Ashurst Aurecon Alliance

Host:

Hello, and welcome to Ashurst, business agenda, Ashurst and design engineering and advisory company Aurecon recently announced an advisory alliance implemented as the global transition towards a low carbon future gathers momentum. The alliance promises to bring together the legal and risk expertise of Ashurst with Aurecon's deep technical understanding of asset intensive businesses. As they look to work with their clients on the climate risk transition journey and towards a net zero future. Joining me on today's episode is Elena Lambros, partner in Ashurst's risk advisory practice, who also leads the sustainability practice and Paul Curnow, Ashurst's partner and global co-head for energy. Joining Paul and Elena is Aurecon's sustainability group director, Paul Gleeson and principle infrastructure advisory, and head of risk and assurance strategy services. Michael Tafe.

Host:

We will hear from these experts on how the alliance plans to work with clients on their most pressing challenges, where their asset and legal risk exposures and opportunities intersect the launch offerings of the alliance and how of the alliance will create opportunities for their clients in a deep decarbonization environment. So without further ado, let's get into the discussion. Elena, thanks for joining the podcast. I want to start with the why, what's the big point of difference that this Alliance presents in a very cluttered marketplace?

Elena Lambros:

I think both of us Aurecon and Ashurst can appreciate that the global landscape on sustainability issues has well and truly shifted. Sustainability is no longer an aspirational goal for organizations. It really is core to the successful growth of a business. Now so alongside this changing world, our clients are on a journey of transition and this journey really requires a diverse set of skills to focus on finding the highest and best use opportunities that arise in a decarbonizing world while meeting legal obligations and ethical expectations to people, community, and environment. I guess that's why I'm personally really excited about this alliance because I think it brings together an integrated end to end solution that make the challenges involved in pivoting to a sustainable future. Now we've got strong collaboration across legal risk consulting and technical advisory to bring a new degree of excellence to our clients.

Host:

Paul Gleeson.

Paul Gleeson:

From Aurecon's perspective, we have been seeing growing trend with how can we best help our clients navigate some of these challenging topics and it's increasingly difficult to quarantine the scopes of technical commercial regulatory legal and get a good outcome because the space is moving really fast. So while historically that might have been okay to separate out those scopes and then try and knit them back together on the client side that we think we can help get better outcomes quicker by integrating in the way we come at those problems with our clients.

Paul Gleeson:

And the other comment I'd make about the question is, yeah, maybe it looks a little bit cluttered at the moment the marketplace I'd say it's quite noisy, but I would say also the volume of work that has to be done particularly this decade is so massive that I don't think it'll look quite for long. I think that we all need to be hands on and getting involved in this. And I also think the scale of the challenge, I wouldn't be the first to comment that it's unlikely to be solved in anything other than a collaborative manner.

Host:

Paul, you mentioned the obvious need in the marketplace for this alliance and this alliance definitely targets clients' most pressing challenges where their asset and legal risk exposure and opportunities intersect, that's what you've shared with the market that this alliance will present. Why is this important now?

Paul Gleeson:

Yeah, it's really clear to us that the set of questions that need to be answered, particularly around topics like climate transition. It's near impossible now to separate things like the technical pathways with the economic pathways, with the regulatory changes that are coming. So the ability to separate out those scopes, the way we would historically in a slower moving world, we don't think it's going to get the right outcomes or it's not going to get them quickly enough. So for us, obviously coming from a technical core of the firm like Aurecon to say, definitely we see there's a big technical response to a lot of these questions, but you can't actually just evaluate that in isolation anymore. You actually have to be looking at what's coming from a regulatory point of view at the same time.

Paul Curnow:

Yeah. Just jumping in there. I think for me, and I've worked in this area for 20 years, I think for me, the big change is exactly what we've talked about, the mainstreaming and that sort of intersection, that intertwining of technical and regulatory and economic. I think for me, it's really also about the cost of the alternatives are more competitive now. And if you think about what was on offer years back in dealing with climate change often was very much focused around carbon markets, just carbon offsetting. And there wasn't so much internalizing how companies would really change. Whereas today it's about really changing infrastructure, changing assets, changing business models. And we've seen, I think the way that costs have come down across a range of technologies, whether that's renewables and others to make that a viable proposition. And so for a lot of our clients, they're starting from a risk management point of view, but quickly moving into an implementation around those investments and those sorts of new assets, new business models. So I think That's a really big shift and it's really only happened in the last, 2, 3, 4 years.

Host:

Michael, I want to bring you into the conversation. Can you share with us some details about how the alliance will actually work in practice?

Michael Tafe:

Always dangerous bringing me into the conversation, but happy to oblige. I think the how we work is actually going to be really quite humanistic, for us we see the types of problems that this alliance will address as being not cookie cutter. That in actual fact, much of the uniqueness of each client circumstances means that every time we see a client problem that we can contribute to and partake in moving towards solution needs a bespoke approach. So the how of this is much more about engaging in ways with clients that allow them to surface the problem in the way it manifests for them and then describing to them how the different subject matter expertise that our two firms represent can be applied in an integrated way to the solution pathways that they might seek. It really will be not something that we expect will be the same each time, but different every time.

Elena Lambros:

Yeah, I would agree with Mike. And I'd just also add to that, in our discussions and when we're developing this alliance, we've been very open with each other in sort of the terms of the clients. We want to work on sort of problems. So we both kind of see that alignment between what we value and what our clients would value and is making sure that we are working with the right clients, who are really willing to take this conversation seriously and happy to work with us in the long term to get through to the solutions.

Host:

Elena, Ashurst been very vocal in its goal to build the consultancy side of its business with the aim of achieving 10% of global firm revenue by 2023, how does this alliance support that goal?

Elena Lambros:

So I think with our risk advisory practice, what we've always done is been very thoughtful about the sort of risk advisory areas or expertise that we go into. We kind of start by looking at what our legal expertise is and make sure that we've got a clear adjacency to that. To us, it's really important to have that alignment because we've got some very strong legal partners in the marketplace and we want to support them and work with the clients along that journey. So for me, this is just natural extension of this, where we get to utilize both the legal expertise. We've got Aurecon's incredible expertise around engineer and design and the risk advisory just really kind of flows from that. So I think it will be a really good supporter of that growth and really align with our strategy of just focusing on areas where we can deliver to the best of our ability.

Paul Gleeson:

The Aurecon's approach to this is quite similar. I think in terms of the way it's supporting the broader growth of our business as well is a similar journey. So we've been building an advisory practice adjacent to our engineering core for over five years now. And it's really proven to be, I think, a better way of solving problems for clients. I think that as an engineer myself, I would say that the value of deep technical knowledge and of engineering is pretty clear. I'd like to think it's pretty clear, but actually being able to frame that and focus that capability through an advisory lens or in this case through a risk framework is incredibly valuable. And both sides of that equation have been learning quite a bit within our business. So for us, it's a natural progression we're still largely a technical firm. And then the advisory growth that we've done internally has got us to a point. And we're now to a point where we're looking it well, how do we continue that through partnerships like this one.

Host:

Michael, you mentioned that it's not a cookie cutter approach to looking at and servicing clients. So what offerings are you going to be focusing on during this initial launch phase of the alliance?

Michael Tafe:

Our focus is going to be on the hard problem and the problems that where more eminence is needed, not less. When we look across the marketplace of service providers that are giving advice on these topics, we see the market sort of falling almost into two broad camps. On one side, you have organizations and firms that sell themselves or present themselves as being one stop shops. Our value proposition is precisely the opposite. We go with a sense that the problems in their current manifestation need deep subject matter expertise. And that it's about the integration of an ecosystem of advice that will make the types of topics that we aspire to help our clients with more successful outcomes.

Michael Tafe:

Of course, right now, and for the foreseeable future the immediate complexity of climate transition makes that a natural field of play for this alliance. We also see though broader social license to operate and even resilience outcomes given some of the changes we're expecting in federal government legislation and regulatory approaches, the intersection of having a legal advisor paired with an engineering capital asset advisor and ensuring that the risks that those types of circumstances and new operating environments for businesses represent that we are integrated in the way in which we face them has massive value.

Elena Lambros:

If I think about social license and what that means for our clients, I've kind of seen through the work that we're doing, that more progressive organizations are really starting to see this as a class of risk in their own right. So what we're seeing is that basically you're lifting it up to that kind of board level kind conversation and making sure that you've got strong governance and a board level commitment to resourcing measuring and leading around this. I mean, I think it's quite clear from all of the press recently, the organizations that going to consistently maintain strong social license, achieve higher levels of trust and those organizations that don't have some of those issues that we've seen with leadership changes and a lot of negative share prices and all that sort of impact. So I think social license is definitely something that our clients are taking more seriously and putting in place.

Paul Curnow:

What's really exciting for us and for all of the lawyers at Ashurst is I think the way Michael put it, the ecosystem is really a nice way to put it because often as lawyers, you either come in, maybe at the tail end of things, the clients have already gone through a whole process, and you're just sort of implementing, and that's a big part of also what we offer, but building in that sort of governance and regulatory is a compliance piece upfront together with risk advisory, plus the technical and sort of engineering design piece is really exciting space for lawyers to be. And it also means that by the time we may be coming in and actually being part of the implementation of those plans and strategies that come out of that, we have a better understanding of it. And I think it also means we are much better lawyers to those clients for Because of that.

Paul Gleeson:

That's good, Paul. Yeah. And to get a little more specific too, on the engineering side. So in addition to the advisory skills that Mike talked about for us, we can see there are some skills, some capabilities we've got at the moment that are getting drawn very hard into some of these topics. And our key example would be the decarbonization capability that we've built over a number of years now, working with a number of clients, helping them to map different technical pathways to decarbonize their operations and their assets. So that one's really clear in its linkage, but the other things are emerging pretty fast for us as well. It's quite hard actually for a client to just look at something like transition risk without also looking at physical risk. So we're starting to see more and more having to overlay these multiple scenarios.

Paul Gleeson:

And so for us in our business, that means so we've got people in say our future energy practice who are really strong on the decarbonization options. Then we've got a growing capability around about climate physical risk. So people that can actually model different climate scenarios.

Paul Gleeson:

And then the best part is actually that the cascade below that is all of the engineering heritage gets pulled in then because once you start to run those scenarios, you'll need a structural engineer, for example, to look at what is that increased wind loading do, or a Marine structures person to say, what happens with this bit of sea level rise or increase cyclone, frequency, intensity, all that stuff, getting overlaid on the transition, and what's going on about as the world heads to net zero, the story for us is really about how do we get all of our people to be able to contribute and play in this space. And there's a huge desire from within our business for pretty much everyone to be able to play a partner. So that's one of the things I love about this is it's a way of really making use of the old and the new.

Paul Curnow:

And really a point, Paul, because we see that on our side and certainly younger lawyers and next generation coming through everyone is just really committed to this area. And so to be able to offer something like this, I think is really compelling for those lawyers. And I guess the same to Paul's point it's hard to actually think of an area of legal practice at Ashurst that isn't touched by this whole area of climate risk net zero energy transition. It really covers every practice group on our side and that's everything around sort of corporate governance and compliance it's across all of the financial regulatory reporting aspects. There's all the transactional side in terms of all the investments the financing, as well as disputes and, and I guess the support around potential climate litigation. So it really covers the full breadth of the legal services.

Host:

So there's no doubting the currency of the issues that you guys will be exploring. And let's talk about the actual teams that will be delivering on these projects. So we've got an environment where there's skill shortages, particularly in these highly technical areas that you guys will be involved in, what sort of skill sets are we seeing from the Ashurst's side regards to developing these teams?

Elena Lambros:

Yeah. So I might just talk to the one that I'm closest to, which is risk management. So for us, we've grown our risk advisory practice quite quickly. We're sitting at around 80 people already. I think our teams really like the sort of challenges that we work on and really appreciate the caliber of people that we partner with such as Aurecon and our legal teams. So for me, risk, I mean, I'm a risk person. The risk management is so important to these types of challenges. Risk has to have that strong seat at the table. They have to be there right when you're planning, what you would need to change and where you need to go through to your implementation into the end. If you've got a really strong risk voice, you've got your informed risk management framework works, you've kind of got dynamic and flexible risk practices in place. I think the organization can kind of navigate through what is quite a complex world.

Michael Tafe:

Elena and I would share a passion here. There's no better time to be a risk junkie. And for me to be sitting inside an engineering organization then looking across and seeing a legal partner, it's super exciting. Where Elena goes is where I go that much of what the risk function does for businesses in solving these problems is helping to navigate. We're about decision science. We're about ambiguity management. We're about future scenario forecasting. And how do you create activities? And plans are fitted for adaptable to agile in the face of persistent complexities and ambiguities. That's the world that we love and enjoy. There's no better time to be a risk practitioner and to be working across the aisle from other risk practitioners that have similar mindsets.

Host:

So we've heard the why we've heard what your offerings are going to be. And also the teams to support those offerings. you're operating in an environment with huge disruption. The net zero and environmental risk spaces are just ripe for change. I'm really interested in Paul Gleason. I might start with you on the specific opportunities that the alliance will create for your clients in this deep carbonization environment.

Paul Gleeson:

Look, I appreciate that one, Ben, because I do very much like to focus on the opportunity as much as the risk here, and particularly for our Australian based clients, there is significant opportunity associated with a lot of this. So while there's a lot of work to navigate and help choose the right pathways, there's also a lot of upside for the players. If they can actually play a part in the transition, that's starting to become visible to people now. I think it probably was less visible over the last few years, but what's pleasing to me is a bit of a shift away from a winners and losers conversation. And towards an idea of if we get this right, we actually enable the whole economy to thrive and prosper. So for us, when we look at specific clients to be able to say, okay, maybe your core business, isn't directly exposed to global decarbonization in terms of your business model, but you've just got to find a way to get your operations to net zero.

Paul Gleeson:

So you can play in that. And the likelihood at some point in the future, someone will look at what's the embodied carbon in the products you're producing, and to make sure you've got that covered off, but for others, it's more existential and it's more helping them look at well, how are you going to replace the revenues that you've got today? Let's say that it's a fossil fuel based or whatever it might be. That means there actually needs to be a fundamental look at the business model itself. And that there is actually some answers there, there are actually things you can move into that are either adjacent or new, and we can help them start to map those opportunities out.

Michael Tafe:

Thanks, Paul, Mike here as well, just sort of reflecting on that and just sharing how awesome it is to be a risk practitioner in an engineering business where a risk conversation ends up with an engineer asking me, so what do I build? And the concept of opportunity and growth is culturally in the DNA in these organization. So it very rarely, is there a conversation that doesn't end with so can I build something now? What is it that I'm going to actually start to turn my hand towards in terms of the new thing?

Elena Lambros:

And the only thing I wanted to add to that is from a client's perspective for me, I just see so many people setting goals, setting aspirations, trying to meet all of their stakeholder expectations. And I think the beauty of this alliance is that between us, we can kind of work with people to actually get that into implementation and deliver an outcome. So I really like to see an outcome moving forward from all of these discussions. I think that's really great.

Host:

Yeah. What a wonderful observation to finish Elena, Michael, Paul and Paul. Thank you very much for joining Ashurst Business Agenda. For more information on the Alliance, please visit Ashurst.com and Aurecongroup.com.

Host:

If you enjoy Ashurst Business Agenda, why not check out our other two podcast series as well? Ashurst Legal Outlook explains the emerging legal trends and requirements of our fast changing world and ESG Matters at Ashurst reveals how business leaders arising to mounting environmental, social, and governance challenges. You can listen and subscribe to Legal Outlook and ESG Matters wherever you get your podcasts.