The sustainable


transition is shifting the base of competitive


advantage. Oliver MacArthur, Aon


Climate change is an enormous challenge. We need science- based tools and risk-based metrics to set our strategic agendas.


Is the renewables market mature enough to meet the demand for energy, especially as the government wants to increase the number of electric vehicles on our roads? Gourlay: We have a 2015 hybrid car which has stopped fully charging. The question is, what happens when all these hybrids need to recycle their batteries? Electric is better than fossil, but there are other problems it creates. Burger: There is a European company that recycles batteries, so there are opportunities there. Significant capital raisings illustrate that there is a funding gap in renewables, especially in its infrastructure. The returns are attractive and that is fundamental. Three or four years ago, we started to see an equilibrium in the return profiles of renewa- bles and fossil fuels.


That creates its own market. There was a recent capital raising for a renewable infrastructure fund which was well over-sub- scribed. That will continue. Gopinathan: In 2020, nobody predicted that gas prices would be where they are today. There have been unpredictable conse- quences of the journey to net zero. This does not need to derail


18 Feb 2022 portfolio institutional roundtable: Sustainable investing


or slowdown such commitments, but we need to acknowledge that there are limitations in terms of where we stand today. Are we positioned well enough on the renewables side to have the security of supply to avoid a heat or eat situation? We need to be honest about such things to strike a balance. There are things we do not know that we need to learn as every year goes by, so our sustainability strategy needs to be flexible to incorpo- rate those inputs. Re-adjustments may need to be made, perhaps because of the just transition, alternative fuels being more capital intensive or questions about whether certain technologies will work or not. Rawson: The bottleneck for industry in the UK is on the regula- tory side, in the consenting process. The capital is there, the industry is standing ready, it is a massive job creating opportu- nity but if it takes 10 years to consent a wind farm… There is a lot the government could do if we are to get through those challenges. That is another trade off we need to be hon- est about. Llewellyn-Waters: There is a tenure tension across everything we have discussed. The average chief executive is in place for seven years, good governance dictates nine for a non-executive director, you have a 30-year net zero action plan that needs to be delivered, democratically elected officials sitting on pension fund capital decisions on a four-year cycle and local govern-


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