Transcript by Kensho.

Lindsey Hall: Hi. I'm Lindsey Hall, Head of Thought Leadership at S&P Global Sustainable1.

Esther Whieldon: And I'm Esther Whieldon, a senior writer on the Sustainable1 thought leadership team.

Lindsey Hall: Welcome to ESG Insider, an S&P Global podcast, where Esther and I take you inside the environmental, social, and governance issues that are shaping the rapidly evolving sustainability landscape. 

I recently went to Davos, Switzerland, during the World Economic Forum's Annual Meeting. For one week in January, this tiny, picturesque ski town in the Swiss Alps is taken over by leaders from business, government, and civil society, as they convene to discuss solutions to some of the biggest challenges facing the world.

Well today, we're going to be covering an idea that struck me in my interviews all around Davos. The importance of working together across silos to address the world's big sustainability challenges. This is part of a special miniseries we're calling Breaking down silos. Each short episode will bring you a different perspective on how collaboration across silos happens in practice.

Today, in Part 2, we'll be hearing the private sector perspective from Stephen Jamieson, Global Head of Circular Economy at one of the world's largest software companies, SAP. And in this miniseries, we'll be covering the idea of collaboration across silos as it relates to some of the biggest topics in the sustainability space, including climate change, energy security, transition strategy, supply chain, circularity, finance and, of course, AI.

As we covered in the past episode of this podcast, AI and nature were some of the biggest topics on this year's Davos agenda and will include links to those episodes in our show notes.

Esther Whieldon: This topic of breaking down silos is something we hear a lot of is podcast and in sustainability circles. At Climate Week NYC 2023, for example, we heard again and again about the need for the public sector, private sector and policymakers to work together. We heard about this at COP28 as well, the UN's big Climate Change Conference in late 2023.

Business leaders from a variety of sectors stress the importance of sharing supply chain data and sustainability best practices with peers. The finance community economists and climate scientists underscored why collaboration is key to finding a common language to deal with the climate crisis.

Lindsey Hall: And it kind of seems like a no-brainer in some ways, right? The idea we should play nice with others that everyone should work together. That's something a lot of us have been learning since grade school, but in practice, much harder to pull off. For evidence, just look at the World Economic Forum's annual Global Risk Report, which identifies the most severe risks facing the world.

This report is released right before Davos and really sets the tone for the week. The 2024 report found that over the next 2 years, the top risk is misinformation and disinformation, followed by extreme weather events. Number three on that list is societal polarization. Now whoever wrote that device factors like political polarization and economic hardship are weakening trust and a sense of shared values, and the erosion of social cohesion is opening the door to new and evolving risk.

So the stakes are really high. And while this idea might seem kind of high level or theoretical, it's not just a topic for discussion at Davos. It also has real-world implications for many of the companies around the world that are trying to form a sustainability strategy. To do that effectively, it requires bringing together a lot of different stakeholders from many different backgrounds.

I'm talking executives, Board members, commercial and finance product teams, government affairs, legal, HR, you name it. And while we're not going to solve all the world's problems in a podcast episode, I'm hoping that in this series, we're going to hear some useful ideas about how some stakeholders are working across silos. Okay. Let's turn to today's interview.

Stephen Jamieson: I'm Stephen Jamieson, Global Head of Circular Economy at SAP, and I really see it across our solution portfolio, helping our customers to really manage this transition from a linear to a circular economy.

Lindsey Hall: Can you say a little bit more about what SAP, which is different than S&P. What does SAP do?

Stephen Jamieson: And I've already been mistaken for working for S&P twice this week. We are a global solution provider of business cloud-based solutions for business enterprise applications. So everything from financial systems through to logistics, supply chain, human capital management, procurement, that full end-to-end ecosystem of business solutions that help power the world's business. We're working with something like 84% of the world's global commerce and working across 27 industries in order to make that reality.

Lindsey Hall: For our listeners who might be less familiar, who don't have circularity in their job title. Can you explain that sort of in plain English for us?

Stephen Jamieson: Yes. So just think about the way that we've been living our lives for the last 50, 100 years. We buy a material, a good, a product, it could be food, it could be an iPhone, whatever it might be from a shop. We utilize that product, and then we dispose of it somehow. Sometimes into a recycling stream, but more often than not, we're disposing of those things.

And actually, when you kind of wind that behavior outwards, what you see is 100 billion tons of resource consumption and extraction each year, and only 7% of that material -- in fact, the percentage is getting lower each year, are actually being reutilized in some way, seeing a second life. So we're talking about over 90 billion tons effectively of materials that have been extracted and leading to a fate in the natural environment.

This has nature impacts. This has biodiversity impacts. Crucially 50% of the world's CO2 consumption is associated with this extracted processes. 90% of the world's biodiversity loss is associated with these extractive processes. So actually, the solutions to climate change, the solutions to biodiversity. Yes, we need to get the energy transition right. Yes, we need to move, de-fossilize our energy base. But actually, it's in the behavior of how people are working and collaborating with businesses and how they consume products, which is where the true solutions lie.

Lindsey Hall: Okay. So a follow-up question for you there. Is this an action item for me as an individual, as a consumer? Or is this something that needs to happen at the business level? Is it government? Is it investors? How do you actually enact that mindset shift that you're describing?

Stephen Jamieson: It's multifaceted, clearly. And it's the old adage that everybody plays a part, but there are certain elements that have to work. And policy clearly is one of those critical pieces that enables ecosystems to find the level playing field on which to operate and which to find solutions. And so we, as a solution provider, have focused a lot of our effort initially around extended producer responsibility.

Essentially, a policy framework that's been very popular in Europe, in 2025 will become very popular in North America and also around the world. And this is about how to crystallize, really, the externalities or the cost of the waste system into the products themselves. So we're seeing a lot of really advanced policy now.

We're seeing plastic taxes in Spain and soon to be Italy, also in the U.K. We're seeing advanced extended producer responsibility regulations that incentivize certain materials that are more sustainable and disincentivize other materials that are less sustainable. And so it's policy innovations like this that are critical to enabling action.

This then stimulates the rest of the activity. It stimulates that need for businesses to innovate to find solutions to be able to go and drive the reframing of the value proposition, discovering reuse solutions, how to scale infrastructure in order to deliver reuse solutions. So these are all things that are possible once we see that regulatory trigger.

Lindsey Hall: We just heard Stephen mention externalities. In basic terms, and externality is a side effect of the business activity that impacts third parties that are not directly involved in the activity. This can be positive or negative. An example of a negative externality would be pollution damaging ecosystems or harming human health.

Esther Whieldon: Stephen also talked about evolving rules about plastics, and we'll be diving into this topic in more detail later this year in a special series about plastics. Stephen used a phrase we've heard come up quite a bit in interviews, the idea that policy will play a critical role in enabling action. Here's how the U.S. Department of Energy's Loan Programs Office Chief Investment Officer, Christopher Creed, put it to me during Climate Week NYC, he said, "This transition is going to be private sector-led and government-enabled."

Lindsey Hall: The U.S. Inflation Reduction Act, or IRA, is one such enabling mechanism that we've heard cited a lot as an example of how the government can help catalyze change. The IRA is a comprehensive energy and climate law signed in 2022 that allocated nearly $370 billion in federal spending and tax incentives to decarbonization efforts over the next decade.

This came up in the first episode in this miniseries in my interview with Jason Bordoff, who's a faculty member at Columbia University's School of International and Public Affairs, and he directs the Center on Global Energy Policy, a think tank he created inside the university. We'll include a link to that episode in our show notes.

Okay. Back to my interview with Stephen. I really wanted to understand in these discussions about the role of different stakeholders, what part I as the consumer play? Does it matter? I'm trying to buy only secondhand clothing?

Stephen Jamieson: It's a critical piece, and I think there's a temptation to think this is fundamentally a consumer challenge, and there has been historically a sort of prevailing view of "we're just serving the customers' demand because the customer demands the cheapest possible garment" or whatever it might be. But when that comes with a fundamental cost to creating a planetary emergency through the carbon emissions that are associated with that purchase, we perhaps need to rethink those models.

And yes, the consumer plays a role, but I think the business community has a very fundamental role to play in educating and enabling and building that kind of understanding of the new opportunities, but fundamentally not placing the burden of responsibility onto the consumer because it's unrealistic.

What we have to deal with as a global community in order to be able to tackle these major sort of systemic challenges is mind-bogglingly complicated and it's only through these sorts of collaborations and these sorts of scenarios that we're able to bring that global community together and actually drive the changes needed.

Lindsey Hall: It's a really good point because a lot of the conferences I go to, they're climate conferences or sustainability focused ones, but Davos is not that. And so one question I've been asking people is, how do you connect the dots between the sustainability community and this much broader business audience. Is that something that you've been thinking about?

Stephen Jamieson: Absolutely. I mean, I came from a Chief Sustainability Officers' lunch just a little bit earlier, and that was exactly the topic. And I think that's actually an acknowledgment that sustainability, I think, one or 2 years ago, Davos was probably the top topic on the agenda.

Arguably, topics like AI have kind of flipped that a little bit. I actually don't see that as a bad thing. I think what's happening is we're starting to see this understanding of what needs to be done starting to be operationalized and moving into an implementation phase in business. That's not to be complacent. There's still so much to do.

But I don't think that just because it's not the #1 headline of the agenda that is in any way lower down the priority list. It's just setting a broader context for how we need to think about these key topics of regulations, reframing the customer value proposition, resetting our resilient supply systems, and enabling that investor perspective that's consistent and predictable.

Lindsey Hall: We heard Stephen talk about circularity and its implications for nature, climate change, and the energy transition. He talked about the role that many different stakeholders can play in changing behavior to adopt circular solution. Stephen said, yes, the consumer or individual has a role to play, but so does regulation, policy, the business community, and technological innovation.

During the remainder of our conversation, Stephen also mentioned work SAP is doing with the Ellen MacArthur Foundation. This is a charity committed to creating a circular economy designed to eliminate waste and pollution, circulate products and materials, and regenerate nature. And I bring this up because charitable and philanthropic organizations are another stakeholder group that we haven't talked about yet.

Esther Whieldon: In our next episode in this Breaking Down Silos miniseries, we'll hear from one of the world's largest philanthropic organizations about how it is teaming up with other stakeholders to find creative financing solutions to big sustainability challenges. So please stay tuned.

Lindsey Hall: Thanks so much for listening to this episode of ESG Insider. If you like what you heard today, 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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