Transcript provided by Kensho.

Lindsey Hall: I'm Lindsey Hall.

Esther Whieldon: And I'm Esther Whieldon.

Lindsey Hall: Welcome to All Things Sustainable. A podcast from S&P Global. As your hosts, we’ll dive into all the sustainability topics that are reshaping the business world.

Esther Whieldon: Join us every Friday for in-depth analysis and interviews with leaders from around the globe. Together, we’ll break down big sustainability headlines and cut through the jargon.

Lindsey Hall: In case you are surprised by that new intro, new music, new cover art, don’t worry, you are in the right place.

Esther Whieldon: That’s right. Today is February 14, 2025, and it's anniversary when we launched the ESG insider podcast in 2019. We are using this occasion to celebrate some big milestones. We're now in our seventh season, if you can believe it, Lindsey, and as we record this, we are just a few thousand downloads shy of the 2 million mark.

Lindsey Hall: That's hard to believe when we launched this podcast back in 2019, ESG was just taking off as a term in the U.S. and people were really hungry for information about this new topic. And we started covering these environmental, social and governance topics through a pretty narrow financial lens. But at that time, we had no idea what was coming with the pandemic. We had no idea how that was going to reshape the way the world was thinking about social issues like worker well-being and diversity, and I personally had no idea how to use a microphone.

Esther Whieldon: Yes, that was a learning curve for sure.

Lindsey Hall: I think we've both learned a lot, and the show has expanded significantly. We now have listeners in six continents, and we're covering some of the world's largest sustainability gatherings. We're talking to CEOs and leaders from all around the world across industries, the private sector, public sector, academia, you name it. And really, this reflects this ethos in the podcast that you need to cover all things sustainable. You're not going to achieve a sustainable future if you don't bring along all actors and all sectors.

Esther Whieldon: And while a lot has changed in the sustainability landscape since we launched the show, our mission remains unchanged. We'll continue to provide listeners with essential sustainability intelligence through interviews with global leaders, demystifying complex topics in plain English.

Lindsey Hall: And also with a healthy dose of bad puns.

Esther Whieldon: Definitely. To introduce our new name as the -- All Things Sustainable podcast, we held a special live event last week in New York City. We brought together a fantastic lineup of guests to help us unpack what is happening in the world and how it is impacting sustainability strategies. Today, we'll be hearing highlights from those interviews from four diverse perspectives. We're talking to an international standard setter, an asset manager, the largest bank in the U.S. and also one of the world's largest technology companies.

Lindsey Hall: And I loved getting to connect with some of our listeners in person at this event, Esther. At the start of the event, we asked the audience to choose the megatrends that will impact their organization's sustainability strategy the most in 2025. We've identified in our research at S&P Global, what we think those 10 trends are going to be, but we wanted to hear from the audience. And the polling results were striking. The vast majority, about 2/3, chose sustainability reporting.

Esther Whieldon: That actually positions us really well for our first guest today, Neil Stewart. Neil is the New York-based Director of Corporate Outreach for the IFRS Foundation, which is responsible for setting global accounting standards. The foundation launched the International Sustainability Standards Board, or ISSB, in 2021, and the ISSB launched its first two standards in 2023. As we'll hear from Neil, since then, we've seen jurisdictions around the world adopt standards or align the reporting frameworks to them.

Neil Stewart: We've recently hit 35, accounting for 60% of global GDP, over 40% of global market capitalization and really interestingly, over 50% of greenhouse gas emissions around the world. Now, these countries that are building in the ISSB standards to their rules include some of the world's most important developed markets like the U.K., Japan, Canada, but also the world's most important developing markets like Mexico and Brazil and then many more smaller markets across Africa and Asia really showing the diversity of countries adopting the standards and showing that how fit for use they are right across the spectrum of different jurisdictions.

Esther Whieldon: Okay. So then we have all this adoption happening. All these governments are seeing this as a useful tool to set their standards. What are the big outstanding questions on the road map for the year ahead?

Neil Stewart: Everyone is looking to Europe to see what's going to happen with regulation there, which has been front of mind for so many companies, not just in Europe, but in the U.S. and around the world in recent years. We're expecting the big omnibus bill out of the European Commission this month. And that is intended to simplify and reduce the burden, not just of the CSRD reporting directive for companies, but other regulation, including the CSDDD on the due diligence directive, the -- really the whole European Green Deal taxonomy and everything, right?

So that's one thing we're waiting to see. I think the other big question is we're all waiting to see what happens with regulation and reporting here in the U.S. We can probably expect that the SEC's climate rule won't continue and other regulation may not happen. So what's going to happen with reporting in the U.S. by U.S. companies -- so along with looking at what happens at the federal level, everyone is looking now to the states.

And I think that ties into really the broader question, the overarching question of with the coming mandatory reporting in many jurisdictions around the world with this move from narrative to numbers towards really more reliance on data, investor-grade reporting, what happens to traditional sustainability reporting and traditional voluntary reporting. So those are, I think, some of the big questions.

Esther Whieldon: Do you see this expanding more into the private market than potentially?

Neil Stewart: I don't think there's any doubt of that really because this is becoming the currency of business. Sustainability data now is not just about between a company and their investors or a company and their employees, but really up and down the value chain, right? And so when it becomes essential for RFPs, for contracts, for a company's connection with its suppliers and customers, then yes, it extends to every part of the business world.

Esther Whieldon: One idea we've been hearing is that some standards and framework fatigue is happening. And I think it's been building up over time, right? For example, in the EU, we're seeing that push to simplify that you talked about, rules and regulations. What are you hearing from the companies that you're engaging with on this?

Neil Stewart: This has been a constant refrain for many years, and it's really one of the reasons why the ISSB was created in the first place, this overwhelming constellation of questionnaires and ratings and rankings and reporting obligations that companies are facing. And really, the complaint we hear is this takes away from work on actual sustainability initiatives. It takes away from the real work that companies need to be doing that they're spending all their time reporting than what about the actual work that needs to be done.

What I'm starting to see, which I think is actually really encouraging, is that the investment that companies are making into sustainability data and disclosure is paying off across the company, not just for reporting to investors or other stakeholders. So they're investing in collecting the data and reporting it in assuring it.

They're making this data investor grade, but you might also consider they're making it board grade. They're making it site ready. And so this data can now be used in strategy, and Board-level decisions. It can be used in thinking about M&A or management compensation.

And back to my previous point, used up and down the value chain, what we're seeing is this new function of ESG controller that companies are having to put in place often to meet mandatory reporting obligations is becoming this clearinghouse for high-quality data that can be used by operational leaders, by senior management right across the company.

Esther Whieldon: I'll jump in here because we heard Neil referencing a number of acronyms. CSRD, that's the EU's Corporate Sustainability Reporting Directive, a set of European sustainability reporting rules for companies. CSDDD, that's the EU's Corporate Sustainability due diligence directive and aims to foster sustainable and responsible corporate behavior in companies' operations and across their global value chains. Another one is the EU taxonomy.

That's a classification system of sustainable economic activities. As Neil referenced, the EU is considering simplifying CSRD, CSDDD and the taxonomy to reduce the administrative burden for companies. This so-called omnibus proposal is expected to publish later in February, and we'll be back with more coverage of this in future episodes.

Neil also mentioned the SEC's climate disclosure rule. These are rules we've covered quite a bit on this podcast about the U.S. Securities and Exchange Commission. We'll include a link in our show notes to previous episodes on this topic. Given the many moving parts around disclosure standards and regulations, I ask Neil, what people need to know about the landscape going forward?

You'll hear him using some additional acronyms, GHG protocol or greenhouse gas protocol, an MOU with GRI, that's a memorandum of understanding with the Global Reporting Initiative that's a sustainability standards organization. There's also TNFD, that's the Task Force on Nature-related Financial Disclosures. TNFD builds on the approach of the TCFD, which is another term he mentioned, and that's the Task Force on Climate-related Financial Disclosures.

There's also CDP, that's a not-for-profit charity that runs a global disclosure system and SASB, the Sustainability Accounting Standards Board. That's another standards body that has now been consolidated into the IFRS foundation. If you think that's a lot to process, you're not alone. Here's Neil talking about the outlook for sustainability standards.

Neil Stewart: I think that it's still pretty dazzling and confusing, right? And there's a lot of different frameworks and standards still out there that companies are using. And one of the things I wanted to make clear is that we're all pushing in the same direction. And while these things might seem to be disconnected, they are connected and increasingly converging and harmonizing. So just as some examples of where the ISSB sits in this Galaxy, for example, we're taking part in the new updates to the GHG protocol. So there's a new governance structure and process to update the GHG protocol. We've got a seat at that table.

We have an MOU with the GRI standards, global reporting initiative. These are complementary, right? So GRI around multi-stakeholder reporting, ISSB for investors, we need to make sure that this is seamless for companies, efficient, reducing burden. -- a really interesting development was just this past year, the U.K. Transition Plan Task Force, the TPT, it finished its work, sunset it, and it handed over responsibility for their disclosure-related materials to the ISSB. So we're furthering the work of there and making sure that those materials can be used around the world for transition planning.

As we do our work on biodiversity, we're looking to the work of the TNFD. So all of these are drawing around closer. Another example, CDP, their climate questionnaire is fully aligned with our climate standard. So the world is simplifying. We're reducing the burden. It should be possible for companies to be able to gather this data once, assure it, analyze it and maybe report it to different audiences as needed through different channels, but it's got to be common definitions, common concepts, common preparation.

Esther Whieldon: You've touched on this a little bit, but is there any other way that your organization approach to sustainability is going to change this year?

Neil Stewart: One of the big things is to consider that while it's been built into mandatory frameworks around the world, why would a company use it if they don't have to. And I think that this is something that is becoming more and more clear, I think I could give you 2 key reasons. One is investors need it, right? Investors need this data. It's part of their decision-making process. It's part of how they price risk over the short, medium and long term, how they achieve alpha.

And in the same way that investors had long called for TCFD and SASB mostly, they're now asking for the ISSB standards. It is this global language, a global baseline providing comparability, providing high-quality data, providing the metrics that they need to build into investor decision-making.

And the tagline of the IFRS foundation is better information for better decisions. This applies to both financial accounting standards and sustainability reporting standards. But there's also the decisions within the company, and we've alluded to this a little bit, but we're really seeing that the standardization of data becomes a really important tool for management to be able to gather this data and use it to manage the company. I think we've seen a lot of this already with climate data.

And now we start to see a more refined approach to lots of different challenges, sustainability challenges, making companies more resilient, thinking about the performance, the cash flows and access to capital and the cost of capital and how those all tie into sustainability-related risks and opportunities. So I think one of the big themes for us over this year and coming years will be not just how these standards can be used to report to investors, but how they can really be used to enhance the financial performance of companies.

Esther Whieldon: We know our audience is keen to understand the changing landscape for sustainability rules, regulations and standards. And we just heard from Neil, there's a lot to keep up with. We also wanted to understand how financial institutions are navigating this complex landscape. So we brought back one of our favorite guests from over the years, Marina Severinovsky. Marina is Head of Sustainability North America at Schroders. I'll let her tell you more about her role there.

Marina Severinovsky: Schroders is a large global asset manager. We're headquartered in the U.K. We have about $1 trillion in AUM across 60 investment desks, which across various asset classes, both public and private, all actively managed and all of which integrates financially material sustainable considerations into investment decision-making. Of that $1 trillion, about $120 billion is sustainably branded.

And so it's actually being managed to some specific criteria around sustainability. And then about $5 billion is impact investment. A lot of that is in private markets through what we have an arm called Blue Orchard, our impact manager. But some of it's also Schroders in listed assets. And then as the Head of Sustainability for the Americas region, I do market strategy, client communications, product development, investor management, and then we also serve as a resource, my team and I for our local investment teams in their integration efforts of financially material sustainability.

Esther Whieldon: So what sustainable investment trends are you watching this year?

Marina Severinovsky: I have 8 trends that I'm watching. The first one is we need new ways to define and measure flows that come into sustainable like strategies because people are changing fund names and it just kind of look the same as it did before. And then a lot of money is staying in private vehicles, which we really can't track. So it's a bit of a challenge.

The second one is a growing call for policy leadership and greater collaboration with the private sector. I see this call for kind of regulators to move us forward because the private market itself can't move the money to transition if we don't have that framework for us. The third one is my favorite, is an increased focus on physical risks of climate change and the role of insurance.

And it's all tying into, I think, a greater focus on adaptation, resilience and investors' ability to invest there alongside climate mitigation. Then the fourth one is a perspective change, I would say, from decarbonization as a constraint on a portfolio to actually using transition as a way to unlock value. So in other words, rather than climate investing being like a limitation, how can we use it as a tailwind? Then I've got probably my favorite, again, piece is thematics.

I always think about the thematics of opportunities. So interesting sustainability themes this year, technology and innovation, health and wellness, food and water, sustainable infrastructure, resource security and the circular economy. Then I've got -- I know you like this one, the kind of growing awareness that sustainability always has to be looked at through a human lens. So it's always about social considerations at the end of the day.

Everything will lead to that. And then finally, the last two, an emerging focus on natural capital and biodiversity at the very least an interest, if not a lot of money yet. And then the last one is an increasing focus on sustainability and decarbonization in private markets.

Esther Whieldon: A lot to unpack there, and I want to take them all. But how is investor interest in decarbonization and the low carbon transition evolving?

Marina Severinovsky: So I think the most important observation that we have had, especially the European client base, but it starts to extend to U.S. clients is that people have moved from simply targeting low carbon investments to more sophisticated approaches. So they're trying to align their portfolios to a net zero pathway or they're trying to support low-carbon transition through climate solutions.

And so again, it's not just constraining the investment opportunity set by targeting only low carbon exposure, it's trying to target transition and to unlock value over time by encouraging alignment to net zero across the broader sort of investments in your portfolios. And that obviously focuses a lot on active ownership, which takes on a very critical role, especially with carbon-intensive and hard-to-abate sectors.

So there's two areas we think of in terms of like pillars of transition. So one is companies that are reducing their own emissions. towards a more long-term sustainable business model. And the other ones are the ones that are providing products and services that enable the transition of others. So for the first one, we think it can unlock a great deal of value because historically, we find that companies that have decarbonized more and quicker have outperformed their peers. And so we see no reason they wouldn't continue to do so.

And then the other one is that companies that are enabling transition for others should continue to find ever stronger demand for their goods and services. The last point I would make is that I think we do ourselves collectively a disservice by framing transition investing as just something solely that's like sustainability related rather than actually letting it have wider appeal.

There's a whole other area of interest that like in what we think of as environmental themes that's actually driven by outcomes or wanting to isolate specific return opportunities. And the example that I give is we do at Schroders a global institutional investor survey every year and our 2024 survey, 77% of U.S. institutional investors said that they were either already investing in climate transition or they were intending to. But their #1 reason was for diversification.

Their #2 reason was for alpha and only like third and far down was we want to decarbonize our portfolio. That's very different than in Europe, where that was the first answer is decarbonization. But my point is there's an investor class out there that wants to do this, not necessarily because they're decarbonizing, but because they're looking for diversification in alpha, and that's okay, too. Like they're also contributing. They should be in the on the theme.

Esther Whieldon: Everyone can make a difference.

Marina Severinovsky: Everybody can make a difference. I love that.

Esther Whieldon: Often, discussions of sustainability can tend to focus on environmental topics with social ones taking a back seat. Marina was a guest at our first ever live podcast event, and she told us then that 2023 would be the year the human element of climate and nature come to the fore. I asked her at the February 6 live event, how does she see the conversation about the human component of sustainability issues playing out this year?

Marina Severinovsky: I stand by. I think it all comes down to how you look at it, like in a vacuum or an isolation or if you again try to connect the fact that really we're just always trying to meet society's ever more urgent needs. So this recognition that everything that's done in the name of sustainability is about human beings. So climate nature, like we need a habitable world. So when we talk about energy transition, we can't forget that people are at the center of that effort. And there are workers and communities that do rely on coal and oil and gas, and they have to be supported through transition.

And then if we think about the broader population, you have to give consideration to energy security, the affordability, the availability of energy, the resilience of the energy grid, right? I talked about physical risks of climate. They're very evident. You have these extreme weather disasters. Again, I won't belabor, but we all see what's happening and the effects of this on infrastructure, real estate, insurance cost and availability of insurance, public health, right?

It's all quantifiable, and it comes down to how people and communities are impacted, especially regions that are the most exposed and the least resilient, right, to these hazards. And so there's a bigger role again for investors to fund adaptation and resilience. I think things like also health and food supply, right? We focus on those things.

I'll give you one example, we did research last year around basically heat stress and like the risk to workers. So that's the crossover. Like it's not just sort of, okay, rising temperatures in a vacuum, it's all about how workers are impacted in different supply chains. I struggle to find a sustainability theme that ultimately is not about people, right?

So the energy demands of AI, demography and aging populations, how you make sure that they have healthier lives, sustainable cities, infrastructure, how you have resource security through the circular economy, like every single one of these is about how people and society are impacted and served. And I just think like we should remind ourselves of that over and over again. And the people who disagree with us sometimes, right, should also be reminded that that's what it's about.

Esther Whieldon: Marina also talked about the fundamental role that nature and biodiversity play in the economy. She pointed out that natural capital underpins all of society. The ecosystem services that it provides facilitate the global economy. We're completely underpricing the value of nature because we have no great systems to do that. It's not officially recognized as an asset class.

We're very early stages because there's no one measurable unit like greenhouse gas emissions, there's lots of data, and there's the availability of data and also the ability to integrate that data. It's also very location specific. So we have created internally a model that kind of distills a lot of negative and positive externalities using like a dollar value.

So we're trying to calculate what are all the costs and credits that a company would face if all their negative externalities or benefits were priced financially and recognized by society. So we've done that for our clients. As I said, we're not seeing a ton of assets moving yet, but there's definitely a lot of interest. One area that I would say that we can work on now is deforestation.

We made a commitment by the end of this year to eliminate commodity-driven deforestation across our entire $1 trillion book of business. We've engaged with 400 companies so far in the last couple of years in order to make that happen. And that is one where, again, it's material risk that we can kind of mitigate in our clients' portfolios now because we have some quite stringent regulation coming down the pike, especially in Europe around this issue. I pose the same question to Marina that I did to Neil.

How will your organization's approach to sustainability change in 2025? She mentions a few acronyms. NZAM, that's the Net Zero Asset Managers initiative. And in January, this UN-backed initiative said it was launching a review to ensure it remains fit for purpose. CA100+, that's Climate Action 100+, an investor-led initiative and SBTi, that's the science-based targets initiative. Okay. Here's Marina.

Marina Severinovsky: So I don't see us changing very much. And the reason is, I think, at our organization, we've always been tied to investment. We consider ourselves an enabler of the 60 active investment teams. That's how they see us, too. We don't compete with them. We don't run money. No one gives us credit, like, oh, look there's great alpha because of sustainability.

That's never been the answer, right? It's just what can we provide to you as the PMs and analysts that gives you research and models and data and active ownership support, but you ultimately are the investor, you are doing the work. I think one thing is we've tried to always sort of communicate that, right, that it's sustainable investment through the lens of financial materiality.

We're trying to give these insights. I think one thing that can change, and I think we're seeing a change in real time is around industry commitments. and initiatives, right? So NAM, CA100+, SBTi. I think we just want to reiterate again as investors, right, when we went into these sort of commitments, right, these memberships are a reflection of what we're doing.

They're not a driver of what we do. And so they have been very helpful for us in terms of engagement, in terms of, again, furthering what we think of clients' interest, but it's not dogma. The other thing is we are, I think, reiterating in the kind of environment they're in right now that we are refocusing our research, our analysis, our tools to really emphasize investment outcomes at the core reexamining the investment case for every sustainability issue because some are financially material in an approximate time frame, like an investor's time frame and some are not.

And so you do have to decouple. And so that includes wider structural trends. The last point, this is what I want to leave you with, I think, and this is partly me because I'm trying to like establish like a long career, right? So I would like to reframe ESG and sustainability into something like 21st century business risk or long-term investment considerations. But ultimately, it's this kind of focus on risk and opportunity objectives and not on, again, dogmatic sustainability objectives.

So it's us helping our 60 active investment teams across different asset classes think long term about all the sort of risks and opportunities that will come and social and environmental change is a massive part of that, right? But I think that kind of broader view and that reframing of what we talk about when we mean sustainability is, I think, critically important going forward, again, especially in the current environment.

Esther Whieldon: Marina just talked about how to reframe sustainability. In simple terms, when we talk about sustainability in this podcast, we're referring to the long term. How do you run your business or your government or your organization in a way that is viable over the long term. To do that requires an understanding of many of the topics we just heard about from Marina, climate change, nature, people and more.

This idea of reframing sustainability also came up in our next interview. I sat down with Brian DiMarino, Managing Director and Deputy Director of Global Sustainability, Strategy and Operations at JPMorgan Chase. I wanted to understand how the largest bank in the U.S. is navigating this changing landscape we've heard about today from Neil and Marina. Brian starts off by explaining his role.

Brian DiMarino: I'm responsible for pretty much everything that my manager is responsible as the Head of Sustainability, but I have very specific focus areas. Those two are -- I'll call them three really, operational sustainability. So how does JPMorgan not as a bank, but just a corporation that operates all over the world, mostly real estate and business travel, decarbonize its footprint.

So how do we measure that? How do we reduce it? How do we address what we can't reduce, basically. Broad strategy, so a lot of that's working with the businesses on how are they addressing this, what are their clients saying, how can we help? What conversations can we get involved in to support them? -- along with the targets that we have and helping them support those targets. We have eight sector targets for high-intense sectors.

We also have an energy mix target, and we have a $2.5 trillion sustainable development target. So we help the businesses work through those. And then the third piece is external engagement. So how do we talk to our stakeholders outside of the firm, not just our clients, but how do we talk to the NGO community, governments, things like that, regulators, what's on their mind and how do we help sort of marry the conversation across that universe.

Lindsey Hall: Okay. So take us a little behind the scenes here today. We're seeing these huge sea changes in sustainability and the way organizations are talking about sustainability. And I think a lot of people kind of look to JPMorgan as the largest bank in the U.S. as sort of a leader or a bellwether. What can you tell us about how your approach to sustainability is changing in 2025?

Brian DiMarino: I'm going to echo a little bit of what Marina said in that it's not really changing at all. Our focus on sustainability is steadfast, the same as it was last year, the year before and the year before that. We continue to work through these sector targets. They're very complicated. We don't have a lot of control over what every one of these sectors does. So it's a lot about partnering with clients, helping them address their issues, trying to find ways to finance and facilitate the things that they need to do to decarbonize.

But those things are hard, right? We've -- by definition, in almost every version of a reporting scheme or a focus to decarbonize, there's been an identification that there is a technology gap between where we are and where we need to be. And so we need to find ways to get those technologies like from R&D to on the shelf to deployed in the market.

And I think that's been one of the big struggles is the most interesting thing to me anyway about the challenge of climate is that it is seeded in a very real understanding of thermodynamics, organic chemistry and logic. Like we sort of understand the issue now and how we need to go about solving it.

And the majority, I think, of the technologies you probably need have been identified somewhere in some university lab, and we just need to find a way to get those things scaled up and get them moving. And that's really the hard part. So we're continuing to do everything that we've done in the past. We continue to grow teams that focus on these topics. We continue to address client concerns and issues on these topics, but it is a very complex space, and it's growing every day.

Lindsey Hall: You used the term technology gap, and we hear a lot of talk on the podcast about the finance gap, the climate finance gap, but less so about this technology gap. Can you just tell me a little bit more about where do you see that gap?

Brian DiMarino: Yes. Again, I don't think it's that we don't have an understanding of what we need to solve. I think it's about getting these technologies down the cost curve so they become cost competitive with whatever their counterpart might be, whether it's in the energy space or the carbon capture space or the built environment or travel or whatever it might be, right?

You have to get those things down the cost curve or there's always an economic disincentive for a company to adopt that option. And I think this is one of the greatest challenges of the climate era that we're living in. It is voluntary for the most part. And so we need to recognize that on a voluntary basis, corporations and the capital society make decisions on economics.

And so finding ways to draw business cases that actually make a ton of sense for companies is what I think will get us there. So again, I think the technology is very much where we exist and are understood. It's about getting them actually available to us at a price that is reasonable for people to start adopting.

Lindsey Hall: There's a lot more from my conversation with Brian that I want to share, and we're actually going to devote next week's episode to hearing in more depth about how JPMorgan Chase is approaching navigating this changing landscape in 2025.

So please stay tuned for next Friday's episode to hear more. For today, I want to continue pulling this thread of the role technology can play in facilitating sustainability solutions. For this, let's turn to our final guest from the live event, Jonah Smith, Vice President and Global Head of Environmental, Social Governance at IBM. He explained that his role touches every aspect of the technology company's operations, value chain and stakeholders.

Jonah Smith: So my job is really a lot about collaborating with all of those aspects of the company, everything from our ESG agenda, strategy, our framework, which is comprised of 3 core pillars: environmental impact, equitable impact and ethical impact as well as goals and KPIs around that, how we execute those programs, again, in collaboration, how do we account for it?

How do we account this in a verifiable, accurate way that's also meaningful to our stakeholders and disclose it, it's some mandatory voluntary frameworks and so forth. So there's that aspect as well as ESG disclosure. There's other elements as well, our operations, our efficacy of our value chain, so human rights and social innovation programs and so forth.

Lindsey Hall: We talk a lot about collaboration on this podcast, and we hear from many of our guests about the importance of collaboration among companies across private and public sector. Can you talk to me a little bit about the work that IBM does, in particular, some of the social innovation and sustainability projects that you do with nonprofits and governments?

Jonah Smith: Sure, happy to. So again, you can't do this work alone. If you're doing it alone, then you're not doing it well enough. So you've got to reach across find partners that you can help scale and impact with. IBM is a leading global technology firm, hybrid cloud, AI. We've also got our servers infrastructure. We also have a huge R&D arm. We also have a huge consulting arm.

So we collaborate internally with all of those pieces to bring it together as well as externally with partners like nonprofits with government, in particular, with the social innovation piece, we, in 2021, launched a program called the Sustainability Accelerator.

So this is a global pro bono social innovation program that really utilizes IBM technology to help, again, with partners like government and nonprofits to impact and help communities that are facing challenges from economic or environmental stress, those type of challenges all around the world. And again, utilizing our technologies to help scale and impact that and employ those solutions for them, bespoke models. We started in 2021 with the sustainable agriculture. And all the themes for each of the years I'm about to mention are aligned with United Nations Sustainable Development Goals, sustainable agriculture.

Then there is clean energy. In 2023, we did water management. Last year, we announced resilient cities. And actually, this Tuesday, February 11, we're going to announce the recipients of our resilient cities theme. So there's 5 recipients that we'll announce on Tuesday, along with our new theme for 2025.

Now we have 20-something projects that are either finalizing or still in operation, really have an impact around the world, things like with the first cohort that mentioned sustainable agriculture, something like 65,000 beneficiaries, direct beneficiaries of that program. We anticipate that we'll reach maybe just over 1 million with some of our clean energy cohort work that we're doing.

Lindsey Hall: We heard Marina talk about how people are really at the center of all these different sustainability goals and projects. And I'm interested to dig in a little bit more about resilience, the community resilience work that you're doing. Resilience is a word that we're hearing pop up more and more in our podcast interviews. Why community resilience? Why is that the latest area of focus?

Jonah Smith: I mean, look what's happening, look what just happened in the U.S. and in L.A. You could just go down around the world to see all the different communities and how they're being impacted by what's happening in the world and so forth. So we need to really look at how we can build resilient cities. Think of all the innovation and the technology and the patents and everything else that we do, and we bring it all together, our software solutions with our consultants, and we bring our AI and everything else, and we're building all these models and then we're solving these problems.

We've got an application that we did with Sustainable Energy for All, a partner in Africa and India. And I think more specifically in Kenya, I think we'll reach maybe 1 million people, I think where we think we'll reach with this application. But in terms of like utilizing AI to help like predictive analytics on where should you build cities.

And by the way, we've also seen stuff with NASA and geospatial modeling and where there's going to be issues with climate stress and everything else. So then as you start to look at all these things and the complexity of it, that's very difficult for Jonah, for myself to kind of figure that out and draw like 10,000 different factors that are impacting some area.

But with AI, right, especially the type of models that IBM creates like Granite, which is really efficient and very specific targeted for that type of work that can figure that out very quickly, right? And then we can offer those solutions to on the ground. And then you build smart cities, more resilient cities to go back to your question, you do things that are helping these communities.

Lindsey Hall: Sounds like you see a lot of practical applications opportunities for AI. Talk to me about how you're balancing also the risks inherent in this new technology.

Jonah Smith: Well, IBM is a 114-year-old company with -- and as part of that journey, throughout our history, you'll just see like a lot of structured governance. We really hold our hat on being very ethical, being very transparent. And think about all of -- all these models we talk about, which we all like make open source so other developers can build off of them and we can see -- everyone can kind of understand what's going on.

We've got principles around ownership and integrity and authentic AI and everything else and governance in terms of like you think about like bias and not bias, and we have a whole AI ethics board that we bring use cases to where we kind of ensure that there's really good governance in all of our models. So that's first and foremost -- in terms of that risk component, there's uncertainty in the world. And the opportunity is to figure out how you can progress through that. So with challenges, there's opportunities.

So that's what IBM is doing with that. So that's the risk component. In terms of the beneficial component, it's just limitless, right? There's just so much that AI can do, so much the technology can do. And again, I talked about we have a really big R&D arm. I think it's something like 19 facilities all around the world where we're looking at what's the proper data set for doing AI for all the inferencing, which is like computing all that data, right?

Where are we pulling the data from? If you pull from the entire universe, that might be too big, right? But if it's this smaller set, that might be the right set. And what's the right large language model to then process all of that. We have specific models that do that type of work for each one. And then by the way, like a lot of the chips today, the processors, they're built for other reasons, right?

They weren't really built for AI. So IBM, we're developing a special chip that actually does this in a more efficient way. That means reduced inferences. It means reduced energy use, which means reduced greenhouse gas emissions associated with, which is another big risk of AI, right? Where do you cite your servers in your data centers?

Can you do it with renewable energy somewhere that reduces that risk, right? How do you do your hot cold aisle containment and optimize where and how your servers event their air and how you optimize that and reuse. So like all these things that we're doing, and we're doing for clients as well. And by the way, we use AI to help us figure out how to do this the best, right? That's the real opportunity. And it's just -- it's astronomical, it's exponential in terms of the benefits of all this.

Lindsey Hall: Okay. So Jonah, I think what I'm hearing is a real sense of optimism come through from you. Would that be fair to characterize your?

Jonah Smith: Yes. I mean I've been told I'm an optimist in the whole life, but like I don't think I'm a blind optimist. I also see challenges and risk. But let's, again, figure out how we can progress through that.

Lindsey Hall: Okay. And so with that optimist hat on, what is the biggest challenge that you are facing or that IBM is facing in terms of social innovation for 2025?

Jonah Smith: Just like Brian was saying about JPMorgan Chase, IBM, we're going to keep being IBM. We're going to keep innovating. We're going to keep keeping our fingers on the cusp and the pulse of what's needed in order to be the catalyst that helps the world work better, right? And how can we do in a more sustainable way. So we'll do that. There's going to be challenges with that like anything, but we just need to use all of our expertise, our skills, our technology, software, consulting, everything else, our R&D to bring that to bear and help clients do that.

As part of that, just I think about the world and the state of the world, 2 things that come to my mind right away are in terms of like the skills gap, so AI skills gap. So IBM, we have a goal to skill 30 million learners by 2030, and that incorporates learners of all different ages and provide them with free education with valuable skills and career development opportunities. And part of that's AI and upskilling or reskilling how do we keep people relevant in today's jobs as things shift, right?

So that's a big task that we're up for the challenge for doing, and we think we do really well, but that's going to be a big focus, right? Another thing is, again, going back to the wildfires in California and all the work that we're doing around the world with partners, like I mentioned with NASA and geospatial analytics and everything else, and we have an environmental intelligence suite of software that also helps with this.

But how can we utilize AI to help us predict things like that. And it's much more than just the devastating fires in California, but it's all over the world you're seeing this extreme effects of climate stress. And so how can we utilize AI and all these other technology and software that IBM has and our partners, ecosystem of partners, which we have all over the world to really help us, hey, you know what, this is actually a hotspot.

This is a potential area where you know what, you may not want to build this house there or have a big community there, maybe this extra -- or if you do, you need to put in these firewalls when you need to do X, Y and Z. So that's the two big things I think that we'll be focusing on.

Lindsey Hall: So we heard from today's guests about how the standards landscape is evolving, how some investors and financial institutions are approaching sustainability and about the role that technology can play in solving for sustainability challenges. By the way, that new IBM Sustainability Accelerator program that Jonah mentioned, it's also about AI, specifically looking for innovative projects that leverage AI for sustainable consumption and production.

One idea that came across from all of our speakers is that they're going to stay the course with sustainability. Marina said she doesn't see Schroders changing very much. Brian said JPMorgan's focus on sustainability is "steadfast" and Jonah at IBM said, we're going to keep being IBM. We're going to keep innovating. So in other words, Esther, I think what we're hearing is keep calm and carry on.

Esther Whieldon: And this is also the message we heard reflected from our audience when we asked them a second polling question at the event. We asked, how will your organization's approach to sustainability change in 2025? And about 45% of the audience said they expect little or no change, while about half actually indicated they expect the organization's focus to increase this year, dedicating more time and resources to sustainability-related topics.

Lindsey Hall:  We'll be back next week with more highlights from my conversation with JPMorgan's Brian DeMarino, where he talks about how the bank is navigating the current landscape. So please stay tuned. 

Esther, we've got this new name, new logo, new music. I think this means we can introduce a new segment, too.

Esther Whieldon: Yes, what do you have in mind?

Lindsey Hall: Okay. I've got a couple of ideas. Like what if this new segment is defining more jargon like we always do, but it's jargon I've learned from my kids the past week because I'm a terribly embarrassing parent.

Esther Whieldon: Okay. What do you got?

Lindsey Hall: Well, for this, let's hear from an expert, my 12-year-old. Okay, take me behind the scenes. What words are 6 graders using?

Child: Words like skibidi.

Lindsey Hall: Okay. What is skibidi?

Child: It depends who you're talking to. They might think it's like good or bad, could be like smart or dumb.

Lindsey Hall: Okay. So it could really mean anything at all.

Child: Yeah.

Lindsey Hall: All right. What are the other words? Tell me what the cool kids are saying.

Child: Sus, I guess. That's more what like younger kids are saying. Younger cool kids are saying.

Lindsey Hall: Younger cool kids. What is sus?

Child: Short for suspicious. It's like a cooler way to say when someone is doing something that is just weird. Then you say "that's so sus."

Lindsey Hall: Yeah. Esther if you remember, that's actually an Idea I floated for our new podcast name. 

Thanks for tuning in to this episode of All Things Sustainable. If you like what you heard, please subscribe, share and leave us a review wherever you get your podcasts. 

Esther Whieldon: And a special thanks to our agency partner, the 199. See you next time!  

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