Jane: [00:00:00] Hello, I'm Jane Goodland, and a very warm welcome to the LSEG Sustainable Growth podcast, where we talk to leading experts on issues that touch on both sustainability and finance. Now, this was the very last episode of the year, and I was lucky enough to be joined by two members of the LSEG COP 28 delegation. We had David Harris, who leads on our sustainable finance strategic partnerships, and Adrian Rimmer, who's a director of sustainable finance in our capital markets division. But before we get into the conversation, I wanted to remind you to follow us. And don't forget to rate us on Spotify, Apple Podcasts or any other platform. Right. Let's listen to the conversation with David and Adrian.
Well, hello, David and Adrian, thank you so much for joining us on the podcast today. I can't wait to get into the conversation and hear all the nitty gritty details of your trip and your time in Dubai at COP 28. So, let's dive straight in. I'm going to come to you first, David, because you've been to quite a few COPs in your time and I just wanted to know kind of what's your reflections of COP 28 versus some of the things that you've done in the past, like how does it compare?
David: [00:01:12] Well thanks, Jane. And it is great to be with you. I should say it was also a real privilege to be to be at COP. What it was huge. There were 100,000 people there. Dubai is also a very spread out place. So, you've got the kind of the blue zone, that's where all the kind of political peace is happening, but also a range of other things. It's part business conference, part finance people. It's also part carnival festival.
Jane: [00:01:36] I have heard you say that it's a bit festival-like, I'm not sure this sounds much like work to me, David. But anyway.
David: [00:01:42] It's all sorts of things all at once. But it was, it was gigantic. And you've got not only this blue zone area, but you've also got the green zone, which goes all around it and is even bigger than the blue zone. But you also had other events taking place right the way across Dubai, and it's very spread out. It was pretty hectic. It's a huge amount of stuff going on, but how it differed to other COPs was not only was it bigger and this was the biggest COP ever but also it was one of the most significant. So if we go back to COP 21 in Paris, that was a monumental COP with the Paris Agreement and that ambition to only have one and a half degrees above pre-industrial temperatures.
Jane: [00:02:23] And that was back in 2015, right?
David: [00:02:25] That's right. Exactly. Then the next big one was probably actually in Glasgow, which was the COP 26. And that was very much the finance COP. This was dubbed the energy COP and it lived up to that. So, it was one of the really important COPs.
Jane: [00:02:41] Sounds great. Can we come to you, Adrian, and bring you into this conversation? I'm keen to again hear a little bit about kind of you're a bit of a COP veteran, so how this one compared. But also tell us what you were doing there. What was your main focus when you were over in Dubai?
Adrian: [00:02:55] That's the main point is what are we doing there and what are we hoping to achieve from it. But yeah, just in terms of as David was saying this is my 13th COP and they're all very different.
Jane: [00:03:06] Thirteen? My goodness.
Adrian: [00:03:07] Absolutely. And they're all they all have their own idiosyncrasies. This one really was just the sheer scale of it, the amount of people and the size of the blue zone itself, as well as everything else. You would find that inevitably every meeting was at the other end of the venue, to the one you were at, so it was an awful lot of walking around. I clocked 22,000 steps one day.
Jane: [00:03:29] I was going to say it’s good for your stepometer.
Adrian: [00:03:31] Exactly, it gives you a sense of the sort of scale of what you're operating with and the sheer number of people, and you've got a lot of individual rooms with different countries and their pavilions, different business groups and their own sets of side events. You've got an official set of activities taking place, and obviously also the negotiations themselves, where people are sitting in rooms literally going through line by line pieces of text and trying to agree on small things like where a comma goes or whether it's a shall or a should. So, the process around this are quite interesting, and I always find it's helpful to stick your head in some of those rooms and remember what on earth the purpose of this thing is. From our perspective, we were really keen to make sure that we are engaged with areas that are very much aligned with LSEG's business. So that is the work around how do we gather the data that's needed to make sure that countries can make effective decisions? That's both through disclosure frameworks around the corporates and businesses within regions. It's also how things like carbon markets are developing. There's a whole track called article six, which is around the trading of carbon between countries and the creation potentially of an internationally traded environment as well. And so, keeping track of what's going on there and engaging with the businesses and the countries that are participating in that is really key.
Jane: [00:04:46] And you come from the capital markets part of our business where obviously carbon markets is very much kind of part of your focus. So presumably you were involved in some conversations and meeting around that.
Adrian: [00:04:58] Exactly. So, we had so we held a breakfast actually, because again, to David's point, there were a huge number of companies and organizations there, many of the stock exchanges. So our peers from within the capital markets business from around the world. Julia Hoggett, the CEO of LSE plc hosted a breakfast at our office in Dubai with all of the other exchange representatives that were participating. That was really interesting because it brought together a lot of the kind of global South exchanges. So emerging markets, developing countries, so African Southeast Asian exchanges. And what we did there was really look at what is the kind of role of the exchange in helping facilitate the processes needed to decarbonize? Many exchanges are being given the mandates by their governments to drive better information disclosure, but also to be the institution that puts together the carbon market structure in their region. So we covered those two points. And what became very clear is there is a real need for capacity building. There's a real need for exchanges to bring in the expertise that's going to be required to help them do that properly and effectively. There is a need for the wider ecosystem to be supported, and there's also a need to make sure this isn't done as a sort of top-down thing from the global north. There's a real sense that the exchanges in Africa and Southeast Asia in particular, want to see that there's a ground-up approach to this too. That they are building capacity that they are putting in frameworks that are relevant to the companies in their region, and that carbon finance is going to reach them in an effective way.
Jane: [00:06:24] I think that's a really important point, kind of illustrates the globality of the COP process, is that this really is about kind of everyone in and kind of trying to solve this together. David, back to you now, because I'm really curious to hear a bit more about the launch of something that I know that you were involved in. It's the net zero climate data utility. I think that's the name of it and so that was launched at COP 28. Tell us a bit more about that, please.
David: [00:06:54] That's right. So, it's got the acronym NZVPU, which is the net zero data public utility. So, it's quite a long one. But, let me explain a bit of background and why this is important. So the financial sector is increasingly integrating climate into its investment strategies. We see that LSEG with our demand for the data, the analytics. Increasingly, this is the main reason why pension funds switch their benchmarks is to integrate climate into the design of those, into their passive portfolios. The scale of usage is huge. I mean, maybe another stat here is we do a survey of asset owners each year. Now we have we have over 300 asset owners around the world who respond. 80% are integrating climate and sustainability into their portfolio. So, this isn't a bit of the market. This is the whole market.
Jane: [00:07:45] I think that does really demonstrate the fact that this is ubiquitous in terms of this is not a kind of a nice to have anymore. It is absolutely becoming front and centre. Part of the way in which money is invested.
David: [00:07:58] It is. But there is a big challenge here. And that is despite the fact we've had a lot of progress on corporate reporting over the last two decades, initiatives like CDP, the Carbon Disclosure Project, playing a big role. TCFD, but still today, if we look at, say, all large mid-cap listed companies globally, that's the FTSE All World Index, of all of those companies, 60% are providing their Scope 1 and 2 emissions. This is basically their operational carbon emissions, but 40% are not and that's a problem. So, we estimate that, our peers estimate that. And it's not an excuse for inaction by the financial services sector. But it does make allocation of capital less efficient less effective. And we need to solve for that. So ISSB, this is the International Sustainability Standards Board, which is kind of setting globally consistent, frameworks for climate reporting is really important. And hopefully we'll be seeing governments implement that. But in the meantime, before that happens NZDPU provides a solution on trying to provide a single source of climate data. So, there are three reasons I'd say why I think this particular initiative is important. The first is that it focuses in on the most important quantitative climate data. So this is the information that is most often being used. So not only emissions data Scope 1, Scope 2, Scope 3, but also targets information as well. How are companies going to decarbonize? What are their short medium long Term targets? So, the fact that it's that quantitive core data is really important. The second reason is that it's actually structured and organized in a very granular way, which is what we need. So, it breaks down, for example, the Scope 3 emissions, which is the emissions through supply chain and through your products, but into the 15 subcategories. It also puts it into fiscal years. If a company restates its emissions, that's all very clearly set out. So, it provides it in a way that's structured in a very sensible and very detailed way, which makes it very easy for markets to use, but thirdly, it's fully open. So, it's not just the financial sector who can use this, but all stakeholders. So academics, civil society groups, governments as well. This makes this information available for everybody.
Jane: [00:10:14] And its free, Right?
David: [00:10:15] It's completely free. This is a step on that pathway, we need climate data to be like financial data just as available, just as consistent. And this is an important step towards that.
Jane: [00:10:28] And in terms of just so that we can understand kind of who's behind this, I know there was quite some very sort of famous faces there in terms of the launch. Tell me a bit about that.
David: [00:10:39] We had our group chief executive David Schwimmer there alongside many of the other big data and analytics player represented at CEO level. But it was at a political level. We had the French President, Emmanuel Macron, was there and he's been a big backer of this, and we also actually had senior governmental representatives as well for from across a range of other countries too. So, there’s a lot of support for this.
Jane: [00:11:07] And I think there's a website isn't there David. In case anyone wants to know more.
David: [00:11:10] That's right. NZDPU.com.
Jane: [00:11:07] Good, Excellent. So people can find out more if they want to there. Adrian, flipping back to you. Now, we've already talked about the fact that COP 28 is very much kind of the energy COP. And so of course fossil fuels. That agreement was in great deal of focus at the negotiations. And eventually there was a conclusion, there was an agreement and obviously that was to transition away from fossil fuels. But from your perspective, how does that feel to you? Is this a good outcome? It's very difficult to know, isn't it? Are these outcomes actually enough?
Adrian: [00:11:48] You're absolutely right. Language is incredibly important. I mentioned before the way that the process at COP is people negotiating paragraphs of text in incredible detail, but at a high level there was a very strong desire. And fossil fuels have never been directly mentioned within the text in the same way. So, at one level, the fact that we're talking about transitioning away from fossil fuels in a just and equitable manner is an incredibly powerful statement to make within a text. It certainly didn't go as far as an awful lot of countries wanted it to, but that's the nature of this process. It's a consensus driven process. Every country has to sign up to that and so by definition, you're going to get those who want to move at a much faster pace, those who feel concerned about commitments that they will be forced into. And so you end up with a compromise text. But I think it is absolutely groundbreaking that we've had a statement about transitioning away. It leaves a lot of wriggle room and that's important to note, and that's where you'll see criticism of that, as well as people talking about how much of a landmark it was to get that text in there at all. But what I would say is this is a governmental process, but it's got to be driven by the private sector in very large part. And that was what was incredibly important to see as part of the process. The 100,000 people, an awful lot of those were private sector representatives. An awful large proportion of that was from the finance sector. This is where the money is going to come to drive that transition process. So, David mentioned data, but we've also got to catalyse investment structures and the mechanisms by which this money is going to flow.
Jane: [00:13:23] We often hear about policy signals, don't we? When investors and corporates are talking about the speed with which they want to adopt climate transition plans or other sustainability initiatives. Often it seems to be, but we need the right policy signals. So, I think that this is a policy signal. And obviously, like you said, there is some kind of detail to be filled in about the pace of that transition away from fossil fuels, etc. but nevertheless, from my perspective, I think it is a landmark. It is the first time that we've ever been really explicit about this, and we've got all the countries around the world signing up to that. And I think it definitely demonstrates progress. You mentioned the private sector Adrian. I'm going to speak to David again now about kind of the increasing role of the private sector and of course, the finance sector in these COP moments, because historically, it felt like it was far more just for the governments to get round the table. And it now seems like you said before, a bit of a festival in terms of getting so many more parties involved. So, talk to me about why it's so important for the private sector to be in and involved in COP.
David: [00:14:32] I think this is really important because there has been quite a bit of criticism, actually, about the size of the COP and people saying, well, actually do we need 100,000 people there? Shouldn't there be a separate kind of political process? But actually, what we've got to have here is a whole economy transition. We've got to be able to unleash the power of capital markets, as Adrian was saying, to drive and enable this. And I think also what we need to show is that actually the private sector saying to governments, yes, we need you to act, and we there is an urgency here. And for us to be able to allocate capital, then the following things are needed. So, a lot of that is obviously about the economic incentives and wanting an ambitious deal. But it's also, I mean, to the point we were talking about earlier on things like the data, if the financial sector is going to act, we need the data, we need governments to implement mandatory climate reporting. And LSEG has been very clear on this. We'd like to see every government implement ISSB by 2025. So, I think it's actually essential that you have the private sector there in numbers. And for everybody to better work together to get the solutions we need to enable that target of one and a half degrees to be met.
Jane: [00:15:44] When you think about the task at hand, and undoubtedly it is the biggest thing the world has ever done, isn't it? It's literally the biggest project that we have to collectively work together on. I can't think of anything else that's required this degree of collaboration and direction. I think it is obviously quite easy to criticize the COP process, but actually when you step back and think about what it's trying to achieve and how it's trying to do it, it's really quite phenomenal and kind of breathtaking, actually, when you think about it. So, let's come to kind of some of your takeaways from COP 28, your time in Dubai on the ground. Adrian, do you have a standout moment and or anything where you sort of thing, I'll never forget that. Tell me about that.
Adrian: [00:16:34] I mean, there's so much taking place, but I think one of the key things from our perspective and really demonstrates the interaction between the governmental process and what the private sector and civil society are doing at COP as well is that an area of little progress has been article six, which is the process by which countries can trade between each other. And so rich countries can invest in climate action in developing countries and emerging markets and get credit for that under the Paris process. Now there's been very little progress on that. In fact, from what we hear, it's been become quite rancorous. And it is a challenging piece of text to draft and get right and have all countries agree to. However, for the first time at this COP, we saw real consolidated action from the private sector to fill that vacuum. And by that, I mean institutions. So civil society groups in the standards bodies for the carbon markets for the first time agreeing to work together. So, the top six standards, agreeing they will do things in consistent ways and work together to make sure that there is consistency in the process. And at the same time, organizations like the Science Based Targets Initiative and the VCMI, which is around the claims code for corporates and carbon markets working together to create what they've called an end-to-end integrity framework for carbon markets. And what that really does is it makes sure that we don't stop doing things whilst the governmental process catches up with what's necessary. So, the private sector engages with civil society and creates the institutions and the capacity that the governmental process can pick up on when it's ready to do so.
Jane: [00:18:01] And now coming back to you, David as well. I'm kind of keen to hear your stand-out moment or a key thing that you're going to take away from it all.
David: [00:18:08] I guess there was a moment where we were getting ready for the NZDPU launch, with our chief executive, David Schwimmer. And we'd found the room that we were going to be actually having the session in because as we were discussing earlier, it's so huge. Took ages to find it. And we thought, well, let's just wait in the next door events room. And we went next door, and it was a theatre room with maybe about 300 seats. There's probably 20 or 30 people in there. So, we took a seat and we're kind of getting prepped, and we'll be briefed ahead of the head of the session, slowly it was filling up and it was about maybe half full, maybe 100, 150 people. And then somebody was talking on the stage, and I looked up and it was actually President William Ruto of Kenya, and they were discussing actually this trebling of renewable energy pledge by 2030, but also about the commitments from some European countries. And the next up was the German Chancellor and then then the Denmark prime minister. And they were talking about providing the risk capital to enable private sector to be able to help scale renewables in Africa. And it was just it was it was a moment of chance, but it was actually fascinating and amazing to have been there.
Jane: [00:19:24] Well brilliant. Thank you so much, both of you. It's been a fascinating conversation. And certainly, I've learned a lot. But thank you also for sharing your experience because reading it in the papers is one thing, but actually understanding and hearing from people on the ground and in the actual COP, really super interesting. Thank you so much for your time and sharing your experiences.
David: [00:19:45] Thanks, Jane. It's been brilliant joining you.
Adrian: [00:19:46] Thanks a lot.
Jane: [00:19:49] So that's it for this year. It's the very last episode of the LSEG Sustainable Growth podcast. I hope you found this episode as interesting as I did, and a big thanks to David and Adrian for sharing their experience with us. If you've got questions, comments, or someone you'd like us to talk to next, then do get in touch by email at FMT@Lseg.com. So that's all from me but watch out for the next episode in January.
