23 June 2022
The Ashurst 30 For Net Zero 30 podcast series is all about speaking with 30 climate action champions about real steps to take now in order to reach the 2030 goals. Today, I sit down with the host and creator of the series, global sustainability partner, Anna-Marie Slot, to go through the biggest takeaways from the first 10 episodes. You're listening to ESG Matters at Ashurst.
Anna-Marie, over the first 10 episodes of 30 For Net Zero 30, you've spoken to a range of experts on all things ESG, ranging from sustainability finance gurus, self-professed ESG geeks, to former members of parliament, and even UK Lords. In your view, what have been the key takeaways from your discussions?
It's been a fascinating few interviews and I'm really looking forward to the next 20 as well. I think what these have really shown across the globe from all of the different people that we've talked to is five real key themes that were coming out.
First being awareness, awareness of climate change and its impact, awareness of that business imperative. The second really goes to behavioral and systematic change, and what of those changes are necessary now. The third one's no surprise. It's all about communication and communicating what's going on and how we're going to get there.
The fourth one is very interesting. I'll come to that later, but it's about how green finance can in fact be profitable, but also be part of the solution. And then I think the final one is also no surprise, but really all about the impact that each of us as individuals that make up this ecosystem that we call the world, both at business and at home, can have a real impact on what's happening here.
So looking at these themes in greater detail, could you perhaps highlight the impact that they can have? Firstly, you mentioned awareness as that first step. What do you mean by this, and in your opinion, what can drive greater awareness around the importance of achieving that zero net 2030 goal?
So awareness is really interesting, and if you look at what's happened in sustainability over the last two years or so, I used to say that was 18 months, but time is passing. And what's really happened is that this concept of climate change, the fact that there are business externalities that have not historically been taken into account when businesses were looking at how they run themselves and how they're structured is really moving further and further up the agenda.
I mean, we have conversations with C-suite individuals around the world and climate change and sustainability has popped to the top of the agenda. And that's no surprise. I mean, that is, as you see a global shift from something that was a nice to have that sat once a year in your annual day, as something that you did as a team building exercise, into something that is actually a recognition of the externalities in the ecosystem that have been previously either ignored or underrated in their importance.
And it's that real shift into being a business imperative and an element that you really need to be paying attention to at the highest levels that has grown through the SDGs, through the commitment at government levels to nationally determined standards from stakeholders, such as Greta Thunberg and her like in lots of different countries who are saying, this is an issue for us as inhabitants of this planet, and particularly an issue for the inhabitants that are going to be here longer than you and I because we're a little bit further on in that age scale.
And so I think that growing awareness has really brought this to in fact, where it needs to be in the conversation, which is a critical component of how you construct a company in a resilient and sustainable manner going forward.
I had a brilliant conversation with Wai-Shin Chan from HSBC, and maybe we can just excerpt that quote to kind of give another view on that awareness and the role that awareness plays.
The biggest shift. That would probably be the overall awareness or the increase in awareness in sustainability from everyone, the general public, investors, corporates and governments. For businesses, this awareness is evolving.
If I could explain, maybe a few years ago, it was fine for a company to have some form of climate target, say a 20% reduction in emissions at some point in the future. Then this evolved such that it had to be aligned with two degrees, and then in the last 18 months, okay maybe 24 months or so, this has really shifted to being aligned with one and a half degrees. And that's been behind the ubiquitous Net Zero movement that we've seen bandied around so often these days. And that is a good thing.
However, we are now entering the phase of what I'd like to call climate integrity where climate integrity really matters. This increase in awareness that I mentioned highlights this. For example, there is good net zero on one side, and to put it gently not so good net zero on the other side. There is a lot more scrutiny of how good these climate targets are.
So awareness is one thing, but once the rubber hits the road, we all know that there's a great deal of change that needs to occur, not only system change, but also behavioral change. How are you seeing this play out?
That is the interesting one, and that behavioral change is the longer and harder part of this whole conversation because it does come down to people altering what they do based on this new information, and that's not easy for anybody.
And so the key awareness that we talked about just now, that Wai-Shin was referring to, really is a way that you need to bring this issue to people's doorsteps and bring it to the doorstep of the business, of the individual.
I mean, human beings are trying to do lots of different things at once. We have jobs, we have our home life, we have our families, we have our interests. We probably also have a desire to sleep, and occasionally have some fun. There are lots going on for everyone. And those people don't change when they become a business, they just collectivize into a business and businesses also have a lot going on in the same manner.
And so to do things in a different way, and to take into consideration new types of thinking, really requires a certain amount of bandwidth in people's lives, and you have to commit to creating that because it isn't there before.
And I think a fascinating aspect of that is for example, COVID. COVID was something that was a possibility for people, but is now had a huge impact on your everyday life. If boards had gotten together every year and they look at their impacts and they look at their risks and I'm sure they all spent five or 10 minutes talking about something like a global pandemic that wouldn't require you to overnight put all of your employees on a remote working schedule. I'm sure it didn't take that much time to discuss, because it was seen as such an outlier, such a black swan.
And now people have seen that it actually is possible. Not only is it possible, it happened and people reacted and have adjusted to it. And it's that kind of huge behavioral shift, which was kind of in the back of your mind, which I think is key to keep in the front of your mind. As someone said, once to me, you need to bring the question of climate change really to someone's doorstep so that they can act on it now in order to be able to really affect change in 2030, 2040, 2050, and get to where the planet needs to be in order for us to continue to thrive on it.
I think all of the people that I've interviewed have had really interesting inputs on how that system change happens for people and in terms of how that behavioral alterations exist. Esther Pan Sloane who's with the UN has some really interesting comments on that, just from a personal level.
Esther Pan Sloane:
You can change that. You own those assets. You can decide where they go. You can say, I refuse to support fossil fuel companies or gun manufacturers or companies that profit from riot gear or companies that profit from hate speech. You can make those decisions and take your investment funds out of those companies.
And that's a way of making change that's a lot more effective than standing in the street with a sign. Because a corporation can ignore a protester, but if lots of people start pulling their money out of the stocks of publicly traded companies, they'll start to pay attention. And even private companies pay attention to how consumers feel and what the social trends are happening.
So I would say, please consider yourself and your power as an individual to direct your assets towards companies and activities that are consistent with your values, and if you find that your assets are supporting activities or behaviors that you don't like, move them.
So Anna-Marie, with all this increased awareness and behavioral change going on, we move to a really important element and one that's come up a lot during your discussions to date. And that's all around communicating that change. In your view, what's key here?
Yes, so communicating, it is a theme that's coming across of all the conversations and we do have to work as a whole. It's an interesting dilemma climate change because it does really require groups of people to be doing things as well as individuals to be doing things.
And so I think communicating that change has been really key for the people who have been successful at this so far. They have done a very good job of communication. And it's been also really interesting finding ways to communicate in the world that we live in now with the demands on bandwidth, as I said, for everyone. And lots of other important issues going on in your present day. It's quite hard for people to really get their minds about an eventuality, and I think it's very difficult for people to really engage on something that seems like a tomorrow event.
And so I think it's that communication aspect of really staying front of mind for people and having all levels of the organization understand why things are being done in a certain way. That's critical for the delivery of the goals and the solutions that we need to be delivering.
Again, Wai-Shin had some great things to say about that. I mean, HSBC is a massive organization. So I'm sure he's familiar with trying to communicate across such an enormous group of people.
But the message of clear communication of action is one that all organizations can adopt. I also think that this communication should be regular. So the progress updates can be helpful, and we tend to have short memories, or at least I do when it comes to certain issues. We're all so busy with our individual daily tasks. So the reminders and why it's important, why we're doing this, what our roles are in these could help keep the action momentum going forward.
And I think that'll really, really helps because I've always thought we need to break down the longterm vision into shorter term goals. Otherwise, climate change can feel a bit abstract and the net zero targets going out to 2050 or the climate neutrality target from China going out to 2060 can feel very, very far away indeed.
One of the key learnings from a personal point of view I've had from the series has been all around that myth that green finance is not profitable. Maybe this is one of the purposes of this whole series, but it's a thing that is talked about quite a lot. In your discussions to date, do you think we've really de-bunked this myth?
Yeah, it's a funny one, that one. So, when I first started doing sustainable finance deals in 2014, which is the same year that ICMA published the green bond principles, which were kind of the first voluntary set of standards. We spent a lot of time with people talking about how difficult it was, that green finance was additive and how complicated it all was.
It's fascinating in that subsequent period how quickly that whole market has evolved and how quickly the mindset has shifted. I mean, going to the earlier point about behavioral change. I mean, it really is possible and to do it quickly.
I mean, the green finance market overall, bonds and loans has literally come from nowhere to be a massive, I think the latest numbers on the bond side is a trillion in issuance. Nothing compared to the standard "regular finance market," but certainly something that is growing double digits year on year. And I think a lot of that has to do with the recognition that this is a must have, not a nice to have. And so then you have the minds across the world that are active in finance thinking, okay, well then what are the opportunities for finance in this whole system?
There are such opportunities there really. I mean, if you look at the markets, I'm a big believer in the markets and the markets have responded in a fascinating way. Because at the moment, all of these guidelines and rules that govern green bonds and green loans and sustainability linked bonds, sustainability linked loans and everything in between. It's social bonds, social loans. They're all at the moment voluntary guidelines that people have subscribed to in doing their offering and that the market has evolved from.
So those are opportunities where people have said, okay, I'm going to be clear. I'm going to be transparent about what I'm saying. I'm going to adhere to these guidelines so that you know what I'm talking about when I say what it is that I'm doing. Are there bumps in the road? Definitely. Will there be further evolution in the market? Most definitely. So I think that market has been a fascinating one to watch. I've been very happy to be involved in it. And I think one of the key proponents certainly on the bond side is Sean Kidney, and he always has some interesting things to say.
I mean, we've seen green bonds grow like a rocket currently about a trillion dollars outstanding. We've seen this year, the growth of social bonds and sustainability bonds, and even pandemic bonds. Using the same principle, the daughters of green bonds, if you like, which is around transparency of the allocation of proceeds, and then reporting on the allocation of those proceeds on an annual basis.
This has been very interesting. I've had major investors come up to me now and say that when it comes down to sovereign bonds for emerging markets, they've now got a strong bias for use of proceeds formats because they really like the increased visibility and transparency around it.
And I think that's a critical part of it. Of course, that is linked to the whole enthusiasm for doing something on climate. One of the things the green bonds market has done, has showed that you can get a return and support the planet at the same time.
Now, another really interesting aspect and mentioned in your first answer to the overall themes of this series to date, and that is all about the intersection of the corporate world and individuals. Now, what are some of the themes coming out of your discussions with our experts regarding the role of consumers in climate repair?
Power and role of stakeholders has been fascinating in the world of climate change and climate resilience. I mean, in some ways maybe it's not surprising. We're all residents of this planet and therefore, we all have something to say about it. But it really is quite interesting how much influence individuals are having in these conversations.
And this intersection between what stakeholders are asking of companies now that previously kind of were probably niche players, a person or a group or an impact fund had an interest, and so they would try to put that forward at a company AGM. But really, I think now those conversations are much wider. They have more depth. You see large institutional investors like BlackRock and others being more active in how they vote.
Now, this is the fantastic part of this whole conversation. You have an entire spectrum of people, so we have people on one side that think people aren't doing enough around climate change. There isn't enough movement, quick enough. You have people thinking that we're spending a lot of time on it and are probably a little bit less interested in doing it as quickly. Think we have till 2050.
So I think what you're really seeing is that focus from the stakeholders at an individual level having an impact at a corporate level. And I had a fascinating discussion with Lord Deben who was really insightful into how and why he thought that people have really started to reflect this in their daily lives and think about it in a more active and ongoing way and have demands around it in terms of what they think should happen going forward.
I'm very keen on the Pope's encyclical Laudato Si, which I think is the best introduction to climate change that exists. He wrote it six years ago. It is very much one of the pieces of work which has changed people's minds.
And one of the key understandings there, which I don't think anyone else has really brought up, is that climate change is the symptom of what we have done to the world. It's not the disease, it's the symptom. And it's the symptom by which the planet is crying out for us to cure the disease.
And therefore, I just think that the way anybody listening to this can really make a difference is just to ask themselves the question in every decision that they make, what's the best way to help to heal the earth? If you're thinking of buying a new car, make the jump and buy an electric car. If you're thinking of heating, then think about how you do that most effectively.
But small issues, just tiny ones, like making sure the taps aren't leaking, not cleaning your teeth under running water, only heating enough water for your coffee and not insisting upon boiling the whole kettle all the time. These are tiny things, but they add up, they add up to a huge change.
We could close two generators if we all only heated the water we need for our coffee. And I know sometimes it sounds too simple and too small to do, but unless we do all those things together, we're not going to win this battle.
So I think key takeaways are those real five big points that we've gone through today. Awareness of climate change. Behavioral and systematic change across business. The key role that communication plays. The fact that that sustainable finance in fact can be part of the solution done properly. And then the impact that we as individuals have both in our roles as individuals, and in our lives with organizations that we work for.
Anna-Marie, thank you so much for joining me today, and I'm really looking forward to the next 20 episodes.
Glad to hear you're looking forward to it and to everyone else listening, thank you for listening to this special episode of ESG Matters, where we've tried to condense for you what's happened in the last 10 sessions.
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