Could you introduce Low Carbon Advisors (LCA) to our audience?

Mark Gainsborough, Shell’s former EVP of New Energies and I incorporated LCA in Singapore and, with our panel of senior advisors, work with clients globally.

Our LCA advisors are former CEOs, global EVPs and leading academics with “lived” corporate and entrepreneurial leadership experience. Ours is a lean model and our clients get high quality, CEO peer-to-peer time with the most experienced minds.

How has the pandemic changed the sustainability conversation?

The pandemic highlighted existential issues, with climate change prominent among these. Getting to net zero carbon is the leading existential requirement for our society.  All businesses will be under increasing pressure to up their game over the next few years and this is the hottest topic in the whole pantheon of ESG issues. Within 5 years, all listed and large privately held businesses will need to have a roadmap to net zero carbon by 2050, or earlier.

Conversations about the costs of the energy transition have begun to shift too, with more leaders understanding that the cost of energy transition is small compared to the failing or delaying to make the change.

Progressive leaders are costing carbon pricing into their investment decisions, recognizing the risk of stranded assets and embracing the opportunity of new customer value propositions. Those companies and governments that seize the early mover advantage and move beyond risk and compliance will be winners, embracing purpose-driven innovation, enhancing their full value chain and unlocking the potential of new alliances and collaborations where they share generously, co-create, and co-invest.

What are the most common mistakes that companies make in their climate strategy?

Even very sophisticated companies with bold climate ambitions do not have fully worked out plans to deliver net zero. For companies who are only now starting to think about this issue it’s hard to know where to begin.

Getting to net zero is not just about deploying technical solutions, it requires a mindset and culture shift and a true leadership capabilities. One of the biggest issues is that corporate leaders don’t see climate strategy as their job, delegating it to a sustainable compliance team, an HSE leader or even to procurement, in the case of renewable energy.  To succeed, it has to be owned by the business itself – operational leaders and the board. 

Another gap is that companies look at sustainability as a risk and compliance issue rather than seeing it as platform to create a better value proposition and new business opportunities. For instance, forward-thinking chemical companies are becoming part of the end-to-end value chain on plastics and taking ownership of what they produce by applying circularity to plastics production and working with customers on packaging design that used fewer high carbon elements or more recycled materials.

How do you think carbon pricing plays into decarbonization efforts?

Countries that have established a carbon price, whether through a tax or a trading mechanism (like the ETS), have clearly driven a change. A classic example is the UK, where the government imposed £40/ton of tax in the power sector, effectively driving out coal from the energy mix. The challenge is working out the right policy to establish the price to avoid disadvantaging local businesses, causing industries to offshore to lower-tax destinations, and effectively exporting the carbon problem. Because of these contiguous risks, carbon pricing cannot exist in isolation from other policy instruments. I believe it is unrealistic to expect a global carbon tax anytime soon, but we are seeing different countries gravitating towards carbon pricing policies, which is great news for all investors in low-carbon solutions and technologies. Singapore is a strong voice in ASEAN, and it has the ability to lead the way in the region in terms of decarbonization; however, Singapore must also navigate doing the right thing for the environment without disenfranchising the industry.

What are LCA’s key objectives for the next few years? Do you have a final message?

We will continue to expand our business model to allow a wider range of businesses to access world class expert industry advice on the journey net zero. We will do this through new business models and JVs as well as through strategic investments in emerging companies and technologies.