With the climate conference COP26 in Glasgow fast approaching, sustainability, alternative energy and sector reforms across a range of industries are increasingly on the political agenda and therefore closely monitored by investors in the City and around the world.
One company at the heart of this ecosystem is En+ Group, the largest producer of low-carbon aluminium globally as well as the world’s biggest hydropower company, with nearly 90,000 employees around the world.
In a wide-ranging, two-part interview, City A.M. caught up with Lord Gregory Barker of Battle, who was appointed independent chairman of the En+ board of directors in October 2017, just before the company’s IPO in London. In February 2019, he became executive chairman of the board.
Yesterday, the former MP and energy minister under David Cameron discussed what it’s like to run a global energy company and the global sector he operates in, while today we zoom in on climate change efforts and the role of the energy sector in this process.
Later this year all eyes will be on COP26 in Scotland: what do you expect to come out of this event?
Firstly, it is really important that COP26 takes place in person because frankly there is no substitute for being able to look your negotiating partners in the eyes in order to build trust and extract commitments.
This is going to be a really important time to say whether we are on track or not, and my suspicion is that we are not!
This will be a critically important time when governments, and also increasingly private sector companies, must put their commitments on the table and see the extent to which they have measured up to the ambitions set out at Paris. COP will give us the opportunity to then raise ambition accordingly while there is still time.
What role can, or should, the energy industry play in fighting climate change and global warming?
Being the single largest emitter of carbon emissions means the energy industry really must lead the way in transferring to a sustainable basis of operation. The great news is that the mind blowing progress that has been made in the energy sector over the last decade has been remarkable!
Britain’s surge in clean energy has happened in a way that most people never thought was possible.
The huge rollout of offshore wind, the deployment of solar and the massive fall in prices of clean technologies really does point to an exciting and competitive future for the clean energy industry. It is also a sector that is facing a very credible and exciting period of transition. And for Britain, this abundant source of clean energy is rapidly turning into a massive industrial advantage for UK plc.
Sustainability is a buzzword in the City at the moment: what does it mean for an energy giant like EN+?
Put simply, sustainability means that we are putting back as much or more than we take out, both in the natural world and in the communities where we operate. That means we understand our footprint and aim to negate any disruption that our business processes cause. Becoming a net zero producer is our aim. But additionally, it is vitally important that we understand our responsibility to biodiversity, particularly as significant stakeholders in Lake Baikal, the world’s largest freshwater lake. We operate right around the world, in twelve countries across five continents; again, understanding our footprint in each of these jurisdictions is extremely important.
Fortunately, reporting is improving and we are understanding more clearly the environmental and societal impact of our business.
With that ability to measure comes the ability to better manage that footprint and incorporate sustainable practices into our decision making. For us, being active members of the UN Global Compact is a huge help in bringing discipline and greater understanding to the way we rise to these challenges.
The pandemic has put the spotlight on the energy industry, do you feel it becomes increasingly difficult to find fresh investors? And those who do, are more demanding and critical?
On the contrary, we are seeing significant interest and excitement around our business, you can see this reflected in the share price over the last year. In January we issued one of the world’s largest sustainable finance facilities, over a billion dollars, which is linked to our sustainability performance.
To further prove the point, just last week, Mubadala, one of the world’s most respected sovereign wealth funds with huge experience in low carbon investing, bought 2.6 per cent of the company.
I think that it’s difficult to generalise about energy per se as it is such a diverse field. That said, if like us, you are mindful of your environmental impact and determined to be an ESG leader, then I think that, providing you have solid investable products, finance and investment are not an issue.
How do you see the energy space evolving in the long run?
The transition to a zero-carbon energy sector is going to happen much quicker than people expect. I think already we have reached a tipping point towards a clean energy future. This will come at a huge cost for some companies, specifically those whose business model is still rooted in fossil fuels.
There will be losers as well as winners. There will be stranded assets and those companies that haven’t invested in the low carbon transition are going to pay a price for that.
I think that what you’re seeing is that investors, rightly or wrongly, are looking towards 2030 and seeing what the world needs to look like then, and wanting to get ahead of the trend, are ascribing values for 2030 to businesses now in 2021. A low carbon, clean energy economy is becoming a self-fulfilling prophecy and the market, investors and consumers are all driving us in one direction. Investment trends that a couple of years ago some sceptics thought were a fad or unsustainable are now being driven with real speed and integrity. The low carbon world is coming for sure, the big question is will it come fast enough for the planet?