ESG Matters bonus episode transcript: McLaren’s race to zero emissions

Transcript

Speaker 1:
Ashurst is proud to be the official legal services partner of the McLaren Group, who share our passion for excellence, commitment to innovation, and ambition for a more sustainable future. Together, we are driving extraordinary performance.

Anna-Marie:
Hello, and thanks for joining us today. In this special episode of ESG Matters at Ashurst. We are pleased to introduce Tim Bampton, Chief Communications Officer at McLaren Racing, who will discuss the company's efforts towards sustainability in an industry not traditionally known for their environmental focus. As the official legal services partner to McLaren Group, we are excited to hear about the role that McLaren is playing in Formula One's race towards a zero-emissions championship by 2030.

My name is Anna-Marie Slot, and I'm the Global Sustainability Partner at Ashurst, and you're listening to ESG Matters at Ashurst.

Thanks for joining us today, Tim. We're really looking forward to hearing more about what's going on at McLaren.

Tim Bampton:
Thanks Anna-Marie, it's a pleasure to be with you.

Anna-Marie:
So, motor sport, and certainly Formula One, don't obviously come to top of mind when thinking about sustainability. What are you doing at McLaren apart from your zero-emission target to position F1 differently to the traditional gas-guzzling image that's been associated with the sport for so long?

Tim Bampton:
Anna-Marie, thanks for that. It's the obvious question. It's important to start by saying, or to explode a few myths because the sport as a collective, we haven't done a great job of telling the sustainability story around Formula One in particular. To your point about the gas-guzzling image, one of the realities it's not as known as it should be is that the engines that we are using today in the sport are at the absolute cutting edge of efficiency. We talk a lot about thermal efficiency and the effectively wasted energy that is emitted from most internal combustion engines and most road cars. Even the most efficient engines have an engine that is about 30% thermal efficiency, whereas in Formula One that has been 50% thermal efficiency for some time. In actual fact, they are by far and away the most efficient engines, internal combustion engines at least, that exist.

Now, that's not to draw a veil over the challenges that are ahead, but what it does illustrate is the power of technology to address and solve and start to break down some of the challenges that face us. So obviously we, as McLaren Racing alongside sport or Formula One, have a very clear target, which is to be a carbon net zero by 2030 or before, and so when you look at the actual output of the race cars themselves, they're about 0.7% of our carbon footprint.

As you can imagine as a global sport, most of our footprint comes from air travel, whether that is of people moving from race to race or air freight. Being a global sport, it's inevitable. And in actual fact, Formula One tracks well below the other two major global sports being the Olympic Games and the FIFA World Cup by an order of magnitude in terms of carbon footprint. That said, I think there's an inherent ability for Formula One and motor sport more broadly to make a positive impact by deploying its know-how technology and innovation to solve some of the sustainability challenges that face us. So I think we look at it as compliance, moving forward to net zero, and then moving forward beyond that to positive impact and leadership.

Anna-Marie:
Interesting points and a very interesting point around where the cars fit into that analysis. I think people probably don't really recognize what you were saying about how little the cars themselves contribute. There is this number that's been put out, 256,551 tons of total carbon emissions in Formula One in a single year. You were mentioning a few of the things that you're focused on. Could you just tell us a bit more about what the strategic direction is to reduce that over the next five to 10?

Tim Bampton:
Obviously our major focus is on how we can reduce the impact of the comfort print around logistics. So as you correctly said, there's just over 256,000 tons of carbon emitted as a sport overall. Now that's a figure from 2018. So we're already down from that. However, the logistics are about 45%, and what I mean by that is freight of all nature. So that could be vans leaving factories, air freight, and then near on 30%, just over 27% of our carbon emissions are around personnel travel. So the sport as a whole is obviously looking at how can we reduce that through the shape of the calendar? And some of the work that can be done around just being more efficient in how we actually address the travel challenges around the sport.

But when we also look at the carbon footprint of our operations track side, that has to be a major focus for the sport as well. So the situation for us in respect to our sites, so the McLaren technology center, is something much easier for us to work through. What we have to do as a sport is make sure that there's alignment from the teams, with the governing body and with Formula One themselves around common initiatives.

I'll give you one example. We ship around motor homes around Europe and they are, and they have been traditionally quite palatial structures. They're fantastic if you're a guest, but we can significantly reduce the sustainability impact of those operations. I don't just mean carbon, but also in the way that we move towards circularity, the materials that are used in the construction of those. So one idea that is currently out there is for us to, over the course of five, six years, move away from bespoke units and actually have a modular unit that can be put in place at tracks that is a much more sustainable solution, much more energy efficient and resource efficient, and that would go across all of the teams in the paddock.

Anna-Marie:
And I just have to ask, who's staying in those palatial mansions?

Tim Bampton:
Yeah. No one actually stays in there overnight, but we have what we call a race base, and so you have what have traditionally been these great big trailers that are towed. They contain the cars, but then they 'Thunderbirds-like' evolve into these engineering centers. If we can change that, those are trucks that are run on currently diesel generators. So we want obviously shift to electric over the course of time, but those are all kind of nerve centers at the race where the engineers can process data and debrief and figure out how to optimize and improve the cars. But again, if that's something that can be delivered as a modular unit and in the same way as our hospitality units, where our guests would come during the course of the day, those are two areas that at track certainly that are well achievable in terms of impacting our footprint at races within a matter of years.

Anna-Marie:
So you've identified a few different areas. You're looking at a couple different focus areas for F1 and for yourselves in particular. Now, just to be a little bit controversial, there are net zero claims coming out from countries even by 2030. Do you think this is an ambitious goal for you to commit by 2030?

Tim Bampton:
I think it's a fair question. And I think it's a fair challenge. And I think our overall perspective is, we want to make sure that we are making the changes we need to make in a meaningful way and not jump to short solutions, quick solutions. So I think that the 2030 horizon is aligned with a number of key organizations. It's aligned with the sport itself. I think the key phrase for us around carbon net zero for example, is by 2030 or before. So I don't think it's a measure of ambition, Anna-Marie, I think we needed to put a marker on the wall and go after it. Now, our very nature as a sports team, a high performing organization, is that we're highly competitive and we want to be the first to get there, so I hope that we can move to a situation where that target, we beat it.

I think that we need a framework to start with. It's a long-term journey. We have an initial horizon of the kind of classic McKinsey, one to three, three to five, and then to 10 and beyond, but 10 for us as a horizon, we can start with. I think also to your point about ambitions, one of the things I'm excited about is we are about to appoint our first Director of Sustainability and in fact, we'll be the first Formula One team to appoint that role. I fully expect that person to help us drive our ambitions even harder. We have a workforce, a team of people who are incredibly passionate and enthusiastic about advancing our sustainability agenda. So we simply need, I think, to understand exactly where we are and then map our ambitions quite aggressively against that. Because I think if I come back to an earlier point, we were talking about at the beginning of this piece, I think we are a compliance stage generally as McLaren racing right now, for the most part, we then have our 2030 horizon, as I said, that may come forward in a number of areas.

But I think moreover, the ultimate ambition for us is to actually impact sustainability in a way that's directly positive. So we can contribute to the sustainability agenda and landscape in a way where we can deploy our technology and our know-how to actually proactively address the issue as opposed to simply compliance or ensuring that we've ticked all the right boxes.

Anna-Marie:
And I think in some ways, you already have, if I'm right, you've already been working towards that. I mean, a lot of this is not so glamorous work in the trenches on a day-to-day basis, but maybe can you share with us some of the things that you've already put in place when it comes to looking at your overall ecosystem from a sustainability perspective?

Tim Bampton:
Sure. And I think what's worth doing a moment is just drawing back slightly, perhaps I should have probably brought this further up front, but in terms of just giving an overview of our sustainability framework strategy, and I think one of the things that we are almost dogmatic about at the moment, is not talking about a sustainability strategy so much, but a strategy for a sustainable team. So we enforce the idea and embed the idea that sustainability is something that is baked into every decision that we take and every action that we make. And so within that framework, we have four core pillars of focus.

The first is the journey to carbon net zero. The second is transitioning to a circular economy through the reduction and elimination of waste, recycling and reuse. And that's effectively the environmental side of our strategy. And on the societal side of our strategy is the commitment to diversity, equality and inclusion.

And then secondly, to the promotion of health and wellbeing and with a particular emphasis on mental health, because I think as an elite organization, or an elite sports team in a high-performing organization, we have a unique ability to influence that conversation, which is becoming more and more important. So that's the overview with effectively a cake split into four pieces.

If you look at the moment, one of the higher priorities is obviously the journey to carbon net zero and one of the things that was pleasing for us, to see what is a really good example of where our technology can make a real difference is something that's called the BeeComp seat. Last year we were the first F1 team to use natural fiber composites. You imagine the drivers are sitting inside this tiny car and they have to fit into a seat that is perfectly matched to their contours and keeps them in place.

We were working with a light-weighting specialist company called BeeComp. They've optimized the properties of flax fibers to make a seat, which has got all the required strength and stiffness from a safety point of view, but it's got a 75% lower carbon footprint compared to the carbon fiber counterpart. So that's a great example of innovation at work as an inbuilt mechanism of our search for performance, but that has a great positive output when it comes to reducing our carbon footprint.

If we can pull that sort of know-how and ingenuity through our overall sustainability journey, I think that we can achieve a lot on a day-to-day basis. I think the final thing really is just, again, going back to the hybrid engine, but moreover looking sport-wide at the promise of e-fuels and the technology that can be deployed to advance sustainable fuels. So moving from carbon fuels, and this is really probably a bridge to all-electric in the future, but the ability for Formula One in the engineers in the power train area to optimize the use of what is being called e-fuels, which I think is something that Formula One see as a real priority and ability for the sport to influence over the next five to seven years.

Anna-Marie:
And I think in particular, Tim, one of your points, which is critical is that interplay of carbon reduction and circularity in all aspects of how you view your business, start to end. On those other two pillars, we spent a lot of time talking about environment, net zero and carbon neutrality. Can you just share with us a little bit more around, in particular, the social impact aspects?

Tim Bampton:
This is something that actually goes beyond Formula One, Anna-Marie, I think the under-representation of both female and people from a BAME (Black, Asian & minority ethnic) background in engineering generally, and technology. McLaren, as part of Formula One has a real opportunity to help to address that issue. We've been for so long focused on the lack of women in senior engineering positions and encouraging young women through our STEM (science, technology, engineering and mathematics) programs, which we see as a key driver of D-E-N-I to give young women a vision of a career and a future in STEM fields. And so if we can influence that, not just necessarily to drive greater numbers of female engineers in Formula One, but actually in science and technology more generally as part of an industry effort, I think Formula One has an incredibly powerful opportunity in front of it.

And I think exactly the same applies to people from BAME backgrounds and different socioeconomic backgrounds. So I think there's a lot of work we are doing in the recruitment space to ensure that we are not fishing from the same pool that we've always done traditionally and I think Formula One has always done traditionally. So that is a really active area for us at the moment. We have to do that in parallel with initiatives that are filling the funnel, if I can put it that way, through STEM and STEM activity. And there are again, multiple initiatives that are running in the sport, but we are ourselves formulating now fairly broad and far reaching initiative that will address that. That's something that we will be unveiling over the course of the next few months, but really excited about how that can impact the diversity, equality and inclusion imperative.

This translates all the way up, of course, to gender pay gap, because we simply don't have enough women in senior engineering roles and that's a product to ensuring that we are getting to young females that are primary school age and building that idea that this is a genuine and credible career path for them, if that's something they're interested in. I think that's not withstanding the day-to-day work we're doing within the organization to ensure that we are pushing women through and pushing people through from a diversity perspective to ensure that we're getting greater and more accurate representation in our workforce. But I think also inspiring people to come into engineering and technology and into this sport because it is ultimately a meritocracy, the best people rise to the top of what we have to make sure we're doing is providing the equal opportunity for everyone to succeed and be their best self.

Anna-Marie:
It sounds as if you guys are really focused on this and thinking about it from multiple aspects and really trying to drive down into where we can create real change. Do you see that focus and that sustainability from your position? Where do you see that fitting in with the rest of the business culture and having an impact on a wider scope?

Tim Bampton:
It has to be endemic. It has to be part of the fabric of us as an organization. High-performing teams operate at their best when they are diverse, when the people have the same opportunity to succeed and to thrive, they operate on the basis of honesty and transparency, these are principles that are fundamental to us as a team and our success. And so, certainly talking about the subtle aspects, I think there's effectively an inward focus in the sense of making our culture as high performing as we possibly can. That to me, and I think to the entire leadership of McLaren Racing is synchronized with the need to be as diverse and provide equality as much as we possibly can as part of the organization.

But it's also the ability to outwardly inspire beyond that and we talk about, as in terms of our vision, to be the most inspiring team in terms of our fans, in terms of our partners, in terms of the industry. So I think, again, we are always riding a dual track in terms of taking care of home, if you like, and making sure that everything we're doing as an organization and as a team is pointing towards our ultimate goal. And equally at the same time, ensuring that we are inspiring, through our work and through our approach, people from all parts of society. That may be the work we're doing in mental health, for example, with MIND in the UK, because we have a very unique position to come from, whether it's our drivers talking about what it means to them and breaking down barriers that have existed, but also our own team members and being honest and open about those challenges in the environment that we work with.

That has huge power in terms of not only putting our colleagues closer together, but also reaching out to people who need to hear that and need to hear these messages, which can be life-changing. So I think, to circle back to your question, we put sustainability as one of our five core pillars in our business strategy, but I'd go back to the point about, it should be baked into, and it will be baked into, every decision we make and every action we take, so that it's something that's just embedded in the organization as an intrinsic quality or an intrinsic value of how we operate.

Anna-Marie:
Tim, I know you guys were quite busy at the beginning of COVID utilizing your engineering skills on a slightly different format. Do you just want to share with the listeners what McLaren was up to when COVID first hit in the UK?

Tim Bampton:
Yeah, with pleasure. And I would underline we were, but a small part of a much bigger effort, but nevertheless, I think we still played an important role in that, and that was the response to the UK government's call for ventilators when there was a really critical shortage in the health system of ventilators. A number of things I think that were illustrative of the Formula One mindset and why I feel so optimistic about how we, as a team from the Formula One industry can really contribute to the sustainability agenda. But that was the sort of innate response that our people had towards the challenge. If you wind back the clock, we were going into furlough. We had a race team that couldn't race. We had road cars that couldn't be built. So we had this powerful force of people from all sectors, whether it was logistics or project management or engineering or inspection and testing that could all come together and rally around a very different challenge.

And of course it was important to everybody from a human perspective that we responded, but just watching engineers come together, putting egos aside, putting their backgrounds aside and coalescing as one group to solve immediate problems was really inspiring. And so we, as part of a consortium of UK industries, which include Ford motor company and Airbus and Rolls Royce, British Aerospace, and a number of other of our fellow Formula One teams, we were able to produce over 13,000 medical ventilators, which doubled the NHS stock. The value was the ability for us to ramp production really quickly. So we went from 50 a week, which is where the existing manufacturers, that was their rate of production normally, and we took that to 200 a day. So it was a phenomenal acceleration of production capability.

That was everything from manufacturing parts, so we turned the machines that we would normally build suspension on into manufacturing components for medical ventilators. And if you can imagine also all of the governance and all of the regulatory hurdles that needed to be jumped and crossed in short order, it really was an incredible achievement from an industry perspective. But I think for everyone at McLaren Racing and our fellow companies at McLaren Automotive [inaudible 00:24:19], it was a hugely rewarding effort and program and I think proved again that the ingenuity of our people, the know-how that we've developed, the systems that we've developed can really contribute to unexpected challenges that improve society and improve the world.

Anna-Marie:
Really inspiring actually. You think about that ability to change your mindset and get everybody moving in another direction. I find that very optimistic in terms of having McLaren on board to find the solutions for the sustainability challenges that we'll be approaching sooner rather than later, altogether in our business ecosystem. Thanks very much, Tim, for your time today.

Tim Bampton:
My pleasure Anna-Marie, thanks for giving me the opportunity.

Anna-Marie:
Certainly our pleasure, and thanks everyone for listening. This is part one, in fact, of a two part series where we'll be exploring McLaren's sustainability journey. In the next episode, we'll dive into the ways in which McLaren is leading the way in the F1 arena, around sustainability, innovation and technology, from now into the future.

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