Sphera’s Sandy Smith offers his thoughts about his experience from one of the most important climate change events to date.
The following transcript was edited for style, length and clarity.
James Tehrani:
Welcome to the SpheraNow ESG podcast, a program focused on safety, sustainability and productivity issues. I’m James Tehrani, Spark’s Editor-in-chief. Today, I’ll be speaking with Sandy Smith. Sphera’s vice president of sales in EMEA and APAC, about his observations from the recently completed COP26 event in Glasgow, Scotland. Thank you so much for joining me today, Sandy. How are you?
Sandy Smith:
Hey James. Nice to see you.
James Tehrani:
Cool. Let’s get into it. Before we do, I’m sure most of our listeners will know what COP26 is, but just for the few who might not, can you give us a brief overview of what COP26 is?
Sandy Smith:
OK, so COP26, as the number would suggest, is the 26th time we’ve gathered together, politicians, industry NGOs, to come and solve the challenge of climate change. So, that’s the main purpose of it. It goes around to different countries every five years, and COP26 in Glasgow was five years after Paris so it is one of the big events. They had a bigger COP event where they come and have a special focus and refocus on the specific climate commitments that are being made.
James Tehrani:
So, Glasgow was sort of the center of the world for a few weeks there.
Sandy Smith:
It was, yeah. The plans have been working on it. The U.K. had the presidency this year. Actually, the U.K. with Ireland, sorry. Italy was helping support. They had the presidency this year. They were working over the past two years. So, there was a lot of work going on for a lot of time and a lot of buildup and excitement about COP coming about, and yeah, for two weeks, or two weeks and a couple of days, because it did overrun into the weekend, and so significant changes happened on Saturday and Sunday. But yeah, everyone kind of had their eyes on COP, whether it was politicians, businesses, NGOs, or consultants like ourselves working in the system marketplace.
James Tehrani:
Did you have any one-on-ones with any world leaders while you were there?
Sandy Smith:
One-on-ones? No. I had a lovely conversation with the energy minister for Portugal. So, he was at an event that our CEO was talking at, and he did a very good presentation, talking about how Portugal will have phased out coal. So, I gave him a standing ovation and a quick chat on the way out to congratulate them, but it was a fantastic achievement that a European country has gotten to that place and certainly deserved some celebration.
James Tehrani:
How long did that take to get rid of coal? I mean, that’s a major accomplishment there. Did he say?
Sandy Smith:
It’s certainly easier for some countries. It depends on what their energy infrastructure is. So, my understanding is that Portugal had two main sites, which they’ve managed to kind of decommission. So, it doesn’t mean they’ve got rid of fossil fuels. So, there’s a distinction. They’re running through COP, but they’ve gotten rid of their coal fire power plants.
James Tehrani:
Very interesting. So tell me a little about the overall vibe. Was it hopeful? Was it positive? Was it what you expected?
Sandy Smith:
Going into it, there was a lot of hope, a lot of optimism, a lot of politicians talking, such as Boris Johnson, who said we’re at one minute to midnight, we’re going to need to get it solved at COP. The challenge of climate change was laid down in Paris of staying in line with 1.5 or 2 degrees Celsius [above preindustrial levels]. The commitment for COP was to get the commitment for 1.5. But as we got closer to COP, the NDCs, the Nationally Determined Contributions, that were coming through from the governments, I think made it clear that the commitments would not keep us in line with the 1.5 degree rise by the end of the century. And we were probably heading toward … at the start of COP, it was looking like it was going to be more like a 2.4 degree rise. So, optimistic going into it. But, I think, some disappointment coming out of it.
James Tehrani:
Well, that is disappointing to hear that because obviously we have a long way to go to get to where we need to be. Was ESG a hot topic at the event at all?
Sandy Smith:
ESG’s always a hot topic. And there was a different day on COP in terms of transport days, there was a financial day, and ESG was definitely a hot topic within the financial day.
James Tehrani:
I’m sorry, the what day? I didn’t catch that.
Sandy Smith:
Financial day.
James Tehrani:
Oh. Financial day. OK.
Sandy Smith:
Yeah. They had different themes on each different day. They have focuses in terms of the speakers. So, it came up in more in that area, but COP was definitely about climate change. So, it’s not really about ESG. It is really focused in on the climate change aspect. So, it perhaps wasn’t mentioned as much as it is in the other sustainability conversations that are going on at the moment.
James Tehrani:
Did anything jump out at you as a surprise at the event, something you weren’t expecting?
Sandy Smith:
I was surprised how much our sector, certainly after the events, span the outcomes of COP. So, the outcomes are that we’re heading toward, at best, at 1.8, at worst a 2.4 degree rise. The actual COP formal website actually only mentions the 1.8. So it takes this very-best-case scenario, which, if everything went well, and we baked in all of these vague commitments and not focused on what’s actually is happening, we get to 1.8. It didn’t mention the 2.4. And I was surprised in terms of people have come out of COP, and some people have been very negative in terms of some of the activists, but a lot of the marketplace is saying kind of positive and negative side of it. To me, that’s still a surprise because, ultimately, we kind of moved 20% toward the target throughout COP, and for such a big event, we really needed to get further on down the line. We needed to be having some stronger commitments and to solve the issue in Glasgow.
And now, one of the outcomes is now the encouragement to come back next year. So rather than going on a five-year cycle, we’ll come back next year. And I think it’s in Egypt next year for COP27. And there is a strong encouragement. That’s still not a mandate, but it’s a strong encouragement for countries to come back and make some better commitments.
James Tehrani:
Yeah. I don’t want to spend too much time on countries, but it’s interesting to read stories about countries that made promises early in COP26, and then by the end of it, they’re already backtracking on that. But I think that kind of speaks to how difficult and challenging this is actually going to be to keep within the 1.5. And you’re saying they were talking up to, what did you say, 2.4? So that’s a huge challenge for world nations to kind of come together and do this. But I do want to talk about the business aspect of this. So, did you have a chance to talk to a lot of companies when you were there and what was the vibe that you got from them?
Sandy Smith:
I think the businesses are more optimistic. So, there was a whole range of organizations, senior level speakers, coming along and presenting at COP. And there’s definitely a feel that I have personally, but also from the business leaders that, potentially, politicians are not going to be able to solve this. And they’re going to come up with commitments that are not going to lead to that fast transition to potentially keep 1.5 alive. But with businesses, I’ve got a little bit more hope. So, the business leaders were definitely more aggressive in their commitments, more bold in what they were looking to do. We had the… In the transport day, we had automotive companies backing zero emission cars in 2040, 2035. In some marketplaces, not all automotive manufacturers signed up to that, but those kind of commitments, I think, were welcome.
And we saw those across the different organizations. There were some great examples from companies like JCB with hydrogen-powered tractors and electric vehicles. So, there’s some great technology out on the marketplace. On the abatement side, there was also one of the speakers from Carbfix, who actually shared a platform with our CEO, talking about how you could have carbon storage, effectively taking CO2 from the atmosphere and turning it into a solid rock. And it’s those kinds of technologies that could be combined with the fossil fuel industry to potentially provide a window of optimism of how we can move forward, but still meet those targets of 1.5.
James Tehrani:
You kind of got to my next question. I was curious about any innovations that you saw at the event that were noteworthy. And you mentioned one of them with the carbon, but were there any others?
Sandy Smith:
Yeah, I think Carbfix was the one that stood out for me, and I think stood out for a lot of people in terms of there’s language in the final document about unabated coal power, unabated fossil fuels. So, can we have a fossil fuel industry that could keep on going, but would have technology that doesn’t exist today? I mean, a lot of the bets are—or that this technology will be able to scale to a point where we can have carbon capture and storage. There’s a lot of investment going into that area. There’s a lot of political capital going into that area. Without success in carbon capture and storage, whether it be by people like Carbfix or other technologies around the world, then we are definitely going to be in real trouble. So, it was very nice to see their presentation. It was nice to hear about their pilot programs and it was nice to see their early success. So, that was one organization that I was really glad that I got to see their presentation.
James Tehrani:
Excellent. And greenhouse gas (GHG) is obviously a really big issue. And when we were preparing for this podcast, you had shared a quote with me that said something to the effect of “greenhouse gas accounting isn’t rocket science.” I want to get your take on that, because if that’s the case, then why are so many companies struggling in their efforts to achieve net zero and Science Based Targets?
Sandy Smith:
So the quote came from the Global Reporting Initiative (GRI) who were talking. I think what’s missing, and the companies that say that they’re finding it challenging is the will to do it and the investment to do it. So the business case for sustainability is significant and you see organizations like Tesla kind of proving the point in terms of the benefits that they’re getting about moving early. But when we look at what companies are investing in, it’s often a really small fraction of what that business case is. So why they’re saying it’s challenging it’s because they’re not really investing in their digitalization approach is that they’re not investing in their internal teams to solve them.
So, with greater will on the business to say, ‘OK, there are some barriers here. There are some issues that we have to solve, but it’s not rocket science to solve them,’ right? We just have to potentially invest an appropriate amount of money and put some effort, put some shoulder behind the wheel, to get it solved.
James Tehrani:
So how do you persuade businesses that are resistant to dive into this that there is a business case for sustainability?
Sandy Smith:
It’s different around the world. So I know we speak to our U.S. colleagues and, and they are telling us that they are talking about generating that first business case of why an organization should move. In Europe, I think the understanding of the business case is there, but what’s missing is the scaling. So, we often work with them to understand what is the true business value. If you look at the increased sales, if you look at the reduced cost, if you look at the reduced risk, if you look at the investment, lower price loans, and you add them all up, we end up with a figure 10, sometimes 20, times what they were considering as the business value.
So in Europe, we have a way of working with them to understand the true value of the business case and come up with a number using some of their data that really is an eye-opener. And they haven’t realized that it’s that big. And then in our U.S. marketplaces, perhaps those conversations are starting, and we’re talking to the clients about the basics of the sustainability business case.
James Tehrani:
You talk about the data and I’ve talked to several Sphera sustainability consultants about this, and the data is out there. It’s just basically, how do you harness that data. Is that sort of the issue in terms of improvement, in terms of sustainability?
Sandy Smith:
Yeah. There’s definitely a data capture issue. So often the data is there and it’s about feeding it through the organization and creating meaning from it. So, if we look at some of our large multinationals, while the data is out there, I’m not kind of underestimating the challenge of bringing that all together into one final number for an oil and gas giant or a chemicals giant. It often resides in multiple systems, in multiple different formats, with different levels of accuracy. But yeah, largely, the data is out there and it has to be collected.
There are some aspects of Scope 3 reporting. So, some of the value-chain reporting for greenhouse gases, which is a big theme of data collection where the data may not be out there or may not be at hand for these organizations, but it’s really about a process of asking your suppliers for the data and then starting to collect it so that if they looked in the organizations right now, they wouldn’t find the data. But it’s not overly complicated to start talking to your suppliers, certainly your key suppliers, then asking them to provide the data. And often they’re very happy to provide the data. It’s just that they’ve never been asked.
James Tehrani:
Definitely. And how big of a topic was Scope 3 at COP26? Are companies really ready to make that transition to looking at Scope 3, or are they still struggling with Scopes 1 and 2?
Sandy Smith:
Different businesses in different countries are having different frameworks. So, it was definitely an international audience. So, in some of the emerging markets, it’s more on kind of Scope 1 and Scope 2, but Scope 3 is definitely a huge topic at COP and outside. So, there’s the recognition of an organization. Greenhouse gas emissions are not just their Scope 1 and Scope 2 emissions. It does extend through all the different categories of Scope 3, and particularly purchased goods and services. So, for the large multinationals who are kind of leading the challenge, that’s their challenge. They’re currently looking to go and get that data. And, we can get the data, but we just… if we ask a supplier for the data once, and don’t ask them again, and we ask a thousand suppliers, we may not get a lot of responses, right? And then we may say, ‘OK, well, we didn’t get any responses and move on. It’s too difficult.’
So, organizations have to put that will and budget in there that if we’re going to go to our value chain to go and get these greenhouse gas numbers, we’re going to have to put some effort. We’re going to have to chase them. We’re going to have to support the value chain. We may even have to invest in the value chain in order to help our suppliers improve and produce lower products with lower greenhouse gas numbers.
James Tehrani:
That sounds like a true value to me. So, any other final observations from COP26? I know that you said there were a bunch of tents. Can you tell me a little bit about that?
Sandy Smith:
Yeah, so it was… I went in the second week of COP. So, I think things had started to quiet down. So, I think the first week there was huge queues, there was obviously … it was a COVID secure venue. So, international travelers kind of entered the venue with all their kinds of COVID negative tests, did create a backlog, but it was held in Glasgow’s science museum and around the dock area. Yes. With lots of pop-up tents and lots of exhibitions and interesting bits of low carbon tech in the car park. So, it was an interesting event to be able to see for the first time for myself.
James Tehrani:
Well, great. Well, thank you so much for sharing your observations from COP26 with us. It was a pleasure talking to you, Sandy.
Sandy Smith:
Thanks James.
James Tehrani:
This concludes our podcast.
