[Notice: This episode was recorded before the announcement of Liz Truss’s Energy Price Guarantee]
As one of Europe’s largest renewables investment managers with over £7 billion in assets within the wind, solar and bio-energy sectors, Greencoat Capital has provided significant opportunities for innovators and game-changers in the renewable energy space to accelerate the global transition to a low-carbon economy.
Founder and Managing Director of Greencoat, Richard Nourse, has used his experiences leading energy teams at Merrill Lynch and Morgan Grenfell to drive the company’s commitment to revolutionising the industry. Now, he joins Nurole CEO Oliver Cummings to discuss the future of renewable energy and how boards can best invest their time, talent and resources to navigate it.
Show notes and transcript available at https://www.nurole.com/news-and-guides
Hello and welcome to another episode of enter the boardroom with neural the business oriented podcast that brings the boardroom to your channel of your choice I’m your host Oliver comings CEO of neural the board level hiring platform that specializes in the high value chair independent director Advisory Board member and trustee
Placements that drive high impact boards today I’m delighted to welcome Richard nor to the show Richard is the founder and managing partner of greencoat capital greencoat is one of Europe’s largest Renewables investment managers with over 7 billion pounds under management in Wind solar bio energy and more across the UK Europe and US
Providing secure income for their clients whilst accelerating the transition to a low carbon future in 20122 schroers PLC acquired a 75% shareholding in Greek Co for an initial consideration of 358 million pound before founding greencoat in 2009 Richard had a long career in the city laterally at meril Lynch where he led
The Amir energy and power team and before that at Morgan grenfell he’s also worked for Her Majesty’s government shareholder executive and acted as a commercial representative for the government’s 2017 cost of energy review Richard has previously served as a non-executive director at ureno a supplier of safe uranium Enrichment
Services and fuel Cycle products for the nuclear industry and his Twitter handle describes himself as a recovering Banker type 1 father and the keeper of a herd of rare breed Capital Richard thank you so much for joining us today thank you for having me Richard I’d love to start
With your journey it’s an amazing story going from banking into setting up your own incredibly successful business can you talk me through the Golden Threads that have got you to where you are today I often get reminded when I bump into chrispen Wright who you may know is
Still at rosch about how I got hired by Morgan grall out of University which was that I had to wait all day so I was due to be interviewed at 11: and I eventually got interviewed at 5: and I then listened to someone talked to me for 20 minutes and then somebody came
Panting into the room handed him a note and he left and taking Krispin with him and I got hired and apparently the conversation outside the room went along the lines of well I thought that went rather well I think we should hire him and I literally said hello and that was
It so perhaps I should think despite the fact that I’m a person that talks a lot that less is more and that part of I suppose these things is you just need to be lucky and I hope that you’re in the right place at the right time when good
Things happen so I don’t really know what to say beyond that but each sort of time I’ve taken a step in my career it’s kind of not been something that I’ve spent years planning it’s been something that’s kind of happened so whether it be the move to from you know being at
Morgan greni which at the time I joined it was know an exciting dynamic or beit oldfashioned but Dynamic organization going to Merl Lynch again which a lot of the rful team had gone to leaving maral Lynch Sher executive and then setting up green coat and then Reinventing green
Coat as part of the success of green coat what we did first at Green coat was a failure the best thing was is that we we had the the vision to see a way to the success that we since had fascinating tell me more about the initial failure and how you overcame
That when I left Merl Lynch maril Lynch was sh Riding High sort of long before the financial crisis had kind of emerged I guess I was heading towards the point where I was thinking about sort of doing some non-executive roles and trying to find something to occupy myself sort of
A third of the time and I then then got to the point where I nearly joined another private Equity Firm but didn’t so one of the ones I’d advised when I was a banker and for various reasons that then got me sort of set on the idea that private Equity probably was an
Interesting thing to be doing albeit that I had some advisory expertise but I didn’t have any of the other skills that one needed to do to be in private equity and then 2008 came the financial crisis got worse and I still felt that private Equity was the right way forward but but
Still you know kind of it was more intense the issues rather than anything else and ultimately I had lunch with a friend of mine who said to me just don’t be stupid I’m a private Equity lawyer who at the moment is helping people get out the commitments they’ve made to
Private Equity Funds not to put more money into people who don’t really have the skills who have the hubris that you do after your well-developed career in Investment Banking and so you know forget it I okay that’s that’s good and know I paid for lunch and you know
Thought to myself well you know wonder where that takes us then occurred to me that we kind of heading into 2008 Tony Blair and the other European leaders were sitting down with the 2020 targets and it seemed to me that the sort of thing that we’ sort of known was sort of
There or thereabouts the sort of transition to Net Zero we didn’t know it was Net Zero then we thought it was an 80 90% reduction was coming on us and that my old friends utilities and I knew a lot of the European utilities would have a series of challenges one as
Technology changed but two as business models changed that they as utilities probably wouldn’t be best place to survive and indeed that has been the case if you look at the amount of value that European utilities have lost over that decade it’s absolutely huge as other people have come to eat their
Lunch and the old truths are no longer truth and the level of change has been enormous and so I spoke to three different utilities two large Continental European ones and then also an Irish one ESB and ESB was kind enough to set up essentially a private Equity Fund which they contributed people to
And I developed a team around those people plus myself plus others and we started investing a 200 million euro Fund in essentially small companies which we hope would become big companies but resolutely remain small I think we got to the point where probably by 20101 it was becoming clear that it was tough
And what we were doing that the speed of change was very slow the financial crisis had continued rumbling along and that the adoption rate of Renewables was there but it wasn’t fast enough for the companies sort of supplying the picss and shovels to really succeed and so Von
Gutier my partner and I came up with the thought that we needed to think about something else to do was it doing more of the same or was it trying to move into a similar but different part of the market and we saw that the the folks at
Climate change Capital who had been our big competitors or to say they were competitors was probably over egging our position they were the market leaders tried and failed to raise a listed fund and and it from that we then they failed thank goodness I rang the team up and
Said hey really interesting what you’ve done wonder whether you’d like to come and do it with us and they weren’t so sure was the truth but by early 2012 we now at that they joined and they effectively launched their Fund in 2013 and from that it’s now right on the edge
Of the foots and all of our infrastructure businesses have thrived and we’ve grown away from what they’ve done or building on the Baseline of what was done to what we are today and that private Equity business that we started after 10 years we gave it back to ESB
And kind of have moved on fascinating so do you think looking back you could have shortcut the process anymore or was that just an inevitable part of the journey now I think everything has its time so if you look at the sort of renewable space in the period up until when we
Listed in 2013 I think there only been four renewable energy infrastructure transactions in the UK and I think in an average year now there are 40 wind farms that get bought and sold there was no solar back in 20078 it just didn’t exist it was on spacecraft and satellites and
Things like that and if we were going to decarbonize decarbonizing essentially 400 an hour was effectively going to be immoral because people wouldn’t be able to afford it so as we’ve moved our business forward things that we sort of thought were going to be successful at the beginning so biomass I think we
Really were excited about biomass has not really changed its characteristics over the the period since 2008 to where we are today clearly there’s a possibility of carbon capture storage for ones like drags and possibly in the future for others but the change in particularly the wind and very much the
Solar sector have been the most intense with the reduction and the level I cost of wind from 150 an hour to today’s 4050 pound an hour and the level ice cost of solar dropping from 400 to probably less than than wind and and globally solar
Will be the great winner and much of the populations around the world are in areas where it’s intensely Sunny that will lend themselves to renewable energy supplied principally by solar with use of batteries and some back up whereas in sort of Darker Chilli and Northern climes we’ll probably see a bit more
Wind less solar Finland more wind albe I believe there is now a finished solar farm under construction hope for everyone I want to just of understand the role that boards have played through that Journey for you because you’ve now got a fascinating perspective having been a banker a
Member of a board and also Now sort of successful founder that where a number of the listed entities that the company operates has have their own independent boards what what’s been your experience of boards you you didn’t have a board yourself a green code how do you think
About that how’s your thinking of boards evolved suppose my initial experience of boards is really showing up to boards to provide some support to the input that CFOs CEOs heads of m&a Etc providing to boards to help them make big decisions around an m&a transaction or a fundraising transaction and you’re sort
Of brought in as a sort of Mator type character which perhaps leads to the hubit it’s those pink tights and you’re there just to provide advice to a group of people that you don’t really know you probably know the chairman you certainly know the executive team well and your
Kind of read of the board is a sort of slightly unusual one I suppose my most unusual one ever was advising Texas utilities where kind of doing that all sort of on the telephone in Dallas while I was in Dallas with the executive team and the board all around the us but
Normal British boards I think kind of that was my initial experience it’s that sort of kind of high tension small bit part moment that was kind of my experience really all the way I think through until started greenco and then probably during my time the shelder executive I had started to see how
Boards were operating and in a bit more detail and all the things that they were doing but wasn’t actually sitting on one but very involved with the British nuclear fuels board as that was being disassembled and similarly the ureno board one step away from it I wasn’t on
It then so and the British energy board again we were 35% shareholders as the government but we’re not on the board but but interacted with what the board was doing and S all the board papers and I guess then moving to almost Sublime ridiculous when as a sort of small
Investor in small companies with a 200 million fund and a 5 million investment and something trying to assemble the board that would effectively take the entrepreneur to where they needed to get to to stop being an entrepreneur in a pure sense but being entrepreneur plus business manager over that Journey was a
Fascinating experience in getting good executive chairman in particular really to drive that was was hugely important and and I’ve just used that word and I said chairmen and I think really my experience to the point of actually relatively recently where we have a chair shown a German page on green co uk
Wind has been that it’s been very male occupied area of the world and then I guess more recently then as a director of ureno for 10 years 12 years on effectively what’s a big joint venture so it’s a it’s a slightly clunky board it’s not got doesn’t operate in the way
Usual board works and you’re more like there as a shareholder representative rather than as a as a member of a sort of one team board but you trying to create both and then obviously we have the boards of green cat UK wind and the boards of green cat Renewables both
Individual independent plc’s with strong non-executive boards essentially being good clients to us and I think we do a better job if you have a strong board that’s basically overseeing the work that we that we provide towards them there been an evolution I guess around around that tiny little moment that
Glimpse you see of what a board does you know through to now seeing board really working properly one of the things that’s been fascinating for me to sort of see more time I spent with boards is how many of them are are sort of dysfunctional don’t don’t seem to sort
Of add value in the way that they should there was an amazing survey done recently which said something like 49% of boards think that at least one of their board members should be replaced and they sort of not fit for purpose which is just an extraordinary statistic
What sort of value are you looking for from your boards can you give us some examples of how they have added value for the organizations that they’re Serv I think on ureno the defining moment was there probably two actually so one was the board by the time I had joined had
Decided to Embark upon expansion into the US on a the First new nuclear plant to be built in the US for a generation and effectively had started the process of building these plant truthfully before they had finished agreeing what type type of plant they were going to
Build and that led to very substantial cost overruns and seeing the board sort of managing the situation that we were in recognizing was not a good place to be that then rapidly followed on or was still probably going on as Fukushima happened and the thing that was then
Probably the most interesting was that I think there were a reasonable number of us around the board table who were pretty clear that something fairly fundamental had changed in the nuclear world and I think also there was that noise of the approaching Renewables hegemony that we see today we know I’m
Still strongly pro- nuclear and I’m sure nuclear has a future I just think that its future is much less secure than it probably would have been 10 years ago and getting the management team to the point where they were ready to accept as sort of facts rather than wild
Conjecture those points was was a really key piece and I think in that case we had a board where you know it wasn’t the best functioning board and the the respective chairs did an extraordinar good job of of getting the response that ultimately was needed so and I think
That probably has happened so that in ureno kind of really huge changes I think in in the the listed funds I I don’t manage either of the listed funds my colleagues do but there it’s very clear that they are different boards but they are successful in terms of helping
The managers identify things that you know really are important that they help identify the areas where shareholders may cause kind of concerns and I guess it’s sort of doing it in a way that allows the executive team who let’s be clear executive teams are what run
Companies to deliver their best in a way that lets the board in to help the executives be their best and you mentioned the chair having done sort of good jobs there were there things that stood out for you in the way that they went about that I’m always fascinated to
Understand the sort of tools and techniques of of good chairs what do you think with the Frameworks that they use without breaking any confidence you’ve been involved in in private investing and and I guess one of the questions I’d ask yourself is you know are the kind of folks who kind of
Undertake It generally speaking those kind of unopinionated you know etc etc I think the key thing is is for the board to deal with us the manager actually is the skill and doing that in a way that’s intelligent and thoughtful because you’re getting I hope a good service
From us you know one that we’re really caring about and behind but it’s then making sure that you as the board get that service delivered in the way that you want it and how that’s brought about through you really subtle use Sher is a fantastically subtle person she really
She’s very clear what she thinks she wants to get done and then she goes about thinking about the steps she needs to take to make it happen and I think that’s kind of leading her board without getting out in front of them you know kind of far as I see as an observer
Rather than a participant and I don’t attend the board meetings but it’s seems to us has led to some pretty good results for the company over the years and we’ moved from being 260 million to now we’re on sort of 3.7 billion I think we’re on sort of cusp of the footy so
Quite a change that she and others have overseen fantastic I’d love to move on to touched on sort of the renewable space already for those who are not deeply burs in the space as you are what do you think are the key issues that board members not in the sector need to
Be thinking about historically the key issue was really around sort of well there were probably two or three key issues so one was is that all Renewables were subsidized so they were sort of first of a kind subsidization of Renewables to enable enough Renewables to get built for them to compete with
The incumbent Technologies and we’ve passed that point so that’s a huge point that people need to be really thoughtful about for a long period of time that’s not to say that the assets that were built during that period will continue to receive subsidies out until 2037 because they cost much more than they
Would do now now to get built and therefore it’s obvious that happens so managing that interface and being aware of the the sort of the role of the subsidy in the sort of scheme of things was important I think that the other big area obviously is safety so we operate
Across green coats multiple funds over 250 assets I say we operate the independent Boards of each of the spvs will contract out with competent third parties the operation of those but we as a contractor need to be or person Contracting with the third parties need to be confident and competent to be
Confident that they will run them safely we’re not responsible for it but it absolutely is a vital thing for us as green code and then I guess that the final thing was that the investment proposition of these funds is to be a kind of low risk low return Dependable predictable secure income Capital
Preservation type of story and I think that you know all the steps that got taken by any of our listed funds and or our private funds our private funds now account for about half of the a we have under management it’s to very much deliver what it says on the tin we don’t
Want to surprise investors in any way shape or form and and indeed that’s kind of one of the things I’ve learned the most actually in the last year or so is that people haven’t really actually wanted to speak to us our clients so much because they’ve been having
Problems and issues in all their other Investments but renewable Investments have done you know exceptionally well throughout the pandemic and then obviously they’re benefiting from high power prices at the moment I think today the is is going to be sort of maneuvering through the obligations and rights essentially that attach to the
Type of regulatory regime that we have today and looking at the obvious this kind of huge issues that very high power prices cause and very high gas prices cause and it’s gas that’s the biggest issue and gas prices in the context of heating bills are going to be huge
Issues social issues for us this year and so the cost of the energy that this country will need is now starting to whereas historically it’s sort of been I know 2030 billion that kind of order of magnitude you know that compares with a defense budget of 35 billion you know
These are enormous numbers we’re talking about hundreds of billions this year and that I think it’s going to produce a series of issues for government and for the boards of the companies that own the assets that are going to be pretty significant to deal with what do we need
To be doing about this I mean is this just a question of further investment is going to be required or is there more board members can be doing to plan and mitigate against the the impacts Alis F Davis has made interesting contribution to this debate where he’s really said
That by the time we get to 2030 2035 we’re going to be looking at a low carbon low cost Energy System that has been basically derived from Mostly Renewables but with probably a small amount of nuclear he didn’t say nuclear but I would say nuclear and so 2030 2035
Is a kind of Sunny Uplands that we can all see and I think there’s no discussion there’s no doubt there’s no questions that there’s that combination of climate and affordability and energy security all come together and we’ll be fine the issue is is that for the next few years we don’t have enough
Renewables to do that job the way it should be done our houses are not insulated well enough to allow us to use smaller amounts of gas than we would otherwise have used and that it’s therefore going to lead to a periods of intense discomfort for the next little
While and what essentially needs to happen is is that you know you look at the point where nearly 50% of the British population is going to find that the cost of energy is more than 15% of their disposable income this is starting to get to be you know a huge issue a
Huge social issue and therefore I think that the energy utilities have suggested really two things I think one is a large set of interventions by the government this winter effectively to cap the cost of energy by essentially creating a pot a little bit like the Spanish tariff deficit poorts but it’s tariff deficit
Poort which customers repay over the next 10 15 years and and that I think definitely gets you through this winter and the amount of the government intervention is going to be kind of way Beyond I think anything anyone had previously thought would be necessary but that is not the long-term solution
The long-term solution is to build more Renewables but that will take time and I guess then the question will be is does the government continue to run the Tariff deficit model for the next few years and or could we move to a form of energy reform that Bates the market and
I think that utilities essenti saying that they are ready to have energy reform and that they’re looking forward to energy reform but energy reform needs to be done in a way that balances the rights that different types of players in the market have so is your perspective that the inflationary
Pressures that we’re seeing at the moment are short to mediumish term and the ones you get over that hump will be back to a normal environment in terms of energy inflationary pressures if not potentially even deflationary yes I think everything’s really in the definitions of short and medium term so
Back on 2030 so the committee on climate change which I think one of the best institutions we have in this country has been very clear that it thinks that by the early 2030s we need to have decarbonized the electricity sector and decarbonizing the electricity sector means that instead of let’s say making
Electricity from burning coal which for every kilowatt hour of electricity you get from coal you get 1 kilogram of CO2 emitted into the atmosphere that we move from that to less than 50 g I.E 20 fold reduction in the amount of emissions across the system by the early 2030s and
So if you’re sort of down at around around 50 grams we then have the capability to then decarbonize transport we have the ability to decarbonize heating using electricity those are the sunny Uplands that alist Phillips Davis has mentioned in his article in the Ft I think that the path to get there given
That we’re only about halfway there is the bit where we’re having the tense time now and so the forward curve for gas is pretty high for really quite a long way out and doesn’t return down to sort of post or pre pandemic or precurrent crisis levels until 25 26 so
Therefore we have a period now where there’s really very high electricity prices but actually that doesn’t just it’s not just this winter it’s going to be next winter as well and high gas prices the key thing really is to advance as quickly as possible the Advent of the Renewables and the
Government obviously has talked about sort of their 2030 targets but really moving it in in an almost sort of wartime type of approach is kind of going to be what’s necessary and if you look in Germany if you’re in dist door at the moment you’re being encouraged to
Use less gas you’re seeing that there are no lights on on public buildings at night etc etc and they really are heading into a situation where they worry that this winter they may not have enough gas I don’t think we will not have enough gas I think we may not have
Enough money to afford the gas that we want to have so we need to get as quickly as as we possibly can that that we’re not going to get there quickly Enough by building Renewables they just take too long to get planned to get built to get deployed Etc and therefore
The way in which the government intervenes in the market will be absolutely key for effectively affordability and clearly one talked initially about customers being you know people as in residential customers but obviously small businesses also are going to suffer similarly so if you’re if you’re sitting on the board of an
Organization with reasonably significant energy spend which isn’t currently hedged what are the things You’ be thinking about doing now should you be just continuing to sort of roll or should you be trying to lock things in I don’t think there’s an there’s an answer to that question because obviously it
Toally depends on the market that you’re in but you’re sitting there in a place where somebody else can get the access to the energy they need at a price that’s completely different to the price that youve got access to the energy that you need then you’re going to see large
Market share move to those participants with the lower cost of energy I think that’s something that we will truthfully we’re going to see over the medium term anyway you know if you’re finding that making electricity in Texas is going to be a lot cheaper than making electricity
In the UK you will see that industries that would have been in the UK are now going to happen in Texas because they’ve got masses of sun and lots of wind and I think that in the short term you will see that glass bottles that get made in
The UK may not get made in the UK this year they’ll get made somewhere where there’s lower cost of energy now clearly Supply chains and all those other things have been sort of optimized for a decade of globalization that we’ve seen and then clearly you can’t go and put up a
Glass bottle making factory wherever immediately I think it will lead in my mind to some reduction in economic output is almost certainly what will happen people will have to shut for periods and I think obviously that’s even if you don’t go towards actual rationing of molecules it’ll be rationing through pricing for businesses
That we will start to see this year you know my wife’s a farmer so those cattle that you mentioned in the introduction are really hers not mine so she’s looking at building a barn a barn this year cost three times as much as it would have cost if we bought it last
Year if we could wait another two years it’s forecast to come right back down again so therefore you just will see less activity I think in barn manufacturing than you have done over the years and that’s obviously bad news if you’re a barn manufacturer so each business will be different I think but
People with a large energy component of their their bill I’m afraid I think are going to s a very difficult couple of years so you see both a timing effect but also there’s a sort of Geo sort of political shift that you can see happening here as Loos centers basically
Relocate reorient towards those with the renewable resource yes because the renewable resource will be much cheaper than anything else and also it’s secur as well you know you can have it when the wind blows In The Sun Shines and that sort of issue around intermittency that
Sort of the folks on Twitter who seem to termine to continue to be stupid or ill informed kind of keep mention oh gosh but it’s intimate yes we know that I think there’ll be solutions for that which will be much cheaper than the Alternatives of continuing to burn
Fossil regardless of whether or not there’s a climate discussion to have or not and I think that that is completely true so mford has often been disparaged on Twitter Twitter obviously seems to be main role to dispar people but you know he was very clear that some Industries
Will have to move yes he was talking about brexit I think that actually the world order of what what happens where will change because of energy and if energy becomes a bigger and bigger piece or component of and people have materially lower energy prices in some
Parts of the world and you’ll see it moving you’ve already seen that happening in aluminium smelting or you know but we for instance have three large green houses that we have being built in the stangle or two of them are actually up and running and the two they
Up and running get their energy from the sewage outflow pipes of the norch sewage treatment works and the bars and deadmond sewage treatment works and don’t worry there’s no sewage going on to any of your Tomatoes there’s been a heat exchanger in that outflow pipe and that cold 13 degrees water or lukewarm
13 degrees water is pumped round to the greenhouses where there’s some of the largest heat pumps in Europe and we then use that to basically heat the greenhouse the temperature they need to grow out to grow tomatoes and the tomatoes in those green houses are 75% lower carbon footprint than any other
Tomato grown in a comparable way you know most tomatoes are grown in Northern Europe in green houses using gastard Heating that’s a very expensive way these days to grow tomatoes so you’ll see essentially businesses moving depending on what the cost of energies now that’s a medium-term effect but
It’ll be very profound and you’ll see we’ve always envisaged I think towards the end of the transition that more complicated substitutions it’s quite easy to substitute electricity you put a wind farm solar farm batteries back up Etc I think there are a lot of processes that involve use of coal or reduction of
Some description that will ultimately require hydrogen which will be quite expensive and those almost certainly will move to where the hydrogen’s made because transporting hydrogen currently is the most expensive part of the chain and I think we seeing this move from everyone talks about Renewables as wind
And solar Farms but actually in the future a third of the output from Renewables will be used to make hydrogen I think most people believe and that hydrogen then is used to do that last little bie of decarbonization that brings us nicely onto the whole sort of topic of ESG
Which clearly plays a huge role at Green code and you you’ve sort of been very passionate and public in the way that you’ve sort of gone about that um I’d love to hear more about how you’ve gone about embedding that in the organization as as you grow I think you highlight six
Areas of focus that particularly relevant for you around workplace health and safety reducing carbon emissions and producing renewable energy cyber security workplace health and safety robust governance and compliance and engaging with local communities but what have been the key gotes the learnings that you’ve had from that that other board members now
Thinking about their own ESG strategies might be able to benefit from I guess I’m almost the worst person to ask about this because we started off sort of with these sort of things frankly as given for our business operating model so our main pitch when we went to see investors
Was is these are great investments from a financial point of view and you know they have good income characteristics and your capital is preserved and as low risk and we spend 14 years doing that and whilst we’ve been doing that the things that we were doing anyway like
We’re a premium listed company on the UK stock exchange with our biggest fund we’re aim listed in Ireland on our listed fund but we don’t have you know very large amounts of money for very large Pension funds with millions of people relying on us doing what we’re
Doing so you know having good governance is had to happen and then health and safety comes from the government actually of the individual spvs as we talked about earlier health and safety is just not something you can compromise on how we interact with the local community that’s just a given you don’t
Get to you know build a large Wind Farm or a big solar farm you know if the community is to a man woman and child against what you’re doing so these things have been things that have really been part of what we have done truthfully since the beginning now do we
Measure them more than we used to definitely do we think about how we can talk about them more than we used to yes do our clients ask us to help them understand the sort of information that we’re providing to them and the think of a way of really quantifying a series
What otherwise becomes sort of anecdotal yes to all of those things and I think that’s the interesting sort of piece of where we’re going so I don’t think we can yet tell you that all of our funds are you know article 9 sfdr compliant but we’re pretty close if we’re not
There on them already so those are all good things I think that the truthfully the that everybody else is kind of catching up that sounds a bit arrogant but it wasn’t a deliberate policy I didn’t go aha let’s start start this business with the best ESG characteristics well I didn’t know what
ESG was but it was just that they were Givens in the type of business that we were in rather than things that we’ve had to think how do we pollute less or whatever it is you know do we have some pollution yes we do we have P stations
Which emit sulfur di oxide and every now and again we breach the permit we try really hard not to we focus on that a lot you know on health and safety we have we hope near misses only and very occasionally we have some form of an accident do we manage that monitor that
All definitely so these are all things around about I think sort of creating more of a structure around stuff that we kind of knew was obvious I think I hope that sort of not sounding arrogant it’s not in all meant to we weren’t the Smart Kids on the Block who sort OFA there’s
This massive wave coming it’s called USG let’s get in there it just was very lucky and I think it slightly comes back to my story at the beginning getting hard you just sometimes have to be lucky if the person hadn’t arrived in with the the note to say that the person
Interviewing me was needed I might never have got my job at morg grfa and we wouldn’t be talking today there’s been a lot of talk about greenwashing and organizations who are greenwashing and it strikes me that the whole certification and S proof of organization’s green credentials is
Actually much more cly I had ever initially sort of anticipated and talking to someone recently about you know various case studies that there as an investor face where they had an investment opportunity in an organization that had some solar panels where on due diligence they fig figured
Out that there was some sort of connection to you know child labor that the solar panels were already already made though manufactured and it was unproven whether child labor had been involved with the manufacturer and so they had this sort of dilemma of could they invest in this company using those
Solar panels because it would be a waste to just let them go but equally it was tainted by this sort of allegation what’s been your experience of of sort of navigating that balance between sort of greenwashing but also sort credibility around credentials it’s a really good point so I think
There sort of two slightly different points so on the solar panels and weos and I think it really is weers in China that we should mostly be concerned about so slave labor that it’s pretty clear that there are issues so it’s pretty clear that we should all be trying as an
Industry to do something to say we’re not going to buy panels from places where there are issues that we aren’t getting the right answers to and the solar industry is kind of coming together to make sure that that does happen did we focus on that as much as
We should have done we and the rest of the industry no is pretty clear that you know if you look most of the UK solar park has been built pre 2017 so probably pre significant involvement of slav over the then period but that doesn’t excuse
I mean it one needs to I think that we feel that it’s a little bit like the position of the rspb on wind farms yes wind farms do from time to time CL you know kill birds but it’s the alternative that nothing will survive if it gets
Very hot because we don’t take the right steps to do climate change therefore wind farms that are in the right place are wind farms that they should support and I think it’s it’s different but similar on the issue of slave labor now we have found it immensely difficult
Truth I think the whole industry to really get good answers to the questions that we want to know the answers to out of some panels coming out of China over the last few years but I think that we we see particularly as sort of China opens up post pandemic and don’t forget
You know the Shanghai lockdowns pretty recent you know the getting more access and getting the questions answered better I think will really come through over the next 12 18 months and there’s a lot of focus on that so having given you a very positive picture on RD and it was
All great we were in a place clearly there are the issues like the ones that you you raised I think on the the general greenwashing again I’m probably not the best place to do this I think that it’s difficult just from this a personal point of view to think that you
Know people who are doing immense damage the environment like the oil and gas companies through doing what they do and selling it to people who then use it for the purpose that it was designed for I burning you know are doing immense damage I think that we have to accept
That that is just where Society is now and the key thing that is is the moving with those companies I do think that there’s a point at which you know if you’ve got 20 billion a year and for the last five or six years you’ve been of capital expenditure spending no more
Than a billion a year then saying you’re really strongly on the journey and putting ad votes out on Twitter and social media in general is probably pulling all by legs a little bit but that’s not to say that they shouldn’t and aren’t a key part of the move and
You know others not me will hold them accountable to that Journey the tricky piece in my mind actually is is that buying a coal mine you know today if it’s on three times free cash flow it only has to work for four or five years and you you’re in the money these are
Quite difficult issues I think and you’re seeing sort of investors in companies that have taking steps to clean themselves up the the join needs to be that those are the successful companies rather than the ones that AR and even if the coal mine is only successful for five six years it’s still
Potentially a great investment and and so therefore making these screens around that I think is difficult now I’m way over my skis and one of the things about joining troas has been fantastic has been actually starting to talk to the teams there that do the work on the The
Wider more Diversified Market they have their own tools sustain X which they they use for screening and clearly you know others will have different tools but it’s then that how those tools are put to work to make the investment decisions that seems to me is the
Unanswered bit for many in terms of the sort of greenwashing I think it’s clear wasn’t it that green bonds originally got issued with people could make their own claims as long as they published what they were doing then other people could make their minds up but as I can
See the evidence suggests that there isn’t really a very big credit spread between a green Bond issued by somebody and a non-green bond issued by somebody and or companies that are heading towards being Greener and their credit rating of comparable financials and one that isn’t but again that sort of price
Differentiation hasn’t truthfully opened up enough to allow the sort of the AHA it’s obvious isn’t it to sort of come through now do I think that will’ll be stranded assets yes do you know do I think all sorts of things that that could emerge yes but but you know if you
Look at oil and gas companies nearly all of them have an 8 to 10 year weighted average Reserve Life we’re going to be using oil and gas for the next 8 to 10 years no problems probably for the next 30 Years so therefore I don’t think that
Shallow BP or others are going to get stranded in what they have today that the key is for them to move to do what we need to do and obviously you’re seeing some signs of that and you know BP obviously Looney what he’s doing but I think also
What total is doing is also interesting I don’t think it’s greenwashing I think that they’re probably making more out of what they’re actually doing today that they could but I think that the direction is starting to change and particularly if you look at say for instance BP and what they’re going to do
In pneumonia and the size of those Investments that they say they’re going to start making that really will be differentiating and and it’s pretty exciting to see what they and others are looking to do there I would just want to touch on one last topic there around your sort of diversity and inclusion
You’ve done a lot of work on that front you’ve got this CSR Forum i’ love to hear more about the impact that that has had on the business so I guess we’re starting from a point where the fact is that green coat is own was owned by four
Middle-aged white guys basically and so you know on the face of it we’re not incredibly diverse I think if you spoke to my partners you’d say we have a French engineer we have to gentleman from Yorkshire and God do we know that during the Olympics that they came from
Yorkshire and occasionally they’d be known to mention it other times but we kind of have tried to focus on making green cat a place where we don’t all go in and the hippo wins the highest paid person’s opinion we try to make green code a place where we do listen to
People of what they say and that means not having everybody looking the same on the team so you need offense defense a kicker a quarterback Etc and that those people all have their own own role that needs to then be heard and I think that’s the starting point for what we’re
Trying to do and so for instance we have probably a third of our businesses Engineers who actually their job is to oversee the safe and reliable operation of the actual physical assets that we have by other people those people do something completely different to what the investment team does what the
Accountants do and so therefore you need to take note of that you need to rejoice in the fact that they have a different point of view because that’s why we’ve hired them so I guess that’s kind of the start on the sort of CSR side I think we
Felt that you know when you you see internships it’s forever the internships were going to somebody’s child friend relation clients child friend relation Etc so we’ve taken some quite large steps over the last few years to try hard to change that so we tracked people in different stages and the thing that
We’ve probably most happy about what we’ve done is which involves probably somewhere between a half and twoth thirds of the group is is that every year we have had 8 to 10 folks from basically tough places that aren’t the kind of places that it’s easy just to
Whiz around to Green coat and stay in your relations flat and Fulham and all the rest of it and this is for people who are in the middle of their a level yet and so we’ve now been running that for three years I think and the best
Thing is that we’re going to take back someone who’s doing his university sort of Sandwich pieces at lra who wants to come to us for six to 12 months who wasn’t thinking of going to University before he came on our course and I guess that we found that what it does for the
People at Green coat is fantastic and that’s kind of why we started doing it was also saying what we could do for kind of a wider group and it’s not sort of simple trade-offs we’ve tried hard to go and find people from sort of you know far away places I think quite quite
Often that sort of you know there are poor people in the north there are people who need this sort of leg up etc etc Simplicity is just you know not that so we been really happy with that and we run that College in lowestoft has been probably our biggest supplier of
Students and then one in rosom in in the middle bit of Ireland which is probably not the most Cosmopolitan bit of Ireland I roscom is a great place but but probably not so that we’ve very much done and from that then we’ve built on it and and schroers has helped I think
In that regard as well schroers has a one of the reasons we picked Shas was the sort of the culture that we saw at shers and shers actually have sent us over an accountant to help run our finances and the second person they sent
Us an HR person we hadn’t got as many as we needed and the third person they’ve sent us is a cultural person and so she comes and sits in our team most weeks and we’re trying to develop what we’ve already started but with a slightly more sophisticated approach I think so so
Next year I hope we’re going to be David Kulu came to see me last week and he’s very enthusiastic that we should try to take some tea Lev students I I didn’t really know about tea levels but I know there were a thousand people haven’t yet
Got their results it seems and so we’re going to do that and also not just his 10,000 blackend um opportunity but also perhaps we might try to get for people who are going to struggle to actually sort of physically get into the office so kind of how could we approach that
And so we we’re in early days we’re discussing that so nothing kind of really groundbreaking I think that we can sit there and go you know the world should come to see what Brink’s doing I’m sorry we haven’t done that but I think that we we’re really pleased with
The steps we’ve taken and some of the successes this little success having a person who’s who wouldn’t have gone to university is coming back now having gone to University to then do his Gap here with us it was just one of the best moments of my holiday last week go I
Love that Richard I could keep talking to you and asking you questions all day unfortunately you’ve got to that time where it’s uh time for a five question quick fire where I say a statement and you give a short response that sounds right off we going fantastic so first up
Is the best book that every board member should read and why I’ve really struggled on this but I think it’s a one clear winner so it’s Caroline card Perez’s book invisible women and I don’t think it’s just to do with your role as a board member I think it’s to do with
Your role as a human I couldn’t believe what she was writing about and for those of you who haven’t read her book it’s called invisible women and it’s essentially on sex it’s developing sex disaggregated data and so I had no idea that nearly all medicines are only
Tested on men no car crash dummy has ever been formulated to be a woman before the EU doesn’t insist on this the Americans don’t nobody does and therefore if you’re a woman involved in a car crash you have a materially higher chance of being injured than a man
Involved in a car crash and I’m thinking God this is just you know wow and she goes through example after example after example and I just sort of think how fantastic my wife has been not to just beat me more than occasionally deserve to be on these points so that for me was
My kind of big book I think probably the last few years invisible women amazing thank you your favorite quote and why there is a guy who sad he has now died so David McKai who was a sort of poly math scientist at Cambridge who England was lucky enough or the UK was lucky
Enough to get him to be the chief scientist at deck for a while and David wrote a book called sustainability without the hot air sort of probably sort of late last decade decade before last so 2008 that kind of order of magnitude he has two great lines I think
The first one is is if we all do a little we’ll achieve a little and and I think that’s such an important point which is is that it’s all very well not charging your phone or what ever it is and etc etc but actually it’s the big
Steps that we all have to take and those of us who are in a position to take big steps who can contribute to the sort of challenges that we have it’s no good just sort of well I don’t know switching your TV off at night rather than having
It on standby I mean it’s just not good enough we need to do more and and so I’m a big believer in in that phrase I think probably slightly misquoted him and then the other one is is that he’s talking about nuclear and he says that he’s
Neither for or against but he is pro arithmetic and and I guess to me that’s another absolutely key piece which is is that it’s all very well having a point of view on time but if the MERS just don’t back you up then you’re probably on pretty thin ice Shaky Ground whatever
The right analogy is and and those two both occur in this fantastic book and again it’s a little bit out of date and and obviously the thing that he hadn’t understood I think then which has happened now is that the cost of renewa BS have just gone down out of all
Proportion that £400 to 3040 the 99% reduction in the cost of making a solar panel it’s brilliant stuff so those two love that your best ever holiday in why I have a 23y old and a 20y old and I think probably we took a view that probably about five six years ago I’m
Not quite sure when that they were just going to leave home and this was pre pandemic and we all went to Namibia and we rented a bright red Jeep which was a little bit gy but my children got to pick the music that we listen to all the
Way around and Namibia is a fantastic country where it’s big and it’s much less sort of intense I think than many other countries in that part of the world and I think that we all kind of got to have to live with each other in a
Way that was just different to how we’d ever done it before a sort of an a normal holiday that we’d ever been on so often we go to Scotland or something to the same place each time or we go skiing to the same place each time or you know
This was just different and I think that we’d all takeen sort of memories from that that will certainly be with us forever and I think it’s also led us to realize that actually there’s some importance in doing and what now frightens me is neither of my children
Came on holiday with me and my wife this year is that you know whether this is some kind of logarithmic relationship between the cost of the holiday and their desire to come on it with you or not as they get older you know you got to do more until I suspect they have
Children and maybe will’ll be babysitting or something like that that I don’t know and they they’ll want to come to wherever we want to go on holiday but M beer I think we you know driving around and that slightly vulgar reged jeep was pretty good sounds fantastic um your significant
Professional Insight I think it’s very obvious that you need to be really lucky and keep com back to my my initial story but it’s clear that if you kind of are in the right place and you’re you you’re working hard at the issue then the luck emerges and you can take advantage of
That luck and you know if you’re in the wrong place and I think it’s the societal comment as well you know kind of clearly it’s more difficult to have luck and so those of us who have privileges you know kind of that luck comes through or obviously but I think
You shouldn’t underestimate that that really trying hard leads to that sort of breakthrough of those sort of of moments when when you make a big step forward for my sins I have a a geology degree because I wasn’t good enough at math to do a sensible subject when I was at
University and I didn’t think I going to talk to it otherwise and one one of the things you spend a lot of time on is evolution and that sort of Step around Evolution which is you know that Evolution things tend to carry on being much the same for quite a long while and
Then there’s a big leap forward and then you find the old thing dies out and the new species as it were has occupied the niche that the old species was occupying but just doing it better and I sort of think that’s the same in business as
Well so and it’s that sort of Lucky bit as well yes there is evolution isn’t that the bird wanted to develop a different color shaped beak it’s that it randomly did and that was the one survived now I think it’s slightly different in business and that we’re trying to make the randomness less
Random but then occasionally you just get that big jump forward and you’re in a better place than anyone else and you can kind of turn the handle a bit and make a big step forward yeah that’s fantastic I love that and last but not least your favorite app so I was
Wondering about this I mean it’s obvious it’s Twitter because I am an absolute Twitter holic and I spend my life sort of looking at angry people saying things in well used to be 147 characters but and I was sort of wondering could I come
Up with a sort of more worthy one so my my son’s a type one and there’s a fantastic app that allows me to see what his blood sugar level is at all time globally but he switched me off from that because he doesn’t want me to interfere with his blood sugar level so
Therefore I have the app but it’s absolutely useless because it requires him to have it turned on to allow me to access it so I’m going to stick with Twitter the only thing I think also just last word on Twitter is is that in the
Old days it used to obviously be the 147 but the thing that’s fantastic is the attachment that comes with it and you’re having interesting things curated for you by people you think are interesting if you don’t think they’re interesting don’t follow them but if you do think they’re interesting then look at that
Attachment and and it’s a little bit like when I was at school my parents would write to me regularly and my mother would write and it would be dogs of well your father’s impossible you know kind of love Mommy and literally if I read the entire terms letters they’re
All the same pretty much whereas my grandmother would write to me on her sort of ail envelope she lived abroad and she would enclose a a bit of sort of an airil cutting from the telegraph that she thought a 9-year-old boy would find interesting and she was effectively an
Early Twitter person because I’d had a small letter and in it would be a cutting from the paper which would be interesting to a nine-year-old boy and it would be on a friller so Twitter for me is that same thing it’s that enjoying the you should read this and you will
Leave less ignorant than you you went in and there’s a lot of rubbish written on Twitter and there’s just a lot of opinions and you know yaha yabo Etc but that that bit when you get an interesting attachment and it takes you off uh you know 15 minutes or 10 minutes
To read it and then a day or a week to think about it that’s why why I find it so interesting Richard that’s been absolutely brilliant thank you so much it’s always such a privilege to talk with entrepreneurs and particularly someone who is doing something that has
Such a positive social impact and has been so successful doing it is really fantastic so thank you so much for your time