July 13, 2023

How Blockchain Transforms Carbon Credits? - Jonathan Rackoff | BCL #302

Jonathan Rackoff, VP & Head of Global Policy, The HBAR Foundation. Jonathan has over 20 years of experience as a sustainability and ESG leader. He is currently Vice President of Global Policy and the Sustainable Impact Fund at the HBAR Foundation. He has an extensive legal background having spent time working at the White House.

Jonathan:If you're planting trees, those trees are also very good at fixing carbon fromthe atmosphere. The problem is that trees can burn down, they can be cut down,they can die, right? We're about solving business problems using thistechnology.

Julian: Heyeveryone. Thank you so much for joining the Behind Company Lines podcast. Todaywe have Jonathan Rackoff, VP and head of Global Policy at the HBAR Foundation.The HBAR Foundation acts as an integrated force multiplier to help builders andcreators overcome the challenges of bringing their ideas to market.

Jonathan, I'm soexcited to have you on the show. Not only because obviously it's different fromour usual guests, but in terms of, kind of the whole ecosystem of blockchainand the different networks and, and the different protocols and applicationsthat are being built. There's so much going on that it's amazing to havesomeone like yourself to really make sense of it, but also kind of give us andshare, the exciting I I, I guess, the applications of this type of technologythat you've seen, especially in the spaces that you're particularly, interestedin and, and pushing forth.


before we get intoHBAR and, and what you're working on today, what were you doing before youjoined the company?  

Jonathan:Well, first thank you for having me on the show. You, you do the lot, a lot ofthese, and I've been been a fan for a long time. So, So, sure. As you said, I'mthe head of global policy at the HBAR Foundation and that is the basically VCimpact arm of the Hedera Blockchain Network.

Before that I wasat Coinbase on a secondment. I'm a lawyer by training. Yep. And I have beenrepresenting Coinbase from from the outside on sustainability and esg. Itmatters. And they asked me to, to come in and help build some some coolinfrastructure and and that was an eye-opening experience.

It, it, it broughtme into this this blockchain world and all the amazing things you canaccomplish with the technology. So,  

Julian:Yeah. Yeah. I was so excited to think about your, your past experience beforeyou even jump into what excited you about blockchain and, and what particularyou're, you're trying to solve.

It, it'sinteresting and talk about your, your past experience in almost your pastlifetime. As, as not an entrepreneur, but you know, somebody involved in notonly the sustainability space, but you know, policy and things along with thatnature.  

Jonathan:Yeah. Yeah. Yeah. So, so as I said I come at this from probably the most boringbackground of all your, of all your guests, right?

Traditional lawyer,I spent 10 years as a, as a litigator. I was an appellate lawyer with with abig DC law firm. And and thought that was great, right? But then I had thiscool opportunity to go into the Obama administration. I went to the white HouseOffice of Management and Budget and ran the regulatory domestic policy,regulatory regulatory portfolio as well as some some ethics and compliancematters.

And and then fromthere went to the Environmental Protection Agency in DC and. Helped defend theObama climate policy agenda. And then from there I had thought perhaps I wouldhave a exciting job in the Hillary Clinton administration, but we all know howthat went, right?

Yes. And I moved onto back or back to private practice, but this time not as a litigator but as anadvisor to mostly tech companies on a range of policy and regulatory matters.And so that was around 20 17, 20 18. And this was when, at least from my pointof view the cool blockchain activities were really just beginning.

And so had thisgreat opportunity to, to look at the landscape and and thankfully pick somereally cool clients. And as I said, one of those, one of those was Coinbase.But while I was there I just didn't realize that organizations like the H HPFoundation or the HED Network which were based on I had heard about Hedera, Ihad heard of the, some of the cool new up and company companies, but, butcandidly, I, I, my head just wasn't in it.

Right. But I hadwhen I finished my work at Coinbase, Wrapped the the secondment in the ordinaryordinary course. I met a, a very cool guy named Wes Eisenberger, who reachedout sort of out of the blue to tell me all of the amazing things that the folksat Hedera were doing with respect to climate and sustainability and E S G.

And spent about sixmonths trying to kind of arm twist me to come on board and. You gotta give itto him. He's smart and passionate and persuasive and ultimately decided to, tomake that jump and haven't looked back.  


it, it's incredibleto think about now this, this whole kind of network, I don't even know, maybe anetwork or, or kind of recipe for what sustainability is gonna look likeinvolving so many different components.

Politics technologyand, and obviously, cooperation and corporations and things like that. When wethink about, or even if you could kind of paint a picture for the audience, howpolicy and the intricate details of, when a piece of legislation comes out. Doyou have, like, how does that have an impact on corporations?

When does thatinterpretation start and when do these companies start adapting to, what isbeing say, whether it's with, regulation or, or whatever is going to beimplemented. What's that process like then, and how tied are companies to whatthose policies will be before they even, go in, go into effect?

Jonathan:Sure, sure. So, obviously it depends on the, on the company and what sort ofindustry or sector. They're operating in if you are an early stage company ormature company, your resources are obviously quite different in terms of howyou can Yeah. Respond to the the regulatory landscape.

Most companies arejust trying to comply with whatever the rules happen to be at the time. But youknow, in a, in a world like like ours in the blockchain space and also in thein the climate policy and sustainability, ESG spaces, there's so much changehappening that companies that depend on these these sectors for their forregulatory clarity, they really have to be pretty plugged in, right?

You have tounderstand where the legal landscape is moving to the extent that that'spossible. And where where it might be possible to, to move the landscape, tonudge in the right direction. People like me with my background and role I. Andwe do the best that we can to to help shape what the landscape ultimately lookslike.

Julian:Yeah, yeah. Thinking about, blockchain and, and even before jumping into itskind of implementation in this whole web, how have companies been, and in, evenin governments, how has this ecosystem revolve in terms of sustainability andmaking sustainable choices and also, there's certain credits that are involvedand there's a lot of people pushing for, more sustainable practices.

But, not allcompanies can have it. But there, there's a certain intricate system that I'm,I'm interested to hear your explanation of it on how companies are actuallyable to, hit these sustainability targets, but how they're able to off offloadthem as well.  

Jonathan:Sure. So, in the in the standard corporate sustainability space you're going tohave increasingly senior ranked people.

Typically a chiefsustainability officer, but it could be someone else with a different titlethat performs the same roles. Yeah. And it's their job to try and ensure thatthe the company is doing two things minimizing. Its for the most part it'senvironmental impact. There are other things that CSOs care about, but.

Let's just supposewe're talking about the environment for the moment. And often that means thatmeans climate doesn't mean only climate, but that's one of the largest concernsthe the carbon footprint of a company. Could be their water use efficiency. Itcould be how they deal with their with their trash.

Could be manythings. But, but climate and energy consumption are, are really key worries formany companies. And and so they're, they're very concerned to, to bring those impactsdown as much as they can, right? They're also concerned about how theycommunicate to the public, right? So if you're a publicly traded company asmany in this space are beginning to learn the s e c and other financialregulatory entities in the United States care quite a bit about whether or notyou are communicating truthfully and accurately to the best of your knowledgewith due diligence, what it is that you're, you're doing with respect tosustainability and many other things, right?

So, if I say as thechief sustainability of Company X that, my carbon footprint is a certain. Acertain place and I'm gonna bring it down within 10 years to some lower figureI better have a plan for doing that and be able to justify why I made thoseclaims. Right? And so, a chief sustainability officer is focused on those twothings, bring you down their impact and communicating clearly and accurately tothe public.

And they can dothat in a variety of different ways, right? They can issue a. Achieve a anannual sustainability report, an annual ESG report, a climate impact report.There are lots of different names. There isn't a lot of standardization, butthe point is they're trying to communicate to their stakeholders accuratelyabout what their company's impact on the environment is and what they're doingto bring that impact lower.

Right? Yeah. Andso, it is not always possible for a company to lower their impact as quickly oras much as they would like to, right? So in the, in, in my world we call, atleast in the climate space, we call those companies companies with hard toabate emissions, right? So if you're, if you're Exxon and your business isfossil fuels, there's only so much you can do, right?

Yeah. Some, somecompanies like Amazon for example split, put a lot of energy intosustainability. But, they have a brick and mortar footprint. They have physicalsupply chains, packages moving from place to place, right? So it's. Alwaysgoing to be a challenge to bring down the emissions profile of that activity asmuch as you might like.

Right? Yeah. And soone of the things that that we do at the at the HBR Foundation is look atblockchain based solutions to help companies both communicate what it is thatthey're, they're doing with respect to sustainability, but also to focus on thethe emissions or climate or carbon offsets that sometimes companies want topurchase.

To compensate forwhat they're unable to do.  


And how does thatmechanically work with blockchain now, and how is it different than before?What, what was the incumbent kind of process before and what is, why is this? Idon't, I don't know if better is the word for it.  

Jonathan:So, let's just take the the offset world.

We'll, we'll, wecan broaden it as, as in your, in your wisdom however you like. But in theoffset world, typically companies have been been faced with a, with a prettyhard choice. They have emissions that they can't abate. They can't lower theirtheir footprint below some some threshold, but they want to do more than simplyemit all this additional carbon into the atmosphere.

And so they go tothe market and they can buy what are called carbon credits, right? It's calledthe Voluntary Carbon Market. The, we call it the voluntary Carbon market, thevcm, to distinguish it from some cap and trade compliance markets. For example,the the emissions trading scheme in Europe, the, the EU ets, right?

Put that aside. Inthe voluntary market, you go and buy carbon credits that generally refgenerally reflect. One ton of carbon removed from the atmosphere or carbondioxide equivalent. So you could have methane and other gases, but generallygreenhouse gases reflecting one ton of carbon dioxide equivalent brought downfrom the atmosphere, removed from the atmosphere reflects one carbon credit.

The problem is thatthere hasn't been a lot of standardization, right? The scientific methodologiesthat that carbon project developers have used to to issue those credits. Havebeen Well, I, I, I'm not gonna suggest that they're also terrible. There, therehave been some high profile examples of methodologies that have been proven orshown to be weaker than we would like them to be.

Right. And so the,the problem with the, with the voluntary carbon market is that these uncertaintiesabout the quality of the credits the quality of the environmental benefits thatthose credits are designed to reflect. Have many people believe prevented themarkets from growing, right? Mm-hmm.

There also are noregulatory mandates. Generally. There have been very few mandates that would'verequired companies to buy these offsets. Yeah. But the point is, if you couldbuild a better carbon credit using blockchain technology, the idea is maybesome of these concerns about the environmental integrity of the credits, theconcern about fraud, the concern about just unintentional mistakes mm-hmm.

In in theunderlying environmental projects, maybe that could be mitigated.  


So from what you'resaying, it sounds like there, there's concerns about the validity of a lot ofthese credits because whether they're actually doing, they, they actually camefrom work that hold carbon out, whether it's like some activity, like, I don'tknow if it's like planting trees or, or cleaning up, in terms of, or, or Iguess.

Donating to afoundation. And so there's need for a better way to track these credits. And,and why is that impacting the growth of the market? Is, is who, who'sessentially saying that these credits aren't worth. What they are, what youpurchased them for. And therefore, kind of stifles the market from, continuingwith activity.

Cuz I, I wouldassume that's kind of some of the behaviors that are impacting, which is justnot trusting the market or having, bad actors and things like that, but Yeah.What, what else I guess impacts the market to, not, not be growing and, and howdoes this help, how does the vehicle actually help it grow?

Jonathan:Sure. So, there's nothing. One of the things I've learned in entering thisblockchain space is that, many of my colleagues and friends in, in, in myorganization and others, there, there's grip with so much, enthusiasm and, andI love being around it.

But as a, as atrained DC lawyer skepticism is sort of part of my my makeup. And, I, I I'malways wondering why why folks think that blockchain solutions are gonna solve.As many problems as their advocates think they're going to solve. Right? Andthere, there's obviously some some degree of exuberance in some of the claimsthat well mean people make in this space.

But, but the truthis that there weren't a lot of good existing solutions to to fix some of theperceived problems in the carbon markets, right? Blockchain actually introducesfor what I take to be the first time a way of. Building tools not just tocommunicate clearly the the chain of, of custody of these credits, right on theblockchain but also to build applications on chain, right on, for example, onHedera that, ad functionality.

And so one of thethings that that my company does, the HBAR Foundation. So we we invest not onlyin sustainability projects, we have four. Fund verticals the Metaverse cryptoeconomy, FinTech. But mo most of my time as the head of policy is spent on thesustainable impact funds.

That's a hundredmillion dollar fund. And so we've been investing in in companies. So, you mayhave had some of the founders of those companies on your podcast, or, or maybeyou should. Cuz they're great, great companies, but, companies that want to usethe, the Hedera network.

And the tools thatwe've we've built with our investee partners to improve the carbon markets,that's been one of our main priorities. Right? Yeah. And so, one company, onesuch company is Envision Blockchain, right? So they've been helping us build atool that we call The Guardian which does a number of different things but it'sone of its most exciting applications is to help create.

Carbon credits thatare auditable. Right? And so what this means basically is that the metadataassociated with the underlying project is built into the asset itself. Thedigital asset, right? So think of it you, you raised the the example offorestry projects. So there are a lot of ways, there are a lot of ways to docarbon removal, right?

You can do carbonremoval for what they call nature based projects and also technology based.Solutions. And so a, a, a famous example, or a in the news frequently exampleof a technology based solution is, is direct air capture. So big machines pullcarbon out of the atmosphere and mineralize it in the bedrock.

There are some highprofile companies like CL marks that are doing great work in that space, right?But that's very expensive. The cost right now anyway, per ton of carbon removedis beyond the the, the budget of, of many companies that wanna buy credits. Theadvantage of those technology based solutions is that that carbon oncemineralized into the, at, into the, into the bedrock is there forever, for themost part, right?

Yeah. If you'replanting trees, those trees are also very good at fixing carbon from theatmosphere. The problem is that trees can burn down, they can be cut down, theycan die, right? Yeah. And so we don't know without, without more work if apiece of paper that reflects, some number of acres of trees planted Or purportsto reflect that we don't really know just by looking at the paper, if thosetrees are still standing right or if the right kind of tree was planted forthat part of the world.

Or the carbonproject developer that's doing the tree planting has all of the different sortof wraparound apparatus installed to ensure those trees. Our the growth ismonitored and reported accurately. Yeah. And verified. Right? And so what, whatour work with vision blockchain and their guardian product is designed to do iscreate a an auditable carbon token to mint a, a carbon token that isn't just a,a piece of paper tethered to some database somewhere where someone has manuallyentered information about that.

Standard trees. Ifwe're using a forestry example, But rather something more like, if you'll go toZillow and if you're looking for for real estate, you, you wanna know a lotmore about the potential. Home or condo that you're going to buy, and simplyhow many square feet there might be.

You wanna know preciselywhere it's located. You want some great photos you wanna know how manybathrooms and you wanna do all of the the title search and so forth that oftenyou have to hire lawyers to go to the county courthouse, to to do that for you.If you could have it all just in one spot.

It's gonna be mucheasier to and much faster and more efficient to buy that credit and beconfident that it is reflecting a great project. And so, what this does is ittakes innovations in lots of different spaces and brings them together, right?And so if you have remote sensing capabilities, internet of things, right?

You embed thosesensors in the stand of trees, right? Cameras. And you can tether those camerasto the to the carbon credit that you mint on chain, in our case, Hedera, right?Yeah. You can get regular pings. So, you open up and we were, I think our oneof our challenges is gonna be working on the front end of this.

So it, so it's it'seasier to access for lawyers like me and not just the excellent sort of blockchainexperts that I work with. But the goal is to have. Ultimately a product acarbon offset product that you can just click into and see all the relevantinformation to assure you if you're a corporate buyer, that what you're buyingis high quality.

All the differentRV monitoring, ver reporting verification apparatus that needs to be installedaround the project has been installed, that the projects have been verified andit follows a scientific, scientific methodology that, everyone in the industrywould, would approve of.

Right? So that'sone, one example of a project that we've, we've spent quite a bit of timeinvesting in and, and working together with our, with our partners on.  

Julian:Well, it's, it's incredible to see that, there is such a need to, to validateless credits, but also it  

comes, it makes methink about who, who's auditing these credits to, say that there were lessvalue.

So, I'm a companyas purchased a credit. It was based on this activity if carbon extractionactivity, but then for some reason that no longer exists. So does that mean mycredit is no longer valid? And who dictates that?  

Jonathan:Julian, you're asking hard questions. I love it. And, and what that sort ofmeans is that I won't have a good answer because there isn't a good answer.

This, thissustainability ESG world is exciting for for precisely this reason to me,exciting to me because there's so much room. Wild, wild west, wild, wild west.Well, it's, it's not as much to the wild, wild west as it used to be. And, Ithink a lot of the, yeah. The tough media criticisms of the, the the carbonmarkets have been maybe too tough and haven't reflected, all the good workthat's being done, but there is 100% room to add value, right?

So, to, to answeryour question directly, the, I think the truth is that if, if your stand oftrees burns down in the industry, we call that a reversal, an environmentalreversal. And, but a credit. Reflecting, the carbon pulled down from theatmosphere by those trees has already been issued purchased and retired by acompany on one of the carbon registries.

Mm-hmm. It's notclear. There is at this moment, there is a infrastructure in place. To ensurethat that company who has purchased that credit and gotten credit yeah. Yeah.For the environmental benefit has to do anything more than that. And that's aproblem. Yeah. Right. That's a problem without any easy answers.

There are a lot ofsmart people working hard to develop policy solutions to that problem. But keepin mind, we're doing it. Largely in the absence of government regulation of thespace. Yeah. Right. Yeah. So, having been in government and worked in onenviron environmental regulatory matters, I can say that, I'm certainly not anopponent of, of smart regulation, but in many instances you have if notover-regulated spaces, you have complexity to the to the regulatory environmentthat makes compliance very hard.

Very, very costly.Right. As a, as a trained lawyer who works, in the in the subject matter space,sometimes I would, I would open up a I pull up the reg on a, on the internetand, and struggle to understand what it means, and I'm, I'm closer to it thanmost. Right? And so the, the answer might not be entirely to replicate the.

The sort of topdown regulatory models that we use in other Yeah environments. But but it ischallenging without governments in multiple jurisdictions coming together andharmonizing their rules and setting rules to ensure that, there isn't a way forcompanies to not that they would necessarily do this.

Intentionally butto to navigate around these requirements, right? Okay. Sometimes we call thatgreenwashing, right? Mm-hmm. Greenwashing is the sort of pejorative we use to,to suggest that a company is just trying to get a. Good pr, right? Sure. But itmeans more than that. It means that they have, whether intentionally orinadvertently they have communicated to, to their stakeholders to, and that maybe to their to their regulators if they're publicly issued company or theircustomers, their employees they have been successful in a way that they haven'tbeen successful because, being successful in reducing our environment,environmental impacts is hard.

Right. And so,it's, it's exciting to think about ways to use to use dlt to build tools. So,That will make success easier to attain, less expensive to attain, right?  

Julian:Yeah. Yeah. I mean, there's so many questions. I think, we, we could go on andon about, at least for me, and how, and how you qualify, these credits and whokind of validates or verifies that, what's the timeline for how these, when youcan retire these, if you can extend that timeline, I mean, there's.

There's probably somany, so many questions we could dive into. But I'm curious, based on,

just shifting our focus back to HBARn and whatyou're working on describe to us a little bit more about, what's been thesuccess so far, and how do you measure. Assess as a company who's structuredin, in your way?

Is it the amount ofprojects that you're working on? Is it, the the growth of those projects? Interms of the adoption of companies? Yeah. Give us a little bit more insight of,of where you've gone to now and what's particularly exciting about the next frontier.  

Jonathan:Sure. So, as I said, the HBAR Foundation is a spinoff from, from Hedera.

So the HederaNetwork is our proof of stake It's not technically a blockchain but closeenough. It's our, our DLT network, our layer one. And, it is, it is unique. Orat least it, it had been unique. I think there's some great innovation going onby by other chains, but you know, it is extraordinarily low energy.

Right? So one ofthe big environmental criticisms when I was working with Coinbase for example,was, that everyone in this space was was harming the environment, right? Proofof work. It was the, one of the. Sort of easiest targets of course. But youknow, I think our industry was because it was relatively new wasn't cut any ofthe slack that sort of legacy industry has.

Industries hadbeen, and the focus had been in almost every other New York Times article aboutthe space that we, it's the the last straw for the environment is, is, these,these blockchain companies, right? All, all of that I think is. Is worthtalking about. Perhaps a bit exaggerated, but when I discovered the HederaNetwork, I was amazed at how little impact really operating the networkinvolved.

One of the. We'vehad a variety of different outside validators look at our energy consumptionand hedera transaction is, is significantly less energetically intense than avisa transaction, for example, right? So the traditional financial world isbehind where we are. And, there are a lot of other ways of.

Of, of benchmarkingour energy consumption. But low energy, I think is is sort of indisputable.We're also very fast yeah, high throughput. We can handle lots of transactionsper section per second. And it's very inexpensive. And so we've set the Hedera,Hedera governance Council has set pricing for activity on the network in a veryaccessible way.

So we want peopleto build on, on, on Hedera. We want we're, we're sort of positioned ourselves.As the, as the network for for enterprise, we want to see actual utility andnothing against meme coins, but you know, that's not what we're about. We'reabout solving business problems using this technology.

And if, and if wewin, right, the, if, if we're successful we fade into the background, right?That, that would, that's, that's ultimately what success looks like. We're nottalking about the fact that it's hedera or that it's a blockchain tool or a D LT tool. It just works to borrow a phrase from Apple.

And, the, sort ofthe regular folks on the street don't particularly care that it is, it is a, aDLT based solution or detail DLT enabled solution. But that, that's a bit of aways off. Right now the HBAR Foundation. Invest in companies that are buildingthe network and, and we use fairly standard metrics transactions on networktime to made net we want activity on the network.

That I think iswhat my fantastic. Exec team at the foundation wants to see from, from myperspective as, as head of Global policy and one of the leaders of theSustainable Impact Fund. I wanna see more than that. I wanna see the the, thebuilding of tools that are calibrated to solve problems in this voluntarycarbon market space.

Yeah, in the ESGreporting space. And we could, as you said, we could talk, we have a wholenother podcast all about what those problems are. And, I could bring some ofour, fantastic colleagues on to, to talk about those solutions in greaterdetail, greater technical detail than I'm able.

But the bottom lineis, we are changing markets outside of blockchain, outside of dlt using our tools.And what success looks like, looks like is. A carbon market that starts to growmuch more quickly carbon pricing that starts to rise. So one of the things wedidn't talk about before is that carbon credits now they vary in pricedepending on the the underlying type of carbon removal involved, but they havebeen relatively inexpensive.

And that works inthe short term for companies who wanna invest in, in offsets. But people wholook at climate. Projections, the climate policy folks that ask the question.So how, how, how high do carbon prices have to be to reflect their actualimpact? If you emit a ton of carbon what do you have to pay to reflect theimpact?

And most peoplethink that the prices need to be much higher. And so we get to higher carbonpricing with higher quality carbon projects. And by developing tools that allowus to communicate the environmental benefits that those products bringcredibly, reliably, transparently. So the whole world can see, this isn't a,some sort of shady operation where, we're selling snake oil.

We're actuallychanneling private finance to climate action. We have more forestry projects,more soil projects. Many other different types of investments. Bio biodiversityis, is getting a lot of attention. Now, how do you create markets that so it'snot this, this wouldn't necessarily be the the carbon markets, but how do youinject money into the Amazon region, for example, to ensure that biodiversitythat currently exists isn't, isn't lost to incentivize indigenous people's landstewards to invest in not extracting.

Which is quiteunderstandable that folks would want to do. Now people want to go standard ofliving, but how do you create economic incentives to ensure that. That, thatbio diversity is preserved. One of the biggest impediments to that is the lackof transparency and the inability to channel finance back to the, the folksthat are, are doing that work on the ground.

And so, what reallyexcites me and what will be success from my point of view is that is, is whereour investee companies, our grantees, and that's one of the things I shouldnote. We are a grant fund. So we operate very similarly to an impact vc, butfor the time being, we are making grants.

Uh mm-hmm. And insome instances I think our our grantee companies might be happy to go with atraditional VC model because, we, we bring lots of. Benchmarking to the, to thegame in exchange for the grant. But, but what we are, what we're hoping thesegrantees will do is, is build these solutions that will raise the carbon, pricewill grow, the market, will see in investments made into parts of the worldwhere there's deforestation and biodiversity laws and ecosystem destruction.

And we see thosethose environmental harms. Being mitigated. Yeah. So, from a, from an hbarfoundation perspective, we want, more great innovators building on Hedera,right? From a sustainable impact fund perspective. We want that too, but wewanna see concrete results in the in environmental markets as a result of thetools that our partners are building.

And we work withour partners to ensure that they are as successful as they can be. So, one ofmy, my rules as, as head of policy is to help. It's a sort of get in thetrenches with founders and help them navigate around some of the thechallenging regulatory and, and policy obstacles that may hold them back.

Julian:Yeah, it's, it's interesting thinking about, is there a future where, companiesstart to, it seems like all the activity happens after the fact. You purchase acredit after, something has been accomplished or completed. But is there afuture where the mechanics of this network allow companies to invest in theseprojects so that they accumulate these credits and then, at the end it's notsuch a, a, a large cost, but maybe an accrued cost that they can distribute?

I think of. Theactive work and it's all kind of preemptive investment, does that alreadyexist? Or if it doesn't, does this network allow it to exist?  

Jonathan:So that's a great question. And if I understand you correctly, can companies domore than just offset their emissions? But can they invest in environmentalprotection and using these tools and then also get credit for that?

Absolutely right.It doesn't, it doesn't happen now as much as we'd like to see it happen. But,but yeah, if, if, if we can develop tools that allow ESG reporting to be muchmore timely. So right now, the way it works for most companies, You issue anissue report or a sustainability report on an annual basis, right?

And so you havesomeone on your sustainability team in your company or, as is more realistic,usually a, a small team of people working to, to gather the data over thecourse of a year that you then you report once a year, right? Mm-hmm. And so,cause that means most of the reports that you read are a year out of date.

We want timelyreporting. On a regular basis on a continuous basis. And we want to givestakeholder communities a way of sort of peeking, peeking into thesustainability teams work on ongoing basis. So if, if we gave folks thatability, right, they'd get credit, not just once a year.

But on an ongoingbasis, and when I say credit, I mean they're going to receive all of the publicsupport for their good works that they deserve to receive. If we give thepublic a reliable way, a credible way. Of transparently observing thoseefforts. Right? Yeah. Yeah. The theory of that case then is that people willwanna invest more, right?

Right. I'm surethere are companies that will decide to invest their, their monies elsewhere.Right. And from my point, point of view anyway, it's important to distinguishbetween sort of pure Phil philanthropic activity, right? This is not justcompanies, just trying to do good. They're trying to remove strategic businessrisks.

From theiroperations. And by lowering, lowering your environmental footprint andcommunicating to regulators and communicating, communicating to stakeholdersthat you're doing that it's our belief that in most cases the company willperform better than the market as a result as well.

Julian:Yeah, I, I have a few FAQs for, so I'm gonna hit you with some rapid firequestions and we'll see what we get. Sure. But first one I always like to openit up with is  

what's particularlyhard about your job day-to-day?  

Jonathan: Acouple things. On a personal note I think post pandemic, I'm just moreextroverted than I used to be.

And one of thegreat things about my team is that it is it is fully global. We are remote and.What that means is that we're on Zoom calls all day long trying to coordinatewith our with our partners. I don't think our business would be possible toconduct if we had one one headquarters.

Where would it be?Right. Our, our, our teams are, are distributed all over the globe. But it is,it is a challenge to to jump into conversations like you and I are having.With, with the enthusiasm that you want when, one of my great colleagues isabout to go to sleep. And, and I'm just waking up at times, times and so forth.

But, from aprofessional point of view, not just so that, that's the personal note. From aprofessional point of view, I, I think one of the, the biggest challenges isespecially recently, is the the fear and uncertainty and doubt that we all feelin the, in the blockchain space due to the regulatory environment.

Now, we are not in,in the business of trying to replace the traditional financial system,especially in the sustainability world. We're trying to build solutions forsustainability and environmental problems. But people back colleagues I used towork with in dc there's a I think the folks working in blockchain have gotten abad rep, right?

And we, we all, weall know how that bad rep. Happened prominent people doing no good in the spacehave, have made it more challenging from a messaging point of view. Yeah, butit's hard, it's hard to to convince people in the traditional environmental andsustainability communities sometimes who don't have the kind of familiaritywith our work perhaps that they should that we are.

We're doing as muchas, as we actually are. And, and also at the same time to bring down the, thelevel of, of concern that we're gonna be shut down on the basis of of regulationof the blockchain space that might be a little bit more aggressive. And, from,from the perspective of someone who used to work in the, the DC regulatoryworld, I, I don't fault my.

My old colleaguesare their, their replacements in the Biden administration for being for takinga kind of strong position on on blockchain regulation or on on climate issues.But one of the work one of the sort of important types of work that we have todo in this space is to educate folks about exactly what we're doing and, andwhy it's not.

It's not really aconcern at least from my point of view but rather an opportunity to, to solveproblems that the traditional top regulatory environment has, has struggled tosolve.  


If you weren'tworking on this, what would you be doing?

Jonathan:Wow. That's You're gonna threaten to send me into existential crisis there.

I honestly, at, atthe moment, I'm, I'm, I'm very happy. And, and, and don't give that question aton of thought there, there always is the the possibility of, of getting pulledback into the world of traditional lawyering working at a law firm helping bigcompanies solve these kinds of problems from the perspective of their outsidecounsel.

I found that to be,Very rewarding. I also loved my time in government, and I could see a world inwhich I had an opportunity to go back and, and contribute there again. But, buthonestly if you look at the at the kinds of work that that we're doing in theHBAR Foundation now and the kinds of companies we're investing in this iswhere, this is where the change and the impact is happening.

And so, hopefully,we'll we'll keep on doing it for quite some time.  

Julian:Yeah. I guess, to rephrase that, what, what's a product outside of somethingthat you're involved in, that you're particularly excited about or keeping aneye out or a fan of? That's whether it's adjacent to your space or not thatyou, are interested in?

Jonathan:You mean totally outside of climate or, or or DLT? I mean, I'm a I'm an an aviduser of the outdoors and for I have. My wife will laugh if she watches thispodcast, but, companies like like Arc Teeks that make fantastic outdoor gear.Yeah. If, if, if they wanted a, a general counsel who got a great discount onthe, the latest jacket or backpack, and I had to do some product testing outinto the into the Alaskan back country, I.

I could be tempted.I might have to do it.  

Julian:Last little thing, Jonathan, I always like to ask this question.  

What's somethingthat's had a lasting impact on you? Whether it's a book, whether it's a, aanecdote, a quote, or an individual, what's something that's had a lastingimpact on you even today?

Jonathan: Imean, so many things. I'm I'm old enough to have been influenced by lots of people.One of my first jobs out of college before law school I worked at the NationalInstitutes of Health in the Department of Bioethics, and I worked under ZikaEmanuel Ram Emanuel's brother. He's very prominent bioethicist and full ofenergy and exuberance.

And there was atime when I guess I wasn't as as talkative or as forceful as I should be. Andhe, he, he, I remember it as a straight up yell, told me not to be a shrinkingviolet. And then if, and then beep, beep, beep, for, for the the curse words thatI we're gonna edit out.

And it always stuckwith me. It's, if you wanna get things done, kind of, charge, charge ahead. Andso I don't think many people accuse me of being a shrinking violet. After thatI love manual.  

Julian:Yeah, yeah. No, it's always encouraging. I think especially I'm sure when, whenyou're, earlier in your career to, to have that individual that kind of helpsyou detach yourself from the, I guess reactions from the environment that maybeimpact your confidence or, or ability to move forward.

But if you just, ifyou just ignore all of that and, and move forward, then oftentimes you'll findthe success that, that you're looking for, at least the mic.  

Jonathan:Absolutely, absolutely. Smart people. I found, and I, I'm, I'm, this is one ofmy sort of, definitely one of my weaknesses. If, if you're good at analysis,you can, you analyze yourself first and you look at all of the things thatpeople could say.

Perhaps accuratelyto criticize your work. But if you spend all your time thinking about that, youdon't ever get any work done. And so, one of the, one of the lifelong projectsis, sort of to turn down the volume of that sort of self-talk and just forgeahead and hope for the best.

Right. And, andusually it works out.  

Julian:Yeah. Last little bit, Jonathan and I would always like to ask my guest, isthere anything we left on the table, any question I didn't ask that I shouldhave?  

Jonathan:No, you're, I mean, you, you, this was great. I, I love this conversation.Right? I mean, the, the, the only challenge for you is that, if, if you'retackling, all of the ways that that blockchain could accelerate climate marketswe didn't talk about energy markets, we didn't talk about traditional Yeah.

Environmentalchallenges like like water rights and and all of the new, the new ESG reportingrules that, that we're expecting from. From government agencies and, and maybewe'll, we'll pick that up in some future conversation.  

Julian:Absolutely. And  

where, where can wefind you and be a fan of you?

What's yourLinkedIn? What, what's, where can we find and, and hear your voice and, and bea fan and support what you're doing.  

Jonathan:I'm, I'm mostly on LinkedIn. You can find me with my name Jonathan Rackoff. R ac k o F F. I do have a a Twitter account, but, but honestly, a trained lawyerthat means tweet as little as possible.

So I'm being toldby, by, by many in in my in my network. I need to be a little more a littlemore vocal on Twitter. So we'll see. Yeah, LinkedIn. LinkedIn and also the, theHBAR Foundation maintains a blog. And so we, we put out some of our ourcommentary in, in, in that venue.

Julian:Amazing. Jonathan, it's been such a pleasure chatting with you. Not onlydiscussing your career and, and what's been exciting about your journey, butalso what the Hbar Foundation is working on different projects that will have alasting impact, not only for, corporate and, and, and kind of the, the largerspaces, but even us as individuals.

And, and it'sexciting to see this kind of, move into this cooperative network that, thatreally does incentivize everyone to, to be a good actor and, and participate.So ultimately, excited to see what you guys will be working on. But thank youagain for being on the show. I hope you enjoyed yourself today.

Jonathan:Thank you, Julian. It was awesome.  

Julian:Of course.  

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