Game Changers: Season 3 Wrap-up - The Big Themes that Shaped our Conversations

Speaker A: Hello and welcome to ESG Matters at Ashurst and our wrap up episode for season three of our Game Changers series. Over the course of the last 10 episodes, co hosts Elena Lambros, Ashurst risk advisory, ESG and sustainability partner, and Lorraine Johnston, an ASHOS partner who specializes in sustainable finance, have spoken with all sorts of people, including investors, regulators, technologists, energy leaders, environmental advocates and policymakers. And while each conversation focused on a different sector, from finance to plastics, modern slavery to climate regulation, some clear themes kept emerging. And in this episode, we're going to take a step back to reflect on what those reoccurring themes were and to revisit some really powerful moments from our guests as we bring what's been another fantastic season to a close. My name is Ben McAllery and I'm joined now by season three hosts Elena and Lorraine. Thank you both so much for joining me.

Speaker B: Great to be here, Ben.

Speaker C: Lovely to be here with you both. Thanks.

Speaker A: Well, we've got another season in the bag. And just like previous seasons, we've got some really compelling themes, as I mentioned in the intro that came through from the guests that you guys interviewed to begin, and certainly I think one of the strongest themes that came across throughout the season is that ESG challenges, they're not isolated problems, but are sort of holistic and more systemic. And Elena, in episode seven, Dariel d', Souza, a former director of compliance and enforcement at the Australian Energy Regulator who is a leading voice in climate risk regulation and governance, reminded us that climate change isn't just an environmental issue.

Speaker B: That's right, Ben. A number of our guests reminded us that climate change is in fact, a systemic risk that touches every part of our society, from finance, infrastructure, supply change and ecosystems. Our guests are constantly urging us to zoom out and to look at the architecture of the system and not just the symptom. Let's hear from Dariel on, um, why that's the case.

Speaker D: This is the point that I make at the beginning of my book that we see different types of systemic risks. We've seen the GFC when, for example, Brexit happened. We saw this major disruption to the trading system. And these are all sort of examples of systemic risks. And the response is the same. We need to really take stock of the system and make sure that it is capable of responding to these risks, whether they come in the form of climate change or other, um, sources. Sources of systemic risk. So that is exactly the point that I try to make. Now, I do want to talk about the examples back in Australia, because those were Also, ah, really significant. And what I found were there were two regulatory frameworks that I looked at that stood out. One in, uh, Queensland, your home state, Elena, and one in Victoria, my home state. And importantly, both regulatory frameworks were, uh, revised significantly following major disasters.

Speaker A: And Elena, another strong thread was that ESG is not about producing better reports, but about producing better outcomes.

Speaker B: Yes, that was actually one of my favorite lines in that podcast. But in episode nine, I sat down with Chris Evans, who is Australia's inaugural anti slavery commissioner, and he delivered one of the most direct reminders of the importance of outcomes rather than just reporting for reporting's sake. Here's some of what he had to say.

Speaker E: There's too much as they focus on process and reporting. Why are we doing this? Always go back to the objective. It's to end exploitation, to stop children working in mines, to stop children having to work on farms, or for people to be involved in situations where they can't leave their, um, employer, uh, they don't have access to their passport, they've had to pay for the job and they're in debt. It's about them. That's why we're doing this. If we're not impacting on them, we must all pack up and go home. So that's what we've got to focus on. Not on the quality of the glossy report at the end of the year, but on are, uh, we having impact?

Speaker A: Lorraine, coming to you now. Again and again, guests emphasise that no single organisation can solve systemic challenges alone. And in episode six, Oliver Cade, who's the Chief Technology Officer and UK Country Manager at Seven Clean Seas, was unequivocal on this, wasn't he?

Speaker C: Absolutely.

Speaker F: There is no doubt that collaboration is the lever for change. And what Oliver reminded us is the importance of these collaborations and partnerships and achieving sustainability objectives. You can hear Oliver's passion and some examples of this from Seven Clean Seas.

Speaker G: We build projects that are creating the impact, but really it's the funding through the sponsorships that we have with corporate partners and philanthropic partners that are really driving the impact and the growth of our initiatives. So, you know, I mentioned that funding gap in waste management. That's the challenge that we're trying to bridge. The solutions, uh, are quite easy and of course, you know, involving the kind of the local context. But we, we understand how to build projects. The key limitation is how do we finance them? Typically, when we talk about waste management, particularly plastic waste management, this is, uh, a net loss cost. So when governments are financing waste management, it's typically being covered by taxpayers, or at least that's how it used to be done historically. But with growing consumption and growing a population, really the burden of waste management and that cost is becoming increasingly heavy for governments to be able to provide it. And that's why what we're seeing now is a shift towards what we call a polluter pays model. So, you know, sometimes considered or known, particularly in the policy landscape, as extended producer responsibility. But what that means is how can we start to shift some of that burden of financing waste management away from taxpayers onto a lot more of those, um, organizations that are putting plastic out on the market or are consuming plastic within their operations? We are seeing that shift. That means that typically when we're looking at financing our waste management, working with corporate partners that are going to fund our initiatives are hugely valuable. And that's the way that we're going to be able to scale. To give an example, our largest partner is Howarden. Uh, they are a global insurance company, over 20,000 employees worldwide. And they actually consume a lot of plastic within their operations. And they've been a massive partner, uh, for seven clean seas for the last five years. And through that partnership, they have sponsored the recovery over 692,000 kilograms of plastics. Now, if it wasn't for them supporting us in the early stage and for their continued support, we wouldn't have been able to band across Indonesia and also outside of Indonesia into parts of Thailand as well. Because it's having these organizations which are continually providing support, continually recognize that the global plastic crisis is one that needs attention, that allows us to be able to grow, scale, and keep our impact growing year on year.

Speaker A: And Lorraine, one of the most powerful themes across the season was capital allocation. So not just who pays, but who funds, who benefits, and how investment structures shape outcomes. In your recent Synergy episode with Claire Reid, your conversation moved beyond technology and into what Synergy's financing models look like, didn't it?

Speaker F: Yes. When Claire was describing Synergy's micro grid model, she described capital allocation in action. Instead of house builders carrying upfront, uh, renewable infrastructure costs, capital is structured differently through third party funding models that remove barriers to deployment. In this clip, Claire describes how the impact goes beyond compliance or carbon reduction and how energy infrastructure becomes a revenue generator.

Speaker C: Perhaps I'll start with explaining what a micro grid is. So imagine m you're building a new community for, let's say, 300 new homes and a school. And to comply with future home standards, you're going to put solar panels on each of those homes and some of those Houses, some of those homes will have really big roofs and they'll be facing south. And um, they will be generating huge amounts of energy. And with solar energy, unless you use it straight away, you, you lose it. And then within that community you may have some homes that are being built next to trees, so they've got lots of shading and um, or facing north, so they'll generate probably 50% less energy than that big south facing roof. And, and then you may have some apartments on um, on that same, within that same community. And they're sharing that one single roof between 12 different families. So when you build a community and each home has its own solar and it's generating for itself, there will be homes that are just throwing energy away and there'll be homes that aren't generating enough to do more than switch on a kettle. And um, if you join all of those homes to a micro grid, everything that's generated is effectively put into a pool. And every single home on that microgrid has equal access to everything that's in that pool, that pool. So those 12 families living under that one roof are uh, no longer constrained by the size of their roof. They've now got access to what 300 homes have generated. And um, that home that was generating so much energy that even with all the windows open, the heating on the hot water on constant, and every electrical appliance, including its electrical vehicles being charged, still wasn't able to use everything it was generated, instead of throwing that energy away that's now being used by the people living in the houses that were facing north and slightly shaded. So it becomes fair and it becomes community. The other piece that makes this microgrid so effective is a battery. So there will be a communal battery located somewhere, um, on that site, normally up near a substation, so out of view. And um, anything that's not used, especially in the summer months, will be stored in that battery. So even when the sun goes down and those solar panels have stopped generating energy, there's a huge battery in the corner of that community that's filled to the top with solar energy. So those homes continue to use that, uh, solar energy, that renewable green energy. Of course every home is still connected to a meter, so you're only paying for what you're actually using. But the benefits here are the people living in that community will own the solar panels. Uh, this, the developers who will at some point be mandated to use renewables. They won't have to fund those renewables because synergy will fund that. Synergy will fund the solar Synergy will fund the Communion battery and Synergy will maintain those as well. That means your house builders will meet um, with current building regulations and um, that they'll be ready for the future home standard. And because those residents aren't needing to use so much grid energy, grid capacity requirement is reduced. And that helps projects that are blocked from starting, it enables them to move forward. There's a garden town, uh, called Otterpool in Kent. And a garden town is typically a lot of houses, a lot of commercial and um, this particular garden town plans to build 8,500 homes if they were to all be built on our uh, microgrid. Those homeowners are estimated to save £100 million every 30 years in their energy bills.

Speaker A: As the season progressed, the conversation moved from broad sustainable investing principles to the practical realities of transition planning, particularly in real assets. Alayna, was there a particular guest that you interviewed on the subject that stood

Speaker B: out for you on the topic of transition planning? Pauline Martin from Oxford Properties in episode five did a really lovely job of framing transition planning through a fiduciary lens. Let's take a listen.

Speaker H: We know as ah, ultimately the reason why we work is for our pension plan members and so that is really something that is important for them and that is the main reason why we're doing this work. And Omers ultimately believes that well run assets, including those with a thoughtful and clear plan to address the impacts of climate change, will perform better, particularly over the longer term. So it's really within our fiduciary duty to do so. But in addition, you know, we see it from the ground up, I will say as well, in the way in which we do business. So across our various um, stakeholder management, we see it come kind of in two ways. The first one is within our development arm and Becky sort of mentioned it, a number of jurisdictions, ah, particularly at the planning level, are requesting the new developments to be net zero ready. So even if that's not kind of immediately, once they've completed, at least have a way to get there. And that's definitely something that we are seeing. Again, depending on where we are in the globe, that might take different forms. Some jurisdictions are very advanced and some are just starting the journey, but it is something that we're seeing more and more come up. And then the other point is from an asset management perspective, tenants also have their own emissions reductions targets and net zero targets. And so they're demanding what the energy efficiency of our assets in the space that they will ultimately be occupying and how they can reduce that and work with us to reduce that. So there's definitely, from the ground up, kind of two clear ways that we're seeing that come up. And increasingly as well, from an investment perspective, when we're buying or we're selling our assets, this comes up more and more. So really, across the board, various stakeholders are demanding this. So it's coming in from various different directions, but definitely coming through for sure.

Speaker A: Moving now to the theme of sustainable investing, Elena, in the first episode of the season, you spoke with Ashurst alumni Rebecca Ong, now at Fidelity International about her work as a sustainable investment analyst.

Speaker B: Yes, that's right. Uh, Rebecca has her finger on the pulse of changes in sustainable investing and her passion really shined through when she spoke about Fidelity International's twin approach of mitigating environmental and social risks, as well as funding innovative solutions to benefit society and the natural world in the long term. In this clip, Rebecca shares what her role as a sustainable investment analyst involves

Speaker I: a bit about me I'm a lawyer. I'm a mum of two young kiddies. Um, I actually started going to law school wanting to be an environmental lawyer. And I ended up working at ashos for quite a lot of my junior career that saw me in the resources team and then the corporate team. And I ended up working at Fidelity International as a corporate lawyer until around 2018. I started seeing these kind of pieces of regulation come across my desk and I thought something shocked shifting, uh, we saw the taxonomy regulation and sustainable finance disclosures regulation, which for a lot of people sound really dry, I'm sure. But for me it was super fascinating because it started to click and it was a bit of an aha moment for me as to how regulation can work with finance to help shift capital flows to more sustainable outcomes. So I joined after that the sustainable investing team. And from then on I kind of get to spend most of my days looking at how regulation and policy can help our climate goals, which is great. I kind of, just for the listeners, split my job into two kind of key topics. One is looking at how regulation and policy can affect Fidelity and helping Fidelity kind of comply with that. For example, corporate disclosures like we're about to see quite a lot of in Australia on sustainability. And the other is looking to engage with governments on how we can kind of pull different policy levers and shift policy to support, um, the climate transition and other sustainability outcomes. I think you see a lot of transition plans from companies come through and they say policy is a key barrier to some of their net zero commitments. And so what we try and do is engage with governments and we see that as a critical part of trying to overcome those barriers that are identified to the transition.

Speaker A: Yes, there were some really practical examples there on that theme of practicality. Lorraine, let's say you work for an organisation looking to engage more meaningfully into turning ESG strategy into action. What could they do and where could they begin?

Speaker F: I think Konrad Energies, head of esg Nishikant Gupta said it best when I interviewed him. Um, back in episode three, Nish shared Konrad's remarkable story, including some brilliant words of advice for any up and coming ESG specialists. Let's take a listen.

Speaker J: Future generations are essential to advancing sustainability. What I've realized through our graduate program as well, which uh, we have at Corner Energy, their fresh perspective, digital fluency and urgency around climate and social justice, um, are reshaping how we approach long term responsibility. Uh, at Conrad Energy, uh, we see the innovation and drive as vital to building a low carbon inclusive future. And uh, the second part of the question where, you know, for those eager to make a difference, um, my advice would be to stay curious and informed. Don't shy away from asking the whys and hows. Um, sustainability is a constantly, it's a vast area but it's also constantly evolving sector and shaped by emerging technologies, policies and of course global frameworks which are changing every now and then. Be bold in your vision, uh, but ground it in practical action. What's, um, the impact of your work? Ask those questions. What are the benefits I'm going to get from what I'm doing? Collaboration is key, which I started with um, in the beginning. Working across disciplines, whether it's within your office or within the sectors, often sparks the most impactful solutions. And I've learned this uh, over the last 15 years. Brilliant ideas come when you collaborate and at the same time on a personal level lead with integrity and authenticity. So whether you're just starting out already in a leadership role, trust is built through transparency, how honest you are in whatever work you do and above all, I would say act. Even small steps matter. So every effort builds a momentum and inspires others to join your journey and it will eventually lead you to your final goal. But don't shy away from taking those small steps. So I think that would be my message to the younger generation.

Speaker A: And with that clip, that rounds out our fantastic wrap up of season three of Game Changers. Elaine, Lorraine, thank you so much for bringing this season to our listeners and for sharing your insights into the season with me today.

Speaker B: Thanks Ben.

Speaker F: It's been a pleasure.

Speaker C: Thanks both.

Speaker A: And thank you listeners for tuning in not only to today's episode, but all of the Game Changers episodes over the past three years. If you haven't already, I encourage you to stay tuned and that's being subscribed so you don't miss any future episodes when we start up season four. But until next time, thanks again for listening and goodbye for now.