx, founder & chief vision officer. Photo: Handprint
For example, EDBI-backed Singapore fintech start-up Thunes, whose “North Star” metric is transaction volumes, has connected its global transaction volume to a commitment to mangrove restoration. Their commitment is to restore one mangrove for every 5,000 transactions that move through its system.
With an Australian esports company, Handprint integrated forest restoration prompts at the platform’s check-out page, which boosted sales by 16% and created a six-fold return on money dedicated to tree planting.
With global delivery business FedEx, whose business goal was to increase the usage of a new in-house digital tool, customers who tried out the tool were rewarded with an impact voucher that they could redeem. This gave FedEx insights and data into how they can continuously re-engage these same customers indefinitely.
“I think this idea of ‘how do we attract customers’ — especially this younger generation that’s more aware [about the environment] with a value proposition that does not need to cost much, but could actually create a lot of loyalty and might incentivise switching over time — that’s where the real value is,” says Schillebeeckx.
Next, Handprint is after companies that have deep pockets to finance nature projects. Banks, for example, which already have big budgets for corporate social responsibility initiatives and spend an enormous amount on the cost of customer acquisition and customer loyalty, are a big target for the start-up.
Schillebeeckx cites an initiative by Maybank some time ago, in which the bank pledged to remove 150kg of plastic from the ocean for every person who signed up for the bank card.
“But it’s a one-off payment, which means it’s a high-risk strategy because they say we’re going to put this money and whatever that costs, that doesn’t necessarily create a lot of loyalty because I can take that bank card, that means they’re going to spend the money to remove 150kg of plastic, and I can stop using it two months later and then cancel it,” he explains.
Instead, Schillebeeckx proposes turning this into a long-term engagement strategy, where the bank makes the same commitment over two, three or five years. This will, in turn, create more customer loyalty, which is ultimately what the bank is after, he adds.
Verifying impact projects
Admittedly, this engagement ROI is challenging to calculate and requires a new way of thinking. “Yet, if companies can do this successfully, then it will be cheaper than what they’re doing now, and it might result in higher customer lifetime value. So that’s the promise of the Handprint approach, I would say,” he adds.
To date, Handprint has removed 47,000 kg of ocean plastic, planted over 580,000 mangrove trees, forest trees and bamboo plants, and restored 3 million sq m of ecosystems through engaging companies to invest in its BVCM partners.
Handprint has a host of partnerships with various impact organisations around the world. Seven Clean Seas, Reef Restoration Foundation and the Black Jaguar Foundation are just a few. Others include plastic collection systems in developing countries, sanitation projects, education projects and non-profits for early childhood education.
Lately, the quality of carbon-related projects has been called into question. An investigation accused Verra, the world’s leading carbon standard for the voluntary offsets market, of selling “phantom credits” that overstate their actual impact.
But Schillebeeckx says all organisations onboarded into the Handprint ecosystem undergo a due diligence process that “typically takes two months and a lot of questions”, following which a continuous reporting process is carried out.
These impact organisations need to report on the impact they are creating for every dollar Handprint sends them. “So the moment we send them, say, $25,000, and if the cost of impact is $2.50, they need to deliver 10,000 units, which could be in the form of hours of education or kilos of plastic,” he says.
In addition, Handprint’s marketplace, which connects companies to impact partners, has a third layer where it introduces its clients to specialised auditors who verify projects independently.
“You have [Singapore-based firm] Kumi Analytics, which does space-based verification using machine learning satellite data to identify how a forest is evolving over time; partners that do that for biodiversity on land; and partners that do this for biodiversity in the ocean,” he continues.
Schillebeeckx says the goal is to have a “global supply of companies” that work with Handprint “ so that we can provide organisations with high-quality impact reporting, tracking and storytelling.”
“There’s a radical interpretation of how we’ve approached sustainability that suggests that we have put the worst polluters and the biggest environmental criminals in charge of the future of humanity, and that is intuitively extremely strange,” says Schillebeeckx. “So, we should get every company involved, and that means that we need to redefine responsibility, not in terms of the damage companies do, but in terms of something else. And that’s what, that’s a big part of our kind of underlying philosophy and our thinking about how we should approach sustainability."
