In Conversation with Brennan & Partners
30th June 2021
Hosted by Brennan & Partners, Peter Mather (Group Regional President Europe and Head of Country UK, BP plc), Dr Clive Dix (CEO, C4X Discovery plc and former Chair of the UK Vaccine Task Force) and Professor Sir Mark Walport (Senior Advisor, Brennan & Partners) discussed corporate sustainability and innovation for the future. The panel was moderated by The Rt Hon Claire O’Neill (Managing Director, Climate and Energy World Business Council for Sustainable Development) and the session was opened and closed by The Rt Hon Sir Hugo Swire (Chair of the International Advisory Board, Brennan & Partners).
The conversation explored the importance of sustainability and innovation to future society with a focus on the desire for change from a wide variety of stakeholders and the policy infrastructure that is required for success. The discussion also reflected on the investment model to date and the opportunity that the COVID-19 pandemic has presented for a different approach to future endeavours.
Themes that emerged included:
>> Motivation for change – in contrast to the pandemic the impact of the lack of sustainability or innovation is slow or unknown. However, the pandemic has offered an opportunity for reflection and reprioritisation for the public and private sectors, as well as individuals personally. Whilst sustainability is a long-term journey it is now a necessary part of the conversation not least because of the benefits and opportunities that it presents, but also because it is a core concern of citizens and consumers worldwide.
>> Legislative environment – private enterprises can be deterred from investing in sustainability and innovation due to high upfront costs. Governments can play a role in activating investment through the establishment of domestic and cross-border standards, metrics, tariffs and trade agreements such as carbon pricing or common environmental standards. These can encourage investment and provide an even competitive environment for those enterprises seeking to compete against incumbents or those acting in bad faith. Examples of success include the solar and wind sectors, and lessons can be learnt from these markets and applied to others. Furthermore, common standards enable transparency and the ability for consumers and investors to judge enterprises, which in turn will deliver self-perpetuating momentum and a drive for change.
>> Government action – Governments can take direct action by acting as a customer for innovation and sustainability initiatives. Public sector acceptance of higher levels of risk trade-off by mitigating investment risks for the private sector, enabling them to pursue initiatives that may have previously deemed unviable. In this respect the COVID-19 pandemic can act as a catalyst for change, similar to the role that warfare played in bringing innovations to market during the twentieth century. Additionally, Governments can foster sustainability and innovation through both aligning reporting standards and establishing consequences for those who breach requirements. Areas such as ethics and anti-corruption have been successful due to the embedding of accountability at the executive level, and sustainability may be another area that would benefit from this approach to driving a change in behaviours.
>> Investment strategies – investment models need to adapt away from a pure focus upon efficiency and cost as the key drivers for decision making. PPE is a recent example of where these drivers worked to the detriment of nations who had outsourced their manufacturing capability and found themselves unable to domestically fulfil demand during the COVID-19 pandemic. A more balanced approach is required that isn’t solely driven by budgets and favours long-term benefits such as security of supply chain, quality, sustainability, etc. Consequences of this approach may mean reduced diversity of products or higher prices, but equally positive trade-offs could include increased product quality, innovative solutions and peace of mind for the integrity of supply chains.
>> Partnership – greater collaboration is required between organisations to enable an environment for change. The COVID-19 pandemic has demonstrated the results that co-operation towards a combined goal can achieve in the healthcare sector, with Governments and Pharmaceutical companies coming together to deliver vaccinations in an unprecedented timeframe. Issues such as disease prevention and food production cannot be resolved by individual companies or even sectors alone and require a collaborative effort from multiple stakeholders to design and deliver long-term sustainable solutions.
>> Consumers – the power of consumers has vastly increased and sustainability in particular is an area of enhanced power and activism. The ubiquity of available data is now enabling consumers to make informed purchasing and investment choices. Consumers are key stakeholders and their influence when considering sustainability to drive innovation from both the public and private sectors cannot be ignored. An example cited was vegetarianism which over the past twenty years has increased in market share and is now a standard offering from the grocery and hospitality sectors. Furthermore, citizens can wield their influence at the ballot box too to drive a sustainable agenda, challenging politics and the public sector to adapt and find new solutions to the issues that they care about.
>> Investors – investors and capital markets area acting as catalysts for change. Whilst the environment was the first element of sustainability to achieve widespread acceptance amongst investors, the importance of a comprehensive understanding and commitment to sustainability is increasingly recognised across markets, such as in the capital markets of the USA.
>> Technology – the advancement of technology lowers both the barriers for change and risks. Harnessing technologies such as data intelligence, quantum computing and artificial learning will also enable the benefits of innovations and sustainability to be realised far quicker than ever before.