22 June 2022
At Ashurst, we acknowledge First Nations peoples as the traditional custodians of the land on which we work in Australia and pay our respects to their elders past and present. We extend that respect to Aboriginal and Torres Strait Islander peoples listening today.
The Ashurst 30 for Net Zero 30 podcast series is all about speaking with 30 climate action champions across the globe about real steps to take now in order to reach our collective 2030 goals. Today, I have the pleasure of sitting down with the host of the series, Anna-Marie Slot, to go through the biggest takeaways of episodes 11 through 20 of the series, plus we share what's in store for the final 10 episodes. You're listening to ESG Matters @ Ashurst.
Anna-Marie, the first 10 episodes of 30 for Net Zero 30 included the key themes of awareness, communication, and the importance of ESG in the boardroom. Now, with another 10 under your belt, what's been your observation of the key themes over the most recent episodes, and if it has, how has the narrative changed?
Yeah, thanks. No, the next 10 have been as interesting as the first, as far as I'm concerned. I think one of the fascinating things I realised is that in this segment of 10, we started with sustainability and digital and that interface, and we ended with sustainability and digital and the interface, through starting with Matthew Le Merle who's at Blockchain Coinvestors, and ending this 10 with Suranjan Som who's at Hitachi, and so I think that's really interesting. In the middle of the 10, we've kind of randomly traipsed around the world, looking at a couple of key themes, basically following the money, whether that's investing, insurance, or entrepreneurship. And then the second big one probably coming through is really the discussions around the business case of sustainability and how that's expressed big picture, trying to avoid just looking through a single lens, but looking at people, planet, and prosperity altogether.
I think the next big thing that we saw in this 10 was really looking at sustainability across industries and across the globe. So, looking into how sustainable cities work, looking into how data centres are part of this conversation, looking into agriculture, and so really broadening out the scope there. I think the final point of the takeaway which has been interesting is really this conversation in light of the evolving situation around COVID because I think we'll get to that later on in the conversation, but the outcomes and the impact of COVID on the sustainability conversation is I think different than from what people expected.
Yeah. So, just reflecting on that, what's very obvious listening to this series so far is we've seen so many shifts in terms of where people are taking sustainability and ESG. You've reflected on the different industries and around the globe. But I guess for both corporates and individuals, they now have a real option, don't they, to take action and a real choice when it comes to making sustainable investment decisions. What do you think has been the key driver for this change?
Yeah, so it's really interesting. I think in some ways it's about people kind of refining something that they knew before but that had kind of become submerged. So, it was a lot about lots of the different people that we talked to, they knew about sustainability. They had thought about it earlier in their careers, but then it got submerged under other things they were doing, and now the importance of ESG considerations has resurfaced, right? The IPCC report, the IEA report, the work that's being done on transition plans, the understanding that the science behind this is not in question any longer, and in part that crystalized a bit at COP26 where people came together and talked about the IPCC report. They talked about 1.5, but I think really it's about people bringing that awareness into the work world in a way that hasn't happened before, and into their businesses, right, through companies they were starting, through ways that they're spending the time, through how they're looking at risk in their own industry, to how they're looking at opportunities from ESG.
And so, I think, in particular, we spoke with Louise Wilson who has in fact started her own platform about sustainability investing, and it is that manifestation of something that she knew to be going on, but hadn't really connected with what she wants to be doing and spending all of her time focused on in her working world. So, I think that's probably best heard through Louise's own words when she joined us in episode 12. Let us just listen to what she had to say about that.
The action that I've taken, if you like, is with my co-founders to create this platform that allows people to make a change through their money. There was some research done that said how you choose to invest your money is 27 times more impactful than other things you could do, like give up meat or drive less. Where the 27 times come from, I don't know, and I don't think in many ways it really matters in some ways whether it's 27 or 25 or 30. The point is that actually, we can make a big difference just by thinking more carefully about where we put our money when it comes to investments.
So, Anna-Marie, one of the key trends you mentioned at the start there was for businesses not to sort of lose sight of the overall business case of ESG. Could you expand on that a little bit?
The important part here is the business case of the E, the S, and the G, right? And so, that's E, S, and G and I think that's what's the really interesting thing that's happened over the last, probably last 12 months really is the expansion of the conversation from particular aspects of ESG to an understanding of all that E, S, and G could mean. So, that's environmental, social, and governance, right? So, people talk about climate change, but you can't talk about climate change without talking about just transition. You can't talk about social without talking about governance. You can't look at any one particular thing in isolation, and that matters whether you're in companies, whether you're in industries, whether you are in government. It matters across all of the functioning ecosystem of the world, right?
So, I think one of the people who had a really interesting insight on that was Chris Castro who is the head of sustainability for Orlando City, which is one of the cities in Florida in the United States. And so, he was talking about how that broader picture of the ESG, that wider view of what is sustainability really feeds into how they're seeing people come to this conversation. And so, again, maybe we can listen to Chris in his own words joining us in episode 13 for some really interesting insights.
Right, it really comes back to that triple bottom line of sustainability, people, planet, and our prosperity. And so, that's one kind of big shift that I've kind of seen is the focus on health. Secondly, I've seen a real focus on equity. I personally believe that we can't have a sustainable future without addressing these inequities and really centering those that have been disadvantaged, too often are Black, are Hispanic, are Indigenous, and other communities of colour. And so, I'm excited that there seems to be this convergence of kind of the traditional environmental group and the traditional social justice groups that are coming together and realising that we can't have, again, a sustainable future without addressing equity and justice as well.
So, Anna-Marie, expanding on that broader business case piece of ESG, and specifically looking at the role insurance plays in ESG and the key takeout's of COP26, what's your thoughts on the role of insurance?
Yeah, it's so funny. No one really asks that question, right, in regular conversation, right? "Ooh, what do you think of insurance?" because everybody kind of tries to forget that it even exists in the structure, but it is actually fascinating, and you also don't hear that too often, it's fascinating, insurance. There's been so much focus on the banks and so much focus on lending, and that's good, but insurance really underpins how the financial system functions, and the key here where insurance and ESG overlap and become partners in this conversation is the focus on risk and the time horizon that insurance has. And so, that's why it becomes a really interesting conversation around what is that industry doing, how are they then looking at it because these are people who really do focus on what does that look like 20, 30, 40 years out because their entire business model is structured around what risks have been at what times and what payouts have to be made.
They also, on the other side of that, that's their primary, but behind that, they themselves are enormous investors in the market in order to be generating the returns that they need to be making those payouts. So, I think really the conversation with Julian Richardson might not top your list on, oh, let me listen to the podcast on insurance, but it really is a fascinating insight into the market from somebody who's been in there for a long time and has really thought about this. And so, I'll hand over to Julian to explain.
And so, really, the insurance industry is sort of the glue and the oil of the capital stack, and by bringing in the underwriting community to focus on sustainability, they can bring new products, de-risking products that will help more capital be deployed in sustainable investment opportunities and remove those risks which typically act as barriers to capital being deployed. So, that's the first action we need to see.
We also want to see more collaboration across stakeholders because, interesting, the Sustainable Development Goal 17, I think it is about partnerships, and we need to collaborate broadly with policymakers and other capital providers and civil society to understand what we can do as an industry and where our capital is best and most effectively used. One example of that is on adaptation and resilience finance. A lot of the attention has historically been on mitigation, so we understand investing in wind farms and solar plants which mitigates emissions or reduces emissions, but we know climate change is here already, and again, in the international community, a lot of the attention has been on why is all the attention on mitigation. Why is more money not flowing to adaptation and resilience?
And, again, this is a great opportunity for the insurance industry because resilience finance is fundamentally insurance. We can't stop catastrophes happening, but when they do happen, we have to enable communities to bounce back quickly and resiliently from those events. And so, the insurance industry has an enormous role to play in it, not just sort of providing insurance-type covers, but the expertise in modelling that exists within the industry, our ability to transfer and trade risk, it is really important to bring that to communities.
Throughout the series, we've heard a lot from investors, bankers, and financial service gurus, specifically within the financial services and professional services sectors, but it's also been really nice to hear over the last 10 episodes some subject matter experts across other industries, hasn't it, like transport, cities, agriculture, and data centres.
Yeah. No, it's been really interesting, and getting those insights from the different industries is key also to the conversation because again, this is a whole of business transformation. It's not that one group or one industry needs to transform. Everyone needs to transform. And so, looking at the intersection of sustainability and digital, it is fascinating to me, looking at that as digital disruption, and how does that look sustainable, but also things that you don't really think about. I mean, we use so much data all the time, and people like Yee May at Equinix run those data centres. And so, having the insights from how they're looking at their own sustainability and looking at the whole of life supply chain. Who are you working with in that entire value chain really has been fascinating, and that's equally applicable to agriculture, Lynette Ryan talking about how they're working through their value chain as well. I think to see what real transformation, real commitment looks like, let's listen to Yee May talk about what they've done at Equinix, how they're delivering on their commitments, and how they're really looking at this as a business imperative.
Yee May Leong:
Equinix has really truly reduced carbon emissions by 50%, right, even as our portfolio doubled, but that's not good enough, and we have continued to improve or analyse what we call power usage efficiency from 1.62 to 1.51, and we continue to focus on reducing that through our energy consumption, reducing that through our global Energy Efficiency Centre of Excellence programme. We're also continuing to cover over 90% of renewable energy globally and investing in new investments which support our commitment to reach 100% clean and renewable, and we are really, truly the first data centre company to set a global goal to become climate neutral by 2030 which aligns approved science-based targets addressing reduction of Scope 1, 2, and 3 carbon emissions.
So, I think first and foremost, it is imperative for industries to normalise their commitments and the definition of net zero, and these science-based targets have developed net zero guidance for businesses to reference, and it's ambitious, but additionally, businesses large or small must begin to prioritise and address opportunities to improve efficiencies across their organisation operations, including their supply chains.
So, one are the clearest trends I think hearing from your guests over the past 20 episodes has been around the language they're talking about ESG, and specifically how ESG's changed over the past two years. So, I'm wondering, in your view, what impact do you think COVID has had on ESG practises over the last two years?
Yeah, it's been really surprising, I think, a very surprising aspect to the conversation because COVID was one of these black swans. COVID was what happens when an international global pandemic causes you to have to shut off all of your operations and go remote overnight, right? That was a question that was probably asked in boardrooms before COVID happened and probably given a few minutes of consideration, oh, are we ready, we're not ready, but it wasn't actually ever done. So, having COVID happen, I think at the time, a lot of people thought, "Well, this means sustainability and ESG, those conversations are on the back burner because everybody's just struggling to make it through." But in actual fact, what it's done is really opened up the possibility around having those conversations. What does that look like? What does the ability to adapt and innovate look like? How does transformational change happen quickly? How do companies alter their mode of operation in a significant way at speed and at scale? That's what we're really talking about with delivering 1.5, speed and scale to transformation for everyone.
And so, I think key to that obviously is the communication to it. It was kind of one of the themes we heard in the first 10 as well. Key to that is talking to people about how that looks for them, and I think Sallie Pilot from Black Sun was really interesting in talking about what they see around those big trends and how they see COVID intersecting with that conversation. And so, really listening to Sally is a great way to hear that on a day to day.
So, I guess from our perspective, there are kind of five big trends that I think are really driving this that have become quite enhanced or accelerated in the last two years since COVID hit, and I say often to clients and anyone who will listen to me that the silver lining of COVID is that we've got these issues onto the agenda as real business issues, not just sustainability issues.
So, I think there's a couple of things really happening. There's obviously the rise of stakeholder capitalism and the wider understanding I think by business that profits are really the result of the strength of their relationship with their various stakeholder groups, and this is more and more important moving forward. The idea that sustainability and sustainable business is on the top of investors agendas. So, there's a lot of change being driven that way which is driving the corporates' agenda, and I think that the fast pace of regulation and legislation around this area, and the thing I wanted to highlight here is not just corporates, but it's also investors that are under scrutiny and changing regulation legislation in terms of their investments and green deals and just transition. So, that's really important because of the impact that that has on the information that they want from corporates.
And then of course, we've had an accelerated digital transformation over the last few years, and then I think finally but almost most importantly is the realisation of the commercial impact, particularly when it comes to different generations, and I'm speaking mostly of millennials here, and I think that this idea that millennials really want to work for companies that have a purpose and are making a difference and are really trying to tackle these issues. So, we find with our clients that really the driver of change are all those things that I talked about, but often, it's their own employees that they're having to be accountable to, to be part of the solution rather than part of the problem that's driving a lot of the change internally which I think is super exciting.
Yeah, well, that is very exciting. Anna-Marie, thank you very much for joining us in this wrap up episode. But before you go, I'm hoping that you'll be able to share some insights into what we can expect over the next and final 10 episodes of the podcast series.
Sure. Well, you can't give away everything on day one, but looking forward to some really interesting conversations around built environment, probably be trying to do something with some change makers in Africa, given that COP27 will be held, and I think everybody very much thinks it will be an Africa COP this year. So, also looking to get some insights from ASEAN, Southeast Asia area, given their massive connectivity between sustainability and livelihoods in that part of the world and places where the first impacts are already starting to be felt of climate change. So, stay tuned. I think we have some interesting stuff coming up.
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