Welcome to the Eclipse Podcast. I'm your host, Toni McKee.

Today's episode is a voyage into the heart of the NetZero transition, with a luminary leader paving the way for sustainable financial transformation, Jessica Fries.

Jessica is Executive Chair of Accounting for Sustainability, a global nonprofit powerhouse on a mission to make sustainable business, business as usual. She also sits on several prestigious committees, including with the Global Reporting Initiative.

Today, we're gonna deep dive into Jessica's wealth of experience and expertise, exploring the landscape of net zero, where we've come from, where we are today, and what's next on the journey.

Welcome, Jessica.

Well, nice to meet you, hopefully in person at some point.

So, Jessica, you're the executive chair at Accounting for Sustainability,but obviously you've had a pretty long, varied career within the sustainability and finance space. Can you kind of sum it up for us? Where did you start your career and how did it lead you to your current role?

I started my career at PWC, originally in audit, but I was always really interested in corporate purpose and sustainability issues that was something that I'd studied as part of my degree in Masters and was lucky enough to have the opportunity to to do a secondment to Accounting for Sustainability. It was billed as a 12 month secondment, 12 to 18 months at a push, but I really loved it, and through that early work with Accounting for Sustainability, we really focused on reporting. So set up the International Integrated Reporting Council, which is now part of the ISSB,   (the International Sustainability Standards Board), and really reshaping the corporate reporting landscape, as well as convening some of the key roundtables which led to the task force on climate -related financial disclosures.

And after that period of time, I really enjoyed the work with Accounting for Sustainability. It really felt like it brought together my experience to date, but had real impact. So I moved across, ultimately, to A4S as Exec Chair.

Excellent. So how long altogether have you been focusing then on sustainability and working in this financial space?

Well, over 20 years. So 20 - 25 years on sustainability issues.

OK, so I suppose that you've seen a lot in that time. When you look back at that long. experience working in sustainability, how do you think the finance community has progressed?

Particularly thinking of the early work with Accounting for Sustainability, we've always focused on the role that the finance and accounting community has to play. We particularly engage with the most senior levels within organizations globally. Really looking at how we make sustainable business, business as usual. And some of the early engagement that we had, say with the CFO, the Financial Officer community, we had quite a few CFOs who were intrigued, but their first question was why me? Why CFOs? It was very much seen as a niche activity.

And if that was one of the reasons why we set up the Integrated Reporting Council, was really to look at how finance and sustainability did come together and why some of these issues like climate change, like nature and biodiversity, like diversity, equity and inclusion, some of the social issues that are really key to corporate sustainability as well as to our ability to have a sustainable future from an economic, social and environmental perspective. It really wasn't something that was part of the mainstream dialogue.

So I think now, if you look forward, I don't think anyone really questions that something like climate change has financial consequences, which we're already experiencing in the here and now. And it's something that finance professionals have a really key role to play in terms of adopting a  leadership stance and helping to influence change, but also in terms of their day -to -day decision -making.

Oh, that's interesting. So you've seen a clear movement in that direction where finance teams are really embracing that even on a day -to -day level.

 Absolutely. And of course, there's still further to go, but I think we really see it as much less work on the why. So why is this relevant? Why should I be taking action?Much more focus on the how. And I think a really great example of that is in the build up to COP26 so when Glasgow hosted the UN Climate Conference, a lot of organizations made commitments to net zero. Organizations and of course governments and other key parts of the economic system. So, there was a really big momentum towards committing to net zero by 2050 or earlier and a focus on how we can keep global heating to below 1 .5 degrees above pre -industrial levels, which scientists see as the maximum increase that is necessary to avoid the worst impacts of climate change. And we're already perilously close to hitting that threshold.

After COP26, you then saw people really focusing on, okay, so how can I turn commitment into action? And that's something that aligns really well with the work that we've done at Accounting for Sustainability. So for well over a decade, we've been working with CFOs, accounting professionals, the capital markets to develop peer-to -peer networks so that peers can really have a space to speak to one another, understand some of the barriers that each of them are facing in terms of translating commitment into action, and putting in place a lot of the practical tools and guidance that can really help organisations to take action. So really practical, really coming at it through that finance lens, and so that's something that we've really focused on and since COP26, seeing real momentum in that area, particularly amongst companies, but really investors as well.

Brilliant. That's so good to hear, because sometimes when you're in the trenches of your daily work, you can't really get a sense of-- or it's difficult to get a sense of how much progress we're actually making. So I feel like it's nice to hear from you. you, someone who's on the front lines, that progress is really happening. So you mentioned Cop 26, and you've also been very active in Cop 28. Can you let us know from your own personal perspective what the conclusions were at Cop 28, and what was your specific role in the conference?

 Many of the individuals from the Finance and Accounting Committee. who we really work with don't attend UN conferences like the COP summits which happen every year, so we felt it was really important to bring that voice of finance to COP and to make sure that that finance perspective was really adequately reflected in the discussions, but also for finance really important to understand what some of those key developments were. What was the on -the -ground discussion? And so we did a series of broadcasts to really share those need -to -knows back to the finance community.

We also did quite a lot of work to engage the finance community on the ground in the region, running a series of workshops and panel discussions and high-level roundtables to really explore two key themes, the first, transition finance and transition planning. That's something that is really critical to help organizations go from that net zero commitment or their climate commitment into the practical action.

And finance, as I say, has such a key role to play in really helping organizations to develop a credible, robust transition plan. And, of course, not only to drive their own decisions, but it's increasingly been hardwired into disclosure and reporting frameworks. And again, finance has traditionally really held that important oversight of reporting, and particularly financial reporting. So as sustainability reporting gets mandated by governments around the world, we're seeing finance increasingly playing that role of making sure that there is really robust controls and that the information that goes out is credible as investors really need to rely on it for their own decisions.

The other key theme that we really focused on is nature. And of course, climate and nature are intrinsically interlinked. And another big UN conference that had happened earlier, COP15 which was really focused on nature and biodiversity loss, a key goal agreed by governments around the world to halt biodiversity loss by 2030.

And if we can't achieve both of those climate and nature goals in parallel, then a lot of the ecosystem services, which we rely on as individuals, as humans from a community perspective, but also from an economic perspective, are going to be depleted in a very dangerous way. So really thinking through and enabling companies to think through, how can you achieve both climate and nature goals in parallel is critical.

So how do you take the thinking from COP and the progress that you made there with your various workshops and actually bring it out of that environment and into the finance community?

We've been developing a lot of practical guidance on something like transition plans. So there's a lot of work that has happened by a number of global coalitions to really set out high level guidance. So what does a credible transition plan look like? Two key bodies. One is GFANZ, the Glasgow Financial Alliance for Net Zero. That's a grouping of a lot of the big banks,

 asset managers, asset owners, other players from the capital markets community who have really come together and from a financing and an investor perspective, they really set out a lot of guidance on how do you finance the transition and what kind of expectations might those financial institutions have of corporates when it comes to a transition plan.

Here in the UK, you've had something that has been set up under the auspices of the UK Treasury called the Transition Plan Task Force, and they've taken some of that GFANZ guidance and really developed much deeper guidance, including for different sectors, which is something they've been doing recently.

And from an A4S perspective, we've been both supporting both of those groups so that they can take forward and gain benefit from that insight from the finance community into the work that they've done.

But then we are also working with particularly CFOs and finance teams to translate some of that cross -cutting guidance for different businesses into the so what for a CFO or a finance team.

And we've been developing things like top tips for finance teams so that they can really have the kind of insights that they need to be able to take action. And that's something that all finance teams really need to get grips with because it has financial implications for their organisation. And they really have the skill sets that are needed to drive action.

But it's not going to be easy is it? 

It's not. It's really not. And I think that that's something that as organisations we’re setting their net zero commitments, I think there was a huge amount of energy and different sectoral groupings all coming together to commit to action. Now it really is that hard graft of the how. And that's why finance is so critical because you need to translate that goal into budgets. So where do you need to invest so that you're going to have the right products and services that can maybe tackle some of climate change? So a real opportunity space, you need to be able to model some of that, model what kind of performance measurements you're going to be tracking. So how do you know that you've set a big picture goal, you've announced it publicly, you've been discussing it potentially, with your investors and other stakeholders, but how are you making sure that you're really on track and able to report on that annually?

How are you translating something like a 2050 or even a 2030 goal into the near term? And for organizations where you have the CEO, the CFO, other key parts of the organization, the individuals aren't necessarily or unlikely to be there when those goals are being hit.  So how do you make sure you've got the right interim milestones in place? And how can you really make sure that you are engaging with your value chain to be able to take the kind of steps and develop the innovation that is needed to really get to net zero?

You're not going to be able to do this on your own. So you really need to be adopting that holistic approach. And I think we find that it's very energizing for individuals within an organization to get involved in this kind of work because it does require new thinking. It does require different ways of working but you can have such a huge impact and that is something that drives real employee engagement as well.

There are so many challenges. I think you've just listed most of them and I guess-- guess that accounting for sustainability, you must be working very closely with these companies to try to overcome a lot of these challenges and also through your tips and tricks. But what about how companies engage their stakeholders? You mentioned employees just now, but from a broader perspective, how do you think companies should be engaging all their stakeholders in their net zero transition?

It is really critical to engage all stakeholders and it is internally important to get the buy-in. So, you do sometimes starting within the organization might be the best place to start.

To really set a credible transition plan, you need all parts of the business to be engaged. And certainly one thing that we often hear from organizations is, find those people within the organisation across all of the different functions, who are going to be really passionate about driving change and you can have those internal change makers who can help to drive the plan within the organisation and help to achieve the kind of change that might be needed.

Identify the kind of ideas that might be necessary. But it's also, of course, critical to engagement. some of those external stakeholders.

From a finance perspective, of course, investors are one of the key stakeholder groups that are going to be really important to engage. And investor groups are increasingly focused on something like the transition plan that an organisation might have set. For an investor or a bank who has set a net zero target, the achievement of their own target is going to be only possible if all of the organisations that they invest in or lend to are also on track to meet their own net zero goals.

 So, you're starting to see more and more groups and coalitions of investors really coming together to ask companies to set credible targets and be able to provide some of that disclosure to track performance year on year. So for CFOs and finance teams, really engaging with investors and banks to understand what their expectations are and to be able to ensure that you're going to be ready to provide some of those disclosures, both to investors but then, of course, broader audiences.

So, really just understanding what their needs are and trying to work together with them to ensure that they can achieve their goals, basically?

Yeah, absolutely. But also, really, that question of credibility and what is robust? There are a lot of concerns around greenwashing. And so having a really robust transition plan that is backed by the kind of finance that might be needed to achieve that plan is really critical. And we're seeing not only investors, but this can drive your sales, you can develop new products, depending on the sector that you're in and where you sit in a particular value chain.

The fact that organizations are really setting goals along the different value chains is a real driver of opportunity. And so for finance teams, that's another key thing to be thinking of. So where is that opportunity? Where is that customer demand going to be? And of course, one of the other big themes that we saw at COP28 and something that many individuals have really experienced on a first -hand basis is that we're already starting to see the physical impacts of climate starting to hit.

So not only looking at how are you going to be reducing your emissions for your own organisation and along your whole value chain, but thinking about how are you making sure that the investments you're making now, are resilient and that you have started to ensure that you understand what some of those risks are now and into the future and started to be incorporating that also into your decision -making.

We know that we're already experiencing a heating planet and that is going to get worse, so we already know that some of that is baked in.

What do you think, if you look just into the future three years, what do you think is your biggest hope for what the world can achieve in terms of climate change?

So if I look forward, I think it can be very hard to stay positive because we know that the trajectory that we're on is taking us to a planet that is well above the 1 .5 degree threshold and that we know that the physical impacts of climate we're already starting to experience are going to get worse. The kind of ambition that we need to stay on track, requires us to have halved emissions by 2030 and to get to net zero by 2050. But it is only if we stay focused on the art of the possible and be hopeful about the future and what can be achieved that we'll have any possibility of achieving the kind of future that we might want for ourselves, our families and communities around the world. So, I think it's really important to focus on what is possible, what each of us have within our own ability to drive change. And also, this is a huge change that is going to impact the lives of all of us and it does have so many opportunities embedded within it to really be driving positive change. So, I think that focusing on that change that each of us can achieve is going to be really critical. Certainly coming back to the work that we do at Accounting for Sustainability, common with many organisations working in this area, we find that within our own team, everyone really is motivated and has purpose in the work that they do and so that is something that you can take that energy from others and really help to drive change in your own work and I think that that comes not only from the team but also the organisations we work with.

We work with CFOs, with CEOs, with chairs, from pension funds, with many actors around the world and we can really see that change starting to happen people engaging, coming up with new thinking and really focusing on what the art of the possible is and that determination to make sure that we do collectively take the action that we need to, to have hope for the future.

Perfect, that's really good advice and I think we'll leave it there, but this has been a really interesting conversation. Thank you so much for sharing your thoughts.

Great, well it's been a real pleasure to share some of the thoughts and really nice to connect with you Toni.