We are in the midst of an evolution when it comes to climate tech in Southeast Asia, driven by market dynamics, sustainability-linked financing, and evolving regulatory frameworks. The urgency of addressing climate change has never been more pronounced but comes at a time when we are more aware of greenwashing with stringent mandates on sustainability reporting, and a growing need for comprehensive green transition plans. Notably, Singapore has set a precedent by becoming the first Asian country to mandate climate-related disclosures for large non-listed companies, while Malaysia aligns with globally accepted recommendations from the Task Force on Climate-Related Financial Disclosures (TCFD).
We wanted to explore this topic in more depth, so we took the chance to speak to Hari Nair from Zuno Carbon. His company provides businesses with data-driven insights to enhance their sustainability efforts. The company’s platform centralizes ESG data, enabling organizations to gain a clear overview of their current sustainability status and identify areas for improvement. This approach not only simplifies the process of sustainability reporting but also allows companies to focus on impactful actions rather than administrative tasks.
We take a look at how climate tech startups are pushing for green practices in Singapore
The region’s unique characteristics make it a compelling market for climate tech solutions. Southeast Asia hosts heavy-emitting industries such as oil and gas, shipping, and manufacturing, which are integral to global supply chains. This positions the region at the forefront of the global sustainability movement, as companies strive to meet international regulations like the European Union Deforestation Regulation (EUDR). However, the diverse levels of maturity in understanding and implementing sustainability practices across companies present both a challenge and an opportunity for tailored solutions.
In this interview, we discuss the evolving climate tech landscape in Southeast Asia and how companies navigate the complexities of sustainability reporting, the unique challenges faced by businesses in the region, and the increasing demand for ESG solutions across various industries. Hari also delves into how AI-driven technologies are streamlining ESG processes and what the future holds for Zuno Carbon as it continues to innovate and expand its reach.
How do you see the current landscape of climate tech evolving in Southeast Asia?
Market-driven forces, sustainability-linked financing, and regulatory changes are shaping the landscape in Southeast Asia.
In recent years, we have seen a crackdown on greenwashing claims, more stringent mandates on sustainability reporting, and green transition plans across countries in the region. On the home front, Singapore became the first country in Asia to mandate climate-related disclosures on large non-listed companies earlier this year; in neighbouring Malaysia, financial institutions and the businesses they back are gearing up to comply with new guidelines that align with globally-accepted recommendations from the Task Force on Climate-Related Financial Disclosures (TCFD). As awareness of climate impacts grows and the public becomes more educated on the matter, we’re seeing a shift in a positive direction.
Because of the increasing demand driven by the urgency of climate change, climate tech is gaining momentum in Southeast Asia. For many companies, sustainability commitments and decarbonisation have become a necessity rather than a nice-to-have to remain competitive and compliant.
Where does Zuno Carbon fit into this?
Zuno Carbon helps companies measure their carbon emissions and track their Environmental, Social and Governance (ESG) metrics, enabling them to gain data-driven insights to improve their sustainability efforts.
We believe that full visibility of current efforts is crucial for making informed changes. That is why our solution is engineered to provide a single source of truth for all sustainability and ESG data within a company.
By centralising this information, companies can gain insights and prioritise improvement areas, making their decarbonisation efforts more meaningful and impactful for both the company and the planet. We also streamline the process of sustainability reporting, allowing our customers to focus on driving real action rather than spending time on chasing spreadsheets and reports.
Is Southeast Asia a unique market for these solutions and climate tech in general?
Southeast Asia is both unique and similar to other markets for climate tech solutions.
It is unique because the region is a hub for heavy-emitting industries such as oil and gas, shipping, and manufacturing. Many companies in Southeast Asia are part of larger global supply chains, requiring them to submit sustainability reports, particularly concerning emissions. Global regulations on climate change and sustainability, especially from the US and Europe, often impact companies in this region, presenting a distinct challenge. Take the landmark European Union Deforestation Regulation (EUDR), for example. Introduced in June 2023, this regulation requires producers and companies trading palm oil, cocoa, coffee and other commodities into the EU to produce a due diligence statement confirming that their goods were not produced on deforested land. Although the EUDR is a step in the right direction to promote transparency and deforestation-free supply chain management, critics argue that it discriminates against smallholders, who lack the resources to comply with it.
However, Southeast Asia is also similar to other regions in that companies have varying levels of maturity in their understanding of climate and sustainability. There are laggards, early adopters, and those in between. The challenge here is to provide solutions that are simple enough for beginners to use while being flexible enough to meet the more comprehensive requirements of mature companies.
What trends have you observed in the demand for ESG solutions among businesses in Southeast Asia, and which industries are leading the charge?
In Southeast Asia, the demand for ESG solutions among businesses is driven largely by market and investment forces.
While regulatory demands also play a role—such as in the Philippines, where sustainability reporting rose from 22% to 90% in five years due to mandatory disclosure requirements for publicly listed companies—companies typically begin focusing on their ESG efforts more rigorously once they realise that neglecting these efforts impacts their bottom line.
There is demand for ESG solutions across almost all industries, including manufacturing, real estate, logistics, transport, built environment, shipping, and oil and gas. However, the heavy industries are leading the charge due to stronger market forces, whether from global clients, pressure from parent companies, or investment considerations. We are also starting to see a trickle-down effect, where the awareness and initiatives by larger organisations are prompting or in some cases forcing SMEs to start taking sustainability seriously.
How are businesses in Southeast Asia preparing to comply with upcoming climate-related disclosures, and what role do AI-driven ESG solutions play in this preparation?
As businesses in Southeast Asia begin their sustainability reporting and climate disclosure processes, they quickly realise the extensive time and effort required to gather data.
Larger operations face greater challenges in data collection and streamlining. Among other things, they need to measure waste, collect electricity bills, obtain data for vehicle fuels, and track business travel. It is a year-round effort that takes up a lot of resources and bandwidth, requiring frequent collaboration between teams. Some governments have recognised these challenges and implemented measures to take the pressure off companies. For example, Singapore’s government introduced a new Sustainability Reporting Grant to help large businesses defray the costs of sustainability reporting.
Beyond such support from the government, AI-driven ESG solutions also play a crucial role in alleviating these challenges. AI can significantly reduce the need for manual calculations, improve accuracy, and streamline the entire process.
For example, at Zuno Carbon, we provide AI-enabled emission factors (EF) data matching. This means that for every activity data entered into our platform, we automatically match it with the best emission factor from a database of over 30,000 curated EF, allowing users to instantly get the carbon emission equivalent for that data point.
Another widely used feature is our document intelligence. For data points involving hundreds of physical or digital invoices, we leverage Optical Character Recognition (OCR) to automatically pick up the key details, reducing human error and increasing efficiency.
How does your company measure the effectiveness and impact of its ESG solutions, and what metrics are most important in this evaluation?
Most companies who track their ESG efforts often have a global framework to follow in preparing for their disclosure.
Within our platform, users can select the framework they wish to use, the topics they want to track, and the frequency of data entry. This allows companies to focus on metrics that are material to their organisation, ensuring they go through workflows specifically designed for their chosen metrics.
For example, a company focused on manufacturing operations would find it crucial to measure their Greenhouse Gas (GHG) emissions. We provide specific workflows for tracking Scope 1 (direct), Scope 2 (indirect), and Scope 3 (value chain) emissions. This enables them to monitor their emissions effectively and gain insights to prioritise their decarbonisation efforts moving forward. This user-centred approach ensures that companies can measure performance and impact based on their unique needs and goals.
So, the metrics vary from company to company, but at the end of the day what we measure is how much time we’ve saved for our customers in calculating emissions and preparing reporting. And as a result, how much closer to their sustainability commitments they are.
What’s next for Zuno Carbon?
Innovation and adding value with AI are key priorities for us. We are developing more AI-enabled features and dedicating additional resources to improve our existing AI functions. By strengthening our innovation pipeline, we aim to stay ahead in the industry and continuously offer advanced solutions to our clients.
We are also expanding to new markets, aiming to strengthen our presence in Asia and move into the ANZ (Australia and New Zealand) and US markets. In doing so, we are exploring solutions to address unmet needs, ensuring we provide comprehensive and tailored services to a broader audience.
As we scale up our operations, we will also focus on building up our professional services capability by enhancing team skills, implementing process improvements, and recruiting more senior sustainability experts. These steps aim to provide better services and ensure that our team is equipped to handle the evolving needs of our clients.