00:00:08:14 00:00:09:25 Hello, you're listening to 00:00:09:26 00:00:11:17 Leadership in Extraordinary Times 00:00:11:18 00:00:13:09 with me, Peter Tufano, 00:00:13:16 00:00:15:12 the Dean of the Said Business School 00:00:15:13 00:00:16:18 at the University of Oxford. 00:00:19:00 00:00:20:19 We're a diverse and global community 00:00:20:20 00:00:22:12 of academics and researchers, 00:00:22:13 00:00:24:17 students, entrepreneurs, executives 00:00:24:18 00:00:26:21 and alumni working together 00:00:26:22 00:00:28:10 to help transform the global 00:00:28:11 00:00:29:10 business landscape. 00:00:30:04 00:00:31:19 And in this podcast, we'll share our 00:00:31:20 00:00:33:11 research, insights and hear from 00:00:33:12 00:00:34:19 those on the front line of this 00:00:34:20 00:00:35:20 crisis. 00:00:36:09 00:00:37:17 We need to think about the world in 00:00:37:18 00:00:39:06 which we find ourselves, 00:00:40:02 00:00:41:18 but we also need to think about the 00:00:41:19 00:00:43:13 world that we want to build as we 00:00:43:14 00:00:45:05 emerge from this pandemic, 00:00:45:09 00:00:47:10 an economic, social and climate 00:00:47:11 00:00:48:10 crisis. 00:00:49:02 00:00:50:20 This calls for a new type of 00:00:50:21 00:00:51:20 leadership. 00:00:51:21 00:00:54:02 Leadership in extraordinary times. 00:00:59:07 00:01:00:14 Episode three, How Capital 00:01:01:11 00:01:02:24 Markets Can Take Sustainability 00:01:03:08 00:01:04:08 to the next level. 00:01:05:16 00:01:07:13 As the world strives towards zero 00:01:07:14 00:01:09:07 net carbon, corporate sustainability 00:01:09:23 00:01:11:09 data is no longer going to be 00:01:11:21 00:01:12:21 a nice to have or 00:01:13:17 00:01:15:02 something to make shareholders feel 00:01:15:03 00:01:15:24 a bit better about their 00:01:15:25 00:01:16:25 investments, it will 00:01:17:22 00:01:19:21 be central to a corporation's long 00:01:19:22 00:01:21:13 term licence to operate and 00:01:21:14 00:01:22:22 therefore inseparable from the 00:01:22:23 00:01:24:10 perspective of financial risk in 00:01:24:11 00:01:25:10 return. 00:01:25:22 00:01:27:14 This means that accountants must 00:01:27:15 00:01:29:07 agree and implement a set of global 00:01:29:10 00:01:30:23 sustainability standards, which 00:01:31:10 00:01:32:25 is what this episode is all about. 00:01:33:17 00:01:35:10 So we've brought together a panel of 00:01:35:11 00:01:37:00 experts who are perfectly placed, 00:01:37:01 00:01:38:14 helps explore this high profile 00:01:38:20 00:01:39:20 debate. 00:01:40:09 00:01:41:23 Sandy Boss is the Global Head of 00:01:42:04 00:01:44:01 Investment Stewardship for BlackRock 00:01:44:07 00:01:45:23 and a member of BlackRock's Global 00:01:45:24 00:01:46:23 Executive Committee, 00:01:48:01 00:01:49:21 Dame Elizabeth Corley is the Chair 00:01:49:23 00:01:51:14 of the Impact Investing Institute 00:01:51:23 00:01:53:11 and Non-Executive Director of 00:01:53:12 00:01:54:12 Pearson BAE Systems 00:01:55:09 00:01:56:09 and Morgan Stanley. 00:01:57:11 00:01:59:02 Tajinder Singh is the Deputy 00:01:59:05 00:02:00:09 Secretary General of the 00:02:00:10 00:02:01:22 International Organisation of 00:02:01:23 00:02:03:18 Securities Commissions and 00:02:03:19 00:02:05:05 Richard Barker is Professor of 00:02:05:14 00:02:07:11 Accounting and Associate Dean 00:02:07:13 00:02:09:08 here at Said Business School. 00:02:10:06 00:02:11:10 In an open letter to the 00:02:11:13 00:02:13:01 International Financial Reporting 00:02:13:02 00:02:16:05 Standards Foundation, or IFRS, 00:02:16:16 00:02:18:10 Richard, and seven other colleagues, 00:02:18:15 00:02:20:11 myself included, recently 00:02:20:12 00:02:21:11 set out how the IFRS 00:02:22:24 00:02:24:06 has the relationships, the 00:02:24:21 00:02:26:07 authority and the expertise to 00:02:26:18 00:02:28:05 take on this additional role 00:02:28:14 00:02:30:17 and to create a Sustainability 00:02:30:18 00:02:32:13 Standards Board or SSB, 00:02:32:23 00:02:34:06 which would then set reporting 00:02:34:07 00:02:35:06 standards. 00:02:35:21 00:02:36:25 Chairing the discussion is Clara 00:02:37:06 00:02:39:02 Barby, Chief Executive of 00:02:39:03 00:02:40:13 the Impact Management Project, 00:02:41:07 00:02:42:20 I'll hand you now over to Clara. 00:02:44:12 00:02:46:05 Hello and welcome to today's 00:02:46:06 00:02:47:21 Leadership in Extraordinary Times 00:02:47:22 00:02:49:16 event from Oxford University, Said 00:02:49:17 00:02:50:16 Business School. 00:02:50:24 00:02:52:09 Wherever in the world you are, thank 00:02:52:12 00:02:53:12 you for joining us. 00:02:53:17 00:02:54:24 Today's subject is all about 00:02:54:25 00:02:56:14 sustainability reporting and the 00:02:56:15 00:02:58:04 need for sustainability standards 00:02:58:05 00:02:59:04 globally. 00:02:59:05 00:03:00:15 So now let's go into the debate and 00:03:00:16 00:03:01:17 I want to start with Richard. 00:03:01:21 00:03:03:10 Richard, the IFRS Foundation has 00:03:03:12 00:03:05:01 just consulted on whether there's a 00:03:05:02 00:03:07:06 need for global sustainability 00:03:07:07 00:03:08:19 standards and the role that it might 00:03:08:20 00:03:09:17 play. 00:03:09:18 00:03:11:02 Can you scene set for us? 00:03:11:13 00:03:12:23 What are the key concepts for our 00:03:12:24 00:03:14:01 audience to be aware of? 00:03:14:15 00:03:16:09 Why is this such an important moment 00:03:16:15 00:03:17:25 for the IFRS and what else is 00:03:17:26 00:03:19:25 happening around the IFRS 00:03:20:00 00:03:21:24 to make this a moment for rapid 00:03:22:02 00:03:23:02 progress? 00:03:23:11 00:03:24:16 So I think to frame this, 00:03:25:10 00:03:26:17 it helps to start with the 00:03:27:01 00:03:28:08 International Accounting Standards 00:03:28:09 00:03:30:18 Board, which sets global 00:03:30:19 00:03:32:07 financial reporting standards, which 00:03:32:08 00:03:34:16 are mandatory in more than 140 00:03:34:17 00:03:36:06 countries around the world. 00:03:37:02 00:03:39:02 The IASB is an independent body. 00:03:39:03 00:03:40:20 It sits within the governance 00:03:40:21 00:03:42:11 structure, the independent, robust 00:03:42:19 00:03:44:12 governance structure of the IFRS 00:03:44:13 00:03:45:12 Foundation. 00:03:46:05 00:03:47:05 And its mission is to 00:03:48:02 00:03:49:13 provide useful information to 00:03:49:24 00:03:51:22 investors as the primary focus 00:03:52:14 00:03:53:24 of financial materiality. 00:03:54:00 00:03:55:17 That is now 00:03:55:23 00:03:57:22 the way that the IASP interprets 00:03:57:23 00:03:59:14 that mission is to provide 00:03:59:15 00:04:00:23 information through financial 00:04:00:24 00:04:01:23 statements, including 00:04:02:21 00:04:03:21 the notes to the accounts. 00:04:04:14 00:04:06:16 So we have mandatory financial 00:04:06:17 00:04:07:11 statements globally. 00:04:07:12 00:04:10:01 Now there are two 00:04:10:02 00:04:11:21 ways in which that provides actually 00:04:11:22 00:04:13:05 limited information from the 00:04:13:06 00:04:14:05 investors point of view. 00:04:15:06 00:04:17:03 The first is that the financial 00:04:17:04 00:04:18:11 statements are historical. 00:04:18:22 00:04:20:03 Investors are concerned with the 00:04:20:04 00:04:21:16 future. Can say the future cash 00:04:21:17 00:04:23:14 flow, accounting record, what 00:04:23:15 00:04:25:06 has happened in the past, what the 00:04:25:09 00:04:26:18 current rights and obligations of 00:04:26:19 00:04:27:22 the reporting entity are. 00:04:28:09 00:04:29:12 So if you take something like 00:04:29:13 00:04:30:21 climate change where we know 00:04:31:09 00:04:32:15 we have a dramatic global 00:04:33:06 00:04:34:17 transition to net zero by 2050 00:04:35:04 00:04:36:19 ahead of us, one that hasn't 00:04:36:20 00:04:38:15 happened yet, so we know there's 00:04:38:16 00:04:39:10 going to be a significant 00:04:39:11 00:04:40:10 discontinuity. 00:04:40:15 00:04:41:22 The accounts provide limited 00:04:41:23 00:04:43:06 information. As I mentioned, 00:04:44:08 00:04:46:03 the second limitation is that 00:04:46:04 00:04:47:18 accounting is only concerned with 00:04:47:25 00:04:49:09 the financial effects on the 00:04:49:15 00:04:51:02 reporting entity itself of the 00:04:51:11 00:04:53:08 entities, activities and other 00:04:53:09 00:04:54:10 activities and events. 00:04:55:02 00:04:57:07 So if, for example, an entity 00:04:57:08 00:04:59:14 emits carbon and that imposes 00:04:59:15 00:05:01:04 a cost on society, but the entity 00:05:01:08 00:05:03:06 does not pay that cost as next to 00:05:03:15 00:05:05:01 the external cost, then that's 00:05:05:12 00:05:06:12 not in the accounts. 00:05:07:09 00:05:08:20 But again, from an investor's point 00:05:08:21 00:05:09:23 of view, you might want to know 00:05:09:24 00:05:11:09 about that because a business 00:05:12:00 00:05:13:23 with a high carbon footprint is 00:05:13:24 00:05:15:08 one that needs to undertake a 00:05:15:09 00:05:16:24 significant transition of its 00:05:17:00 00:05:17:24 business model. 00:05:18:14 00:05:20:16 So, not surprisingly, investors 00:05:20:17 00:05:22:07 are increasingly calling for more 00:05:22:12 00:05:24:10 sustainability information, not just 00:05:24:11 00:05:26:03 climate, but ranging all the way to 00:05:26:05 00:05:27:05 social inclusion. 00:05:27:23 00:05:29:09 And the reason I called the 00:05:29:10 00:05:30:20 sustainability information is 00:05:30:22 00:05:32:19 because sustainability 00:05:32:20 00:05:34:22 data is relevant to understanding 00:05:34:23 00:05:36:24 the viability of business models, 00:05:37:14 00:05:39:02 the corporate licence to operate, 00:05:39:12 00:05:41:06 and therefore the corporate capacity 00:05:41:07 00:05:42:16 to create enterprise value. 00:05:44:11 00:05:46:09 So we have an information. 00:05:46:25 00:05:48:15 We have a global standard setting 00:05:48:21 00:05:50:06 body that is providing financial 00:05:50:07 00:05:51:17 statements and we have global 00:05:52:06 00:05:53:20 investors who are requiring more 00:05:53:23 00:05:55:05 information these days. 00:05:55:11 00:05:56:11 Just them. 00:05:57:08 00:05:58:08 So the capital 00:05:59:05 00:06:00:18 allocation decision was made by 00:06:00:20 00:06:02:03 investors and indeed made by 00:06:02:04 00:06:04:05 companies themselves or in principle 00:06:04:06 00:06:05:13 compromised by that lack of 00:06:05:18 00:06:06:18 information. 00:06:07:12 00:06:09:10 So that's why the 00:06:09:11 00:06:11:00 International Financial Reporting 00:06:11:03 00:06:12:14 Standards Foundation has been 00:06:12:15 00:06:14:20 consulting on creating a Sustainable 00:06:14:21 00:06:15:20 Future Fund to support. 00:06:16:16 00:06:18:05 The idea is that a Sustainability 00:06:18:06 00:06:20:16 Standards Board would sit alongside 00:06:21:10 00:06:22:16 the International Accounting 00:06:22:17 00:06:24:05 Standards Board so that the IASP 00:06:24:24 00:06:26:04 with the Financial Accounting 00:06:26:05 00:06:27:15 Standards, the Sustainability 00:06:27:20 00:06:29:02 Standards Board, would set 00:06:29:08 00:06:30:11 sustainability reporting 00:06:31:11 00:06:32:02 very helpful. 00:06:32:03 00:06:33:04 And I want to move from that 00:06:33:05 00:06:34:25 conceptual framing to Tajinder 00:06:36:03 00:06:36:23 at IOSCO. 00:06:36:24 00:06:38:21 Tajinder, this is not the first time 00:06:38:22 00:06:40:20 that the IFRS Foundation has been 00:06:41:05 00:06:42:21 at an important point in time. 00:06:42:24 00:06:43:24 20 years ago, IOSCO 00:06:45:06 00:06:46:16 played a major role 00:06:47:07 00:06:48:05 again. 00:06:48:06 00:06:49:13 And I want to ask you what is 00:06:49:14 00:06:50:19 similar about the moment we're 00:06:50:20 00:06:51:24 facing now with the IFRS 00:06:52:19 00:06:54:00 Foundation and what you saw 00:06:54:15 00:06:56:11 at IOSCO 20 years ago and what 00:06:56:12 00:06:57:16 might be different in the 00:06:57:17 00:06:58:25 considerations that you're making as 00:06:58:26 00:07:00:05 securities regulators? 00:07:01:24 00:07:03:12 Thanks a lot, Clara, and before 00:07:03:22 00:07:05:06 talking about the history, let me 00:07:05:07 00:07:06:10 take just a few moments 00:07:07:04 00:07:09:08 to explain why IOSCO is interesting. 00:07:09:24 00:07:11:25 So just to back up a bit, any 00:07:12:00 00:07:13:18 financial system, of course, has 00:07:14:02 00:07:15:04 two ends the providers 00:07:15:23 00:07:18:06 of finance and the users of finance. 00:07:18:18 00:07:20:12 And therefore, the role of investors 00:07:21:00 00:07:22:18 and capital markets is paramount 00:07:23:04 00:07:24:02 in such a system. 00:07:24:03 00:07:25:06 And that is where securities 00:07:25:07 00:07:26:07 regulators come in. 00:07:26:10 00:07:27:22 And that is where IOSCO, as an 00:07:27:23 00:07:30:04 organisation of over 125 00:07:30:05 00:07:32:00 securities regulators that 00:07:32:01 00:07:33:17 regulate more than 95 percent of the 00:07:33:18 00:07:35:05 world's capital markets comes in. 00:07:35:21 00:07:37:09 These securities regulators are 00:07:37:10 00:07:39:11 responsible for the oversight 00:07:39:12 00:07:40:19 of capital markets and have 00:07:41:06 00:07:42:16 responsibility for disclosure 00:07:42:20 00:07:44:12 regulations in many jurisdictions, 00:07:45:04 00:07:46:21 including the form and content 00:07:47:07 00:07:48:10 of financial reporting. 00:07:48:20 00:07:50:07 And that's why we set up a 00:07:50:08 00:07:51:22 sustainable finance task force 00:07:52:07 00:07:53:16 that published a report about the 00:07:53:17 00:07:56:00 difficulties in this area, including 00:07:56:01 00:07:57:06 the plethora of voluntary 00:07:57:19 00:07:59:04 initiatives that we should mention. 00:07:59:18 00:08:01:05 Since then, we've conducted a fact 00:08:01:06 00:08:02:17 finding work, reviewing corporate 00:08:02:18 00:08:04:17 reports and engaging with 00:08:04:18 00:08:06:07 asset managers, all of whom 00:08:06:13 00:08:07:13 confirmed that the 00:08:08:10 00:08:09:18 current investor demand for 00:08:09:19 00:08:11:04 sustainability information is 00:08:11:18 00:08:12:18 not being met. 00:08:12:24 00:08:14:19 And that's why the 00:08:15:00 00:08:16:10 school board discussed this in 00:08:16:11 00:08:18:02 November last year and agreed that 00:08:18:10 00:08:20:01 the following steps were necessary. 00:08:20:09 00:08:22:03 Firstly, that we need to develop 00:08:22:10 00:08:23:24 similar to what Richard mentioned 00:08:24:00 00:08:25:15 about the accounting standards, a 00:08:25:19 00:08:27:13 pathway to mandatory standards 00:08:27:17 00:08:28:17 in this area. 00:08:28:23 00:08:30:07 They all comply or explain. 00:08:30:18 00:08:32:08 Secondly, to engage with the IFRS 00:08:32:14 00:08:33:12 Foundation. 00:08:33:13 00:08:35:12 And thirdly, to not forget 00:08:35:18 00:08:37:12 that these discussions 00:08:37:20 00:08:39:19 also should involve, going 00:08:39:20 00:08:41:09 forward, the establishment of an 00:08:41:16 00:08:43:03 assurance framework for 00:08:43:04 00:08:44:13 sustainability disclosures. 00:08:44:23 00:08:46:11 And these objectives take us or 00:08:47:00 00:08:48:12 taking us to these conclusions, 00:08:48:13 00:08:49:23 which are firstly 00:08:50:15 00:08:52:07 to support the establishment of 00:08:52:10 00:08:53:20 Sustainability Standards Board 00:08:55:05 00:08:56:19 that that the IFRS Foundation is 00:08:57:01 00:08:58:21 consulting on focussing 00:08:58:22 00:09:01:01 on information that serves investors 00:09:01:13 00:09:03:20 and capital markets or enterprise 00:09:03:21 00:09:05:13 value creation that 00:09:05:21 00:09:07:16 sits alongside the IASB. 00:09:08:02 00:09:09:10 And we think this would command 00:09:09:11 00:09:10:24 sufficient market acceptance 00:09:11:11 00:09:13:05 to support mandatory disclosures 00:09:13:06 00:09:15:01 across jurisdictions to 00:09:15:02 00:09:16:20 allow integration with the financial 00:09:16:21 00:09:18:10 reporting standards and form the 00:09:18:17 00:09:20:08 basis for an audit and assurance 00:09:20:09 00:09:21:09 framework. 00:09:21:12 00:09:22:14 Secondly, to encourage 00:09:23:12 00:09:24:12 this SSB to leverage 00:09:25:13 00:09:27:03 on the content of the Alliance of 00:09:27:09 00:09:29:11 Standard Setters, for example, 00:09:29:12 00:09:30:21 the climate prototype that was 00:09:30:22 00:09:32:09 published last year. 00:09:32:21 00:09:34:01 And thirdly, to apply 00:09:34:19 00:09:36:19 the building blocks approach 00:09:37:10 00:09:39:04 to provide the common, consistent 00:09:39:05 00:09:40:09 baseline of non-financial 00:09:40:19 00:09:41:19 information. 00:09:42:01 00:09:43:12 We hope that the system can be set 00:09:43:13 00:09:45:04 up, which can allow filtered input 00:09:45:12 00:09:47:06 from the superset of the wider 00:09:47:07 00:09:48:18 sustainability topics from the 00:09:49:03 00:09:51:04 largest box that Richard showed 00:09:51:13 00:09:53:16 to the in a box, for example, 00:09:53:17 00:09:54:17 things that are related to the 00:09:54:18 00:09:56:17 stakeholder impact in a way that 00:09:56:18 00:09:58:21 helps the SSB assess 00:09:59:04 00:10:00:13 the dynamic materiality of 00:10:00:14 00:10:01:14 sustainability topics. 00:10:01:15 00:10:03:03 Coming now to the question about 00:10:03:14 00:10:04:19 what we did in the past. 00:10:04:20 00:10:06:02 We've had a long history of 00:10:06:13 00:10:07:24 collaboration with the IFRS 00:10:07:25 00:10:09:06 Foundation, and that's not 00:10:09:18 00:10:11:05 surprising since IOSCO and the 00:10:11:15 00:10:12:17 IFRS Foundation shared 00:10:13:11 00:10:15:04 the objectives of promoting and 00:10:15:05 00:10:17:08 facilitating transparency within 00:10:17:09 00:10:18:08 the capital markets. 00:10:18:16 00:10:20:17 So in two thousand in the year 2000, 00:10:20:18 00:10:22:09 I also issued a resolution 00:10:23:04 00:10:24:17 that set the foundation for the 00:10:24:22 00:10:26:13 adoption of the IFRS 00:10:27:01 00:10:28:16 across member jurisdictions 00:10:28:23 00:10:30:16 leading to the establishment of the 00:10:30:21 00:10:33:04 IASP, the International Accounting 00:10:33:05 00:10:35:04 Standards Board and the current 00:10:35:12 00:10:36:15 governance system. 00:10:36:18 00:10:38:04 As Richard mentioned, that's a 00:10:38:09 00:10:40:09 robust system and that 00:10:40:16 00:10:42:09 has also at 00:10:42:19 00:10:43:22 its three tier. 00:10:44:07 00:10:45:16 At the top tier it has 00:10:46:04 00:10:47:20 the monitoring board that IOSCO 00:10:47:21 00:10:49:24 chairs because securities 00:10:50:00 00:10:51:22 regulators did have an interest that 00:10:52:01 00:10:53:11 in the interest of investors. 00:10:53:24 00:10:55:19 So regarding our relationship, 00:10:56:06 00:10:57:06 we also have a 00:10:58:09 00:11:00:01 protocol with the IFRS Foundation. 00:11:00:02 00:11:01:11 As I mentioned, I chairs the 00:11:01:22 00:11:03:10 monitoring board, which oversees the 00:11:03:11 00:11:05:14 IFRS trustees to ensure 00:11:05:15 00:11:07:05 that they discharge their duties in 00:11:07:06 00:11:08:09 accordance with the IFRS 00:11:08:21 00:11:10:19 constitution. So these are in 00:11:10:20 00:11:12:11 a sense, the similarities which we 00:11:12:17 00:11:14:11 can actually use now going forward, 00:11:14:12 00:11:16:07 because this is, again, information 00:11:16:08 00:11:17:17 that capital markets and investors 00:11:17:18 00:11:19:18 need in terms of what's different. 00:11:20:14 00:11:22:20 Now, unlike in 2000, 00:11:22:21 00:11:25:01 we already have a structure 00:11:25:02 00:11:26:15 under the IFRS Foundation 00:11:26:24 00:11:28:19 that has proven to be successful 00:11:29:05 00:11:30:12 jurisdictions have adopted 00:11:30:13 00:11:32:13 enforcement mechanisms, and 00:11:32:14 00:11:34:04 because we already have this and 00:11:34:05 00:11:35:17 we've seen it work, it can help 00:11:35:18 00:11:37:16 speed up the process in this 00:11:37:22 00:11:38:22 realm. 00:11:39:12 00:11:40:22 Secondly, we have the important work 00:11:41:11 00:11:43:05 of the alliance of standard setters 00:11:43:11 00:11:44:11 which we have encouraged. 00:11:44:19 00:11:46:04 And the climate prototype that I 00:11:46:05 00:11:47:05 mentioned that builds 00:11:48:03 00:11:50:03 on the TCFD recommendations as well, 00:11:50:13 00:11:52:13 can provide a running start 00:11:52:23 00:11:54:23 for the SSB when it is set 00:11:54:24 00:11:56:14 up to go ahead and go forward. 00:11:56:15 00:11:58:02 And just before I hand back to 00:11:58:04 00:11:59:16 Clara, let me mention that the 00:11:59:23 00:12:01:11 sustainability task force that IOSCO 00:12:01:12 00:12:03:07 is working on, this 00:12:03:08 00:12:04:19 is an important element of that. 00:12:04:20 00:12:06:06 But there are still two other 00:12:06:15 00:12:08:15 areas that we're working on, asset 00:12:08:16 00:12:10:16 managers and greenwashing and 00:12:10:23 00:12:12:18 ESG industries and data providers. 00:12:13:00 00:12:14:24 But the one thing that we note 00:12:15:04 00:12:16:23 which is relevant here as well, is 00:12:16:24 00:12:18:12 that sustainability reporting is 00:12:18:24 00:12:20:06 crucial to all of them. 00:12:21:01 00:12:21:23 Thank you, Tajinder. 00:12:21:24 00:12:23:08 And we've had a question from 00:12:23:19 00:12:25:16 the audience quite rightly 00:12:25:17 00:12:27:05 saying we get the urgency. 00:12:27:12 00:12:29:00 What needs to be done to make sure 00:12:29:01 00:12:30:15 it happens urgently is there 00:12:31:01 00:12:32:08 is that one big thing 00:12:32:25 00:12:34:10 that you think needs to happen. 00:12:34:11 00:12:35:18 And, Richard, maybe I'll come back 00:12:35:19 00:12:37:12 to you before I go to Sandy and then 00:12:37:13 00:12:38:18 Elizabeth and just say, 00:12:39:09 00:12:40:19 what is your reflection, having 00:12:40:20 00:12:42:08 looked at this space as an academic, 00:12:42:09 00:12:44:04 Richard, on the big 00:12:44:10 00:12:46:01 levers we can pull to make things 00:12:46:03 00:12:47:03 happen fast? 00:12:47:22 00:12:49:19 Well, I think as the agenda has 00:12:49:20 00:12:51:07 just mentioned, the fact that the 00:12:51:12 00:12:53:01 first foundation has an existing 00:12:53:16 00:12:55:07 infrastructure, has a governance 00:12:55:08 00:12:57:02 framework, it has a things that seem 00:12:57:09 00:12:58:13 trivial, like a capacity to 00:12:58:14 00:12:59:24 translate standards into different 00:13:00:00 00:13:01:04 languages that really matter for 00:13:01:05 00:13:02:05 getting these things done. 00:13:02:16 00:13:04:01 So you have a framework already in 00:13:04:02 00:13:04:23 place. 00:13:04:24 00:13:06:14 I think absolutely critical is you 00:13:06:15 00:13:07:24 need the support of the broader 00:13:08:00 00:13:08:24 ecosystem. 00:13:08:25 00:13:11:04 So if the strong investor support 00:13:11:05 00:13:12:14 strong corporate support and 00:13:13:00 00:13:14:14 strong support from regulators and 00:13:14:15 00:13:16:07 jurisdictions around the world, then 00:13:16:08 00:13:17:08 it can happen very quickly. 00:13:17:13 00:13:18:24 But that support actually does need 00:13:19:00 00:13:19:24 to come together. 00:13:20:11 00:13:22:07 The setting accounting standards 00:13:22:08 00:13:23:16 is not a quick process, and 00:13:24:09 00:13:25:10 it's actually really important. 00:13:25:11 00:13:27:11 The IFRS Foundation itself has 00:13:27:12 00:13:29:10 a faster track, more entrepreneurial 00:13:29:11 00:13:31:07 mechanism for progressing 00:13:31:08 00:13:32:10 sustainability standards. 00:13:32:22 00:13:34:12 Final thing to say, there's a lot 00:13:34:22 00:13:36:09 of existing work is already been 00:13:36:10 00:13:37:08 done. 00:13:37:09 00:13:38:21 So if you take the work of the task 00:13:38:22 00:13:40:17 force on public disclosure 00:13:41:04 00:13:43:00 by the work of the other standards, 00:13:43:01 00:13:44:10 such as a framework providers in 00:13:44:11 00:13:46:03 this space, you can get to a common 00:13:46:06 00:13:47:11 standard really quite quickly. 00:13:47:12 00:13:48:22 If the motivation's there. 00:13:49:16 00:13:51:07 Sandy, I want to come to you now. 00:13:51:08 00:13:53:00 You know, Richard has just said how 00:13:53:01 00:13:54:05 important the support of 00:13:54:22 00:13:55:24 the ecosystem is. 00:13:56:00 00:13:57:07 And without question, that means 00:13:57:08 00:13:58:07 investors. 00:13:58:08 00:13:59:20 At BlackRock you're using this 00:13:59:22 00:14:01:08 information every day to make 00:14:01:18 00:14:02:18 actual decisions. 00:14:02:19 00:14:04:04 And so I want to understand your 00:14:04:05 00:14:05:13 perspective on why 00:14:06:08 00:14:07:18 why are these disclosures are 00:14:07:25 00:14:10:03 important for your decision making. 00:14:10:04 00:14:12:14 And actually, why is convergence 00:14:12:15 00:14:13:24 so important? Why do we need to be 00:14:14:00 00:14:15:19 talking about global mandatory at 00:14:15:20 00:14:17:16 this point rather than what we have 00:14:17:17 00:14:18:15 had? 00:14:18:16 00:14:19:11 Great question. 00:14:19:12 00:14:20:22 And I think anyone who's read 00:14:21:05 00:14:23:06 Larry's 2021 letter, our CEO 00:14:23:07 00:14:24:22 Larry Fink's letter will know how 00:14:25:10 00:14:27:06 committed we are to our conviction 00:14:27:07 00:14:28:18 in our investment conviction that 00:14:28:19 00:14:30:06 sustainability risk is, in fact 00:14:30:18 00:14:32:06 an investment risk for our clients 00:14:32:07 00:14:34:20 and also managing sustainability 00:14:34:21 00:14:36:12 risk well presents opportunities. 00:14:36:13 00:14:38:10 So I think Larry said in his letter, 00:14:38:11 00:14:40:01 there's no company that will find 00:14:40:02 00:14:41:22 that its business model is untouched 00:14:41:23 00:14:43:13 by the transition to a low carbon 00:14:43:14 00:14:44:10 economy. 00:14:44:11 00:14:46:10 And last year we said 00:14:46:19 00:14:48:08 climate risk is investment risk. 00:14:48:12 00:14:49:10 We think there'll be this 00:14:49:11 00:14:51:06 fundamental reallocation of 00:14:51:07 00:14:52:06 capital. 00:14:52:07 00:14:53:21 And then a few few months later, 00:14:53:25 00:14:55:11 people said, well, what about covid? 00:14:55:12 00:14:57:02 Might that actually delay it? 00:14:57:08 00:14:58:20 But in fact, what we've seen during 00:14:59:01 00:15:01:01 2020 is an acceleration 00:15:01:05 00:15:03:00 of that reallocation of capital. 00:15:03:06 00:15:05:05 And we've also seen in parallel 00:15:05:06 00:15:06:16 to the changes associated with 00:15:06:17 00:15:07:22 climate risk, some really 00:15:08:03 00:15:10:07 significant events that the pandemic 00:15:10:08 00:15:11:22 has shown in terms of companies' 00:15:12:12 00:15:13:23 social and economic licence to 00:15:13:25 00:15:16:01 operate. So it's not just 00:15:16:02 00:15:17:16 about climate risk, but it's this 00:15:18:02 00:15:19:17 incredibly fragile ecosystem that 00:15:19:25 00:15:21:15 we're living in and how companies 00:15:21:24 00:15:23:08 are increasingly expected to 00:15:23:22 00:15:24:22 be playing a part. 00:15:25:04 00:15:26:23 So then what does that mean in terms 00:15:27:01 00:15:29:01 of data and sustainability 00:15:29:02 00:15:30:20 disclosure? How do you get from this 00:15:30:21 00:15:32:15 investment thesis to 00:15:33:00 00:15:34:00 what we're looking for? 00:15:34:01 00:15:35:22 Well, if our investors want to 00:15:35:23 00:15:37:21 actually express that conviction, 00:15:38:01 00:15:39:17 then they need information and they 00:15:39:18 00:15:40:18 use it in two ways. 00:15:40:19 00:15:42:10 One would be at a company specific 00:15:42:21 00:15:44:19 level to understand this 00:15:44:20 00:15:46:21 is the value of this company, 00:15:46:22 00:15:48:06 not just as a function of its 00:15:48:07 00:15:49:20 financial statements, but also a 00:15:50:01 00:15:51:04 function of the broader 00:15:51:22 00:15:53:01 sustainability, risk and 00:15:53:19 00:15:55:11 opportunity that it faces. 00:15:55:12 00:15:56:20 You know, as Richard mentioned, it's 00:15:56:21 00:15:58:06 not just what's in those backward 00:15:58:07 00:15:59:13 looking financial statements. 00:15:59:14 00:16:00:13 It matters. 00:16:00:14 00:16:01:19 But beyond that, we're also 00:16:01:20 00:16:03:18 interested in looking at 00:16:03:19 00:16:05:09 a comparable way across companies 00:16:06:01 00:16:07:22 and being able to form 00:16:07:23 00:16:10:01 products that will tilt toward 00:16:10:02 00:16:11:12 companies that are managing that 00:16:11:13 00:16:12:24 sustainability risk better and 00:16:13:10 00:16:15:03 away from companies that are not 00:16:15:04 00:16:16:03 doing so well. 00:16:16:04 00:16:17:16 And we saw, for example, in the 00:16:17:22 00:16:18:22 formation of ESG-oriented 00:16:21:07 00:16:23:04 indices, the products around those 00:16:23:05 00:16:24:16 last year, 80 percent of those 00:16:25:06 00:16:27:09 outperformed their traditional 00:16:27:10 00:16:28:23 benchmark during the course of the 00:16:28:24 00:16:30:20 year, and that other research 00:16:30:21 00:16:32:07 confirms similar findings. 00:16:32:08 00:16:34:07 So we really see that this is not 00:16:34:08 00:16:35:25 just a cyclical event, but really a 00:16:36:03 00:16:37:06 structural trend. 00:16:37:10 00:16:38:19 As more and more investors are 00:16:38:20 00:16:40:17 seeking to find ways to put 00:16:40:18 00:16:42:17 their money toward their belief 00:16:42:18 00:16:43:21 that we share, which is that 00:16:43:22 00:16:45:08 sustainability is an important 00:16:45:11 00:16:46:11 investment theme. 00:16:46:17 00:16:48:04 So why do we need the common 00:16:48:05 00:16:49:02 standards then? 00:16:49:03 00:16:50:22 Well, look, I mean, we've done a lot 00:16:50:23 00:16:52:09 in the last year, particularly 00:16:52:24 00:16:54:15 our stewardship group has met with 00:16:54:16 00:16:56:03 the companies that we invest in on 00:16:56:04 00:16:58:04 behalf of our clients to ask 00:16:58:05 00:17:00:04 them to do disclosers using 00:17:00:05 00:17:01:19 the TCFD framework. 00:17:01:23 00:17:03:13 We're also very interested in the 00:17:03:22 00:17:05:16 standards that are set out by 00:17:06:01 00:17:07:24 SASB they're specific, 00:17:08:07 00:17:09:24 they're industry relevant, 00:17:10:04 00:17:11:23 very suitable for the kind of 00:17:11:24 00:17:13:08 investment decisions we need to 00:17:13:09 00:17:14:24 make. And there's been tremendous 00:17:15:02 00:17:16:20 progress in those standards. 00:17:16:21 00:17:18:12 And we've seen now seventeen hundred 00:17:18:18 00:17:19:18 TCFD reporters. 00:17:20:02 00:17:21:20 We've now have 400 percent increase 00:17:22:05 00:17:24:07 in SASB reporters in the last year. 00:17:24:16 00:17:26:16 But that said, companies are still 00:17:26:17 00:17:28:02 facing a variety of different 00:17:28:23 00:17:30:24 possible ways of disclosing. 00:17:31:03 00:17:32:03 It is for them a bit 00:17:32:25 00:17:34:13 of an alphabet soup still. 00:17:34:18 00:17:36:07 And then that means that we as 00:17:36:08 00:17:38:00 investors don't get the information 00:17:38:01 00:17:39:20 that we need. So for that reason, 00:17:40:01 00:17:41:19 we are ready for the Sustainability 00:17:42:03 00:17:43:12 Standards Board to stand up. 00:17:43:17 00:17:45:13 We're very enthusiastic about 00:17:45:19 00:17:46:19 the Cop26 deadline 00:17:47:17 00:17:49:04 that the trustees have set. 00:17:49:11 00:17:50:11 And our view is 00:17:51:07 00:17:53:02 that the IFRS is just the 00:17:53:03 00:17:54:18 perfect organisation to take this 00:17:54:20 00:17:56:21 on. I think we everyone on this call 00:17:56:22 00:17:58:05 and hundreds of others have been 00:17:58:06 00:17:59:22 really supportive of this idea 00:18:00:02 00:18:02:06 because that single global standard 00:18:02:10 00:18:03:24 will help both the companies and 00:18:04:10 00:18:06:07 ourselves as investors to be 00:18:06:08 00:18:08:01 able to understand this incredibly 00:18:08:02 00:18:09:13 important set of risks for the 00:18:09:19 00:18:10:20 investor community. 00:18:11:07 00:18:12:02 Thank you, Sandy. 00:18:12:03 00:18:13:18 That's great. And and really 00:18:13:19 00:18:15:01 obviously brings it home in 00:18:15:19 00:18:17:01 terms of how it actually affects 00:18:17:02 00:18:18:13 decisions, which is what this is all 00:18:18:14 00:18:20:07 about. And on that note, 00:18:20:12 00:18:22:06 I wanted just to bring you in 00:18:22:13 00:18:23:16 Elizabeth, and I'm going to come 00:18:23:17 00:18:24:21 back to you later as well. 00:18:24:22 00:18:26:14 But you're unique insofar 00:18:27:01 00:18:28:14 as you have the experience 00:18:29:00 00:18:30:15 not only in asset management, but 00:18:30:16 00:18:32:12 also in terms of being a director 00:18:32:13 00:18:33:20 on the board of large companies. 00:18:34:02 00:18:35:22 You also chair the Impact Investing 00:18:35:23 00:18:37:09 Institute and therefore 00:18:37:18 00:18:39:11 you're exposed to changing investor 00:18:39:16 00:18:41:05 preferences I want to come back to. 00:18:41:11 00:18:43:08 But obviously also purpose 00:18:43:09 00:18:44:09 driven business. 00:18:44:17 00:18:46:02 Now, Sandy was talking about purpose 00:18:46:03 00:18:48:08 driven business, and I imagine 00:18:48:09 00:18:49:14 that many of the purpose driven 00:18:49:15 00:18:51:05 businesses that you're looking at, 00:18:51:12 00:18:52:16 Sandy, are the big ones. 00:18:53:03 00:18:54:22 In impact investing, you get a whole 00:18:55:00 00:18:56:22 range right down to 00:18:56:23 00:18:58:14 smaller SMEs, 00:18:59:05 00:19:00:11 but also flavours in terms 00:19:01:01 00:19:02:10 of how they're mission driven, 00:19:02:11 00:19:03:18 including social enterprises. 00:19:03:21 00:19:05:16 And we have a question from 00:19:05:17 00:19:07:13 Ryan Chien-Ming in British Columbia, 00:19:07:14 00:19:09:01 Canada, who rightly says, and I 00:19:09:10 00:19:10:23 think, Elizabeth, it's helpful to 00:19:10:24 00:19:11:24 come to you for this. 00:19:12:15 00:19:14:00 How do you see sustainability 00:19:14:05 00:19:16:02 reporting having an effect 00:19:16:10 00:19:17:14 on social enterprises? 00:19:17:21 00:19:19:00 Are we talking about something 00:19:19:01 00:19:19:22 that's foreign to them? 00:19:19:23 00:19:21:02 Or, in fact, is this their bread and 00:19:21:03 00:19:22:23 butter? How do you think about that? 00:19:23:10 00:19:24:09 Well, thanks, Clara. 00:19:24:10 00:19:25:20 And it is a great question on 00:19:26:05 00:19:27:17 two levels. One, it's around 00:19:27:24 00:19:29:19 outcomes rather than just risk 00:19:29:20 00:19:31:05 avoidance. And secondly, it's 00:19:31:06 00:19:32:20 talking about small companies as 00:19:32:23 00:19:34:00 well as large companies. 00:19:34:11 00:19:36:09 And I think that's a really, really 00:19:36:10 00:19:37:20 important dimension to think about 00:19:38:07 00:19:39:09 whatever we do. 00:19:39:10 00:19:41:08 And I wholeheartedly support 00:19:41:09 00:19:43:01 the idea that the SSB should be set 00:19:43:05 00:19:45:09 up as soon as possible and encourage 00:19:45:10 00:19:47:03 global convergence from existing 00:19:47:04 00:19:48:03 work that's been done. 00:19:48:04 00:19:49:08 There's a lot of work that's been 00:19:49:09 00:19:50:17 done, but we also have to be 00:19:50:23 00:19:52:20 proportionate and we have to be 00:19:52:21 00:19:53:25 very aware that we don't 00:19:54:18 00:19:56:06 put such a burden on small 00:19:56:07 00:19:57:01 enterprises. 00:19:57:02 00:19:58:08 But it becomes very difficult. 00:19:58:21 00:20:00:09 And I think we've learnt lessons on 00:20:00:10 00:20:01:14 the accounting side that we can 00:20:01:15 00:20:03:02 apply from from the get go when 00:20:03:14 00:20:04:20 we think about small social 00:20:04:21 00:20:05:21 enterprises. 00:20:05:22 00:20:07:13 But the key thing for me is that we 00:20:07:14 00:20:09:08 use consistent language and 00:20:09:09 00:20:11:07 consistent frameworks, because 00:20:11:08 00:20:12:18 the one thing you don't want if you 00:20:12:19 00:20:13:17 are an entrepreneur and you're 00:20:13:18 00:20:15:03 starting up with your purpose 00:20:15:16 00:20:17:19 driven or profit driven or both 00:20:18:02 00:20:19:19 is to suddenly find halfway through 00:20:19:20 00:20:21:05 your evolution of your company, 00:20:21:09 00:20:23:02 you've got to completely relearn the 00:20:23:03 00:20:24:12 way in which you engage with capital 00:20:24:13 00:20:25:11 markets. 00:20:25:12 00:20:27:11 So we have to find a continuum 00:20:27:16 00:20:29:04 from the large companies through to 00:20:29:05 00:20:31:07 the smaller ones that is relevant. 00:20:31:12 00:20:32:16 And I think that's very, very 00:20:32:17 00:20:34:07 important. And that means thinking 00:20:34:13 00:20:36:06 through ahead of time the different 00:20:36:14 00:20:38:22 constituencies and being pragmatic 00:20:39:04 00:20:41:05 as well as purposeful in what we do. 00:20:42:02 00:20:43:25 There's no doubt at all that the 00:20:44:00 00:20:46:01 combination of climate change, 00:20:46:13 00:20:48:18 social justice movement and covid 00:20:48:25 00:20:50:10 has put the whole question of 00:20:50:16 00:20:51:16 purpose and outcomes 00:20:52:17 00:20:54:02 and responsibility onto large 00:20:54:10 00:20:56:01 corporate agendas as well as social 00:20:56:02 00:20:57:02 enterprises. 00:20:57:05 00:20:59:06 And I think if we can find 00:20:59:07 00:21:01:07 a way of engaging with capital 00:21:01:08 00:21:03:08 markets in a consistent way around 00:21:03:09 00:21:04:12 that, that will be very helpful 00:21:04:13 00:21:06:03 because there is still a plethora 00:21:06:10 00:21:07:10 of different ways in which 00:21:07:11 00:21:08:16 information is requested from 00:21:08:17 00:21:09:14 companies. 00:21:09:15 00:21:11:13 But let's do it pragmatically 00:21:11:14 00:21:12:20 and let's do it in a way that could 00:21:12:21 00:21:15:00 reflect a small, purpose 00:21:15:01 00:21:16:24 driven company and a large 00:21:17:01 00:21:18:13 profit driven company, because 00:21:19:02 00:21:20:18 at the point of meeting, they will 00:21:20:23 00:21:22:01 overlap on key criteria 00:21:22:20 00:21:24:15 and key essentials, and we know 00:21:24:16 00:21:26:07 enough from learning our accounting 00:21:26:08 00:21:27:19 standards progress that we can 00:21:28:06 00:21:29:15 anticipate some of that. 00:21:30:04 00:21:31:15 The other thing, though, is to make 00:21:31:16 00:21:32:22 sure we don't try and strive for 00:21:32:23 00:21:34:00 perfection and spend so 00:21:34:19 00:21:36:06 long perfecting things that we 00:21:36:18 00:21:38:03 aren't putting them into the market 00:21:38:04 00:21:39:00 for use. 00:21:39:01 00:21:41:05 This is a very, very fast space. 00:21:41:10 00:21:43:19 It is dynamic and it is situational. 00:21:44:02 00:21:45:17 And whilst it's structural, 00:21:45:24 00:21:47:09 as Sandy said, and it's what 00:21:47:19 00:21:49:08 regulators are expecting, which is 00:21:49:09 00:21:51:02 what Tajinder said, we should really 00:21:51:12 00:21:53:03 start moving forward from existing 00:21:53:06 00:21:54:24 standards as smoothly as possible 00:21:55:05 00:21:56:12 so that we can start to get the 00:21:56:13 00:21:58:05 experience and start to get track 00:21:58:06 00:22:00:05 records of the relevance of data 00:22:00:15 00:22:02:12 as forward indicators of future 00:22:02:13 00:22:04:02 performance and value creation. 00:22:05:04 00:22:06:02 That's extremely helpful. 00:22:06:03 00:22:07:06 And actually, I want to come back to 00:22:07:07 00:22:08:21 Tajinder, Elizabeth, in light of 00:22:08:22 00:22:10:18 what you've said, because we 00:22:10:19 00:22:12:10 both need to cover the spectrum of 00:22:12:13 00:22:14:17 large to very small companies 00:22:14:22 00:22:16:14 with different kinds of governance 00:22:16:20 00:22:17:18 and missions. 00:22:17:19 00:22:19:15 We also need to prevent 00:22:19:22 00:22:21:11 fragmentation globally, 00:22:22:06 00:22:23:08 geographically and and 00:22:24:03 00:22:25:07 so, Tajinder, want to come back to 00:22:25:08 00:22:27:02 you, because you really do 00:22:27:03 00:22:28:15 look at things globally. 00:22:28:21 00:22:30:04 Why is it so important that 00:22:30:20 00:22:31:25 we get this right from the 00:22:31:26 00:22:32:25 beginning? 00:22:33:08 00:22:34:07 Sure. 00:22:34:08 00:22:36:01 I think absolutely. 00:22:36:16 00:22:37:25 If you were talking about 00:22:38:20 00:22:40:02 20 years ago when the IFRS 00:22:40:18 00:22:41:25 Foundation was set up, now 00:22:42:18 00:22:44:03 20 years after that, capital 00:22:44:05 00:22:45:18 markets, if anything, even more 00:22:46:01 00:22:47:06 globalised as an example, 00:22:48:06 00:22:49:10 you know, in a completely different 00:22:49:11 00:22:51:07 area, we found that derivatives 00:22:51:08 00:22:53:01 markets are so global that we needed 00:22:53:04 00:22:54:12 international standards for 00:22:55:04 00:22:57:03 financial market infrastructures and 00:22:57:05 00:22:58:06 for margin requirements. 00:22:58:20 00:23:00:08 And last year 00:23:00:20 00:23:02:11 or the year before that, we had done 00:23:02:12 00:23:04:05 some work on market segmentation 00:23:04:14 00:23:06:06 and market participants and 00:23:06:07 00:23:08:11 authorities realised and recognised 00:23:08:12 00:23:09:14 the need to avoid harmful 00:23:09:15 00:23:11:14 fragmentation driven 00:23:11:17 00:23:13:07 by regulatory measures as that by 00:23:13:14 00:23:15:09 itself can give rise to 00:23:15:10 00:23:17:07 different risks and therefore 00:23:17:08 00:23:19:08 having global principles is helpful 00:23:19:09 00:23:20:08 in this context. 00:23:21:04 00:23:22:13 On the other hand, I think we can 00:23:22:14 00:23:23:13 say that because this 00:23:24:12 00:23:25:23 is basically our bread and butter 00:23:26:04 00:23:28:06 establishing global standards, that 00:23:28:07 00:23:30:07 global standards and principles can 00:23:30:08 00:23:31:18 work well, can interact well 00:23:32:04 00:23:33:04 with the local. 00:23:33:13 00:23:35:15 And in this current context, maybe 00:23:35:24 00:23:37:16 the way I would like to think about 00:23:37:17 00:23:39:13 it is going back to the building 00:23:39:16 00:23:41:01 block building blocks approach 00:23:41:18 00:23:43:23 that I just mentioned, which is that 00:23:44:16 00:23:46:17 the IFRS, as the 00:23:47:02 00:23:48:14 SSB, the Sustainability Standards 00:23:48:15 00:23:50:14 Board standards should really 00:23:50:15 00:23:51:22 be the global standard on the 00:23:51:23 00:23:53:01 enterprise value side. 00:23:53:14 00:23:55:03 But we probably need a mechanism 00:23:55:11 00:23:57:02 that is able to filter in 00:23:57:12 00:23:59:05 the elements from the grey box, from 00:23:59:06 00:24:00:20 the outermost box, from the 00:24:01:02 00:24:02:15 broader materiality perspective, 00:24:03:04 00:24:04:15 which are more likely to be 00:24:04:16 00:24:05:17 jurisdiction specific. 00:24:05:18 00:24:07:06 So there is an interplay between 00:24:07:10 00:24:08:18 global on the one hand and 00:24:08:19 00:24:10:09 jurisdiction specific on the other 00:24:10:17 00:24:12:14 hand. And that's why 00:24:12:15 00:24:14:02 we hope that the solution that is 00:24:14:03 00:24:15:06 being developed now will 00:24:15:24 00:24:17:12 be supported globally, but that 00:24:17:25 00:24:19:20 it should allow interoperability 00:24:20:04 00:24:21:14 with jurisdictional specific 00:24:21:15 00:24:23:10 standards. So maybe that's my 00:24:23:11 00:24:25:00 my answer, really Clara, to your 00:24:25:05 00:24:26:05 point. 00:24:26:25 00:24:27:19 Thank you. 00:24:27:20 00:24:29:12 Yes. And I think the role of 00:24:29:19 00:24:31:14 jurisdiction, specific 00:24:31:25 00:24:34:07 work here is so intertwined 00:24:34:08 00:24:36:18 with local public policy priorities 00:24:37:13 00:24:38:13 and there needs to be more 00:24:38:14 00:24:39:14 conversation about that. 00:24:39:15 00:24:41:15 How what can be global, what needs 00:24:41:16 00:24:43:03 to be local inherently, and how 00:24:43:11 00:24:45:11 can we celebrate both, if you will, 00:24:45:20 00:24:47:10 with a system that takes both into 00:24:47:11 00:24:48:10 account? 00:24:48:15 00:24:49:16 Richard, we have an interesting 00:24:49:17 00:24:50:18 question in the chat, which I want 00:24:50:19 00:24:51:24 to bring back to you. 00:24:52:08 00:24:53:09 So it's someone called Arnando 00:24:53:13 00:24:54:20 Asaka. Thank you for asking the 00:24:54:21 00:24:55:14 question. 00:24:55:15 00:24:57:02 And he's asking, how can we 00:24:57:03 00:24:59:01 incorporate some form of discounting 00:24:59:02 00:25:00:03 or bring externalities 00:25:01:02 00:25:02:05 into the balance sheets? 00:25:02:13 00:25:03:23 And I think there's quite a lot in 00:25:03:24 00:25:05:01 there. And you can look at that in 00:25:05:02 00:25:05:21 different ways. 00:25:05:22 00:25:07:15 But, you know, he makes the point 00:25:07:16 00:25:09:03 that the mispricing of climate risk, 00:25:09:12 00:25:10:13 in his view, is bigger than the 00:25:11:01 00:25:12:01 mispricing of subprime mortgages. 00:25:12:16 00:25:14:00 And so I wanted just to hear 00:25:14:12 00:25:15:21 some reflections from you, Richard. 00:25:16:10 00:25:18:04 How far can the balance sheet per se 00:25:18:07 00:25:19:04 take us? 00:25:19:05 00:25:21:01 And then what else do we 00:25:21:02 00:25:22:05 need to be doing? Just to come back 00:25:22:06 00:25:23:19 to your earlier conceptual point? 00:25:24:23 00:25:26:06 I'm smiling because I've just 00:25:26:10 00:25:27:17 finished revising a paper 00:25:28:08 00:25:29:14 on precisely that question so I can 00:25:29:15 00:25:31:09 send Arnando a copy of that 00:25:31:17 00:25:33:07 if if that would be helpful. 00:25:33:15 00:25:35:12 The balance sheet does not 00:25:35:15 00:25:37:07 anticipate the future because there 00:25:37:08 00:25:38:13 is no such thing as reliable 00:25:38:14 00:25:39:19 information about the future. 00:25:40:04 00:25:41:17 There is only reliable information 00:25:41:18 00:25:43:01 about the past. You can't you can't 00:25:43:02 00:25:44:01 audit the future. 00:25:44:02 00:25:45:16 So accounting has a niche which is 00:25:45:17 00:25:47:05 providing one type of input into 00:25:47:16 00:25:48:16 investment decisions. 00:25:49:18 00:25:51:00 Likewise on externalities, the 00:25:51:01 00:25:52:22 accounts are not intended to capture 00:25:52:23 00:25:54:13 externalities, and if you start to 00:25:54:16 00:25:56:03 build those into the accounts, you 00:25:56:04 00:25:57:19 compromise the usefulness of the 00:25:57:20 00:25:59:21 existing usefulness of the accounts 00:26:00:05 00:26:02:03 so you don't undermine financial 00:26:02:04 00:26:03:22 accounts as they are currently done. 00:26:04:05 00:26:05:24 When you do need to do is complement 00:26:05:25 00:26:07:04 them with other information. 00:26:07:14 00:26:08:20 So the information gap is 00:26:09:14 00:26:10:25 not because the balance sheet isn't 00:26:10:26 00:26:12:22 good enough. The information gap is 00:26:12:23 00:26:14:09 because there isn't sufficient 00:26:14:10 00:26:16:09 sustainability related disclosures 00:26:16:16 00:26:17:23 to go alongside you. 00:26:19:01 00:26:20:16 You're listening to Leadership in 00:26:20:17 00:26:22:07 Extraordinary Times with me, Peter 00:26:22:10 00:26:23:10 Tufano. 00:26:23:14 00:26:25:03 In this episode, we're looking at 00:26:25:04 00:26:26:12 how capital markets can take 00:26:26:13 00:26:28:08 sustainability to the next level. 00:26:29:04 00:26:30:22 To address this question, we've got 00:26:30:23 00:26:32:25 four top authorities in the field, 00:26:33:13 00:26:35:10 Sandy Boss, Global Head 00:26:35:11 00:26:36:18 of Investment Stewardship for 00:26:36:19 00:26:38:25 BlackRock, Elizabeth Corley, 00:26:39:09 00:26:40:19 Chair of the Impact Investing 00:26:40:20 00:26:41:20 Institute. 00:26:41:25 00:26:44:04 Tajinder Singh, Deputy Secretary 00:26:44:05 00:26:45:12 General of the International 00:26:45:13 00:26:46:19 Organisation of Securities 00:26:46:20 00:26:47:18 Commissions. 00:26:47:19 00:26:49:09 And Richard Barker, Professor of 00:26:49:10 00:26:50:22 Accounting and Associate Dean of 00:26:50:23 00:26:52:07 Faculty here at Said Business 00:26:52:08 00:26:53:08 School. 00:26:53:09 00:26:54:18 Chairing the event is Clara Barby, 00:26:55:12 00:26:57:01 Chief Executive of the Impact 00:26:57:02 00:26:58:02 Management Project. 00:26:59:14 00:27:00:21 The discussion now moves on to 00:27:00:22 00:27:02:20 climate, the International 00:27:02:21 00:27:04:05 Financial Reporting Standards 00:27:04:06 00:27:05:15 Foundation has tested in its 00:27:06:04 00:27:07:21 consultation whether it should take 00:27:07:23 00:27:08:23 the lead on climate. 00:27:09:20 00:27:11:08 There were nearly 600 responses 00:27:11:25 00:27:13:20 to that consultation and an 00:27:13:21 00:27:16:00 overwhelming response that, yes, 00:27:16:08 00:27:17:08 it should. 00:27:17:16 00:27:19:04 But there's also an overwhelming 00:27:19:05 00:27:20:07 call not to stop there. 00:27:21:13 00:27:22:21 We're going to pick this topic up 00:27:22:22 00:27:24:15 with Sandy Boss for a practitioner's 00:27:24:16 00:27:25:16 perspective, why does 00:27:26:11 00:27:29:11 BlackRock always talk about ESG 00:27:29:12 00:27:30:12 and not just E? 00:27:31:23 00:27:33:12 Elizabeth Corley follows on from 00:27:33:19 00:27:35:13 that to talk about this topic in the 00:27:35:14 00:27:37:23 context of the just transition. 00:27:38:13 00:27:39:13 As a society, why can 00:27:40:11 00:27:42:04 we not dislocate climate from other 00:27:42:10 00:27:43:10 matters? 00:27:43:22 00:27:44:22 First up, Sandy Boss. 00:27:46:10 00:27:48:02 One of our comments in the 00:27:48:03 00:27:49:16 consultation, which we responded to 00:27:49:17 00:27:51:14 on December 30th was, yes, 00:27:51:15 00:27:53:09 please climate and don't stop there. 00:27:53:10 00:27:54:16 So climate risk has become 00:27:55:10 00:27:57:10 so significant that now we're seeing 00:27:57:13 00:27:59:20 an increasing number of actual 00:28:00:04 00:28:02:03 significant multibillion dollar 00:28:02:04 00:28:04:03 write offs that energy companies 00:28:04:04 00:28:04:22 are taking. 00:28:04:23 00:28:06:06 But what we're also seeing is it's 00:28:06:07 00:28:08:06 affecting discount rates and cost 00:28:08:07 00:28:09:20 of capital as we're seeing a gap 00:28:10:08 00:28:11:15 between the companies that are 00:28:11:16 00:28:13:19 managing that sustainability well 00:28:13:22 00:28:14:25 and those that aren't. 00:28:15:05 00:28:16:10 But I think it's really important 00:28:16:11 00:28:17:24 for us to recognise that these are 00:28:17:25 00:28:19:12 not the only really significant 00:28:20:10 00:28:21:17 financial risks, 00:28:22:10 00:28:23:18 future financial risks that 00:28:23:23 00:28:25:01 companies are taking on. 00:28:25:02 00:28:26:13 So take the example of natural 00:28:26:25 00:28:28:12 capital. So a company depending 00:28:29:13 00:28:30:18 on biodiversity forestry 00:28:32:04 00:28:33:04 replenishment, water, you know, 00:28:34:02 00:28:35:03 WEF has estimated now 00:28:35:23 00:28:38:15 that 50 percent of GDP 00:28:38:16 00:28:40:19 is dependent on the use of 00:28:41:03 00:28:43:02 of nature in some fashion. 00:28:43:03 00:28:44:17 And I've seen data from Swiss Re 00:28:44:18 00:28:47:01 that says 20 percent of companies 00:28:47:05 00:28:48:12 actually have a dependence 00:28:49:16 00:28:50:24 for their business model on 00:28:51:22 00:28:54:09 an exposed or endangered ecosystem. 00:28:54:10 00:28:55:23 So that is a really significant 00:28:56:12 00:28:58:07 risk. Now, similarly, if 00:28:58:08 00:29:00:15 you look at social issues, obviously 00:29:00:16 00:29:02:05 we've talked a lot about purposeful 00:29:02:06 00:29:03:19 business management and how that can 00:29:03:20 00:29:05:10 be a positive differentiator. 00:29:05:15 00:29:06:24 But then you see recently in 00:29:07:11 00:29:09:01 the past couple of weeks, 00:29:09:11 00:29:10:18 Vale, the Brazilian mining 00:29:11:12 00:29:13:24 company, taking a seven billion 00:29:14:00 00:29:15:05 financial cost associated 00:29:15:23 00:29:18:06 with the tragic and devastating 00:29:18:22 00:29:20:11 dampers that occurred a couple of 00:29:20:12 00:29:21:25 years ago. So these are you know, 00:29:22:00 00:29:23:21 it's not just climate issues, it's a 00:29:23:22 00:29:25:11 full range of social issues that 00:29:25:17 00:29:27:04 matter. And if we didn't think 00:29:27:17 00:29:28:20 about our ESG approach, 00:29:29:23 00:29:30:24 well, that's kind of what the 00:29:31:00 00:29:32:07 investment research shows us. 00:29:32:16 00:29:34:14 So I talked earlier about the 00:29:34:15 00:29:36:08 products that were forming and where 00:29:36:09 00:29:37:23 we're seeing differentiation. 00:29:38:03 00:29:39:03 And thus far we 00:29:39:24 00:29:41:21 have formed some low carbon 00:29:41:22 00:29:42:25 transition products. 00:29:43:00 00:29:44:21 It's early days for investing 00:29:44:22 00:29:46:24 in a net zero transition, 00:29:47:03 00:29:48:19 and I believe those will show 00:29:49:06 00:29:51:15 promising return characteristics. 00:29:51:19 00:29:53:13 But what our data shows us right now 00:29:53:16 00:29:55:17 is that the risk returns 00:29:55:18 00:29:57:10 associated with E, S, and G 00:29:58:17 00:30:00:09 oriented investing, bringing those 00:30:00:14 00:30:02:13 factors in together, that's 00:30:02:14 00:30:03:17 where we're able to see really 00:30:03:18 00:30:05:15 differentiated performance, 00:30:06:03 00:30:07:17 superior risk return performance 00:30:08:10 00:30:09:19 vis a vis a sort of standard 00:30:10:11 00:30:11:18 traditional index. 00:30:12:13 00:30:14:12 Great. And Elizabeth, I'd love your 00:30:14:23 00:30:15:23 commentary. 00:30:16:11 00:30:17:14 Sandy's spoken so well from the 00:30:17:15 00:30:19:02 perspective of enterprise value 00:30:19:18 00:30:21:11 and why these factors interrelate. 00:30:21:12 00:30:23:07 What about the perspective of 00:30:23:12 00:30:24:22 society and what we need? 00:30:25:11 00:30:26:23 Well, the two are inextricably 00:30:26:24 00:30:27:24 linked as Sandy said. 00:30:28:07 00:30:29:21 And I think we we have a sort of 00:30:29:22 00:30:31:09 legacy from the last century of 00:30:31:10 00:30:33:06 bucketing things as economic or 00:30:33:07 00:30:34:16 social or political. 00:30:34:25 00:30:36:15 And if anything we've learnt in the 00:30:36:16 00:30:38:08 last few years is 00:30:38:16 00:30:40:15 these are very porous membranes 00:30:40:24 00:30:42:13 and what might be economic today 00:30:42:22 00:30:44:12 can become social tomorrow and vice 00:30:44:13 00:30:46:11 versa. And this is particularly 00:30:46:12 00:30:48:07 true as we address climate 00:30:48:08 00:30:49:22 transition, a transition to a net 00:30:50:06 00:30:52:07 zero world, because in 00:30:52:08 00:30:54:15 any transition, in any industrial 00:30:54:16 00:30:56:04 revolution, there are winners and 00:30:56:05 00:30:57:15 losers. And we know that capital 00:30:57:16 00:30:59:21 markets are completely indifferent 00:31:00:01 00:31:01:02 to winners and losers. 00:31:01:03 00:31:02:09 They're not there to police 00:31:02:10 00:31:03:08 morality. 00:31:03:09 00:31:04:23 They're not there as a value system. 00:31:04:24 00:31:05:23 However, if you have 00:31:06:24 00:31:08:15 short term winners, at the 00:31:08:16 00:31:10:13 consequence of long term losers, 00:31:10:17 00:31:12:06 that is an unbalanced transition 00:31:12:13 00:31:14:00 that just will not last; it will 00:31:14:01 00:31:15:01 implode. 00:31:15:03 00:31:16:20 And as Sandy commented on, 00:31:16:25 00:31:18:11 there is no doubt at all that the 00:31:18:12 00:31:20:09 more thought given to the way in 00:31:20:10 00:31:21:25 which we now renew 00:31:22:11 00:31:23:16 post covid, building back 00:31:24:12 00:31:26:15 into not just a greener 00:31:26:16 00:31:28:01 environment, but one which is more 00:31:28:02 00:31:29:14 sustainable on many factors and 00:31:29:25 00:31:31:20 is fairer, I think will 00:31:31:21 00:31:33:16 really make resilient economies. 00:31:33:21 00:31:35:10 We want to stimulate innovation, 00:31:35:11 00:31:37:08 create jobs, sustainable jobs and 00:31:37:09 00:31:39:03 skills. And what better way to do it 00:31:39:12 00:31:41:02 than deploy talent to - and capital 00:31:41:03 00:31:42:19 - to address the biggest challenge 00:31:42:24 00:31:43:25 this world faces. 00:31:44:11 00:31:46:04 But if we do that in a way which is 00:31:46:05 00:31:47:20 indiscriminate and doesn't reflect 00:31:48:02 00:31:49:16 on that wider responsibility, 00:31:50:08 00:31:51:21 then we cannot assume that those 00:31:51:22 00:31:53:11 returns are going to be sustainable 00:31:53:12 00:31:55:03 returns, whether that's profitable 00:31:55:11 00:31:56:14 or whether it's in terms of 00:31:56:15 00:31:58:15 political or regulatory acceptance 00:31:58:23 00:32:00:18 or whether it's consumer loyalty. 00:32:01:02 00:32:02:21 And I think it's, a question came in 00:32:03:00 00:32:05:02 around the whole question of 00:32:05:03 00:32:06:02 supply chain. 00:32:06:11 00:32:08:09 We know we've seen we talked 00:32:08:10 00:32:10:16 about that dreadful Vale experience, 00:32:10:23 00:32:12:02 but we know that there's an 00:32:12:03 00:32:13:02 expectation in 00:32:13:24 00:32:15:20 capital markets which don't think 00:32:15:21 00:32:16:21 they just act. 00:32:16:22 00:32:18:20 There's an expectation of sensible 00:32:18:21 00:32:19:23 supply chain behaviour. 00:32:20:11 00:32:22:13 When we discover that supply chain 00:32:22:14 00:32:24:04 mismanagement has happened, it has 00:32:24:12 00:32:26:19 very, very significant consequences 00:32:26:20 00:32:28:21 on valuations and customer loyalty 00:32:28:22 00:32:29:17 both. 00:32:29:18 00:32:30:23 So I think these things are 00:32:30:24 00:32:32:15 inextricably intertwined. 00:32:32:24 00:32:34:18 And certainly if you were sitting in 00:32:34:23 00:32:36:21 a corporate boardroom, you would 00:32:36:22 00:32:38:21 well be talking about carbon 00:32:38:22 00:32:40:09 and environmental things. 00:32:40:10 00:32:41:21 But equally, you'll be talking 00:32:42:05 00:32:44:07 about inclusion, diversity, 00:32:44:10 00:32:46:06 equality, approach to 00:32:46:07 00:32:47:22 supply chain, approach to the way 00:32:48:06 00:32:49:16 in which you look after your people, 00:32:49:17 00:32:51:17 gender and other inequalities, these 00:32:51:18 00:32:53:01 are inextricably linked. 00:32:53:24 00:32:55:05 Thank you. And we have another 00:32:55:06 00:32:56:10 question, Elizabeth. 00:32:56:11 00:32:58:08 We will talk about urgency as 00:32:58:09 00:33:00:08 a pointed question on. 00:33:00:12 00:33:02:04 Yes, what is the timeline? 00:33:02:11 00:33:04:05 So Tajinder perhaps a reflection 00:33:04:06 00:33:06:03 from you, and then I invite 00:33:06:04 00:33:07:24 obviously anyone else to weigh in. 00:33:09:04 00:33:10:19 Sure. I think probably 00:33:12:02 00:33:13:14 a good reference point is the amount 00:33:13:15 00:33:15:07 spent by the trustees of the Forest 00:33:15:08 00:33:16:23 Foundation, that was earlier this 00:33:16:24 00:33:18:21 month about what 00:33:18:22 00:33:19:21 the next steps are. 00:33:20:05 00:33:21:05 And there is a clear 00:33:22:03 00:33:24:01 recognition about the role of 00:33:24:02 00:33:25:25 the Forest Foundation, as 00:33:26:00 00:33:27:21 well as the 00:33:27:22 00:33:29:10 establishment of the Sustainability 00:33:29:11 00:33:30:13 Standards Board. So 00:33:31:09 00:33:33:09 what what that talks about is 00:33:33:10 00:33:34:17 that the trustees will produce a 00:33:34:18 00:33:36:18 definitive proposal by 00:33:36:19 00:33:38:05 the end of September 00:33:38:15 00:33:40:21 of this year, and it could possibly 00:33:40:22 00:33:42:18 lead to an announcement of the 00:33:42:19 00:33:44:12 establishment of the new SSB by 00:33:46:01 00:33:47:17 November 2021, which is basically 00:33:47:24 00:33:49:15 the property tax summit. 00:33:50:00 00:33:51:08 I think so. That's those are the 00:33:51:09 00:33:52:14 timelines. Now, that's about the 00:33:52:15 00:33:53:15 setting up of the SSB. 00:33:53:24 00:33:55:22 I think to that I would be at 00:33:56:01 00:33:57:16 the point that we've talked about 00:33:58:03 00:33:59:13 here, which is that there is it's 00:33:59:14 00:34:01:04 not like we're starting from scratch 00:34:01:16 00:34:02:24 in terms of, you know, 00:34:03:19 00:34:05:07 the work that has already happened 00:34:06:08 00:34:07:19 with the voluntary standard setters 00:34:07:21 00:34:08:21 there working together. 00:34:09:10 00:34:10:25 And therefore, there is a mass of 00:34:11:00 00:34:12:00 material. There is, on 00:34:12:22 00:34:13:20 the climate side we have the 00:34:13:21 00:34:15:03 prototype that is there. 00:34:15:16 00:34:17:09 And therefore there is that urgency 00:34:17:16 00:34:19:02 that we are all talking about is 00:34:19:03 00:34:21:00 actually pretty much ingrained 00:34:21:08 00:34:22:22 into the processes that are there. 00:34:23:07 00:34:24:15 And I think therefore that can 00:34:24:16 00:34:26:14 actually lead to a 00:34:26:15 00:34:28:04 very quick, now after the SSB 00:34:28:13 00:34:30:09 is set up, I think it can actually 00:34:30:10 00:34:32:07 lead to a very quick setting up 00:34:32:08 00:34:33:02 of the standard. 00:34:33:03 00:34:34:20 But let me just add one 00:34:35:05 00:34:36:21 caveat here, that 00:34:37:14 00:34:39:05 it is true, it is urgent, and that's 00:34:39:06 00:34:39:24 why we are all here. 00:34:39:25 00:34:41:19 We are wanting to get things done, 00:34:41:24 00:34:43:22 by yesterday, if possible, but 00:34:44:04 00:34:45:04 I think the when 00:34:46:02 00:34:48:01 we talk about the success of 00:34:48:02 00:34:49:21 the IFRS Foundation that 00:34:49:23 00:34:51:21 was set up 20 years ago, let's not 00:34:51:22 00:34:53:13 forget that due process is an 00:34:53:14 00:34:55:13 important element of 00:34:55:21 00:34:56:21 the staying power 00:34:57:21 00:34:59:20 and the acceptability of 00:35:00:02 00:35:02:07 a particular standard in the markets 00:35:02:12 00:35:03:12 and around the globe. 00:35:03:21 00:35:05:01 So urgency, yes, 00:35:06:14 00:35:07:21 impatience, somewhat, 00:35:08:17 00:35:09:25 but, speed, not at the cost 00:35:10:17 00:35:12:07 of due process is 00:35:12:21 00:35:13:21 one that I would make. 00:35:14:13 00:35:15:07 Great point. 00:35:15:08 00:35:16:24 And Sandy, if there are companies, 00:35:17:14 00:35:18:14 either actual 00:35:19:13 00:35:21:14 or potential investors of BlackRock 00:35:21:15 00:35:22:25 listening to this, what would 00:35:23:10 00:35:24:24 be your message to them in terms of 00:35:24:25 00:35:26:19 what they should be doing now rather 00:35:26:21 00:35:28:03 than sitting around waiting? 00:35:28:14 00:35:29:19 Well, yes. Thank you for asking, 00:35:29:20 00:35:31:06 because we do have a very specific 00:35:31:07 00:35:33:04 message, which is we would like 00:35:33:05 00:35:35:00 companies to be reporting using TCFD 00:35:35:23 00:35:36:23 four pillars. 00:35:37:14 00:35:39:14 So we want to see governance, risk 00:35:39:15 00:35:40:23 management, strategy targets 00:35:41:14 00:35:43:17 and metrics that show how companies 00:35:43:18 00:35:45:08 will be aligned toward that well 00:35:45:09 00:35:47:07 below two degree, ideally one point 00:35:47:08 00:35:49:04 five degree world, a net zero 00:35:49:05 00:35:50:12 by 2050 world. 00:35:50:17 00:35:52:09 We recognise that not every company 00:35:52:17 00:35:54:01 is in exactly the same place. 00:35:54:02 00:35:55:20 We don't think there should be a one 00:35:55:24 00:35:58:01 size fits all strategic pathway, 00:35:58:06 00:35:59:16 but it is very important for 00:35:59:24 00:36:01:08 companies to demonstrate how 00:36:01:24 00:36:03:09 they will be fitting into that 00:36:03:10 00:36:05:10 journey. And we asked for the SASB 00:36:05:11 00:36:07:10 standards for the industry and 00:36:07:11 00:36:08:20 that the company is in 00:36:09:10 00:36:11:06 and there, it's because in order to 00:36:11:07 00:36:12:15 develop that ESG perspective 00:36:13:12 00:36:15:04 that's so important, there are many 00:36:15:07 00:36:16:23 matters beyond climate that really 00:36:17:02 00:36:18:23 do matter to us as investors. 00:36:19:05 00:36:20:18 And we recognise that companies 00:36:21:13 00:36:23:01 have been reporting using other 00:36:23:02 00:36:24:15 standards. So, for example, 00:36:25:03 00:36:26:03 GRI, many of the 00:36:27:03 00:36:28:18 metrics can be mapped directly to 00:36:28:19 00:36:29:19 SASB standards. 00:36:29:20 00:36:31:07 So we ask companies to do that. 00:36:31:11 00:36:33:08 I mean, our hope coming back to 00:36:33:10 00:36:35:08 Tajinder's point is if the 00:36:35:09 00:36:37:04 private standard setters 00:36:37:08 00:36:39:12 can actually converge toward 00:36:39:17 00:36:41:16 the SSB, ideally 00:36:41:17 00:36:43:05 we won't have the perfect be the 00:36:43:06 00:36:44:14 enemy of the good and we can 00:36:45:03 00:36:47:04 get global recognition 00:36:47:05 00:36:49:12 of the importance of TCFD reporting, 00:36:49:15 00:36:50:15 increasing alignment 00:36:51:13 00:36:53:02 around the relevant metrics that 00:36:53:08 00:36:54:19 companies need to report. 00:36:54:22 00:36:56:16 And then that becomes the foundation 00:36:56:19 00:36:59:08 for that future IFRS 00:36:59:14 00:37:01:14 sponsored Sustainability Standards 00:37:01:15 00:37:03:08 Board due process 00:37:03:13 00:37:05:10 produced set of standards. 00:37:06:04 00:37:08:05 Great. So the message is definitely 00:37:08:16 00:37:10:16 don't wait, get going now 00:37:10:17 00:37:12:02 internally within your company. 00:37:12:08 00:37:13:17 But I have to say 00:37:14:12 00:37:16:05 the timeline that Tajinder outlined 00:37:16:10 00:37:17:23 as a potential timeline that is 00:37:18:08 00:37:19:10 fast Cop26, 00:37:20:05 00:37:21:15 all roads leading to Glasgow, that 00:37:21:16 00:37:23:00 is fast. And as you've all 00:37:23:13 00:37:25:11 said, with the level of content 00:37:25:12 00:37:26:17 that's already been developed, 00:37:26:24 00:37:28:17 that's quite an optimistic path for 00:37:29:00 00:37:30:13 us, I think if it can be achieved. 00:37:30:25 00:37:32:18 Now, there's a very good - I like 00:37:32:19 00:37:34:04 our audience - there's a very punchy 00:37:34:05 00:37:35:04 question here. 00:37:35:10 00:37:37:05 Which, from Kim Palgreen and 00:37:37:06 00:37:38:15 Kim, thank you for asking this, 00:37:38:16 00:37:40:21 which is why is this taking so long? 00:37:41:13 00:37:43:03 She says at KPMG we were pointing 00:37:43:10 00:37:45:05 out risks on reputation, changing 00:37:45:06 00:37:47:03 laws, liabilities back in 2000. 00:37:48:04 00:37:49:16 It's a really fair question, 00:37:49:17 00:37:51:05 Richard, I'm going to come to you. 00:37:51:12 00:37:52:19 What is it that's taken us 00:37:53:13 00:37:55:16 until now to be moving 00:37:55:17 00:37:57:03 and now suddenly we're all moving so 00:37:57:04 00:37:58:03 quickly? 00:37:58:08 00:38:00:04 Well, it's a combination of factors. 00:38:00:05 00:38:01:13 If you if you take climate, 00:38:02:02 00:38:03:14 you know, a precondition for 00:38:03:15 00:38:05:17 developing climate related standards 00:38:05:18 00:38:07:17 is having some form 00:38:07:18 00:38:08:25 of consensus on what carbon 00:38:09:07 00:38:10:05 emissions are. 00:38:10:06 00:38:11:21 So the work of the greenhouse gas 00:38:12:07 00:38:14:07 protocol, which is 20 years old, 00:38:14:11 00:38:16:05 years old now, I think was 00:38:16:06 00:38:17:18 absolutely essential in defining 00:38:17:19 00:38:19:07 what we mean by carbon emissions 00:38:19:23 00:38:21:15 and equating other forms of 00:38:21:16 00:38:23:06 greenhouse gas in terms of carbon 00:38:23:07 00:38:25:05 potentially. And so once 00:38:25:06 00:38:26:16 you have those kinds of standards in 00:38:26:17 00:38:28:06 place, you then need the appropriate 00:38:28:07 00:38:29:14 institutional pressures and 00:38:29:20 00:38:30:18 structures. 00:38:30:19 00:38:31:20 And I think what you're seeing now 00:38:31:21 00:38:33:04 is those things coming together. 00:38:33:05 00:38:35:02 So the ecosystem I mentioned 00:38:35:03 00:38:36:22 before, investors calling for 00:38:37:03 00:38:37:22 this information. 00:38:37:23 00:38:39:11 So all those institutional pressures 00:38:39:12 00:38:40:20 just take time, I think is the 00:38:41:20 00:38:42:18 reality of it, but now is an 00:38:42:19 00:38:44:01 absolutely critical window because 00:38:44:02 00:38:45:01 they're all coming together. 00:38:45:13 00:38:47:03 I think the big shift that has 00:38:47:04 00:38:48:22 occurred in the last couple of years 00:38:48:23 00:38:50:17 was that these issues have become 00:38:50:18 00:38:52:10 central to mainstream finance. 00:38:52:16 00:38:54:09 So if you looked back five or 10 00:38:54:10 00:38:55:13 years, active investors 00:38:56:20 00:38:58:08 were engaging with very carbon 00:38:58:09 00:39:00:05 intensive companies and there 00:39:00:06 00:39:02:01 was a very robust dialogue. 00:39:02:19 00:39:04:18 But I came from the Bank of England 00:39:04:19 00:39:06:05 prior to my role at BlackRock. 00:39:06:07 00:39:08:07 And when we made the switch 00:39:08:08 00:39:10:02 to say we're not just worried 00:39:10:03 00:39:11:10 about the financial risk that 00:39:11:11 00:39:13:12 created the last financial crisis, 00:39:13:18 00:39:15:14 but we now recognise that 00:39:15:15 00:39:17:04 unless we bring forward 00:39:17:11 00:39:18:25 the risk associated with climate 00:39:19:09 00:39:21:14 risk into the financials 00:39:21:15 00:39:23:08 of the banks and insurance companies 00:39:23:13 00:39:25:04 we're regulating, there will be no 00:39:25:07 00:39:26:25 good point at which we'll recognise 00:39:27:04 00:39:28:21 that. The mechanism that says stress 00:39:28:22 00:39:30:18 testing is for three years or five 00:39:30:19 00:39:32:25 years doesn't show the exposure. 00:39:33:04 00:39:34:18 So I do think the Bank of England's 00:39:34:19 00:39:36:16 work putting this onto the 00:39:36:17 00:39:38:25 risk management landscape 00:39:38:26 00:39:40:13 combined with the FSB, founding 00:39:40:21 00:39:41:21 TCFD, and now 00:39:42:18 00:39:44:19 increasingly the role that many 00:39:44:20 00:39:46:16 regulators are playing to 00:39:46:17 00:39:47:20 ask banks in particular, 00:39:48:15 00:39:49:24 as well as insurance companies, to 00:39:50:00 00:39:51:10 be more focussed on this. 00:39:51:13 00:39:52:23 I do think there's been a tipping 00:39:52:24 00:39:54:22 point and that then that 00:39:54:23 00:39:56:22 really does change the dialogue from 00:39:56:23 00:39:58:14 what was previously, you know, 00:39:58:16 00:39:59:17 bilateral discussions 00:40:00:18 00:40:01:22 between very responsible 00:40:02:20 00:40:04:20 active investors and their most 00:40:04:21 00:40:06:02 carbon intensive companies. 00:40:06:19 00:40:08:03 And Clara I'd just add to that. 00:40:08:04 00:40:09:18 I completely agree with what Sandy 00:40:09:19 00:40:11:03 said. I think a lot has been 00:40:11:04 00:40:12:15 happening in the last 20 years. 00:40:13:02 00:40:14:22 And I think the the whole 00:40:14:24 00:40:16:17 shift of thinking this is optional, 00:40:17:02 00:40:18:10 an optional extra, and also 00:40:19:00 00:40:20:06 that it's only about risk 00:40:20:09 00:40:21:24 management. It's essentially about 00:40:22:00 00:40:23:08 risk management, but it's also about 00:40:23:09 00:40:24:12 opportunity creation. 00:40:25:11 00:40:27:09 There are so many issues 00:40:27:10 00:40:28:05 to be addressed. 00:40:28:06 00:40:29:25 You can't just say I'm no longer 00:40:29:26 00:40:31:22 holding X in my portfolio. 00:40:32:04 00:40:33:19 I don't want to buy that because 00:40:33:20 00:40:35:04 somebody else will end up buying it 00:40:35:05 00:40:37:02 and that will not address climate 00:40:37:03 00:40:38:17 change. So this has to be a very 00:40:38:21 00:40:40:02 inclusive approach. 00:40:40:10 00:40:42:02 It has to be one about looking at 00:40:42:10 00:40:43:21 brown assets as well as green assets 00:40:44:03 00:40:46:04 and really incentivising 00:40:46:05 00:40:48:03 accelerated innovation and solutions 00:40:48:04 00:40:49:11 to address the climate challenge. 00:40:50:13 00:40:51:24 Ex-Gov. Mark Carney talking about 00:40:51:25 00:40:53:02 the Bank of England said this is 00:40:53:03 00:40:54:03 probably one of the biggest 00:40:54:04 00:40:55:15 opportunities that we have, as 00:40:56:01 00:40:57:10 well as one of the biggest risks. 00:40:57:22 00:40:59:17 And Elizabeth, I mentioned at the 00:40:59:18 00:41:01:05 beginning that you are a director of 00:41:01:06 00:41:02:10 public companies as well. 00:41:02:11 00:41:04:05 What's the mood in the boardroom and 00:41:04:10 00:41:05:16 has that mood changed? 00:41:06:03 00:41:07:22 Massively, Clara. I think it started 00:41:07:23 00:41:09:12 - it was already there. 00:41:09:13 00:41:10:22 I mean, everybody of all the 00:41:10:23 00:41:12:01 companies overall were thinking 00:41:12:02 00:41:13:01 about these issues. 00:41:13:07 00:41:15:10 But the last 18 months, the whole 00:41:15:11 00:41:16:16 attitude has accelerated. 00:41:16:21 00:41:18:23 And it's been this perfect storm of 00:41:19:12 00:41:21:03 real awareness of the of the state 00:41:21:11 00:41:23:00 of urgency around climate change 00:41:23:09 00:41:25:13 and including natural capital 00:41:25:14 00:41:27:03 and biodiversity, not just carbon 00:41:27:13 00:41:28:14 as described 00:41:29:09 00:41:30:18 thinking about the whole social 00:41:30:19 00:41:32:18 justice movement last year and 00:41:32:19 00:41:35:07 then the the cracks in society 00:41:35:08 00:41:37:09 and in resilience that covid 00:41:37:10 00:41:39:09 has shown and all these things 00:41:39:10 00:41:40:03 coming together. 00:41:40:04 00:41:41:16 This this is absolutely central 00:41:42:01 00:41:43:10 to boardroom discussions. 00:41:43:21 00:41:45:21 And I think there is a lot going 00:41:45:22 00:41:46:21 on already. 00:41:47:04 00:41:48:12 And I think, as Richard said, the 00:41:48:13 00:41:49:08 time is right. 00:41:49:09 00:41:50:15 This is about an ecosystem 00:41:51:04 00:41:52:11 change and systems change. 00:41:52:15 00:41:54:06 The one thing I think we should do 00:41:54:10 00:41:55:15 better this time is think 00:41:56:12 00:41:58:08 across silos so 00:41:58:09 00:41:59:10 that we get the whole of the 00:41:59:11 00:42:00:25 ecosystem represented in the way 00:42:01:10 00:42:02:20 in which we can move rapidly. 00:42:03:05 00:42:05:02 And to use Tajinder sprays that 00:42:05:03 00:42:06:05 there is a sort of filtering 00:42:06:06 00:42:07:14 mechanism of good ideas that 00:42:08:02 00:42:09:09 come in from more regional or 00:42:09:10 00:42:10:16 jurisdictional levels. 00:42:11:07 00:42:12:18 That is more dynamic than we've seen 00:42:12:19 00:42:14:04 in the past. But we can learn from 00:42:14:05 00:42:15:09 that. I think it's a huge 00:42:15:13 00:42:17:10 opportunity this year to get 00:42:17:11 00:42:18:10 this right. 00:42:19:02 00:42:20:19 The panel now turns to the question 00:42:20:20 00:42:22:16 of industry specificity, 00:42:22:23 00:42:23:23 why is this important? 00:42:24:25 00:42:26:04 We're going to get Richard Barker's 00:42:26:05 00:42:28:03 reflections on this, given his deep 00:42:28:04 00:42:29:16 knowledge of financial accounting 00:42:29:17 00:42:30:16 standards. 00:42:31:00 00:42:32:22 Does he think that when it comes 00:42:32:23 00:42:34:13 to sustainability information and 00:42:34:14 00:42:36:11 reporting an industry lens 00:42:36:12 00:42:37:11 is more important? 00:42:38:02 00:42:39:02 And if so, why? 00:42:41:08 00:42:42:15 My view on this is that 00:42:43:12 00:42:45:12 one shouldn't be too binary, right? 00:42:45:13 00:42:47:00 So if you think about financial 00:42:47:04 00:42:48:12 reporting, currently 00:42:49:08 00:42:50:09 the financial reporting standards 00:42:50:10 00:42:51:21 are not explicitly designed by 00:42:52:00 00:42:53:03 industry, but different 00:42:54:03 00:42:55:11 industries have different financial 00:42:55:12 00:42:56:22 reporting models when it comes down 00:42:56:23 00:42:58:17 to it and analysed by different 00:42:58:18 00:43:00:14 sectors are by investors and so on. 00:43:00:15 00:43:01:17 So so industry is built 00:43:02:14 00:43:03:24 into financial accounting, financial 00:43:03:25 00:43:04:25 reporting houses. 00:43:06:05 00:43:07:17 And then from a sustainability 00:43:07:18 00:43:09:15 perspective, sustainability issues 00:43:09:16 00:43:11:10 are not just specific to industry. 00:43:11:11 00:43:12:22 Right. So a tonne of carbon 00:43:12:23 00:43:14:10 emissions, of carbon emissions, 00:43:14:11 00:43:15:19 whichever industry you happen to be. 00:43:15:20 00:43:17:12 And so a degree of industry 00:43:17:13 00:43:18:23 reporting is very important, and a 00:43:18:24 00:43:20:10 degree of standardisation across 00:43:20:11 00:43:21:22 industry is also very important. 00:43:22:05 00:43:23:10 It's actually not one or the other. 00:43:25:16 00:43:26:22 It's a matrix. 00:43:27:06 00:43:28:01 It always is. But it was interesting 00:43:28:02 00:43:29:17 hearing Sandy talk about the role of 00:43:30:02 00:43:31:16 SASB and how how decision useful 00:43:32:04 00:43:33:17 it is for you at the investment 00:43:33:25 00:43:35:18 level. Sandy, do you think that 00:43:35:23 00:43:37:16 in addition to what Richard said, 00:43:38:00 00:43:39:15 the way in which strategic asset 00:43:39:16 00:43:41:10 allocation tends to be done and the 00:43:41:11 00:43:43:06 industry lends itself and applied is 00:43:43:07 00:43:44:08 part of what is making 00:43:45:06 00:43:46:11 the industry focus useful 00:43:47:09 00:43:48:14 for sustainability information? 00:43:48:15 00:43:50:04 Or have you learnt different things 00:43:50:05 00:43:51:05 about it? 00:43:51:11 00:43:52:21 I mean, it's an interesting question 00:43:52:22 00:43:55:03 about where is the greater value 00:43:55:16 00:43:57:05 allocation between industries or 00:43:57:07 00:43:58:16 allocating within industries 00:43:59:05 00:44:00:15 across sustainability? 00:44:00:22 00:44:01:23 I would say that 00:44:02:23 00:44:05:03 while there has been a theory that 00:44:05:11 00:44:07:09 all of the value generated in 00:44:07:10 00:44:08:23 ESG investing over the last year 00:44:09:07 00:44:10:22 associated with essentially 00:44:11:11 00:44:13:12 going long tech and short 00:44:13:13 00:44:15:03 oil and gas, that actually hasn't 00:44:15:15 00:44:16:17 proven to be the case. 00:44:16:21 00:44:18:06 Well, obviously, there has been a 00:44:18:07 00:44:20:06 caché performance with one 00:44:20:07 00:44:21:14 set performing better than the 00:44:21:15 00:44:22:08 other. 00:44:22:09 00:44:23:21 Where we've actually seen a lot of 00:44:23:22 00:44:25:02 differentiation is within 00:44:25:19 00:44:26:19 sectors, companies 00:44:27:15 00:44:29:02 that are managing their carbon 00:44:29:16 00:44:30:21 exposure or companies that are 00:44:30:22 00:44:32:22 managing their other sustainability 00:44:32:23 00:44:35:06 risks better pulling ahead 00:44:35:10 00:44:37:03 of those who are doing so in a less 00:44:37:05 00:44:37:24 good fashion. 00:44:38:00 00:44:39:14 And you can look at any industry, I 00:44:39:15 00:44:40:14 think, and find real 00:44:41:02 00:44:42:04 differentiation. 00:44:42:05 00:44:43:24 So, I mean, I agree with Richard's 00:44:44:00 00:44:46:05 point. It is it is a continuum. 00:44:46:06 00:44:48:05 And sadly, yes, it 00:44:48:06 00:44:50:07 is a matrix where Factor 00:44:50:08 00:44:52:12 X will be very important across 00:44:53:00 00:44:54:15 five industries and irrelevant to 00:44:54:22 00:44:56:21 others. But nonetheless, 00:44:58:05 00:44:59:24 the understanding of that factor and 00:45:00:01 00:45:02:03 where that needs to be considered, 00:45:02:07 00:45:03:25 that's very important for companies 00:45:04:14 00:45:06:00 who need to make prioritisation 00:45:06:01 00:45:08:03 decisions and also for investors 00:45:08:04 00:45:09:22 to know what are the things I really 00:45:09:23 00:45:11:06 need to worry about. 00:45:11:17 00:45:13:00 But it is not one size fits 00:45:13:18 00:45:14:24 all. I do agree, though, with the 00:45:15:00 00:45:16:14 point, you know, a tonne of carbon 00:45:16:15 00:45:18:01 is a tonne of carbon and we've 00:45:18:07 00:45:19:18 actually identified a thousand 00:45:20:08 00:45:22:04 companies that will focus on 00:45:22:05 00:45:23:24 more than we do otherwise 00:45:24:10 00:45:25:23 in our listed company universe, 00:45:26:02 00:45:27:10 because those are companies 00:45:27:23 00:45:29:04 that have significant carbon 00:45:29:05 00:45:30:18 footprints, irrespective of what 00:45:30:22 00:45:31:22 their industry is. 00:45:32:21 00:45:34:08 One point I'll just make and I think 00:45:34:09 00:45:35:17 Elizabeth has talked a lot about 00:45:35:18 00:45:37:05 small and medium companies. 00:45:37:09 00:45:38:22 I do think one of the risks that 00:45:38:23 00:45:40:02 we're attentive to 00:45:40:18 00:45:42:06 and my group focussing on large 00:45:42:23 00:45:44:25 listed companies is that 00:45:45:06 00:45:46:19 what we don't want is an outcome 00:45:46:20 00:45:49:01 where unsustainable activities 00:45:49:02 00:45:50:03 migrate into so-called 00:45:51:11 00:45:53:03 other regions or private companies 00:45:53:22 00:45:55:01 that have different goals. 00:45:55:06 00:45:56:24 So it is important, as the 00:45:57:00 00:45:58:19 Sustainability Standards Board 00:45:59:09 00:46:00:18 thinks about its work and as 00:46:00:19 00:46:02:22 regulators pick up its work, 00:46:03:04 00:46:04:22 that we ensure that we don't get 00:46:04:23 00:46:06:12 sort of dark pockets of 00:46:06:13 00:46:08:14 unsustainable activity because 00:46:08:20 00:46:10:11 that doesn't really help anyone that 00:46:10:12 00:46:11:22 kind of cleans up one set of 00:46:11:23 00:46:13:25 companies, but leaves issues 00:46:14:09 00:46:15:22 that, frankly, the planet still has 00:46:15:23 00:46:16:22 to deal with. 00:46:17:00 00:46:18:01 Agreed, thank you. 00:46:18:02 00:46:19:20 And there's another interesting 00:46:19:21 00:46:21:09 question about greenwashing. 00:46:22:03 00:46:23:15 How can investors crack through 00:46:23:16 00:46:24:15 greenwashing? 00:46:24:19 00:46:26:03 And that's asked by by Wendy 00:46:26:16 00:46:27:16 Andersen, and actually, Tajinder, 00:46:27:24 00:46:29:03 I'd like to bring that to you 00:46:29:04 00:46:31:04 because you touched on the role 00:46:31:05 00:46:32:04 of assurance, and 00:46:33:07 00:46:34:25 although it might be very obvious 00:46:35:18 00:46:36:25 that the reason why global 00:46:37:14 00:46:39:06 standards with the due process that 00:46:39:07 00:46:41:01 you were emphasising are so 00:46:41:07 00:46:43:01 important is because it allows for 00:46:43:02 00:46:44:12 assurance. Can you reflect a bit 00:46:44:13 00:46:45:25 more on that for us and help us 00:46:46:02 00:46:47:10 understand how you as securities 00:46:47:11 00:46:48:22 regulators think about that to 00:46:48:23 00:46:49:25 prevent greenwashing? 00:46:50:13 00:46:51:13 Thank you. 00:46:52:01 00:46:53:17 When the discussions first talking 00:46:54:04 00:46:55:12 about sustainability and so 00:46:56:02 00:46:57:14 on, I think the first thing that we 00:46:57:15 00:46:59:06 were talking about was not about 00:46:59:14 00:47:01:06 sustainability reporting, but about 00:47:01:07 00:47:03:04 addressing greenwashing, because 00:47:03:05 00:47:04:15 clearly as regulators, that's the 00:47:04:16 00:47:06:15 thing that we're concerned about. 00:47:07:02 00:47:08:12 And and indeed, 00:47:08:23 00:47:10:14 these are all interrelated things. 00:47:10:15 00:47:11:20 You know, the proper supply of 00:47:11:21 00:47:13:23 information, proper disclosure. 00:47:14:08 00:47:15:18 Indeed, it goes back even to 00:47:15:20 00:47:17:16 taxonomy connects 00:47:17:17 00:47:20:02 really to what is disclosed 00:47:20:08 00:47:22:03 and whether what is disclosed is in 00:47:22:04 00:47:23:06 accordance essentially with the 00:47:23:07 00:47:24:06 label on the tin. 00:47:24:11 00:47:26:02 Or not, here's basically the point 00:47:26:09 00:47:27:22 that we are talking about, 00:47:28:10 00:47:29:10 and we we 00:47:30:08 00:47:31:20 do take this quite seriously. 00:47:31:21 00:47:33:19 That is the other workstream that 00:47:33:20 00:47:35:01 I mentioned, we are talking about 00:47:35:12 00:47:37:09 the workstream on disclosures is the 00:47:37:10 00:47:38:19 one that is kind of running along 00:47:39:03 00:47:40:20 fast because of the urgency that we 00:47:40:21 00:47:42:03 are talking about. But this one is 00:47:42:04 00:47:43:17 not too far behind. 00:47:44:03 00:47:45:13 What we are trying to see is 00:47:46:01 00:47:47:14 essentially what is what are the 00:47:47:15 00:47:49:00 disclosures that are also made 00:47:49:19 00:47:51:08 at firm level, at asset managers 00:47:51:14 00:47:52:14 level and also 00:47:54:00 00:47:55:07 taking into account any of 00:47:55:22 00:47:57:04 the case studies that would be 00:47:57:05 00:47:58:14 available inside, 00:47:59:04 00:48:00:22 you know, jurisdictions to see 00:48:00:23 00:48:02:20 whether we can actually have a 00:48:02:21 00:48:04:19 set of practises 00:48:04:20 00:48:06:22 or best practises that we can 00:48:06:23 00:48:08:17 have to be able to help 00:48:08:18 00:48:10:14 regulators, because similar 00:48:10:15 00:48:11:14 to what we were talking about, 00:48:11:15 00:48:13:12 industries and so on, the 00:48:13:13 00:48:15:16 regulatory arena is also diverse. 00:48:15:17 00:48:17:01 You have people at different ends of 00:48:17:02 00:48:17:23 the spectrum. 00:48:17:24 00:48:19:17 And our job is to be able to make 00:48:19:18 00:48:21:13 sure that people 00:48:21:14 00:48:23:10 are able to look at what 00:48:23:11 00:48:24:19 are the best practises and good 00:48:24:20 00:48:26:23 practises across 00:48:26:24 00:48:28:12 the world to be able to cross 00:48:28:19 00:48:30:01 fertilise so that 00:48:30:20 00:48:32:17 we are able to address this 00:48:32:24 00:48:34:24 issue sooner rather than later, 00:48:35:10 00:48:37:07 because as can be, 00:48:37:08 00:48:38:14 let's say, in this area, can 00:48:38:15 00:48:39:18 actually set back a lot 00:48:40:11 00:48:41:11 of the work that we are really 00:48:41:12 00:48:42:11 talking about. 00:48:42:14 00:48:44:12 I have to say that it had 00:48:44:16 00:48:46:04 a very, very core level that the 00:48:46:05 00:48:47:16 basic stuff of regulation, which is 00:48:47:17 00:48:49:12 about saying, OK, you know, if that 00:48:49:13 00:48:51:11 is misselling happening, then that 00:48:51:12 00:48:52:06 needs to be addressed. 00:48:52:07 00:48:53:15 But there are differences as well 00:48:53:16 00:48:55:13 here. And I think we should 00:48:55:21 00:48:57:18 the ability and what 00:48:57:19 00:48:58:24 we will be able to come up with in 00:48:59:00 00:49:00:15 terms of these practises should go 00:49:00:23 00:49:02:23 a long way in terms of helping 00:49:02:24 00:49:04:22 regulators and supervisors to 00:49:04:23 00:49:06:04 address discrimination. 00:49:07:12 00:49:08:19 Richard, we are just a few 00:49:09:13 00:49:11:05 minutes more of our session, and I 00:49:11:06 00:49:12:13 want to come to you for final 00:49:12:14 00:49:13:24 reflections, having listened to the 00:49:13:25 00:49:15:03 dialogue that we've had. 00:49:15:08 00:49:16:20 What are the key messages we should 00:49:16:21 00:49:18:22 leave the audience with today, 00:49:18:23 00:49:19:22 from your perspective? 00:49:20:12 00:49:22:10 Well, it's a big question, Clara, 00:49:23:01 00:49:24:22 but I think the first thing 00:49:24:23 00:49:26:04 is the mainstreaming of 00:49:26:05 00:49:26:25 sustainability. 00:49:27:00 00:49:28:24 So, you know, you don't 00:49:28:25 00:49:30:23 have purposive impacts 00:49:30:24 00:49:32:06 on CSR or something in one box 00:49:33:04 00:49:34:04 and profit making 00:49:35:02 00:49:36:07 corporations in a completely 00:49:36:08 00:49:37:12 different space. In other 00:49:39:04 00:49:40:19 words, you're describing at board 00:49:40:24 00:49:42:20 level, it's inconceivable 00:49:42:21 00:49:44:01 that you're not thinking about 00:49:44:04 00:49:45:12 transition to zero carbon, for 00:49:45:13 00:49:46:14 example, diversity and 00:49:47:09 00:49:48:19 inclusion within your organisation 00:49:48:20 00:49:49:24 and so on. So the second 00:49:50:17 00:49:52:10 thing that that I think is striking 00:49:52:18 00:49:54:20 is that governments 00:49:54:21 00:49:55:24 who haven't talked too much about 00:49:55:25 00:49:57:05 governments but there have been latent 00:49:57:06 00:49:58:04 into the discussion and they have 00:49:58:05 00:49:59:11 two quite distinct roles. 00:49:59:12 00:50:01:12 I think if we're going 00:50:01:13 00:50:03:11 to get to a rolling 00:50:03:12 00:50:04:22 out of a global solution, 00:50:05:24 00:50:07:24 then support by different 00:50:07:25 00:50:09:16 jurisdictions across the planet is 00:50:09:17 00:50:10:17 incredibly important. 00:50:11:04 00:50:12:05 Moreover, governments 00:50:13:07 00:50:15:01 have a role with respect to societal 00:50:15:11 00:50:17:03 reporting and not just to investors. 00:50:17:12 00:50:18:19 So we focus on reporting to 00:50:18:20 00:50:20:03 investors and on the role of the 00:50:20:13 00:50:21:15 IFRS Foundation, the needs of 00:50:21:16 00:50:22:15 investors and so on. 00:50:22:24 00:50:24:11 There are additional needs for 00:50:24:20 00:50:26:09 corporate reporting, for impact on 00:50:26:10 00:50:28:00 the environment and society, and 00:50:28:01 00:50:29:16 governments need to step up and fill 00:50:29:17 00:50:30:13 the gap, as it were. 00:50:30:14 00:50:32:12 But it's not that I just 00:50:32:13 00:50:33:13 reported to investors 00:50:34:13 00:50:36:00 that something which I think is 00:50:36:08 00:50:38:05 absolutely critical is the urgency 00:50:38:06 00:50:39:08 of all of this. And that's been 00:50:39:22 00:50:41:20 mentioned several times by 00:50:41:21 00:50:43:10 both all three of the other 00:50:43:11 00:50:44:10 panellists. 00:50:44:12 00:50:45:22 And that I think it's really 00:50:46:06 00:50:47:16 important that there is there 00:50:48:02 00:50:50:03 was collaboration across the system. 00:50:50:04 00:50:51:25 So the 00:50:51:26 00:50:53:17 challenge of sustainability is not a 00:50:53:18 00:50:55:07 national challenge or an industry 00:50:55:10 00:50:56:25 challenge or a regional challenge is 00:50:57:00 00:50:58:03 a global challenge. 00:50:58:04 00:50:59:04 And and the natural 00:51:00:00 00:51:01:18 solution for reporting standards is 00:51:01:19 00:51:02:23 a global solution. 00:51:03:13 00:51:04:13 And so the faster 00:51:05:22 00:51:07:12 that all of the relevant parties, 00:51:07:14 00:51:08:21 investors and companies in 00:51:08:22 00:51:10:12 particular was very strong voices, 00:51:10:22 00:51:12:08 those are regulators the developed 00:51:12:09 00:51:14:03 to generalise towards that, ask our 00:51:14:07 00:51:16:03 governments and governments 00:51:16:04 00:51:17:21 and so on and so forth, all need to 00:51:18:07 00:51:20:01 come together on this and 00:51:20:06 00:51:21:25 recognising that there is a very 00:51:21:26 00:51:23:14 strong platform on which to build. 00:51:24:04 00:51:26:10 So when Sandy was describing the 00:51:27:05 00:51:28:16 BlackRock support for TCFD and SASB, 00:51:29:14 00:51:30:23 what she's describing is something 00:51:30:24 00:51:32:12 that's absolutely in line with the 00:51:32:13 00:51:34:05 development of IFRS because 00:51:34:22 00:51:36:07 that is the direction of travel. 00:51:37:03 00:51:38:06 So in just the same way 00:51:39:00 00:51:40:21 that when the IASP came into being, 00:51:40:22 00:51:42:09 it adopted the standards of its 00:51:42:14 00:51:44:11 predecessors, you would 00:51:44:12 00:51:46:06 expect the Sustainability Standards 00:51:46:07 00:51:48:05 Board to come into play and adopt 00:51:48:06 00:51:49:15 the best practises already out 00:51:49:16 00:51:51:05 there. So the more that investors 00:51:51:13 00:51:52:12 and companies are moving in the 00:51:52:13 00:51:54:14 direction of, for example, adopting 00:51:54:15 00:51:55:14 TCAP, the faster the 00:51:56:10 00:51:57:06 system will get. 00:51:57:07 00:51:58:06 So that urges people 00:51:59:09 00:52:00:09 not to lose that. 00:52:02:12 00:52:04:03 My thanks to Richard Barker, Sandy 00:52:04:18 00:52:06:14 Boss, Elizabeth Corley, Tajinder 00:52:07:01 00:52:08:03 Singh and Clara Barby. 00:52:09:08 00:52:11:05 My name is Peter Tufano, and you've 00:52:11:06 00:52:12:14 been listening to Leadership in 00:52:12:15 00:52:14:01 Extraordinary Times, a podcast 00:52:14:14 00:52:16:03 from Oxford University's Said 00:52:16:04 00:52:17:04 Business School. 00:52:17:23 00:52:19:12 Before you go, remember to rate, 00:52:20:05 00:52:22:02 review and subscribe 00:52:22:03 00:52:23:23 to future episodes wherever you 00:52:23:24 00:52:24:25 get your podcasts. 00:52:26:14 00:52:27:24 In the next episode, we'll be 00:52:28:03 00:52:29:15 looking at the evolution of high 00:52:29:16 00:52:30:23 impact entrepreneurship and 00:52:31:14 00:52:33:07 why this investment sector is more 00:52:33:08 00:52:34:23 important than ever as the world 00:52:34:24 00:52:36:15 begins to emerge from the pandemic. 00:52:37:12 00:52:38:23 You can find more information about 00:52:38:24 00:52:41:06 this and all our previous episodes 00:52:41:07 00:52:42:15 from Leadership in Extraordinary 00:52:42:16 00:52:43:20 Times at oxfordanswers.org. 00:52:46:01 00:52:47:01 Until next time. 00:52:47:05 00:52:48:01 Thanks for listening.