The future of environmental, social, and corporate governance: ‘It’s not about ticking a box.’

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Alain Bejjani
Chief Executive Officer, Majid Al Futtaim Holding

Neil Brown
Managing Director, KKR Global Institute and KKR Infrastructure

Chris Hulatt
Co-founder, Octopus Group

Kristen Siemen
Chief Sustainability Officer, General Motors

Kristen Weldon
Managing Director and Global Head of Sustainable Investments, BlackRock Alternative Investors

Eugene Willemsen
CEO Africa, Middle East, and South Asia, PepsiCo


Mustafa Alrawi
Assistant Editor-in-Chief, the National

MUSTAFA ALRAWI: Thank you for being with us today. That was a very forthright discussion that we had just now. Thank you to Dan for hosting that. We’re going to have about 40 minutes now where we’ll be talking about the future of [environmental, social, and corporate governance (ESG)], a very dynamic conversation that we expect to whether ESG is going to keep its momentum and move forward, given some of the events that are happening at the moment.

Before we have a panel discussion, just so you know the format, I’m going to have a one-on-one discussion with Alain Bejjani, who’s the chief executive officer of Majid Futtaim Holding. So I would really appreciate it if you could join me in inviting him onto the stage. Please join us. Thank you. (Applause.) Good to see you. Thank you. Thanks for being with us, Alain.

ALAIN BEJJANI: Thank you for having me. It’s a pleasure.

MUSTAFA ALRAWI: So, as I mentioned, ESG, a hot topic of conversation, in particular last year when we had the COP-26 meeting in Glasgow. Many, many corporates were discussing how they would achieve their targets, and put it at the center of their businesses. I’ll offer you congratulations first, because Majid Al Futtaim has definitely been a leader when it comes to ESG in this region in particular, especially on the environment side. And for those in the audience, I’m sure they’ve all had various interactions with the group across a number of your operations. But maybe from your point of view, the top-down point of view, we could hear how ESG had been, and in particular the social and governance side of things?

ALAIN BEJJANI: Sure. Thank you very much. I would say ESG is really about getting your—getting your fundamentals right. And we have seen how the discussion evolved. And you mentioned Glasgow. But also, what’s happening around the world today with the issue around fuel, the issue around the transition, what does it mean, and the impact that we’re all having as organizations, whether private sector or public sector.

As a private sector organization, it’s very important for any company to actually be, I would say, a real player in the context of stakeholder capitalism. It is—it is an obvious thing that the name of the game is stakeholder capitalism. It’s not anymore just creating value to shareholder. It’s not anymore about, you know, the business of business is actually business. There is a wider responsibility that we have to deal with. And that is about the fundamentals of our business. This is where the S and the G come into play.

It’s true we’ve been focused on the E to a large extent in the past, but the social impact and the governance impact are very important because these give you real sustainability to your business. The fundamentals—when I say “getting the fundamentals right,” I mean how do you impact your environment in a way that actually makes a difference? How do you become part of the fabric of the environment that you operate in? How do you strengthen that fabric?

I’ll give you an example. Majid Al Futtaim, for example, made the pledge a few months back now, three, four months back, to, for example, hire 3,000 UAE nationals in the company in the coming five years. And we have been moving ahead on that pledge. We already have had about 500-600 people in the past few months. What does this mean? Other than the competitiveness side, it is really about how do you impact the society and the community that you operate in? And that is something that you have to do across the board, wherever you are.

How do you actually deal with your people? How do you make sure that the talent, the human capital that you have, is actually an added value, and people feel that they belong to you, they feel that actually they can entrust you with some of their lives because, in reality, when you are—when you work in a company, let’s say, you are rewarded for the efforts that you put in. But you’re not rewarded for the time that you spend. And this is a very important time of our life. The only reward that we can give people to attract them, to give the organizations the ability to continue to thrive, is actually by people having a fulfilling experience. This is the S side of things, the essence of it, I would say.

And then, of course, governance. Making sure that you have the right governance framework in order to manage risks appropriately and make sure that you don’t get into a situation where you are either mismanaged or, I would say, overly exposed to risk where you shouldn’t be exposed to risk. And, you know, studies across the globe have proven that companies that had—that are well-governed—OK, if you look at S&P Global and other specialized, I would say, organizations that look at this. Organizations that are well-governed, that are committed to ESG, et cetera, have a better and more sustainable financial performance than other organizations.

This means transparency. This means independent view into your business. But this also means better outcome, more sustainable outcomes. And from a measuring standpoint, we are in a situation where we need clarity, globally and also regionally, in terms of what’s the S and the G. How do we measure that? What’s the framework? We don’t have yet a global framework to measure them. And I’d like to say that Majid Al Futtaim was one of the very first companies—global companies.

There were 61 companies that started—that signed up the WEF Stakeholder Capitalism Metrics, because we are going to be measured not only against the typical measurement tools that currently exist—being low risk, et cetera, et cetera—but we’re also going to be measured about other global companies. And investors are going to be able to say, oh, this is how Majid Al Futtaim is faring against X global company, Nestle, for example, or others who have joined us on this—on this topic.

So it is very important to give—to measure properly, to disclose properly, to audit what you do so it’s not only your word against the world. It’s actually third parties that are coming in, looking at what you’re doing, saying: This is what you have actually done versus what you have actually said. Because this will give also third-party investors, whether they are debt bond investors, whether they are equity investors, the ability to invest with their eyes wide open knowing where they are putting their money. And this gives you, as an organization, the ability to diversify your sources of investment, to diversify the market that you can tap in.

This is what allowed us, for example, at MAF to start in October 2019 the largest, I would say, global benchmark in terms of green sukuks. We did two issuances in October 2019 of $1.2 billion. That actually got us investors that wanted to make sure that they invest in organizations that actually—it’s not about what they do, it’s about how they do it as well. And a lot of people globally want to, because they’re aware of the importance of what they do. They want to make sure that their money is being invested in the right vehicles, in the right organizations, on the right projects.

But they want also to have some objective ways to measure that, to make sure that, yes, I am really putting my money where I am told I am putting my money. I think it’s very important. It’s very important to be transparent. It’s very important to say what you do and to do what you say. But also, to have someone that comes and says what’s actually up. This is what it is.

MUSTAFA ALRAWI: I think that, from what you’re saying—and correct me if I’m wrong—but given that you’re the chief executive, the major difference with where ESG is going as a trend now with corporations, unlike CSR or even marketing or PR lines that we talk about, community engagement and other things, is that as the leader of the business you’re very much involved in how ESG fits into your strategy and into your—the execution of that strategy.

ALAIN BEJJANI: I would say I’m very much involved about how my strategy and our business fits into ESG.

MUSTAFA ALRAWI: It’s the other way around?

ALAIN BEJJANI: It’s the other way around. Because you cannot squeeze ESG into what you do. You have to accommodate ESG in what you do and make sure that the way you go about things is actually environmentally friendly, socially responsible, and properly governed and transparent. It’s not about ticking a box. It’s not about saying, well, that’s what we’re doing and from an ESG point of view this is how it looks like. It’s about really remodeling, reengineering, redefining your priorities in order to make sure that what you do is as important—how do you do things is as important if not more important than what you do.

Because what you do, you can do it once. But if it’s not sustainable, it’s worthless. You don’t really create value to your shareholders. You don’t create value to your stakeholders. You don’t create value to your team members. You don’t create values to your employees. And you don’t add value to the environment that you operate in. And we know how much the world today needs us to put back into the environment more than we take away from it.

We know how much we as individuals want organizations that we cooperate with, that we work with, that we work for to add to our lives as much as we are adding to their lives. And that’s the only way in 2022 forward to actually attract talent and to be competitive in any market. Some people may be more or less aware of the importance of it. But the reality is, it’s a matter of time. It’s a matter—it’s not a matter of if, it’s a matter of when.

MUSTAFA ALRAWI: I mean, I would finish with this, because we are running out of time, unfortunately. But I would say, you mentioned transparency a little bit earlier.


MUSTAFA ALRAWI: If working around ESG with your business has improved levels of transparency, do you see that having a knock-on effect across the corporate sector in the region?

ALAIN BEJJANI: So I would say I’d love for it to be the case. I think there is more and more awareness. And I think the region needs to be move from being aware of the importance to actually move into, I would say, action and being willing to do what it takes. At Majid Al Futtaim, we’re fortunate because we have always—we have been brought up as an organization, our DNA is although we are a privately owned company, we are fully transparent. Whether it’s about our financial performance, whether it’s about everything that we do. I think we disclose more than public listed companies do.

So transparency for us is actually a strength that we would like to use more. And we would like to actually invite others, we would like others to actually role model what we try to do, to show people that actually private sector companies do not need to be actually closed, do not need to be discrete. They can be very transparent with what they do. And you’re still—you’re still master of your own destiny. You can decide what you want to do. You can make long-term bets versus short-term requirements. It’s OK. There is nothing wrong by saying, I’m doing this for this reason, and by being transparent.

What’s important is that we move in the region from now, which is good level of awareness about the importance of it—that wasn’t the case, I would say, a few years back as much—to actually being willing to do what it takes in order to make it happen in a sustainable way. This is in everyone’s best interest. We’ll create more value. We’ll grow our economies and will create a much more vibrant place that will attract—not only grow local talent but attract global talent as well. And I think Dubai is a great example of that.

MUSTAFA ALRAWI: Well, we’ve run out of time for this conversation. ESG, it seems, does help you build resiliency into your business, which is extremely important in this day in age. Please join me in thanking Alain Bejjani for his time. Thank you, Alain. (Applause.)

ALAIN BEJJANI: Thank you. Thank you.

MUSTAFA ALRAWI: Thank you so much. Yes, see you soon, I hope. Thank you.

Well, we’re still going, stilling talking about ESG. We have a panel that’ll be coming up onto the stage in a moment. I’ll make my introductions once they’re here and we get going into the conversation because, as I said, we don’t have a lot of time left and I need to give up my seat, actually. Please.

OK. So this is the last panel discussion before lunch, I think. So we’ll make it—we’ll make it the best one yet, for sure. Thank you so much. I’ll get straight into it, because, as I said, we’re kind of on a tight schedule here. But we want to drill down into ESG. We want to talk about it not kind of theoretically but in terms of in practice. And we have a panel here that has a varied experience and really is on the frontlines of what is happening.

I mean, perhaps the first thing I could talk about, if I’m able to get Neil Brown’s thoughts from KKR, is to understand, you know, do you out-perform with ESG competitive investors or funds that do not use ESG?

NEIL BROWN: Yeah. It’s a—oh, there we go. Can you hear me now? OK. Absolutely. I mean, it’s actually a pretty easy answer, a straight “yes.” We formalized our ESG program in about 2008 or so. We have a lot of data now. And what you see is with a rigorous ESG program embedded in our funds and in our companies, you’re more responsive to customers. You’re more responsive to employees. You’re more responsive to shareholders. And the data showed that this distinction out there between so-called shareholder capitalism or stakeholder capitalism is just a false divide. Actually, you produce much better returns for everybody when you embed it. But the key is to make it real. It needs to be measurable. It needs to be verifiable. And it needs to be transparent and reported.

MUSTAFA ALRAWI: So the transparency and the measurement, very important. Kristen Weldon from BlackRock, if I could bring you in here. Do you share those opinions?

KRISTEN WELDON: Absolutely. So thank you for identifying me by my surname as well, because I think there’s two Kristens up here. But absolutely share the same view. About two years ago we identified that there was going to be this tectonic shift in assets—in sustainable asset management. And I think we’ve seen that now in terms of about, you know, $4 trillion invested sustainably. And that really underlies the view that we have, that better integration of those factors that Neil just mentioned ultimately leads to better investment performance. And I think the reason really for that is because we look at that integration truly as a risk management tool. So being able to identify ESG risks and opportunities that are financially material results in better long-term performance and more resilient portfolios.

MUSTAFA ALRAWI: Thank you. Chris Hulatt, Octopus, you’re on both sides. You’re an investor, but also, you know, you’re raising money as well. So, you know, how do you see this particular issue?

CHRIS HULATT: Yeah, absolutely. I think there are two quite different lenses to look at this through. So for us increasingly, when I speak to institutions around the world now it is not just what we do that matters, it’s how we go about doing it. I think people really care about the values that organizations have. When I meet pension funds, I talk particularly about what do we care about? What matters to Octopus? You know, for us as an organization, we recently became something called a B Corp, which has been really important to us. There are very few B Corps around. They are businesses that have changed their legal status so that they are very purpose-driven in how they go about doing things. And that, to me, is a real differentiator.

Those sort of values are so important in demonstrating what do you care about, how do you do things. For us, everything we look at is through the lens of not just our customers or our staff but the environment, the communities we operate in, and our shareholders. And I think that gives us a perspective that is really important. When I look at ESG, I think one of the real challenges is it shouldn’t just be sort of box ticking. How do you bring it to life? That is when it becomes really powerful, and that gives you things that you can talk about with your clients. And I think it also means that you think about the underlying projects very differently when you’re looking for that extra angle.

MUSTAFA ALRAWI: So we have an investor point of view. And Chris, obviously, sits, you know, on kind of both sides. But we also have a consumer kind of corporate voices here today. So I’ll kind of broaden the conversation out to them. So, Kristen Siemen is from GM. You’re here from the states, from Detroit. ESG is your, you know, absolute day job. And so, you know, from your point of view, where does this conversation—when it’s investors, when it’s companies, what’s the most pertinent kind of aspect of it right now that you’re aware of?

KRISTEN SIEMEN: Sure. Thank you. I mean, ESG, we—in fact, Kristen and I were talking outside the room—that umbrella’s getting bigger and bigger, of what’s falling under that umbrella. But I think at the highest level, if you look at traditionally companies, and GM included, we had a lot of focus on what was happening from an environmental standpoint. Spent a lot of time, you know, on energy efficiency, water efficiency. As we’ve broadened our view of what sustainability is and what falls under there, it really encompasses not only what we do but how we do it. And, you know, things like our product quality, product safety, you know, community engagement, involvement, just transition—you could go on and on about the things that are under there.

But I think the important thing is consumers and employees care about how a company operates and how they accomplish their goals and how they put a product into the market. And so that focus, and really looking at it from that lens of how do we address the challenges that are out there around climate change and around making sure that there’s, you know, equality and opportunities in everyone is really important. And the consumers care, so it ends up being a positive for the company, for the employees, for investors. You talked about resiliency and, you know, how a company responds.

MUSTAFA ALRAWI: Thanks, Kristen. I think more than ever today stakeholders want to be engaging with a good corporate citizen. Eugene Willemsen, you run Pepsi in the region. I’ll bring you in. I mean, very much, I think, you know, from Pepsi’s point of view I would assume that given governments are looking at policy when it comes to sustainable initiatives and other aspects of ESG, kind of your—from the private sector point of view, but also Pepsi—I assume you want to be at the forefront of that. You want to be engaging with this trend.

EUGENE WILLEMSEN: Yeah. We absolutely want to be at the forefront of it. We’re the leading food and beverage company across most of the markets in Africa, Middle East, and South Asia. So we also see such a responsibility for us to lead also from an ESG perspective. And within that context, we launched about a year and a half ago our end-to-end transformation across the entire value chain, which is pep+. And it actually touches on many of the points that Neil referenced earlier. Clearly it’s measurable, it’s very transparent. But I’d like to add one element, which is end-to-end, right? Because for us also being a company that has a massive agricultural footprint, it’s really important that we touch the entire value chain.

We’ve committed ourselves to measurable and very aggressive targets. So, by the year 2040, we want to be a net-zero company across the entire value chain—so both scope one and scope two, but also scope three activities.

We also want to become a net water-positive company, which means that within our four walls we’re going to do whatever we can to minimize water usage, but also we’re going to deploy our techniques and our know-how to save water beyond our four walls, whether that’s with the farmers that we work with or whether that’s with other farmers that we don’t directly work with, and we have a couple of great examples, actually, here already in the region. One of them I saw recently in Riyadh. We have a big snacks factory in Riyadh, and through a partnership that we have with alfalfa growers, which is not a crop that we’re using, we’ve been able, actually, to turn that facility into a net water-positive facility by saving water that these farmers were using for their crops, leveraging our technologies.

So, for us, absolutely critical it’s measurable. It’s transparent. That’s also what our stakeholders and our consumers demand from us, and we have very aggressive and ambitious targets that—and that’s the last point I’d like to make—the entire organization top to bottom has fully bought into and also has in their objectives to deliver on.

So it’s part of my objectives as the CO for Africa, Middle East, and South Asia to hit my objective when it comes to all the elements that fall under that positive.

MUSTAFA ALRAWI: I mean, clearly, we can see that by adopting a lot of these strategies there is going to be a long-term impact and a good one, hopefully. But, you know, we live in—you know, someone said yesterday, you know, we got to live in the real world, and in the real world short-term factors come into play all the time, some harder than others, whether we’re talking about geopolitical or otherwise.

I mean, Neil, KKR is a long-term investor. But how do you marry the long term with the immediate short-term noise but also ensuring that, you know, you’re keeping to your ESG goals?

NEIL BROWN: No, it’s a good question. I think the key is that ESG is not something that you add on to an investment. It’s not something you add on to a fund. You know, we’re managing around $470 billion these days across all asset classes and what we see is that every company should incorporate it into just the culture, as Eugene talked, from top to bottom and into measurable results, and every company can make a difference, and if they can make a difference they can also produce better returns.

And so, you know, I think we have to remember that—you know, we’re co-hosted here with Atlantic Council talking about energy, thinking about ESG and the energy transition—it’s hard work, right. Like, this is not puppies and rainbows. Even within the renewable sector, thinking about issues such as conflict minerals in the supply chain. You know, Eugene mentioned end to end. How do you get confidence that the decisions you’re making that could be good for climate may not be good on other ESG factors?

So you need that view. You need to do the work to make sure that you have that plan in place to make the product as ESG friendly as possible.

But then there’s also the other side of our economy, which are browner or more polluting assets of all sorts. That’s true it’s a(n) upstream oil and gas. That’s also just true, let’s say, in chemicals or whatever it is. We have to decarbonize those industries. That’s really hard work. As an investor, it’s always easier to say, oh, I’m just not going to do that investment, right. Leave it to somebody else.

But if we’re serious about these ambitions we need to do those investments. We need to put in the plans to decarbonize, to introduce more diversity. We need to be held accountable. We need to be transparent. But that, to me, is the next wave of how we’re going to have a more active ESG-friendly investor community, going forward. I think we’re going to move beyond the simple labels that, I think, have dominated the last few years.

MUSTAFA ALRAWI: Kristen Siemen, you were nodding when he was talking about—Neil was talking about the long term. And then, of course, you’re a publicly-listed company and so, you know, a lot of short-term considerations. So how do you manage that?

KRISTEN SIEMEN: Yeah. I mean, I think the long-term goals are important, right. I mean, you have to start somewhere. If you look at our renewable energy goal, we set—you know, five years ago we set a goal that we were going to be a hundred percent renewable energy by 2050, and two years later said, you know what, we can do it by 2035, and then last year, we accelerated that to 2025 in the US. You know, and so by setting that long-term goal you get started, right.

You have to start some somewhere, and so whether it’s, you know, our carbon neutral goal for 2040, we’ve got a goal or a commitment to be—eliminate tailpipe emissions from our light-duty vehicles by 2035, that’s a long way off. You know, short term, though, we’ve got a product portfolio in place that takes us down that path. We’ve committed, you know, over $35 billion by 2025 with AVs and EVs, 30 new EV models by 2025.

So that I think you see those short-term progress and then you set the long-term commitments so you start seeing yourself get down that road to be there. It engages your customers, engages your employees, and, I think, really sets you up for success in the long run.

MUSTAFA ALRAWI: Kristen Weldon, you run sustainable investments at BlackRock. Is sustainable investment by its nature always long term?

KRISTEN WELDON: Well, certainly, in my role it is. So I’m responsible for sustainable investing across our alternatives platform so actually in quite a similar position to Neil. So we manage over 300 billion (dollars) across a set of alternative asset classes, and it’s imperative that we take that long-term approach. So I understand Kristen’s point. I think that you need short-term metrics in between to measure and make sure that you’re on the right path. But the long-term approach is critical to make sure that you see that over the lifetime of an asset.

So we’re integrating sustainability factors from origination, through due diligence, but probably most importantly, through that value creation mechanism that happens in the private markets. Therefore, you can apply that lens and, hopefully, have better sort of exit for that company when you eventually come to sell because you do have that long-term perspective.

MUSTAFA ALRAWI: I mean, Chris, Octopus Group, it seems you’re living up to your name; I mean, tentacles in lots of different companies. And your measurements, your—what you have to measure your business by, the fast-growth startup, are completely different. I mean, you may not—I mean, forgive me, but I mean, long term might be too optimistic, right?

CHRIS HULATT: I guess it depends on different parts of the business. We have a venture capital team that is investing in backing hundreds of entrepreneurs where how quickly they can grow over two or three years is really important. But equally for us as a renewables investor, we’re looking at building assets that will last 25, 30, 40 years.

But the bit that is really powerful is you now have this confluence of investors wanting to put capital into this sector while at the same time you have organizations like GM wanting to use that power. So that’s when it’s really powerful. It’s when you have demand for the off take and demand for the capital.

Our pension fund class in the UK at the moment is saying, how can you double the size of our portfolio. You know, energy security in Europe is such a fundamental issue. The UK government will be updating its energy strategy soon, and building renewables as quickly as possible is a really important part. So these are long-term assets.

But why does it take years to build a wind farm? Well, it’s because there are so many bureaucratic steps that go between an investor expressing interest and being able to start building it. How can you compress that schedule and allow capital to make a difference more quickly?

And just touching on the point about—that, I think, you were making around, you know, how to get engagement. Well, to us, it’s trying to bring communities along with you. If you just build a wind farm next to a village without really giving them any opportunity to share in the benefit of it or understand why it’s being done, then that doesn’t work very well in the UK and in many other countries.

But if you allow communities to maybe access the power from the wind farm at a reduced rate then you get buy in. If you go to a place like Australia and you go to the Northern Territories and you work with communities to wean them off diesel-powered electricity generators by building solar in those communities, then you have a story which investors really want to do, incredible ESG credentials, but massive impact on those communities.

MUSTAFA ALRAWI: Thanks, Chris.

I’ll go to Eugene now because, I mean, Pepsi’s, you know, quite an old company and you’ve sort of seen consumer tastes change, corporate landscapes shift. In your—from your, I guess, your corporate point of view, is ESG here to stay? Is it something that we’ll still be talking about—hopefully, we’ll all be back here in 10 years—we’ll be talking about that still and how it’s moved on? Are you confident in that?

EUGENE WILLEMSEN: Yeah. No, absolutely. I think there’s only one way for a company to be a sustainable company and provide sustainable returns to its shareholders and other stakeholders, which is by truly embracing ESG, and if you look at the—that positive strategy, for us, that’s an integral part of our overall business strategy. So it’s not something that is an add on. It’s an integral part of how we conduct business, how we do business.

But, in all fairness, it’s also—if you look at the targets that we put out there, those are really ambitious targets and it will require a lot of collaboration across the value chain and also participation from other stakeholders, including governments, to collectively help us achieve those targets.

So just on the topic of energy, as an example, in many of my markets, you know, purchase power agreements still are a challenge and that, for us, is critical in order to move to renewable electricity, just as an example. So it’s absolutely here to stay. I think there’s a lot of heavy lifting that will come from corporations like ourselves, General Motors, other corporations, that have committed to bullish targets. But we will need to have other stakeholders also lean in in a very meaningful way and we need active participation from governments to put the right legislative framework in place but also create the right infrastructure for us as companies to deliver on those commitments.

MUSTAFA ALRAWI: Thank you. For the rest of the panel, I guess it’s the same kind of point. Will we—I mean, Kristen Siemen, this is—you are ESG at GM. I mean, will you still be ESG at GM for years to come?

KRISTEN SIEMEN: Well, I can’t do it alone, right. I mean, like you said, it’s really integrated into our culture and I think that that’s an important part. You know, we talk about it at General Motors. It’s just like safety and quality. It’s not an add on. It’s part of absolutely every person’s job of how you look at it.

I loved your discussion around the community because it’s another area that we feel very strongly about is whether it’s where our facilities are working with the communities on what they need that facility to provide and how it interacts with the environment in that space or how this transition, in our case, to an all-electric future doesn’t leave somebody behind.

We talk all the time—our mantra, our brand, is is everybody in because we know we can’t do it by ourselves. It takes policy. It takes our dealerships, our customers, governments, et cetera, to really make that transition real and also to make sure that nobody’s left behind as that transition occurs.

You know, these major transformations have a history of leaving communities behind, particularly communities that are disproportionately affected by climate change. And so doing a lot of work to—around equitable climate action to make sure that that doesn’t happen. So, you know, like you said, at Pepsi ESG is not an add on; it’s part of our culture. It’s integrated into—our cultural goals, our business goals, our ESG goals are, really, all the same.

MUSTAFA ALRAWI: Neil, do you expect to be making investment decisions for a long time with ESG factors as part of that process?

NEIL BROWN: Yes, but I think that, over time, I hope we get to a place—I think we’ll get to a place—that you don’t even call it ESG investing. You call it just investing. And I think that, you know, today, there’s a lot of speculation of whether the current situation we’re in with energy shortages, with the conflict—you know, there’s this question out there that, you know, did Putin kill climate kind of thing. You know, there’s speculation out here. The same things were—the same questions were asked at the onset of COVID as well and how would the world respond, and what we saw was an actually—an even stronger move towards ESG, towards climate.

I’m hopeful that in the broad space that some of the tribalism we’ve seen on climate versus fossil fuels, on ESG versus whatever else—I’m not even—(laughs)—sure what the right phrase is—that some of that tribalism gets bridged in our current moment of crisis, that we realize that on the environmental side, on the climate side, that energy reliability, security, and affordability are the foundation upon which sustainability is built, and then on the more traditional side, on the fossil fuel side, that you don’t sort of go out and gloat, say, you know—and, you know, come from the US—you know, drill, baby, drill sort of thing—that the pendulum will swing back and that the investment decisions that do need to be made today to increase production are done in the most sustainable way possible. And if we can get that kind of pragmatism back into the debate, I think that we will, I think, come out of this current crisis even stronger.

MUSTAFA ALRAWI: Kristen Weldon, do you think that sustainable investing will just be investing for you?

KRISTEN WELDON: Absolutely. So I think Neil took some of the words right out of my mouth. But we identified sustainability as our new standard, going back now probably two years, and I think, in time, it’ll just become part of what we do and, hopefully, my role won’t exist and it’ll become integrated throughout all parts of the investment process.

I think Neil raised a point earlier as well where it can’t be done in tandem with taking into account traditional factors as well. It is part of that investment process. It’s part of due diligence, and the longer that we go on like this the more inherent it will be to the investment process and we won’t have to separate it as a separate ESG integration or sustainable investing process, full stop.

MUSTAFA ALRAWI: Chris Hulatt, the last thought with you on that subject?

CHRIS HULATT: Yeah, absolutely. Well, I agree what the others have said. But, to me, we now need to take this forward. So when I look at the kind of formal documentation or reporting that we prepare and for us in this industry where ESG is such an important factor, my concern is that this becomes these ESG documents reporting we send to our clients are almost designed to be weighed rather than read, and I think that is, you know, a shame and a mistake, and what we really need to do is get engagement sort of bottom up.

You know, one of our big pension fund clients has 9 million underlying members in the UK, normal people, and what they really want is to communicate to those 9 million people that a sliver of their money is invested in, say, a wind farm in the middle of the UK or a solar farm in Spain or whatever. And for that, they don’t need ESG reporting. Really, what they want is a forty-second TikTok video. That is almost a more powerful way of communicating the value of that capital, and when you have that bottom-up engagement combined with the attitudes of the institutions and the corporates, that’s when change really happens quickly and it’s very sustainable and permanent.

MUSTAFA ALRAWI: I hope the discussion that we had today would make a good argument that ESG isn’t just, you know, PR. It’s not just, you know, touch points on a press release. But I think we can see from these brilliant people here and also the other brilliant people working in the sector that it really is something that will have a very positive effect for all of us.

So please join me in thanking our panel for today’s discussion: Eugene Willemsen, Kristen Weldon, Kristen Siemen, Chris Hulatt, and Neil Brown. Thank you so much.

NEIL BROWN: Thank you for having us.


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Image: Crews pump out flooded streets after heavy weekend rain flooded the Sea Pines neighborhood in Lantana, Florida on October 27, 2020. Crews continue to pump millions of gallons of water out of the development. [GREG LOVETT/]B1 Cp Wpb 102920 Climate 01