Carol: Welcome to the P factor. Now this time we have Arthur Lam, founder of Negawatt, to be in our podcast today, and he has recently being a witness of a special wedding. So why don’t you start introducing yourself to our audience a little bit, like your background to let our audience know?
Arthur: Hello P-FACTOR! My name is Arthur and I’m very honored to be here to talk about my journey and also what I’m actually going to work on right now. So I actually was educated in the US as a mechanical engineer. Back in 2008, no I came back around 2008, which is the most fun this time because it was during the financial crisis. And I actually got into a hedge fund, right after I graduated, so I only worked there for about nine months, and then the entire industry collapsed that time. And, the good thing was, I was the cheapest employee of the whole company. So I got to actually stay there for about another six months. But I know it was too boring, right? Because nothing was moving. Right? So at that time, no one is spending. No one is investing, right? So I thought, okay, what can I do myself? Like, obviously, I’m not, I wasn’t a doctor. I wasn’t an accountant or a lawyer, right? Definitely not i banker. So. So being an engineer, what kind of problem could I see? Right? So I thought, okay, if I wanted to be an entrepreneur, I probably wanted to target the largest problem that I could find. Right? And that problem to me at that time was climate change. Because no matter who you are, where you from, what company you work for what government, everyone is actually need to face climate change, eventually.
Okay. And so I thought, okay, if I could solve climate change, right, then I sure could maybe convince my investors to pay me, right. But knowing nothing from climate change at that time, I just kind of looked into it. But being an engineer, and I thought, okay, let’s, let’s start with buildings, because I could touch it. I live it in every day. Yeah. So we started with like, building energy efficiencies. Okay, that was 15 years ago. And, you know, that company startup was okay. And then eventually, we expanded our businesses doing energy management around, I think started from Hong Kong as well, getting that we ventured into over 10 countries, okay, we’re doing something called energy performance contract. So we will manage buildings, and energy, and then we’ll share the profit, we share the savings I create with a client.
So the last 10 to 15 years, I’ve been doing about 400 EPCs – energy performance contracts and saved about, I would say 2.5 billion kilowatt hours. Okay. And what does that mean? That means, like, I effectively planted about 25 million trees. Okay, worth of trees, and to remove that carbon emissions. You know, it’s very hard. So, I think we did a pretty good job in reducing energy consumption in buildings. Okay, that’s a previous company. But after working in over 10 countries, right, I realized one thing is to save the world, we have to save the environment. But to save the environment alone, will not save the world.
Carol: Makes sense.
Arthur: That makes sense, right? To yours of people, whatever, people, it’s harder. So the bigger problem that I discovered was actually ESG. Okay, it’s not just sustainability. Sustainability is a subset of ESG. So I thought, Okay, I’ve worked for venture for about 10 years, 13 years. Okay, what’s next? Okay, and I want to solve ESG. Right, because this is how people would go forward. Right? I think ESG is a very hot topic right now. But it has been around for 20, 30 years. Yeah. And you want to explain why ESG is so prominent, and it’s such a hot topic right now. But it’s been around for many years. So I thought, Okay, what’s my next venture? Okay, I want to change I want to implement the ESG concept, not just on the building, okay. Not just on the biggest corporates in the world, not just the government, not just for the people who has the resources to do it. Okay. So I thought okay, I want to make ESG mass. Okay. And, and then to make impact, I realized there are three elements that that I need to create. Number one, obviously, is the environmental impact, right, whatever I do, I have to create positive impact from the environment. Okay, number two, okay. We have to I’m create positive economy, we have to generate economic output. Okay, based on sustainability. And number three, we have to create communities. Because without communities, it’s very hard to scale. Otherwise, it’s always going to be me working by myself or my team, trying to do one project at a time.
Carol :So you want to get as much people involved as possible.
Arthur :Because when you save the world, not only the privilege, or the government will do it, right, everyone has to participate, because they’re stakeholders means public. Right? So how do I implement or spread the idea of ESG for all stakeholders in the world, which is actually global citizen? Right. So that’s why I did Negawatt, okay. So Negawatt is we started with buildings, automation, efficiencies as well. I would say, building is also an infrastructure. So a person would spend about three to four hours a day on the phone, right? But a person would spend 90% of the time inside of building. So that’s how I thought, okay, if I could make people connect, or get data or to influence people, from their phone, with their phone inside a building, practically, I would think that I would have a better chance to change how people react or behave. So that’s the core mindset of Negawatt, right? So Negawatt is we started with Prop tech – property tech company, started with buildings and real estate. But now we are also slowly transforming ourselves into something called a regenerative economy. Because what we want to create at the end of the day, is really to create a sustainable future. Okay, with the fundamentals of ESG. And because economy, you have to be everyone has to take part in it. Alright, so. So that’s why Negawatt from three or four years ago, we started with building automation, digital transformation, how to make sure the M and E, the mechanical and electrical systems are efficient and right, and get all this data for the building. So they could, effectively manage buildings. Right. But I think during COVID, that taught us quite a few things.
Carol :Actually, COVID, I would say … would you see it as a threshold of changing the whole environment?
Arthur :Definitely. I would say a turning point.
Carol :Yeah, because a lot of companies changed their business model. It changed the people’s behavior as well.
Arthur :Because simply, if you don’t change your business model, you will die. I mean, look at all these great companies right now that they have actually, they have transformed themselves during COVID. And it’s awakening. Right? So for us, for Negawatt, we also change as well. Because we were just doing mostly buildings and equipment, right? Yes. And then COVID changed everything. No longer do people go to work anymore. So what does that mean? Well, without people inside the building, the building itself is quite energy efficient already. Because it doesn’t use any energy. Right, no one uses it. They just work from home. Yeah, like, you know how like, people were reading like these, like ESU reports and saying, like, oh, during COVID years, we have reduced our energy consumption by 40%.
Carol :Of course, you don’t even turn on the light.
Arthur :Amazing, because there’s something called work from home. Yeah. It is what we call an industry called greenwashing. And even with greenwashing, the subset is actually called greenshifting. You’re shifting the responsibility, okay, as a landlord, as an accompany, to your staff and employee. Right. So, is that good or not? Well, it depends on how you want to take it, right? Yeah. So I thought, Okay, well, instead of doing just M&E of a building, and I realized, wow, so what actually is the most valuable asset inside a building? So if you ask an engineer, right, of course, it’s always equipment, or the structure of the building, right? Yes. If you don’t have an X factor, you don’t have air conditioning, no one’s gonna work. If the building structure is not safe. But if you ask an architect, right? It’s gonna be like, of course, the design of the building. Yeah, no one wants to rent an ugly building. Right? But if you ask the landlord. They will say the land. Without the land, they know every doesn’t make sense, right? But COVID taught us it is actually people, right without people inside of buildings, that building is worth nothing.
Carol :Yes, that’s true
Arthur: So when we thought to ourselves, okay, what do we do? Like, how do we actually solve the fundamental issue and sustainability is right? And all the stuff that that we talk about? At the end of the day, it’s just people. Right? If you talk about E is the environmental impact, right? Who makes those impacts? Not companies, is the people who make those company decisions, right? To make an environmental impact, whether it’s positive or negative.
Social, the s, right? Yeah. What is it about? People, people have to be socially responsible, you have to restore happiness, you have to restore wellness, right, for whom? people governance was that is not about anti-bribery, or reporting or tax or whistleblowing. It’s about people. Right? So at the end of the day, why are we disrupting many other things in society, but not caring about the fundamental part of the issue, which is people, then that’s why we said, Okay, how about we design a product? Okay, that changes people. Right, that’s how we came up with our new app, I would say engagement at ESG engagement app called 02. So rather than just buildings, we work with people, okay. And also, I was just because one day, I was just not happy, just with myself. Because I’ve been working in sustainability fields for about 13 or 14 years. When I’m working, maybe about 15 or 16 hours a day. I am working towards sustainability. But when I’m not working, I’m just an average Joe. I don’t see myself as a very environmentally friendly, or socially responsible person. I was like, wait a minute, if I am not even doing it myself? How can I convince my stakeholders, my clients, their tenants, their employees, their staff, their investors committees, and the general public to be sustainable, or to be responsible? It boils down to only two questions. Number one, it’s not convenient. Right. Number two, there are no incentives.
Carol :I think incentives are a major factor. That’s kind of like a hurdle.
Arthur :There’s always a reason to, like being socially responsible, being good to the environment, paying your tax, you know, being fair, there’s always a reason, but what are the driving forces to do it? but unfortunately, we’re in a very practical world, right? convenience and incentives. So I thought, Okay, why don’t I design a product that can drive efficiencies make it convenient, okay? And also incentivize people to do well, because there’s no rule in the book or in any laws and regulations, it says that I cannot incentivize people to be good. You can only penalize people for doing bad. You could do corruption. If you throw garbage in the street, if you jaywalk if you don’t pay your taxes, whatnot, you get penalized, you get fined, you go to jail. But no one said anything about how to incentivize people. Right? You know, so I got the inspiration from Facebook, right? If you do something, what is the first thing you do? You put on your social media, what do you do? You get likes. Right. So people want to tell other people that they have done it right. So this is a part of the community that I’m talking about, right? So that’s why the whole concept of ZERO2 it’s about gamification, on sustainable behavior or socially responsible behavior, where we can quantify, digitize it, and then consolidate these efforts to make it you know, countable with quality data, right inside of society, whereas individual people would be properly incentivized. So, this is how I want to change how we look at ESG.
Because then, I was not happy about how my industry was looking at ESG. Right? Like, because if you took a look at ESG, right on the service, you’d have a be good. Don’t pollute the environment, be fair to your staff, and be, you know, don’t do corruption and stuff like that. Right. But why would people only care about it right now, but not 30 years ago, but not 50 years ago? They do. It’s before it’s called ESG. It’s called Enterprise Risk Management. Yeah, exactly. Right. It’s called ERM. So who cares about that the most? Obviously, the banks, right banks are all about risk management. So for them, for them to manage their risk, what is the risk, right, the risk of their client not paying up going to default? Right? That’s what they care about the most. So for them to gauge that risk, they would say, Okay, what will actually impact the cash flow of my client? And as a result, they’re not paying them, or paying us, right? So there are factors into three categories of environment. Right? Either a factory, but you are destroying the world. Number one is not sustainable. I’m not talking about the environmental point of visitors. It’s not it’s not even replicable, right? Because you’re destroying something.
Number two, you are not fair to your staff are the stakeholders, right? People go on strike, then you have zero output, you have no cash flow. If you talk about governance, right, even if your boss is found to be corrupted, right? Not paying taxes and whatnot, you get you get, you got to either stop trading, right. So that always impacts the cash flow of a business and banks care about cash flows. So that’s why the banks are being put on the other ways like okay, let’s talk about ESG and be good. But at the end of the day, it’s about risk. So that’s why when all the people talk about ESG right now, it’s about reporting. It’s about the disclosure of ESG efforts. In other words, it’s just like, tell me, what are all your risks that could impact your business?
So I would know everything, whether you’re going to pay me up or not. Right? What are the risks? Right? But the concept of ESG? How we do I’ll call it ESG. 1.0. Is this closure is about reporting, right? When you look at this word, disclose, but when do you need to disclose something? When you have done something wrong, you disclose the risk, right? Automatically, that’s already a negative effect, as a company and as a person, why would I want to disclose something that I’m not proud of? Right? So, think about it, so they would think about, okay, if I could only disclose the least amount of information, I’ll be more protected. So the concept, we don’t think it’s right.
All right. So the whole ESG is like reporting, and then all this stuff at the end of the day, what does it do to the company? Right, this is a problem to do with the company for to do very well at ESG. Before, a lot of reporting, a lot of disclosure, and bla bla bla bla bla, at the end of the day it’s cost, right? It costs people to make changes, it costs people to digitize the data, and it costs people to do good and do well. Okay.
Of course, if you don’t do it, you might not get your loan renewed from the banks. Otherwise, why would all these developers go to ESG? Right now, okay. Of course, there are companies who are actually at the forefront and really doing ESG. Totally, they want to do it, there are great companies out there right now. Unfortunately, most of the people in the industry do ESG, and because of the banks, the investors are asking them to disclose their risk to make sure that they as a business have a sustainable future. Okay, less risk of default.
But no one actually says if you do ESG, your stock price should go up. No one says if you do ESG people are going to buy more of your products. Okay, so that is a problem that I see what ESG is before was before. So ZERO2 is actually designed to leverage ESG. Okay, not just on a disclosure level, not on the costs perspective, how do we drive the economy, okay, by incentivizing people doing the right thing, okay, by exposing and connecting brands, who want to do the right thing …To do the right engagement with the right customers? Right? So this is what we call the regenerative economy. That’s what ZERO2 is about.
Carol :I see. Okay, since we’re a podcast here, can you use a very short sentence to describe to let our audience know, what can they do with this newly-rolling-out ZERO2 App
Arthur :Download the app, number one, and basic fundamentals activities, recycling and reduce or reduce over usage. For example, if you go to retail outlets, you go out you bring your own Tod bag and then you use it without a plastic bag right? You buy takeaways without cutleries, okay? You get points for it by scanning QR codes with our app. Gamifying your own utility bills, okay. You reduce your household utility consumption, and you get points as well, okay? And also not just on the environmental side, we also promote the social side, which is wellness, okay? You walk, you do sports, you meditate boxing, cardio activities, and aerobic sports, we also incentivize you to digitize that. So to make it a healthy, socially responsible, environmentally friendly, cautious decision, digitize them and reward you with incentives, such as up to 90% off from products that you will use every single day.
Carol :That’s a very big incentive. So basically, you’re telling people to be good, and you have a discount?
Arthur :Do good, do well, yes.
Carol :Actually, I have another question regarding ZERO2, because I see the app has been rolling out for about a month. Also, I see you posted on social media that there is a lot, as you talked about before, of the people in the community that they’re actually participating in their daily lives. I see the photos like that. How is it in general? What is people’s reaction towards this ZERO2 app? And who are your target audience?
Arthur :I think everyone is our target audience. Then you might ask me like, What do you mean everyone? What about the elderly? Who doesn’t know how to use an app or phone that you’re wrong? Actually, our first corporate partner is actually Hong Kong Housing Society, of which 40% of the residents are over 65 years old.
So this is actually the design of the mission of ZERO2, or Negawatt. We don’t just want to build technology to disrupt others. We don’t want you to eradicate people who are not efficient, who are not tech savvy. Rather, we want to build zero to be inclusive. We want them to have the power to enable to empower people, and bring these people who are forgotten. They’re not tech-savvy, right? And have no clue what ESG is bringing back to society, and we store social responsibility to them, make them be part of the community again, right? Because they are part of us. Right? They were like us 30 or 40 years ago, they’re still us right now. Okay. Yes. So this is the concept of ZERO2. So, we had a really great campaign and project with Hong Kong Housing Society. And just about a month or so we have registered users over 10,000 people. That is the largest ESG community you can ever find in Hong Kong with 10,000 registered users, right, assuming that month, okay. And the impact, it’s amazing. We have saved over 140 tonnes of carbon emissions recorded. Okay, we’ve recorded over 6000 kilometers of walking distance. Okay, from the communities, right? Burnings 250,000 calories.
So this is the impact that we’re able to empower and initiate and to be sustainable. Okay. So once we have been a great case study, if I could convince these elderly people that were not, some of them were not properly educated. They were because they didn’t have the privilege to be educated. Right? It’s a fact. And they were low-income to middle-income families. They have no idea what ESG is, but does not stop them from being a socially responsible citizen. Okay, so we have this great study, that means everyone in Hong Kong, or in fact in the world should do it.
Carol :Definitely. So people don’t need to know, you don’t need to know exactly what ESG means. As long as you’re doing that in your daily life. It’s kind of benefiting the whole society.
Arthur :I think a lot of people will say, like, oh, I have no idea what ESG is, and I’ve never heard of it. I’ve never read, you know, in he’s not in the school curriculum. Right? So that’s why, but if you look at it, all these details, if he’s put time in order to read about it, you don’t have to actually learn about it. So you learn it’s when you’re growing up at the end of the day, who doesn’t know that you cannot be detrimental to the environment? Who doesn’t know yet fair to each other? Who doesn’t know you cannot corrupt and collude and pay taxes, right? Yeah. So it’s just common sense on how to be a good person, a socially responsible company. Then also with you know, I would say, a vision to actually be part of for a sustainable future.
Carol :Understood, actually, this is another question. I would like to follow up with you since you’ve been in the industry for more than a decade. Compared to what you did before, do you think people’s mindset changed in these 15 years?
Arthur :Absolutely. Like 15 years ago, it’s all about financial impact. Right? Yes. ESG wasn’t generating any return. Right? It was like, show me the money, show me the payback. Show me the ROI, show me the IRR. Why should I do it? And then you talk about the side benefits or do good and do well. But now, I think the generation has passed. Right. And, I think the government has also done a pretty good job in teaching what shows actually responsible citizens. Kids right now, are even more environmentally friendly, of course, because when I was young, I didn’t learn about sustainability when I was young, climate change wasn’t even a problem 30 years ago, right? But now, like, you see kids learning about like solar panels, regenerative, alternative energy, recycling, all these, this stuff that you know, it’s doing great. So, kids right now are definitely more exposed to that idea. And now that train them, we don’t even have to explain to them why we have to be socially responsible people. So, but right now, it’s also I would say, you know, a blessing in disguise that all these financial institutions, banks, they are taking the lead to really drive the economy towards a more socially responsible and sustainable economy. Right. So, of course, it has everyone has to the part the government also has to put regulations, and the banks also have to give incentives and support companies or incentivize companies who will be able to contribute to society. Okay. And also now we’re doing the mass public. Right.
Carol :Yeah, that’s why, in the beginning, I was mentioning about the special wedding that I witnessed last month, that the character that you designed, the cute piggy of ESG. Just you married him with Miss Ming Chin Lim? Yeah. The famous celebrity here in town. Yeah. So is that one of the campaigns to try to make him more interactive and to broadcast it to the mass majority?
Arthur :Yeah, I think, Why is it a wedding? Okay, and why is it a zero-carbon wedding? Okay. We think that being sustainable or driving sustainable impact is never a one-off event, it is actually a lifelong commitment. Right? So that’s why we want to create a wedding that symbolizes that people are actually committed to it. And it’s difficult to just break up. Yeah. And a lot of people, industry, okay, I want to do this and they get it done. Let’s do it one year. I mean, there are companies out there say, Okay, we’ll do a lot of ESG. And what do you do? Okay, we asked our staff, to go to the beach to clean up and pick up the trash.
Carol :That’s what most of the company do.
Arthur :It is still a positive impact. Like, don’t, don’t listen to my podcast and stop doing that, you know, continue to do that. But think of a way you can do it continuously every single week, which is impossible. Yeah. True. So that’s why, you know, it’s a lifelong commitment. So it’s, and then also, we’re very happy that we’re able to work with the celebrity Miss Lin. And she agreed to be our responsible person or spokeswoman. Right. And also, we all want to introduce a concept of you know, carbon trading, right? So because of the wedding, it is not a full wedding if there’s not a diamond ring. Yeah, right. So why a diamond ring? Because a diamond ring, what was a diamond made of? Carbon, right? So well. We don’t have a lot of money. I mean, we’re a startup, right? So we could not buy her a real diamond ring, but we bought them carbon credits, so rather than giving her a 300-carat diamond ring, so we got her 300 tonnes of carbon credits.
Carol :That is a special wedding gift.
Arthur :Yeah. Why? Because that’s also not just on the material concept. It’s it’s our commitment to help her Miss Lin, to be a carbon-zero person. I think she might be one of the first people in Hong Kong to reach carbon zero. Why? If you look at statistics in 2020, the average person in Hong Kong emits about 4.5 tonnes of carbon emissions per year. Okay, so when we bought her 300 tonnes of carbon credits, what’s that? Seventy-plus years? Yeah, right. So that means, in theory, she, from that wedding onwards, is actually carbon zero carb for at least 70 years.
So, of course, she’s going to live a lot longer than 70 years, right? But I think that’s our commitment to her. For the next 70 years of her lifetime, she’s going to be carbon neutral. Because she’s also going to use our app to reduce her carbon footprint to less than 4.5 tons per year, right? That means she could be the first carbon positive. Carbon positive. Positive and negative, it’s the same term. Okay. Right? So it’s not just neutral, she could be. The first carbon-positive person, because working with us, because of our commitment to Miss Lin, right? She could be, you know, the most sustainable celebrity in town.
And then also our wedding, well, our launch party, um, is also a carbon zero wedding. So we calculated, um, all the embodied carbon and also the operational carbon. What does it mean? So whatever materials we need to fabricate or to make, to make that event happen are called embodied carbon materials, or just wood and recyclables. We use a lot of recyclable materials, right? And the operational carbon is like the utilities, like water, electricity, like commute, all this stuff. So, first of all, we designed the event or the wedding to be the most sustainable way as possible. Okay, but we have to use materials, right?
For the remaining materials, we actually purchase carbon credits from the Hong Kong Stock Exchange. Okay, so we are very proud to be a participant in Core Climate, which is the trading platform in Hong Kong Exchange. So, that’s why we want to do it right, right? To make a statement, is a lifelong commitment, right? Not just the concept, right? But actually actionable quantifiable items that we can do.
Carol: That’s good to know. So one last question for you and also for the company. I’ve seen you like, for example, you share on your Instagram that you go to the rainforest to help plant trees or buy more carbon credits and also you keep running in Hong Kong trail every morning. So, what is your next adventure for yourself and also for the company?
Arthur: Well, I think, why did I go to Tanzania? Right, because actually, Nagawatt is part of a rainforest restoration project, right? So it’s called Minginku Rainforest, which is an ancient rainforest with 30 million years. So, because of ESG, we’re about sustainability, right? Reducing carbon emissions is one part, but nowadays we talk about biodiversity. Okay. So if you, like, for example, if you install solar panels, you can save energy, create alternative energy, reduce carbon emission, but it does not increase biodiversity, right?
And because in Minginku Rainforest, the priority of biodiversity is by restoring forests over there, we will help the ecosystems over there. So I thought it was a very, very impactful event. Whatever we generate, whatever we reduce, right? From Hong Kong, we would plant trees in Minggu forest to even get more carbon credits from that project.
And why would I hike every day? Um, I don’t know because I just want to break my own mindset. I just thought, you know, running a business, right? If I don’t. If I cannot control myself, um, which is my body is pretty much something that is, I have, I should have a hundred percent control, right?
If I don’t even do well and contro my health and body, how can I convince other people that I could run a company? Right? So, I think it’s a mindset. It’s also, I want to have a great me-time, you know, during the hikes in the morning about 7 or 8 AM. If you want to hang out with me, go to Aberdeen trail around 7:30 to 8 am, I might be there. You’ll find me there. And I’ll talk about anything that you want to talk about.
And what’s the last question? About venture for your company. So, we’re very honored that earlier this year, we were able to sign a strategic MOU with the UAE government in February together with our chief executive, John Lee, led the highest delegation to the Middle East. And we were one of the 13 companies that signed an MOU with the local government and we’re going to start with Master City, which is a city that owned by Mubadala, which is a Abu Dhabi sovereign fund.
So they really like the concept of how do we engage the citizen and make ESG practical and actionable on the ground level. Right. So, we’re going to have some pilots, and then we will see what it’s going to be. So I think our goal is not just Hong Kong, but also the next step is probably the Middle East and also Southeast Asia, and Belt and Road countries.
Carol :I see. Nice to know. So we’re going to see maybe ZERO2 app expand to the Middle East in the near future.
Thank you, Arthur, for coming, and thank you for your time and for your thorough explanation of Negawatt and the ZERO2 App. And hopefully, everyone who’s listening to this podcast, just download the app and start to do good from today.
Arthur :Yeah. And thank you very much. And I’m very honored to be here on P-FACTOR. So download our app, if you’re interested, you know, IG me, direct message me. My IG is Arthur Lam, A R T H U R L A M 1539. And I’ll send you my direct referral code so you get more points for signing up.
Carol :Or they can find you on the Hong Kong Trail.
Arthur :You can find me on the Hong Kong Trail as well.