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Thursday 29 October, 2015

Sustainability roundtable reflections

Last week, we hosted the second roundtable in our ‘Rethinking Business’ event series, in partnership with the Financial Times. The event brought together business leaders, NGOs and think tanks to discuss the issue of resource scarcity.  Here, Simon Wilde, Senior Managing Director at Macquarie Capital discusses how the finance sector can help support the circular economy.  

As a passionate advocate for sustainable business, I was delighted to join the Financial Times / Coca-Cola Enterprises roundtable series ‘Rethinking Business: Creating a Sustainable Future’. Macquarie is a leading provider of ESG and alternative energy research and finance and, as the owner of a diversified portfolio of over 4000MW of renewable energy assets, we are intimately involved in sustainability issues. We would, though, be the first to admit that we don't have all the answers – and I believe strongly that collaboration is key to driving the sustainability agenda into mainstream business thinking.  

Coca-Cola Enterprises clearly think this too and, with the FT, assembled an exceptionally interesting group of major corporates, such as HP, Lego, Marks & Spencer and Veolia, combined with smaller groups like ZipCar and a range of policy groups including Forum for the Future and WWF. Such diversity led to the exchange of interesting information – and no shortage of debate... 

We heard that up to $3 trillion of eco resources are extracted annually without any payment being made, and that with rapid growth in population and consumption expectations, this will only get worse. More optimistically, the concept of the "circular economy" – recycling and reusing resources – offers a potential escape from this dilemma. Accenture told us this is a $4.5 trillion market opportunity and we heard that by turning old jumpers into overcoats, redesigning printer cartridge sales models and keeping glass bottle deposit schemes in place business is already embracing this approach.  

There is no doubt that we can all do more. The best way to achieve this was hotly debated. Should we focus on measures that are cost effective today or should we try persuading consumers to pay a "green premium" or governments to enact the better regulations? Clearly business does have a responsibility to engage with the public and government and this could be improved by a more integrated approach – and events like these help build momentum and a sense of common purpose. But personally, I am most excited by what businesses can achieve today, both by themselves and in partnership with their peers and supply chains. We heard about great initiatives underway and there is so much more to come.  

And the finance sector has several key roles to play. First, we can lend our support to commercially viable schemes and assist in the exchange of best practice. Macquarie's financing of smart energy meters is a good example of this.  

Second, we can help businesses explain sustainability success to their investors. I challenged the corporates present around the extent to which their investor relations departments engage with the sustainably teams and we concluded that more could be done.  

And finally, finance provides useful concepts for "selling" the benefits of sustainability. The financial sector has always had to carefully balance risk and return. Too much of the commercial justification for sustainability has been on "return": reducing costs or increasing revenues. Vital though this is, it's only half the story. Doing the right (sustainable) thing can also derisk businesses, which is hugely valuable to investors. Just two of the examples we discussed: recycling plastics can lead to increased security of supply and ongoing printer ink replacement services can lock-in customers to reduce revenue risk. More can be done to articulate the risk reduction potential of many other initiatives. 


Simon Wilde

Senior Managing Director, Power, Utilities & Renewables Macquarie Capital London

Simon Wilde has 21 years of advisory experience in power and utilities having worked in the sector since joining the banking industry in 1992. He has acted on behalf of most of Europe’s major utilities such as Centrica, EDP, National Grid, E.ON, Endesa/Enel, Iberdrola and Vattenfall, as well as for governments in Western and Eastern Europe. In recent years, Simon has increasingly facilitated investments of Asian and financial investors into the sector such as AMP, CKI, Macquarie, MEAG and Tokyo Gas.

Mr Wilde was previously Head of Power & Utilities at RBS / ABN Amro. Prior to this, he gained experience at J.P. Morgan, Credit Suisse and Creditanstalt.

Mr Wilde has advised on transactions with total asset value of close to $100 billion, across all aspects of the energy and utilities value chain.

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