Who knows whether business is delivering on science-based targets?

Leadership StrategiesSustainable LeadershipSocial ImpactSustainability
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Simon Kingston
May 11, 2022
3 min read
Leadership StrategiesSustainable LeadershipSocial ImpactSustainability
Executive Summary
Highlights from our breakfast discussion on getting to Net Zero targets, in partnership with Bill and Melinda Gates Foundation and Mike Hugman.
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Russell Reynolds Associates and the Bill & Melinda Gates Foundation hosted a breakfast discussion with Mike Hugman, Director of Climate Finance at Children’s Investment Fund Foundation. Attendees included senior corporate leaders, investors, and philanthropic funders.

Mike kicked off discussion on the topic of how real progress could be made on getting to Net Zero targets. There was lively debate on how business, investment, and social impact organisations should work together in pressing for policy and regulatory change. The intention is to feed these inputs into the way CIFF and other philanthropies think about their strategies for achieving Net Zero.

You can listen to the highlights here:

 

1. Measurement of climate action plans

  • There is still a multiplicity of different frameworks for companies to report on climate disclosures, and an agreed international framework is still some years away. Accounting standards took 300 years to develop; the global community is now trying to agree on a non-financial reporting framework in the space of five years. 
  • The consequence is a nervousness among corporates and a fear that minor inaccuracies in reporting will disproportionately undermine their credibility and status. This is delaying and distracting, and also inhibits corporations from taking action, innovating, and reporting transparently. With so much focus on publicly listed business, who is scrutinizing privately held competitors? 
  • To reach Net Zero emissions by 2050, annual clean energy investment worldwide will need to more than triple by 2030 to around $4 trillion. The “missing” investment is needed in emerging markets. Investment there is currently inhibited by underdeveloped local capital markets, even in middle-income countries, where the cost of capital continues to deter would-be investors. In lower-income countries, the limiting factor is lack of demand for low cardon products. 
  • Therefore, what is needed in the short- to medium-term is a pragmatic approach to reporting. There should be some latitude not to escape real change, but because overly stringent reporting is counter-productive.

2. Engagement and partnerships to improve plans and ensure accountability

  • Super-charged sector-specific initiatives are needed to ensure accountability of climate action plans. Philanthropic organisations can play a crucial, catalytic, role in this space, by carrying the financial and political risk that governments and corporations are not willing or able to take. They can also act as brokers between commercial competitors.
  • Philanthropies such as CIFF can enhance their system-level impact by effectively connecting the initiatives they are supporting, such as projects on carbon disclosure, climate finance, and work with hard-to-abate industries.
  • Philanthropic actors need to improve on communicating the rationale behind their initiatives and stay connected to one another. Perversely, some civil society groups may slow down the transition, by closing the space for innovation and by criticising imperfect action.

3. Policy, including positive lobbying, to secure the regulation needed

  • There are different roles for different capital pools. Philanthropies, for example, are more able to focus on the longer-term, riskier innovations.
  • The PDP model may be one to draw upon, as a successful format for convening the finance, corporations, expertise, and policy focus required to move the needle. There is a role for engaged philanthropies as the guarantor of these sectoral initiatives. They are able to incentivize collaboration between competitors, and reach policymakers with positive advocacy, as opposed to lobbying. 
  • Philanthropies could be more explicit about the policy changes they want to see and advocate, where appropriate, with responsible competitors.  

With thanks to the attendance and insightful contributions of:

  • Carmel McQuaid, Marks and Spencer| Head of Sustainable Business
  • Emma Howard Boyd, Environment Agency | Chair
  • Elsa Palanza, Barclays Bank PLC | Managing Director, Global Head of Sustainability and ESG
  • Gillian Karran-Cumberlege, Fidelio Partners, Head of Chair & Board Practice/Chapter Zero, Board & Steering Committee Member 
  • Harry Boyd-Carpenter, European Bank for Reconstruction & Development (EBRD) | Managing Director, Green Economy and Climate Action
  • Ian Cheshire, Menhaden Capital Plc/Spire Healthcare| Chair
  • Joseph Mares, Trium Capital | Portfolio Manager, ESG Emissions Impact Fund
  • Marika McCauley Sine, Mars, Incorporated | Global Vice President of Sustainability
  • Mike Hugman, Children's Investment Fund Foundation | Director, Climate Finance 
  • Patricia Atkinson, Impetus | Managing Director 
  • Quintin Price, Liontrust Asset Management PLC| Non-Executive Director
  • Rosie Donachie, Crypto.com | Head of Environmental Social and Governance, Senior Vice President
  • Sally Bridgeland, Impax Asset Management Group plc | Chair