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Carlisle Company Profile, News, Rankings | Fortune

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Carlisle

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The private sector is stepping up in the global fight against climate change, with $60 trillion of assets under management with net-zero commitments. But it can only go so far without smart regulation and cooperation from the government.  As landmark climate legislation is passed and the SEC rolls out a tougher stance on climate risk disclosures, how are policymakers, investors, and business leaders striking a balance? What will it take to supercharge public-private partnerships to drive innovation and encourage more investments into a sustainable future?

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What will it take to supercharge public-private partnerships to drive innovation and encourage more investments into a sustainable future?

Hi uh welcome. Let's just dive right in. Um Laura I would love to start with you. You really believe that we actually don't have a financing problem. The money is there, it's just not going to the right places. Tell us more about that. So uh you know, know the estimates that are out there about the additional investment needed per year. Uh M. G. I. Has done some, a number of people have done so let's say it's 3 to $4 trillion of extra for Finance a year over and above what is currently being spent. Okay then look at that over $60 trillion $130 trillion dollars committed by the financial institutions around the world to look at their investments to make sure their climate sensitive and climate uh informed that suggests to me that it's not the magnitude of the money. The issues are going to be, where what kinds of projects, because a lot of these projects need to be long term, they're capital intensive. They have a lot of risk associated with them. There's also the projects in terms of geography, much of the climate challenge is does not reside in the United States. The United States may indeed, and we'll talk about the IRA and other things may make significant reduction in its own carbon emissions. But what about India? What about Bangladesh? What about very poor countries? The money is not available there. We have to have another way of thinking about how you de risk that. So let me just start with that marty, I'd love to bring you in. Um, obviously you hold enormous sway over where to invest in what types of companies to invest in. Talk a little bit about your strategy, um, overall and investing in leaders and laggards. Well, our strategy really has been around engagement with our public companies as well as our private companies. Were actually seeing some success and working with the portfolio companies and our general partners in the private equity place that we're doing through this data convergence project that we co hosted or co lead with with Carlisle. But we we take it from stance on, we're not divesting, we're not adding more capital to the leaders and taking money yet away from the laggers. It doesn't mean that that won't be part of our, you know, path to net zero by 2050. But at this point we've done a lot of private engagements with our public companies as well. But what's really needed is this regulatory environment to give these investors like calpers the information, we need to do that appropriate risk management to know truly where those leaders are and truly where those legs are and that data is is missing on any level of scale. We certainly get some of that information through our private engagements with companies. We also get some of that data through climate action 100 plus, but there's a lot of work to be done and it's getting late in the game to continue to talk about, you know, transparency of information to investors. What data do you want that you're not getting We would like to see the scope one, scope two emissions. And we'd like to find, you know, a mechanism that consistently in a standardized way reports out some of the scope three emissions as well. But when we're still talking about scope one scope two. Talking to companies about transition plans with their just transition plan to move from, say, an oil and gas company to an energy company. When we start hearing that language, then we know that some of the business planning, the risk management, the governance and most companies are really working to look at the long term sustainability of that company which aligns with our liabilities, which we pay over decades to our two million members laura let's talk a little bit about incentives. I mean, how do we incentivize companies to invest in these types of projects that you want them to be investing in? Well, there are a couple of things here. First of all, I want to say that in the absence of transparency regulation. The investors including calpers have brought a lot, a lot of pressure on the companies we now have, we had a amalgamation of a number of standard setting agencies around the world now into one called the international I. S. S. B. International stan setting board and you know, the over time there are going to be developed more and more global standardized measures of these targets of scope 12 or three. Um Some countries will regulate those that is forced companies to state them. The U. S. For political reasons may be quite far from that. I really want to just recognize that. But interestingly enough a number of the companies we're talking about in the U. S. Or global companies they're gonna have to do it elsewhere and then it will become available to everyone. So I I just want to say that I think the movement on disclosure and transparency is moving, it's moving. That movement is has momentum even if the U. S. For political reasons can't take a major step right now. Um Other incentives. So basically if you look at the inflation reduction act, what you see is uh the major way the U. S. Is deploying policy is tax incentives. There are tax incentives for everyone, There's tax incentives, production tax incentives, investment tax incentives, uh nuclear tax incentives, red residential property tax incentive, uh solar energy tax incentives, E. V. Tax incentives. And so what what the U. S. Path right now is let's stimulate private demand by companies and by consumers for every single product or service that addresses the climate challenge. Let us do that through tax policy. And that's the the gist of it. I do want to say something that is often missed and unfairly is there is also $62 billion that was given to the Department of Energy and a lot of the innovation that is being talked about, uh, through, through the other panels. That's the D. O. E. Is using loans and, uh, and test beds and, and project development and research to promote innovation. So there's also a lot of innovation happening. Absolutely. There we have a question in the chat for Marcy, do you think there's a need for a more comprehensive and global reporting standards such as I. F. R. S to help investors assess companies and securities? I do. And that's some of the work that's been happening with the I. S. S. B. You'll see the C. F. D. We did a P C. F. D report on our own portfolio, but it was not a mandatory reporting. Uh, certainly something we asked for a public companies. But yes, there needs to be mandatory, standardized reporting as a global investor. That needs to be a global initiative marty. One of the interesting things you were saying is you've been surprised by the lack of pressure that consumers are applying. Why do you think that is and what's going to change that? Yeah, I am. And as laura indicated, these tax incentives, you know, should incentivize the behavior from the consumers, but we're not seeing the consumers come in and use this very active voice similar to what you're seeing from investors like calpers. And until that third voice comes in with government investors and then the consumer making those demands on companies, I think we're going to continue to be challenged one to get the information we need and to move this transition along, uh, at a quicker pace than what we're seeing, especially over the last decade. How how do both of you, um, view the current kind of political environment? There's a lot of pushback against E. S. G. Investing. I know you both said that, yes, he is a bad word. We don't use that anymore. Talk a little bit about how the politics are affecting your decision making. Yeah. You know, E. S. G. Has has become this three letter word that has become a political football at least here in the US. I I don't see that globally and with our international counterparts or in those conversation, hopefully, you know, in the context of the United States political environment. And so really, what we're talking about is risk management, were long, long term investors. We need to manage the risk of making decisions today, that have to play strong over 10 years and 20 years. And so this is risk management, it is about sustainable Investing to make sure that we have many in that portfolio that needs to grow at 6.8% every single year to fund these benefits. And so I think the language needs to change at least here on the us side. And it should be simply, we need to find a way to make sustainable investors, that sustainable investments withstand all the various market cycles and the various conditions that are going to be ahead of us. So I would I would like to say that, uh, I like the idea of distinguishing the E and talking about climate led investing. I think the problem here is that if you don't like some of the best thing, then you just get opposed to E. S. G. If you don't like some of the g thing, then you just get opposed. It was it was fine for a while to maybe blend them together. But we're talking about here, you really want to focus on climate and climate led investing and that I think will help clarify now, that doesn't mean there won't still be in the United States climate, like everything else is a source of division, it's a source of political division. Um, so I want to emphasize here that there's also the role for states. So, you know, we're sitting in California, um, your panel is sitting in California and California spends more than most countries in the world on climate. Uh, California has just announced uh, that it will ban, uh, the sale of carbon emission cars starting in 2035. Um, and there are numerous other things the state is doing. So what I'm saying is that in the United States, even if there's division at the federal level, there are California is not the only state here, there are a number of states that are going to push this forward. And I think in a world of political, in division division in the federal level, that's good news for the United States. But it's very frustrating. Let let me say one other thing because I think the question about the I. F. R. F. Was part of the group that came together with I. S. S. B. So basically these are now an agreement around the world that these are all going to work together, which is really very, very exciting. Um, and I think that uh that plus the Ira plus uh some new ways to measure carbon, You know, there's a very interesting new product service, product service under development from generation investment and it's called Climate Trade. And it's like a google maps for, for tracing carbon down a block. So you can literally measure the carbon at a location and what that will allow companies to do to say, okay, I've committed to net zero, I've committed to this admissions target now I've got a search to every single place I do business around the world to make sure I'm hitting my target. So I think technology is going to help us here as well. Great. Um, Marcy one more question in the chat for you. Um this is a good one. What challenges do you see in terms of companies pursuing these, you know, investments with maybe a recession on the horizon, does that impact your thinking in the short term? It's a it's a consideration for thinking, but, but you know, these public companies, this is not a new problem for them to solve. This is not a new demand coming from the investors. And this whole issue of materiality is certainly part of our discussion is, you know, who makes the determination of materiality? Is it the issue or is that the investor? My belief is it has to be the investor making that? Um, but you know, companies have pretty good balance sheets for the most part and I just want to make sure that there's reasoning if this slows down and it doesn't become another excuse to do nothing. And, um, so I think that public companies can continue on this path, continue engaging with investors continue to do their transition and continue to do their transparency and reporting. And I don't see that as a significant financial costs no matter what I hear from. Yeah, I don't consider the significant. So depending on where the regulations, uh, you know, from the sec, the draft regulations that were out for public comment. And I'm sure they received thousands of comments both from the issue of community as well from the investor community. But depending on where those go, you know, for what's important to us scope. One spoke to materiality determined by the issuer or by the investor and by the investor and I and that public companies can can work there without significant cost and significant distraction. I completely, I wouldn't say, I completely agree. I just, I just want to add to go back to the rest of the world here. I am really very concerned about the need for global finance to figure out a way to help with the risk and investment needs of the emerging markets. And I just want to note at the end of the day that uh, there there are the multilateral development banks like the World Bank that should be doing much more than it is doing. Uh, and there is a philanthropic capital. So it's important to think about for some of this risk mitigation, particularly in emerging markets, it's going to have to be highly blended finance. And that's where public sector money can play an important role. Thank you both so much.

Fortune CEO Alan Murray discusses with CFO's across the business world their ideas and best practices.

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