# COP28 Data: 11-01-2025 21:40:42 ## Lista de Vídeos 1. [Hopes for COP28](https://www.youtube.com/watch?v=mJ9wSjcCoEM) 2. [think ahead: COP28 Expectations and the Role of Business](https://www.youtube.com/watch?v=MU9Li2tUwTM) 3. [think ahead: Challenging Contemporary Energy Systems](https://www.youtube.com/watch?v=hJOeONgMszA) 4. [think ahead: Energy Transition, A View from the UAE](https://www.youtube.com/watch?v=ONsN6nxftZk) 5. [think ahead: Complex Climate Trade-Offs](https://www.youtube.com/watch?v=XE9DPMV4ENM) 6. [think ahead: Meeting the Climate Challenge](https://www.youtube.com/watch?v=_LE1nBUDaDQ) 7. [think ahead: How Regulation is Supporting the Path to Net Zero](https://www.youtube.com/watch?v=HyC66Ybmhok) 8. [think ahead: Climate Transition and Emerging Markets, led by the Wheeler Institute](https://www.youtube.com/watch?v=jKanGWK6WmA) 9. [think ahead: Fireside Chat Hosted by Christopher Caldwell](https://www.youtube.com/watch?v=Bc5pYw7tppQ) 10. [Hopes for COP28](https://www.youtube.com/watch?v=DM6cHHwLwbY) ## Transcrições ### Hopes for COP28 URL: https://www.youtube.com/watch?v=mJ9wSjcCoEM Idioma: en [Music] one of the key issues Business Leaders should focus on at cop 28 are public private Partnerships these are tools that can help enable new projects in developing economies and ensure that the transition is just and Equitable a key issue is the decide of effective regulation to mitigate climate change research shows that so far existing rules have not yet leveraged their full potential to motivate business businesses to address environmental sustainability there is a significant Gap that now needs to be identified and addressed at cop 28 these gaps relate to providing capital from some of these institutions to the underdeveloped institutions and see how we can actually make them more practical and more feasible what we need to prioritize is how to incentivize early action by businesses to tackle climate problems a key issue step business leader should focus in cop 28 will be on increasing resilience towards impact of climate change as more countries will inevitably experience the impact of climate change it's important for us to develop and Implement a workable solution for this issue I think one of the key issues is energy diversification uh energy diversification is important to prevent disruption of energy Supply I think a big issue is finding the capital and expertise to invest in companies that improve the green infrastructure basically generating energy from Green sources battery storage solutions and smart [Music] grids I think the cop 28 is a fantastic opportunity for Business Leaders to really get together and talk about shared issues and start excellent collaboration programs to really aim to solve the current climate crisis together my hope is for policy and Business Leaders to agree on an ambitious framework for tax policy that reduces carbon emissions and fosters investment in green technologies I hope that we can achieve more ambitious climate commitment from participating countries more collaboration between countries on climate actions and more concrete plan for funding for adaption one of the positive changes I want to see is greater introduction of Regulation particularly around sustainability reporting my biggest hope for cop 28 is for all the stakeholders to realize that we are all in this together and so we need to work together for something that addresses the iniquities and in injustices that affect people who are especially the most vulnerable out of cop 28 I hope that there's more dialogue and progression and actions from both governments and [Music] businesses [Music] --- ### think ahead: COP28 Expectations and the Role of Business URL: https://www.youtube.com/watch?v=MU9Li2tUwTM Idioma: en all right good morning everyone uh what a privilege to be here with you uh this morning thank you so much for joining us so when Katrina and Julian asked me to speak at this uh wonderful event they said you know we want you to speak about the role of business and the expectations about cop 28 I was like wonderful great topic do I have about an hour 90 minutes something like that and Katrina turns and says you have 20 minutes I was like wonderful okay so I made two promises to myself for today one to keep it within the 20 minutes and therefore I scripted what I wanted to say to you but second and most importantly perhaps a promise that we should make ourselves for today is to avoid the easy path of Doom and Gloom when we look at the scientific facts about cop 28 let's be optimistic let's be proactive let's be more impactful today so here it goes so as I'm sure all of you know cob 28 presents a significant ific milestone in our Collective Journey towards climate action as I'm sure you already know the the conference of the parties start at convening in 1995 that's three decades that we've been discussing uh climate change and the pro the challenge here is to forge those global agreements and reduce greenhouse gas emissions um and do our best to mitigate climate change impacts these conferences have been in in fact instrumental in in fostering this International cooperation and and to some extent at least propelling climate action hence for example the the Paris agreement now there's no question that the urgency to address climate change is both clear and immediate right some recent assessments that we know they conclude that we have only a 50% chance of staying within the 1.5 degre Celsius and to do that we have a remaining carbon budget of about 250 gatons of old CO2 how long is that how long is that going to take us at cuted emissions six years six short years before we hit the uh the boundary of only 50% chance of of heating 1.5 now two months ago September 2023 the global temperature anomaly sounded alarms across the scientific Community not only did we witness the hottest September on record but also 2023 is now on track to be the warmest year ever with surface temperatures being around 1.75 de warmer than pre-industrial times and pushing this year's average to 1.4 de cels above pre-industrial levels right the implications of this trajectory couldn't be more profound and of course the stakes could not be higher the science confirms an existential urgency to take decisive action so as we head to cop 20 uh cop 28 unfortunately the whole atmosphere is a little bit of a cautious optimism at best um which of course reflects the complex and inherently political nature of global climate neg negotiations and climate uh diplomacy right the I I would argue that the global communities expectations remain at best cautiously optimistic so of course the road to cop 28 is not about policy alone it's a more holistic effort it calls on us the business Community to introspect to engage and to mobilize in alignment with our sustainability goals so looking at the agenda for today's event and we do have an exciting day ahead of us I'm confident that our discussions are just are not going to be just academic there will have to be a call to action and urging all of us from our respective roles to realign our business strategies our business mindset mindsets even with a global sustainability agenda so hopefully in sodim we also cultivate a a more collaboration to tackle this quite unprecedented challenges so as we go through today's reach agenda I invite each one of you to engage with an open mind to embrace the spirit of constructive but also Fierce debate um and to cont contribute actively to our discussions across the day and across the various panels what I would like to do next is share with you some of my views about the expectations for cop 28 and in fact um the interplay between cop 28 and business strategy now first let me start by saying it's important to understand that cop 28 is not just another annual Gathering but I do honestly think it's a crucial turning point this year we start at the threshold of the first Global stock take under the Paris agreement which is a comprehensive process that evaluates the process of this the progress of nearly 200 Nations toward the ambitious climate targets that we collectively set in 2015 15 this stock take which started last year is set to culminate at cop 28 and it will reflect it will reflect how far we've come or rather perhaps how far we have not come uh in our path to uh uh to confine global warming uh within the thresholds of 1.5 to 2 degrees this technical assessment um concluded as I'm sure many of you may have read it with the synthesis report in September 2023 and sadly painted a very dire picture despite an increase in the number of countries that adopting CO2 reduction targets the existing pledges are not on track to keep temperature rise under 1.5 degrees in fact global temperatures are optimistically are projected in the 2.4 to 2.7 degrees range by the end of the century this is far beyond the parties agreement targets so against this backdrop cop 28 um will host and uh and and and will'll discuss some key policy discussions on some critical issues including the establishment of the loss and damage fund and the global momentum towards phasing out as opposed to phasing down um fossil fuels and CO2 um fossil fuels now I do think that the loss and damage fund it is a historic development this fund is the first United Nations mechanism to help countries that have already suffered irreversible um climate driven damage however the successful oper operationalization beginning with the World Bank hosting this fund um it does inevitably face geopolitical tensions and reflects broadly the challenges that will all that will have to be addressed at cop 28 now developing and developed countries have made significant concessions to facilitate an agreement but big questions still remain an answer about who will contribute to this fund and when now importantly though uh cop 28 has also is often described as the implementation cop that's because the conclusion of this stock take exercise that I talked about earlier is supposed to set a road map of uh how exactly we're going to accelerate climate action as I mentioned just now it's also the stage where we hope to operationalize this loss and damage fund and for the parties to agree on the Frameworks that uh that will enhance overall climate resilience and adaptation at the same time the negotiations will focus heavily of course on climate Finance with a standing committee on finance preparing a report on the developed countries pledge to double adaptation Finance by 2025 so the emphasis there is not only going to be on meeting the hundred billion pledge that countries have done in the past but also to start thinking about post 2025 CL climate finance and in fact update that that pledge and and set a new Target for Global fin for climate Finance now all of these ambitious challenging and often contested agenda items of course reinforce the idea that cop 28 is about turning previous commitments into action and deciding uh concrete steps for forward now these issues all of the the ones I just mentioned of course underscore the critical link between these Global Climate policies and the business landscape in fact the business Community finds itself at the crossroads um of these discussions with the decisions that we will hopefully take at cop 28 very likely to inuence to influence a whole host of factors including regulatory Frameworks policy commitments investor expectations even potentially consumer preferences so what does that mean for us it means that um there's a need to for a robust road map uh in terms of how we're going to realign our strategies with climate Target and in so doing to set a pragmatic um but hopefully optimistic and ambitious path forward for business in fact and this is a lot of the work that I I do is in in terms of the integration of environmental and social issues into strategy more broad more broadly we know that the business world is already undergoing a profound transformation A disruption as I often uh call it it's um a slow but steady shift from rhetoric to T tangible action so this change is evident in businesses not only in terms of innovating uh their products to be more socially and environmentally responsible but also in terms of how they entirely restructure their operating and business models doing their best to align line with the planet's uh limits so this fundamental shift is motivated by several factors of course to create value to manage risks to comply uh with emerging laws and regulations to better manage the stakeholder ecosystem that actually places these demands on business and of course as part of the broader effort to really redesign and reconstruct um the entire infrastructure within which our Industries operate now there's no question my mind that the engagement of the business sector um especially when it comes to climate but also broadly with sustainability issues has moved from considered an optional extra something wonderful to do on Friday afternoon activity to a core and fundamental element of strategic management in fact you'll even see that some some companies already think about Beyond Net Zero and they talk about so companies like Microsoft for instance say not only will be Net Zero but we're going to be net negative hoping to take out of the atmosphere all the CO2 that we have put in since the founding of the company now just an example of several commitments uh that reflect a growing recognition uh that the urg of the urgency of climate action and the role that Us in other words corporate leaders can play in D in really driving sustainability forward now uh reflecting at least some of the themes that we're going to see at cop 28 and uh in the various panels that we're going to see today um is of course the the commitment to renewable energy which has seen a significant surch in recent year so give you some numbers in 2022 the global investment in energy transition Technologies including Renewables re reached a record high of $1.3 trillion do um but even with those amounts the investment Stills fall short of the average annual investment that is needed to remain on track for 1.5 deg the IIA the International Energy agency estimates that around 2.8 trillion will be invested in energy in 2023 with over $1.7 trillion doar directed towards clean energy which includes Renewables nuclear gr storage and low emission fuels now it's important to understand kind of these numbers Visa V fossil fuels because this is a significant these are significant increases in clean energy investment um to give you a sense is 24% for Renewables versus only 15% for fossil fuels and again demonstrates this um hopefully decisive shift towards um in our investment priorities now even more recently and ahead of cop 28 um over 100 CEOs from the alliance of Co climate leaders have issued an open letter urging both the public and private sectors to adopt transformative policies to accelerate decarbonization efforts their message is clear without bold action and enhanced collaboration the goal of a 50% reduction in emissions by 2030 with remain Elusive and some of you may have already seen the UN report that came out yesterday um according to the estimates we need a 45 to 50% reduction by 2030 what are we on track on nobody knows an increase of 9% so we're moving at speed but in the wrong direction um I'm I'm I'm going back on my second promise of avoiding the Gloom so let me return to my script um so um I believe that this interplay between government policy and political will to the extent that it exists and we'll talk about that in a bit and pro proactive steps by businesses in fact underline what I mentioned earlier as the essence of cop 28 which is to have an implementation cop in fact I do think that the private sector and the business sector's commitment and importantly and this reflects back to what Julian was saying about business as problem solvers right and therefore the Innovation capabilities that we bring to the table combined always with supportive regulatory policies and Frameworks and the necessary infrastructure are absolutely pivotal for this transformation or this transition to Net Zero so let's be a bit more specific let's go from the general to the more specific and think about how potentially these cop 28 discussions and potential outcomes may affect or could shape or at least impact business business strategies I mean we all we're only going to know once we see the outcomes but let's let's play this thought experiment so first there's no question that at cop 28 we're going to see a huge push to accelerate the transition to clean energy um and this will require in many cases a significant acceleration perhaps for some companies it's going to be a strategic shift towards embedding sustainability more deeply within operations and business models companies will have to adapt by investing more in renewable energies rethinking energy procurement strategies and funding Innovation aimed at reducing emissions these alignment will have to move Beyond environmental responsibility is it will it is and will become even more so a business imperative and is will be motivated by of course the need to create value regulatory pressures market dynamics and in some Industries changing consumer expectations I think that um companies across across Industries are likely to also emphasize the crucial role of collaboration especially in those Industries where the transition is more difficult and is and and sticking your head out first as a business can be risky um but also collaboration between businesses and government in order to fundamentally transform the global Energy System system and move away from our unhealthy Reliance on fossil fuels also this shift in towards sustainable energy sources could open doors of course to economic growth new markets and and growth opportunities for companies and I do think that those the companies that do make those Investments today or already started making these Investments on more sustainable energy solutions would benefit from potentially government incentives top into these new markets first and of course bu their brands and reputations now to effectively manage this transition though it's also crucial for companies to optimize their energy usage expand their Reliance on G green en clean energy sources and prepare for for upcoming policy shifts that favor environmentally friendly Alternatives now navigating these uh challenges these changes successfully is becoming increasingly vital for businesses especially those that do want to maintain or enhance their Competitive Edge in a very Dynamic landscape as I mentioned earlier and and we discussed this a lot in our classes here at lbs looking at sustainability and the energy transition As A disruption as opposed to a path with a Rosy path ahead second issue at cop 28 there's a growing expectations that businesses will place a greater emphasis on integrating nature people lives and livelihoods Into Climate strategies this approach isn't just about reducing the negative impacts right but hopefully going to move Beyond and build an understanding about improving the relationship between um what companies do and the broader ecological and social environment so I both anticipate and hope that an agreed upon policy framework will incentivize companies to take more proactive measures to ensure that their activities positively contribute to environmental sustainability and social well-being this includes for example making Supply chains more resilient to climate impacts and actively supporting biodiversity for example now this focus on on people nature lives and livelihoods also highlights the need for a more holistic approach to climate action it calls for companies to actively contribute to the restoration and preservation of natural ecosystems and it's broadly about evolving from this idea of simple compliance to laws and regulations to actually focus on a regeneration which of course will will benefit the planet but will also benefit Society local communities and so on um they um I also think that um companies will ultimately have to consider more carefully and diligently the social implications of their environmental strategies and especially their transition plans to net uh zero emissions this relates back again to what Julian mentioned as potential tradeoffs right because we need to have plans that reflect a transition that is both just and Equitable and this could involve for example creating jobs in GRE in green Industries ensure ensuring Fair label labor practices and supporting community-led initiatives that enhance resilience to climate change I think that these type of strategies will play an increasingly Central role in corporate decision making as companies uh seek to align their growth objectives with the broader goals of sustainable development and social Equity third the focus on climate Finance at cop 28 highlights an important shift in perception and handling of climate related funding for businesses this means um reevaluation of investment strategies and financial moders models to better align with the broader goal of sustainable development especially in developing countries indeed a key aspect of the cop agenda is making climate fin Finance more affordable available and accessible and this may result in increasing funding for green projects enhance support for climate adaptation Technologies in vulnerable regions and greater incorporation of sustainability criteria into investment decision making I also think that within that context companies are going to face huge pressures for more transparency and accountability about their climate Finance contributions requiring them to report not only on the amount but also the effectiveness of their investments in reducing emissions and improving um resilience now third inclusivity in climate action it's another central theme of cop 28 and marks a shift towards integrating a wide range of perspectiv and experiences in addressing climate challenges I think that for businesses this means that future strategies will likely need to Encompass a broader spectrum of stakeholders their interests particularly those of marginalized communities and future Generations this could result in businesses adopting more Community centered approaches ensuring their practices not only comply with environmental standards but actually positively contribute to local economies and their social fabric um finally I think there's going to be a development potentially on the legal front we know that uh in recent years there's an increase in terms of climate litigation risk so depending on what decisions and what commitments we collectively make at cob 28 for for instance if we do set new benchmarks and expectations it may well be the case that businesses might find themselves under closer legal scrutiny to ensure compliance with these enhanced standards so to summarize cop 28 will likely influence significant shifts in business strategies emphasizing the urgent need for a transition to clean energy integrating holistic climate strategies that consider people and nature and re-evaluating climate Finance models the focus on inclusivity in climate action will require companies to adopt more Community focused and socially responsible practices while the rising Trend in climate litigation underscores the need for robust legal preparedness um I think that as we look forward these tees will be crucial for shaping the corporate approach to uh not only climate policies but sustainability more broadly now before I close my talk it's important to address directly a critical issue the not so green elephant in the room so the yawning gap between our Global Climate Ambitions and the tangible actions that we take despite this widespread consensus on the urgency of climate crisis there's a trampling disconnect between intentions and real world actions and outcome within the business Community our community there huge gap between aspirations and actions is equally apparent while many companies have indeed pledged to reduce carbon emissions and Achieve Net Zero targets there's a prevailing trend of overstatement and greenwashing this is partly due of course to the still EV evolving regulatory Frameworks which don't give us clear understanding well what does Net Zero actually mean but might also be the fact that these are very very long-term targets that often constrain or avoid immediate action but I even with these challenges I think that the majority of companies genuinely do strive and actually experiment profoundly for ways to reduce their carboned um footprint we I've also seen a new phenomenon too by the way it's is not just green washing uh more recently we we' also seen green hushing right where companies actually shy away from disclosing the environmental effort which again highlight a very complex and evolving in this case political landscape with respect to sustainability um so as we approach cop 28 and and even Beyond cop 28 there's a very pressing need to align these lofty climate climate goals with concrete actionable steps so ladies and gents it's crucial to acknowledge the challenges and inconsistency and the path ahead a recent Stark and sad illustration of this is the UK government's uturn on their Net Zero policies prime minister Rishi sunak decision to delay the ban on new petrol and diesel cars from 2030 to 2035 along with easing Energy Efficiency targ efficiency targets for rental properties and backtracking on plans to replace gas boilers with hit pumps exemplifies a concerning Trend this comes of course after president Trump with drew the us from the climate agreement these steps taken under the guise of a socalled pragmatic approach do raise serious questions about the commitment to long-term climate goals in the face of immediate economic and political pressures or indeed populist or extreme right-wing pressures this us U-turn is not just a local misstep it sends a disconcerting signal to the global Community suggesting that climate commitments can be relegated when faced with daunting challenges or political expediency this is a narrative we cannot afford to entertain and as active citizens should not tolerate especially at a time when the urgency to act against climate change is Paramount nevertheless and despite these challenges there remains a margin for cautious optimism and a call to action the road ahead in climate action is indeed fraud with complexities but it also presents opportunities for transformative change the discussions at cop 28 and the evolving business strategies in response to these conversations are not just formalities let's grasp let's grasp this for a second they are in essence survival strategies for our economies our communities and our planet so as we move forward let us remember the words of the former un Secretary General of the un bimon who said there is no plan B well because there is no Planet B This is Our Moment to shift from incremental steps to significant string climate action so as we engage in today's discussions and look towards cope 28 let's carry this thought with us let's not only Envision a sustainable world but let's actively construct one our decisions our actions will shape our Legacy one that we hope will be marked by stewardship and foresight as the book says let's be good ancestors for the generations to come let us challenge the status qu and transform our Ambitions into tangible actions for for our the future of our planet hinges on the choices that we make today so thank you so much for your attention I wish you an enjoyable fierce but productive day ahead thank you you just stay there okay so thank you Janis thank you terrific stuff we've got a bunch of questions uh so keep them coming but I'm going to pick up on a few of the ones that have come through already um just a little bit on the Regulatory and governmental en environment and then I'll move to kind of business business issues um so question about private initiatives um and development of codes of conduct actually let me ask you this specific one I see mainly protectionist measures such as the Border carbon adjustment mechanism that taxes carbon and there's also a question around uh carbon trading markets what is your view of the efficacy if you like of these types of politically motivated attempts to to manage these things sometimes for climate benefit sometimes arguably for yeah protectionist regions yeah so those are two separate issues carbon markets and the carbon border adjustment border tax but I do think that um both highlight the idea that even within the system there might be market-based solutions that we can take advantage of so the devil is always in the details in terms of how well do we design and implement this market so in my view for instance the fact that you might have a carbon uh trading Market whereby you reduce the carbon allowances for instance in line with what science would require us to do and therefore constraining the market and in the process um essentially pushing companies to adjust their carbon emissions through through an increasing price of this offsets makes makes sense but the question is how is it implemented is it Global how does the European versus the Chinese versus an American or the Californian system change can we exchange those globally because these in a sense cannot be local markets because we're addressing a global issue right so again in those kinds of of of issues I would I would go with with um um sort of the devil is is in the design details when it comes to the Border adjustment tax I do understand the arguments that it might be more protectionist but look even the inflation reduction act in the US um got criticism by the EU that is a protectionist act now we haven't done this before we need to navigate this and these are all going back to the issue that climate change and what we do is a global problem it's the problem of you know know of the commons if if you like and we'll just have to work hard and with political will to resolve them I I frankly don't think there's anything depending on you know how the the who's going to pay for this tax I don't think there's anything wrong in terms of leveling the playing field and say you know if you're producing in Europe with low carbon and someone is trying to undermine You by importing from elsewhere with products that have been produced with high intensity of of carbon yeah of course you should be taxed maybe that may create a race to the top by other other comp countries but again is going to be a design feature what are you going to do with those processs how are you going are you going to increase the size of the government are you going to redistribute those tax proceeds back to the people in a progressive or regressive way so there again it's all about those design choices that we make that will determine the outcome and we will be coming back to some of these issues around government policy over the course of today we'll also talk about measurement and that was another question but I'm not going to touch on it now let's go to corporate strategy because you like like myself I mean we're professors of strategy we try to help companies to make good choices somebody says I love Colin mayor's definition of purpose the one that I I used half an hour ago but are there any good examples of big companies who don't put growth and profitability first yeah frankly Julian I think that this conversation of you know uh profits first Milton Freedman said this Milton I mean Milton Freedman is dead it's been a long while so in every sense right exactly so let's let's actually have a more comp more nuanced argument of what what's going on here right so if if you look at the business world there's no question that if you see their stakeholder ecosystem everybody is demanding that they do things differently whether it's customers investors governments accountability in the supply chain and so on and so forth so it's part of a corporate objective right of course you're a business you have to remain profitable but the question is how are you going to do this how are you going to do this in a world where the competitive lands is Shifting so fundamentally because every single demand that you're facing and these are fundamental demands right we're talking about your investors your customers and so on you will need to adapt so this is an adaptation Challenge and that's what we so that's why I mentioned before it's not a Rosy picture right I I don't agree with this views that say oh you know it's all about finding a stakeholder finding win-win dance kumaya and the world is going to be a better place it's not it's a disruption and disruptions are deadly think about you know Sears Kodak Polaroid Blockbuster that was an easy disruption compared to sustainability so that's why I said that sustainability has these two components you have to start investing in a world where these negative externalities are going to be priced in so that's a higher cost world and on top of that if you have the foresight you also need to see where will the opportunities arise right but you have to do both and I think a lot of the companies you know May in in rhetoric for the focus on the opportunity while misunderstanding the elevated costs and while at the same time not really building the capability in order to build differentiated position yeah so we need to wrap up I've got one one final question for you I mean you you absolutely as you lay out the facts there's a risk of Doom and Gloom as it were I avoided it though I did try to avoid you did your best to avoid but you know there are some un escapable facts which are really uh rather uncomfortable um I'm wondering what what makes you OB optimistic I mean there must be some things that you see out there you know in your conversations with Business Leaders that that at least give you some grounds for optimism I mean and I guess I mean particularly around businesses because those are our our primary audiences a business school what what do you see them doing do you see any any role models that you can really look to and say this is what others should be yeah following I think what the I mean in addition to being in and I'm not saying this in a Cheesy way but in addition to being in the lbs classroom and seeing our current mbas our embas across exeed even the the the early careers seeing you know it used to be the case that 15 years ago you have to convince people about the why they should care about these issues right today they come in knowing all of these facts and ready to and demanding of us to tell them how on Earth do I do this help me do this help me bring about that change so that's one key component of optimism the second one at the corporate level is the fact that we are witnessing and I think across the board and in most indust is a profound level of experimentation companies are truly putting money into and and we are going to see failures because these are fundamentally difficult issues these were issues that were always somebody else's problem these were issues that often they were under the rug like you know meeting um all the greenhouse gas emission gases for instance so there is a um um a wave of profound experimentation which we have already seen paying off at least in some Industries like electric vehicles renewable energy and I think the task the first task which was let's try to instigate let's try to start the process of change to a large degree has been uh achieved and now so that's a point of optimism and now the the the our key challenge perhaps even bigger challenge is how do we accelerate it right and I think that even the fact that we got the conversation to that point is a point of optimism for me as well good a point of optimism is where we will end thank you thank you very much your thoughtful ideas thank you everyone thank you --- ### think ahead: Challenging Contemporary Energy Systems URL: https://www.youtube.com/watch?v=hJOeONgMszA Idioma: en so we move directly on to our next session and I am going to welcome up onto the stage Professor Derek bun a colleague at London Business School uh who's going to be leading a panel to talk about challenging contemporary Energy Systems Paving the way for transformation Derek thank you thanks here we go go yeah please yeah so if you you sit thank you Julian so um we have uh um I a challenging set of issues to go through at the moment I think the energy transition and it's been with us for about 20 years since the Kyoto Protocol and uh it's had its ups and downs various progresses have been made and you know in some respects I mean I feel that the uh the easy things might have been done already and the big challenges are are kind of facing us at the moment and so to kind of put some of those things in perspective we have we have three guests who are both prominent in their fields and can bring a lot of expertise uh into this area I'm very pleased to to welcome Daniel Hannah from from barles uh Albert from um uh Bloomberg new energy finance and Marta basz from BCG I'm going to ask them each to kind of just say about a minute uh for about a minute about themselves um and what they do and what their expertise is and then we're going to go into some of the big questions and I will post post some some topics there that I think um are kind of crucial uh over the next uh 20 years really in in kind of building on the energy transition and making a kind of a a substantial impact on decarbonization and there will be an opportunity for for questions uh both online and and from the audience um in the in the way that I think has been explained to you already um if you just scan the the the QR code and they will appear on my um my um iPad here and uh I I have the the uh the privilege of deciding which ones I might I might kind of ask the group so if we if you could just spend um maybe 30 seconds introducing yourself what you do uh and your expertise so so um Daniel please yeah uh Daniel Hannah the global head of sustainable Finance at Barley's Bank um we've got a commitment to mobilize a trillion dollars of sustainable and transition Finance by 2030 and to align our financing towards the NetZero pathway and we are um also investing 500 million in early stage climate Technologies perfect thank you Albert you um first of all yeah thank you very much for having me um I so I noted earlier that I'm the only person here on stage who's not an alumni of lbs so thank you in particular for for welcoming me here to speak today um so my name is Albert Chung I'm Deputy CEO of Bloomberg NF we call ourselves bef for short um and we are the research business within Bloomberg that focuses on low carbon transition um so all we do every day is think about um the past present and future of of global low carbon transition across energy transport industry um agriculture uh increasingly financed as well um and uh I've been there about 15 years at this point so yeah looking forward to the conversation yeah and and I promised that you would be an honor Alum us after this thank you very much it is a pleasure to be here I'm Martha Vasquez I've been in Upstream oil and gas exclusively for more than 20 years the first 10 at the slom so have field operations practical uh experience experience and I have the privilege to be leading at BCG the topic of the decarbonization of the Upstream asset and I would like to also make the disclaimer that uh we firmly believe I firmly believe that oil and gas demand will decline in most scenarios and there is a big challenge to make sure that the pathway is clear on how we do this in the most responsible and low GSG emissions way and that is my Miss thank you very much thank you we we'll come back to some of those points I'm sure in the next half hour so I I think I'd like to start by by taking a kind of a perspective view um looking at at the current trends looking at in particular the challenges in the trends and that and I think Albert you'll be best place to kind of start that off with your your work at Bloomberg um so I'll try and kind of talk a bit about where where we see things at the moment I think to work in energy transition is is to kind of live with contradiction and to have cognitive dissonance every day because you're always seeing record growth things are always moving faster than ever and the progress is incredible but at the same time it's it's never enough and you're never like the transition is never moving fast enough so maybe just to back that up with a few kind of facts and data points that we see from BF um last year for the first time we saw more than a trillion dollars invested into low carbon Technologies so think of renewable energy plants um electric vehicles battery storage hydrogen um carbon capture stage all these Technologies we know and needed to to achieve Net Zero and a trillion dollars is not a small number it's uh it was a fantastic um and it grew 30% year on year so I don't think there's that many Industries growing 30% year on year so that's really great um renewable energy installations this year will be um almost 500 gaw again up 30% from the year before um 90% of new power plant capacity that's being installed is clean so almost all if you're building a coal or a gas plant today you're an absolute minority um and and shrinking um electric vehicles we think um today they're probably 14 or 15% of the market globally which is an incredible achievement we used to count the number of countries that had 1% EV sales and we the first country the second wow we now have three countries that have 1% today it's 14% globally and we think it's 30% in the next 3 years so just in incredible progress um however lots of challenges um you will have seen um we're starting to see offshore wind projects being cancelled um or auctions for offshore wind failing and that's probably the biggest kind of red flag that we've seen recently um and that's because of supply chain disruption cost inflation and there's this window right now where the costs of key Renewable Energy Technologies have risen and so the project developers who signed contracts in the last year or two to deliver projects at a certain power price now suddenly find themselves unable to achieve those those power prices that they they said they would do so they're having to cancel their projects and that's causing a lot of pain and it's putting at risk some of the the energy and climate targets of certain countries and we're also seeing Rising competition between countries um we all know that these Technologies are largely produced in Asia many of them produced in China anywhere between 50 to 80% of the supply chain of these Technologies is in China and so you have the US Europe India other countries stepping in and saying well we want a piece of that pie so we're going to start um putting in TR barriers and subsidizing local production which is is creating some tension as well and then I think the going back to the cognitive dissonance just with all that growth um if you take that trillion dollars you add in another 300 billion that's going into Power grids investment which is also critical for the transition you get to about $1.4 trillion going into kind of Net Zero compatible kit that's that's being deployed at the moment um we think we need to be doing three times that much about $ four and a half trillion dollar per year for the rest of this decade in order to get on track for Net Zero by 2050 so that's the scale of the challenge um and we I know we want to talk about hard toate sectors and so on but maybe I'll leave it there for now and we can come back to other challenges as well yeah thank you very much that's good and I think just where that that those trillions are going to come from I think um we we've got the third speaker that can perhaps say a few things about that um I'd like to ask you a little bit about the the supply chain issues that you brought up I mean to what do you think those are temporary or do do you think there really has been a structural shift and that and that this this idea that the costs are going to continue to come down is now historic and that that going forward the you know the supply chain issues are crucial and possibly becoming more crucial um there's good news on that front um so um as I said during the energy crisis because of these disruptions um solar became more expensive for the first time in 15 years batteries became more expensive for the first time in 15 years and and wind as well all those things have been coming down for a long time so solar is now backed down and back down in in fact to record lows and because the supply chain responded very quickly that's been an incredible turnaround just in the last year so on solo we're we're in a great place actually it's hurting the manufacturers because they've they've now overinvestment year um in about a week and a half um and I can't tell you the result of that but I can tell you it's yeah things are looking better and then um wind is really the one that's still having pain and I I do think it will return to a downward cost Trend it's just taking little bit longer because it it's easier for the other Supply chains to respond for a variety of different reasons um the raw materials are um uh smaller markets that can respond more quickly the supply chains frankly a lot of them are in China and Those comp companies can respond more quickly so I think wind is just going to be a little bit slower to respond and that's why you've just got this window where projects are really challenged but ultimately we we think it does turn around yeah that's good to hear your optimism we we may come back to some of the those issues shortly I mean I'd like to pass over to you now Mar and particularly uh from the the oil and gas perspective um in in some respects there hasn't been quite so much progress there as there has been in power generation and you know I'd like to to kind of hear your thoughts on on kind of what are the possible easy wins that we might have in the near term and what may need to happen in in the medium and longer term thank you thank you Derek just to ground us on some of the facts the oil and gas industry contributes to 5.1 gigaton of emissions scope one and two this is about 15% of the emissions in energy and uh but when you put together the scope 3 emissions that is about 24 um gigaton which is more than 50% of the emissions in energy and you are noing so I think you some of you are are familiar with this statistic it it is material okay it it matters just intrinsically from the footprint now I started my introduction just saying that um there is only one way going forward which is a decline for the demand and the supply of oil and gas still there is a big role to play for this asset class however not all the barrels are equal okay and we believe that whenever uh whenever we put together all the barrels in the world uh both what is existing what is in development what is in Exploration what hasn't been uh explored yet uh some of those barrels will stay on the ground and the winning barrels will be the low low cost and the low emissions barrels now you you say we haven't made uh enough progress there the pressure I I want to make a third Point around the pressure that is in is high it has been high and it is increasing is extremely hard and we will hear more from Daniel uh and I was just in a conference in in London uh over the last today increasingly hard to get access to Capital it is not debt but especially when there is a uh a transition from the big owner to the meat and a small cap company um they need to demonstrate that they are doing this in the most competitive way uh to get access to Capital Talent extremely difficult to access the talent pool that we have in this room and to actually retain the great people that we have who we by the way we need in order to decarbonize other Industries as well right and uh finally there is a huge pressure and um on the tax front on the fiscal front I think most people here will have heard of the IRA in the US Australia has made progress in methan the the carbon border mechanism in Europe but also the methan uh the methan emissions tax Outlook all of that is putting pressure this is an important point to remember now why else we haven't done enough progress um I think what what we notice is extremely hard uh for uh for companies to T called the energy trilemma I think for the last three years this is a topic that we have spoken at length but we can leave it so vividly in new ways even in the UK right in the UK that we have the offshore petroleum licensing bill you know uh being proposed at the moment so that we can have annual licensing rounds there is a big element of energy security okay energy security that if countries like the UK have it in top of Mind imagine other countries in the world who are very early not only in their energy security but the second point is the the economic growth element and on top of that having to decarbonize and do this uh with a net zero mindset is extremely hard sometimes to to reconcile these tensions and possibly the fifth point that we leave every day whenever we work with some of these companies is that it's extremely hard to change the context in which people work it is not only about the operational and Technical challenge or the commercial and the financial challenge it's about creating the context for people to make different choices every day right the people who are doing offshore and onshore operations have to have the right performance framework and incentives to say hey I'm going to take eight hours to restart this well instead of two hours okay to minimize flaring because this is one of the most practical l so to transform each of these companies it takes time it is not going to happen in weeks so I can expect uh the earlier we engage um the better but it will still take uh months um and possibly the last the six point just in direct answer to what can we do today versus what might take longer this is a positive news by the way but uh 40% of the emissions uh um I mean there is a dark side but a positive news 40% of scope one into emissions in in in my industry is from methan uh and it is has it is woring from one side but on the other side we have viable technically operationally and economical solutions to Abate this emissions today it is not IR realistic when a company says by 2030 I will be zero mean operations okay so this is really important together with Energy Efficiency in flaring there goes 50% of the footprint okay now longer term what people are what we need to bet uh to bet on in order to really have a net zero pathway is two main things electrification for which Renewables or nuclear or anything that is uh lower uh G emissions is is really critical enabler and carbon capture so ccs and fortunately just to end in a in a positive note part of the actions that we see many oil and gas companies taking is actually launching these new businesses right and I think if some of the some of the gains in this very profitable industry go towards launching these businesses as soon as possible I think it is a huge contribution to the energy transition yeah thank thank you very much M there's a lot in in what you have said there um I I want to pick up very quickly on a couple of points and then then then then bring in bring in Daniel I mean methane is very topical at the moment and you right to suggest that that that is a possible um significant win that that can happen I mean as probably most people know or not everyone I mean methane is about eight times as detrimental as carbon dioxide in terms of emissions uh and and a lot of it can be solved by better operational performance um what's what's the quality of a kind of international government governance and audit and uh in some way authenticating the the the supply chain for for methane I mean given that a number of countries are putting in uh regulations uh that oil and gas you know should should have methane limits below certain levels EU has just done that and so on um I mean I mean is is the quality of monitoring sufficient to be able to kind of uh authorize that process yeah no thank you Derek and uh no uh and and I would like to say more uh no uh however in some jurisdictions we're moving really fast and I think it is the combination uh when it works best we have a combination of Market you know pushing for a shareholder and the the commitments of the companies but also the fiscal and Regulatory support when you put them together it can I think it can be quite powerful uh to create not only the pressure to have to do it uh but also a way to monetize the low G emissions hydrocarbons and the two more points the certification of this low G emissions gas is an increasingly important topic and miq is an example we work closely with them is an example of a third party organization who says I think we were talking before um it is not about monitoring mean emissions at a country level level it's hard to take action we need to go to the asset level to the facility level to be able to track down and be able to certify hey yes you know along the value chain this LG cargo is indeed you know L um mean emissions so yeah that is the certification and possibly the last part I just would like to give the audience and the panelists here confidence that we do see and we are working with companies who are taking action to prepare you know for more market and uh government support and incentives but also to be able to monetize these low G emissions G emissions gas thank you and then there's just one other thing that that you you mentioned um and that that I think possibly could link back to an aspect that Albert you could comment on um you you talk about the the kind of the inevitability of of demand Destruction for for oil um uh I'm not so sure about that I mean a lot of that depends upon the transportation sector and the transportation sector basically um in that context is all about electrification and I just wonder um what the scope is for electric vehicles uh in uh third world countries in you know in in Africa in in South America do we really expect Transportation uh in developing countries to move away from diesel uh and I don't know I don't know if you want to comment or maybe Albert first of all in terms of of Trends you're seeing on electrification I mean globally not not just in um sure maybe just very quickly I think um if you take our sort of base case view from our long-term electric vehicle Outlook um ro road fuel demand Peaks sometime later this decade um and then starts to decline from there um but we we need to go a lot faster if we're going to reach Net Zero and I think Emerging Market countries are one of the big um you know call it challenges um and adoption in those countries is really really far behind so when I talk about the 14 or 15% penetration of EV sales globally today um that's because the big markets are doing that heavy lifting China Europe uh us is catching up and those are responsible for you know I don't know the very large portion of auto sales but it overlooks many many many small markets where penetrations are not or 1% um I think this can change I think it'll change first in the kind of two and three wheelers Market think of you know bikes and um Tuk TS and things like that buses as well I think those will change first but even with cars I think there's there's room for optimism because we see in the second half of this decade between 2026 and 2030 depending where you are in the world um it will become cheaper to buy an EV than to buy an equivalent quality internal combustion engine 2030 2031 in Emerging Market countries for cheaper cars so it's a a bit further away in those markets but it is coming um and that's I think that's when it starts to become interesting can can I can I come in here because I I think it's worth just stepping back I mean five years ago 1 in 70 new cars were EVS now this year we'll probably be at what one in four one in five and so just in five years we have seen an exponential growth in EVs and I take your point very much on on Emerging Markets but actually here the majority of mileage done in Emerging Markets is two wheelers not four uh and you're seeing in places like India huge Innovation already on in terms of EVS uh in terms of the two-wheeler Market but then also battery swapping and the sort of infrastructure around that that can really start thinking about how you create an ecosystem so actually India kind of gives me hope that again you know what what we have seen is technology has consistently outperformed the expectations particularly in places like on Sola and and EVS I think the big question if I if I can keep going uh the big question for all of us though which I think and Mar and Albert did a fantastic job scene setting the one thing we haven't talked about was interest rates were a rock bottom level for the whole last decade and a bit in which we've seen this tremendous growth so I think actually one of the big challenges speaking as a as a banker is you know is the transition affordable at 5% interest rates I I think that is and you've seen that impact in the markets in terms of valuations of some of the very big renewable companies coming down 70% since their Peak um and it is definitely getting harder to raise capital for even great companies I mean we work with a lot of early companies and you know that process is now probably taking more like 12 to 18 months when you know just a year ago it was probably taking about six so there's definitely the the trend has shifted and I think it's important to reflect that but and I think it was right that I go last because money in some ways I think is is the last thing to worry about I think as as Mar and Albert very well set out if the context works if if the project works the transaction Works money will find a way and I think there's really two big challenges in my mind that we need to solve for one is we need to scale Renewables I think Albert absolutely correctly talked about it three-fold increase in Renewables needed we need to Electrify what we can and then power that through Renewables and the second is that we need to really tackle these hard to evate sectors that Martha kind of talked about 30% of the emissions that we need to reduce in this decade is going to come from new technologies that need to get Scaled up so you take those two things and I think that then presents two challenges um at Barkley's we've funded Moray West which is going to power half of Scotland's electricity through offshore wind um and in my past life I've done a lot of renewable financing including the largest uh concentrated solar Park in in the world but the Big Challenge and the big stat that sort of was missed out is if you strip out the big countries China and India Renewables are basically flat since Paris and I think that's that's a disaster so how do we scale financing into the emerging you know the the lowest the countries that have most exposed from climate change and actually have the biggest opportunity Elite R I think is one of the big challenges we're going to see more around things like using the World Bank and other catalytic type Capital crowd in the private sector but really we've got to collectively think about how do we go after uh and really Electrify at PACE um and then power that through Renewables and Emerging Markets the second one is about the hard to evate sectors so how do we tackle other sectors where you can't use electricity uh and power those through Renewables and so that's going to need new technology um Mar talked a couple of those carbon capture hydrogen the likes at Barkley we think the hydrogen Market is going to grow Eightfold over the next sort of couple of decades and we're already starting to see momentum coming in there but we need to move faster to tackle climate change we've got to take great ideas from ideation to IPO and at Barkley we're trying to create this kind of escalator to speed that up that's why we've got some very focused Partnerships around the early stage there's something that we do with unreasonable and actually I was with them yesterday with 20 new companies that are thinking about all these sort of challenges um we've backed 300 of those companies over the last since 2016 they've gone on to raise over 10 billion of financing employed more than 24,000 of people um and some of them have then gone unlisted we're also deploying 500 million to support these technology companies directly through Equity carbon capture some Great British companies like Brill power and the energy storage or proteum which is a hydrogen Solutions company but we've got this Gap at the moment this kind of scale Gap and broadly I think that we've got very good as an industry at scaling software companies right Facebook social media these type of companies but the issue there is adding a million people onto those platforms is a marginal increase in capital in climate Tech you basically have an exponential increase in capital you have more and more Capital that you kind of need to deploy and I think that the finance industry as a whole is not very well suited for for tackling this missing middle of capital and that's something that we're very focused on I think a couple of things that will help the inflation reduction act in the US the EU new green deal the sort of work that the UK is doing around providing cfd back stops for some of these new technologies but overall we need to innovate there to really scale up these technologies that can tackle the heart to evate sectors I'll pause that thank you and and I think that that queued into a number of things that I was going to ask you about um but I mean you mentioned hydrogen um and I mean I mean hydrogen's to to me seems to be a kind of a major challenge because you're trying to kind of create a new economy almost um o overnight it's not just you you're bringing in something like an offshore wind and it's going to kind of slot in where there was previously other kind of generation you know you you you're developing something which has got production infrastructure and Market um I mean h how does that new economy come in because you you've got the demand the infrastructure and the supply all of which don't exist at the moment um I mean do do you see that being done through major policy commitments or do you do you see it being done through if you like organic growth where the the industrial sector does it first because they need to do and then and then from the industrial clusters it it spreads out um it's clear that we need long-term storage and it's clear that hydrogen is the best solution for that but I mean I I think I think the investment will is it makes a lot of sense but but how does that kind of translate in into the development of the sector so I think it's a great set of question we probably do a whole panel on just hydrogen and I'm sure Albert and Mar have got very strong views on this as well um I I'm not sure I agree with you that it is the solution for long-term storage I mean I think there batteries um and deploying other Technologies we've backed a company called Energy Dome that use compressed CO2 that can provide more than 24 hours storage at a very cost effective rate so I think there's a lot of innovation in the storage but I think the challenge where I see hydrogen fitting in is the things where you can't use Renewables and storage in a simple way and where you may have excess renewable capacity then I think to your point you could then transfer it but the economics around hydrogen I think are you know there's a lot that we could talk about there but to come back to your framing which I think was right I think one of the big challenges is we got a coordination problem so you're a professor of decision sciences and I think is exactly right so you need both investment from the producers and the consumers but both producers and consumer looking at each other and saying well you go first and that leads to a sort of suboptimal equilibrium and so that's why I think policy has to play a really key role the inflation reduction act which I think you know estimates and again probably these are Albert's numbers I'm sure I'm borrowing you know could unlock over a trillion dollars in carbon capture and hydrogen both of which have been mentioned big policy tool we're seeing the hydrogen hubs here in the UK as well I think that's really really important um but the key thing that we need to deliver I think is kind of from a to make a project bankable is offtake and so how you can have long-term off-take of these things which really comes to this this point around if you like the inflation reduction Act is trying to pump Prime the production but we need to see the consuming sort of businesses effectively commit to long-term off-take so if you look at I was involved in financing the world's largest green hydrogen project in in in Saudi Arabia and Y and effectively that was the key piece there was a long-term off take often these places there aren't now there is some discussions going on in us and UK policy tools effectively how do you provide that sort of support in the absence of it as a temporary thing and then get the private sector to come in so I think this this is a very live issue I think you put your finger absolutely on it um and there's a lot of work going on across the finance industry and policy to think about what are the solutions to tackling that but I think Albert I'm sure you no yeah Daniel Mak some really important points and I'll just maybe build a little bit and add a couple other other other points to that I think um one thing that's important to know about hydrogen is I think there is now a a consensus a narrowing consensus around where hydrogen should actually be used and it used to be this idea hydrogen will be used everywhere and we use it in our homes and our cars and I think all a lot of those things have gone away and it's really understood now there's some really key applications where hydrogen is required to decarbonized like steel production um ammonia production chemicals you know some some parts of refining now the issue is that those are big industrial companies whose products are Commodities and therefore if they are not competitive if they decarbonize first but but become uncompetitive because they've taken on a load of cost then they lose so they they've gone green but they go out of business and if you want to buy green hydrogen today it's probably going to cost you5 or $6 doar per kilogram depending where you are in the world most of these industrial companies say we need it to be one or $2 per kilogram if we're going to be able to uh switch to hydrogen and still be competitive so that premium for them like somebody's got to help deal with that so whether it's government mandate subsidies um uh things like that but but what's interesting is when once you feed that through so if you're a steel manufacturer and you switch to hydrogen and it increases your costs by 10% it makes you uncompetitive but for the car manufacturer who's buying that steel to make a car the car that's sold at the end is maybe only 1% more expensive and to us as a car buyer you you would find that negligible you would say I didn't even notice that so I think there's to your point about off-take I think there's really um an important focus on how do you get the whole chain to recognize this value or somehow kind of connect the user through to the the kind of green hydrogen whether it s kind of green certificates or other programs that can really connect it through and I think that's where well we it needs more work and more thought to figure that out yeah thank you and in terms of the chain Upstream I mean are are they oil and gas companies enthusiastic about developing their capabilities in hydrogen or are they dragging their feet I think um um more broadly many of them are enthusiastic not only about hydrogen but about carbon capture and Renewables I think there is at least um two examples and I hope it's okay to expand Beyond outside of hydrogen but just I think in the last two weeks we heard the total energies is a partner partly owner of the largest offshore wind farm in Scotland and it has just started 114 turbines so I think that is a very tangible example of something that a traditional oil and gas integrated company is doing right to uh to expand uh there is also I think over the last six months uh exom Mobile in the U in the US acquired a 5 billion pipeline operator to support the carbon capture agenda so I think it is we need them in this business we need them in the future in the future businesses and I'm I'm very glad to see that thank you can I ask the panel kind of a pointed question on this um you know we we understand how to decarbonize the electricity system in this country for example what what do we do about the gas Network um I mean do do we expect hydrogen to be the the solution for decarbonizing the gas Network do we think the gas Network should become a stranded asset and we shouldn't use it anymore I wean do I I yeah let me go first because we we we are the carbonizing gas networks at the moment and by the way um we need the gas Network to be transporting gas low carbon for the foreseeable future I think first before we I I hand over to you to speak about the hydrogen uh Network and most I would say 90 or 95% of the emissions are methan leaks so which we can actually aate today so I genuinely feel really positive you know about the Outlook this almost low hanging fruit um to decarbonize the the gas Network there so by decarbonizing you you mean putting hydrogen through the existing network no I mean I mean transporting gas with low G emissions impact I'm talking about the operation Transportation the switch no the the switch of fuel that is a that is that's a different topic right but the point is that we will need gas between now in 2050 right okay yeah yeah but do you have any thought on decarbonizing gas yeah just to say you know we have our own Net Zero scenario that we've built at BF that goes out to 2050 and kind of tries to answer the question of what's the technology mix that will decarbonize the global energy economy in that Outlook in the net zero scenario we still have oil we still have gas we still have coal in 2050 um alongside some carbon capture and storage a little tiny little bit of carbon removal for for some of the really really difficult things so I don't think we're saying these fields go away and and you still need to transport the hydrogen if you're going to have hydrogen in some of these um facilities you're going to need to transport the hydrogen as well so there will be a role for molecules that will be retained in a net zero world but it will be smaller it will be quite quite a lot smaller in some cases so I think the challenge and the question for gas networks is what does that transition really look like for them how do you avoid kind of um investing in stranded assets and that there you need to go much more in depth into what's the role of this particular asset is there a carbon capture inore storage facility nearby which makes it Net Zero compatible and so on it I think it gets quite specific at that point interesting do you do have a view on this Danel I mean so the only thing I would add is is also this point around carbon capture because I think we're going to have to use pipes to effectively transport CO2 the other way to to storage so I think and I think I'll pick up on Albert's point which is maybe to tie it a little bit back for things like hydrogen but I think we're going to see the emergence of very large projects like neon but then also there are going to be some very specific on on site situations where you're trying to decarbonize something that's just very hard to do so and then there'll be the emergence of these sort of smaller projects there kind of a barbell Outlook and I think that context then becomes really key because I think we can all model things um you know very well now and you know they've got some great modeling that BNF and others have done but actually there is the Practical context of when you're trying to decarbonize a situation and that may mean that you're using something that from a model perspective looks suboptimal but needs to be delivered so I think we're going to see these bespoke small projects that's something that I mentioned proteum that's where they're very much focused and these really large Mega projects that are going to kind of think about how do we get things like green ammonia and others to the most cost- effective U Place possible thank thank you um I actually wanted to to ask you a question Daniel about infrastructure in general and infrastructure financing um I mean we we've we've spoken a lot about about the Technologies which are coming in but when you're thinking about electrification in general the the degree of network expansion that has to occur is enormous not not just the kind of the high voltage but but local as well I mean um what what's the kind of the the solution there I mean is a scope for a lot more third-party Finance in infrastructure ownership we've already seen in this country for example separation of the system operator from from the the transmission ownership which should open up the potential for for you know independent investment uh in a regulated way on infrastructure assets is that an asset class that would be attractive um regulated asset class obviously and more of that or I mean it has to happen no no I think it's a very good question I think it definitely does I think we have seen infrastructure become a sort of recognized asset glass and actually increasing amounts of capital going into financing it I mean you're absolutely right I think the amount of capital I think Albert touched on this as well that needs to go into grid infrastructure is is is very significant we're going to have to see um companies that own and run grids you know increase the amount of investment you know manyfold over the next um few years and that needs to be financed I think it will be financed through Equity I think it'll be financed through infrastructure debt and and the like so um and then that effectively has got to be paid at some point as well so I I think I I think the capital actually for infrastructure is is actually an easier discussion to have because in some ways that's scaling what we've already got and I think you've seen a number of very large funds like Brookfield and other raise large amounts of capital to deploy into these sort of decarbonization stories and other things for me the bigger challenge actually is this scaling of the next set of Technologies these sort of Technologies full the hard to evate sector and that sort of missing middle I talked about rather than say the infrastructure financing I think you know for the right project the right sort of scope money will find its way for that but I actually think the the sort of this mid middle of capital for how the sort of new technology the next wave of climate Tech that's going to require a bit more Innovative thinking and and there's a thinking there because um that that technology is unproven and it's very high risk because of that or be because it's kind of economic role is not understood or or yeah that it it may not be the right solution it it's all of the above I think it's all those situations and and I think we should you know think about EVS I mean to to to use an example just to make the point but I think the first EV came over like more than a 100 years ago um we are trying to scale some technologies that um not all I mean hydrogen and carbon capture have been around in some components but some of these other areas we are trying to scale technologies that are very nent um and you've got effectively risk on risk you've got new technology risk you you've got infrastructure risk you've got Le sort of regulatory risk as well so I think it's there is a number of different um Dimensions there that even with you know certainty as I have that we are going to see this kind of uh decarbonization wave continue it's just a question of how fast um you know for an investor that's a very hard set of risks to break down and so that's where you know public private kind of coordination can really work and I also think coordination across um both within the industry you know Insurance private Equity Banks but then I think Albert made a fantastic point which I hly agree on we're going to have to start thinking about value chain financing and value change Solutions and how do you effectively look through the entire ecosystem and work out how to effectively uh effectively create the lookth through that allows that situation to be bankable um across the ecosystem thank you thank you very much that that leads into uh a question which is not a surprise in this institution it's coming from the audience and that is you know the the scope for for new businesses for startups for for uh Innovation uh for the kind of things that that graduates from Business Schools like to do um I mean do you see the the this the energy transition being a kind of a big established company game or do you think there is a kind of fertile ground for for a lot of new new new innovation to to come in uh and grow yeah I'll ask yeah yeah I mean I so I think it's both um I feel I'm going to maybe repeat a lot of what Daniel's already said but um I I actually think the sort of startup ecosystem in climate energy Tech has been pretty healthy the last couple of years slightly more difficult at the moment than it has been but um lots of Venture Capital Money available for those companies developing new technology um much more hard tech than I'd seen in the previous round I think when we were doing this a few years ago was a lot of software companies trying to optimize this this or that bit of the chain which is incredibly important but I think now there's an understanding that okay there's some really hard Hardware based issues like can you apply electrochemistry to mind tailings to get clean copper out the back because we have an issue with copper production you know really difficult things um that are now able to attract capital or until this year I would say we're able to attract Capital to to to do exciting new Innovations um and and then at the sort of later end and again I'm just repeating what Daniel has already said but um there's a lot of money available for sort of proven Technologies infrastructure um funds um you know obviously Bank debt and and large large corporates so I again apologies for saying what you've already said but there is just this missing middle right now for kind of the first of a Kind projects um and so I'll give an example from hydrogen so our team our hydrogen team has this um market share pie chart they produce which is all of the kind of hydrogen electrolizing manufacturers around the world and how much market share they have or how much production capacity they have and it looks like a um like a sea urchin or a like a dandelion or something because there's just hundreds of tiny slivers so if you if you want to develop a hydren project how do you choose a vendor that you trust is going to produce a piece of kit that you can rely on for 20 years when it's an emerging industry there's 100 suppli all of whom have just built their first factory so it's almost like you it's starting the company now is doable but it's sort of how do you get to the point where you're the The Trusted one how do you get the finance for that first project to demonstrate that your thing works that that's where the the tricky part is so can I I mean agree with everything Albert says I'm trying not to repeat it but my journey around sustainable Finance really started here at London Business School um and I I with a few others launched uh the first green online search engine uh we had a bit of success planted like 250,000 plus trees H and then it didn't work out and so I had to become a banker instead of a successful um but so do I think to your question Derek absolutely there is a huge space of that and I and I think um there's a lot of innovation going on in this sector I you know you can get quite um sad and depressed I think about where the state of of climate can be and you spend any time with people that are innovating entrepreneurs it really does give you faith and I think you know some of the stats that we've talked about today you can see the impact of technology and I think that's what's going to really ultimately win this for us right is just scaling great new ideas and there's a number of different ways to do it I think so you know I've mentioned one of the Partnerships that we have at Barkley is unreasonable there's a focus one called carbon 13 that we're working on so if you've got a great idea you know have a look you know you can see we run a number of corporate challenges as well so we've kind of worked with some of the very large companies say okay well how can they decarbonize say ports and Southampton we've got a Challenge on at the moment you got a great idea on that have a look on my LinkedIn you'll see a link to it you can kind of go to or just email me so I think this kind of ecosystem and actually we just we're just about to publish a research piece and 99% of the people that we uh spoke to companies and entrepreneurs said the UK is a great place for climate Tech um and you know I think 70% of the companies that we talk to see decarbonization as a Big Driver of value for them going forward so I think there you know all the challenges that we talked about absolutely are there but 100% you know there's definitely capacity to do it and I'm sure there are someone sitting you know many people probably sitting in this room who've got a fantastic idea that's going to make a big difference to this whole situation over the next few years I think that's a very good point on which to finish this panel I think um I think we've covered a lot of interesting issues I think we've covered a number of kind of very big intractable problems to a large extent um but but I think there there's more optimism in this panel than I I was kind of expecting to start with and so so with that in mind I want to thank you very much for your contributions thank [Applause] you --- ### think ahead: Energy Transition, A View from the UAE URL: https://www.youtube.com/watch?v=ONsN6nxftZk Idioma: en so just to get a started Alex I mean not everybody will know Peta I I know it pretty well as a company that weon and business school have worked with a lot over the years just tell us petac and what you do at petac so petac has been going for about 42 years now uh and we started out as the clues in the name right it started out as an oil and gas Services Company um based birly in abedine looking at the North Sea and as well as in in sha in the UAE where a lot of our business is based so we've been delivering large scale onshore and offshore energy assets mainly oil and gas for the last 40 years so we design it we build it and then we operate it and more recently we started decommissioning it as well uh my role is we started an energy transition projects group about three three years ago um because the the essence of what we do in in the oil and gas Services when engineering construction and operation is equally applicable in hydrogen or carbon capture or offshore wind uh a lot of the uh the the periphery of the the job that you do a lot of the actual work to make project successful revolves around safety procurement Logistics construction safety uh scheduling invoicing all all that good stuff uh it doesn't really matter whether it's a a steel pipe with oil and gas in it or whether it's a steel pipe with carbon dioxide in it like going for a CCS project so we are a a company that can deliver um the energy assets for a low carbon future thank you good so you've lived in the UAE I think Abu Dhabi for many years obviously you're doing business there all the time so we're going to just pick your brains a little bit on the view in that region and I guess there's a for some people there's an in conr in congruity easy for you to say thank you around um cop 28 happening in the region because for a lot of people who are perhaps not so involved there they think of Saudi aramco literally the biggest company in the world they think of the state oil companies in AB Abu Dhabi Oman Qatar Kuwait and so forth and they think this is a region which of course was built on oil uh and continues to invest in oil and gas so how how do you make sense of what they're doing is this is this their attempt to sort of show to the world that that they are part of the solution rather than being part of the problem so I think it's an existential question for the GCC countries if you look at their history the last 7500 years they've built their wealth they've built their geopolitical presence and and influence based upon delivering energy to the world and I say energy rather than oil because um it has been oil and gas for the last 100 years or so but ultimately they they deliver the energy that we all need to turn the lights on uh to to produce the pet chemicals that that we all use day daily and it's quite it's quite interesting sometimes when you I always like to talk to just stop oil or Extinction rebellion and I normally take my Petra fat lanyard off but I'll ask them you know well how did you get here and what are your shoes made of and and what did you eat today and because actually the oil and gas it permeates everything we do so so the Middle East has been the swing producer a massive producer of the energy for the globe um for for for decades if as customers the world starts turning to a net zero future which is the plans is in law and so their customers are now going to say to aramco to adnoc we need energy but I want it to be zeroc carbon or low carbon um that's if if adnoc or ramco can't Supply that they'll go out of business um so for them to retain that that social Packa with their CI CI citizens to retain their their Global footprint to retain their business model they're going to have to change to and they are changing to a lower carbon Energy Future um and they're uniquely well placed in order to do that in that not only are they able and have done so for 40 50 years deliver large scale projects they've got the infrastructure for export they've got the infrastructure internally for large companies to deliver projects um and and they have that interaction with customer and Supply chains the shipping the the import terminals Etc so that they're there they've also now fortunately for them made a shedload of money with the oil price that they've got the enough funding if they choose to to then invest in the capex needed in order to build those assets so it's a strategic play for them and you've seen aramco and adnoc uh moving faster and further in the energy transition uh and they they're they're part of the cop 28 and cop 27 discussion around phasing out or phasing down the view from the the Middle East is very much oil and gas will still be needed um we're still going to need fertilizers and pet cams for for well well past 2050 and what we're asking for is net zero so overall it has to be Net Zero so that means you've got some emissions you can't do we're not saying we have to all stop Flying or stop using Plastics um but you've got to then counteract that with either direct air capture carbon capure project so we've got the uh uh we've got that Net Zero piece so for them it's existential it's required and they're well placed to do it so so talk about some of the specific types of uh projects that you see in the middle e so for for most of the general public they've heard of neom and indeed um it was just mentioned in the previous panel by Daniel um many people have heard of Mazda um I mean you don't have to focus on those but it would be quite good to get your just your explanation of what some of these major projects are that we're seeing being so there's there's two main strands one is to produce oil and gas more efficiently so reduce emissions reduce methane leaks make sure that they are the lowest carbon production of of uh of oil and gas that will continue to need into the future I think um the UA calls itself the the has the lowest carbon footprint for per barrel of oil produced because it's actually quite easy to get it's not deep water offshore in Brazil where you've got pre-salt deposits that takes a lot of energy just to get the oil out for them it's it's abundant it's fairly allow they've got the infrastructure so cleaning up their emissions and making sure there's no leaks and producing the lowest carbon barrel of oil we need uh that we will continue to need for the for the future secondly they're looking at low carbon projects the um I think the largest solar farm is now in the UAE Mazda was set up in 2006 actually run by uh Dr Sultan aljaba um who's now the president of well the leader of CEO of adlock and the president of of cop uh cop 28 uh so his his background for instance has been in that for a while uh petat were fortunate enough to be awarded a main CCS project in habshan uh just back in November for adnoc so there's a lot of carbon capture work going on uh along with solar there we're starting to see some potential wind projects particularly in the GCC that can produce if you've got abundant solar and decent wind you can start to produce green hydrogen uh we see a lot of activity in Oman for instance where they've got uh very good um export routes from dukham down in the South that can go to Africa up the Su canal and also to Asia and they're looking at you know billion dollar scale projects with wind and and and solar to produce green hydrogen from water and again that's another energy Vector they can see so that's where we're seeing the activity and which Technologies do you see the most potential I mean the previous panel we talked a little bit about some of this but green hydrogen carbon capture uh I think blue ammonia i l do not know what blue ammonia is apologies but I mean are there some technologies where you think I mean particularly in Middle East but perhaps more broadly where you see the biggest potential for actually reducing emissions given that we're going to be using um oil and gas for the foreseeable future so I think it's going to be a a wide fragmented mix of energy sources and and vectors for transporting the energy we've been really lucky the last 100 years our wealth industrial sort of growth has all been in the globe um being lifted up out poverty by hydrocarbons as a bit of a monoc crop or monoculture coal gas or oil highly energy dense easy to transport uh and can be used in a a multiple different different ways from Aviation through to you know Coal Fire Stations um as we go forward in the low carbon world you're going to find a really fragmented mix of Technologies so in some places it might be wind if you've got abundant wind some places it might be geothermal uh it might be Hydro right if you've got somewhere like Norway with with Lo loads of hydro facilities um you might find that it's hydrogen again where where that makes sense uh and you might find that it's it's sustainable aviation fuel so where we're seeing activity and where we're focused on is in four main areas one is carbon capture and we are uh tech technology neutral as a company that allows us to sit with a number of different solutions whether it's a well established aiming solution or hot potassium carb we've been looking at uh and even just yesterday quite a novel uh a novel Solution that's that's basically an organic solution um so carbon capture we think is is where we're seeing activity in the UK for instance you've got these clusters coming up in tside and uh humberside the Scottish cluster Etc in the UAE clearly in order to get low carbon um fuel out they're going to have to start capturing some emissions or direct air capture so carbon capture is definitely one way of doing it and that speaks to Net Zero because we're going to have emissions so therefore you need you need to capture some of the remaining heart toate sectors hydrogen is another uh key directive and we're seeing a huge amount of that in in the in the GCC I mentioned Oman hydrogen is a really tricky molecule as my colleague would call it it likes to escape it's very small goes through valves Etc it's also not particularly efficient because you have to take electricity and water by electrolysis uh to produce hydrogen which is best then used locally if possible because it's quite hard to to transport um and if you want to transport it long distances we're starting to see it being used as either ammonia so turning it from hydrogen into ammonia so it can be shipped or used as shipping fuel MK is looking at that and others or we're seeing it as a ethanol as well being used so there's a I think is it Michael Li talks about the hydrogen ladder which is is ruffle some feathers but in my view if you've got Electrify everything so if you've got electrons and it's completely zero let's use let's use electricity that's fine but if you've got a stranded electron sitting off the North Coast of Scotland and the grid can't take it you have to do something with it so you could use a battery to then store it part-time uh that's quite expensive in short term if you can't use a battery and you can't put it into the grid then you might as well turn it into some kind of liquid or gaseous fuel so hydrogen is the the The Logical The Logical route use that hydrogen locally um either blend it to to make uh sustainable aviation fuel or a methanol or ammonia for transportation um is the it's the best way of using it because that otherwise if you transport hydrogen on its own even as a a liquid organic or as a compressed that's actually quite expensive in terms of the energy penalty so those are the reasons thank you um final question um bringing it back to kind of the corporate level and I was just looking online so adnoc the Abu Dhabi National oil company they plan to to spend 15 billion on clean energy projects by 2030 they've got a pledge to get to Net Zero by I think 2045 I looks on Saudi aramco's website they've got a pledge to get to Net Zero by 2060 that's an awful long time away um they have a 1.5 billion sustainability Fund in aramco but you know they spend $38 billion a year on capex so I guess my my question is you know not withstanding all of this good stuff you know is it is it enough right I mean this is this is a good a good effort it's progress but it does feel like we're still you know going back to what Yan says right at the beginning we're still you know not getting anywhere near where we we need to and I guess it's a question to to you in terms of how do both the companies think about it but but also of course how do the governments because in all cases these are basically government controlled companies so we can't completely separate out the state oil companies and the national governments how how are they thinking about it how are they talking about actually managing to get to the uh to the ultimate Net Zero Target so it is interesting because they are setting they got targets 20160 2050 um and and they're getting pressure to bring that further down they have interim targets I think uh um KSA have got a a 2030 Target to reduce by 280 odd million tons per year uh uae's got a 2030 Target as well so they are they are moving that direction however their business model is also predicated on selling hydrocarbons and energy to the world so there's definitely a ying and yang there in terms of how they do that I think as a as a globe everyone is agreed we've got to get to an N zero the end point is set and we we're kind of saying mid mid century is what we need to do I think you we're horribly off track right we we need to accelerate absolutely clear um but it's us as consumers right so there's a business model there right how how do we change our demand as well and it can feel overwhelming as a consumer what difference can I make as an individual but I would strongly encourage everyone to look at their what they're doing what they're buying you vote three times a day or more depending how hungry you are on when when you eat right where's your food coming from is it you know is it is it is it carbon intensive meat is it plant-based is it highly processed is it packaged has it had how how many food miles does it have we as consumers can make that choice every day three times a day on what you eat likewise how you travel what you wear um can you cycle can you take public transport I think I've seen the climate Action Report came out with we need to build every um every year a public transport system the size of New York cities every year for the next 10 years in order to you know again get people because car mileage is still going up and and while the battery electric vehicle uptake is is is is on track that still takes carbon intensity to to run those vehicles and you've got to charge them where's that electricity coming from so I would really encourage you I think we can all individually make a difference and that's ultimately it's those buying signals that will affect the business models of what the of what has produced and and we we have the power indeed thank you good we are going to take a break in one second um so first of all thank you so much Alex for a terrific [Applause] session --- ### think ahead: Complex Climate Trade-Offs URL: https://www.youtube.com/watch?v=XE9DPMV4ENM Idioma: en thank you very much Julian it's it's really great to be here so what I'm going to speak about is complex climate tradeoffs so when we think about the climate crisis we think it is so urgent that we should stop talking and start acting we might think about the Nike logo just do it we don't need to talk about issues such as this but the reality is much more complex there are a variety of tradeoffs where if we pursue the climate agenda there might be some other types of cost to society and we need to be mindful of them and this is absolutely not to downplay the scale the magnitude the urgency of the climate crisis but to number one recognize there are other considerations and number two if we don't recognize those considerations then any strategy that we have to address the climate issue might run into problems and resistance so there's three types of tradeoffs that I will focus on in my talk today so the first is the tradeoff between climate and financial returns now you might think well is it is that even a trade-off to begin with if you look at the letters from Larry thinkink the CEO of Black Rock he claims that climate risk is investment risk so if you want to maximize your risk adjusted Financial returns minimize climate risk he also says investment conviction is that sustainability and climate integrated portfolios can provide better risk adjusted returns to investors again this suggests that there is a win-win and no trade-off finally we believe that sustainable investing is the strongest foundation for client portfolios going forward and you might think well this is what Larry think says but maybe he's talking his own book so let's go to a more objective source so the financial times so so they produced some really impactful paper articles entitled The ethical investment boom claiming the outperformance of ESG strategies is beyond doubt and many other authoritative newspapers and media Outlets have articles with similar claims but the big concern with all of this is the issue of confirmation bias so what is confirmation bias this is the idea that we accept a claim uncritically if it can confirms what we'd like to be true and this particularly applies to ESG investing we would love to believe that ethical companies perform better and particularly in the area of climate we like to think that companies that pollute the planet will meet their come ups and later on suffer from high lower Financial returns but the problem of confirmation bias is that we will believe things even if it's not backed up by rigorous evidence and this was the topic a TED Talk I gave at lbs a few years ago called what to trust in a posttruth world about how critical and how Discerning we need to be on issues that we feel very strongly about like climate and indeed there's a book I've written which is coming out next year with penguin called may contain lies about how careful we need to be with simple statements which seem quite appealing so how do we apply the idea of confirmation bias to the examples that I've already given if you go back to the Financial Times article then a reader wrote in and said well actually the case on ESG investing is far from closed and he highlighted a number of pieces of evidence suggesting there sometimes is a tradeoff maybe ethical companies don't perform better and then if I go to the Larry fin statements let me start from the bottom and work up we believe that sustainable investing is the strongest Foundation but if we are to take some action it has to be more than just belief our investment conviction is that sustainability can provide better returns but again we want more than conviction is their evidence and this is why the heartbeat of what we do at London Business School is not just to tell nice stories but make sure that this is backed up by rigorous academic research and that's what I'm going to apply to the first statement of Larry thinkink climate risk is investment risk so is climate risk investment risk now the prevailing consensus is the answer is yes and this is backed up by some research published in a top Finance Journal so the paper finds and I'm quoting stocks are firms with higher total carbon dioxide emissions earn higher returns so more polluting companies earn higher shareholder returns and their interpretation is our results are consistent with an interpretation that investors are already demanding compensation for their exposure to carbon emission risk so the idea is that companies that emit a lot of carbon they are risky why because there might be a global carbon tax in the future and so investors are only willing to invest in these risky companies if they are compensated for by a higher return but let's think about this and let's think about it critically because what happened if we replace carbon dioxide emissions with another ESG Factor so let's replace this with employee satisfaction so there is evidence shown that stocks of firms with higher employee satisfaction earn higher returns now would the interpretation be the reason for these higher returns is that companies with lots of employees satisfaction are risky it's just too risky to have happy employees and therefore we will demand higher returns because we don't want to hold stocks with happy employees absolutely not we would not interpret this as risk we would interpret this as outperformance right so why is it that companies with happy employees they do better it's just these are better companies they are generating higher Financial returns because they are more profitable and so that might be the interpretation for the carbon emissions result companies that emit more carbon have higher profits why because they can get away with polluting we don't have sufficient government action on climate change so there are polluting companies which are able to generate higher profits and those higher profits lead to higher shareholder returns so there seems to be a bit of ESG double thing here where if we see a bad thing leads to higher returns we say well that's proof that it's risk and if it's a good thing we which leads to higher returns we say well that's proof that it is actually good so the question is well how do we disentangle if we have higher returns is this a good thing it's outperformance or is this bad thing is it compensation for risk and the standard way to do this is to do what's known as an earnings surprise test and so this is what I did in one of my earlier papers where I looked at the link between employee satisfaction and long-term share shareholder returns so how do you show that it is out performance well what I did is I took earning surprises so this is every 3 months in the US a company releases their earnings and before they do so companies like Goldman Sachs or my former employer Morgan Stanley they predict what the earnings are going to be and I compare how these companies do compare to what analysts were predicting and I found that companies that treat their employees well deliver higher profits than what the analysts were predicting and therefore the higher shareholder returns was due to outperformance not risk but we'd accepted the early result on carbon emissions without doing that disentanglement we just accepted the interpretation that we want to be true so in a more recent paper with other co-authors what we did is basically the same methodology to try to disentangle the for of the carbon premium why is it that these emitting companies are earning higher shell returns and to our dismay we wish this was not the case we found it was because they were performing better they are delivering higher profits why the absence of government action means that they are doing higher better returns than what analysts were expecting and just four earnings announcements per year can already explain 30 to 50% of the carbon premium so what are the implications from all of this well number one it suggests that sadly climate risk is not investment risk so the message that we can just leave everything to the market because the market is pricing everything in the market is already punishing companies that admit we don't need government action that is not correct the market is not getting everything right number two is that a low carbon portfolio sacrifices is risk adjusted returns why because emitting companies are performing better now one could say I don't care I believe the climate crisis is so severe I willing to sacrifice Financial returns to decarbonize my portfolio and that's absolutely fine but the goal of evidence is just to highlight that there is a tradeoff there is a sacrifice many people will still be willing to pay that sacrifice just like people pay more for organic food but the goal of evidence is to show that a sacrifice is needed and finally there might be potential tradeoffs for investors wanting to take climate action between net zero and fiduciary duty so if fiduciary duty highlights that you need to generate long-term returns to your investors maybe pension fund beneficiaries then these are complexities that we need to address and my colleague Tom goling an executive fellow has written an article about this in a lger okay so that's one tradeoff that I've highlighted tradeoff between Financial returns and climate carbon emissions now the second trade-off is between climate and other environmental and social goals let's say we don't care about financial returns or at least we deprioritize them but we are concerned about Society more generally not just climate but other things there might be tradeoffs with those other things 600 million what is that you might think well that's the amount of investment per month needed to achieve Net Zero no you might think well this is the amount of donations every year to exension Rebellion or or just a oil no 600 million is the number of people in Africa who don't have access to electricity so last month I was at the world economic Forum in a for in a session on a just transition and we were talking about in a developed country how we make sure that if we transition towards renewable energy we don't lose jobs for those employed in fossil fuels and then a lady from Africa got up and she said you all talk about a just transition we don't have anything to transition from right we don't have electricity to begin with so you responsible investors you can talk about decarbonizing your portfolio but if you're pursuing this too aggressively then you're going to stifle economic development for many many millions of people so you might think okay just stop oil that is a powerful statement but for her it's just stop Economic Development so this is one of the things which might be an issue here do we need to recognize that there are some countries which don't even have access to electricity this is again not to downplay the severity of the climate crisis but to recognize there other issues that may be asked in the west we might not be aware of and then if we go back to the West what's go back to the jobs issue because many of us I have to admit that despite me working in this field I don't know anybody who works in the coal industry and the average age of somebody in the coal sector is 55 years old so if he or she lose their job then this could be the human equivalent of stranded assets how are they going to retrain and this is something with long-term impacts on their family if their children then are less affluent and then cannot get the same education that's something with long-term implications which again us perhaps we don't know these people as much we might not emphasize or recognize when we focus on the very important issue of climate and let's say we don't care about the social the social issues with somebody whose goal is only to maximize the environmental performance there are also trade-offs with other environmental factors so we talk about carbon capture technology and then I've heard statements like why do we need carbon capture technology we have a great carbon capture technology that is trees why don't we just grow loads of trees which sounds simple but sometimes growing trees will consume substantial water often in places where people are already thirsty it will drive people off land that is not a problem that many of us in the west need to think about but this is a serious issue we could say well to Country X why don't you grow more trees well there is an impact there on humans what about emissions reduction we can also try to have different types of fuels say biofuels but sugar cane for bioethanol and palm oil for biodiesel those are great biofuels but they can lead to monocultures and that reduces biodiversity which is another emerging environmental issue and the final set of tradeoffs is the tradeoffs between the portfolio of an investor and wider Society so there are many investors who are very well intentioned are taking very seriously the climate crisis and their goal is to aim for portfolio decarbonization or Net Zero portfolios or climate aligned portfolios but decarbonizing your portfolio does not necessarily mean de carbonizing Society so if I own some fossil fuel stocks if I'm to sell my shares I can only sell if somebody else Buys so I'm not depriving it of capital and notice this is quite different from boycotts as a customer if I choose to boycott a company then maybe the products stay on the stores I am depriving it of Revenue but the analogy to investors divesting is not perfect because I can only sell if somebody else buys I am not starving it of capital immediately now others will say yeah we get that but when you sell and somebody else Buys in order to encourage somebody to buy you have to sell for a lower price if you drive down the stock price then you make it harder for the company to raise capital in the future and again that seems a logical argument but again if we think about this if you're an investor and you choose to sell every fossil fuel company in order to reduce their stock price and then make future Capital raising harder well then what are the incentives of a fossil fuel company to reform they know that even if they are best in class and putting in a credible transition plan which is being implemented they will still be divested so this black and white view that we're going to divest from everybody irrespec of whether you are reforming just because you're a fossil fuel company that doesn't provide any incentives it's just like if a company was to say my policy is never to hire any ex offenders well then this means if you're somebody who's been in prison what are your incentives to reform if you're not going to be able to get a job afterwards so this is why one of my more recent papers with a couple of other co-authors what that suggests that actually a tilting strategy or the best-in class strategy when I'm willing to hold maybe a fossil fuel company if it's Best in Class if it's taking action to reduce its climate impact that might be better than blanket exclusion and notice it doesn't apply just to energy companies maybe I could hold something in a hard to Abate sector such as cement or concrete if I'm in holding a company which is reducing its usage of clinkers and that's something which has a huge effect on the environment maybe this is something needed we still need concrete we still need to build schools and hospitals yes there are emissions associated with this but can I hold something which is best in class and the final reason why that's important is that sometimes you might hold a quote Brown company a polluting company but that allows you to engage right so if you have a seat at the table then you might be able to ensure that the company has a plan and is putting this into practice like as a professor do I want to say look I have all the very best students all my students do very well or is your job to work with students who might be finding the topic more difficult and then you work with them in order to improve their knowledge and then end up doing much better than they would have done otherwise and so if You' like to learn more on this there's a great Ted Talk by a lady called nilly Gilbert who is the vice chair of a the um the carbon trust which is working on these issues and it's about how we need to take a very nuanced view on these issues which are often seen as black and white and so let me then sum up before we get to um the Q&A so all the three tradeoffs that I've highlighted emphasize that there's danger in binary thinking so binary thinking is saying that divestment is good holding it is bad pursuing climate is good let's a ignore all of the other objectives of of society and also it's better to always reduce our portfolio carbon footprint not recognizing that this may mean that somebody else holds the emitting company and so this is exacerbated by some recent developments so often people think well we need climate action as a regulator let's try to come up with some rules and some numbers and some metrics but with all of these things we think of the toris and the hair more haste less speed we need to take action but we need to make sure that the action is effective it doesn't backfire it doesn't have unintended consequences so the urgency of the issue does mean we need to act fast but also we need to act wisely so we currently have these taxonomies in the EU saying well what is good and what is bad but hopefully I highlighted that there is no clear distinction between good and bad some something that generates electricity could well be good particularly if it's for people who otherwise would not have access to it something like producing cement or concrete we still need for construction but if you're doing this in a way which minimizes your impact on the environment that could still be a good thing what are ESG ratings they're trying to measure the ESG performance of a company and so this leads to some investors trying to hold highly rated stocks and divest from lowly rated stocks in order to show how committed they are to uh ESG but again if I'm selling the poor performers number one I'm not providing them with incentives to reform and number two I don't have a seat at the table I'm not holding these companies I'm not able to engage with them to improve their ESG performance and finally and more specifically to carbon there are many investors which will report their portfolio carbon footprint there are even some CEOs of asset managers whose pay is linked to the portfolio carbon footprint of what they're holding and one of the big trends now in ESG is to pay for ESG the idea is that if you care about something deeply let's link pay to it to show that there is bite to show that you don't just have statements but those statements have implications for reward but again this is problematic because you can simply reduce your portfolio carbon footprint by selling emitting companies and somebody else buys it it's just like I'm going to clean up the trash in my garden by throwing it over the fence to the neighbor right so I've reduced my trash but I've have not done anything for society and this is something which may well be a consequence and also this only looks at carbon footprint but not the positive aspects of some activity that generates emissions as a byproduct such as the production of electricity or the production of cement or conrete so what might be the solution to all of this and I might be biased being somebody who works for an educational institution but it is literacy and education but what do I mean by literacy we hear often financial literacy we now hear AI literacy but maybe an important issue is climate literacy so there was a lot of action and a lot of excitement among young people and groups like Extinction rebellion and just top oil have highlighted the criticality of taking action but if the message is a one-sided message we're only highlighting the um problems of things like fossil fuels and not the fact that it might be providing electricity not the fact that it might be currently providing jobs that in the long term we do want to phase this out but in the short term there might be some real consequences then we do have some potentially quite strong policies which are so extreme they may not be implemented so I've seen some policies suggesting let's ban all non-essential flights well that would be devastating to a number of countries which rely heavily on tourism for the economy for jobs for economic development and so just to highlight that yes we do care about these issues very seriously but there are also many other considerations around that I think this would lead to a richer a more nuance and ultimately more realistic conversation about climate where we can suggest some ways forward but both ways forward recognize the tradeoffs and therefore they're more likely to be implemented okay thanks very much I'm going to give to Julian for the thanks Alex do you do you want to sit down we we've got you want to sit down yeah sure let's do that yeah let's do it that way um so I've got a bunch of questions um and and of course as as as Alex was talking I was my thoughts were being provoked I've got a few similar questions um I mean you're raising the the trade-offs you are absolutely I think of course giving us a much more nuanced view of those trade-offs than perhaps most of us had had before um a couple of the questions I'm going to ask you this specific question in a second but somebody says given that these are a series of trade-offs what's the answer uh somebody else says you know how would you like us to move away from this binary thinking let me sharpen the question in the following way which is you know we we work at Business Schools we we we believe in markets um and as you said yourself the market don't get it quite right in this case so if we have some sort of market failure we almost always say then the government's job is to step in and to sort of nudge the market in the right direction so inevitably that leads to questions one of the specific ones isn't carbon pricing the way forward tell us about your thoughts on how governments can help to resolve this if you like market failure we'll get to the kind of corporate response in a second yeah thank you it's it's a great question so so what does a market failure essentially this occurs when there's an externality so this is when a company has an impact on wider society which ultimately doesn't bounce back and affect the company's profits in the long term and so then the solution to a market failure is regulation so one of these could be to completely ban certain activities so you might ban something like child labor but something like carbon emissions where we think there could be benefits but also costs it's to take the milder solution of of taxing so that you are recognizing the full social consequences of your action so this is why I and a lot of economists and a lot of um academics who work on this I'm a strong advocate for a carbon tax so that companies will face up to the consequences of their actions because actually the market is not failing in pricing things the market correctly prices carbon emissions under the current regime which is not to punish emitting companies because there's no consequences so the market gets things right given the regime but I'm suggesting we we need a different regime got it so that's and of course we know there were challenges technical challenges in implementing these things but I I do completely buy into that direction of travel moving to the corporate side then and and and you touched on this and I know you've written about it elsewhere how should what's your advice if you like to to the these Chief Executives who are looking at these trade-offs and they are making this inevitable choice to some degree in the short term between of course you know doing good in the world versus making profits we we know that that's a stylized choice we know that the truth is of course more nuanced how do you how do you advise companies to to to resolve that tradeoff I I think it's a great question because some people might say oh yes if the government is who should deal with it but if the government isn't dealing with it then the companies need to step in I think if there are tradeoffs and you're pursuing something because you care about the climate and there's a financial cost to that I think this is fine so I think there are many investors who will support companies who make make some return sacrifices to address the greater good we saw this in um the pandemic where many companies were giving products for free is this because they're forecasting in the future our reputation will be improved by this and it's going to come back to help us or is this because we think this is the right thing to do and there are many shareholders who supported companies doing that or companies which may be fur their workers and continue to pay them rather than just uh laying them off immediately so I think when you have this message and you say well it's a completely win-win we're going to do something and there's never going to be a financial cost then shareholders then get upset if you deliver substandard results but if you're upfront as to why you're doing this I think this gives a a a much better message and you're more likely to be supported why do shareholders invest in the company it's not just to get a higher return in the future but to get a higher standard of living in the future right when I retire in I know 40 years time I don't just care about my income but whether the planet is two degrees warmer or whether we have a cus of society so there are many investors and the Pension funds survey their beneficiaries and they realize that they don't just care about financial returns they are willing to pay the price of a trade of but just be upfront that there is a price to be paid and many in the audience remember Danon the French company Emanuel Fab was the chief executive who was very very uh you know thoughtful about the environment he I think they made them into a big uh benefit Corporation he lost his job at least in part because the board felt he was wasn't delivering enough financial returns any any Reflections on that I mean did he just push sh say too far CU a lot of what he did was things that I think you and I would probably agree were good things to be done yeah so this is interesting so if you if you read sort of how this is often portrayed they say this was a Visionary CEO who wanted to do the right thing but it was the short termism of the stock market which prevented him from doing so but the reality was that he was that down on for 6.5 years so this was a long time period and the company stock price was flat whereas the kakah Hun which is the the peer group that had gone up by 50% unila other competitors have gone up by 50% and why is this well Janis has also done some work on this it's because of the some poor strategy some poor strategic decisions some poor acquisition some poor corporate governance and so what this suggests is that yes you can do good things for the environment and for society but you are also a business and so the challenge of a CEO yes you do need to deliver on ESG goals but you are also business and you also need to deliver in the standard stuff as well indeed a final question um you and I Yannis we we're all teaching our students um we're hopefully doing a decent job um are we teaching outdated theories because there's a there's a hypothesis out there that all of our theory is rooted in this sort of traditional shareholder based view of the world and that that's somehow actually teaching our students the wrong stuff another great question and I have incentive to claim that we are why so the um textbook that I I I I learned when I was an undergrad at Oxford and when we started at Morgan Stanley was principles of corporate finance by brillian Myers I am now a co-author of that book for the 14th Edition which came out a few years ago I would love to claim I completely rewrote the book scrapped 30 years of outdated work and I'm now I'm changing it but that's not the case because actually in many cas's traditional business theory is about the longterm now it may well be that the longterm 100 years ago was an oil company engaging in Exploration and production and that is not what we would call long-term right now but that aspect of investment that long-term investment was something supported by business principles what is shareholder value the very first class in finance shows you that shareholder value is the present value of all future dividends right until the end of time so somewhat bizarrely maybe some of the concerns are not enough focused on shareholder value and this might seem heretical but the problem is companies are focusing too much on shortterm profit short-term profit is not long-term shareholder value long-term shareholder value would say to a car company invest in electric cars this is something which will cost you in the short term but in the long it will benefit you beyond climate long-term shareholder value will say invest in a diverse and inclusive Workforce it will cost you in the short term but it will benefit you in the long term and I think the message that we need to complete scrap the rule book and go to something new that can be a damaging message because then some companies think we've been successful for so long without this why do I suddenly need to change or do I have to go with something unfamiliar and untried and untested but given that what makes business successful and has done so for centuries is a focus on long-term value creation I think that message is something which should still be getting across perfect we are going to close there thank you very much Alex for a fascinating talk --- ### think ahead: Meeting the Climate Challenge URL: https://www.youtube.com/watch?v=_LE1nBUDaDQ Idioma: en [Applause] thank you junian and uh thanks for having me thank you all right wonderful thank you so much so uh let me briefly introduce myself and then I'll I'll call up uh the two panelists in the room and we have a remote panelist as well so my name is um uh Sylvia pavoni uh I am a journalist uh I work for the financial times group so not the company but the sorry not the newspaper but the company and I write for a new title called sustainable views we focus as you can imagine on sustainability and in particular on policy and regulations so all the stuff that may uh feel perhaps not as sexy but actually is really driving uh arguably the space uh but during this panel we're going to talk about the challenges that specific uh Industries and companies face uh and not tackling uh when uh considering climate change uh so let me invite uh on stage um Tom and Mata who are going to help us uh through the discussion so Tom Grande is the CEO of hybrid uh vehicles and he will tell us he will tell you all about the compan is fascinating uh and we have Mata here who is the CEO of EDF Renewables UK obviously perhaps we are more familiar with what uh mata's company does but uh surely is going to tell us uh a great uh more detailed about uh new projects and then joining us remotely I'm sure we're going to see him appearing on the virtual stage very soon is Richard uh W hi Richard who is the UK head of sustainability for hundas bankin so welcome everyone right so we are going to talk about of course the challenges the companies face um dealing with climate change so it's not a particularly easy uh task um to uh to handle um but there are different levels of success and different measures that uh your companies and your industries peps may want to see um to really help you progress um and so let's uh maybe start with some initial thoughts uh on what you think uh on the kind of broader risks that your industries face and let's start with you Tom so you can tell us a little bit more about what exactly it is that you do um and then we talk about specifics okay well um thank you Sylvia I'm Tom Grundy I'm chief exective of hybrid air vehicles and that puts us squarely in the aviation industry uh we're developing the world's most efficient or most sustainable large aircraft so we're really working to scale up um technology that allows us to make an impact on emissions from the aviation sector and that's a huge challenge so I look at what the sector's dealing with overall Aviation is one of the hardest sectors to decarbonize um that being through the simple fact that you need to lift your own fuel up into the air uh before you can do anything else useful so that decarbonization challenge is very real is very present um and uh and it's a big deal you know uh aviation's 2 to 4% um of our um climate forcing emissions um the difference between the two and the four being depending on how you account for the non-co2 effects of Aviation which are significant in themselves but it's it's also an activity that only really a few people around the world currently use so about eight out of 10 people around the world haven't gotten an airplane yet put those two things together um and if you take one long haul flight you've used up about one fif of your own personal Paris climate cord emissions budget so five Long Haul flights for each of us and that's our entire budget done um so big challenge the head for Aviation thank you Tomy and then we'll talk a little bit more about the what you're trying to what you're doing uh with a company what you would like to see happen so that Innovation can actually um take us to to a much uh better place in terms of uh our environmental impact um Mata tell us a little bit about the challenges you're facing at the moment yeah so so good afternoon everybody um so EDF renewable is part of EDF group uh you probably have heard of EDF group is one of the world leader in low carbon electricity generation so 90% % of the electricity we produce come from low carbon technology including nuclear Hydro wind solar and we also do storage so uh the the heart of our purpose is basically to help uh achieve Net Zero so that's that is basically low carbon electricity electrif electrification and uh helping people use electricity decarbonizing their their footprint uh so there is a big role for for our industry into uh into Net Zero and just to give you a bit of a sense today of you know uh energy usage 80% of the energy we use or and more than 80% comes from coal gas and oil so you know that's where our emission come from or most of our emission come from and if you look at the usage of this energy 40% is power more than 40% is power so that's electricity and heat we've got 20% roughly around with transport and another % industry and the rest is building and construction so we have two things to do on our side one is to decarbonize elect electricity uh which is entirely doable and then is to Electrify to enable Industries transport to be de carbonized so those are the the overarching challenges and then again we're going to talk about what you are doing um with your projects here in the UK to to tackle them Richard over to you so obviously you look at this from um a different perspective you uh you work for Bank banks finance all these projects in theory that Mata and Tom are working on but also you under the spotlight um for your involvement in some other parts of uh of the um economy that um contribute to to pollution so after this lovely introduction to what to what the to the responsibility of the financi financial services um industry has tell a little bit about the challenges you face yeah thanks so much Sy and I wish I could be in room with you today so apologies for that but um yeah I'll come on to talk briefly about the role of banks overall which you started to sketch out there but just a set of context handles Bank in itself is a Swedish based northern European Bank um so major focuses around uh the Swedish domestic Market the UK domestic Market again uh and and the Dutch domestic Market those those are are sort of um big and growing Footprints um we're particularly uh focused I mentioned the word domestic probably three times there so that gives you a bit of a sense that's that's sort of the way that we work with uh local uh branches and with uh individuals householders uh small and mediumsized businesses um for the most part but then we do have a a significant portion of um which is devoted to the the larger and indeed largest companies within those marketplaces so so that sort of frames uh thinking that's Al also probably the most boring part about handles Bank really um because where we are known I would say we're probably best known as a values Le organization uh one that uh has a has roots in in responsible banking um and that's particularly uh uh remembered probably through through the financial crisis uh both both in the nordics and and then in uh at a global level um and that's very much down to the business model that we've operated now for for 50 of our 150 years which is about uh empowering um everyone throughout our organization to take uh responsibility and to take decisions in their areas of uh areas of focus um so what's that mean for for for this whole agenda today well it it's meant that we've seen fairly early on our responsibility when it comes to climate change and indeed to the developing broader sustainability agenda and we've set ourselves uh some what we what we believe are ambitious goals at least which I would say probably best represented by the uh 2040 Net Zero goal which covers our investments our lending and our own operations as well um you mention of course the the the role the banks more broadly um and the position they're coming from so so we tend to divide that up as an industry into thinking about uh Greening finance and financing green so when we talk about Greening Finance it's actually making sure that our organizations themselves are set up and governed in such a way that uh in the shortest time possible we we're at a point where every decision uh that's made within the organization has a lens on it of of climate change has a lens on it of nature of biodiversity and sustainability and so this um you know this affects the operational developments of the organization but of course the the Strategic development of the organization as well the areas it does choose to go in um the directions perhaps it chooses to move away from as well um and i' probably say in that context to what you were saying Sylvia that it was a few years ago that uh handles bank and uh took the decision to um to have a very minimal presence in the in the fossil fuel sector for instance uh and it's now you know what you might describe as a nominal level with some of the tightest internal guidelines around that um that we're aware of in the industry as well so these twin roles you know we've got to we've got to treat ourselves first as one might say but also to then support uh in a in a sort of strategically focused way the real economy uh to understand its opportunities understand its risks understand climate change as Professor Edmund was talking about um climate literacy earlier on and I do think you know in all of our organizations um there there is a challenge there to get that more nuanced understanding um of of of the way forward here thank you so much uh rich and I hope uh you all in the in the room and um watching us remotely can actually hear clear clear audio okay very good so right so the uh policies that uh Banks and investors have put in place in terms of where they wish Capital to flow and of course some of them may exclude certain parts of the industry and you mentioned also uh Financial well not Financial climate literacy um within the financial services sector but also more broadly uh throughout the economy and I would argue also policymaking right that's also very very important um because of course whether your projects and your companies surely would want to get the support of private Capital be it's through a bank or an investor um they I'm sure would also wish to see perhaps a stronger um support from policy makers and from from Regulators um how can can you tell us how you feel about the current level of support that you're getting for example for uh innovate in in the aviation uh area and what are the tension points Point yeah it's a it's a very Broad and complex space um the impact of policy on what we're doing um the first thing I'd say is I would split domestic policy and international policy in the aviation in the Aviation Space I'm not Aviation as an industry is regulated under ik which is a un body and that has some effects for example um on again under the Paris Accords um if you take off on a flight in the UK and you land in the UK the carbon that's been emitted by that by that flight is the responsibility of London it's it's on our carbon accounts here if if you fly internationally it's not it doesn't form part of uh part of the the UK accounting and and that covers carries on globally it falls to Iko which is a un body and so policy starts from there for international Aviation um and therefore uh it's multilateral it tends to be a very long process um it's taken uh some years for there to be a voluntary offsetting arrangement in place within the airline industry and if you come back then to domestic Aviation that really does um fit within the remit of individual governments so where we're finding um there's a lot of support for what we're doing is in Nations that have legislated for early Net Zero targets and have explicitly recognized that transport is a big part of that mix and tell us which countries is yeah so France is uh France has led the way France has banned domestic flights where you can take a train in less than two and a half hours for example um Spain looks like it's following our launch Airline customer for our product um has reserved 20 airplanes to go and serve passenger markets in Spain um and I should just say our aircraft that we're developing is a is a large airplane it's 100 seats uh but but it flies a lot slower than other aircraft so the idea is you get there slower than the airplane but you're going on very short sectors so it's a small time Delta much faster than the train journey and of course there's lots of parts of the world where you can't put the train track in in the first place so it's about being there with an efficient airplane it's quite different for the aviation industry to engage with that compared to the tubes with wings flying fast that we're all used to um Andra we've got that um we've got that traction because of policy um there um the airplane is a um our technology is a lifting Wing uh so we we take that bit from um normal sort of aircraft aerodynamics and then we add in some lifting gas from the lighter than air technology sector things like airships um that blimps that people are aware of and we mix the two so what we're doing is using a little bit of lifting gas to give us a bit of a head start Against Gravity uh but not enough to have the airplane floating like an airship ship um that makes the economics much better for the operator and um it means that on these sectors domestic flights we can deliver passengers to their destination more comfortably quietly um and at a price that's the same or below the price of today's Jet flights between those regions critically you get to your destination with less than 10% of the carbon footprint that you would otherwise have okay so which are all very interesting statistics what would you like to see to really from a policy perspective to really help you develop this technology so um from a policy perspective I think Aviation overall and and our and our policy view of Aviation is pulling two different threads together one is the economic benefits that Aviation brings to society and the other is the disbenefits the ex externalities particularly carbon I think there's a massive choice to be made here and I think from a policy perspective we need to be more honest about the costs the environmental costs of Aviation I actually price those in um versus the benefits so ticket we play we pay would have to be higher or subsidies well if you look at it doesn't necessarily follow because we forget the role of Technology here so yeah if you look at today's flights you can price in those externalities and the price goes up for the passenger demand goes down and but but what you're also doing is encouraging technology into the mix so you take the technology that that we've developed we have needed to move past the hurdle of saying this is cheaper this this doesn't require a green premium for passengers before we can start to have a conversation about um emissions um so the lack of Taxation on aviation fuel the lack of pricing of carbon externalities becomes an extra barrier that we have to get over if those that can be changed it's encourages more technology into the market all right okay so the taxation one of the big things um that we'll have to look into thank you so much um M so clearly the technology behind Renewables is been long proven but there are still a few economic and bureaucratic challenges right so take us through those yeah well I mean we speak in our sector of energy transition so it's moving from oil and gas moving into Renewables or other low carbon generation like nuclear so usually start with setting some targets so uh most countries have set some Target to decarbonize electricity because it's possible as you said you know we have the technology to do it um so in the UK for example it's 203 35 we're saying that none of the electricity will Pro will produce will come from oil gas or or coal MH so the um and beyond that then as I mentioned you know we'll need to Electrify so we need to grow uh the the generation capacity massively so we we're speaking of huge growth of the industry if you think about our industry it's a lot of infrastructure so uh you know there are big investment required you know we speak of grid but Power stations and so forth there is a big supply chain behind so we are looking at a lot a lot of investment and um and infrastructure so the the policy is key in setting the environment that will enable this infrastructure or this investment to happen um so it's key on the planning side it's key on setting the uh investment environment so that people continue to invest and grow their industry being supply chain or like our s developers and operators um what we' seen is you know Chang in policies I think the uh I mentioned about targets being set everywhere what we see for example in North America or in Europe or in China you know is is also the support that is provided uh to enable that energy transition so support in terms of speeding up planning support in terms of enabling supply chain industry to grow uh and developers like ourselves to invest in in their project um but there is still a lot to be done because the uh we've done the easy part of decarbonizing uh uh you know um phasing out the coal was the easy part we've done it in the UK in the last 10 15 years yeah now growing at the pace we need we need a lot more uh uh policy uh to to enable that and that that is true not just of the UK but across Europe across all over the world of although you mentioned Co and they did make a comeback right following recent uh really sad events so the war in Ukraine so actually we we started seeing some calls being um relooked at uh across Europe and of course that remains uh a source of energy in other parts of the world so I mean it's easier to have an exclusionary policy for example thinking about where uh Richard would uh you know with with um not look at um when it comes to Coal but then it's not as easy for every jurisdiction around the world and um and then there are other events that take place that make us rethink about sources so what what can um your industry do to really help make the case for ditching completely those highly polluting uh energy sources yeah but I mean the uh electricity is not to produce like or energy is not to produce like a any other produce you you can't stop from uh you know needing electricity or driving a car uh so uh you need it all the time so unfortunately what we see is you know it's a the high dependency that we have in the energy sector so here in the in in in Europe but like in many other places it's it's mainly gas other places can be cool you know if you Source your your gas or coal from a region where abolutely you can't Source it from uh you have to make difficult choices and it maybe switch back on some some coal plants um so I think removing this dependency is key uh and the policy that will make sure that actually there are incentives so that for example manufacturing of solar panel doesn't just happen in China or so we there is a rule for making sure that there is Industries uh locally being developed so we are not as dependent as we are for example in Europe of f fuel coming from other other places I think that that is a big one so we see industrial Renaissance with nuclear the wind industry in Europe has been strong hisor historically but it has been challenged recently I don't know if you heard about orad which is a massive player or cement really struggling financially because there is not the financial support needed and you know the supply chain is slightly struggling to keep Pace with the investment needed to meet the growth so we see that we need to protect that industry and there are other Industries like solar for example we were the largest producer of solar panels uh in the world in Europe and St we generate less than 5% you know 80% plus comes from China so you you really need to think industrial policy and strategy you know it's not just uh it's just not just enabling this project is making sure that you reduce the dependency you have uh across uh some sensitive regions so so very quickly before um bringing Richard back in so um there there is a series of policies at European level at least um that look uh exactly what you discuss so for example Ro critical materials uh and other you know we can talk about the uh uh the carbon pricing schemes and seum and all of that all these wonderful acronyms so are you seeing those as positive do you think that they're actually going to help at least this part of the world so I think they the we have we have instruments you know in uh in our toolkit so you spoke about carbon prices I think we need to uh it's carbon pricing mechanism is too weak at the moment to really make big shift so there are other instruments but defintive carbon is a key one that needs to be uh just to give you an example on the solar example uh the producing a panel in Europe is 50 50% more expensive than in China if we were just to price a carbon element right yeah because in China uh you know the carbon intensity of electricity is much higher than in Europe you know we will will reduce our cost by 10% right so that will start Bridging the Gap so you can see but it's not a one Magic Bullet so in it all you can see the policy is complex there are many aspects to it and certainly carbon is a is a key element to the uh to the policy so do you think the CMA for example which is the carbon board adjustment mechanism is going to play a role in this taxing for example Imports that come from jurisdictions that don't they're not seen as equivalent I think it's essential that you've got this right signal okay yeah so for example you could see a Chinese manufacturer coming to Europe and starting to produce in Europe which would be a good way to do a bit of Technology transfer it used to be the other way around what we need in this case is technology transfer back to Europe so that's one of the tensions that play out so this is a global problem of course a global crisis but then it's still a divided world uh and we we need to navigate all of us through these complexities absolutely and now before bringing Richard be in just to of course let you know that we we are going the panels um panelists are going to take a questions so I can see a couple coming through already so make sure to uh uh to to type them up if you would like to uh to have any any if you have any pressing uh issues that you would like to raise with the our experts Richard okay so I mean we we've heard of course very interesting examples of uh What's happen in terms of innovation across Aviation and the Renewables um industry and also pressure points um and you I'm certain you're looking at all of this uh and you have access to wonderfully complex and and uh big uh samples of data uh but how challenging is it to actually understand where to deploy capital um whether you're looking at a certain industry or a certain uh geography and is is this exercise becoming easier what would you like to see uh to help you um achieve uh yeah I think um the challenge is becoming uh clearer or maybe the solution is becoming clearer I'm not sure I would go as far as to say it's becoming easier yet just listening to mat talk then about the uh the policy Dynamics uh that affect his business you it just it just reminds of how fishlyn so so that part um you know will keep this fish complicated well into the future um I think you're alluding towards the the data aspects of this as well um and I think uh we um sort of as an economy as a whole and and certainly in the finance industry are making and have been making really good progress around uh establishing data standards um being able to then work with our counterparties to ensure that they sort of have a shared sense of those standards and they you know they are what they would expect or what they're planning for as well um and of course that's not the end of that challenge either there there there's plenty still to do you know if we look at our own Gap analysis as it goes on there are plenty of areas where we don't feel we have sufficient um or or in some Cas is high enough quality data for the for the risk analyses that we might want to do um or for the strategic um mapping that we want to do as an organization to to chart our Direction but then we wouldn't have expected to at this stage either so it is it is partly about being comfortable with that ambiguity uh and keeping pushing towards having a greater level of granularity I think one particular area um that I've probably talked about ad nauseum in the past uh that has uh especially difficult challenge is is what you might call well the sector such as you can call this a sector um because on the one hand they they they they're just as heterogeneous as as larger companies arguably you could say more so but they typically lack the resource to have dedicated focus on some of these complex areas um not all of them can afford to pay expensive Consultants either um and so there is a real sort of Market risk there economic transition risk there uh that we need to try to find a way of filling and I think gaps have a sorry gaps banks have a really important role in helping to do that so there's there's an interesting project just as an example right now uh that Bankers for Net Zero that we're a member of a UK organization is pushing forward and that's called project perus and it's trying to um work with uh industry representative bodies sector bodies uh and government to establish standardized uh data criteria for smaller businesses uh ones that will work for them but of course will work for um the capital allocation that we came into this talking about so you know Banks being able to see enough to make reason decisions investors being able to do exactly the same thing and all the way back up the chain in that sense is getting it's improving as you was were saying through these uh initiatives to to standardize data now all of you here are part of Industry that are heavily regulated uh and and so in in your case uh Richard of course you have the regulator also looking at your own uh the way in which uh the bank uh manages risk uh and risk related to Financial Risk related to climate um how is that changing the way in which you feel the industry is moving at least in Europe I think in in very helpful ways so um you know we have different uh strands of of of uh supervisory attention if you like uh on the credential side uh the work that uh the international central banks and Regulators have been doing um around um scrutinizing and and setting some expectations on um risk management how to identify the risks at at the portfolio level but of course to do that you need to you need to have good systems in place to identify them at the uh at the client level as well uh and then how those move through your systems uh integrate into your existing risk analysis systems all the way through to uh your you know the sort of Financial and strategic end of things you know what does this mean in in how many years time for uh for the shape of your of your balance sheets and the risks that sit on it so I think I think that's being really helpful I think it's been a continues to be a collaborative approach between regulators and the industry and long may that continue um and then we have the conduct strand um of of of risk uh management through through our financial conduct Authority and their particular Focus complementary Focus I would argue is is around uh governance uh the banks and others have in place um to ensure uh Integrity uh in the marketplace so that um one's claims match the reality at the entity level just as much as at the the customer level um and that the outcomes then that are being delivered uh as a result of decisions taken by these organizations are in the best interest of of the customers just as the credential regulator might think of the same question but say in the wider interest of the banking system of financial economy thank you so much Richard question is actually flying in so let me uh start the Q&A part of of uh this panel so that there is a really interesting variety of them I'm going to start with one um that um is for you mat in particular and so what do you expect coming out of cop 28 of course we're here uh today uh thinking that cop is only a couple of weeks um um ahead of us um what are your expectations from uh a Renewables industry point of view uh well there is I think a point which is about the growth of Renewables and I think it's about tripling Renewables uh investment uh in in a very short term so and of course I mean I'm sure you're all very much aware but cop this year is going to be hosted um in Dubai um and heavily um attended by of course um oil and gas companies Petro States so uh many leaders so that that probably the main point I think is is more leadership into uh into the the N zero agenda because it takes a huge commitment and you know making the changes that we're speaking about in the aviation industry uh mhm enabling the banking world to support the The Net Zero decarbonization of the world takes huge leadership so I think what I expect of a cup 28 is leaders to show that they're ready to lead the way to a net zero is what you would like to see or what you think is actually going to happen well I think you will see commitment because people cannot afford not to make progress so I would think uh there will be progress but there will always be compromises and the question I think what would be interesting is to see you know the commitment that we the progress that has been made commitment that we make to accelerate yeah the the transition that that would be what I'm looking for and what is the sort of stance uh commitment that leaders are willing to take yeah as part of cup 28 all right so um thank you Mata so let me um ask you Tom but also um R mat if you like to comment on on this other question so be because we talked about regulation and the role of Regulation and how it could be beneficial uh to develop certain um certain Solutions can it also hinder do you think uh innovation in other parts of the world I I do and I think you know that relates very closely to what I think we might see come out of cop in our sector and what I'd like to see come out there's going to be a lot of talk about sustainable aviation fuel as an example which is a very nice solution if we can get there economically because it just drops into existing Technologies but you know there are a lot of disbenefits there there's environmental harms that need to be taken into account there's actually the economics there's the fact that we've been trying to scale sustainable Aviation fuels for over 10 years now we're still at 0.1% of aviation fuel is actually sustainable right now and I think there's an area where um you know something that looks attractive and gets a lot of focus can actually hinder Innovation going on elsewhere in the sector um I talked a little bit about taxation I'd like to see Aviation sto being treated as a special case here there is no tax on aviation fuel at all really today 37 cents a liter which is less than we pay when we go to the petrol pumps here MH that would be enough um by by some estimates to tip the balance in favor of hydrogen technology in aviation which does offer the potential of real net zero actual zero operations so it's a it's a great case where actually over focusing on one potential answer can really hinder the ability to innovate somewhere else that's got much stronger longer term potential in my opinion thank you um Richard uh mat would you like to comment on this as well so where the you feel the regulation for example in the EU uh May H Innovation elsewhere in the world I can use I don't know if I yeah yeah I can use a thre example today uh death Nest so that's the department for energy and Security in in the UK is announcing a change to the cfd the maximum price you can get through a cfd auction cfd auction is a is a way to enable renewable investment by fixing the price for 15 years for for technology so they are annual auctions and what we had as the last auction is no offshore projects uh securing a cfd actually no projects participated because the prices were too low and um what we're looking for in in the UK is not just fixed floating so the foundation that are fixed in the sea but floating uh because that allow to give access to much more uh uh uh places where to to build offshore wind and today's announcement uh is a good success for a good news for the industry because we we've been arguing that prices you know the cap prices at the auction were too low to enable a supply chain and developer in uh operator to make this Investments and they announce a 50% increase for example for floating wind so we have a project floating projects in in development there are a few more uh uh developers operator in the UK having one and the potential for floating is huge across the world but in the UK it's also a key technology to enable Net Zero but this wasn't a consequence of uh regulation in the EU or no but it's a it's a I mean the general the EU regulation uh you know set some targets and some enbl so are equivalent right in uh but it's just to show you know the specific how policy can really bring Innovation and enable Innovation the impact the impct on that it thank you Richard I wonder whether you would like also to comment on this point I would yeah only briefly add that of course um you know policy makers will only put 90 or 95% of their focus into into what's going to be effective uh within their locus of influence or the locus of policy making um it's good when we see that there has been some um sort of international collaboration ahead of ahead of major policy announcements and um but we I suppose in reality we can't always expect that to be the case and we and we haven't with Ira just as much as we haven't with uh some of some of our EU policy But ultimately if it's inspiring uh other jurisdictions to to take stronger action as well as I suppose we're seeing with the cbam now committed for the UK uh then probably it's ultimately to the good all right thank you thank you so much as we we keep on going back to to those um highly complex uh and and potentially very consequential rules um so I I will try to to finish the panel not too uh not with too big a delay because I'm very conscious about um uh what's going to happen next which I think is lunch um but I still would like to uh I still would like to um to pick up a couple of other questions that came in and of course the ones that you feel uh the panel hasn't really addressed do feel free to get in touch with all of uh I'm sure you'll be very happy to um to hear from every everyone um uh today um and um continue the conversation so we've been talking about policy and regulation quite a lot but uh uh someone is asking sure this is important what about individual companies what can individual companies private sector companies do to improve things and I'm going to also uh add another part to this question which is about climate literacy so what can companies do to um go ahead with Innovation and really tackle climate change but also as part of this what are you doing what can companies do in terms of improving climate literacy Tom shall I start with you uh yes so so I think uh it's a very relevant and real question for for us as a business um we have built the technology that we've developed around capability gaps useful places to operate in the market on the one hand and the ability to drw the emissions of the overall sector where the technolog is invested on adapted on the other I I think you know I'm very aware that in the middle of all of that we've got a company to scale and as we scale that company move our product into production balancing the hard decisions um about how far how fast do you go with infrastructure projects how do you scale up in the right way how do you trade off speed to Market so the ability for inservice emissions to be dropped versus any impacts we might have along the way and we don't we don't have all the answers to that we're working to improve our literacy as a as a leadership team actually as anme without dedicated resource in there to do that um so it's the leadership it's the question for so there it's about leadership but I think it's also about engagement so the the other example and the the the um the example I have in mind you watching a business alongside us we're about to set up a a production line in the north of England um business alongside that alongside us there has invested heavily in developing carbon literacy in its own Workforce and it hasn't relied within the company on top down yes leadership but stimulating bottom up ideation and Innovation within the business operations I think that's a fantastic model and one that we're looking to develop and employ so you mean by that being a becoming aware of uh carbon literacy and your own impact your own impact your own your own life at individual level in the operations that you deliver within the bus drive those ideas up through the organization okay so gathering this information and sharing that that's AIT having leadership highly committed to doing so let me go to Richard uh next and then I'll I'll we'll wrap up with you m yeah I very much resonate with what Tom was just saying there about you know from the ground up and initiating uh but not trying to spoon feed an organization I part of that certainly um you know in our organization is that you have different knowledge requirements quite distinct knowledge requirements in different roles within an organization um and so it setting a framework setting an understanding overall about uh you know in our case our banks commitments uh and our bank's view on where things are going where they need to be going uh is enough uh to to then give the you know the department over here or the Frontline advisors over here um the you know the direction they need that to to start looking into the issues themselves and it really takes fire just like Tom was saying it really takes fire when people start to come up with their own ideas start to test some other hypothesis and you know being there to do to to to be the sounding board for that and to help develop that is so much more effective than you know desiging the next year's mandatory training whatever it might so do for example your you know the team involved in origination originating the do they are they aware of the finance the missions for example of a potential deal is it something that they might help is it something you're doing yeah yeah that's that's what we're looking to spread through the organization uh making some pretty good progress I think but it's uh it isn't something that everyone switches on to overnight and so you know we've got to do some degree of calibration on that uh and we've got to make sure we've got sufficient resource in the organization as things progress uh to be able to meet these needs but you do have to be sort of a little bit a little bit Fleet a little bit flexible around this uh and in the end I suppose that's certainly it's our decentralized way anyway in the end we know through uh through experience and that's a much more effective way that just you know try to drill things into people thank you Richard mat last word yeah I mean there the I really like the two points I mean they they comes back to um uh you know to make that transition we need people to change their behaviors mhm to change their behaviors in fact we need to invest in so that people understand what they can do uh what is expected of them how can they do it so engagement about understanding or impact is essential skills uh to change the way we do things is important if I just look at you know what we how we try to enable that with businesses something as simple as changing the way you procure your energy today uh into Renewables is quite challenging because of the complexity of the uh energy electricity market and it's relatively simple you know that a simple things to switch from let's say a gas to a Renewables by with a corporate PPA now if you look at the industry looking to change the way they do their process so chemical industry for example we are investing into we're negotiating with Des again so that the department for energy Security in the UK uh a nitrogen project so we will procure green nitrogen to chemicals industry and this chemical industry some in some cases already have process and system using estrogen in some cases they would have to replace maybe burning gas into estrogen that is a huge change in a company you know changing the way they process the industrial uh uh path so there is not that that while the uh you know the technology is there we know how to do it the switch you know the uh is we spoke about policy but we speak about in fact is how people do things we have to do things differently so we need to invest into people and people need to understand what they can do to make that the changes enable these changes wonderful what the what a lovely way to uh to end a panel that is uh organized by an institution that of course looks at training people and creating new skills because of course um uh academic institutions do also play a very important uh role here thank you so much for uh for joining us thank you so much to Tom M and Richard for sharing their thoughts I I found uh everything that you guys have said fascinating I hope you also found it fascinating too and now um like a big round of applause to for everyone and um --- ### think ahead: How Regulation is Supporting the Path to Net Zero URL: https://www.youtube.com/watch?v=HyC66Ybmhok Idioma: en our next panel how regulation can support the path to Net Zero this is going to be a panel like all the others where you can ask questions uh but the questions will be moderated uh by our moderator our pan moderator and that is same as last before lunch Sylvia please I'm going to let give you the floor and you can ruce the panel thanks very much thank you so much uh it's good to be back um so we started talking about policy and regulation in the previous panel and then judging by the the comments that a few of you um uh submit in the q& uh through the Q&A app there was some push back right against policy I mean so is it just policy should the companies do more but actually quite a lot of it I I would argue and maybe you would expect that from me given that I cover this day in day out for uh sustainable views um a lot of this really a lot of this area a lot of the world of sustainability and ESG and then we will continue actually talking about a lot of this the big and ever expanding alphabet soup that describes this area is driven by regulation so in this panel we actually going to uh to talk a little bit more and really dive deeper into what regulation uh is looking at the moment when addressing climate change but also sustainability uh concerns and to do that let me introduce you to our panelist so we have uh at the at my far right uh lucrecia rlin who is a professor of Economics here at the lbs uh next to her we have Emily McKenzie who is technical director at the task force for on nature related Financial disclosures uh and uh right next to me is Marcel Alber who is assistant professor of accounting so he can really give us some very detailed interesting uh aspects of this um here at lbs and joining us remotely uh is jaier hiier who is the the CFO of hro a s I can see your back uh your back there it's a bage reclaim so uh welcome welcome everyone so um regulation right the first thing to I guess to address is the language of sustainability and the the language of Regulation because this is becoming a very confusing uh subject to address uh not least because uh of the terminology that uh we are ending up using so from ESG environmental social and governance and arguably already this a pretty clumsy clumsy not particularly attractive and some might say meaningless uh term to uh other uh abbreviation such as csid sfdr esrs issb issb and many other the NFD as well so I issb is the uh the initiative um of the uh of International Accounting standard set ifs uh and uh it looks at creating a global Baseline for the way in which companies disclose information around sustainability which can help uh understand what companies doing the same way that uh we mostly investors but also other stakeholders uh are now um able to understand what they do from a financial perspective so look let me start with you you're being um very active uh in the developments of the work of the issb why don't you take us through uh how you feel this the language that is underpinning sustainability through uh the work that you're doing is is developing okay thank you Sylvia and uh you know it's very nice to be here with you know a lot of people interested in sustainability that's good uh so for transparency let me say I'm a professor of Economics that's my main job but I'm also a trustee of the if s which is the International Foundation for reporting standards and um I think the this F the ifs is the global standard Setter for financial accounts so think what the financial system would be like if we did not have standards for financial accounts so how would company you know read performance of companies around the world how investor would you know read this information if we did not have global standards which are auditable assur and so on so now the world is changing there are new risk new risk New Opportunities and uh you know the climate uh uh risk is huge as has been discussed it's not the only risk we have risk related to depletion of nature we have risk which are related to Social and so on but these risk and opportunities have to be taken in consideration by companies investors want to know this information so we need standards we need to achieve in sustainability what 20 30 years ago have been achieved for for financial accountant for financial accounting okay so the ifs after a consultation with stakeholders companies and regulator ask do we need these standards and actually 20 in the last 20 years a lot of organization like this sby the integration reporting Foundation a lot of these organization actually formulated some standards uh on you know and these are private organization which were followed by companies on a voluntary basis but uh in a way so we started this consultation in 2020 from a situation in which there were lots of Standards lots of initiatives lots of you know different acronyms and you know that was called in fact the alphabet soup and so in our consultation we asked do we need to harmonize and do we need to aggregate these different initiatives and should should we do it as Financial Accounting standard centers the ifs and actually the result of the consultation was yes yes yes and uh so then you know I led the task force that actually you know eventually uh let you know form the the SSB uh um and I think it was a fascinating work because it was the result of of you know combination of a bottom up process so something that aggregating from something that was actually already there in the market and the top up process because in order to be a you know a a an aggregator of those initiatives we needed to have the support of the Global Financial Regulators which we got and so the support of the iosco the market regulat the G7 the G20 and so on and so you know in 2021 at cop 26 we uh establish the issb now Emanuel faar that the CEO of donon that Julian talked about is now the chair of the SSB so uh and then you know the standards are out so and I've been out after consultation so they're going to start uh you know kicking in from 2024 and um and these are standard for the global market okay that's a very key thing so that we are a global standard sets why because the Capital Market is global and so we need standards that work in China work in Africa work in Europe and work in the US this is not easy because legal Frameworks and public policy tools are very segmented so but we need a global regulator okay so we came out with this IDE idea of the global Baseline so we uh you know we have a concept which we uh you know we ask companies to disclose standards which are financially material and then maybe we we can discuss later what that means and then if there are jurisdiction which are more ambitious that you want to standards because they want achieve the green deal like for example Europe they have a top up okay but the important things is that there is a coherence between these different level of disclosure so that the preparers and the counters don't get crazy okay basically we need something which is Rel relatively easy and transparent and understandable or otherwise there would be a backlash yeah yeah perfect okay so this is the issp and how many obviously I can't see the hands if they would ever go up uh uh back where you're looking at us from your offices or homes but here how many of you are familiar with for example the ISB or the uh t a few hands okay good wonderful uh so my students of course all your students yes I'm I'm students wow you have been warned um so um very important and relevant uh initiative um Emily why they need to have another Global initiative that looks in this case at nature so on the back of another uh similar task force that we're looking specifically at climate related Financial uh factors why nature and how does your work um gel with the ISB and any others yes there's increasing recognition from from governments from um Regulators from central banks and supervisors from investors and from companies businesses themselves that nature more broadly than just climate change we are experiencing historically unprecedented loss of Nature and its diversity uh driven by climate change but driven by other things also is creating material risks and also presents opportunities um important Milestones have happened in December last year we had the Paris moment for nature where nearly 200 governments agreed to a set of global goals and targets to Halt and reverse nature loss so recognizing this as a so a global issue the network for Greening the financial system which is a network of central by 100 over 100 central banks and supervisors also recognize that nature loss creates R macroeconomic consequences and risks to financial stability so is core to the Mandate of central banks and supervisors and we have a growing number of investors for example Black Rock Aviva others who at norus Bank investment management which is the biggest Sovereign wealth fund in the world who are also recognizing that their portfolios are exposed to these risks and then you have large corporates who are actually up the front line of seeing pollinator collapse or water supply issues or failure to be able to get permits because of uh the impacts that they're having um a variety of of physical risks as well as transition risks apply to Nature as a whole and in many ways we've made tremendous traction through thinking about climate change and climate mitigation But ultimately we're under one planet it has a number of Earth Systems we know um from the Stockholm resilience Center that actually six of those nine if you think of them as Earth system boundaries are outside of their safe space climate is just one of six so in many ways we're just drawing it's like an entry point into seeing the risks more broadly so that's all backdrop for why nature I think very clear argument for why this is presenting um implications for Society at large but also for business and for finance um so why another initiative because there was another initiative uh with another four-letter acronym that has um I think been hugely successful in creating momentum around climate that was the task force on climate related Financial disclosures tcfd uh which created a set of recommendations back in 2017 which um were around disclosure but also around risk management for these issues around climate and it's had huge huge implications I think not only for disclosure and uh for disclosure for investors but also for improving strategy governance and risk management improving decision- making and capital allocation so we tnfd saw that success and also realized that climate and nature are tightly interlined you can't really think about climate risks and opportunities without thinking about nature because we know uh 30% uh of um uh nature of climate risks are driven by nature and and climate is one of the biggest drivers of nature loss so we thought we'd build on the same model the same process we established a market Le task force so we're actually not we're certainly not regulation and we're not a standard we're a set of market-led recommendations because the market is recognizing this is a material issue and we see the issb as an absolutely critical milestone for creating this consistency it's already Consolidated a large number of the alphabet soup indeed tcfd sister organization has just sunsetted and declared success because their recommendations are now folded into the climate standard as to that issb has launched so we hope one day also part of thef part of issb it is folded in and they have declared success since 2017 with isb's momentum so we stand ready to support issb as and when they have you know they've completed their agenda consultation process see where nature is a priority uh stand ready we've worked very hard to create the consistency with the standards so that we'll make it as easy as possible to to dock in so I think I think generally I see the path of recognizing these issues having the momentum to make progress which sometimes needs a four-letter acronym yeah but then over time issb has created this really important platform for that consistency for the Baseline yeah and we've been quite thoughtful about how we can then enable that top up so the European jurisdiction is helpful for us because they've already gone further so how can we make sure our framework can not only help to meet the isb's B Baseline but help sort of 10 10,000 or more companies in Europe who also need to disclose on their impacts regardless of financial materiality perfect so the issb is serving uh also as an umbrella for other existing or pre-existing uh uh reporting standards such as sby we mentioned and also Incorporated um some of the uh principles under TCF and and what you're doing essentially is also helping companies with their strategy right so internally they they become more aware of uh the importance and the impacts of of nature nature laws uh on their activities and again as you know there are many other uh reporting Frameworks and standards that have been developed over the years um lots more to come uh and Marcel coming to you now has have any of these actually helped well uh I'm obviously not in the position to give a perfect answer to that or any answer to that i' like to take one step back and help us think a little bit about um the the usefulness uh of all of this I think um lcia and Emily have given fantastic overviews of where we are are really in the Practical weeds one step back um something we academics care about what's the theory uh behind that and and why do we do that does that make sense and to also give you some insights into what do we do as professors at lbs and with many colleagues uh all around the world it's thinking about is disclosure disclosure regulation a powerful part of overall climate regulation that can help us get to a net zero and that's why we're here so one could ask the question why do that and look has given um a very practical argument Capital markets need this information of course so why not say okay let's disclose as much as we can it's not straightforward how to do that well the reason is that disclosure can also create costs for companies and I think Kier will will uh confirm that compliance cost somebody has to uh report and file these uh reports that why why we have so many accountants in the world maybe but also all sorts of other proprietary costs for example your competitors see exactly what you do so it's not straightforward that full disclosure and full transparency is always um the the perfect um solution I guess the main idea here behind climate related uh disclosures to be a bit more narrow and the issp is that well to help investors but also induce certain behaviors of companies in the sense that like sunlight is is the best disinfectant so if we disclose things have companies become transparent then we can measure things and as as we also say at Business Schools only what measured uh can be managed so the key question I would like to give a brief overview of what we know does this work MH disclosure General um does this work and we have a bunch of studies um I think Alex Edmund would say some of those are more rigorous than others but they paint a consistent picture uh meaning that if we mandate companies to disclose about their sustainability activities and environmental outcomes um more narrowly then they reduce apparently um their their dirty Behavior their pollution effect sizes here have been documented to be relatively large 10 to 25% I don't know whether CFO like kavier would would believe that that companies reduce emissions by 10 to 20 uh% because they have to disclose so it seems to work so it can be a powerful tool a caveat of course these have been effects found at the margin for firms just being pushed in into this sort of um mandatory uh disclosure regime like in the UK since 2013 and my students will know UK companies have to report on greenhouse gas emissions and those affected firms apparently reduced emissions by a to 10% relative to European PE firms however only in the first and second year so this effect was transitory so I think it's obviously an important Milestone um to have a globally a consistent disclosure framework uh but that's only one um one aspect of Regulation probably we need more intrusive regulation as well uh to help um get to Net Zero okay so emissions have gone down and of course then also we need to talk about uh the numbers behind that right so that this decrease is it because they actually stopped emitting as much or is it because they've used some other instruments such as for example carbon offsetting to reduce uh those stated emissions but we'll talk about carbon offsets as well which I know is one of those really really hot subjects that usually people like to hear about uh Javier okay you are the one that actually has to put together this data disclose it I'm sure you have have plenty of um investors and other stakeholders asking you for that data um tell us how complicated it is to uh to put together a meaningful sustainability report and and to look also the risks that uh all these factors um have on on a company such as yours right thanks Sylvia and good afternoon I'm very sorry for not to be there but um I'm I'm I'm also here in the back at call trying to make sure that you're having a successful holiday for some of you that might be tempted to go out this weekend so and I think in terms of sustainability well first of all I think this is an absolute uh sift in the way we operate as as as a business I think particularly Aviation I think is a very iconic uh industry is is an industry that has this perception that this a hard to evate and uh and and and therefore for many years I think at hro we have been really working on sifting our overall strategy because I think that becoming a sustainable able business is not just a matter of uh values it's a it's actually a matter of of value and license to operate I think if if we continue creating a conflict between flying and Planet uh Planet uh should and will win and therefore I think the question for us the way that we are addressing sustainability is very much about how can we protect the benefits of aviation in a world free of carbon that is ultimately carbon would is killing uh the planet I think Aviation has many uh has a critical role in terms of delivering at least nine of the 177 United Nations sustainable development goals but carbon is definitely something that um needs to be removed and needs to be removed at speed and therefore urgency I think is one of the fundamental things and I think sometimes when we talked about regulation and Reporting I think I think one of the important things that we shouldn't forget the goal of all of that I think we we ended up where we ended up today in terms of the impact on planet because over two centuries we have been optimizing our economies to a single currency and that currency is Sterling Pounds or US dollars but actually what we have learned over the last couple of decades is that in the process of optimizing against that currency we have neglected the consequences it has in terms of creating externalities H to to the planet and therefore what we really need to figure out now is how can we H change the reporting how can we give enough uh data points to investors to change the way they measure success not purely in economic terms but actually economic uh terms adjusted by the impact on on planet and that's and that's the fundamental challenge how we can help investors which is ultimately the goal of all these ifs standards how we can help investors to allocate Capital more effectively against a slightly more complicated metric which is a risk adjusted a carbon risk adjusted economic value and I completely agree with Lucan actually is fantastic that the Lucan and the other colleagues in ifs has created the ISB because is the in my view the most powerful and if there's a single horse to back that's the issb to really put order when it comes to sustainability standard because I think we all have a duty to provide uh data to investors to allocate Capital more more effectively I think part of my role as CFO is that I spent U significant import part of my time raising funds to fund uh the terminals that hopefully you enjoy in my career I have raised uh 44 billion pounds of financing globally and I have seen a huge uh increase in investors seeking that uh carbon risk adjusted value value generation that's why I think is is really important the work that is that is happening at this stage unfortunately this stage is a bit too complex uh there are too many standards and um and I think that we all need to keep uh co-creating uh this environment where we try to move as fast as possible because if there's one thing that we don't have when it comes to sustainability and and climate is is we don't have too much time we are already late and therefore uh trying to really converge to a single uh platform which I hope uh and we are working hard uh to to make that happen is is the ISB and the IFRS new standards part also of my role is I co-chair the European for leader leadership networks in the UK to really on on on reporting matters and uh and I think that we are working quite closely with the ASB to try to make the rules simple and uh but also to create a safe space where people can can report I think one of the best news that has happened also apart from the creation is also the appointment of the leaders of the SB Emanuel Faber L mentioned is a pragmatist he has been a CFO and a CEO before so he has suffered the consequences of Po regulation and I think that one of the great things one of the great news is that he's an absolute pragat is the same with Su Lloyd the vice chair of of the ISB she has been setting standards for many many years and therefore I think the issb is doing a fantastic job but they need help and I think that the best way of helping them to create a powerful regulation is rather than complaining rather than moaning about the regulator actually the best thing that we can do is to put in practice those standards as fast as possible so we can find the challenges that those standards unconsciously or inadvertently can create for for corporates so one of the things that we have been doing at hro but most of the big organizations in the UK are doing is to take in a voluntary adoption of the standards voluntary adoption of tcfd tnfd because I think that what we really need is collectively to create standards that can be flexible enough to create an environment of trust because is the most polluting company the ones that needs to start disclosing early for those companies who are have a perfect uh sheet of paper and they are not embarrassed to disclose they are not going to be the ones really H helping to remove carbon from the air or removing uh or or supporting nature I think are those who are H creating the worst impact into that the the ones that needs to see and that's why I think the ISB also has done a very good job in terms of creating clear guidance but again being guidance not being too prescriptive to try to avoid uh people misreporting thank you so muchier so um we still have uh in theory five minutes to to have a little conversation among us but then I we really like to open the the floor to questions uh which are already coming in so thank you so much for submitting them essentially reporting is good right we all want to have uh pertinent information available um too much reporting uh means that of course there is a burden on companies and you all the companies and CFOs I speak to they have the same reaction that you do Cav which came through the video this deflation like oh there is too much too many too many Frameworks too much um too many requirements too many standards so number one good there is a global um effort to bring them together but of course there isn't really yet agreement um on uh I would say on uh what um is important the key important things to focus on because and here we start talking about materiality what is material to companies and whether uh that should be the sole focus of these reporting standards or whether we should also try to analyze and disclose companies impact on the environment and on society which is the point of view of the EU which has been also very active uh in its regulatory work uh and uh and um you know being quite vocal as well about the importance of of measuring impact in this sense look let me come back to you so how do you see this conflict because I think it is a conflict isn't it being resolved well uh I don't think it's necessarily a conflict I mean there are two ways of understanding this uh this problem first let me Define it okay so uh at the F FRS there is a tradition as standard seter for financial accounts we have a concept of materiality okay so that you disclose what do you disclose what is financially material so what makes a difference for an investor to decide to invest or not to invest in a company or for Capital Market uh you know so is this this is a very you know clear concept which has been used for financial account and that uh and this is the same definition that we use for sustainability this has certain advantage of transparency and also it allows to relate sustainability disclosure with financial disclosure because you know at the end of the day in you know maybe in the future we want to have a fully integrated reporting in which all these risk and opportunities for the companies will be fully disclosed now U the European commission comes and says not only the European commission but also the G or other organization around there they say no what we want to know is also what companies you know do impact on the environment so we want the other side of materiality I call that you know more impact than but they call it double materiality now um you know the double the the the second part of materiality of course is very difficult to Define so material for whom material in what sense material Horizon so you know it's very difficult to measure so that that's one you know but a public so an institution which has a public policy tool like for example the European Union which have the legisl you know the the legal framework to impose these standards they may want to ask companies to disclose what they think is useful for their public policy objectives now as a global regulator we are not we don't have these tools because we have to serve a number of jurisdictions which have different legal Frameworks and different objectives so we would not you know so that would be uh you know just going beyond what we are uh you know supposed to do and what so I mean and this is how you know we got we Define this concept of the global Baseline in which say we have this base which is the financial materiality concept and then if a jurisdiction has other objectives they can put a double materiality on top of it and the gri which is an organization which uh is also is a private sector type of organization has also developed some you know standards that the is is building on and we are working with the EU and with the J to make this interop operable okay to provide interoperability now but one thing I want to make sure that everybody understand that to say to limit the concept of materiality to financial materiality that doesn't mean that we do not have to look at Al the interaction of what companies do with the environment because of course you know these risk and opportunities are very much you know the two things are related so in instead in fact in our standards we ask companies to disclose about C CO2 emission scope one scope two and scope three so we have also this metrics so now if we look at the standards of European commission and our standards on climate we are very very similar and what we are trying to you know what we're working on now is trying to make sure that it is clear for the preparers what is SSB specific what is EU specific and what where there is the overlap now of course because on climate transition risk are important what happened to public policy has an effect of what is financially material so you know this connection is very important for us so and uh and so you know so it's not that mechanical okay that's yeah thank you so there already a couple of questions about the ISB so forgive me I I'll have to uh stay with with L but do perhaps you also have something uh to add to to those points so one of them is about uh well so G and sasb are they going to disappear potentially yes now but they have already not not g ssby has already so s is part of the issb a gri yeah so that's the direction of travel um and another question is about carbon taxation so we started talking about carbo pricing um and uh the person asking the question is is asking whether the ice speak could ever become a sort of designer of a globally consistent and integrated carbon tax system carbon tax no I think it's you know I mean the accountant are not going to solve the climate transition problem okay so that how much I you know I love the accountants you know this is a very complex which mean which requires different tools and different policy tools so the carbon tax is one of these tools disclosure is about the information architecture so we need to have the information in order I mean for Capital markets and for Public Policy uh but you know disclosure uh once you disclose it doesn't mean that uh you do something you know you just disclose it okay now you're not going to see anality then you want to have ta we want to have a carbon tax May and actually it is my opinion that you need more than a carbon tax because you also need investment and uh you also you know you need public investment and uh because you know there is not just an externality but there is also the need to to build an infrastructure and also to incentivize technology which is very risky in the private Market may not necessarily go for risk investment so we have to think about a broad set of tools just doing a little bit okay not a job for not a job for the ISB but the question about carbon pricing and the global uh price for carbon meaning either through um markets or through um tax is there Mel what's are we ever going to have a global uh and high enough carbon price yeah hopefully certainly we're not there countries like going to blame it Germany uh does not have a carbon uh tax but there was a blueprint uh out there or there is a blueprint out there since 2021 showing how this can actually work because as L has pointed out these types of regulations tax law is jurisdictional so you need individual jurisdiction like a country or the you um to um to design and impose the tax so your question is how can this work at global scale because we're addressing a global problem of course um the blueprint was um the global corporate minimum tax so 2021 many countries jurisdictions came together at the oecd level as kind of the organizer to agree on the concept of a global corporate minimum tax and that's now only two years later being implemented in more than 100 countries worldwide so this is the way it can work uh companies um coming together at events like cop for example in principle agree on a design commit to a certain level and then introduce it um at the domestic or jurisdictional uh level so there are processes and blueprints out there and and hopefully um this will happen okay so let me ask jaier and then I wanted to ask a question to you Emily would you like to see a carbon tax a global carbon tax well I think I think carbon costs money and I think that you can call it tax or you can call it uh a price for for carbon I think it's uh to be honest if we use an analogy I think that we saw the case of Bitcoin a few years ago when suddenly it was an exercise to try to measure the whole value of the economy against 21 million units h of of a of a particular currency and that's why that set a price for for for for that particular currency I think with carbon something similar will happen I think that uh in the fible future we have a limited carbon budget that collectively we can use and therefore that's going to create a quantification of uh of a carbon unit that today I think is uh from a shadow perspective is trading but I think at certain point it will be more than a shadow market and therefore that's going to create h a price for for every carbon carbon unit so I think that the only thing I I I would disagree with lucrea is that I I do believe that accountants will be the ones sorting climate uh change and the reason for that is because we are the ones who can quantify what's the cost of these externalities and once that happens I uh personally believe that that Capital markets will play their magic and will create the right incentives to uh penalize the wrong behaviors and incentivize the right Technologies to to sort it out so as a prate accountant I I I do think that we have a a huge role to play all right account as a revolutionary okay there is there is certainly a comeback of of account as s do you have an accounting background as well I have an economics background but I have a love of accounting you have a love of accounting okay yeah so I am also with Javier in the path of of of um I guess moving from economics to realize the reality of externalities to then witness the gaps in policy and I mean all of us taking responsibility for this as as both voters and consumers to to solve these externalities and in their absence I see disclosure as a way of of filling these missing markets addressing them that it cannot solve all problems we will still need uh policy and regulation to play play a role um and in the meantime uh coming back to your point about what what we we can only manage what we measure it is actually increasing this recognition that yes we have um produced Capital we have human capital we have natural Capital that the depletion of that natural cap is something that we need to be accounting for account you can bring us into the accounting system and look at the implications of it in terms of risk and opportunities that will bring all of this to life so I like Javier have great faith in accountant saving saving the world Wonder wonderful and so if you're the questions coming in are about tradeoffs and and one in particular is about um the trade-off of for example reducing uh emission through means that may have a negative impact on nature how challenging is it to measure those those tra trade off are you looking at those I'm sure you yes well there's a there's a there's a downside and that there are tradeoffs um you know for for um for many different areas where we may be looking at solutions for renewable energy there may be then the source of minerals for for fulfilling that that is going to deplete um important uh parts of nature but there are also upsides in that there are potentially big solutions for climate change through restoration and conservation of I mean basically the planet as a carbon s sink and a source of sequestration that we can use to solve uh the problem so I think yes we need to be keenly aware of the trade-offs and we need to be keenly aware of the synergies and that's where I think the very interesting challenge uh I was talking to the credit here is going to come for the issb now having developed its first standard with a set of General requirements for sustainability overall and then taking one size of climate now thinking about the interactions of climate and nature where there may be both synergies and trade-offs and then of course the important Dimension and all of this of people at the at the heart of this yes um so I I I mean I think it's a yeah it and having started I I um I I sort of switch sometimes thinking why why is everybody so limited and only think about climate mitigation not to be a you know critique of this day's conference having a focus of that but in many ways it's an asset in that people have come to think about this one issue and then can use that as a bridge to thinking about others that are connected um but in some ways is it's so tough to solve that one thing and coming back to the reporting context with Javier right one of the reactions uh we get when presenting tnfd work would be oh another issue but it's not just another issue it's an interconnected issue you cannot solve one without the other so we are asking a lot of all of us to solve interconnected problems and that's going to be you know uh a really exciting but challenging part of what we'll all help issb to to address so to wrap up this session and given that we're here talking about this uh subjects um ahead of cop let me ask you all to share just a couple of minutes um about what you think will actually come out of cop in terms of Regulation I'm going to start from um Javier well I think I think hopefully what it will come out of cop is a bit more Focus um I think time is the thing that uh we we do not have uh I think cop is going to start focusing more in more specific uh areas and I genuinely hope that what we get is a bit more focus and and simplicity which is what we really need I think a carbon out today is uh is much better than a unit of carbon out tomorrow so I think that I hope that what we get is focus and simplicity a simpler system Marcel I'm sure you agree with with that as well absolutely I mean obviously a lot will be um uh focus on on the global stock Tech this year of course in in terms of Regulation and bring this this together with kier's ask or demand for Focus I'd hope as an academic that we focus on what we know really works transparency in disclosure is very powerful and we also know that um tax policy either as a carrot providing incentives for investment like through the inflation reduction act or as a stick carbon taxes can also provide very powerful incentives for corporations to to change Behavior if we focus on that uh I think that would already be a success all right so Simplicity and um effective ways of changing Behavior ta Emily um I think once again there's going to be a strong emphasis at this cop on the connections between nature and climate so I think increasing awareness and understanding that that is the Paradigm we're moving towards and um and have to move towards and then I think also just continued momentum there will be dialogues at cop between the market L framework developers like ourselves the standard Setters um like issb and The Regulators like to continue on that on on goinging dialogue which because we're all moving with urgency fast but these are complicated things to create that consistency that everybody's asking for is um toates that ongoing dialogue you have to have very nimbly be sharing things to make sure everything we're doing remains consistent so I think those conversations will continue consistency thank you look yeah I think that you know we have made the first step which is uh you know we have now a standard sets at least for climate and then there will be a discussion about how to go beyond climate but now they the challenge is adoption mhm and for adoption you really need a global dialogue and we don't have a a global dialogue I'm not particularly optimistic about cop uh and this is for just for what concerns what we have discussed in this panel but you know in general you know that we need I mean according to the IMF we need about5 trillion dollar annually of a green investment every year from now to 2030 a lot of that will have to be private a lot of of that will have to be coming from emerging markets and money are not going to Emerging Markets so I think that Emerging Markets is the key issue and uh and also you know to get that money in Emerging Markets we need a global dialogue and also in that you know that's is going to be you know the main political issues is is there okay so that of course so uh for a green transition we also want it to be a just transition that works at po same government levels including um uh supporting Emerging Markets uh transitioning to uh to a Greener economy uh and they of course agly and effectively the most exposed uh to the effects of climate change and also uh you want to be able to channel private Capital towards the the companies and initiatives that are um arguably hopefully better at uh tackling this Challenge and so let's hope that accounting will will help and by the way if I can advertise so starting from next week the wheeler Institute at Lando business school will have uh you know four lectures on standards and adoption in African countries and we have a lot of you know already demand for this kind of also capability buildings which I think is very important where business school can have a role and you were already you were saying that were already uh there was quite already a High um level of takeup which indicates the interest that there is in this subject so that's it thank you so much for joining uh for joining this ation um it's uh it's wonderful and the more you get into the detail the more interesting it gets uh I think uh so do keep on following uh all of the panelist work in this area thank you jaier also for joining us uh all the way from hro from uh from the floor um and thank you of course to also to mcel to Emily and to lcia and for anyone of course also want in peps to have a look at the kind of coverage we do at sustainable views on policy and regulation come and check us out at sustainable views thank you again so [Applause] much --- ### think ahead: Climate Transition and Emerging Markets, led by the Wheeler Institute URL: https://www.youtube.com/watch?v=jKanGWK6WmA Idioma: en thank you Julian let me start by congratulating those of you whom I've seen from early in the morning uh uh today who who stuck it out clearly uh highlights the both the importance of the phenomena we're going to study we're going to discuss uh but also the energy that's behind uh uh behind uh all the solutions that we will hopefully uh discussing have been discussing all along uh we have an absolutely star studded panel uh here um and uh I'm going to very briefly introduce introduce some of them uh Nick Hughes did my immediate right uh uh Nick is a work in case study actually case studies in the plural because uh at lond of business school we teach a case on Mesa the mobile money Service uh I see some heads nodding you've heard you read it uh um that Nick started in a in East Africa that transformed um many communities in East Africa and has served as an inspiration for many others uh around the world Nick then moved on he's always on to the next big thing uh that moved on to uh another uh initiative M Copa uh which seeks to address the 600 million number that Alex Edmund uh Edmonds mentioned earlier today which is uh the the the fact that so many uh in Africa in particular but around the world still lack access to energy not just clean energy energy and now mopa using some super cool technology state-of-the-art in very many ways uh uh addresses uh that challenge of uh energy and Nick then moved on oh by the way that's another lbs case uh which all our first year MB is Du um and then we haven't written the case yet but uh Nick's current Venture is called cavex uh which I'm sure you'll talk about some more uh Nick and I also teach a class uh called innovating for impact at London Business School so Nick welcome back uh uh antoinet another dear friend of the school and of the uh of uh this particular Community anet vermil is the is the co-founder with John of the galif foundation which which forces us uh in very many ways partly through Sher force of personality but partly through the the the vision and the and the importance of the phenomena uh to look at areas that we often ignore specifically the oceans and uh Plastics and the oceans and the impact that this combination has on a whole bunch of other things I'm sure anet could tell us tell us all sorts of [Music] um scary statistics on on that combination uh the galif antonet and John have been oh sorry the vermilia have through their Foundation been uh uh wonderful supporters um I think we have at least one galif scholar here uh and from uh the scholarship that they they have endowed at L business school antonet welcome uh gor meta another case study uh gorov um runs a remarkable organization in India um called Dharma life uh Dharma Life Works in 14 states in India now 14 states in India is the equivalent of you know the the particular States inv worlded is the equivalent of uh all of Europe and the United States and a whole bunch of other countries yeah uh one state alone is the size of Brazil yeah so uh 14 States and they work on um Rural Entrepreneurship that has a social impact and energy is one of the uh uh particular areas but back to the the point that uh was made in the earlier panel that it's not just climate it's a whole bunch of other things and each of them recognizes and tries to address that uh in their own way uh from uh from uh their vantage point now the focus of the session is on Emerging Markets we've heard Emerging Markets referred to many times um and and and so I I'll start the conversation with just figuring out what's different about Emerging Markets you know very often uh the discussion is almost as if um these are victims um that oh gosh through our lack of empathy or care uh we're causing victimization uh uh to all of these hundreds of Millions millions of or billions of people or they're villains yeah either they're they're you know the oceans are rising and they you know air is being polluted or they're the ones cutting down the trees uh they're the ones uh doing you know dirty coal etc etc I suspect this group has a slightly different perspective from experience on Emerging Markets so let me start with you Nick and then we'll go to the group as a whole what is different in Emerging Markets uh especially contemporary Emerging Markets as we think about cop 28 yeah sure thanks well it's a pleasure to be here um well I'm I'm a a practitioner uh thanks for the plugs on the cases but um you know when when I look at um subsaharan Africa in particular um I actually see a a huge opportunity in front of us to think about redesigning the infrastructure that we can deliver clean energy to to the 600 million people that are simply Off the Grid I mean it's inexcusable that number of people cannot access grid technology today and yet we have technology at our disposal which can solve for that problem it's just and I think the previous panel only caught a little bit of the conversation but it boils down to inertia in the political systems it boils down to financing um the practicalities of how we design that infrastructure need to be thought through so we shouldn't go into Africa or or other parts of Asia and start to think about centralized Energy Systems I mean that's crazy if we landed on the planet today and looked around we both in terms of energy and in water you would not design the systems that we use today and in many ways similar to Mesa you know when we when we were thinking about empa we we were moving money around on phones 20 years ago long before we had Apple pay and iPay and smartphones because we designed the solution for the person that just had a feature phone we have to think about the way we design the next generation of energy systems for people that don't have the same needs that we've we've grown into over the last 200 years let's think about decensored systems let's let's think about smart grids I mean there was a conversation earlier today about the rise of electric vehicles I I I've been pestering the World Bank for decades to give me a business case for a smart grid it doesn't actually happen because you don't have the anchor consumption to use the energy on a grid and you can't bet your get back your capital expenditure but suddenly we've got electric vehicles in the mix suddenly we might have an anchor use case to roll out smart distributed grids properly and so you can a smart grid is a grid where you you come onto a grid it's been installed maybe it's us clean energy at its source so in in across Africa there's more solar energy potential that we can actually use across the globe there's geothermal energy in especially in East Africa that's that's under the ground it's it's clean to access we could put that onto the grid and the smartness comes when you pay for what you use you don't just build a a distributed a centralized system push energy down load shedding is happening all across Africa they simply don't know where to put that energy the energy companies are only interested in there what they're called cni customers the commercial customers they're not they're not interested in getting to households we've got a jettison that thinking and design much more appropriate systems where where they're smart the energyy is going to where its needs and and we give people the ability to pay for what they use using using fair pricing and um so so you know if you look into that into that you know whole you know where sort of I'm grossly simplifying the opportunity because it's complex and it's hard and it needs money but the opportunity is there for us to rethink the way we build um Energy Systems and we do need to start doing uh the talk earlier today about in internalizing some of these external costs we need to build in the pricing for the global South that gives them the incentive to move down this path and and and I do think the Glo through mechanisms like the carbon markets the global North and the polluters can should be we should be finding ways to get that money from that Source down to incentivize these new clean cleaner more cleverly designed um infrastructure systems great so I'm hearing you say the word you use a few times was opportunity um but then the infrastructure necessary to create the opportunity uh as well as the the some you alluded to the interconnected nature of the World perhaps that's a topic antoanet more generally what is uh uh as you look at developing countries uh what what do you find what is your Vantage Point so today I've been here by the way thank you very much for having me and it's really nice to be here and to have this audience so I've been listening and I it's it's very much where we're looking at using technological solutions to solve problems which is great and I I think it's very much needed but we need to realize that in a very finite World we're using more and more resources to do that and in the end where are we getting most of those resources those are from our emerging markets and in addition to that most of the effects of us doing that are actually affecting those countries more than us because the effects of climate change are actually the consequence of extraction um and of our industry in creating those Technologies so it's not and again going back to Alex um and his of externalities um it's really important that when we move forward we are really considering how we move forward to solve a problem that it is not solving one problem and creating others and that's something that we are very very involved with you know if you think about it that indigenous people who comprise 4% of the world's population have been protecting 70% of the world's biodiversity and so therefore I'm more interested in how can we make nature-based Solutions lucrative and I hate saying that I hate the word lucrative but it's got to be an incentive that we are finding ways to work also with those kinds of solutions that sorry that can help um solve this the the poly crisis because I think earlier I think Julian was saying about the planetary boundaries technically six have been crossed scientists are well it's seven and we've only got two left so we really are running out of time and so in in that respect when I'm looking at uh at Emerging Markets boy we do describe them as the victims but oh my gosh I also work um in areas where we are very closely in touch with people who are incredibly creative come up with amazing Solutions um but every day they are faced in the oceans you can't go anywhere where your Beach is not completely inundated with plastics the fish that they are fishing is complet completely filled with plastics they can't even sell some of it because it's it's polluted inside and out so we have to be so this is not just like it's them it's them it's it's all interconnected and all of us have a role to play in that and that's what I actually enjoy is looking at where can we all start making those changes so I'm hearing you point on multiple levels to the externalities um so the negative effects that actions here or there uh might have on those communities that are not uh factored in um I'm also hearing you say something about the interconnections uh uh that that exist we might come back to that and I'd love to learn more about the ocean context which you're you're so closely involved in as well gorov uh your point of view on Emerging Markets you left a uh a career in finance uh in in Europe to to uh head to India uh and work in rural India what do you see when you go to Emerging Markets what are the what is the reality so I see I think make three points I the first one is actually a huge amount of inspiration towards this challenge I think we can we see um we can see good examples of Emerging Markets deep frogging uh you know versus you know outed markets I think the solutions you find especially I mean I work in rural India amongst rural communities and you can see I think how they actually adapt to the situation in some cases there are challenges and we come to that data but I think the Innovation is amazing and um also the other thing you'll find is that traditional ways of uh you know operating or living were actually climate friendly so actually the these communities are much closer to what it used to be and if you actually go back to the modernization leads to um I mean modern things from Western countries seem exciting and aspirational to people people but then they are sometimes causes of these uh you know these externalities at the Village level so I mean if you work with uh if you go back to some of the I mean modernized some of the traditional methods of of uh living of uh kind of consuming you will actually be able to be climate positive neutral and what's an example example is um example would be I mean I can give an example so I I work on households I work on micro businesses and I work on communities and in the micro business s if you look at I'll take an example of art forms and art right I think we consume traditional art forms so we we looked at Supply chains of traditional hand embroidery or traditional um hand weaving and if you go back to the traditional ways of doing this it was all using natural ingredients and having circular processes now you are seeing using chemical paints using there's so many ingredients now which are in the Advent of massive scaleup being used everywhere and they are being brought to these art forms which destroys the kind of pureness of them and makes them environmentally unfriendly and these are then sources of water pollution wasas creation um un know climate air pollution because of energy and health health obviously implicitly there's uh kind of other influences on the personal health and and living conditions and working conditions so I think that's one thing I mention and quickly the other thing would be um I mean there is that is if you go back to that um the other thing I see is uh why I changed and wanted to make a difference was because it's sad to see what the situation is in a lot of cases so it's a huge hugely important to help these communities modernize um and get what they're supposed to get I mean versus why should be I think niiki mentioned it why should they be off grit why should they be so I think there's the other side of it is that the poverty and the issues these communities face is also you know something which is a problem so one has to find a way to solve that and uh have some sort of just transition yeah I heard you use the word modern modernize and I also heard you use Trad tradition uh so modernize in a traditional manner somehow maybe you'll come to that great now and that all of that allude to some of the challenges maybe we could talk a bit about the the challenges that you you see we've heard a lot about the the you know the need for finances resources uh what challenges do you see um question yeah more anybody yeah sure um uh where to start so so um if we take the carbon markets as a can I I'll use that as as an example um they've been around 20 years I I mean before I got into the telom space I worked at BP I went to cop 6 in the ha and I came away from cop 6 and I thought I'm never going to go to another cop and I weirdly I find myself going back into these cops now and talking about how we can use digital technology to solve for it so so what's the challenge with the carbon Market is it's a lovely economic concept we'll create a cap so we'll either put it in with a compliance cap or a tax but allow people to offset that by finding somebody who's got some excess credits to save that that's a beautiful economic theory how do you make that work in in practice and for 20 years they bumped along and we've we've seen market failure they've disappeared over the last even over the last you know three to four months some of this um outing of greenwash where these flaky credits are getting sold they're getting sold to Brokers the money doesn't make it to the projects there's a much better way to run these markets and again I'm going to come back to digal tools we can there are several things we can do now to ensure the Integrity of a carbon credit we've got uh remote sensing imagery that we can use to monitor oceans and mangroves and forests we've got internet of things that you can't go anywhere on the globe and not be under a network somewhere whether it's the gsm network the mobile operators Network where it's Elon Musk is going to continue pushing out with his low orbit satellites connectivity is there data collection can be done you can aggregate things on the cloud you can interrogate remote data uh third parties can go right down to the very source of the activity that you want to attach a carbon credit to whether it's a reforestation or protection of some Mangrove or it's displacing a petrol pump somewhere and putting in a solar installation the this is all possible and we can but the challenge is how do we how do we build that monitoring infrastructure that gives us the evidence that the clean activity is happening and if we can monetize it using carbon markets we can use those micro incentives so companies that are setting Net Zero goals and using carbon markets properly first of all they should be reducing everything they they can in terms of their own emissions but if they need to need use credits to get to Net Zero then let's find a way to give them confidence to buy credits from the emerging economies and move that move that money down to the projects on the grounds that are now that are following a cleaner energy path so but it's it's hard to make that work you need you need that blend of you need some committed I think the Net Zero um sort of the the use of the net zero policy and companies signing up to it has been brilliant because it suddenly gives you buy side demand and the regulations and the regulations need to come and enforce it and I I think if we can make those things happen we can deliver those Solutions using digital technology there's no reason if I wanted to offset my journey into London today and move 500 Shillings down to an Essa wallet I can do that I can I can do it now if I can give an incentive to a small holder farmer to use a use a solar pump there's no reason why I shouldn't be able to do that and yet we keep hearing about all these scams exactly all these carbon phony carbon credits in emerging markets absolutely and and that's what with that again that's inexcusable we have technology to demonstrate the Integrity of the activity on the ground and we should use that technology wisely and just to make sure uh we are following so can you give us an example so I'm a farmer with a water pump what happens this is an actual case you're working on you work so uh typically you might go and spend let's say $200 if you can borrow it probably from an MFR you'll borrow $200 you'll buy a a pump you've got a choice as a small holder farmer do you want a petrol pump or do you want to those solar pumps look good but it's another three it's $300 not $200 okay my running costs are low but actually I've got if I've got to find $300 why would I make that decision because cash is very real for me I'm going to make the cheapest I'm going to buy the petrol because I can get $200 I'll buy it now if who said you buy this you you take this solar pump what you're going to get is a monthly credit to your impesa account that every single month you'll get let's say a th000 Shillings 10 Bob 10 10 $10 to incentivize you to take that path and or we can use that to finance that pump for you so there you're using small micro payments to incentivize the right choice between petrol pump or solar pump and the money for it is coming from the carbon credit would come from I'm I'm I'm um let's think of a big water company in the UK that's trying to get itself out of a dark corner let's say t water I I've got a I've got a I've got a net zero commitment I've got to find 15,000 tons of credit I like that that's linked to water strategically I can see the co- benefits exist for the farmer in terms of its clean water being used for irrigation that's driving up social economic benefits I'll P those credits give me the data that that's actually happened we can we can do we can complete that Loop yeah uh so and I can see why you started with the point about infrastructure because all of this relies on financial infrastructure uh Communications infrastructure uh uh even in places where there is no road infrastructure that's exactly right yeah we have this incredible digital infrastructure to use today amazing antonet and back to the point about challenges you see I I already see the entrepreneur here coming up with Solutions a perun nod to challenges and we always go to the solutions which is awesome maybe you have a more sobering thought for us so well I think it's I love listening because I'm like oh yes there's that and there's that absolutely I totally agree there's and there are a lot of technologies that are being used in and blockchain as well which are super important to track the The credibility of of many of the things but I just I just want to give a a bigger picture of my my my world view which is is a Learning Journey um so I think I don't know how many of you know here that Plastics come from fossil fuels I mean they are basically a direct output of it um and because of the growth of the EV Market um fossil fuel companies are now focusing on Plastics as their next Market which is a estimated growth of up to 40% by 2050 and most of that about 40% goes on single use packaging so something that you get from your supermarket and literally use for a maximum of5 minutes or have in your fridge for a week that's it and so what happens to those those get recycled and I'm def definitely using my ant hands or waste to energy which is another set of ant hands um and the reason is because we've learned and we've tracked actually I was just telling rajes that in crumble Road tesos they put some trackers in for recycled goods and they found them in Slovakia and in Turkey for open litter burning so the point about recycling is it is a very open loop and there are too many holes in it and there is there's not enough accountability waste to energy is another thing is where we take our Plastics and we burn them in incinerators and say that they will feed energy the problem with that is that we've discovered that the off um gassing are forever chemical products that are even the who does not accept them there dioxins furland pasas and these remain in the soil and in us forever so we've got to sit back and go hang on where's the logic here what are we doing and the other point about it is that Plastics are also um contain endocrine disrupting chemicals and poor rajes has heard this 100 times but basically at the rate that we're going in the last 40 years male sperm count has dropped 50% due to endocrine disrup in chemicals and is on track to hit statistic statistical zero in about 20 years great news um so the point is that we're dealing with a product that is pretty foul and toxic and we still keep using it and we kill so that's up here this is where we are what happens with all of that that stuff is it gets exported to countries that are IL equipped to deal with it in climate condition that basically pour them into the ocean with every Monsoon extreme weather event or whatever so we're dealing with an issue that is social justice uh social injustice environmental damage and human health damage so what has been amazing for me though has been not so much that we can find solutions to deal with a problem that is a problem it we're just literally putting lipstick on a pig what we really want to do is stop that and so the ideal thing is to try and limit this fire hose of plastic production there are some ways that that is being done which is happening right now in Kenya at unep there's the the global plastic pollution treaty where it's like the cop but it's the cop of plastics and we're trying to negotiate ways to basically address the plastic life from production to the end that is amazing because that has been driven and started mainly by people from countries that were the most affected by this the Philippines Indonesia Africa those were the countries that were driving so much of this we've also passed something called the Basel convention which now regulates plastic as a hazardous waste so you can't export it to another country without prior agreement so these are huge steps forward but they're more the legislative regulatory thing because the market the free market before then only allow owed for very unsustainable and untenable Solutions um so in that sense I'm those are the things that I'm seeing on the regulatory stage on the other thing within communities and I've often told rajes about this is that there is um one city in the Philippines basically um they tried an experiment where they got everyone every stakeholder involved and they had plasticfree ordinances targeting businesses and all the people who were involved in plastic uh collection were reallocated to collect everyone's waste from their homes and of that 80% of the community's waste was diverted from being dumped in landfills and it saved them $750,000 per year in landfill and transport costs and the waste workers which is a social justice issue were treated as formal employees so this became something that was one of those amazing Stories where it was just just a win-win win and has kept going um I we'll come back to the point about oceans and what I heard also from you was uh the interconnected nature going from Tesco to the Philippines or turkey or Slovakia uh the interconnected nature of this phenomenon because the ocean surrounds Us in part but also Supply chains surround us uh whether they are Supply chains that were originally designed uh as to be used a certain way or not uh um gorov challenges and I suspect you'll come up with Solutions as well at least that's been the trend so challenges that you see um as you seek to make an impact on climate related issues in Emerging Markets so I think uh for me the biggest elephant in the room is financing challenge I think it's been talked about that the capital required to address some of these issues is huge and it's not really clear how it will I think we're have massive Gap and I think that's we heard about a trillion dollars and so on trillions trillions I think it's more than that but I think if I break it down to my context which is the micro level I mean you would talk about how do you mitigate for imagine a rural farmer in female farmer in a village a typical thousand household Village I mean first they asked to mitigate their their footprint which in the scheme of things is probably doesn't sound that much but you aggregate it it's a hugee issue second they have to mitigate um or kind of they have to mitigate but they have to become resilient climate resilient so they face they face the issues I think which are kind of caused by others which they face in their crop in their current water situation Etc so they have to adapt basically their their practices and then maybe yeah technology is there hopefully there'll be Solutions but mostly that technology is still too expensive to finance for them right so these are micro level challenges at the let's say a single farmer or farmer group at the Village level so you know not all of that can be addressed with it's Capital it's Behavior change it's kind of mindset change it is uh who will fund the loss and damages is there a loss and damage fund there's talks about this obviously at cop but you know how do you bring it to that level I mean even reaching it to that level we have the tools we have the technology to do this but it's a massive Challenge and uh and I mean how do you explain to that also how do you explain that to them I mean like if you so we s working with women entrepreneurs we trying to explain this um yeah in some cases it's very tangible so easy to explain but especially the things which don't have any immediate direct impact you know because mostly that's the case or have any direct benefit or direct consequence uh you know require a lot more effort to explain why the the fair question is why should they be changing their behavior whereas others have been allowed to develop our Behavior change on their part when we're full of inertia many issues right in terms of norms or even fairness so Justice becomes an issue as well right fairness and Justice so I'm just again probably being on the borderline negative as well but I think these are the real challenges I mean and not Solutions comes next I'll honor your sequence and and how are you addressing that challenge I think um it's a work in progress but basically what we've been doing is we've been trying to look at these Market these failures and um and I think some of them have um Clear Solutions and those get adopted I think if I look at the let's say the micro business I'll go to the micro businesses first I mean there's the solutions which are Roi positive right so whether it's I think we've been looking at um the big issue at rural level is wastage of foods right so a solar drying use case where you can dry it's actually a very Roi positive use case so these things then Finance themselves and so you can start with those uh the solar pumps are also a good example at that in that context um solar um because for irrig micro irrigation I think they're efficient Solutions solar cooling is still borderline because the the cost of solar scholing so you have basically three categories one is things which are automatically ready adopt ready adoptable right and because the arrow is positive and uh you have you have models of financing which develop and Technologies which Finance them with pay as you go models then you have things which are you need subsidy you need an offset to actually make them uh and again there we come to the point of can we create outcome Payment Solutions because the climate benefits which Nick alluded to they are not really translatable directly to that household so you need an efficient access to carbon markets uh through technology so using usage tracking you know maybe unique IDs through blockchain where you can track it back um and then uh to solve that so that could be done not the expensive impact bonds which are being propagated with 30 40% cost you can do that with technology now so that's kind of that's the second category and third one is where the use case is still experimental where you don't know I mean there's a lot of innovation required on the tech side to solve the problem and I mean here um I mean there's there's many examples but that's kind of we group into these three and then we can take at least on the second which is interesting especially given the finance backgrounds of of a number of folks here uh I see G Muki who's here who's done a lot of work with impact bonds Etc um so the logic if I understand well we're working on uh some research together uh through with the wheeler institutes and DL Labs on so-called results based financing maybe you could talk a bit about how that links to potentially with climate change uh yeah so I think the simple way if you have this financing Gap um there could be two ways either it has to be subsidized or it has to be financed and the cost of capital is an issue so we are I mean creating a tech platform and that's as an example uh not a plug which just you can just use very simple technology of image um AI based image uh classification to prove that this household uh is the one deserving it so you can validate the kind of uh targeting of such a household is most needy through technology you can um track the climate impact through sensors where if only the usage gets paid I think a lot of criticism of carbon markets is that you're survey based paying out the carbon benefits your technology allows you to actually track climate you know footprint and then paying out against the footprint two sensors and the third thing is that you create a unique record that this thing is not duplicated so this one household actually gets this Ben business gets this benefit and this is not repeated and so you have some sort of trust in the process to by creating a simple leaf ID on the blockchain so that's a very simplistic way and you can just prise this uh directly so hope that answer just relating to some of the points you've made uh there's a there are a series of questions coming through uh as well I don't know if that's up there um with there are questions coming through from from the online panel um and one of them is uh Alex Edmonds talked earlier about the need for climate literacy um how do we achieve this in Emerging Markets what does that even mean in the context uh lucreta made a plug for uh this terrific webinar that she's organizing on behalf of the wheeler Institute on on uh climate standards and Africa uh what about on the Grassroots if those were not dialing in the folks the the small holder farmer or that Community member in the Philippines or the or the uh Village rural Indian villager what does climate literacy even mean in those contexts Anon I I think they're living it I think they see it every day you I mean you're in your if you're on a coast you're seeing Front Line the amount of plastics are hitting your Shore you're seeing the fact that the weather is getting much more extreme there are countries that are going underwater right now um and it's not just I mean I always again carbon tunnel vision the these are countries that are not just losing their land they're losing their culture their spiritual connection this is much bigger um so I what I'm sort of when I hear this I think that um we talk about climate literacy that's because we're so disconnected I think that when you are front line you know full well what the changes are and you're having to cope with them front line and particularly in in coastal areas this is a you know I was in my home state uh in India uh Kerala a few weeks ago uh and the person who was cooking uh at this little hotel we were in on by the beach uh was a fisherman it turned out uh and we say so what are you doing here instead of fishing apparently that beach used to go 3 kilometers out in my Homestead I had no idea uh and and to him it's very palpable and his children are not becoming fishermen anytime soon uh they are doing other professions and and so they see the way the world is headed from their particular initial uh unique uh perspective um so and is that enough I think I think obviously there are all of us when we start looking at the interconnectedness of what we're doing you can sit there and say well maybe the way that they dispose of waste or maybe the way there are Chang changes but I think that within Villages and we've leared this that when you work with the elders in the village they are super important in um educating their their communities on better ways and that's probably the uh it actually started with Al G with his climate talks educating you know you you just keep going down till you get to the point where there is that level of education and literacy but the level of literacy that you need there is probably quite different to Global Financial markets or whatever which are too disconnected that's where I think the the biggest true true but I was thinking Nick of your example of the small holder farmer with the pump that farmer needs to trust that you will keep giving the 10 sure every month yeah and so at some level the farmer needs to understand that there's somebody out there who has a stake in whether he or she uses the pump in a c a particular kind of pump or not and and so there needs to be some at least implicit understanding of of cash flows and so on yeah really but but um remember what you're doing if you're getting 10 you know a, Shillings or $10 a month to a small holder farmer the the the benefit of that is huge um you know this is the the strange thing about carbon Market you've got a you've got a dollar currency and if if I'm T's war and I'm buying uh you know I should I don't you know I'm not picking on T water I'm t water if I 10 10 pound or $10 per ton to me if I'm after if I'm chasing 16 20,000 tons per year to hit my Net Zero the you know I need to understand that you know as a finance director I'm making decisions about do I buy now at this price and at this volume and there are other things I might want to think about like these co- benefits that that's a different type of literacy to a small a of farmer who's who's who's getting $10 a month $10 a month is going to drive that you know that's what makes the difference $10 a month is real income to a small of farmer and you know it might sound like we're fiddling around the edge talking about one small hold of farmer or one household but there are literally hundreds of millions of people like this and we have to think about how do we create that at an aggregated level then you start to see a material shift but I would say bring it back to money bring it back to some money in the wallet of that small holder farmer or money in the wallet of that household that displaces their charcoal burning because there's also health issues linked there and they're getting a an incentive payment to move across to clean energy and when you you start to multiply that by hundreds of millions of people then you start to make a little bit of a dent on on on the challenge and it can all be done I think in the short term longer term we're going to need bigger Solutions we're going to need direct air carbon capture we're going to have to be pulling literally millions or hundreds of millions of tons of carbon out of the atmosphere we don't have the technology to do that yet but we do have the the the capability and the systems to do this at at Big scale to do this sort of shortterm stuff that brings social economic impact and if we if we link L to money link it to real money in their wallet every month that's what will drive Behavior change yeah more of a behavior change you're you're involved in uh lots of activities on at the Grassroots level uh that is around Behavior change some of which is around uh around climate uh or at least the environment yeah I think definitely needed I think at different levels I think at the house at the individual level I think the government of India's mission life is a good example where you know there a policy driven or I mean prime minister driven initiative to get people to live in a climate friendly way which I think is not only an educational tool it's also kind of creating a movement towards changing your mindset to actually you know save water reduce plastic all these I think six seven behaviors they've outlined and I think it's a great example of a top- Down you know kind of movement it still will have to view the results but I think it's definitely required and secondly I think the business um micro business level and I mean just adding to what Nick said I think obviously the benefits passing on the benefits will help but I think there it's about pivoting and iterating the business models where I think the education would be around you know can you help them actually you know have a future proof uh business model uh and the education would be around that and using Tech and other things to to do this because it will have to all pivot and and iterate I see we have 2 minutes and 14 seconds so I'm going to uh uh wrap by asking you uh a question question so throughout the day we've heard and Anon did a particularly good job of uh uh reminding us of all of the challenges uh everything from sperm counts to uh to uh all the awful stuff that's happening in the oceans um it all sounds kind of depressing although you've done a remarkable job of giving us some you know uh Solutions and reasons to um be optimistic what keeps you going in this where it seems like there are so many thousands of uh players involved not just a cop but much Beyond uh it seems like these are such big problems with all of these interconnections and all of these inter externalities what keeps it can seem futile sometimes uh perhaps what keeps you going yeah it does feel like it sometimes doesn't it but look look look at how the world responded to covid you know look we came up with we shortened the R&D time you know by by decades and B Solutions out that have helped and you know we can have big debates about you know about that but I I think humans are are we would you know I'm I am an optimist I do think we'll find Solutions I think we are you know as a as a race we can be quite ingenious when we need to be um but as a just on a pure business basis by 2050 one in four adults on this planet will be on the African continent as a business opportunity why aren't we thinking okay that sounds exciting what in four adults on this on the planet will be in subs and Africa if we're not investing now in good Solutions smart solutions for Africa then we're not doing our job in in the you know in a business yeah so big problems mean big opportunities uh and you see that uh and where keeps you going I think it's I mean the fact that everyone's here in this room it's it's the it's the everyone is en engaged in one way or another so I think I get my Hope from action I hate just not doing anything and all of us can do something if some if all of you just left today and said I'm going to do something today that's one thing the other thing is high level action that's what I look for gorov you you I was you know you've had two hours of sleep and this is not ra frequent I know this and you're working nonstop on these things I'm just amazed at the level of energy you put in what keeps you going thank you it's the if you it's always a question of perspective or you from which perspective you're looking at it I think for me it's working for the women entrepreneurs in the village if you see the challenges they face the challenge I think the unpredictability and um issues they they have I think it's just a tiny thing for us to keep going it's responsibility it's a duty it's it's an honor to be able to do this so as long as you can do it and that's what keeps me going and it's always a question of perspective thank you on that not note of uh of Duty uh let's uh let's all do our duty and I'll do my duty and end on more or less on time thank [Applause] you --- ### think ahead: Fireside Chat Hosted by Christopher Caldwell URL: https://www.youtube.com/watch?v=Bc5pYw7tppQ Idioma: en grateful thank you very much Julian it's um thank you very much everyone for coming here um my name is indeed Christopher Coldwell I'm a um I'm CEO of United Renewables which is a clean tech investor and a renewable energy developer probably more importantly though I'm alumni of London Business School member of the alumni Council and also member of the the sustainability group here so in delighted today to have a far side chat with um a as rati uh who is a award-winning journalist a um senior reporter of climate so Bloomberg and a person who has a frankly unreasonable level of knowledge about all things climate and amazingly manages to stay optimistic in face of all of that knowledge so I just say Julian there without any further Ado um so it's a great pleasure to to speak to you thanks for thanks for this yeah thank thanks for having me wonderful and you've got such a um your leading voice um but also very well-known voice because you're also the host of a you know phenomenal podcast uh for for for Bloomberg uh but the theme for the day is future Generations yes and future Generations is both a source of great optimism but also a source of great concern uh concern because the the world that we're living in the mother and nature has tapped us on the shoulders and said hey you cannot continue to be acting as you're doing uh you cannot continue continue as you are is giving us warnings throughout the L now the source of optimism comes from the fact that well we're all working in this industry and we're all working very hard to to be making this right because of future Generations you know and also future Generations are the source of of of Hope the source of the future so if we can start by just asking um asking yourself um from what's growing up in India um what did environments and nature mean to you uh so I grew up in a small town which by Indian standards is small it has about 2 million people uh it's called nask and it's very close to Mumbai uh and it's uh it's Wine Country it's surrounded by mountains uh it's uh it was a really beautiful place to grow up in and uh you know my parents are retired and and they live there and maybe I will go back and retire there as long as we don't make climate change far worse um and so nature was very close to uh uh us growing up cuz you know uh if if he could drive 3 km we were at a river 5 km we were in the mountains uh and so Nature's always been an important part uh of growing up but also uh the other thing that has something that I've carried through uh is we saw a lot of change in the you know 20 years that I lived in in India uh but also within my family my grandfather never went to University my dad did and was able to send us to uh better schools and and and eventually over here to study and be able to talk to a very smart crowd so we saw social Mobility alongside uh access to nature which is something that I hope everybody gets to experience not just now but in future Generations too fantastic and you're in your your late 30s now uh what generation do you consider yourself a part of some of us are you know like a different generation to yourself unfortunately um and it's it's a question that to me is very weird because I don't think the generations quite match up as they do in India versus what's you know whatever you define as generation x y z in in in West so I I'm sort of you know happy to be young forever amazing amazing and how is your reporting evolved over there over the over the decades so uh you know I started as a science student I did chemical engineering then I did a PhD in chemistry and so to me coming to the climate problem from a science angle was how I was introduced to it um and so uh you know in all the work that I've done I started from the place where uh we understand that the science is dire and we know that if we keep putting greenhouse gas emissions into the atmosphere it keeps getting dire that's been understood for decades now so what can we do about it and where can we apply science that's how I started off uh to look at Solutions uh and so uh initially it was very much focused on bringing my skill set to be able to understand the solutions that that we do have in front of us uh and how to scale that up but in the process of reporting as you know you mature as a reporter and you expand your horizons on trying to cover subjects uh you recognize that there's only so much Science and Technology can take you to a level you need other things to make that technology actually be useful to people uh and so that's why I ended up writing this book which is looking at uh trying to bring people polic and Technology together in different contexts uh and so uh now it's not just about solar and wind and batteries but also about finance and laws and shareholder activism to make sure that uh those Solutions can be scaled in different parts okay fantastic before moving onto your book which we will get in get into later on um interesting to have a little conversation about uh your position as a as as a journalist as a reporter um it's pretty clear that climate is now part of the mainstream media uh so thankfully mercifully it's now been been taken on by the uh by the by the fourth estate but if you look at this in the context of of Youth which is the the the frame that we're we're discussing this today and there's at least a perception that youth is served by a different form of media by social media and by other other channels um how do you feel that the that youth is represented um by and the future Generations represented by mainstream media you know con conventional journalism um I think it's it's a very good point there was a very recent survey one that I can quote for an American uh survey because it was done by Pew uh we saw Tik Tok becoming uh one of the biggest sources of news for people under the age of 30 uh which is interesting but scary to some extent because Tik tok's algorithms are as with any other social media algorithm very easy to manipulate and we know how much of a problem disinformation campaigns can have um and and yet young people do read good journalism we know this from our own uh analysis at at Bloomberg uh Bloomberg News has a high pay wall uh but we do have a web friendly uh output my podcast is free my newsletters are free so we do know when we do our surveys that young people are reading us uh and so it's not that just because yes Tik Tok has become a big bigger source of of news that everything's moved in that direction uh but yes it's a the media landscape is changing and one that we journalists have to keep on top of I slightly surprised that um Tik Tok is being used as a way of getting the climate narrative across because it's the climate narrative is is deeply deeply complex like we're here at an all day events and we're barely scratching the scratching the surface with with all the the Deep levels of interconnectedness here how do you do you see a place for Tik Tok well one thing that as news journalists we have to be very careful about is we go where the audience is and so you do have to figure out ways in which you can simplify things not dumb it down to the extent where they're absurd but you can simplify things to be able to fit it in a two-minute video which is things these are things we've made I've not put it on Tik Tok I don't have a Tik Tok account but I have put them up on YouTube and they do get watched by hundreds of thousands of people so uh yes I think you know you are in the business as a journalist to inform the audience and you have to do that where the audience is fantastic okay and you mentioned that your your entry point to the whole kind of climate debate uh was was from was as a scientist but yet a few years ago you wrote a book uh United We Unstoppable 60 inspiring young people saving our world um how did that come about like how did the and that gave a kind of very unfiltered view from from youth how did how did that happen so the origin of that B was uh September 2019 pre pandemic hopefully a time we all remember uh it was when Greta thunberg and uh and young people had come to uh protest in enormous numbers we are talking tens of thousands across cities around the world and I'm talking about September 2019 in the leadup to the UN General Assembly where a lot of climate conversations do tend to happen uh however as as a journalist what I saw was the only person and the name I picked up was being highlighted was Greta thunberg but she wasn't the only one who story uh needed to be told because there were all these people from very different backgrounds some many of them coming from developing countries whose voices hadn't been heard and so to me that was a place to try and allow those uh young people and I had uh everyone from I think 11 years old till late 30s uh in the book and uh everybody across uh all the five continents and from 60 different countries so to me that was a a chance and opportunity to give young people the voice to explain themselves uh and why they are taking to the streets in such numbers and of course Co happened and then we had to stop protest but they are coming back now so climate protests are are starting back very ni so and did that impact your journalism in any way that they getting all of the insights and views from the from from this diverse script yeah it's impossible to not have the work you do especially when it's um learning about stories of people and how their lives change also affect you so to me I mean coming from a developing country uh but also having within a developing country uh a privileged upbringing which is true uh in in my case uh to recognize that and be able to look back at other situations that people have gone through and how they've used them to be um more action oriented so protest is uh I find you know I've never been uh to a protest I now as a journalist I likely never go to a protest but I do find it a courageous act especially what we are seeing around the world now where protesters are being uh criminalized and laws are being uh brought in to take people who are doing peaceful activities but label them as criminals and so it is a courageous activity and it requires a level of commitment that is uh uh one that is worthy of us understanding why some people feel that they have to take those steps sure yeah it's it's kind of hard to argue against the moral case for for protests and people putting short-term disturbances now for the benefit of the future but on the Practical side of it there there are certainly arguments be made of how impactful it is what advice would you give to you know to Young protesters so a lot of the the nice thing about being a journalist and being able to follow stories is many of the protesters who are in my book are now young people in professional careers so I've have seen them going from their lives as students to being uh being people who now have jobs and many of them almost everyone I know is working in a climate sphere in some sense so you can see that that uh desire to make change happen once they recognize that they also have the power to not just make themselves heard but also be a part of the solu solution they do take that leap and that's a that's a hopeful place to be yeah fantastic well we are um running the risk of kind of generalizing here like one of the themes of your book is diversity yes um and how do we add Nuance into that into the conversation because you can't just say young people as a block you know we need to have a little bit more Nuance yeah well again that's again as a journalist one of the things that we are very focused on is making sure that we hear from all portions of society and all types of people within Society so so we regularly have uh audits that we do on our own stories and look at what sources are we quoting where are we getting our stories from are we covering the regions around the world that are being affected uh so you know and yet the problems becoming so big and so was that Things fall off the crack so the most recent example uh is there was an extreme heat wve in Madagascar and we missed it and so we had to have uh uh and you know we have to meet as a group and be like how how did we miss this uh you know how can we avoid missing such an extreme heat wve in a country where probably the the news media didn't cover it as well and so it didn't come up on our radar so what can we do next time to not miss it so it is a it is a conscious choice you have to make to ensure that you are inclusive in your coverage okay fantastic well I think we we're pretty clear of the the problems and which kind of takes us along to the to their to to your book clim capitalism um but fantastic great congratulations just at a couple of weeks now um but the the starting premise of the of the book uh suggests a need for for optimism and like your your opening sentence is is a very optimistic uh thought could you explain why optimism is so important to you and why you framed your book in this I would I would call it possibilist so you know this is a term I'm copying from Hans rosling uh the late Hans rosling who uh wrote a wonderful book called factfulness and he makes the case that if you look at progress we have made TR tremendous progress and he charted those out and had a wonderful way of explaining to people how that progress happened whether that's poverty levels uh um uh hunger levels uh or uh death of children uh born young uh all those metrics were going in one direction for a while some of those are starting to reverse hunger is starting to reverse uh and so to me what you know he got labeled as an optimist just telling people about progress but he said that's not true what I'm saying is there are possibilities there are possibilities of progress and that we can learn from those possibilities and apply them in other places that's what the book is about is trying to show where the solutions are scaling what were the challenges that people had to overcome in different political circumstances different economic circumstances uh and how they can be applied in other places okay fantastic and your your book is essentially um a defense of capitalism and I think it's pretty fair to say the capitalism of the last 100 years hasn't exactly driven Us in the in the right direction um but you we've had you know inequalities we've had um you know vast consumption of resources that has led us to to a place which is like frankly unsustainable right now but you think we might be near a a Tipping Point where where we have caused to be optimistic that capitalism can can be moving towards solving these problems could you could you explain that I would say it's a case for how you can tweak capitalism to work for uh solving the problem rather than worsening it uh rather than defense of capitalism as it has existed uh that's why the book is climate capitalism that climate change modifies capitalism uh and it's not a book in the sense of making a theoretical case it's going out to places where that's happened uh and again one thing that I don't have to tell a business audience but there isn't one form of capitalism what we have in America in Europe in India in China are all different forms of capitalism they're all constrained by different regulations different political systems different economic capacities that those countries have uh but what what we can see is despite those differences there are ways in which you can tweak it to be able to deploy Solutions like solar in India or carbon capture in the US or electric cars in China and those are solution sets that we can then apply to many of the Technologies we talked earlier in the day at this conference around emerging Technologies like hydrogen and carbon capture and direct air capture or carbon removal all things that will be needed but now we have the road map on how to do them at scale in all kinds of uh contexts sure but as um an award-winning investigative journalist who spends a lot of your time popping hopium bubbles 100 yes 100% we we we have um a capitalism has brought us to a point where there's a lot of like smoke being blown and there's there's an awful lot of smoke screens being being blown uh where we're we're supposed to believe that we don't really need to change very much because there'll be big machines sucking sucking carbon out our atmospheres and you know so we don't worry guys it's okay um where how do you balance that like so the the need for optimism and the the belief that there will might be near a Tipping Point with the history of saying that's well we there's most of the things that are there that are there on the rack now to save us probably won't well as a journalist my goal is to try and help audiences align themselves to what the reality is because there's always a gap what we perceive as the reality versus what is actually happening is there is always a gap and that's probably why news journalists hopefully even in a world of AI will still be around uh but uh what I would say is in a way I Define my beat as covering Solutions and false Solutions and you're absolutely right when capitalism is being Modified by climate there will be people who would want to make a quick buck and so we are getting a lot of green washy Solutions come our our our way that makes for good storytelling for a journalist it nothing is easier if it can poke a hole in a problem uh in a solution that is that has problems but again while that is a service that journalism provides and it's a crucial service because if we don't point to the problem I don't know who else will do it at that level and tell enough people about it um books are a different piece I get to sit in a story for years and be able to make it make sure that when it's out in the audience they can read it for years uh and so that's why I wanted to take a different stance where I'm not shying away from the problems that are there and there are many of those but to focus on the solutions and how you can overcome those problems and I feel like both highlighting good Solutions while calling out bad Solutions are board services that need to be journalistically done okay SS sounds fair and another point that you you make firmly is the importance of policy now kind of pulling it back to our our original theme on on youth um I think it's pretty clear in the UK and a lot of places around the world there is a political bias preference towards looking after older Generations rather than younger and certainly more towards current Generations rather in future um how would you from a climate lens um suggest that polic is is is tweet oh that's an interesting one um it's also I mean it that's down to the demographics of the places you've just mentioned right when it's an aging population that's what the population is trying to do that's not the case in India India's median age is 25 uh and so you are you know many policies that are oriented towards young people if anything there is more uh unemployment in India among youth uh than there needs to be and it's sort of a place where a lot of young people uh and their talents may be wasted if those young people aren't given jobs that's so India has a youth problem whereas invested societies it's an aging problem um I think one thing that we can look at least from a climate climate lens is that there needs to be intergenerational Equity that people in the older Generations need to recognize that they lived on this planet being ignorant of the fact that climate change was being rought under them now we are not ignorant anymore we know the science we know the responsibility of historical emissions of many of the people who are in the older Generations today many of the countries that became rich on the back of those emissions not knowing the problem then but knowing the problem now and so if there is a way in which and I don't know what the policy level would be but if there is a way in which older Generations can be made to understand that historical responsibility we may get more support for policies that are climate Progressive mhm okay okay that's hopeful in a in a sense so um one of the another one of one of your kind of principles is is again towards optimism um but it's quite striking as you mentioned earlier on uh quite how pessimistic on average the younger generation seem to be um and you mentioned kind of Cl climate protest as a as a as a result of that um what reactions have you had you mentioned that you've seen um young people do enjoy your your your newsletters and journalism what reactions have you had what conversations have you had with with young people on on your book yes uh so there was a recent survey done of UK uh young people in the UK and uh that survey found 30% feel that we are heading towards a doomis scenario a cataclysm a catastrophe uh and that nothing can be done about it which is a very high percentage of people under the age of 25 wanting to not really uh participate in what is a completely possible scenario where you can participate in Solutions make sure that catastrophe can be minimized if not avoided uh and so my hope with the book was to try and show that those Solutions are possible that progress has been made right we were on a track to 4° C warming before the Paris agreement was signed we're now on track for 2.8 that's the most recent United Nations um report that came out just before cop 28 uh and so we've shaved up 1.2 de C from the top it's still pretty bad at 2.8 uh but we have time to be able to try and bend that even further does that mean we can't we can avoid all the problems coming our way no right we continue to put greenhouse gas emissions into the atmosphere and thus we'll keep warming the planet uh but we can try to minimize the impact every .1 de celi matters as as we heard earlier and speaking of running out of time we are seriously running out of time so if I can ask just kind of one one final question a little piece piece of uh advice to you know people people in the audience and people listening um how do you feel we should be uh talking to younger people younger Generations about the current crisis um so I said my beat is trying to tell you about Solutions and false Solutions but what I often end up doing is a layer below that which is how do we talk about climate change uh and I think one thing that I have found over my uh seven years of covering climate change is that every year the pace of change in trying to deal with the problem has uh changed and uh the pace of impact is changing right it's all accelerating both Solutions are accelerating and the problems are accelerating ating so we should start from the point talking to any young person that we must recognize that we are going to live for the next few decades on a two track world where climate impacts will keep getting worse but climate Solutions will get keep getting accelerated if that is a world that feels too dissonant well that's the reality we are in but you can be on the part of the solution and try and make those impacts be as minimal as possible yeah great and thank you very much for the the U all the great work that you're doing in trying to increase the pace of the the positive outcome rather than the negative that been a wonderful conversation thanks for [Applause] much --- ### Hopes for COP28 URL: https://www.youtube.com/watch?v=DM6cHHwLwbY Idioma: en [Music] one of the key issues Business Leaders should focus on at cop 28 are public private Partnerships these are tools that can help enable new projects in developing economies and ensure that the transition is just and Equitable a key issue is the decide of effective regulation to mitigate climate change research shows that so far existing rules have not yet leveraged their full potential to motivate business businesses to address environmental sustainability there is a significant Gap that now needs to be identified and addressed at cop 28 these gaps relate to providing capital from some of these institutions to the underdeveloped institutions and see how we can actually make them more practical and more feasible what we need to prioritize is how to incentivize early action by businesses to tackle climate problems a key issue step business leader should focus in cop 28 will be on increasing resilience towards impact of climate change as more countries will inevitably experience the impact of climate change it's important for us to develop and Implement a workable solution for this issue I think one of the key issues is energy diversification uh energy diversification is important to prevent disruption of energy Supply I think a big issue is finding the capital and expertise to invest in companies that improve the green infrastructure basically generating energy from Green sources battery storage solutions and smart [Music] grids I think the cop 28 is a fantastic opportunity for Business Leaders to really get together and talk about shared issues and start excellent collaboration programs to really aim to solve the current climate crisis together my hope is for policy and Business Leaders to agree on an ambitious framework for tax policy that reduces carbon emissions and fosters investment in green technologies I hope that we can achieve more ambitious climate commitment from participating countries more collaboration between countries on climate actions and more concrete plan for funding for adaption one of the positive changes I want to see is greater introduction of Regulation particularly around sustainability reporting my biggest hope for cop 28 is for all the stakeholders to realize that we are all in this together and so we need to work together for something that addresses the iniquities and in injustices that affect people who are especially the most vulnerable out of cop 28 I hope that there's more dialogue and progression and actions from both governments and [Music] businesses [Music] ---