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ESG Challenge: Richard Roberts, Volans Interview — Transcript

by Alliance for Responsible Capitalism · 4,788 words · 689 segments · language en · Watch on YouTube

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0:04okay hi thanks so much again for
0:07agreeing to talk to us pleasure if you
0:10wouldn't mind could you introduce
0:12yourself and share a bit about the scope
0:14of your research
0:15areas sure so I'm Richard Roberts I lead
0:19the research team at a think tank and
0:21advisory firm called volans based in the
0:23UK and um we work really at the
0:27intersection of sustainability and
0:29innovation so particularly working with
0:32Forward Thinking companies that are
0:33looking to transform themselves in line
0:36with um uh the need to align to a net
0:39zero future and think about our wider
0:43ecological and social impact um so uh
0:46I've been here for eight years and I do
0:47a bunch of different things but my focus
0:49of my research for the last few years
0:51and and right now is is very much on the
0:54political role that both companies and
0:56financial institutions and very often
0:57their trade associations play and how
1:00can we use that political influence of
1:03of the corporate sector as a Force for
1:05good on issues like climate and nature
1:07and so
1:09forth amazing that sounds really really
1:13interesting could you share a bit about
1:16your work with the banks for Net Zero
1:18and how that was related how it was
1:21formed yeah absolutely so um so Bankers
1:26for Net Zero was set up as an initiative
1:29uh in the leadup to cop 26 that was in
1:32Glasgow in
1:332021 um uh and it was a kind of I guess
1:37joint venture between company I worked
1:39for volans and one or two other partners
1:41including um an all party parliamentary
1:43group so embedded within the UK
1:45Parliament and really the kind of
1:48thinking behind it was um very simply
1:51that at that time many banks and other
1:55financial institutions were starting to
1:56for the first time set Net Zero
1:58commitments work on their own transition
2:01plans and strategies set interim targets
2:04and for frankly for any bank that is
2:07mature about that process you quite
2:09quickly run up against the issue of many
2:12of your uh your own targets and your
2:15ability to deliver on those targets is
2:17to some extent dependent on policy and
2:19Regulatory change around you and so the
2:23idea behind banks for Net Zero was to
2:25gather together banks that were
2:27committed themselves to achieving Net
2:29Zero not just operationally but for
2:31their financ emissions and to look at
2:34where are those policy and Regulatory
2:37levers or the kind of potential unlocks
2:39that would accelerate progress towards
2:41decarbonizing the sectors that they
2:44finance um so that was that was the
2:46initial idea behind Banks of for Net
2:47Zero it brought together a group of
2:49primly UK based Banks it's it um then
2:53kind of it developed in parallel with
2:55the wider Glasgow Financial Alliance for
2:57Net Zero and became the kind of the UK K
3:00chapter of the um the unbacked Net Zero
3:03banking Alliance and continues to
3:04operate as that and is now um it
3:06subsequently kind of spun out as an
3:08independent
3:11entity and can you speak to the impact
3:14that has had like have there been policy
3:17changes or is it still working on
3:20getting there so it's it's it's
3:23definitely still a work in progress um
3:25and as you will be well aware we've had
3:27a change of government in the UK very
3:29recently and and a very considerable
3:31change in the political will to um
3:36address some key areas of of climate
3:38policy so um so banks for Net Zero has
3:42um basic the way it worked and and
3:44continues to work is identifying
3:47particularly sectors where banks have a
3:50really important stake so so we did a
3:53lot of work um early on looking at the
3:55built environment and um policy around
3:59how you incentivize the Deep retrofit of
4:02homes and buildings to improve Energy
4:04Efficiency and to drive down the carbon
4:06emissions related to the built
4:08environment sector because many many
4:10banks um here like anywhere else in the
4:12world are very exposed to the um built
4:16environment and real estate sector
4:17whether that's lending to commercial
4:19real estate um companies or whether
4:22that's um banks with significant
4:25mortgage books and kind of thinking
4:27about the the carbon emissions kind of
4:29embedded in their mortgage book and so
4:32um so Banks were very keen to come
4:35together and think through what will it
4:37look like for the UK um homes and
4:41buildings sector to get to Net Zero and
4:43and so we worked with the both with the
4:45banking sector but also with
4:47stakeholders from the built environment
4:49um as well as kind of policy makers and
4:52people civil servants working for the
4:53relevant departments to develop kind of
4:56concrete policy recommendations around
4:58how how could you go about decarbonizing
5:01the built environment and particularly
5:03what are the kind of policies that would
5:04help really leverage in um private
5:08capital and private Finance to then
5:10accelerate the the process um if
5:13Government Can kind of give it a
5:14Kickstart um so a lot of kind of
5:17detailed policy work was done on that
5:19issue and and similar has been done for
5:21other sectors like agriculture um but
5:25the the process then of taking that and
5:27turning that into legisl or regulation
5:30or whatever it might be that's needed is
5:33is as I think anyone who's engaged in
5:35the world of political influence and uh
5:38lobbying and policy engagement knows
5:40it's a it's a very challenging it's a
5:42very nonlinear process and um and in
5:45that sense um in some ways it's still
5:48quite early days for some of these these
5:50recommendations it has fed into um kind
5:53of national strategies and task forces
5:55that have been set up but um I I wish I
5:59could um uh point to a specific policy
6:02that has has come through uh directly as
6:05a result of the work the Banks net zero
6:07has done um on that agenda and I would
6:10struggle to do so and yet I think it's a
6:13it's you know it's one factor among many
6:16that it's really important and helpful
6:18for policy makers to be hearing from the
6:20banking sector on these issues because
6:23of the credibility that that Banks and
6:25financial institutions have in being
6:27able to to to get a message across
6:29policy makers that says we want to do
6:32this we you know we want to invest in
6:34this we want to finance this transition
6:37and if you get the policy and Regulatory
6:38mix right then you can unlock an awful
6:41lot of private Finance to uh to come in
6:44behind it so that kind of that
6:46dependency and that potential to um for
6:50uh to bring in private Finance is is
6:52something that is you know is very
6:54important for policy makers everywhere
6:57um but certainly it's certainly true
6:59here in in the
7:01UK yeah so in terms of the the role of
7:06banks versus the role of policy it
7:08sounds a bit like they kind of need to
7:10work in con conjunction but is there
7:12anything like from the banking sector
7:14that you think is more on their
7:17plate yeah I mean I think it it does it
7:20has to be a joined up exercise and and
7:23looking for those kind of synergies and
7:25and positive feedback loops because you
7:27know for for Banks and and other
7:30financial institutions yes of you know
7:32of course they should be doing their own
7:34kind of product and service Innovation
7:36and you know banks have for a while now
7:38been developing things like green
7:39mortgages or um sustain linked loans or
7:43different ways that they can try and
7:45incentivize their customers to um
7:48decarbonize um but the but that's kind
7:52of like that's not going to be enough of
7:54a um of an incentive in many cases on
7:57its own so it so I think is about
7:59finding those instances where you
8:02can you can combine the Innovation
8:05that's coming directly from the
8:06financial sector in terms of we have a
8:08new product or a new service that is
8:10designed to incentivize better behavior
8:12from our from our clients or improved
8:15performance and and you know if you also
8:18have the right policy incentives in
8:19place alongside that then you can start
8:21to see movement at the scale we need um
8:25but the whole reason for for banks
8:27needing to be engaged in the policy
8:28discussion is that nobody nobody thinks
8:31you're going to get to a world where
8:33everyone lives in a net zero home if the
8:36only incentive to get there is you can
8:38get a Green mortgage that is a few basis
8:40points cheaper than a um a traditional
8:44mortgage right that's not that's not
8:46enough of a financial incentive for most
8:49homeowners or home buyers to invest in
8:51the kind of um Technologies and
8:53solutions that are needed to to get to a
8:56net zero built
8:58environment
9:00definitely and going back to the study
9:04and recommendations were there any
9:07specific insights or recommendations
9:11that you would like to pull out that
9:15were that that Shu
9:17you yeah um it's it's a great question
9:22and uh my copout answer is is no because
9:27partly because you know a lot of the
9:29ation was around how you put together a
9:32comprehensive package of um of you know
9:36both sticks and carrots so in if you
9:40think about a sector like the um like
9:43homes and buildings um policies like
9:46Energy Efficiency standards both for
9:48existing homes or and existing rental
9:51properties but also I think quite
9:54crucially actually for for new homes
9:56that get built one of the one of the key
9:58ask of the um retrofits working group we
10:01had was actually was actually not about
10:04retrofits it was about new homes and
10:06saying at the time there was a a
10:08standard under discussion for all new
10:10homes to be built in the UK and the um
10:14discussion at the time was that from
10:162025 um and and this discussion was
10:19happening 3 four years ago from 2025 all
10:22new homes built in the UK would need to
10:24be built to a net zero standard and we
10:26were saying that's crazy the UK's just
10:29signed up to a Net Zero by 2050 Target
10:32new homes being built today in 2022 in
10:342023 are still meant to be here in 20
10:382050 that standard should be brought
10:40forward now because that will actually
10:43incentivize the kind of innovation we
10:45need from all the different actors
10:48involved you know from um uh property
10:52developers but also the people working
10:54on the different Technologies be that
10:55heat pumps be that um different kind of
10:57models of of um insulating homes making
11:01them more energy efficient Etc all of
11:05that um kind of technology and building
11:07the supply chain that happens for new
11:09builds is just as relevant for then
11:11going and retrofitting old homes so the
11:14so I guess there was some stuff like
11:15that that was more about kind of how do
11:17you move the market as a whole and and
11:19using yes a mix of um kind of regulatory
11:23sticks like Energy Efficiency standards
11:26and um uh standards for buildings but
11:28also carrots around um tax incentives or
11:32you know um lower vat for um green
11:36technologies uh um uh and uh kind of
11:39stuff like that that would again help
11:42create a um more of a carrot and and a
11:45positive incentive around uptake of of
11:48low carbon
11:50Technologies yeah that makes sense
11:53yeah um and for sorry sorry goad you
12:00um I was going to mention that you you
12:02had mentioned that the the banks lending
12:05their name and the kind of status that
12:08they have was really important for these
12:09policies are there other roles that
12:12banks have in advocating for policy
12:17changes so I think um yes at least two
12:22others so when we think about any
12:25institution's um political influence
12:27there are different rots for that happen
12:29so one is obviously the direct
12:31engagement that um an institution has
12:34with policy makers but the reality is
12:36even for the largest banks right you're
12:38talking about relatively small teams of
12:40people with pretty limited bandwidth um
12:44there's there's a limit to how much
12:45direct engagement you can do and that's
12:47that's partly where um kind of bodies
12:49like Banks of Net Zero come in to try
12:51and aggregate some of that um but as
12:54well as kind of a a vehicle like Banks
12:57ET that is set up explicitly to do that
13:00Banks like other companies and financial
13:02are also typically members of lots and
13:04lots of different industry associations
13:06trade associations Etc that many of
13:10which will also be weighing in on these
13:12these kind of policy issues on their
13:14behalf and what's very striking not just
13:16in the banking sector but across the
13:18board is many companies and finan
13:20institutions just do not know what a lot
13:22of their trade associations are saying
13:24or doing on their behalf when it comes
13:25to uh climate policy and so
13:29that kind of get for banks to get a
13:32handle on what does their indirect
13:34political footprint look like I what are
13:36their trade Association saying and doing
13:38on their behalf and then to to kind of
13:41take a strategic look at that and go
13:44okay where can we mobilize our trade
13:45associations to lobby for the the
13:47policies we know we need to achieve our
13:49climate goals where are we got issues
13:52where our trade associations are
13:53completely misaligned with us in which
13:55case you know either can we change them
13:57or we need to get out of them and stop
13:59lending them our our credibility and and
14:01paying dues every year so that kind of
14:03issue of banks managing their indirect
14:05engagement um but also you know we're
14:08we're talking here primarily about real
14:11economy policy not about financial
14:13regulation that hits the banking sector
14:16directly there's some of that that's
14:18relevant as well but that means that you
14:21know the reason for banks to do this is
14:23that these policies are necessary in
14:25order for their clients and customers to
14:28to decarbonize and so they Banks can and
14:32should be looking really to team up with
14:34their customers and uh and that's you
14:37know that's an even stronger signal to
14:40policy makers right is when if you have
14:42not just the banking sector getting
14:44behind something but doing that
14:45alongside the in this case let's say the
14:48built environment sector and and coming
14:51together saying we have industry aligned
14:53we have Finance aligned um and kind of
14:56with these with these policies you can
14:59unlock both of those I think that's
15:01that's very very powerful and so kind of
15:04and that's starting to happen in places
15:05and and again Banks init are was that
15:07was partly what we were doing was was
15:09and continue to do is bringing those the
15:11real economy sectors together with the
15:14financial sector um but it doesn't it
15:16doesn't happen enough across the board
15:18that that Banks kind of and and I and I
15:22hope it will as Banks and and other
15:25financi institions
15:26scrutinize their clients transition
15:29plans in more detail or you know as it
15:31first of all it becomes more of a norm
15:33that companies of a certain size need to
15:35have a climate transition plan and then
15:37within that transition plan they need to
15:39be clear about what are the what are the
15:41things they're dependent on including
15:43policy and regulat change and then their
15:45Banks saying okay so if you've published
15:47your transition plan you've told us
15:48these are the policies you're dependent
15:50on let's work together to try and get
15:52that policy and Regulatory environment
15:53right and uh and an enabling environment
15:56for you to deliver those goals and that
15:58so that teaming up between Banks and
16:00their their clients I think is a is a
16:02really interesting area that is
16:05under uh under tapped at the
16:09moment yeah would you say that is what
16:13helps leading companies like take on a
16:15lead leadership role engaging with
16:17climate policy or there other examples
16:20of you know the the banks that are doing
16:22this
16:25right um so I think I mean I think this
16:29whole area is still very nent and early
16:33stage like you know there are some
16:34people who've been thinking about and
16:36working on responsible policy engagement
16:38for decades and credit to them for being
16:42ahead of the curve but most of the both
16:44the financial sector and the real
16:46economy are only just kind of waking up
16:49to this conversation and the and the re
16:52and kind of the realization that their
16:54political influence is an important tool
16:57to to use in order to deliver on their
16:59climate and um and sustainability
17:02targets and goals so I think that um so
17:07that that awareness is only just
17:09building and and in that sense yeah we
17:12need um we need all kinds of different
17:16actors both in real economy and in um
17:19financial sector to be having that that
17:23kind of strategic switch that says not
17:25just as a as a matter of responsibility
17:29we need to make sure that our lobbying
17:31is aligned with the Paris agreement
17:33because that's what NOS want us to do
17:35right but actually saying no we we see
17:38this as as a strategic issue we know
17:40that um in order to meet our own goals
17:43we need things to change and this is
17:45what we're going to do to help bring
17:47about that change and I think that you
17:50know it's difficult to point to
17:51individual companies or banks that are
17:53leading on that right now but I think
17:55that conversation is happening behind
17:57the scenes in an awful lot of ins
17:58institions right now and that's a that's
18:00a positive thing that we need to
18:03accelerate are there other barriers that
18:06are preventing companies to from taking
18:10action I think the the biggest challenge
18:14is resourcing and competing priorities
18:17that um Banks and other companies have
18:20right is traditionally traditionally
18:23partly because an issue like climate
18:25policy has been seen as at best an issue
18:28of responsibility not something that's
18:31strategic companies haven't been used to
18:34investing significant res you know in
18:36terms of like number of people working
18:38on climate policy is an issue compared
18:40to the size of their wider public
18:42affairs or government Affairs team is
18:44has tended to be tiny um and you know
18:48and you do often have dilemmas that need
18:50to be addressed or or resolved in some
18:52way between what a company may want or
18:55need on climate policy you know maybe in
18:58in to some extent in tension with what
19:00it wants on trade policy or on tax
19:03policy Etc and like and again TR
19:07traditionally climate policy has been
19:09that kind of poor sibling who you know
19:10when those things are intention uh gets
19:13um uh doesn't get their way and um so I
19:18think that yeah the biggest barrier is
19:20is how to shift the mindset within Banks
19:23and other institutions that this is
19:26something that is strategic that is
19:28about deliv you know if you if you are
19:30serious about delivering on a transition
19:32plan and that in itself is you know
19:35sometimes a barrier that um um but if
19:38you're serious about delivering on a
19:39transition plan you have to be investing
19:42in doing the policy engagement whether
19:44that and you know whether that is
19:46building a team or or ensuring more of
19:49your government Affairs team is equipped
19:51to deal with climate policy issues in a
19:53serious way doing a kind of strategic
19:55review of what are your trade
19:56associations doing in this space you
19:58know all of that does require people's
20:01time and and often budgets and stuff
20:04like that and that can often I think be
20:06the the barrier and um but the the
20:09unlock for me is you know as soon as a
20:10company sees this as
20:12strategic it becomes a lot easier to
20:15invest the resource in doing
20:19it yeah and you actually recently
20:22published a report on the role of trade
20:24associations in accelerating climate
20:27policy can you speak to them that and
20:29also why they're such important players
20:31in the policy
20:33ecosystem yeah so um so yeah we have a
20:36an ongoing project looking at how do you
20:38mobilize trade trade associations as a
20:40Force for good and the the reason for
20:42looking at that is precisely because um
20:46for most companies and same will be true
20:48for banks investors any institution
20:52however big you know even if
20:54you're um Apple like you you only have
20:57so many um lobbyists yourself right so
21:00for most companies most of their
21:02political influence and policy
21:03engagement happens indirectly via these
21:06industry associations and for big
21:08companies they're often members of
21:10hundreds and hundreds like we we've done
21:12um industry Association reviews for for
21:14some companies where you know
21:16multinationals they'll have 500 600 plus
21:20trade Association memberships all over
21:22the world so that that kind of the
21:24indirect political footprint that
21:25companies have is is massive um and at
21:28the same time therefore trade
21:30associations the big ones are often very
21:32very influential whether you know
21:34whether they engage or not on climate
21:35policy as a different issue but these
21:38are um these are organizations with a
21:42track record and with kind of the
21:44institutional knowhow the networks to
21:47really engage very effectively with
21:49policy makers and to and so I think it
21:53would be a kind of big mistake for those
21:55of us that want to shift the world in a
21:57sustainable Direction ction to to ignore
22:00that huge kind of political power base
22:03there um which which I think with with
22:05enough nudging and probing in the right
22:08places can be mobilized as a as a Force
22:11for good and and we can get trade
22:14associations to go and and Lobby for
22:18these the kind of policies we've been
22:19discussing that will help the companies
22:21they represent to deliver on very often
22:24on the stated goals those companies have
22:29and how are these trade associations
22:31engaging in climate policy or what needs
22:34to happen for them to affect more
22:37positive change so so in the in the
22:39report we published very recently we
22:41kind of um talk about four different
22:43types of trade associations in terms of
22:45how they engage on climate policy so you
22:47have what we would call accelerators
22:50which are you know very often trade
22:52associations that either represent a
22:54sector like let's say renewable energy
22:56that is very very Progressive on climate
22:58policy and it's core to the Mandate of
23:00that trade Association that they push
23:03for more ambitious climate policies and
23:05it's kind of like it's very
23:07straightforward um and those types of
23:09associations you know they're they're
23:11lobbying for the right things and and
23:13all they need or like all the support
23:16they need is is we need more companies
23:18to join them we need kind of um uh more
23:21companies to lean in and and kind of um
23:24give weight to their messages so that's
23:26like that's one easy group then the
23:28other end of the spectrum where often a
23:30lot of the focus of the conversation is
23:32is you have some trade associations that
23:34that are just blockers and always will
23:36always have been always will be like um
23:39you think of groups in the US like the
23:41US Chamber of Commerce that just has
23:43such a long track record of being
23:46totally obstructive on climate policy of
23:49every sort at Federal level at um
23:51subnational level and there you know
23:54there's been a very strong call from
23:56many NOS from many Camp campaigners to
23:59say to big companies if you're a serious
24:01about climate you just have to leave the
24:02US Chamber of Commerce um because
24:04there's no way you can drive this
24:06alignment but then in between those kind
24:09of the the two ends of the spectrum you
24:11like is where I think the lot the
24:13interesting work needs to happen is you
24:15then have a whole load of associations
24:18that would call we would call sleeping
24:19Giants which are massive industry
24:22associations with huge political
24:24Footprints but that just don't really
24:26engage on climate policy issues because
24:28traditionally they haven't seen it as
24:30being part of their mandate um and uh
24:34you know and so that's you know that's
24:36true across sectors like consumer goods
24:39and Retail across the tech sector it's
24:41true for a lot of financial sector
24:43industry associations importantly that
24:46they've just they haven't engaged on
24:47climate policy tradition yet and I think
24:48that's where there's a real opportunity
24:50for the companies and the and the banks
24:53and financial inss that are members of
24:54those trade associations to go and say
24:57hey you haven't been engaging on climate
25:00policy we and the other members here we
25:03have our own um policy agendas we have
25:05our own Net Zero targets we need you to
25:07up your game and get active on this
25:09agenda and I think if we can kind of
25:11wake up that piece of the trade
25:13Association landscape that could be
25:15hugely powerful um in in tipping the
25:18balance and then there's there's another
25:20kind the fourth category which is also
25:22in the kind of a grve zone is there are
25:25a lot of trade associations that are
25:26quite conflicted on climate partly
25:28because of that issue of you know there
25:31are real dilemmas here right sometimes
25:33climate policy is in uh is in tension
25:37with the goal that all associations have
25:41to defend the competitiveness of the
25:42businesses or Banks they represent right
25:45if and if the discussion is this climate
25:49policy is going to increase costs for
25:50our sector and you know those costs
25:53can't be passed on to customers that's
25:55going to be problematic for the
25:57competitive in the seor OR you know
25:58there the regulatory burden here is is
26:00too high and um and so you have a bunch
26:04of associations that therefore often
26:06kind of have send out very mixed signals
26:08in that they'll say some very positive
26:10and constructive things about climate
26:12policy but then when you get into the
26:13Weeds on some of these issues they can
26:16they can often take more obstructive
26:18positions because of that sense that the
26:21the the policies that are necessary for
26:24climate seem to be conflicting with
26:27their kind of mandate around
26:29competitiveness and I think there again
26:32that's actually a group of associations
26:35that has the potential to be really
26:37powerful on climate policy if the
26:41maturity can evolve from a situation
26:43where when you have that traditionally
26:46what's happened is when you have that
26:47tension what happens is the association
26:51says we said all that nice stuff about
26:53climate but actually you know now we
26:54have a real competitiveness issue and so
26:56forget all the stuff we said about
26:58climate um whereas actually if those
27:01associations can become sources of good
27:04ideas for how do you how do you resolve
27:07those dilemmas in a way that is that
27:09means you optimize both the climate
27:11outcome and the economic outcome that's
27:15like that's what the world needs that's
27:16what policy makers are looking for and
27:18actually some of these associations
27:20potentially have huge credibility if
27:23they can if they can be persuaded to do
27:26some of that harder work of of
27:28saying we recognize there's a dilemma
27:31and we're going to really try and come
27:32up with constructive ideas for how we
27:35resolve that
27:39Dila amazing thank
27:42you are there any final points you'd
27:44like to add or a message to leave us
27:48with
27:50um no I mean I I think my main message
27:54is I think this is a fantastic um uh
27:57challenge to be setting and I'm
28:00delighted to talk to you about it and
28:02very excited to see what comes out of it
28:04because I think this is a a really
28:06really critical area and you know um
28:10that report we wrote the project we're
28:12doing on mobilizing trade associations
28:13for good like we're doing it because I
28:15think this is a this is an area that is
28:18going to be super exciting in the second
28:20half of the 2020s in terms of where
28:22where in the kind of wider world of
28:24corporate sustainability is innovation
28:26happening I think a lot of that is going
28:28to be around companies using their
28:30political influence for
28:33good totally agreed thank you so so much
28:37my pleasure

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