Episode Transcript
Speaker 0 00:00:01 Welcome to the Refinitiv Sustainability Perspectives Podcast, where we share examples of leadership and innovation. Small entrepreneurial businesses, large mega corporations, and all types of enterprises in between are seeing a global shift in perspectives around the role of business in society. From e s G investing to sustainable finance, to social impact in our communities, we're on a journey to leverage data and intelligence to make the best business decisions possible. Enjoy the podcast. Thanks for joining this Special World Economic Forum, Davos podcast. This is Kesa Shrine, and we have Andre Shavat Refinitiv, director of Product Management, who is live in Davos at the World Economic Forum. Andre, thank you for joining.
Speaker 1 00:00:52 Thank you. So,
Speaker 0 00:00:54 Andre, take us behind the scenes at Davos, lots of discussion around climate urgency, and then you have Greta Berg's passionate words. What are some of the climate change themes and which voices are emerging?
Speaker 1 00:01:07 Yeah, it's, uh, it's a good question. So, um, obviously, uh, with, with the WEF this year, uh, I don't know if, uh, some of the, uh, listeners, uh, I've read the World Economic Forum report on what were some of the top risks, uh, perceived by some of the, uh, business leaders and, uh, and, and, and politicians alike. But actually in, in the top 10 risks, I think most, if not all of them were actually, uh, there's a, there's a very, very strong, uh, theme around climate change and, uh, how companies are, are basically going, going about addressing that. And, you know, it can be just, uh, as you're walking down the promenade, uh, and, you know, you have all these various shops that are, you know, are either bakeries during the, the normal Tower of the year, but, uh, when it gets to, to Davos, they, they transform into, uh, Salesforce and other various companies.
Speaker 1 00:02:02 But as you go along and you just look at the advertisements, you know, every every company that's there is pretty much banging a, uh, some sort of an, uh, you know, an a positive environmental message. Uh, so for example, I think it's Zurich Insurance. They give away these, uh, blue bubble hats. And, uh, for everyone that you take, they, they plant a tree. Uh, obviously I'm, I'm, I'm assuming that the, the bubble hats are, are sourced, uh, sustainably. But, you know, sustainability is, is just such a key, key theme here in, in, in Davos this year. Everyone's talking about it.
Speaker 0 00:02:39 So, great. Sounds, sustainability, e s g, even green crime, all of those themes are really emerging. One of the themes that is pretty important at this point, carbon correction. Could you tell us what you're hearing about in terms of carbon correction and how that's resonating with the attendees?
Speaker 1 00:02:57 So it's actually resonating, uh, really well, uh, so I say really well in, in, in, in terms of, uh, a lot of people. Uh, it gives them a sense of, uh, what, what that, what that impending, uh, you know, impact, uh, could look like, right? And what David's blog really, um, opened the lid really on, on, and putting numbers, you know, based on information that we have, uh, on exactly what that, that potential cost of global cost of carbon, uh, could look like. So, and it's very significant. Uh, so, you know, we, we we're talking about, you know, somewhere between one and 4 trillion, uh, dollars worth, uh, of, um, you know, cost that is not being, uh, priced in by the, by the markets today. So what's actually capitalized by the markets today is actually just a very small, uh, percentage. Um, and we also know, having looked done, uh, other research around the carbon question, we've also got, uh, our own database, and we look at internal carbon pricing, for example.
Speaker 1 00:04:09 And there's only, you know, uh, there's not that many companies that publicly, you know, state that they have an internal carbon price. So who those who've identified around, uh, 80, uh, companies that have, uh, publicly stated what their internal carbon price is. And, uh, and that's important because it means that the companies are actually, when they're doing, uh, an assessment about whether they're gonna open or kickstart a new project, then they're gonna actually incorporate an in that internal carbon price in the, uh, in the, uh, in the analysis. But there are, uh, many, you know, many, many, many companies over got 7,100 companies in this database. And if you see that there's only about 80 that actually report on internal carbon price, you know, there's obviously, you know, there's a question mark. There are companies really baking in, uh, even, uh, you know, the European Union's, um, emissions trading scheme, which is the most, uh, mature, uh, globally, and that, and that's around, you know, 24, 20 $5 per ton.
Speaker 1 00:05:16 Uh, you know, uh, our company's really, uh, thinking, uh, about what the potential, uh, price of carbon would be if you had a carbon tax that even $40, uh, in the, in the, uh, carbon correction piece that David published, you know, the IMF have a 2030 projection for carbon at $75, uh, per ton. Uh, so you know that that's, um, depending on which industry and sector you're in, that, that, that can, that can have a serious impact. So a lot of the discussions that go on today is around transition and engagement and banks helping companies through that potential transition risk and, uh, and doing it in an orderly way. So what we want is an orderly transition to a low-carbon economy. Uh, but what we don't want to risk is, uh, where governments have to, uh, you know, enforce very strict, uh, policies, which we need to, we need to do this transition in fashion now. Uh, we, we, we can't really wait, uh, in order to, to implement this.
Speaker 0 00:06:26 Okay. Great. Sounds good. So, um, one of the things you mentioned the, the blog, and you're mentioning the blog by David Craig, c e o of Refinitiv, um, around this, around this topic. So thanks for sharing that. We're talking a bit about corporations as well, and I know that a couple of corporations have made waves, um, great statements and really making bold, um, statements around commitment. I'm thinking about BlackRock, Microsoft, for example. Could you give us a bit more insight in what's happening with the statements that these large companies are making and the examples that they're setting?
Speaker 1 00:06:59 So, I'll, I'll start off with, uh, with Microsoft, because, um, it was a very bold statement. Uh, obviously a lot of companies, including ourselves, you know, uh, you know, going are carbon neutral, um, or are aiming to go carbon neutral. But, uh, what Microsoft has announced and going carbon negative i e even taking away, uh, emissions that they've even produced in the past, uh, goes above and beyond that. And, uh, and obviously that is, that is, uh, impressive. Uh, it's, uh, it's a time-based goal as well. So, you know, I think it's around by 2030, uh, that they aim to, um, to, to implement Microsoft going carbon negative here. You know, and we know this, the scale of the carbon challenge in front of this, and I think maybe, you know, carbon neutral is great, but there's obviously we need to do even more to do that.
Speaker 1 00:07:59 So you're seeing other initiatives like the, the Trillion Trees, uh, initiative that was kicked off by the World Economic Forum, um, which even, uh, Donald Trump in his speech, uh, announced support for, for that, uh, initiative. But there are many other companies that are, are getting behind this as well. So that's, that's interesting. Um, but yeah, we're seeing a lot of companies, um, going, it's, uh, it's positive. And I think there is this general feeling of this momentum around, around this topic, uh, that it's impossible for, I think boards and and sea level members that are here, you know, to not address this, this issue, regardless of which sector industry you are in, frankly. Um, you know, it's, it's something that they're, they're definitely, um, looking to, uh, incorporate in, uh, as part of their strategy.
Speaker 0 00:08:52 Hmm. E ESG really crossing sectors, crossing industries, and having an impact, um, with, in the market in general. One of the things that we really wanted to point out as well is how institutional investors are responding to these themes. So the themes that you're mentioning that companies and organizations are really setting out agendas that they're laying out, how are institutional investors responding in your conversations with them? What, what tends to be the conversation around, um, E S G and the commitment that these firms have taken?
Speaker 1 00:09:23 Right. So it's, there's, uh, there's a lot of, um, there's a lot of different approaches, uh, that institutional investors are taking, but I think what we're hearing loud and clear is investors, um, it's important for them to communicate to their stakeholders what is decision useful informa e sg information by industry and by decision useful, uh, basically mean, you know, instead of look, you know, focusing on, uh, you know, hundreds of, of various data points, ESG data points, just focusing the core really material factors, um, you know, that are important, uh, within each industry. And basically, ESG is just seen as a way of, you know, reducing your risk and also enhancing your returns. It's not a, uh, we've moved on from the, the era where e ESG was a, a means of just excluding or, or divesting from, from, uh, particular stocks, but as a, as actually as a tool to, to engage with companies, change corporate behavior for, for the better, for the long term.
Speaker 1 00:10:33 And ultimately, those institutional investors care about long-term value creation. And, um, and, and these are obviously not just long-term issues. These are issues, ESG issues that address the now <laugh>, which is, which is critical. Um, other interesting, uh, insights I've been hearing, uh, from other institutional investors, some are saying that, you know, with all the focus being on climate change and climate related data, we shouldn't be blindsided, but by, uh, just focusing too much on that, we should never lose sight of the both social and, uh, corporate governance, uh, data as well. So, uh, we've heard various banks, uh, you know, that are cognizant of the fact that yes, um, customers are demanding, you know, either, you know, uh, investments that are gonna be positive from a climate change point of view, but in the s and the social and the g and the governance, you know, these are important quality factors to look at in terms of how a company is run, uh, what, how is it, uh, retaining its talent staff. So ESG gives you that window in, in, into that culture, which, uh, few of the data sets can, uh, provide you.
Speaker 0 00:11:53 Great. So reducing risk and improving return, obviously key for investors, but also really looking at social impact and governance as something that can move the needle. So for investors. So in terms of just wrapping up, what do you think will be the key achievements of Davos 2020 that will impact the markets moving forward?
Speaker 1 00:12:14 So I think Davos 2020 really, again, this year with the focus really being around, um, climate, the SDGs, the sustainable development goals, the UN sustainable development goals, uh, a lot of discussion around, um, a kind of, uh, how would I put it? It would be a kind of a, a consolidation, a standardization and a harmonization of standards. That's quite a mouthful. But there are, as, as many of you, uh, listeners may be aware, there are many different, uh, reporting standards, uh, for esg. And today, uh, I think the Davos 2020 has brought a spotlight in how can we consolidate these, standardize them and harmonize them over time? So it's a, there's a lot of conversation around, um, what are the key factors that we need to, to focus on? And, um, the future of Sustainable Data Alliance, which we, uh, which we partner with Economic Forum amongst other partners like the UN and, uh, Everledger and, uh, a number of other firms, uh, is in that direction.
Speaker 1 00:13:26 It's to support, uh, the investment community to really focus on, uh, what are those key, key criteria that we need to, uh, you know, um, you know, help the investment industry to, to measure against. Um, because, you know, there, there are many, many different factors out there, but which ones are the ones that are really matter, uh, that will support the SDGs and which will support, you know, the transitions to a low-carbon economy and a more equitable, uh, fairer system. You know, that, you know, that's, I think doubles 2020 will, will definitely, um, put a stamp on that. I think also just on the climate change piece, we're really getting into the detail now about, you know, quantifying what is the carbon risk? What is that transition risk? And obviously, you know, David, uh, David Crates, um, you know, blog, uh, sheds a light on that, but there's obviously a lot more work going on behind the scenes than how we're partnering with, with other companies in order to get a, be a better handle on, on, on what that is and how, and how investors can, can help guide, uh, their customers to, uh, so, you know, hopefully an orderly transition.
Speaker 0 00:14:43 Great. So from bold statements by individuals and companies to quantifying carbon risk, climate change, and green crime to investor values and really harmonizing reporting standards, lots of great information and direction coming from you, Andre, live at the World Economic Forum for Davos 2020. Andre, thank you so much for joining us.
Speaker 1 00:15:05 No, thank you. Thank you very much.
Speaker 0 00:15:08 Andre shared his views on Davos 2020. And now Antonio Zapo, C e o of Thompson Reuters Foundation details another important issue impacting the market and discussions at the World Economic Forum, green crime. What we
Speaker 2 00:15:24 Are really seeing is that there's definitely a spike in an increase in green crime, and I'll give you perhaps two examples. One is Brazil. Uh, we've seen a huge increase in, uh, logging in illegal logging and deforestation in Brazil since, uh, the Bolsonaro government, uh, a number of reasons. One, it's very difficult, for example, to patrol the Amazon, which is effectively where this is taking place. And also the government has cut back, uh, policing in, in, in the region. So we've seen drug cartels actually moving, uh, from drug trafficking to illegal deforestation because it's a much more profitable and it's, it's less risky. Mm-hmm. <affirmative>. So we've seen this trend happening in Brazil right now. Uh, another trend that we are picking up through our reporting, uh, is palm oil. Um, Malaysia and Indonesia in Indonesia are the biggest producers of palm oil, uh, around the world.
Speaker 2 00:16:15 And, um, and the demand is mostly coming from China and it's coming from India. And what we are actually noticing is two things. One that China effectively is outsourcing deforestation. Um, and then the, um, the demand for palm oil, uh, uh, permits to effectively, uh, you know, introduce palm oil plantations is driven by corruption, uh, in both countries. Uh, and one is not driven by corruption. So we're talking about illegal plantation of palm oil. Uh, it actually leads to fires. Fires is a huge issue in Indonesia right now. Yeah. So what I'm trying to say is that there is a human cost, which is very tangible and is very present, difficult to quantify, but the trends are older and they are pointing in one direction, which is corruption.
Speaker 3 00:17:00 We
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