PURPOSE, INC.

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S2 Ep10 Managing Business Priorities in a Climate-Disrupted World with Laura Zizzo

Transcript

Michael Young:

Welcome to the Purpose, Inc., the podcast where we discuss corporate purpose and stakeholder capitalism. I'm your host, Michael Young.

My guest today is Laura Zizzo, the co-founder and CEO of Manifest Climate. Laura is a lawyer, a social entrepreneur, and a leading advocate helping organizations move to a low carbon and climate adapted future. Laura and her team at Manifest Climate have built a SaaS application for climate adaptation and risk management that uses AI and ML to help organizations tell their climate story and benchmark against best practices and focus on what matters most for their business. Laura, thank you so much for coming on the podcast.

Laura Zizzo:

Thanks. A pleasure to be here.

Michael Young:

All right. So you were a lawyer. Maybe you still are. You may identify as a lawyer still. Now a founder of a software company and a social entrepreneur. How did you get here?

Laura Zizzo:

Yeah, I think once a lawyer, always kind of a lawyer or at least legally trained. And the reason I went to law school was because of climate change really. Way back then, I knew that I needed to figure this out and law and policy was probably part of it. And I ended up on Bay Street at a big Canadian law firm as an environmental lawyer, and I realized we didn't have climate law. I really wanted to work on climate law, and I was busy doing regulatory compliance work. So I became an entrepreneur at the age of 27 when I started my own law firm, and I started the first law firm in Canada focused on climate change which made me see things a bit differently in what clients actually needed to understand about climate. So fast forward 15 years later, we realized it's actually not practicing law that organizations needed me for. They needed me to help them understand how to connect the dots, how to translate what matters about the disruption we're seeing related to climate change to their core business strategy. So we started a consulting firm, and it grew really fast. We couldn't scale it with people fast enough for need. And I remember in 2018, the intergovernmental panel on climate change came out with that 1.5 degree report that we still hear about so much that said that we need half global emissions in the next decade. And I said, how are we going to do that? We have to align decision makers and empower them to understand this so they can make better decisions at the corporate level. And I just went all-in to identifying how to support corporate decision makers make better decisions, get the capital markets aligned with the truth about climate change, and that brought me to technology and a SaaS platform. And really happy to have a team behind me at Manifest Climate that's really doing big things.

Michael Young:

Awesome. And maybe just to focus on who the decision makers are. So we've seen a lot of corporate leaders clearly concerned about climate risk and discussing those concerns and often through the lens of ESG and through net zero pledges. And we can talk, kind of double click on how that's going. But how should leadership be thinking about this, looking at this, what are the opportunities, the upsides, the risks, the watch outs?

Laura Zizzo:

Yeah, yeah. That's a lot. That's a big question. I think the biggest thing is they should be thinking about it. So this is no longer your sustainability team's problem only. This is everyone's problem. This is, as the World Economic Forum has pointed out for the last almost decade now, climate-related risks and opportunity are the biggest threat to the global economy. So this is not something that you do after you do your core business anymore. This is something we have to embed into everyone's core responsibility. That's why our platform and the disclosure requirements from corporate leaders, from the CFO, from the corporate secretary, they're being asked to say what is your climate story and how are you governing this? Who's paying attention to it? How are you making sure there's actually alignment with this big market shift we're seeing? So it's not about doing good for climate change. It's about being around in a climate disrupted future because we're already seeing the inevitable policy responses coming down, things like the banning of selling internal combustion engines. So each organization that uses cars, uses transportation, they're going to have to think about what that means for their business. How do you incorporate this climate disruption into your everyday world?

The other stat that's really interesting and I'd love all corporate decision makers to think about, we just saw that Washington Post article that said one in three Americans were impacted by extreme weather this summer. That was climate related extreme weather so those floods, the extreme heat, fires. That's one in three Americans. That's like a lot of workers. That's a lot of workers that are working for these corporations. How are you thinking about that? So it's not just ESG often thought of these extra financial considerations, right? It is core financial considerations and these trends and how you think about this. So I don't like to think of climate as a subset of ESG. I prefer to think of climate as a lens that really interacts with the E, S, and the G and the core really nuts and bolts of the corporate everyday activities.

Michael Young:

Yeah. And Laura, you mentioned disclosure and I'd love your thoughts on some of what has gone along the lines of check the box disclosure to actual change. And I think much of the criticism on net zero is that many of the leaders who are making these pledges aren't even going to be around in 2050. So how do we close the gap between say and do with regard to climate risk? And your point is an excellent one that not every organization that, climate is not just carbon, right? Every organization has climate risk now. So how do we focus on closing the gap between what is pledged and then what the actual business practices are?

Laura Zizzo:

Yeah. Great question. First, we do have to celebrate that people are making net zero commitments. I don't want to ever be heard of dissing that. That is great. It's just like when people have an ambition to quit smoking in 10 years or an ambition to lose weight but I'm going to continue eating the chips now. We need to know we have a problem. We need to go on a diet. We need to quit smoking. We need to get started right away. So great to have the ambition. But we need to quickly show how we're moving towards making that decision. We can't leave it till the last moment. We've already done that. The moment is now. So I think what we have to push back on whenever we hear a net zero ambition or something that doesn't actually make a change now, we have to really push for what is the change you're making now even though we see a 2050 timeline? Because it's just those analogies with quitting smoking and going on a diet, it's just the same. And what do we do now? Well, we have to start making better decisions. And every decision that we make, we have to think about what does the climate lens on this look like? Can we be accelerating action towards net zero quicker through this very decision? It's not something we can put off.

And the reason we really like the financial reporting element is if you're actually thinking about this as a strategic financial risk, it can be baked into your core risk management and cost benefit analysis in a way that becomes ingrained in the decision making within the organization. And that's what we're really pushing for with the regulatory alignment for TCFD in particular which is the Task Force on Climate-Related Financial Disclosure. We often say like that is not a checkbox reporting tool to some people's chagrin, right? So how do I do this disclosure? They're asking me about processes and governance and strategy. And that's exactly why we like that reporting framework. It's not just give me a list of your greenhouse gas emissions. That is one of the 11 recommendations of this disclosure framework, but most of the disclosure framework is actually about process, right? It's about governance. It's who's in charge here and are you treating this as the priority that it is within your organization in a way that investors feel you have a credible story? So pledges are great. Credibility is quickly being questioned when the pledges are not being followed up with quick change.

Michael Young:

Yes, indeed. Do you have any thoughts on Glasgow upcoming? And are you attending, I know you've been a part of some of the UN work in the past. Do you have any thoughts going into that? I actually want to do a follow-up on Glasgow after it happens. But what are your thoughts there, if any?

Laura Zizzo:

Great, yeah. I have a lot of thoughts about the UN system. I think it's great. Climate change is a global problem. It's going to require global action. But the existing, so I'm an international environmental law scholar by training. That's what I studied in law school, did a lot of work on. And it's very disappointing that we haven't been able to see the action at the international level that is required. And the Paris Agreement really was a response to that. The Paris Agreement changed the way we do international environmental law. So Glasgow is a real stock taking moment about the Paris Agreement, and if anyone is under any false pretenses that we are on track to meet the goals of the Paris Agreement, they would be wrong. The nationally determined contributions from the countries that make up the Paris Agreement has shown that if they actually meet their commitments, with question if they will based on the current trajectory, we are blowing through the Paris Agreement a limit of a two degree rise in global temperature and closer to a three, three and a half degree rise. So we know we have to up the ambition, and that has to happen at Glasgow.

Now the reason that we do not do at Manifest Climate much international policy is I think that we've not connected the dots to the real actors within the economy, right? So the international government bodies, the environmental ministers get together at these international conferences, and they make these decisions. But on the ground, the companies aren't feeling the pressure to actually change. So what we see Manifest Climate as is almost the enforcement mechanism for the Paris Agreement by empowering organizations to understand what this transition would mean for them and how they can be part of it. There was that missing piece between the international discussions and people doing just the same stuff. Even though we have the great statements coming out from the UN saying we need urgent action, we're not seeing much urgent action. So we really need to get it down to those non-state actors that are actually the ones doing the things that need to change.

Michael Young:

Yeah, that's an interesting point about the locus of control. And certainly, in the U.S., in Canada, and Europe, and to an extent other OECD countries, there is movement and commitment. But then the question could easily be raised about well, what about Saudi Aramco or Sinopec, right? So some of these state-owned entities where there isn't pressure being applied and even to the extent that we could look at Exxon and they've been through their own travails on this recently. There may be two sets of books here, and that's what it seems like. How do you think about that? In other words, Exxon's being held to one standard and Saudi Aramco being held to another standard just to use two very iconic examples. Not picking on either of those two organizations.

Laura Zizzo:

It's really interesting. Two answers to that. One, Saudi Aramco is still at the responsible investor conferences in the same way that Exxon is thinking about this because it's a market shift happening. So there's a regulatory pressure, and that might be challenging when we have different regulatory regimes in different places. We certainly went through that in Canada over the last four years when we're thinking what can we do with our neighbor to the south not doing as much, right? And that argument is often heard in Canada, saying, we can't do it unless the U.S. does too. But I think it's a false argument, and I think we need to actually look at the demand side of this stuff. And we need to not make people suffer and not make these organizations suffer. We need to unlock the opportunity that just makes them potentially irrelevant if they don't change. So what I want to really focus on is not the fatalistic approach here but the opportunistic approach here. What is the business opportunity if we do solve this, right? And how do we think about that? And it's not just the oil and gas companies we should be targeting. It's the people who are using that stuff. It's like blaming the tobacco farmers for lung cancer, not the cigarette manufacturers. So we need to think about everyone who's selling anything that burns fossil fuels. We need to think about transitioning demand, changing the whole system. It's a systemic issue, and we for far too long have been putting the blame on yes, some very powerful companies, but they aren't the only ones that we need to look at.

Michael Young:

That is an excellent point, especially on the demand side. Laura, let's shift if we could to what the application, the SaaS app does, what does it bring together, how does it improve organizational attention to climate risk, and what does it do for a business?

Laura Zizzo:

Thanks. Yeah. We know that every organization, big or small, all 41,000 publicly traded companies and all the private companies, we're all going to have to go through a climate journey just like we went through the digital transformation. We're going through a climate transformation where the fundamentals of business are being shifted. We're moving our energy system to a totally new energy system. We're dealing with a different climate. Both of these things are happening at the same time and disrupting markets. So we want to be, we are the navigational guidance for organizations on that climate journey. We do that by using our machine learning to look at their public disclosures and say, what are you already saying about climate in your public reporting and what are you actually doing through some? They come onto our platform, and they give us more information. We organize that information for them aligned with the task force on climate-related financial disclosures so that they can tell their climate story, both internally to their own team so that everyone can understand what they should be doing and externally to investors for confidence so there's continued access to capital. And we know it's not just about disclosure. It's about increasing competency within the organization. So we try to help them with some learning modules, climate 101, TCFD 101. We also do market intelligence and peer analysis. So we just want to surface what matters for these businesses, how can they stay on top of this rapidly developing space and make sure that they can continue to thrive as capital markets change.

Michael Young:

And so from a leveling up standpoint, where are you seeing organizations come in? Where are they capturing the biggest opportunities immediately? What are the sticking points for change?

Laura Zizzo:

Yeah, it's interesting. For us, we're starting with the building blocks of how you make decisions within organizations, right? Instead of going right to the quick fixes of do this thing to lower your greenhouse gas emissions, we're asking, what matters to the organization and who's really in charge here of thinking about this? And when you ask those questions, people are actually doing more about climate than they think. They're just not putting the climate lens on. They're just not connecting the dots with those things we were saying around what does it mean when we, for instance, no longer can buy an internal combustion engine for this business. But they know how to manage risk. They know how to think about opportunities. So we're just helping them understand what processes already exist that they can then put the climate lens on, and that is really some low-hanging fruit. My thesis has always been when you empower decision makers with the information they need to understand this, the light bulb goes on and then we're going to see the innovation we need from the corporate sector. And we've certainly seen that, right? When senior decision makers get this information, they understand it. And I've been inspired by being in many board meetings with risk committees and finance committees saying, this is our problem. And that's so exciting to me when they realize no, this is our problem. And these are insurance companies, these are real estate investment trusts, these are retail food manufacturers, right? They all realize, oh, climate, that's our problem. And when that is understood, we have the ability to get to the solutions we need. But there is no silver bullet. It's not like, here is what we are actually seeing happen. It's a slow and systemic change which is sometimes unsatisfying, but hopefully, we can help kind of keep people inspired that change is happening. It might be happening quicker than you think.

Michael Young:

Well, thank you. And if I could ask you to perhaps compare and contrast, and I like how you referred to us as your neighbor to the south, compare and contrast sort of the U.S. and the Canadian evolution on this topic and the maturity? And I don't think it's a stretch to think that Canada must often think they're living in the apartment above the meth lab, right? Just to really—

Laura Zizzo:

That's a good one. Yeah, I haven't heard that one before. I've heard like sleeping beside the elephant. That is a common one that I think a former prime minister said. We're like the mouse beside the elephant. But yeah, the meth lab one is—

Michael Young:

That’s Scott Galloway. I have to give him credit.

Laura Zizzo:

Yeah. So with the public disclosure element in particular, it's so interesting because so many of the corporate actors in Canada actually have their headquarters in the U.S. So when you're asking who's responsible for the public disclosure element and putting this all together, it's the U.S. We're dependent on the U.S. in a lot of ways. But we're also really dependent on the fossil fuel economy. So we've been thinking about this as an exposed economy quite earnestly, and there's a lot of challenges with that. But I don't think that Canada is far out ahead of the U.S. and, in fact, all around the globe these standards are developing. And there's no matter where you're traded now, whatever stock exchange you're on, those stock exchanges are part of the movement for more climate-related financial disclosure. I certainly think that we are seeing a quick, I don't know, epiphany, is that the right word, happening in the U.S. on this in light of the new administration and the whole of government approach that is happening in thinking, okay, I'm not going to be able to ignore this anymore. So we're getting calls from Texas. We're getting calls from like the deep South in the U.S. saying how do we think about this? Our investors are asking us questions. It's really exciting to see, and we're there to support them through the transition as well.

Michael Young:

Excellent, excellent. Any final closing thoughts, any predictions, your observation about we're not going to make the Paris goal by even a lot but anything either that you're hopeful or very concerned about here in the closing minutes?

Laura Zizzo:

Yeah. Thanks for that, Michael. Yeah. I mean I wouldn't be doing this work if I wasn't optimistic. And I believe that we are going to try to save our species, and we're going to change. But I also do feel a little bit like most of my life, I've been screaming on a sinking ship while everyone's still dancing to the band. And now more people are coming up on the top of the deck and saying, oh, this is sinking, right? So it's actually quite heartening. I'm more optimistic than I have ever been. I think we have to be realistic about the speed and scale of the transition we're about to experience. We're in a revolutionary moment. But if COVID has taught us anything, I think it's taught us that we can make change. Like we can do things differently, and we have to unlock human potential to do things differently if we want to keep our high standard of living going into the future.

Michael Young:

Excellent. Laura, I really appreciate you coming on the podcast, and we are going to have you back with Bruce Simpson because that will be an exciting episode. But I really appreciate your time today, and it's great to get to know you. Thank you.

Laura Zizzo:

Thank you, Michael. It's been my pleasure.

Conclusion:

The Purpose, Inc. Podcast is a production of Actual Agency, helping innovators communicate in a changing world. More at www.Actual.Agency.