Sustainable Business Summit: Day 1
December 8, 2021
Event Highlights
The Bloomberg Sustainable Business Summits bring together business leaders and investors globally to drive innovation and scale best practices in sustainable business and finance.
Reaching the tipping point of consumer and investor demand for sustainability is accelerating the innovation and scale needed for net zero, as panelists expressed optimism and called for regulations to continue the push, but cautioned against missing global diversity that requires flexibility.
Hosted in conjunction with Bloomberg’s Fourth Annual Sustainable Finance Week, our final summit of the year provided key examples of how companies and investors are making the financial case for sustainability.
Click here to view the briefing.
Speakers included:
- Ravi Abeywardana, Technical Director, Climate Disclosure Standards Board
- Björn Annwall, Chief Financial Officer, Volvo Cars
- Clarice Avery, Senior Vice President, Investment Strategist, Natixis Investment Managers
- Dan Barclay, CEO & Group Head, BMO Capital Markets
- Alex Bernhardt, Global Head of Sustainability Research, BNP Paribas Asset Management
- Rebecca Boon, Partner, New York, Bernstein Litowitz Berger & Grossmann LLP
- Steve Case, Chairman & CEO, Revolution
- Cathrine de Coninck-Lopez, Global Head of ESG, Invesco
- Marcie Frost, CEO, CalPERS
- Nili Gilbert, Vice Chairwoman, Carbon Direct
- Dr. Ekaterina (Katya) Gratcheva, Lead Finance Officer, Climate Investment Funds
- Peter Harrison, Group Chief Executive, Schroders
- Yana Watson Kakar, Global Managing Partner Emeritus, Dalberg Advisors
- David Lee, President & Board Member, AppHarvest
- Erkki Liikanen, Chair, IFRS Foundation Trustees
- Carolina Minio Paluello, Global Head of Product, Solutions & Quant, Schroders
- Reuben Munger, Managing Partner, Vision Ridge Partners
- Glenn Pearce-Oroz, Senior Director, International Relations & Special Projects, Sustainable Energy for All
- Megan Starr, Global Head of Impact, Carlyle
- Nathalie Wallace, Global Head of Sustainable Investing, Natixis Investment Managers
- Dr. Beccy Wilebore, Head of Research, Natural Capital Research
- Vern Yu, Executive Vice President & Chief Financial Officer, Enbridge Inc.
Bloomberg Participants:
- Sonali Basak, Financial Correspondent, Bloomberg TV
- Lauren Kiel, General Manager, Bloomberg Green
- Francine Laqua, Editor-At-Large & Anchor, Bloomberg TV
- Rafaela Lindeberg, Global Business Reporter, Bloomberg News
- Carol Massar, Anchor, Bloomberg Businessweek TV & Radio
- Tara Narayanan, Senior Associate, U.S. Solar, BloombergNEF
- Akshat Rathi, Reporter, Bloomberg Green
- Mallory Rutigliano, Associate, Green & Sustainable Finance, BloombergNEF
- Jess Shankleman, Reporter, Bloomberg Green
- Meg Szabo, Senior Editor, Bloomberg Green & Sustainability Events
Event Highlights:
The Financial Case for Sustainability
Despite electric vehicle offerings at less than 5-percent, Björn Annwall, Chief Financial Officer, Volvo Cars said the carmaker is poised to lead the way into a full EV future, just as it did with road safety. “Road transportation is 10- to 15-percent of global emissions. The car industry has to quickly become part of the solution.” For Volvo, quickly means a carbon neutral target of 2040 and half of its sales EVs in just a few years, facilitated by a halt to investing in R&D on combustion engines and factory retools. It’s a risk, Annwall admitted, but consumer demand is high. The current focus is on enabling production to meet that demand, and their IPO strategy, disclosure policy and dramatic investor increase is a “big vote of confidence.” New projects include efficiency and circularity for batteries and reducing the big carbon footprint of steel manufacturing.
After attending COP26, Annwell is confident we are reaching an inflection point of rapid change. He predicts it will include full cost parity between IC and EV cars around 2025.
The Quest for Standardization
Climate issues have gone mainstream, according to Erkki Liikanen, Chair, IFRS Foundation Trustees. But with that is an “alphabet soup” of disclosure regulations and no way to compare corporate strategies or identify “greenwashers.” IFRS has made public a prototype set of standards that offer a “running start” for any country. “It’s imperfect, but at least it’s global. It’s critical to have at least one global baseline.” Jurisdictions can build off of that to meet individual situations. More ambitious countries could strive to exceed those standards, Liikanen said.”G20 countries welcome this initiative and we are confident they will implement it.” A standards board, expected to be in place in early 2022, will have members situated globally to better inspire and speed implementation. A beefier set of standards is expected by next fall.
Schroders Advisory Board Spotlight: Harnessing Natural Capital
Philanthropy is no longer the sole driving force of a natural capital market, according to Peter Harrison, Group Chief Executive, Schroders. He sees value credits surging to the billion dollar realm this year and the circle completed with premium credits driven by enhanced biodiversity and an understanding about the benefit for communities.”A quiet revolution is starting.”
It’s critical for it to emerge as a new asset class, said Carolina Minio Paluello, Global Head of Product, Solutions & Quant, Schroders. who spoke about carbon credit sales and conservation projects becoming investable.
Dr. Beccy Wilebore, Head of Research, Natural Capital Research, said siena tool launched ce-based and data driven offers of natural capital as assets are trending, and described NatCat Map, a tool they launched last year that landowners, local authorities, water companies, etc. can use to create a baseline for their natural capital, revealing opportunities to improve.
The Evolution of Climate Disclosures
A coalescing of experts, initiatives and science-based standards is resulting in more meaningful disclosures, said Megan Starr, Global Head of Impact, Carlyle. A data convergence that ramped up last year brought “more quantitative metrics and focus on how we look at change over time to analyze companies and see where they are headed,” Starr said.
Getting to net zero by 2050 is going to mean a lot of work for the financial community, said Alex Bernhardt, Global Head of Sustainability Research, BNP Paribas Asset Management. “We need to track progress against net zero commitments and effect change in portfolios and the real economy.” One way is through Implied Temperature Rise (ITR), that could be a standard way for companies to report their progress.
What’s really important to get to targets is truly meaningful disclosures, with specifics of how initiatives and risk are managed, standards that meet investor expectations, according to Ravi Abeywardana, Technical Director, Climate Disclosure Standards Board, yet keeping in mind the differences in jurisdictions.
Starr spoke about the easy way for investors to go net zero; by sticking with companies with good sustainability tracking, or what she calls “portfolio magic math.”. The hard way is to provide capital for others to get on a decarbonization trajectory. “That’s the real economy, and what we can measure over time.”
Why Addressing Methane is Critical to the Climate Fight
Using charts and plenty of science, Akshat Rathi, Reporter, Bloomberg Green, offered methane reduction as the quickest climate crisis solution. The Methane Global Pledge, put forth at COP26, needs to be stronger, Rathi said. Livestock is at the top of the offenders’ list, along with oil, gas, coal waste and rice production. “It’s actually profitable for almost 50-percent of emissions that come from oil and gas to be cut, and more and more, oil and gas companies aren’t able to get away with it, ” he said, speaking to leak detection via satellite monitoring and specialized cameras that “turn invisible gas visible.”
Natixis Investment Managers Advisory Board Spotlight: Investing in the Transition: The Tip of the Iceberg
Demand is changing and a technical shift will have a deep impact on how we consume energy, said Nathalie Wallace, Global Head of Sustainable Investing, Natixis Investment Managers, as financial markets are threatened along with the planet.
Capitalizing on that new technology, along with energy transitions, are both opportunities and challenges for positioning portfolios, said Clarice Avery, Senior Vice President, Investment Strategist, Natixis Investment Managers. She also raised the question surrounding high-emitting companies. “Do we divest, or stay with them to help the transition? It’s easy to decarbonize your portfolio by divesting, but the problem persists in the real economy.” She suggested investors consider the life cycle of a product or operation to understand a company’s full impact.
Building a Sustainable Brand
Steve Case, Chairman & CEO, Revolution talked about partnering with AppHarvest, with its innovative Kentucky farm, to reimagine the agricultural system. David Lee, President & Board Member, AppHarvest, said that we need to rely on technology and capital to continue to feed the world, on track now to be short by 70-percent by 2050. “Our kids will be standing in food lines,” Lee said. Case spoke about the need to educate investors to critical needs and long-term solutions “The need is there,” Lee said, “and consumers are waking up to realizing they can be part of the future, voting with their stomachs.”
Large capital investments are needed. Case spoke to technology such as robotics. Lee gave as an example the 90-percent reduction in water usage on the farm, which required construction of a reservoir the size of 50 Olympic swimming pools.
“Climate is a problem, but also an opportunity to companies and create system wide change,” Case said, describing a “trifecta” of sustainability, better food and health.
Climate Finance in a Post-COP26 World
The Glasgow Financial Alliance for Net Zero (GFANZ) was a major announcement at COP26. Nili Gilbert, Vice Chairwoman, Carbon Direct, said she was very excited about the “commitment COP26” and expects next year to bring action, accountability and even more commitments, evidenced by the financial institutions that continue to join about 450 committed $130 trillion to net zero targets. Speaking to “angry” countries, she said it has much to do with trust lost to failed public sector commitments, which “needs to be redressed to move forward.”
On the side deals that are a big part of COP, Cathrine de Coninck-Lopez, Global Head of ESG, Invesco, said that in some ways, they are more powerful, because that is where the commitments began. “Things like deforestation, electric vehicle pledges and conservation finance are also incredibly important toward meaningful change.”
“Connecting the dots” of government policy and what it means for investing is the imperative now, said Yana Watson Kakar, Global Managing Partner Emeritus, Dalberg Advisors. She used as an example Costa Rica, where new policy created an “enormous” market for EVs. “Interestingly, as of just a couple of years ago, there were twice as many new cars, not electric, being registered as there were babies being born.”
BMO Advisory Board Spotlight: Tracking Net Zero, From The Customer to The Corporation
One of the first companies with a sustainability linked bond, Enbridge Inc., delivers natural gas all of Ontario. Dan Barclay, CEO & Group Head, BMO Capital Markets, said consumer affordability has long been their philosophy, and as focus shifted to delivery methods and emission reduction.
Modernizing delivery equipment, encouraging consumers to conserve and helping them make upgrades has “effectively eliminated emissions for two years worth of natural gas use in Ontario,” said Vern Yu, Executive Vice President & Chief Financial Officer, Enbridge Inc. He knows how much more infrastructure can be addressed, in Ontario and globally, recommending investments in natural gas, hydrogen and CSS, adding that Enbridge started the first commercial-scale hydrogen blended NG.
In Conversation With Marcie Frost
Transitioning the largest public pension fund in the U.S. – a $495 billion market value – has Marcie Frost, CEO, CalPERS, thinking about two major issues. Investors need regulatory authorities to get both public and private companies to provide better decision-making data to investors, and the challenge of finding green investment opportunities. Reporting emissions, net job growth and employee engagement are a good starting point, Frost said, with the effectiveness of the metrics to be analyzed going forward.
Relevant to the “great resignation” Frost spoke about employee surveys, satisfaction and engagement.
Financing the Clean Energy Transition
A “just transition” was a focus of the panel, with Glenn Pearce-Oroz, Senior Director, International Relations & Special Projects, Sustainable Energy for All, saying that it now has to also be equitable and comes with the realization there would be winners and losers in developed countries. “We are coming close to a political pivot that has to do with the diversity that’s out there.”
Agreeing on the pivot notion, Dr. Ekaterina (Katya) Gratcheva, Lead Finance Officer, Climate Investment Funds, added that reality still doesn’t transfer into measurable flows, and the challenges are much greater in places where coal transition is behind the curve. “If it’s not a just transition, it’s not a transition,” Gratcheva said.
Reuben Munger, Managing Partner, Vision Ridge Partners spoke about dramatically-increased investing in sustainable, real assets and a shift not just toward power sources, but looking at “the economic implications to communities in transition.”
Offering a perspective on differing global markets, Pearce-Oroz looked at annual kilowatt use per capita. A study done earlier this year shows most sub-Saharan African and other developing countries use 200kw hours per person, middle income countries use about 3,000kw, while the U.S., Europe and the like use more than 6,000kw hours. Back to his pivot point, Pearce-Oroz said mechanisms are needed for transition, but they have to be “right-sized” for varied economies.
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