The film’s central proposition was that we have vastly different expectations of the NFP (Not-for-Profit) space than we do of traditional, profit-motivated companies.
Within that is the central idea that if you or I donate to a charity, we expect that our money is spent directly on the beneficiary.
This held up a mirror in the starkest way – I didn’t think that intrinsically I wanted my charities poor, and it was an unacknowledged belief, though I am totally complicit in thinking, ‘if I’m donating money, and ALL of that money isn’t getting to the beneficiary, this is a scam’ –
Ask me what a good margin is in the for profit space, I’d say 40% – meaning 60% is taken up in overheads, yet I expect charities to do the same job with under 10% ?!
Question: If you dared to dream of solving a social issue, in the way humanity took on the Apollo program and got to the Moon, or with the resources Apple uses to make, sell and globally distribute a new iPhone, what would that be?
See the future, look backwards
I was listening to Eytan Lenko, CEO of Boundless Earth at the 2024 Climate Salad Climate Tech Showcase on Tuesday, talk through the amazing work they were up to at Boundless.
You wouldn’t know from the website, though they are backed by the Atlassian founders, and as such take an Agile project management methodology, and apply it to investing and changing the world.
I spent 4 or so years deep in the Atlassian world supporting a client as their outsourced CMO part-time, and this agile methodology is fused into everything I (and by proxy, Nic Stewart) do in our businesses.
Agile has what’s called Epics, essentially a large piece of work that will spread across multiple Sprints. Sprints are any time-defined block, such as a month or usually a week.
You break down the Epic into tasks and sub-tasks, then grab a set of tasks at the start of each sprint, work through them, iterate, and repeat.
If you’ve got Motion like Nic and I do, it uses AI to organise your tasks based on the available time you give it, and in a basic way, asks as your digital Scrum Master (the person in an Agile process responsible for allocating tasks and ensuring quality).
At Boundless, they pick a topic eg ‘Get EV sales to 10% of the annual market’ – give themselves 3 weeks to create a strategy to do that, which includes identifying relevant stakeholders to invest in, support and assign as leaders to continue the implementation, then 3 months to hire, invest, organise and deploy the strategy.
Then, they set it free and chose another topic. That’s it! They’ve done 8 so far.
True catalysts.
Eytan mentioned during his commentary the lag time between Government announcements and deployment and how, if you look back 12 to 18 months, policy, fund disbursement and awards were only now starting to arrive in the market.
As such, if you want to know what’s available to you at a State and Federal level, that’s happening in real-time, today, look back a year and see what was being announced!
Question: Are you being realistic in your expectations about when programs your business has applied for will come through, and looking back, are there things you could or should be preparing for, such as the National Reconstruction Fund?
The lack of impact felt by the finance industry compared to the consumer economy
Greenwashing throughout investment markets
The challenge of storytelling fundamentals and market psychology
Fundamental motivators of people working in responsible investment
Foundations transitioning their portfolios to values-aligned impact
You can also listen to the complete interview on all good audio podcasts such as iTunes, Spotify etc by clicking below or looking up Smarter Impact or Philip Bateman.
Question: As we close in on the end of the financial year, how do you feel about the impact you’ve had in the past year, and what could 2024/25 look like?
I had the opportunity to join the Global Wind Energy Council (GWEC)‘s APAC Offshore Wind & Green Hydrogen Summit. I’m going to share with you some industry context, a 101 on offshore for beginners, a deep dive into the Financing Offshore Wind Session, and mix it in with a bit of creative love for the enormity of the oceans, human engineering and endeavour.
It’s a thing in Europe, the first offshore wind farm was built in Vindeby, Denmark in 1991, though to quote TGS 4C Offshore;
“.. Australia has 56 offshore wind farm projects of which none currently operating, none where construction has progressed enough to connect the turbines and generate electricity, none are in the build phase, and none are either consented or have applied for consent.” – 1 Jan 2023
So not so much down under, yet!
In some ways being at the conference felt like the early days of solar with AMTIL and Manufacturing Week a decade ago, except because it costs billions of dollars to set up an offshore wind farm, and takes an entire muti-national supply chain, this wasn’t so much small booths with innovative ‘maybe’ technologies, and more so enthusiastic and hardened industry professionals.
The thing about the ocean is it’s extraordinarily vast, powerful and in many ways, untamed (.. aside from overfishing it, we’ve done a great job at that).
And when it comes to offshore wind, we’ve got an extremely mature oil and gas industry that can take what they know, and put turbines on them!
And those turbines are huge, and often subject to “an arms race to increase size, whilst their production lines on previous model don’t get fully realised, and then manufacturing issues creep in” as it was quoted to me in the exhibition hall.
Have a look;
https://www.youtube.com/watch?v=lZMrc1QtG2w
And here Goldwind recently install the world’s first 16MW Offshore Turbine –
As GE put it relatively succinctly in the video below, the considerations of a turbine, or a field of turbines, relate to the GWh (gigawatt hours) they can generate annually, the overall AEP (annual energy production) relative to other choices, Balance of Plant (BoP) costs, which is a power engineering term referring to all of the supporting components and auxiliary systems required to deliver energy – like the cable from the windfarms to the shore – Capital and Operational Expenditure (CapEX, OpEx), Installation and Time at Sea costs for maintenance..
Whilst ‘go big or go home’ is sometimes a useful philosophy, considerations like bigger turbines being further offshore and requiring longer to get to for maintenance, having floating accommodation with the farms so crews stay offshore for extended durations, the manufacturing and consistent retooling of production environments to build bigger scale are all considerations, and on it goes –
“German renewable energy developer BayWa has unveiled plans to use massive 20MW turbines in what it says will be the world’s first subsidy-free floating offshore wind project off the coast of Portugal…” – RenewEconomy, October 22
Other considerations include all the things to do with permitting, not least of which is application times which can be several years, and that permits require the stipulation of the intended energy generation so that modelling for connection to the grid can be undertaken and what that increased output will mean.
If it takes up to 9 years to get your permit (a figure quoted to me), your technology is out of date.
Then you’ve got environmental impacts, biodiversity loss and Nature implications, particularly with a growing awareness of things such as the Taskforce on Nature-related Financial Disclosures, which I discussed in detail last month, mainly related to the new ISSB IFRS standards with the Head of Climate Risk for the United Nations, David Carlin, presented here as a somewhat aside;
And if you haven’t considered the challenges of marine environments, this video gets a regular run when it comes to ‘wow the ocean’ – imagine this with a giant fan on top in the case of floating off-shore production;
It’s the Borgholm Dolphin Installation, around 230 kilometres east of Aberdeen in the North Sea.
I’ve also been a fan of watching footage from ships moving through the Drake Passage for years on YouTube, which is the shortest route to Antarctica, running between South America’s Cape Horn in Chile, to the South Shetland Islands.
The drake passage? Definately not the ideal place for a wind farm, though where would you put one, ideally, in Australia? For that we turn to Australia’s Minister for Climate Change and Energy;
The Hon. Chris Bowen MP, Victoria & Australia
Chris Bowen Australia MP for Climate Change
“Twelve months ago we announced the first steps in creating a new renewable energy industry, with the announcement of six proposed regions with world-class offshore wind energy potential.
I have declared the first two zones. Gippsland and Hunter.
We’ve begun consultation on the next two zones – Illawarra and the Southern Ocean region. And today, I’m pleased to announce the next steps.
Firstly – the Bass Strait region, off the Tasmanian Coast.
Consultation for this region will start at the beginning of October. Secondly, the Perth/Bunbury region off the coast of Western Australia.
***
I’m providing this roadmap today because I know it will give the industry certainty about the immediate path ahead.
It will also give visibility to communities about the conversations coming up…”
Q. What does this consultation look like? How will they determine who gets to put what, where? How will licensing work? How do they determine which of the several, massive developers will get to participate in some, most or all of it?
This was backed by the announcement by the Global Offshore Wind Alliance (GOWA), an alliance of Denmark, the International Renewable Energy Agency (IRENA) and the GWEC, that the State of Victoria was joining as its first sub-national member.
“.. Australia represents the second-biggest offshore wind pipeline in the Asia-Pacific region, behind only China, with 50 GW planned. The State of Victoria has been clear with its ambitions targets of at least 2 GW by 2032, a total of 4 GW by 2035, and reaching 9 GW of offshore capacity by 2040 – and the support and resources from other markets and key industry groups that GOWA can provide will be crucial to these goals being met..”
This fits into a broad and compelling narrative about the massive national Australian transition that is underway, known as ‘Rewiring the nation’ –
“.. Rewiring the Nation is our program to make clean energy more accessible and affordable across Australia. This program is investing $20 billion to modernise our electricity grid and infrastructure. This is a centrepiece of the Australian Government’s Powering Australia plan. Together, these will lower power prices and provide renewable energy across the nation.
Many of Australia’s energy assets, like power stations, are ageing. That’s why we need to invest in essential upgrades and new projects to ensure we have a reliable power supply..”
I only had one day at the conference and particularly chose this session to detail.
It was mentioned to me in the exhibition that “Ultimately finance is the lever by which all of this succeeds or fails” and I couldn’t agree more, particularly in my work as a strategic consultant to investment firms, where I work with Executive Teams and Boards to define, articulate and then document stakeholders throughout the project decision cycle, so we can make change happen, at scale!
The following notes are interpreted and not word-for-word direct quotations
Patrick Rosenquist:
There are a lot of experiences from Europe that we have to draw on in the market. There’s a buildup of a stable and clear pathway:
What kind of projects are we looking into? What scale are we venturing into? What kind of offtake are you getting? What kind of grid connections are you securing?
The clarity that Europe has been providing in different markets has led the way for offshore wind expansion in Europe.
And now, recently, we’ve seen Taiwan doing something similar with a clear tariff structure that’s enabled them to get the local supply chain going.
And I guess that’s the key point, and it will be a recurring topic on this panel: that clarity of feed-in tariff systems and supply chain is really what’s created the market offshore in other regions.
Daniel Nugent:
When we look in the Australian context, it’s really important to consider the options and the off-take structure. It’s vital to examine lessons learned from overseas and what we can apply to Australia.
Clearly, these projects need to be project-financed and require very stable revenue to deliver the lowest cost of capital. Ensuring that we get the balance of the allocation through those revenue structures is key.
There is the need to be credit-worthy, but there should also be an appropriate risk allocation to customers, retailers, or the government that enables the projects to reach financial close.
Thomas Wibe Poulsen:
Looking at what’s been said already, clarity and visibility from the market to developers to the supply chain are vital. Everyone needs to understand risks and get started.
There’s a need for milestones: by this date, you can participate in these auctions, by this date we want you to have first power. It’s essential to see progress and a clear path through all steps.
As an aside at this point, I quote Angela Macdonald-Smith, Senior resources writer in the Financial Review, August 21st;
EnergyAustralia has joined the ranks of major electricity suppliers seeking to elbow into the country’s offshore wind sector, taking a stake in a project proposed off the coast of Victoria that could replace ageing coal generators.
The country’s third-biggest electricity and gas retailer is one of five partners in the Elanora Offshore venture, which wants to develop a five-gigawatt wind project off the Gippsland coast – Australia’s first declared offshore wind zone – that could cost as much as $25 billion when fully developed.
Importantly, the consortium includes major offshore wind contractor Boskalis, which owns a fleet of over 650 specialist vessels and which would help the venture overcome what are expected to be significant challenges for the nascent industry to source the materials and resources required.
I add that because our next speaker Kimberly Cram, is part of the Elanora Offshore consortium with Energy Australia.
Kimberly Cram:
My background includes developing projects in the UK and Thailand for the last six years. One consistent factor across European, American, and APAC markets is the need for consistency, whether that’s in the framework or the supply chain. The viability of the market hinges on fundamental aspects.
Do we have sound policy? Australia has been doing a good job of providing visibility on the framework. Beyond that, the question is how attractive the market is.
I believe Australia is incredibly appealing, especially from a financing perspective. There are many lenders here who have yet to venture into offshore wind in Australia but have been very active in Europe. Hence, there’s already knowledge of the markets and what it takes to deliver successful projects.
However, there’s also an awareness of challenges, such as projects that get operational but then face curtailments. There are challenges with offshore wind, say in Thailand, where projects have experienced delays. There are numerous lessons to learn.
If we’re looking at expertise and the skills required for offshore wind projects, there’s still a gap in Australia, but we aim to bridge that with local expertise. It’s great that we’re having this discussion now, considering aspects like financing, risk applications, and supplier selection.
Iain Melhuish:
From a financing perspective, risk allocation is critical. Many offshore projects perhaps haven’t fully grasped all risks. It’s essential to ensure all risks are understood and allocated appropriately to provide clarity and safety. It’s crucial to ensure that the financing markets can support these projects.
Mel Keane:
One thing I’ve learned, even over the last couple of days, is that consultation is key. Proper forums for discussions are vital. Bringing financiers in early, not just developers, to determine what’s needed is crucial to getting projects off the ground.
Mark Hutchinson (Moderator):
Earlier, we discussed state support. It’s hard to imagine offshore wind thriving in Australia without state support. Most global markets start with some state support. Can we discuss what that looks like, how long it should last, and how it should evolve as the market matures and costs reduce?
Mel Keane:
Jonathan Cole captured it well yesterday: timing is everything. Victoria’s recognition of the need for state support has been promising, especially with the anticipated implementation statement three later this year. Yet, transparency throughout the process is vital.
In New South Wales, the challenge for the Hunter applicants is the lack of visibility on state support. Clarity on offers ensures people can devise effective market strategies without unnecessary complications.
Iain Melhuish:
Providing that support is essential, especially in the beginning, to ensure a financial proposition.
In the early days of offshore wind in the UK, we transitioned from a “Field of Dreams” tariff – Those who recall will remember that once your project was built, you received a nice tariff. Then came the CFD, which initially seemed attractive.
However, soon it became clear there was an auction process attached, which I believe surprised many of us in 2014. This also impacted some very credible projects. But now that we’ve adjusted to this regime, it’s crucial to have clarity about its parameters and timing. Going in too early without thorough due diligence can be problematic.
How well have you explored the market? Do you understand your costs? Have you engaged with lenders to grasp your capital costs?
If you’re constructing something like a CfD without a solid business case, it’s challenging to ascertain your position. But if you delay too long, advancing the project’s development becomes difficult. If you’re investing hundreds of millions, you want assurance that it’s worthwhile. So, discussing a potential CfD is okay as long as we’re clear about its timing and criteria, allowing us to plan accordingly.
Thomas Wibe Poulsen:
The CfD structure is apt for such products. Looking at the most mature offshore market, the UK, they employ a CfD mechanism. Even though they’re the most advanced market, they continue using CfD to realise their projects for various reasons. Relying solely on other models might risk projects not materialising.
So the central question is whether the main goal is to bring these projects to fruition or simply to provide developers with options. Some recent cases in Europe raise questions about the viability of certain projects.
Daniel Nugent:
The role of state and government support depends on the project phase. During the developmental phase, the government’s role is pivotal in granting approvals and licenses. When the execution phase begins, the industry evolves.
The initial projects might be pricier with more uncertainties and execution risks. So there might be a need for some state or government support to manage these risks.
But when we discuss revenue and support, it’s essential not to shift all the risks to the government, which ultimately means the taxpayers. Retailers and customers have roles to play. Collaborating with our vast customer base to present an appealing proposition that mitigates risks is crucial.
With customer needs in mind and some backend government support, we believe we’ve found a model that provides project certainty.
Patrick Rosenquist:
Adding to the initial question about the duration of state support, some technologies need support until they become competitive. This was the case with wind and solar technologies.
Today, onshore wind and solar are among the most competitive resources in Australia. This achievement shows how renewables now strongly support the country’s energy mix.
Offshore wind needs similar state support until it establishes itself as an independent, low-cost electricity generation sector. Building a supply chain takes time. Europe has been at it since 1992, and now they have a mature offshore sector.
If Australia is to succeed, it needs a long-term vision to support the industry until it becomes self-sufficient.
Mark Hutchinson:
A question from the audience: How can financing for offshore wind learn from onshore renewables, and what are the primary differences observed between offshore and onshore practices?
Considering the significant penetration of onshore wind and solar in an area with a relatively small load spread over a vast area, especially when compared to Europe or North America, and the limited number of players, are there lessons from onshore that apply to offshore?
Iain Melhuish:
The capital market is familiar with the EPC* wrap for contracts in onshore, which is simpler with one entity managing all risks. This is not the case for offshore.
Mark Hutchinson:
Could you elaborate on the difference between the two?
Iain Melhuish:
Certainly. For onshore, typically one entity manages everything. For offshore, multiple entities are involved, creating interfaces between them. Understanding this difference will be a challenge for the financing markets here.
*EPC = Engineering, Procurement and Construction, as Mark says above, under a “full wrap” or “turnkey” model, the EPC contractor will fully provide all the detailed engineering designs of the project, procure all the equipment and materials necessary for the project, and then construct and deliver a functioning facility to their client.
Kimberly Cram:
In my view, while technology is a factor, the fundamentals of delivering and funding a project remain the same.
Offshore wind is more complex, but if we focus on core aspects such as a proper framework, understanding the energy mix, market routes, and grid infrastructure, we can find solutions. One of the main challenges is that onshore wind projects have faced significant tailoring, which influences risk assessment and lenders’ confidence in getting repaid.
Thomas Wibe Poulsen:
One more thing about multi-contracting versus the EPC: offshore hasn’t seen an entity that can manage all risks because it would be prohibitively expensive. It’s essential to know that risks remain regardless of wrapping. Banks should focus on who delivers the projects and manages the interfaces between contracts.
Patrick Rosenquist:
Another difference between onshore and offshore wind is the sheer size. Offshore wind projects are larger, demanding more clarity on the revenue stream. This often means that offshore wind projects are financed with full project finance for their entire lifespan, whereas onshore projects in Australia typically involve refinancing after a few years.
Mark Hutchinson:
Another question revolves around supply chain challenges faced by suppliers, especially when most of their costs are in US dollars. Over the last few years, they’ve suffered significantly due to supply chain disruptions, logistical challenges, and price fluctuations between quoting and delivery.
Now, they’re pushing these risks onto the developers.
Given that the offtake is in Aussie dollars and the capital cost of much of the equipment is in US dollars, how do you envision these initial projects will be structured, especially concerning foreign exchange risk hedging?
Thomas Wibe Poulsen:
Well, as a developer, you bear the FX exposure all the way to financial close. But you also have commodity exposures, which are a significant part of your development clarity. It’s essential to understand what you’re committing to.
Hedging is typically used, mainly because lenders require it and sponsors seek it. All the CapEx will be hedged into the currency of the opex. Historically, we’ve engaged with hedging instruments well in advance of financial close to ensure certainty.
Kimberly Cram:
To add to that, a significant portion of the cost originates from the supply chain. The source of manufacturing matters. Typically, you’re dealing with a mix of Euro, USD, or other currencies. Local content also plays a role. For instance, the Taiwanese government aims for 60% local content. This approach can inflate costs—sometimes by up to 300%—due to guaranteed work for local suppliers.
Additionally, by mandating local content, you restrict choices, further impacting debt costs. If you cannot work with Export Credit Agencies (ECAs) from Korea, Japan, or Europe, it becomes even more challenging.
Daniel Nugent:
I believe government support is crucial. Governments stand to benefit from decarbonization, job creation, and content. They should assist in managing these risks. If there’s a genuine desire from governments, they should consider mechanisms to address these challenges, especially since transitioning from initial bid pricing to actual project implementation can be tough.
Kimberly Cram:
Reflecting on the UK and Taiwan, the UK’s CfD indexation plays a vital role. In contrast, Taiwan’s initial PPA (Power Purchase Agreement) lacked indexation. Things have evolved. Many now believe that indexing should be incorporated into corporate PPAs. We can learn from various markets and adapt accordingly.
Daniel Nugent:
Importantly, it’s not viable for developers to price in all risks from the outset. It boils down to proper risk allocation from development through investment decisions and construction.
Mark Hutchinson:
Since this is the offshore wind and green hydrogen summit, I have to ask:
Do any of you believe that hydrogen will play a significant role as an offtake for offshore wind projects in the next decade?
Patrick Rosenquist:
Not in Australia, but possibly in Europe. Due to electricity oversupply at certain times, Europe might be a perfect match for green hydrogen.
Thomas Wibe Poulsen:
I agree. In North Europe, during periods of low prices, hydrogen production makes sense. Although immediate implementation is unlikely, these considerations are mature in the North European market.
Mark Hutchinson:
Does anyone have views on the state support differences between fixed and floating infrastructures, and should that dictate the delivery priorities for supporting systems like the grid?
Thomas Wibe Poulsen:
Floating technology will be crucial for offshore wind in many markets. However, in Australia, it might not be the first choice. Floating tech is maturing, but fixed should be prioritized in Australia due to numerous suitable sites.
Mel Keane:
Australia’s federal system makes it unique compared to parts of Europe. Here, state support happens at the state level. For instance, the Gippsland area will predominantly support fixed bottom structures.
New South Wales might lean towards floating, which might necessitate higher state support due to the industry’s nascency. One topic of interest is whether floating technology eases vessel supply chain challenges compared to fixed bottom structures.
Kimberly Cram:
The logistics are a work in progress. Transitioning from 2,000-tonne steel jackets to 4,000-tonne fixed structures significantly impacts costs. A consolidated foundation design approach would drive down costs. Rapid adjustments in grid infrastructure and ports are essential. Although floating tech might lessen vessel constraints, challenges persist, especially with current vessel availability.
Daniel Nugent:
I would add that the value of a megawatt-hour produced on a fixed versus a floating system is essentially the same.
So, when considering which should be prioritized first, it’s entirely logical that fixed bottom receives the priority. This is evident with Gippsland being granted the first feasibility license.
Clearly, the industry will develop and evolve, but it’s prudent to first work with technology that offers cost advantages.
Patrick Rosenquist:
We participated in financing our first floating wind project in France, known as the EFGL project. One key takeaway from that project reinforces Thomas’s point: the supply chain requirements remain consistent, with some additional components for floating technologies.
Before Australia establishes a local supply chain for aspects like sensor stations and grids, you must consider the supplementary needs for floating projects, which introduce added costs and requirements.
Mark Hutchinson:
There’s mention of C&I (Commercial and Industrial) customers. In Europe, there’s a significant shift towards offshore wind feeding into corporate PPAs (Power Purchase Agreements). Would this be applicable here? I’m aware that onshore solar wind projects often rely on corporate PPAs. Will this be relevant in Australia soon, or is it a long-term consideration for off-take financing?
Daniel Nugent:
Regarding that, there’s been an evolution in the onshore space in Australia. However, when discussing C&I customers, especially in Australia, we must consider the duration they’re willing to contract. The C&I market here typically looks at five to ten-year terms.
When financing these projects, there’s a need for greater certainty beyond just five to ten years. That’s where companies like EnergyAustralia could step in, bridging the gap between mass market and C&I customers to ensure longer-term deals, perhaps with some government support. While they could play a direct role, the challenge with C&I customers concerning project finance will be the term lengths they’re ready to commit to.
Iain Melhuish:
If we’re talking about corporates engaging in corporate PPAs, many of the earlier agreements sought diversity in supply. For one of the options, a significant part of a company’s energy needs would have to depend on a single project, which is risky. With the onshore market, large utilities took these initial risks due to their diverse generation assets.
However, for a corporate entity to depend on 75% of their energy from one project is a precarious position.
It might take some time, possibly when there’s a decline in government support, for larger corporations to see the viability of such ventures. This is especially true given several offshore projects have experienced delays, causing uncertainties around power delivery.
Kimberly Cram:
In my opinion, a blend of merchant and CFD (Contract for Difference) PPAs will be essential. However, discovering the perfect blend of factors to entice a good off-taker is challenging.
A potential off-taker would need consistent capacity, desire it round-the-clock, and expect competitive pricing, among other considerations. Taiwan Semiconductor Manufacturing Company serves as a notable example, though finding such a combination will be crucial.
Mark Hutchinson:
To Kimberly’s point, TSMC in Taiwan represents the world’s largest corporate PPA.
They draw 920 megawatts from a single project, financing the entire endeavour. Yet, they don’t require round-the-clock energy. If 24/7 energy were a necessity, the situation would be considerably more complex.
Closing out the session, Mark put it to the panel;
Q. When will we see our first Financial Investment Decision in Australia?
2028..
2027..
Given that we haven’t gone through consenting yet which will take 3 years, and two years beyond that to close, so five years, yeah 2028..
2028 to 30..
So there you have it folks. Lots to do. If you look back to the 2023 Global Offshore Wind Report that I mentioned at the start of this article, you’ll see we have 380 GW of offshore capacity predicted to come online in 32 markets in the next 20 years, with 200 of those Gigawatts in China.
Additionally, supply chain bottlenecks are predicted in the next few years in every region except China, which holds the majority of that supply chain!
And the real kicker, how does Australia attract the companies, talent and developers necessary in a constrained market, going up against the American Inflation Reduction Act?
Whatever happens, “Beyond all things is the sea” – Seneca 🙂
The Women of OffShore Wind (WOW)
A shout out to Mary Barry, who won the Innovation in Energy Transition Business Award for 2023, and is the Founding Director of the recently established Women of Offshore Wind.
WomenofOffshore
“.. Whether your background is in engineering, environmental science, business and commerce professional, project and stakeholder management, finance or any other part of the industry, WOW brings together a diverse network of trailblazers, innovators, and visionaries who are shaping the future of offshore wind..”
If you’re a business in the industry and don’t have your stakeholder and investor engagement strategy rock solid, ensuring the successful delivery of your business strategy, consider taking 5 minutes to figure out your next steps using my free Investor Trust Score:
Thanks for liking, commenting and sharing, it not only keeps me inspired to bring you more writeups like this, it makes the internet robots take notice and spread the word!
I’m attending Responsible Investment Association Australasia (RIAA) #RIAustralia23 and both day’s were packed with a mix of challenge, insight and the occasional moment of raised eyebrows.
It’s also worth noting if we haven’t met before, my job isn’t actually running an interview podcast or doing event reviews, who knew, right?!
My actual work is done with CEO’s, Boards, and Executive Leadership teams, usually helping them to take charge of their investor and stakeholder relations, develop cut-through messaging & get major projects over the line.
For the last 4 projects, that’s included institutional capital raising, HNW, and sophisticated fundraising, launching a Centre of Excellence in Circular Economy for the South Australian Government, and pitching the ex-PMO’s office on a regional and national rollout of a youth mental health intervention.
These included research, business planning, branding uplifts, websites, video platforms, data analytics, sales team training, IM’s, pitch decks, and presenting.
So that’s what’s going on behind the scenes – my team and I build turn-key Investor Engagement Systems® and support people who care, and create change that matters, at scale. I’ve been leading Bravo Charlie for 14 years now, and if you know a growth stage business, investment fund, or significant government project on the go that may need this kind of thing, please introduce me 🙂
So what’s with all the interviews?
I like learning and getting inspired, and I believe for the sake of humanity and our society, we need to be having better conversations with people who are worth listening to. Smarter Impact is my entirely self-funded contribution to this.
Speaking of which, it was great to meet Nicolette Boele in person today, as in the lead-up to the last Federal Election I’d had her on as a guest with Monique Ryan, Julianne Schultz, and Despi O’Connor, promoting our ‘Search for the Soul of the Nation’ – and how great is having a coast to coast Labor Government for movement on climate?!
What follows are my handwritten notes from the day, quotes may be amalgamated for brevity and expediency
Welcome to Country and speaking truth to power
If you’re reading this early I have not yet confirmed this gents name, though I commend him for taking his opportunity to express rancour at the idea that 60,000-year-old custodians needed to seek permission from 230-year-old settlers to have a voice to Parliament about country. Yes to Voice.
20 years of hard work and our ‘Tetris’ moment
Simon O’Connor opened the day’s business speaking to the establishment of the Net Zero authority, decarbonisation, aligning capital with a healthy and sustainable economy and the role of stewardship.
His invitation was for us to get on board, collaborate and shape what’s going to come.
“20 years of hard work to get here, now we’re at the beginning of a massive change. This is our Tetris moment, to ensure the pieces fall into the right place”.
“Through reporting, data and frameworks, with clear product labelling and relevant certifications, we can address the great transition and in turn, the great social challenges of our time.”
“To think we can achieve this is not too great an ask. The 700 people here, are managing the pensions of millions, and assets of trillions”.
ESG – Woke and broke?
Estelle Parker lead us into a fascinating discussion that posed nuanced and considered insights, mixing populism, politics and economics.
Prof. Tim Lynch spoke to ESG being used in the US as a hammer to align the Republican base, similar to abortion rights, and there is no allegory to this in Australia.
In contrast, Jens Peers, CFA spoke to Europe’s alignment on ESG, and the implicit agreement to use the market, not regulation to undertake change.
A further exemplar of this was discussed as the EU’s collectivist nature in looking at portfolios, vs the US’s focus on maximising each stock in a portfolio irrespective of its aggregated impact, and the nod to cultural individualism.
Fiona Reynolds – “Economy serves society – if that’s woke, well so be it. We need to reject the language and not be sidelined by a political take.
Responsibility, materiality, pricing externalities – speak the language of investments.”
ESG is hygiene to EU money. US managers want ESG references removed from documents whilst still doing it.
The impact of the impending US election will massively shift the speed of acceleration in climate mitigation, one way or another.
We need to know, as an investment house, what are your fundamental beliefs. If you want to be a universal investor, you need to decarbonise the economy.
When we look at MSCI benchmarks for the ASX top 300, we are on track for a 4-degree temperature increase. We all burn at 4 degrees.
Tim and Fiona went back and forth on the issue of lobbying, with Fiona calling out corporate lobbying as the issue climate wasn’t being addressed effectively, and Tim pointing out the entire conference was being asked to become lobbyists.
Whilst I personally take his point on the level of a debate, in actuality from what I’ve seen of the fossil fuel industries in my lifetime and relevant examples of lobbyists masquerading under false pretences, I need to stand with Fiona on this.
Jens further cited the prominent backlash to ESG is in countries where shifting to a renewable society targets the economic power base.
“We are not here to make profits out of these gross violations of human rights”
Ross Piper sat in discussion with Tomoya Obokata, after his keynote on modern slavery and his work with the United Nations.
50 million people each day are trapped in modern slavery.
26 million in forced labour and 22 million in forced marriage.
Mr Obokata: “.. Have policies on modern slavery. Do not rubber stamp these. There are easily identifiable high-risk industries for modern slavery. Investigate your supply chain and act. Ask about the due diligence companies you invest in have done. Don’t divest when you find issues. Fix them. An unemployed person will work anywhere to survive. Divestment perpetuates the issues.
Consider the impact on workers first, then your company profits.
Say ‘ We are not here to make profits out of these gross violations of human rights ‘ .. “
Drowning in a Sea of Requests – Corporate engagement from the inside
A substantial lineup; Mark Rigotti, Claudia Chapman, Patricia Cross FAICDLife, Guy Debelle (Fortescue Future Industries) and Simon O’Connor.
It became quickly apparent the session title hadn’t caught on, no one was drowning in a sea of requests from investors. Guy shared that investors aren’t pushing back on claims they were making, and in turn, not enough companies are being asked ‘What are you doing? how will you get there?’.
There is an importance in asking for granular questions that are company and industry-specific, and this requires resourcing.
It’s one thing to make a claim, the question is how do you back it up.
Compliance was a different story, and Mark Rigotti quipped about not bringing the 3,900 pages of the Corporations Act as a prop, as it would have put him overweight on his luggage.
Further in he added that if you want better outcomes, put inspiration into a discussion and that a bank he knows reports to 205 organisations each month – so compliance is a huge undertaking. Things he doesn’t like? Generic questionnaires and learning about investor requests through the media.
For Patricia Cross, Greenwashing pairs up with virtue signalling; “Don’t be seduced into seeking a headline for yourself. Do what’s best for the company”
The team spoke about remuneration, proxy advisors, the stages of awareness, competence and expertise from both clients and industry players and that if you’re a material holder in a business you should be engaged, otherwise you’ve not done your due diligence.
“You need visionaries, and you also need to do things in bite-sized chunks”
First Nations Investment Markets
“The fundamental question is, do we trust aboriginal people to manage money?”
Peter Yu, Leah Armstrong, Benson Saulo and Alan Dayeh presented one of the most powerful sessions in my recent memory.
“None of these answers on screen are new – what if the question was ‘what’s the opportunity to invest?” – Peter Yu
Peter Yu AM began;
“This is a developing opportunity, not mature. There has always been a common right to negotiate pre or post-native title. Since the Timber Creek High Court decision in 2017, the sky hasn’t fallen in. From a first nations perspective, we are 5% of the global population, with access to 80% of the biodiversity”.
Benson took us through his experience of native tribes in the US, noting cultural variance of language, terms and titles between Australia and America in how we reference indigenous.
Where Australia has Supply Nation(.org.au), in the US their tribes are Sovereign Nations that are economic powerhouses, for example in Oklahoma, with two nations being $10BN and $11BN tribes.
“Where will we be in 7 generations’ time? We must look at who’s next to us, who is behind us and who is in front of us.”
Leah Armstrong spoke about the path to self-determination being the most important thing to indigenous groups. Also that pointing to a gap in investor readiness is about both sides of the equation. Overcoming track record can be done, pay attention to ‘Due Diligence 2.0’.
Peter spoke to the word cloud put to the room “What do we need to do to look at this from a benefit to community and society perspective? What is the value proposition of getting this right for the nation? It is clear from the recent budget, that we exist in a vacuous regulatory context”
Further.. “We operate in an economic apartheid in Australia. In the middle of the richest mineral deposit, probably on earth, the Pilbara, we have a jail full of 99% black faces”
“There is a false economy, the NT runs on welfare payments – in the US the freedom to succeed and fail has been afforded to the native population”
Benson “I started out as a bank teller, even as a teenager, working alongside my colleagues behind the counter, people would come in and when they saw the colour of my skin would stop, wave me on and say they will wait for the next counter to be available. This raises the fundamental question, do we trust aboriginal people to manage money?”
Leah closed the session..
“You can’t have green without orange (gender equality), and you can’t have green without ochre”
The evolution of Impact Investment in an area of sustainable finance
Michael Traill is a bio you’ll need to look up, he’s involved with boards that manage hundreds of billions of dollars and has a name synonymous with philanthropy, he speaks quickly and emphatically, and whilst I’m always engrossed, I can never keep up with the notes.
“You can drown in jargon. And I’ve seen lots of ESG lipstick on pigs” – that was an easy one to note down. The essence of it was his call for values based capitalism. That a clean definition of ‘impact’ is ‘measurable financial and social return, and the $ are risk weighted’.
The focus must be stewardship, ethics and integrity.
Greenwashing in Australia: A view from the regulator
Karen Chester took a few minutes to drop her line that ‘How to avoid Greenwashing’ last year from ASIC was ‘Season 1’, and as of delivering this session which you can read verbatim on the ASIC website under ‘ASIC and greenwashing antidotes’, ‘Season 2’ was out.
If you’re into this sort of thing, ‘ASICs greenwashing interventions’ isn’t that bad as a sequel 😀
I’ll throw a plug in here for the work my team and I did with several industry leaders at the same time late last year, which was a look at regulatory initatives in the UK, Europe and Australia, and housed within a much more attractive season box set, including video interviews!
You can get instant access to it by completing the Investor Trust score I mentioned at the start, the link is in the first comment 😀
That said, I haven’t cancelled anyone’s Financial Services license, so high five to Karen and co on that one.
What’s this all about then?
As Karen puts it..
“Greenwashing is a corrosive agent to market integrity.
Three must-haves:
Transparency through disclosure and a global standard
Bloomberg has ESG investments at 52 trillion by 2025, this is 1/3 of all investments.
Looking at 400 companies, we’ve seen an 8x increase in mentions of ‘carbon neutral or ‘net zero’ in price-related communications.
Our quest is to stamp out greenwashing. (Adopting the) ISSB standards are a must-have if Australia is to remain a global home for capital.
Case-by-case interventions are not sustainable at scale, though we are acting to enforce the law.
No regulator is an island, we are working with the ACCC and clean energy regulators.
We are undertaking surveillance of super funds and green bonds.
There is a line between green hushing and making aspirational statements. We look at if these have a foundation.
Do claims have transparency and a reasonable basis?
We want to see everyone set up for success, and the market eliminating greenwashing.
As good stewards of capital, we want to see what representations have been made, and what’s your basis?
Transitioning the ASX – insights & progress towards Net Zero
Nathan Parkin presented Ethical Partners Funds Management by way of three companies they hold positions in, and Sarah Clarke, Naomi Flutter and David Akers took through us steps they were taking towards Net Zero.
The contention and insight were that all 3 are involved in areas that are traditionally hard to abate, being food, the built environment and chemicals, and that looking at the ASX300 MSCI ratings have us on track to a 4.5-degree warming.
Where David spoke to the core mission, purpose and leadership, and investigation of solutions related to methane output, which is interesting considering A2 don’t own the cows or the farms.
I’ll shout out again here to Sam Elsom and Sea Forest again as I did back at the Climate Investor Forum, whose Asparagopsis product for livestock methane reduction/elimination is schmick (and I’m pretty sure A2 are already onto it!)
David took it as almost confusing when posed the question by Nathan, as to whether A2 would be integrating the acquisition of a business into their ESG reporting, as internally they all assumed this went without question – something I found quite comforting from a cultural perspective.
Naomi Flutter’s take on Wesfarmers was interesting, though I’ve got to admit the level of letdown I felt was intense, hearing her say the crux of their aim was reliant on ongoing government investment into Carbon Capture and Storage and this being effective at scale (Honest Government Ad | Carbon Capture & Storage anyone?).
That aside, Naomi pointed to LEAP-FI via the TNFD (acronym overload? Don’t fret it’s normal [Taskforce on Nature-related Financial Disclosures]) and the struggle of drawing a line in relation to what’s dependent on the natural environment and having 20,000 or so suppliers.
In a sense, that we can’t draw a line speaks to us all being interconnected, which is pretty neat, and economically terrifying if you haven’t got your head around limits to growth and finite systems yet.
Sarah Clarke was a force for Mirvac, challenging the room to ask the same question about ESG or climate action throughout levels of their investees, and that alignment would be easily seen in the answers, as to whether vertical integration of culture had been achieved.
Emissions reduction wise, Sarah anecdotally took us through the many areas Mirvac have taken a process and design optimisation approach, for example, pre-fabricating components off-site and delivering them, from large foundation pillars to entire bathroom units. In the latter case, a housing component would take 7 weeks on-site to build and multiple trades, being pre-fabricated, delivered and installed on-site in 23 and even 12 minutes per unit.
Designing incentives for optimal resource usage such as charges for returns of unused material and such were also spoken of.
David added that A2 realised they could have a greater impact using the Capital Expenditure they spent purchasing carbon credits to offset scope 1, 2 and 3 emissions in 2019/20, with investing into technology and emissions reductions in the supply chain. So they are doing that.
Impact or Impactful?
Joshua Edmunds, Kerry Series, Robyn Parkin, Kylie Charlton and Amanda MacDonald went at it for the last session I attended for the day.
Looking back on the session title, I should have known this was a setup, because I’ve spent a lot of time around Impact Investing conferences over the past few years, and predominantly having Impact Investors as clients for Bravo Charlie, I was getting a little incredulous at hearing the word impact used in as close to as adjective as you could get, rather than an investment taxonomy.
I nearly expected Karen Chester to burst through the door proclaiming loudly ‘Now what did we just talk about?!’ .. okay jokes aside;
This was also used as a slide backdrop to the conversation
Kylie Charlton provided a lot of the contextual groundwork for the session, as Australian Impact Investments are both pioneers and leaders in the Impact space, sharing things such as:
“.. Impact Investing is a term coined in 2007.
There is growing momentum ($30BN AUM, 25x since 2015, 10% year on year).
Impact Investing is less than 1% of Responsible Investing.
Impact Investing is a lens, not an asset class – it’s no longer an allocation.
Government and philanthropic capital is not enough to meet our societal and environmental challenges, private money must fill the gap.
Kate Raworth, Doughnut Economics, is well worth your time.
Impact is a third dimension to risk and return.
There is a pervasive myth that impact is concessional. It is not.
Scale without integrity is nothing.”
Kerry was alight with his passion for the change companies in the NorthStar Impact portfolio are making, from education to regenerative food and agriculture, and how he started NorthStar because he simply couldn’t find anyone doing what he wanted to do with his money.
He spoke to the focus on Additionality (alongside Intentionality and Measurement) and “extending and scaling impact” – “Q. How can we help them do more?”
One idea he floated is “Why don’t we have a corporate tax rate that varies, and is lower for those doing good, and higher for those harming the social fabric?” – makes sense to me.
Robyn Parkin made the excellent point that every dollar spent has an impact, and in the context of the Responsible Investing Summit and those managing our national and global pensions being in the room, it really does hold weight.
Robyn also pointed out the grim reality that only 12% of the UN Sustainable Development Goals are on track. Even with the GIIN & PRI’s work, there is rapidly increasing cynicism about ESG.
Amanda MacDonald spoke about “the challenges of researching scalable solutions will serve most” and the demand of clients who are “returns first”, and more so, their demand for confidence in their advisers. Reasonable, though a tall ask finding market opportunities for this trifecta.
Or is it? Can the perfect “impact” portfolio exist? No.
The long answer posed by Kylie Charlton went something like this;
“.. Start any sentence with ‘But for my capital.. would this make an impact’ ? “
If a particular business didn’t have your money, would it matter, would they make less difference in the world? For example, trading listed equities and expecting that to make an impact. It doesn’t. You buy someone’s shares, the company doesn’t get any more money.
You can have an impact across your portfolio, though different industries and sectors will have different levels of impact.
***
Firing himself up to lay down the challenge, Kerry closed the session speaking of the $4 trillion gap to reach the Sustainable Development Goals (SDGs), which is less than 1% of global finance, and thus;
“When we look at carbon in the atmosphere rising, social inequality rising, and health care going down, is “Responsible Investing” impactful, or an excuse for business as usual?
Day 2
Quotes are from my handwritten notes, and potentially abridged and amalgamated for brevity’s sake.
So Meta – Tech and human rights
Min Wah Voon, Head of working groups at RIAA set the scene, referencing Geoffrey Hinton, the ‘Godfather of AI’ resigning over the direction AI was taking.
Likening his position to the approach a lot of humanity took towards nuclear weapons, and that by over-reacting we avoided the potential impact of nuclear war, a similar trajectory would be better for humanity than letting these digital bombs go off unchecked.
Things really got going when the eSafety Commissioner of the Australian Government, Julie Inman Grant was asked about what she was concerned about;
“.. The convergence of systems is a worry – Haptic suits and immersive technology, being sexually abused in a cyber world could have physical repercussions in the real world, deep fake porn.. there is a lack of guardrails in general – we are creating poison without its antidote, and post-fact ex-ante regulatory control will be ineffective..”
Professor Nicholas Davis, Emergency Technology at the University of Sydney, spoke to 150 large companies about their usage of AI internally, 2 of these had AI plans and as he put it “I believed one of them” – anecdotally we heard a story about the confidence of one CEO who answered proudly how they had solved gender bias in their algorithm, and after being questioned in an excited and nerd like way by the professor, brought his CIO in who confessed it was a nightmare and they were having huge problems with it..
Julie (eSafety Commissioner) took us into the positives of technology, and how when she joined Twitter at the time of the Arab Spring, she saw how technology could democratise speaking truth to tower, though this large data set of interactions also brought up some disturbing realities;
1/3 of professional Australian women are subject to abuse online, of a sexual and violent nature
Adult indigenous users are twice as likely to experience abuse online
First Nations youth are three times more likely to experience abuse online
In short, Julie maintained that when it comes to the power of technology and discussion “.. Tension is good, but balance is important.”
***
Liza McDonald, RIAA Board Member and Head of Responsible Investment at Aware Super, offered that these days every company is a tech company, and to consider material vs opportunistic risk when considering AI.
Liza offered the EOS Digital Rights Principles as a valuable consideration, and that investors must challenge their investees on their AI governance, as there are potentially huge consequences in how companies maintain their social license to operate in the chance of a data breach.
” Ask your investees: Q. How do you calculate a loss of trust? “
***
Nicholas had a simple statement about the usage of things such as Chat-GPT;
“Anything you put through a browser is insecure. If you paste in client data that is likely a legal breach. When it comes to ChatGPT, do the Sydney Morning Herald Front Page test, ask yourself ‘would I want this printed on the front page tomorrow?”
Where is AI doing wonders? Nicholas pointed to Zipline, the medical supply inc. blood drone delivery company that uses AI to fly around countries. Check out Mark Robers 20M+ viewed video from a month ago, ‘Amazing Invention- This Drone Will Change Everything’ if you don’t know what we’re talking about.
***
Julie pointed us to the 4R’s of digital:
Reputation, Regulation, Revenue and Retention – she took us through the implications of the January ’22 Online Safety Act, the systemic transparency tools that were in place, and anecdotally how some companies are able to analyse and report on child abuse in live stream video in 4 minutes, and some are doing it in 19 days. There is work to do.
***
A discussion was also had about the human impact and exploitation of workers in the global south, with things such as content moderation (scanning millions of images and videos, for example of pornography, looking for violence or abuse) or simply labelling of AI data.
***
The panel gave us some excellent places to learn more:
The NSW AI Assurance Framework, not perfect, though a good start
The Secure Board (Book – Anna Leibeil and Claire Pales)
Global Online Safety Regulations Alliance
The Atlas of AI (Book – Kate Crawford)
***
Nicholas made a salient point ..
AI is not the wild west. There are so many existing regulatory frameworks that Australian’ businesses exist within;
APRA, Discrimination Law, Privacy Law, Tort and Negligence, Healthy and Safety, and even the ACCC are looking out for misleading conduct.
..and left us with a somewhat more chilling one;
“Governments can’t compete with the private market for the talent needed to make this (AI security) work”
Australia’s Sustainable Finance Taxonomy
Why are we creating an Australian version of a Sustainable Finance Taxonomy?
It’s a good question that seemed well justified by the panel, though potentially at odds with rolling up to a global framework (and one of the reasons I love what Pathzero is doing, and grilled them on how they input and aggregate data, which you’ll read later.)
Charles Davis, Managing Director of Sustainable Finance & ESG at CBA spoke directly to this, calling for unified taxonomy when he is seeing banks develop their own.
Europe’s issues in labelling between green and brown products, and mobilising capital to the necessary transition were cited as a reason for our Australian taxonomy, though interestingly and quite validly jumped on by the moderator Linda Romanovska, member of the EU Platform of Sustainable Finance;
“Taxonomy is a living organism – we have to start somewhere and these issues are clearly identified – the EU has 27 member states that need to agree”
Sybil Dixon, Head of ESG at Vanguard gave positive light to the work, speaking of the taxonomy as a tool for the government to allocate capital, also warning against needing a translation booklet to work with taxonomies in different markets.
Kristy Graham, CEO of the Australian Sustainable Finance Institute, spoke about the work of the last 10 months, and the importance of getting the foundations and governance right, not racing ahead to label things that then need changing.
Kristy detailed the key points of the recent ASFI 2nd paper ‘Designing Australia’s Sustainable Finance Taxonomy’, including;
Core principles of credibility, usability, interoperability, prioritisation and impact
Underpinned by internationally recognised, credible, science-based technical screening
A transition category and traffic-light colour coding for green, transition and excluded activities
Robust and transparent governance
Mandatory taxonomy alignment for sustainability claims to address greenwashing
Developing climate change mitigation criteria as the most urgent priority
What’s on the label? Industry and regulator efforts to combat greenwashing
Susan Quinn, Head of Policy and Advocacy for RIAA led the session:
Q. How can you avoid ASIC attention? A. Leave the country.
Mark Bland, Partner at Mills Oakley quipped in response to the question, though with a wry smile, it belied a much more important point about the scale of attention our national regulator is paying to what people are saying.
He framed it another way in regards to company conduct; Complete the sentence “How can you call yourself a steward if.. “ whatever your investee or company may be doing.
“Can your claims be considered misleading and deceptive conduct?” ASIC wants to know if you have credibility and believability in what you’re promoting.
Some key points I noted:
Funds have operated under undefined regulations for a decade. This is changing. Where Europe intended the Sustainable Finance Disclosure Regulation (SFDR) to be a regulatory tool for operators, the market used it as a labelling mechanism.
– Kuldeep Yadav, VP of ESG & MSCI
It’s simple. We can’t have a fund say something and not do it.
– Hari Balkrishna, VP of T. Rowe Price
In Europe they are looking at fund names, if you have the word ‘ethical’ or ‘sustainable’ in your name, then over 80% of your portfolio must align.
The point of the regulator is that things do what they say on the tin.
Divestment as a strategy has been proven to not work. Ultimately if we keep handing over things rather than transitioning them, we will end up with Aramco owning all fossil assets.
– Susheela Peres Da Costa, Principle at Stewardship Centre
This was interestingly contrasted by a panel member talking about the market engine of making renewables more cost-effective than fossil fuels as a way to transition.
Susheela made the call to conference participants and companies;
It’s incumbent on us to make things understandable. We need them to be basic and factual.
Don’t use adjectives in describing things, only nouns.
Mark spoke further to rating agencies as regulators, keeping in mind that ratings are opinions, and if you have an opinion and no license, see a lawyer.
Hari offered this useful insight;
Impact Calculators always fail. They ignore negative externalities over time.
Pathzero
I spent some time with Carl Prins and the Pathzero team, and it was fascinating to see the effective way they are bringing data together, as we converge into this information being critical if not mandatory;
“.. rapidly generates a PCAF-aligned estimate of financed emissions across your investments using readily available company information..”
“.. Access an estimate of corporate emissions across your operations. Use this information to quickly understand your emissions profile and take a risk-based approach to decarbonisation.
Improve and refine your carbon information by uploading any previously calculated carbon data before leveraging Pathzero Clarity’s state-of-the-art calculation capability to generate audit-grade carbon information across scope 1, 2 and 3 emissions..”
If you haven’t done so yet, take 3-5 minutes to Discover your Investor Trust Score, and see how you perform across the critical dimensions the world’s leading businesses & investment funds score highly on! It’s a new tool I’ve just launched and I’m confident you will find the results highly valuable.
Recent feedback on the Investor Trust Score
Incredibly simple to use, though delivers really impactful insights. I especially love the segmentation of the key factors that determine trust.
– Dickie Currer, Startup Victoria & AirTree Explorer
Genuinely insightful questions.
– Dr. Jodi York, Chief Impact Officer, Kilara
Tools like this are critical to help build your credibility at a time when there is increasing competition for global capital.
– Peter Castellas, CEO, Climate Zeitgeist
Very useful! This has focused our efforts on key areas that will improve our messaging and outreach. Also great for our marketing and comms team.
I’m really pleased to launch the Investor Trust score, a free tool you can use to see how you perform across the critical dimensions the world’s leading businesses & investment funds score highly on.
A big thanks to my colleague Andrew Hollo for his support in the development over the past months, he’s one of the world’s leading strategists for public value organisations, and to Peter Castellas, Dr. Jodi York and Dickie Currer for road testing it with me prior to bringing it to you!
The innaugural Climate Investor Forum was held at the MCG in Melbourne, an initiative of Peter Castellas and Climate Zeitgeist, with support from Michele Hartz and a variety of sponsors.
In this recap I’ll take you through the sessions and present a single slide from each of the 25 business pitches. I hope you enjoy reading, learn lots, get inspired by the people and innovation, and importantly, reach out to make new connections, and see how you can amplify or integrate what you see into your own business and network.
Leave a comment and let me know which of the pitches appealed most to you, or if there is a business you think should be on the list or at the next summit!
Thanks in advance for sharing this post and subscribing to my Smarter Impact newsletter, which comes out every Thursday 🙂
“We are the first generation to feel the impact of climate change and the last generation that can do something about it.” – a fitting opener from Peter Castellas, quoting Barack Obama who got it from an American Governor. Peter added “Only as far as we seek, can we go – it is up to us to seek, dream, look and reach”
This recap is written from my hand notes, so quotes and attributions may not be accurate – thanks for your understanding!
Connecting the climate investment ecosystem: the incredible opportunity in front of us
Megan Flynn heads Pollination, and called on the room to “Brave, optimistic & solution focused. That’s how we win” – the point was made that when hear “the Governments role is not to pick winners” the inversion is “Let the market decide” – though when faced with the legislation of the US Inflation Reduction Act, which contains $500 billion in new spending and tax breaks that aim to boost clean energy, reduce healthcare costs, and increase tax revenues – Australia must have a considered response if our market is going to keep pace.
“The IRA is a provocation that we need to respond to. Done well we can position ourselves at the centre of the main game”.
Energy Justice (ensuring equitable access to energy for all members of society) is hugely important. EV charging infrastructure deployment into African American neighbourhoods is key to ensuring this happens.
Realiability and affordability are the axiom of successful power.
Setting policy at Government levels has a pull effect on the market.
Our present position combines opportunity, moral obligation and the existential dread of inaction.
An eternal optimist, this is a whole of supply chain transformation.
We’ve moved way beyond the moral imperative. It’s an economic imperative, with Ag making up 18% of CO2 emissions, we are a sector in transition. How do we leverage the exciting state of natural capital? Solving the intersection between climate and nature is not about 1:1 equivalency.
We have Science Based Targets initiative (SBTI) alignment to 2030. The path is clear and it’s business as usual to get there. We need to figure out scope 3 emissions from fertilisers and move to net negative through 2030-2040. Removal of methane will get us to net zero, and we have great data and geospatial tools to work with.
The landbase is available to shift emissions. We need protocols on vegetation and land mass, adding canopiy cover and replacing deforestation with afforestation (planting new trees).
The keys to unlocking capital for climate solutions
More markets isn’t the problem. Poorly constructed ones are. – BK
Traditional private equity has a 3-5 year investment hold. This doesn’t work. Wollemi brings deep operational and technical expertise with a global footprint, looks at a 15-25 year hold, and is focused on bringing in more capital, and seeing nature recognised as infrastructure. – PH
Climate risk must be factored into ‘Best Financial Interest Duty’ (BFID) – KF
Everything we buy will be net zero within 10 years. In our fund we hold Australia’s largest horse feed supplier (Hygain), and provide the laundry facilities to most of the countries hospitals. Gas is used to power this cleaning and this is an example of the transition challenge we face. – AB
The future is pricing the environment into valuations. Pollination is encouraging capital, rewarding innovation, replenishing ecosystems and getting us to net zero. – DC
The Clean Energy Finance Corporation is the Federal Governments Green Bank. We match $2.5 private dollars to $1 from the government, and have made lifetime investment committments of over $10 billion dollars since being created by the Gillard Government and is on track for 82% renewable power generation by 2030. – IL
A 60 second walk-around
Charlotte Connell of Climate Salad put together this short enthusiastic video from the day:https://www.linkedin.com/embed/feed/update/urn:li:ugcPost:7044465437421572096?compact=1
Getting down to business (pitches)
Congratulations to all those who presented, as well as those who applied, it was a fierce field from a quality perspective, and inspiring to see so much progression and passion from those presenting.
For the sake of brevity and fairness, I’ve chosen 1 slide from each presentation of the businesses that brought their best to the day. If something takes your interest, get in touch with them, I’m already seeing announcements, deals and press related to the ongoing success of those I met at the Forum.
“.. With the unprecedented corporate commitments to meet net zero targets, businesses involved in carbon offset project development, nature-based solutions, carbon trading platforms and carbon neutral services, biodiversity credits, climate smart technologies and indigenous land management are experiencing extraordinary demand..”
“.. The transition to a circular economy is gathering pace. Circular economy business models include designing out waste and pollution, renewable, recycled, or highly recyclable inputs in production processes, reducing biodiversity loss, sharing economy businesses, products as service and resource recovery..”
“.. Climate tech is broadly defined as technologies deployed to reduce greenhouse gas emissions or solve any aspect of the complex and multi- faceted problem of climate change. The technology innovations are part of a hot, fast-growing, everexpanding sector and are becoming the primary destination for an entire generation of tech talent (engineers, developers, data scientists etc.) ..”
“.. This sector is attracting significant investment globally in innovative transit models and infrastructure leading to advances in electric vehicles and charging infrastructure, micro mobility, sustainable fuels, marine transport, aviation and rail freight.. “
Representing Silva Capital, Raf presented a compelling look at the state of things, and how the challenge wasn’t funding, capital is looking for a home. He elaborated on the call to action being for businesses to innovate around providing solutions to our net-zero goals, and that once people see a forward price curve of carbon, they are easily motivated to act, and that they will need direct access to ACCUs (Australian carbon credit units) to meet their corporate emissions reduction goals.
The role of the corporate ‘buyer’ and investor in scaling decarbonization solutions
Fiona: The only lever we have is Sustainable Aviation Fuel (SAF) – electric / hydrogen planes are not practical in the short to medium term, particularly as most of Australians aviation is long-haul. – FM
Graham spoke to several of the challenges and the opportunities they were working on:
We are looking to electrify everything, though this is a considerable challenge when you have 260 ton diesel trucks.
Bringing EV charging in at this scale and on remote sites
Adding an equivalent power volume that diesel provides onto the grid for drawdown including energy management storage
Methane destruction for metallurgical coal
Low-carbon green steel
Tools and platforms to enhance traceability, particularly for social and environmental outcomes
Future minerals for the green transition
BHP Ventures, BHP Innovations and Xplor active in the market
Ingrid shared how 50% of the technology we need for net zero is in prototype and we have a way to go.
“.. The clean and renewable energy space covers economy wide deployment of technologies, products and processes and a vast array of business models from mature technologies and infrastructure to innovative Hydrogen and battery storage businesses, microgrids, industrial process innovation, to digitisation and demand management.. “
“.. Alongside established ocean industries, new emerging business are proliferating as part of the blue economy. Addressing challenges from overfishing, habitat destruction, pollution and the impact of climate change, are growing businesses in diverse areas such as aquaculture, marine renewable energy and blue carbon.”
I was so impressed by Sea Forests presentation I’m including their video for you:https://www.linkedin.com/embeds/publishingEmbed.html?articleId=7488245447984031895&li_theme=light
“.. As urban and industrial ecosystems evolve, rapid advances in energy efficiency and sustainability in the built environment and infrastructure include innovations in design and construction, heating and cooling, residential buildings, commercial buildings, integrated transport solutions and materials in the supply chain.”
The days forum concluded with a poem by Peter Castellas, before drinks and dinner. I’ve quoted some of the three stanzas beow, ask him for a copy if you’re a fan of the spoken word, it was great 🙂
“.. There’s a feeling that resonated throughout today from every woman and man
That we are all in this together – we are all one clan
It’s a critical moment in history as many of here intuitively know
So we need to act decisively, which is the subtext of this whole show
***
Our privileged position on this planet means we have a responsibility that we can’t shirk
No more fluffing around the edges folks, we’ve got to get to work
And we saw this many times on stage throughout this long and fascinating day
The dedication, passion and spirit of those you leading the way
***
We are going to need these solutions to secure a sustainable future
As we suck out the worlds resources to feed the desire voracious consumers
And as billions move into the market economy for the first time many bathed in photochemical smog
We have to invest and help scale the technologies that can help the old ones leapfrog
***
I want to pause before I finish and take this moment to say thanks
We wouldn’t be able to underwrite this show without the support of the sponsors to be frank
They saw the need, got behind it and generously backed the vision
And could see the benefits of creating a network at the nexus of the investor/technology and corporate collision
***
And my respects to the people that came before us on this sacred hallowed ground
Lets all do part for our ancestors and make the next generation proud
Because all of us here are part of the movement, the spirit of our times
Yes it’s a zeitgeist – that’s really hard to capture in a series of bad rhymes
***
As we consolidate the friendships weve hopefully made at this inaugural Climate Investor Forum
Let’s try and finish the evening with an element of decorum
Because its now time to celebrate with some bubbles and some beer,
But first, get your phones out, mark your diary cause we are back this time next year! ..”
The End .. ? The beginning of dinner!
The Lord Mayor Sally Capp was in her regular affable and enthusiastic way, sharing the City of Melbourne‘s mission to have the entire municipality 100% renewably powered by 2030, with Net Zero set for 2040. Her call was for support in our energy transition, and that 60% of emissions comes from existing buildings that need retrofitting.
This was followed by a keynote from the Former President of Kiribati, Anote Tong, who’s keynote presentation can be seen in full by clicking here.
He speaks to migration with dignity, thinking we were immune from the tribulations of the world, and the reality that science has now caught up with us. I highly recommend you watch the link above, and I did a follow up interview with him personally after it, which you can see below;https://www.linkedin.com/embeds/publishingEmbed.html?articleId=8978570071622035333&li_theme=light
In the closing words of Peter Castellas “.. I invite you to participate on 20 March 2024 at the MCG where will take the event to another level. Viva la Zeitgeist 😊”
The completion page quoted Brian Trelstad of Bridges Fund Management Ltd. and Harvard Business School saying “All new impact investors should take this training to get down the learning curve incredibly quickly. The work that CASE has been doing and the work that the IMP has been doing has really distilled not just the last 15 years, but probably the last 50 years of thinking about how to measure and understand Impact.”
Personally, as a strategy and communications advisor to a variety of investment fund CEO’s, investees and ecosystem partners, the risk of doing comms badly in a world of shareholder activism and personal director liability cannot be underestimated. What you say, how you say it, when and to whom is too important to be left as an after thought or relegated to the marketing department.
More so, there is tremendous opportunity to lead your industry, achieve the impact you seek, support your investees to get traction and generate returns, gain follow on investment from larger supporters and generally not mess it up, by integrating a strategic communications approach and considering the functions of my Investor Engagement System™ from day 1.
