Disclosure, Corporate Commitment and the Human Element of Business
As part of our series with Andrew Wilson we discuss the importance of standardization on disclosure, whether Net Zero is a feasible and realistic target and reference the more human elements of business.
Giles: If you don’t mind, I might just lead you onto another quick question here, which wasn’t on our original list, but I’ve done some work this morning looking at standardization on disclosure and carbon reporting across ESG and CSR, but specifically stuff that the Global Reporting Initiative are doing to link in various other partners they work with. I wonder, just given that that’s something I’ve been looking at this morning, whether there might be anything to say about how standardization of companies report is also vital in this space as well in terms of actually getting the message of what they’re doing out there in the most powerful way and of course, leading investment in the green money in the right directions, and of course, illustrating transparency in a really clear sense as well.
Andrew Wilson: So there was a brilliant headline in a newspaper article a couple of years ago that read ‘Lies Damn Lies and ESG’, sorry. And I think that really encapsulates where we’re at in terms of the ESG market with lots of different metrics out there. And you can see Tesla ranked number one for ESG in one particular scoring system and ranked bottom for auto manufacturers in another. So I think standardization within the market is absolutely critical to drive investor confidence, to drive consumer confidence and I think critically from a business perspective, any accusation of greenwashing. We’re currently involved in a project looking at how you develop a standardized framework to judge the sustainability of any trade or related financial transaction. It’s incredibly different, difficult to do at a transactional level where you deal with multiple geographies, different parties in a transaction, but ultimately something we think is vital because right now within the market, you’ve got different banks, different companies applying very different methodologies to what they call green or sustainable and I think in terms of achieving Paris Agreement, achieving the Sustainable Development Goals, but also in terms of building public and consumer trust, the degree of standardization in terms of approaches, reporting and data availability are absolutely key.
Giles: Thank you. And I think we’ve touched on power and energy so I don’t know if I’ll dive too much more into this question, unless there’s anything you wanted specifically to mention on how corporates should be shifting off fossil fuels sustainably and quickly.
Andrew Wilson: Well, just to say, I think there’s an important element to this debate which often goes amissI think what we’ve seen, particularly with UN climate space, is heavy focus on corporates looking to corporates to make voluntary commitments or investment commitments and I think that only really gets you so far and I think one of the keys, I think, in terms of decarbonising energy supply, is government policy.So what are the right sorts of incentives?How can carbon pricing be used more effectively?How do government get the right policy frameworks in place to mobilize finance?I think it’s the $5.2 trillion investment cap for renewables that we now face.So I think policy frameworks are absolutely vital andI think we’ve been very clear, as a global organization in saying to governments, saying to international organizations, business is ready to step up but what we need is effective policy instruments designed in partnership with the private sector that can help drive the necessary investments in energy production, but also energy efficiency.
Giles: Fantastic. Thanks Andrew. I think perhaps you sensed my next question leading into net zero, which obviously is certainly as a policy instrument albeit a very confusing one across the planet. I wonder what you might say about net zero in terms of its achievability. Is it working? Is it a suitable metric for us to be using to charge towards core percents? And just whether you feel that it’s really achievable and perhaps the right way to go about changing what business does.
Andrew Wilson: So from our perspective, it should not only be achievable, but it’s absolutely imperative. The science is quite clear that we need to achieve net zero by to stop catastrophic effects of man made climate change. I think there’s no getting around that. I think that’s a simple reality. I think the question of whether it’s achievable, I think you can say and I’ve heard this from many business leaders, you can say very clearly, yes it is, because we have most of the technologies that are needed. What really is needed is a significant policy shift to allow deployments of that technology to changes to how business operates today, to clean the energy sector and really to unleash the investment that’s needed. I think what we see now is really some good commitments from countries in Glasgow last year at COP a little by way of detailed plans in terms of how they’re going to be implemented. And we have a big network, as I said earlier, with 45 million businesses. Many of those are SMEs. If you’re an SME today, you may want to make a net zero commitment. You may want to decarbonise your operations, but where is the support, where are the policy incentives? Where are the value chain incentives to do that? So it’s achievable for sure but I think now is the time certainly over the next five years for governments to really step up with holistic workable plans.
Giles: Fantastic. Yeah. I mean, that’s been my experience of writing about environment and corporate in -odd years now. It has always been the case that it’s about a holistic approach and about some joined up thinking, because so often what we see is one policy comes online and then five years down the line, it’s altered or rejigged. Of course, from a business perspective, what you need to know is what the policy is in ten years time in order to get that investment in, to build in the tech, which is just being developed as we speak now. So it’s all very much long term as well and that’s certainly been my experience on these things down the years. I wonder if we might close just we started on Ukraine. Thank you for your time, I should add, maybe we can close on the human element of business. The pandemic has certainly changed a great deal about working business in the last two years and suddenly we find ourselves in a position which somebody on the radio was describing last night as the closest we’ve been to a global conflict in 60 years or so, I just wonder whether given those relatively horrific human impacts, there’s anything to say about the kinder in the more equitable sense of how business can develop in the future alongside the transition to sustainability, ESG and CSR and just perhaps on a nice advantage, perhaps what those corporates can be doing to encourage more human elements of what capitalism is all about.
Andrew Wilson: So I think if the pandemic teaches anything and I think there’s some very striking literature emerging on this is companies that perform well were able to adapt rapidly to some of the initial lockdown and the uncertainty caused by the pandemic with us that had high levels of engagement with their workforces and I think that really sends a strong signal about the importance of a humancentric approach towards business, particularly in what is now a very uncertain environment with a pandemic and the risk of global conflict. So I think businesses that put people first in their operations through their supply chains are really the ones with the opportunity not only to survive but thrive through a period of uncertainty. Those of that don’t, simply put, are taking quite a risk.
Giles: Fantastic. Thank you so much, Andrew. It’s been a pleasure talking with you. I hope we can talk again in the future and thanks again so much for your time this afternoon.