1 January 2020

Our Commitment to Fight Climate Change

by Michael Zimmel

Over the past several years we have seen a flurry of climate pledges from corporate giants such as Walmart, Amazon, Google, Microsoft, and the like. The common theme among these announcements is urgency. You will repeatedly see the statement “We have sat on the sidelines for far too long” as commitments are laid out targeting carbon neutrality by the year 2030 and beyond.

Most of these companies have been around for decades and have racked up cumulative emissions in the tens of millions of metric tons. Like the inertia that defines greenhouse gases once they enter the atmosphere, businesses used to a paradigm of endless pollution also experience inertia when trying to reverse this trend.

Instead of having to backpedal on its emissions, what would it look like if a company committed to carbon neutrality from day one? What if a business only scaled if it could be held responsible for the emissions that accompanied this scaling?

At Volve we recognize the urgency of the climate crisis, and specifically the corporate sectors’ role in it. That’s why we are excited to announce our commitment to the above scenario. Starting with the launch of our corporate card and expense tracking platform, and moving forward as our company grows, we will be measuring and addressing the entirety of our role in climate change.

What We Did

Past the jargon of ‘climate neutrality’ what does this actually mean? With this blog post, we walk you through all the considerations that stand behind this commitment, and the work that led up to it. In addition to taking care of our own climate impact, we hope that our documentation of this process serves as a guide for other upstart SaaS and Fintech companies who want to do the same.

1. Measuring Emissions to Date

Volve is a young company. We started work on our recently launched corporate card and expense tracking platform in mid-2019. While based mainly out of Singapore, our team is entirely remote and still quite small. On top of having a small physical footprint, COVID-19 further reduced our need for real-world infrastructure. As a result, our carbon footprint is smaller than larger teams with physical offices and organizations that require frequent long-distance travel.

Another unique aspect of Volve at this stage in our growth is that we work with several contractors and 3rd party firms to support us in developing our product and running our business. In addition to this, many of Volve’s administrative functions are completed using other SaaS platforms (think Slack, G Suite, Dropbox, Zoom, etc.). This, in combination with the remote status of the company, means that our emissions sit behind several layers of obfuscation.

2. Capturing Scope 1, 2 and 3 Emissions

Typically, a company’s footprint is calculated through what is called Scope 1 and 2 emissions. Scope 1 emissions are considered anything that is directly emitted through the activities of the company (e.g., if your company owned a coal plant). Scope 2 refers to emissions produced through the purchase of electricity (e.g., the electricity used to run your office or equipment).

In addition to Scopes 1 and 2, there is Scope 3 which refers to all other indirect emissions up and down a business’ value chain. Put simply, many emissions associated with the inputs or outputs of your company can fall into Scope 3. When it comes to calculating Scope 3 emissions, while this is not technically required in many emissions auditing protocols, it has emerged as best practice to document and act on these emissions sources anyway.

If all this sounds a bit open-ended, that’s because it is. In Volve’s scenario, we have no Scope 1 emissions and a very small amount of Scope 2 emissions. But there are many things essential to making our company work that would be classified as Scope 3. The question then is: Where does one draw the line when it comes to accounting for emissions up and down the value chain? When it came to this we wanted to be as conservative as possible while maintaining perspective around the most significant areas of indirect emissions for Volve.

3. The Outcome of Our Calculations

What this leaves us with is a footprint mainly consisting of household and contractor electricity bills, computational emissions coming from the servers we use to run our business, and the embedded carbon in the phones and laptops we use on a day-to-day basis. While not large contributors to climate change, we also accounted for the physical credit cards we distribute to users, in addition to the small amount of employee commuting that takes place.

Watch this space: We will soon update this article with our final and approved emission calculations.

4. Reducing, Offsetting, Donating

After coming up with a number for your company’s carbon emissions, common practice would dictate that you then purchase carbon offsets and call it a day. As many have pointed out though, this practice can be less than effective if not thoughtfully approached. The first issue with offsets is that they need to meet a particular set of criteria in order to be functional. Arguably the most important condition to address is “additionality”, which refers to whether or not a given offset would exist if not for the purchaser’s financial backing of it.

Taking a step further back, offsets come under criticism for being a band-aid solution that does not properly incentivize the right emission reduction behavior. Furthermore, since it is clear that we will never meaningfully solve climate change just through the purchase of offsets, why even bother supporting this industry?

Despite these numerous, valid criticisms, we don’t think they necessarily rule out all offsets, just the bad ones. Nonetheless, we decided to improve upon the standard offset purchasing strategy. Instead of just purchasing any offsets, we would only purchase those that were most stringently vetted and offered at a realistically high price. In addition to this purchase, we decided to make a charitable contribution to a local climate activist group.

The thinking here was simple: Volve is a young company with a small footprint. Offsetting our emissions at market rate would only cost a few hundred Singapore Dollars. Given this marginal amount of funds portioned towards climate impact, would offsets actually be the highest leveraged way we can spend money on the problem?

5. Our Hybrid Offset+Donation Strategy

With so many dependencies at play, it might be impossible to ever objectively answer this question, but basic logic tells us that the support of grassroots climate activism is arguably just as, if not more impactful than purchasing a few tons of an offset.

Our hybrid offset+donation strategy landed us on two specific organizations to distribute funds to. On the offset side, we used the Gold Standard offset marketplace to find the WithOneSeed project in Timor-Leste. Not only is this project one of the closest to Singapore, but we felt it had one of the strongest appeals to impact among the retail offsets we saw. In addition to sufficiently passing the stringent criteria of Gold Standard offsets, we were impressed by the broad social benefits beyond climate mitigation that the project offered. At $18/ton, we appreciated the higher pricing relative to market rate offsets that trade under $10/ton.

Along with Stripe, and other companies, we see the value in paying intentionally high prices for offsets if that means improving the economies of scale of novel mitigation methods.

6. Supporting Singapore’s Youth

With our offset selected we then looked for a local Singaporean climate activism group that would be a deserving recipient for a contribution in the same dollar amount as what we allocated for offsets. SG Climate Rally immediately jumped out as the front-runner. The group, largely consisting of young people and students, is known for organizing the first ever climate demonstration in Singapore back in September 2019. Since then the group has been one of the most visible forces spreading climate awareness in our beautiful city-state.

After interviewing two of their team members we were impressed with the group’s organizing methodology and were reasonably convinced that they will play an important role in Singapore climate movement for a long time to come. Another aspect that convinced us our donation would be high impact was their clear budgeting priorities that they were asking funding for.

Watch this space: We will soon update this article with our the offsets we bought and donation we made.

Our Takeaways

While Volve is a young company, we hope that our work can help companies of all shapes and sizes think about their relationship to climate change. Specifically, we hope we can serve as an inspiration to other startups, particularly those that are remote.

Below we have captured three main takeaways from this project.

1. Carbon Accounting for the Remote Workplace

It should come as no surprise that the emissions from a largely remote company will be less than its physical counterparts. But the accounting that helps us arrive at this clear distinction is not always straightforward. Volve’s labor comes either from employees working from home or contractors working from a diverse range of setups. This can make for tricky calculations when trying to break down which energy expenditures are explicitly for Volve.

As you will see in our accounting, we took a conservative and holistic approach to this question. Instead of pulling hair out over whether emissions fell into either a Scope 2 or 3 category, we conservatively counted the energy use of anyone who did work for Volve. While imperfect, we are confident that at worse we have over counted our emissions from electricity use.

2. Carbon Accounting for SaaS

Another part of this accounting that is tricky has to do with the tools we use for running Volve. In addition to the servers that host our software, we use a variety of SaaS tools that help keep our remote team organized and on the same page.

Take for example Slack – the closest thing to an office that Volve might have. While it is obviously more energy efficient to meet via a chat application than it is a physical office, how are we to know what emissions are associated with running this application? It is easy to account for the electricity draw from personal devices that using Slack requires, but what about the transmission of data to and from Slack’s cloud servers?

Whether it is Slack, or pretty much any other SaaS tool, there is not currently any available estimation method for determining how using these services creates emissions on the individual organization level. Logic tells us that these services are so optimized, that a small team’s usage of them cannot possibly amount to more than a few kilograms of CO2 equivalents per month. But this is pure conjecture. Considering the speculative nature of these estimations, we did not include them in our overall footprint.

As with calculating the usage of services like AWS, Azure, or DigitalOcean, it is clear to us that a lot of work needs to be done when it comes to improving the accuracy of these calculations. For a small company it is easy to overcome these inaccuracies with overestimation, but this strategy will not scale for very long.

3. Offsetting at the Margins

Speaking of size, it is important to note that a smaller company’s offsetting strategy can look very different from a larger company. When Amazon considers taking its 50+ million ton footprint carbon neutral, it needs to make a dent in the entire offset industry. For us, with just a few hundred dollars’ worth of emissions at play, does the same bulk offset strategy work?

When operating on the margins of climate change, it is important to embrace both your relevance and irrelevance. This is why we decided to both purchase high quality offsets and donate to a grassroots climate activist group. It might be impossible to ever have a clear 1-to-1 understanding of how money spent on these things offsets your footprint. But we think that if anything was to ever approach this place of confidence, a two-sided strategy like this would be it.

Our advice to companies like ours would be to also consider looking into donating to climate activist groups, either in lieu of or in addition to purchasing market rate offsets. If you are having trouble finding the right group, see if there are any local chapters of organizations like the Sunrise Movement in your area. From here, don’t be afraid to reach out to organizers and learn more about how donations might be used.

Volve’s Future Climate Impact

As we discussed in the beginning of this post, the most important part of the work we have done here is not necessarily taking care of the relatively small footprint Volve has racked up to date. But it is the commitment that we will be responsible for our emissions moving forward.

If there is one thing, we hope other companies can take inspiration from, it is the idea that earlier is better when it comes to facing the light on climate change. This is true in respect to the urgency that the climate crisis is unfolding. It is also true in respect to the difference between course correcting a small and large company. It will always be easier to address climate change if such a practice is worked into a company’s growth from day one, as opposed to being a plan B ten years down the road.

Finally, we hope that Volve’s users can take stock in our serious commitment to climate responsibility. From your perspective it might seem like every company these days has some sort of claim towards being green. Let the work we have published here be a clear signal that sustainability is not a marketing gimmick for us, but something we want to have built into the very fabric of our company.

If you have any questions about this project, or anything else related to Volve, please reach out! We would love to hear from you.

Michael Zimmel
Founder & CEO
My recent work centers on analyzing and communicating how financial leadership principles can be applied to create value. Building on two decades of financial management experience, I founded Volve to offer solutions for streamlining corporate spending and accounting workflows. This is my commitment to help improve the work and value-add of finance and accounting departments.

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