Transcript provided by Kensho.  

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, a podcast hosted by S&P Global, where we explore environmental, social and governance issues that are shaping investor activity and company strategy.

Douglas Peterson: Eight years ago, today, not so far from here, a crowd of 400,000 people marched to draw attention to the issue of climate change. Two days later, world leaders gathered across the town of United Nations for the 2014 Climate Summit, just as UN General Assembly's meeting today. Eight years ago, the UN Secretary General Ban Ki-moon closed the meeting by declaring, "This morning, we have heard overwhelming commitment to a low-carbon and climate-resilient pathway. Change is in the air."

Esther Whieldon: That was S&P Global President and CEO, Doug Peterson, during Climate Week NYC speaking at an event hosted by S&P Global Sustainable1. He went on to talk about a theme we heard at some of the hundreds of climate-related events that took place across New York City last week. Specifically, he said that the world has made some progress over the last 8 years on climate change, but significantly more action is needed and at a faster pace.

Lindsey Hall: Well, in today's episode, we're bringing you some of our key takeaways, highlights and interviews from our time on the ground for Climate Week. And, Esther, I have to say, it was a really trippy experience to see you and our producer, Kyle, in person, after so many years of remote podcasting, either from my cook closet or from my daughter's bedroom. It was also wonderful to meet many of our listeners, so thank you to everyone who found us during the week to say hello. Esther, what about you? What were some of the interactions that you were having? And what did you hear?

Esther Whieldon: I heard quite a few themes, and I think the people I talked have heard them, too. One of which is, there seems to be a greater acknowledgment of the importance of ensuring the low-carbon transition is done in an equitable and just manner. At the opening session of Climate Week NYC, for example, we heard this theme from Colette Pichon Battle, who is Founder and Co-Executive Director of the Gulf Coast Center for law and policy. She said, "If we get to a place of transformation, let it be one where we are paying attention to who will be harmed first and worst."

Lindsey Hall: Climate Week NYC was all about action. The tagline for the week was, 'Getting It Done'. And throughout the week, we heard about the systemic changes that are needed to combat climate change. Here's a clip from the event that S&P Global Sustainable1 hosted on September 21 and the IMC. In it, you're going to hear Nathalie Wallace, Global Head of Sustainable Investing at Natixis Investment Managers, and she talks about the scale of transformation that's going to be needed.

Nathalie Wallace: We are experiencing systemic change and shifts in economy, call it, climate economics. These are really major. And they are potentially, yes, dividing societies, and there will be winners and losers. And as investors, working on behalf of our clients, that's what we need to understand. Our role as investors and on behalf of our clients is to keep on working along our fiduciary duty to really position the portfolio of our clients, again, to benefit and contribute to a changing environment.

Lindsey Hall: We just heard Nathalie talking about the role investors play in combating climate change. During Climate Week, we also heard an increasing sense of urgency, and you'll hear this come up in my interview later in the episode with the Chief Sustainability Officer at Amalgamated Bank. We heard during the week about the trillions of dollars committed to Net Zero. And now we're at a point in the sustainability world where we're asking, "What next? Goals are nice, but how do you turn these goals into action?"

And that's a really important question as we look ahead to COP27, the big UN Climate Conference taking place in Egypt in November. We'll hear one answer to that question from another guest in today's episode. After Climate Week, I spoke to Amy Hepburn, the CEO of the Investor Leadership Network. The group formed during the 2018 G7 and it includes some of the largest institutional investors across G7 countries, representing asset owners and asset managers with more than $10 trillion in assets under management.

Now Amy highlighted 3 areas of focus for the group: climate change, blended finance and diversity in investments. You'll also hear her mention multilateral development banks or MDBs. Those are international institutions that offer financial assistance often in the form of loans and grants to developing countries to more economic and social development. Here's Amy.

Amy Hepburn: We are CEO-led and CIO-led. And so that's a part of what we do is really drive action through these 3 areas by pulling together the top leadership in our membership.

Lindsey Hall: And now I know you had a jampacked several days. Can you take us behind the scenes? What were the highlights for you during Climate Week? Where were you in all of this busy week in the city?

Amy Hepburn: From all of the events that I attended, I would say that there was a tremendous focus on really institutional investor leadership in the conversation around climate change. And so from whether it was institutional investor forums or sustainable investment forums to a variety of panels that I was on, I would really say that the tenor of the conversation last week in New York was different than any other Climate Weeks I've been a part of and other sort of global convenience.

I think there was tremendous energy to be back together in person again, which I felt and I myself appreciated, to have in-person conversations. But I really feel that the energy in the city was around bringing together different actors for a new kind of conversation. Particularly from an investor angle, there has been a lot of talk over the years around risk.

And I feel that the opportunity conversation came out a lot more last week, which was, yes, there is risk to not take into account all the climate considerations in your investment portfolios and what is the role of investors in this. But I think there was a real positive spin around the leadership role the investor community can play and taking advantage of both the opportunities that are being presented with new technologies but also the opportunity to take this issue seriously and to really lead by example through partnerships and creativity.

I stress a lot in my conversations around the importance of thinking differently about this problem. We can't continue to address it, even as investors, in the same way we have over and over again and expect a different result. We have to try new partnerships. We have to try new approaches. We have to try new, I would say, in our case, taxonomies on our portfolio to really try to understand what is our role to create a more sustainable planet.

Lindsey Hall: Yes, I heard you speak on a panel during the Sustainable Investment Forum North America about what needs to happen to bring together private and public sector finance. What can you tell our podcast listeners about what needs to happen to close that gap?

Amy Hepburn: Yes. I mean, I highlighted 3 things, was calling it my 3Cs, which is collaboration, better cooperation and more creativity. And I think when you look at the climate financing gap, no one set of actors, no one sector is going to close it alone. And so what we need to do is, we need to come together in more meaningful and profound and deliberate ways.

And in particular, when we talk about our role with MDBs, multilateral development banks and other public sector actors, I think there's some real opportunities around derisking, new derisking elements, around data transparency and around developing a more sophisticated project pipeline and bundling pipeline so that the ticket size is one in which private sector investors can invest is an area where I really feel like we can -- that's very specific. But I think those are areas where I'm really pushing to see us make some more meaningful progress.

Lindsey Hall: Yes, that was one thing that I took note of when you were speaking on that panel is your comments about how investors often say it takes just as much effort to do due diligence in kind of small check as a large check. Can you unpack that a little bit more for our listeners?

Amy Hepburn: Yes. I mean I think for so long the conversation around particularly increasing investment and green investment in emerging markets has been around how can we galvanize private capital. And what I can tell you is that the private capital is there. We have a tremendous amount of private capital sitting on the sidelines.

But what the conversation needs to be and what I felt, honestly, in a very positive way, it was focused on last week was how do we unlock that capital into these markets, not how do we convince that capital that they should be there, that's done. The investors are there. The investors, I don't feel there is convincing that there is a need to green their finance, that there is a need to focus on transition or there is a need to go into these markets. They're ready to go.

The willingness to explore these markets and the capital is there, the question is creating the right enabling environment for them to get in. And I think there's not really been enough attention paid to the fact that we need the right projects to invest in. And it does take just as much effort for these large institutional investors to write a small ticket with fewer zeros than it does to write a big ticket.

So these investments need to be bundled. They need to be created in a way where we're not only derisking it to the extent that it makes sense but that we're also bundling it in a way that it really is going to have impact. And so I think that project pipeline is an essential building block to unlocking capital in emerging markets, for sure, private capital.

Lindsey Hall: And this might be kind of a basic question, but for our listeners to understand where does that work need to happen? Can you like break it down for us a little bit more what actually needs to happen in your view?

Amy Hepburn: Yes. No, I mean, I think it's a great question. I mean I think it can happen in a couple of different spheres. It can happen within countries, like it can happen with better relationships between institutional investors and governments. I think multilateral development banks, MDBs, have tremendous expertise in project development. I think that is an area that's right for collaboration in terms of investors and MDBs. I think that's an area where we could really build that out.

I think just creating better forums -- I've seen some real creativity in the space that was even highlighted a little bit last week around different entities trying to think about how do we develop projects and make sure that they're getting eyeballs from investors in a way that could actually be successful. So I think there's a lot of creativity in this space, but again, I think it's a matter of bringing the right actors together around the table.

Lindsey Hall: And I think that, for me, was one of the key takeaways from Climate Week, the tagline of the week was, 'Getting It Done', and there is this big focus on moving from just stated goals to actual meaningful action. And so this conversation that you're having, I think, is really key.

How do we think creatively? How do we bridge those gaps? I had also written down from your panel this quote you had about, "We need different thinking." Can you tell our listeners a little bit more about what that different thinking looks like and why you think that's the case?

Amy Hepburn: Yes, absolutely. I mean -- and I think a big part of thinking differently is making sure that you have different points of view around the table. And I think for a long time in this space, we have all operated in silos and sort of echo chambers, talking to like-minded actors, investors talking to investors, MDBs talking to MDBs, governments talking to governments.

And I think what we're seeing is that, again, this issue is not going to be solved by any one of those set of actors. It's only going to be solved in concert. And so I think thinking differently requires us to come around the table and say, "What are we good at? What are our strengths in this conversation? What are our strengths in investing? What are our strengths in investing in emerging markets? What are our strengths in these local contexts?"

And I think what we need to do is leverage those strengths. And I look at it from the investor and my perspective from our members, I mean, our members, it's capital allocation. I often say that in the ILN, that's the tool, that's the most powerful tool we have in our toolbox, is capital allocation. We are institutional investors. We're not nonprofits. We're not advocates and activists. Like, we are investors.

So what are we good at? We're good at capital allocation. And we're good at designing portfolios and making decisions around investments that will be successful. So how do we do that for the benefit of the planet? How do we do that for the benefit of the people? How do we do that while still honoring our fiduciary responsibility.

Lindsey Hall: I'd like to end our conversation on a forward-looking note. All this conversation we're having seems very relevant to COP27, which is coming up in November, in Egypt, the big UN Climate Conference. What are you expecting from COP27 as it relates to this whole topic of bringing together different players, different actors to actually drive meaningful change?

Amy Hepburn: Yes. No. I mean, first, I should say, Lindsey, I pride myself on being a well-informed optimist. And so I'm not a Pollyanna about any of this, but I really am enthusiastic and optimistic about the climate conversation as it relates to investors right now. And I'll tell you from our membership, I mean, last year was -- at COP26, was one of the first times members, CEOs from my member -- members of ILN attended a COP.

And this year, I have double that. Investors are wanting to engage in the conversation at the front end. They don't want to just be brought in at the back end. And so they want to be part of the conversation. They see themselves as having a leadership role. They see themselves as having an opportunity in a role helping to design the solutions of which their capital can play a role.

And so what I'm hoping comes from COP27 in Egypt is this opportunity for investors, again, to sit at the table on the solution side, to sit at the table and say, "Okay, this is the risks we face in investing in emerging markets, particularly with the green lens, are real." But from that perspective, how can we work together with others, because that's what COP does. I mean COP is a Conference of Parties.

So it's bringing together the MDB. It's bringing together governments to say, "Okay, how can we partner with you in a more productive way?" And I'm confident that, that conversation is going to unfold. There is a different energy that even 2 years ago, when I took on my role as CEO at the ILN, was not here. We are at a unique moment in time. And I can tell you, from my perspective and from the work that I've done in this space, I can tell you that I feel like it is ripe for progress.

It is ripe for serious change. And so I think if we can all sort of lean into this moment with authenticity and creativity and a real desire to improve this planet, for people and prosperity, I think we are going to find results that we have been waiting for, for a long time.

Esther Whieldon: So there's a real emphasis on the importance of bringing diverse viewpoints and a variety of actors to the table. I loved what she said about those 3 Cs.

Lindsey Hall: Yes. Me, too. And our next guest adds another C to the mix, culture war. I spoke to Ivan Frishberg, Chief Sustainability Officer at New York-based Amalgamated Bank. Amalgamated is a 100-year-old bank initially founded to provide basic banking services to migrant workers and today it's active in the sustainability world.

It's a member of the Global Alliance for Banking on Values. That's a network of financial institutions advocating for social economic and environmental sustainability and banking. It's also a Certified B Corporation, which is a designation for 4 profit companies that use their business to build a more inclusive and sustainable economy.

It's also part of the Net-Zero Banking Alliance, and it's the first U.S. bank to have its Net Zero target certified by the science-based targets initiative. I started by asking Ivan about how Climate Week this year differs from years past. Just a warning, you're going to hear a lot of background noise. That's because I caught Ivan on the sidelines of a very busy Climate Week event. Okay, here's the interview.

Ivan Frishberg: I think there is just so much more urgency this time around, both because problem keeps getting worse. Also, now it's moving into the regulatory space, so that brings a lot more pressure and focus to what we're doing. But also, I think that the capacity that's here. So in the different opportunities for finance or what companies are figuring out how to do or the new services that are coming online, there's a lot more potential to take action.

The one sort of like little theme that sort of caught my attention is about data. And everybody has always said for years now there's been a certain -- data is a problem, the lack of data is a problem, that's the challenge. I hear now all of that, but I also hear that there's enough to work with, and we don't need to let the perfect be the enemy of good. And we don't need protection. We need to start doing. And I think that I have heard in a lot of the conversations.

Lindsey Hall: I heard Ivan speak during a Climate Week panel at the Sustainable Investment Forum North America, where he talked about the current ESG landscape. I asked him to elaborate for our listeners.

Ivan Frishberg: It's sort of an extraordinary thing. And what I talked about on the panel was that we're sitting here in Climate Week, everybody knows about climate denial. Everybody thinks it's totally absurd. There's no doubt that it held us back as a movement, right? And so what is happening now with all this pushback against ESG or the sort of phony woke Capitalism thing is that it's sort of a denial of capitalism, that this is the market's working.

It's the market's working efficiently and effectively for investors, for the communities they serve and you have political forces often served by some pretty narrow special interest or ideological special interest, who are trying to basically deny all of those systems. So they want to tell an asset manager not to look at data that will inform risk and return.

They're telling a bank that they have to lend to certain activities, even if the bank says, "We're not interested in that or it doesn't fit our risk profile." And they're telling them when and how to do their business. And all of this is just an effort to kind of tell capitalism what to do, and it denies the basic elements about how the market works. And I think it's gotten such traction because it's part of our culture war.

Lindsey Hall: I asked Ivan, during a week like this when there's a lot of hope and ambition, what's the answer when it comes to getting around some of the backlash and just staying focused on the end goals?

Ivan Frishberg: I don't think we can just stay focused on the end goals, unfortunately. And maybe that was my point about climate denial. We couldn't just focus on the science and about what needed to be done because this sort of backlash denial movement certainly had an impact, right, and our ability to make progress, and that's what's going on here.

So I think everybody here is doing incredible work. They're doing incredible work for the economy and for the planet. And so I think we have to dedicate a little bit of time, particularly as financial friends to pushing back on this effort and saying, "No, we're not going to take it. We're not going to let you sort of play these political games because if we don't, I think they will have an impact on the work that they have been trying to get on.

Lindsey Hall: You've heard Ivan talk about the greater sense of urgency, the push for increased data, and also this idea we've talked about quite a bit on this podcast, "Don't let perfect be the enemy of good." We also heard from both Ivan and Amy about the importance of communication.

This is a theme that really stood out to me, and maybe that's because this is a thing I think about a lot, how do you communicate about these topics. Much of the debate right now is around the language we use when we talk about ESG or when we talk about sustainability. If you can't communicate effectively in plain English, how can you solve these big thorny climate problems the world faces?

Esther Whieldon: These are big questions, and we have lots more to cover from Climate Week. We didn't have time for everything in just this episode. So stay tuned for next week's episode, and we'll bring you more highlights from our time on the ground in New York. If you'd like to read more about key takeaways from Climate Week and the questions we're asking heading into COP27, please see the link in our show notes.

Lindsey Hall: Thanks so much for listening to this episode of ESG Insider and a special thanks to our producer, Kyle Cangialosi. Please be sure to subscribe to our podcast and sign up for our weekly newsletter, ESG Insider. See you next time.

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