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Lindsey Hall: Hi. I'm Lindsey Hall, Head of Thought Leadership at S&P Global Sustainable1.

Esther Whieldon: And I'm Esther Whieldon, a Senior Writer on the Sustainable1 Thought Leadership team.

Lindsey Hall: Welcome to ESG Insider, an S&P Global podcast, where Esther and I take you inside the environmental, social and governance issues that are shaping the rapidly evolving sustainability landscape.

In today's episode, we're bringing you more key themes from our on-the-ground coverage of the GreenFin conference in New York. This event is hosted by GreenBiz Group and S&P Global Sustainable1 was a sponsor.

So Esther, tell me, who did you talk to? And what did you hear?

Esther Whieldon: This was my second year attending GreenFin, a conference all about accelerating sustainable finance for both climate and nature. Data and disclosures were a big focus this year with an emphasis on improving the quality of disclosures and scenario analysis.

And I heard more discussion this year about how to decarbonize emerging markets and hard-to-abate industries. I also heard how these topics are prompting an evolution in the role of sustainability professionals and driving a need for greater internal collaboration.

We look for these issues with today's guests. We'll hear key themes about advancing the pace of the low carbon transition with Kristina Wyatt, Deputy General Counsel and Chief Sustainability Officer at carbon accounting software company, Persefoni.

We'll get the perspective of a financial institution from Samantha Norquist, Chief Sustainability Officer at Forbright Bank. This is a community bank based in Maryland that is focused on accelerating the transition to a sustainable clean energy economy.

And we'll hear how the current landscape is impacting the way companies approach diversity, equity and inclusion in an interview with Alphonso David. He is President and CEO of the Global Black Economic Forum, a group that is dedicated to elevating and advocating for black and marginalized communities around the world.

And to learn more about the growing role of accounting and advancing sustainability objectives, we'll talk with Sarah Digirolamo. Sarah is a partner at audit, consulting and advisory firm, Deloitte. She is Deloitte's U.S. Audit and Assurance Financial Services ESG leader and the U.S. Investment Management ESG leader. But first, let's turn to Kristina Wyatt on her key takeaways from the conference.

Kristina Wyatt: At GreenFin, I think we're hearing quite a lot of how to mobilize capital toward the transition to a lower carbon economy and what some of the challenges are around that and things like blended finance to stimulate the movement of capital to emerging economies, et cetera.

It's interesting, I think, that it could very well be that financial institutions, particularly ones that are here, have already made net-zero commitments or other greenhouse gas reduction commitments. And so a lot of the discussion has been around how to start to measure with greater accuracy, how to build transition plans, working towards, say, their 2030 targets, how to accelerate the transition to a lower carbon economy, how to move finance at a more significant pace toward decarbonization solutions.

So there's a sense that we can make progress and there are viable solutions out there. There are plenty of projects, technologies, opportunities to deploy capital toward the transition, but one of the real challenges is speed and the need to deploy more capital faster.

Esther Whieldon: Kristina said she heard a fair amount of discussion around how to move capital to emerging markets.

Kristina Wyatt: And I think as companies start to think more about the importance of finance going deeper into company supply chains, that inevitably causes the focus to go beyond the developed world to emerging markets because that's where so much of what we produce and consume is actually cultivated.

Trying to include the developing world in our decarbonization efforts, of course, has challenges for the financial world. And so thinking about things like blended finance or credit enhancements or other mechanisms to make it more appealing for investors to invest in the emerging markets. You know, it's a challenge and an opportunity.

Esther Whieldon: So we heard how there's a greater focus on advancing the low-carbon transition and getting financing to emerging markets. To get the perspective of a financial institution at the conference, let's turn next to Samantha of Forbright Bank, who starts off by describing her role.

Samantha Norquist: So I'm Samantha Norquist. I'm the Chief Sustainability Officer at Forbright Bank, which is a just under $10 billion in assets being headquartered in Chevy Chase, Maryland. I'm our first Chief Sustainability Officer because it's a newer role amongst a lot of banks but particularly banks of our size. So really spend half of my time thinking about sustainability in the context of our lending business and how we integrate ESG factors and responsible lending policies into our lending decisions.

And then the other half of my time, more so on corporate strategic initiatives is probably the simplest way to describe it, but everything from measuring the carbon footprint of our physical locations, to publishing our annual sustainability report, getting our employees involved in the conversation. It can be quite different day to day kind of depending on whatever initiatives that we're focused on.

Esther Whieldon: How would you say the discussion around sustainable finance and banking and lending, and all of that, has evolved in the last year or so?

Samantha Norquist: It's evolved a lot over 3 years that I've been focused on this as a full-time role. I think in the last year, I am honestly starting to see some settling a bit of, I think, a lot of my early work in this space was figuring out terminology and kind of having a standard set of definitions that we were all working from to even have the conversations around the opportunities in this space.

So I think there was just a lot of, for lack of a better word, terminology swirl around what is ESG, net-zero commitments, carbon disclosures, sustainable finance frameworks. I think that was a lot of the conversation. There's obviously been a lot of difference of opinions as we've defined certain of these terms.

But I think in the key stakeholder groups in which I operate, we've sort of figured that piece out, and now it's starting to shift a bit more to what are the actionable opportunities versus kind of getting caught up on definitions, if that makes sense.

Esther Whieldon: So what are some areas that the bank is looking to investing for the low carbon transition?

Samantha Norquist: Sure. We actually just published our 2023 sustainability report last week. So I think some of the more interesting things we've done recently, we've done a few battery storage deals. One of the more interesting transactions we've done a couple of is waste to energy because it solves two key issues, key sustainability issues. We think about, as I mentioned, both the environmental piece and the social piece. So we also did a good amount of financing in affordable housing, multifamily as well as healthcare.

Esther Whieldon: What do you think is the biggest challenge going forward for sustainable finance?

Samantha Norquist: I think what's most top of mind for me, and I went to a great session here today on the topic of transition finance. Something that clicked for me today is that many people think of the transition as a transition away from fossil fuels, which is a more binary way to think about it. And we don't fund fossil fuels at Forbright Bank, but we're a mission-aligned bank.

I think where the conversation is going and where we kind of want to focus our efforts increasingly is that that's really our baseline. What's more important is what does the just broader transition to a lower carbon economy entail, which is much more broad than even just energy. So thinking about transportation and agriculture and heavy emitting industries that also need to move towards lower carbon solutions.

So I think moving away from that really boxed-in way of thinking of just reducing fossil fuels, but expanding it to be creative about what all needs to be decarbonized across our economy. And I think there's a lot of interesting activity there when you broaden that scope.

Esther Whieldon: Is there anything we didn't get to talk about that you wanted to talk about?

Samantha Norquist: I did facilitate one of the roundtable lunch discussions and the topic was balancing risk, return and sustainability within lending specifically. So had a good group of other banks and lenders talking about creative solutions of how do we balance highly regulated bank risk tolerance with being for profit in most instances across the group that was speaking, and then also achieving sustainability outcomes.

And I think we are finding ways to do it, but I think that it requires constant creativity. It does require that public-private partnership in a lot of instances that we were mentioning at the beginning of our conversation. So I think left that conversation feeling equally inspired by some of the work that has been done and then also it's still a big challenge to figure out that overlap of those three things and then how to scale that.

Esther Whieldon: And which part of that is the hardest? Is it the risk? Is it the returns? Which aspect? Obviously, the sustainability is its own.

Samantha Norquist: Yes, animal.

Esther Whieldon: Within those two, but like, yes, which aspects make the hardest?

Samantha Norquist: I think it depends on who you're talking to. Yes, I think for -- and then also even within Forbright, I think it depends on who you're talking to. Are you talking to our Chief Credit Officer? Or are you talking to business development?

I think what seems to be a bigger issue for us most often is the return side, because I think most really well-established technologies, there's a good amount of supply of capital. So solar, for instance, needed a lot of solar across residential, commercial and utility scale. And we like those opportunities from a risk perspective and clearly from a sustainability perspective. But they're increasingly looking for pretty low cost of capital sources. So I think that's where that starts to become a little bit trickier for our balance sheet from a return perspective.

So it's kind of space by space. Risk will always kind of be #1 for us. We're obviously a regulated institution that takes consumer deposits and so risk is a nonnegotiable. But then being able to find the sustainability impact plus return, I think, is where it can be a challenge.

Esther Whieldon: As I mentioned at the top of the episode, the role of accountants in disclosures and then managing sustainability objectives was a big focus at this conference, which leads us to our next guest, Sarah of Deloitte. Here she is.

Sarah Digirolamo: I'm a partner in our sustainability practice at Deloitte, an audit assurance partner. And I'm also our financial services leader for sustainability. So I focus on ESG reporting, voluntary, regulatory, thinking about how you set up your organization to be able to report and disclose and also performing assurance over ESG information as well.

Esther Whieldon: What are some things you've heard at this conference, some takeaways or things that people who weren't able to attend might be interested to hear?

Sarah Digirolamo: Yes. So I started my career in financial reporting. I was an external auditor. I still do some of that work, but focus heavily on sustainability. And accountants have gotten a lot of press at this. We heard from someone on the main stage that accountants will save the world. We're hurting in the profession so I'm happy to have anyone join us that's looking for accounting.

But really, from both my perspective and what we heard here, is that in order for us to make meaningful change when it comes to sustainability, you need to have complete and accurate data to do so, and that's where accountants are coming in.

So I was on a panel today with a few ESG controllers who have backgrounds in accounting, have shifted over time into sustainability. And really, a lot of the topic has been about how that will be a catalyst to being able to make strategic decisions and choices to have meaningful business change.

Esther Whieldon: At GreenFin, and in other recent events I've attended, I've heard how some sustainability professionals are being asked to work more on data and disclosure issues. I asked Sarah whether she's seeing this trend, and if so, what are the implications?

Sarah Digirolamo: So what's really interesting about the sustainability space is that in order for it to evolve in the way that people are looking to make change, it takes great collaboration, probably more so than in any area I've seen before. So many are being asked to come outside of their comfort zone. Those who are in sustainability, asked to do things around reporting, vice versa. And so it's definitely a challenge, but it's about collaborating. So getting the right people together to do it.

So nobody should be really doing one thing by themselves. So a lot of upskilling, sharing of education. So I talk to controllers and internal controls people all the time. They need to be upscaling on sustainability. And they also need to be educating sustainability professionals on things like internal controls and whatnot. So I think what drives me personally in this space is that sense of collaboration and so it can be challenging. It's not an easy task, but finding the right people to be in your mix is really critical on that.

Esther Whieldon: Is there a possibility or a concern that all this focus on disclosure could distract companies from putting energy towards actually meeting their goals? 

Sarah Digirolamo: Yes. So it's been a really interesting conversation over the past few years because this sustainability controller role has actually evolved from some of those concerns for 2 reasons. One, the skill sets needed in order to report on this really sit with those who have that background. But also sustainability in order to make progress, you need people focused on the strategy. So this is an input to it.

So there is a concern. But what we're seeing is an evolution or a transformation within organizations to build out infrastructure within to support that. So -- and it's, again, a mechanism to have the data so they can make meaningful change, make good business and strategic decisions on sustainability. So a concern, yes, but solution being to really look at the skill sets of individuals within the organization and figure out, do you need other resources to do that, so those people can focus on the strategy and the execution around sustainability.

Esther Whieldon: Any other trends from this conference or in general that you think is noteworthy that we haven't mentioned?

Sarah Digirolamo: Yes. The one big thing is that it's going to take a lot of money for us to transition, not just from a climate perspective, but also on other ESG topics. So what's really interesting about this conference is you're bringing together not only financial institutions, but also those who are looking for financing to be able to convene and think about how we move this forward.

So I've worked in financial services for many years, specifically banks and asset managers, and data is key before they will put money into the hands of those that they're investing or lending to. So it's a really great mechanism for both sides to understand what one another is looking for and really convene on that. So financial services is a tremendous catalyst for being able to help in this, and so bringing that together and sharing ideas on how to do that has been -- I think will be really powerful going forward. 

Esther Whieldon: So we've touched on the topics of the low carbon transition, disclosure and sustainable finance. Let's turn now to the issue of social equity and environmental justice. I attended a panel on the topic of diversity, equity and inclusion and much of the discussion centered around the implications for companies and other organizations of a Supreme Court decision last year that overturned affirmative action at colleges and universities, which has prompted a number of lawsuits.

To understand more about this issue, I sat down with one of the panelists after the session ended. Here's Alphonso of the Global Black Economic Forum. He says the high court's decision also has implications for environmental justice initiatives.

Alphonso David: So we currently face more than 50 cases that have been filed in federal court since the affirmative action decision was issued by the Supreme Court last June. Those cases fall in a number of different categories. There are cases challenging contracting programs. There are cases challenging internship and fellowship programs. There are lawsuits challenging charitable grant programs. There are lawsuits challenging private businesses. We have a well-coordinated, well-orchestrated, well-funded attack on D&I and we are pushing back.

Esther Whieldon: And you mentioned that companies are also being targeted in these lawsuits. What kind of effect is this having on corporate decision-making and DEI policies? What are you observing happening?

Alphonso David: Well, I think that is important for listeners to distinguish between the affirmative action decision that was issued by the U.S. Supreme Court, which is squarely about education, and how that decision is being misapplied in the business context. That decision had nothing to do with contracting. It had nothing to do with fellowship programs. It had nothing to do with internship programs. It had nothing to do with employment.

There are different laws and policies that govern how businesses function that have nothing to do with education. But nevertheless, what we've seen is an attack on business practices across the country. We've seen lawsuits against law firms who they have internship programs that are focused on diverse communities. They've been sued. We've seen lawsuits against charitable organizations.

Esther Whieldon: Will this have an impact on environmental justice?

Alphonso David: Yes. I think the idea that diversity, equity and inclusion is different than environmental justice, I think, is a misnomer. I think we have to think about environmental justice and diversity, equity and inclusion as the same.

Think of it, it's environmental justice. And what we're trying to do is essentially look at our environment, how companies are investing in our communities, how companies are investing in our culture in a way that's equitable. And if you don't do that in a way that's equitable, then it's not environmental justice, and it's no different than diversity, equity and inclusion. So for those who think, "Oh, that's D&I, it has nothing to do with environmental justice," wake up, it's the same thing.

Esther Whieldon: You're saying, ultimately, it could trickle down to them.

Alphonso David: It not could, it will. We have to just think about what happened with the affirmative action decision that was solely about education and how that decision has now been misinterpreted to apply to so many different segments of society. We also have to keep in mind that there's litigation around ESG and whether or not companies can use ESG as a framework for their investments.

So it's already here. We're already seeing litigation around environmental justice and folks who are challenging the free enterprise construct that we're supposed to be operating in. Companies are basically taking their dollars and saying, this is how we want to invest those dollars, and are confronting litigation and legislation around the country, trying to control how they invest their dollars and whether they invest their dollars.

Esther Whieldon: So as you can hear, Lindsey, the corporate landscape for diversity, equity and inclusion and environmental justice continues to evolve, and this is one of several big themes at GreenFin. This year's event also focused on disclosures, data and how to get financing to the areas of the economy and industries that have the biggest challenges ahead.

Lindsey Hall: And it also focused on how to get more financing to climate adaptation and nature. We cover those topics into recent episodes of this podcast and will include a link in our show notes.

Esther Whieldon: And please stay tuned as we continue to track the evolving sustainable finance space.

Lindsey Hall: Thanks so much for listening to this episode of ESG Insider. If you like what you heard today, please subscribe, share and leave us a review wherever you get your podcast.

Esther Whieldon: And a special thanks to our agency partner, The 199. See you next time.

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