A growing number of governments, including of every Australian state, Britain and the European Union, have set targets of net-zero greenhouse gas emissions by 2050. Few have mapped how to get there.
It is a similar story in the corporate sector. Businesses are under increasing pressure from investors and shareholders to back up claims they are committed to the goals of the Paris agreement. Take BHP, one of the world’s 20 big emitters: it has set a mid-century net-zero emissions target but is yet explain how it will reach it, and plans to invest more in oil and gas than climate solutions.
Martijn Wilder, long-time head of Baker & McKenzie’s global climate law and sustainable-finance practice and a founding board member of the Clean Energy Finance Corporation, has seen up close the divide between the decision-making that goes into setting targets and establishing rules at United Nations climate talks and that drives spending decisions. Having moved in both diplomatic and investment circles, he found people in each who wanted to tackle the climate crisis but had little comprehension of how the other worked.
The gap prompted him to leave a guaranteed stable future at the law firm, where he spent two decades, to set up Pollination, an ambitious – and, he and fellow founder Tony O’Sullivan say, unique – global climate advisory and investment firm.
They say they will work across five areas: infrastructure investment, merchant banking, venture capital, non-profit work and an advisory arm. Two months after starting operation, the client list of their advisory business includes BHP, the World Bank, the Asian Development Bank, New Zealand’s a2 Milk Company and the NSW government.
Wilder says the firm’s goals are to bring together experts who can break down barriers to the transition to a clean future, and redirect capital that has been committed but not to climate solutions.
“Climate change is the central issue of our generation, but we’ve got this funding problem,” he says. “Families don’t know where to go [with their money], big investment funds can only write cheques of $1bn – what do you do with that? – and governments either don’t want to invest or it takes a lot of time, and are often restricted by legal barriers.”
Beyond infrastructure, they say they want to back investments that protect natural capital and water security. Wilder says creating markets for climate adaptation and resilience will require coming up with financial solutions that could, for example, protect a reef or a mangrove, support a new technology that improves soil fertility or better manage water use.
He says an increasing number of corporate players are talking about the climate emergency, but not moving quickly enough. Referring to the work of the task force on climate-related financial disclosures (TCFD), a global body that aims to highlight companies’ exposure to risks related to the climate crisis, Wilder says many companies are attempting what he describes as “TCFD light” – acknowledging the issue, not yet matching it with action. But he believes the movement is in the right direction and picking up pace.
“Any board anywhere in the world that thinks in 2019 that it should not be assessing climate risk will put its directors at significant exposure,” he says. “It is just no longer tenable for a board not to do that.”
O’Sullivan, a former Australian head of investment banking at Lazard, says there is evidence investors, businesses and governments are increasingly turning their mind to what net-zero emissions means, pointing to a warning by the governor of the Bank of England that major corporations have two years to agree to rules for reporting climate risks before global regulators make them compulsory. He says the solution has to be more than “just building another solar farm”.
“If you come out, as a lot of governments have done, with a deadline that says, ‘I’ve got 30 years to turn around an economy which has been based on fossil fuels for the last 200 years’, how do you transform an entire economy in that period?” O’Sullivan says from his base in London. “We really feel the advice we’re giving is going to transform governments and corporates.”
Pollination’s management team includes Patrick Suckling, who until recently was Australia’s environment ambassador, and Rob Jesudason, the former chief financial officer of the Commonwealth Bank. Senior advisors include Sam Mostyn, chairwoman of Citi Australia, James Cameron, the founder of green merchant bank Climate Capital, and Christof Kutscher, the global chairman of AXA Investment Managers.
The firm has offices in Sydney, London, New York, Chicago and Paris. Wilder says they want to extend into Singapore, Tokyo, Mumbai and, eventually, China.