Soil is the foundation upon which life is built. Soil puts food on the table, purifies our water, stores vast amounts of the worlds carbon, and protects us against floods and droughts. We are intrinsically linked; when soil's health is at risk, so is our own. In this episode, Lily Billings, Head of Group Sustainability at Foresight Group discusses why soil is so essential to life, and what needs to be done to protect it with Mark Nason, head of professional practice at the Chartered Institute of Ecology and Environmental Management. Key Takeaways include: Understanding what soil actually is and why it's so essential to life Understanding the different ecosystem services that soil provides Addressing some of the key threats facing soil health Understanding what we can do to improve the health of soil Mark Nason is Head of Professional Practice at the Chartered Institute of Ecology and Environmental Management (CIEEM), and has over 25 years of experience in environmental research and education. The podcast is for information purposes only and without limitation, does not constitute an offer, an invitation to offer or a recommendation to engage in any investment activity. Listeners should not construe the content of this podcast as investment advice and no reliance may be placed upon the content. The opinions of speakers are their personal opinions and not necessarily those of their respective companies. Foresight Group LLP is authorised and regulated by the Financial Conduct Authority (FRN 198020). Foresight's registered office is at The Shard, 32 London Bridge Street, London, SE1 9SG. {TRANSCRIPT} Lily Billings [00:00:04] Welcome to Foresight Sustainability Podcast, a series that explores the sustainability themes that will play a crucial part in shaping our world in the current period of accelerated change. In this series, we will be sitting down with industry experts to explore some of the major developments in sustainability related fields, and consider the challenges facing businesses in a new decade of climate action. With these sessions, we aim to inform and promote dialogue around the mainstreaming of sustainability. I'm your host, Lily Billings, and I'm the Head of Sustainability at Foresight Group. I'm responsible for the corporate sustainability strategy, and everything from emissions reporting down to nature recovery and social responsibility. I'm joined today by Mark Mason. Mark is a soil expert and he's here today to talk to us about all things to do with soil and how it relates to carbon and nature recovery as well. So welcome, Mark. Would you like to introduce yourself? Mark Mason [00:01:01] Hello. Yeah, thanks, Lily. So I, well, I've worked in environmental research and education in some shape or form for my whole career, and that's involved lots of teaching, writing new degrees and apprenticeships, and doing research into soils and ecology. And so this month I started a new job as Head of Professional Practice at the Chartered Institute of Ecology and Environmental Management. And so in that role, I'm really excited about it. I'm basically here to support and challenge people working in ecology and environmental management, to be ambitious for themselves and for nature. Lily Billings [00:01:40] Brilliant. Well, we're really happy to have you here today because I think so many of us are starting to realise just how important soil is when we're thinking about how we might tackle climate change and also the impact that nature has experienced over the last few hundred years, really. So is it possible for you to tell us a little bit more about your day to day job? Obviously you've moved recently, but how you get involved with what you do around soils. It would be really interesting to hear what's a normal day look like for you. Mark Mason [00:02:11] Yeah, well, I'm not entirely sure yet, but so basically I'm responsible for helping to evolve the training programme for CIEEM. So we've got about 7000 members who work in ecology and environmental management. So it's a significant responsibility and the world is changing so quickly and we need more people to know more about the environment and to know more about soil. So I'm responsible for thinking about the types of training programmes we need, thinking about the competency frameworks and accreditation so that when people do things there is, we know that they're doing them to a certain standard best practice. And one thing that I'm also really excited about is that I get to carry on working on projects as I have been for a number of years, to try and support new people into the profession. So getting people into good jobs in environmental management and also helping to make sure that it's a rewarding and inclusive environment to work within. Lily Billings [00:03:11] Brilliant. Thank you for explaining some more. And I actually have a question then. So how did it all start? I mean, what first got you interested into the world of soil? Soil is obviously quite a niche subject area, albeit we now realise it's much more important than we ever really realised before. So yeah. What got you interested? Mark Mason [00:03:28] Yeah. So I don't think I started off being that interested in soil, if I'm honest. I've always been really interested in nature and in fact I tell people that one of my earliest memories is playing in the garden with my friends aged three or four, and I have a distinct memory of telling them off because they were getting spiders confused with red spider mites. And that really offended me on some level. I think my interest in soil came a little bit later, so I did an ecology degree and that allowed me to keep my interest quite broad. So I studied everything from fish migration to fern classification, and a small amount of soil science. And then after my degree, I worked briefly as a quality assurance analyst in a lab. So I was looking at testing the equipment that hospitals use to measure levels of drugs in patients blood and urine. And it wasn't really for me. I enjoy lab work, but I wanted to be outside a little bit more. So I applied to work as a technician on a European Union funded project at Bangor University that was looking at experimenting with ways of creating woodland and heather moorland at post-industrial sites, especially on slate quarry waste in Snowdonia. And I was really lucky through that to have the opportunity to register for a PhD alongside my day job. And because the main constraint to establishing biodiverse habitats under those conditions tended to be a lack of soil, I chose to study how soil forms and particularly the relationship between the inputs of plant litter. So for example, when trees dropped their leaves in the autumn, and the formation of the organic matter in the soil, that then happens over time. Lily Billings [00:05:04] Great. I mean, I can see how that would get you hooked, actually. There's a lot yet to understand, I think, for many of us about soil. So I've got a bit of an obscure question for you, which is, so what actually is soil? You know, we've all got an idea of what we think it is, you know, what we can see it. But how do you describe it when you've been teaching students about soil. Mark Mason [00:05:26] It's such a great question because it often flummoxes quite a few people and it's one that I start almost every module or professional training course with just to check where people are at. So bear with me. So soils form over time, and they form from rocks weathering or the movement of sediments from one place to another. And then as life gets a foothold and gets going, we then get an accumulation of organic materials in the soil. And so there's a huge amount of variation in soils in age, determined by the geology and the climate, how much we interfere with them and the biology. And that gives rise to a fantastic diversity of different soils. And we can describe them and classify them, using keys in the same way that we might classify species of grasses. So an average soil, if there's any such thing, is about 50% empty space. And that often surprises people that the biggest single component of soil is actually the space between the stuff and that might contain air or it might contain water, a mixture of the two, and that varies throughout the year. Then you get about 45%, which is the mineral material. And if anyone's ever looked at a soil texture triangle, we often classify that in terms of different sizes of particles like sand, silt and clay. And then the smallest slice of the pie. And this is another thing that really surprises people is the organic matter. So the living organisms and the remains of organisms and stuff that's in the process of decaying can vary quite a lot. But if there's any such thing as an average so that it might be around 5%, but we'd expect that to be lower in a really young soil or degraded agricultural soil, and a lot higher in an older soil, and particularly in peat soils. And I think lots of people who teach soil science, including me, have quite a good way of describing what soil is, and that's to compare it to a good cake or a chocolate brownie. So you've got the sugar, the flour, and the cocoa, and they're a bit like the mineral component of soil. And the very fine silky cocoa is quite analogous to the clay fraction in soil. And in fact, one way of identifying what type of soil you have is to see how silky or gritty it feels, even against your teeth. But that would just be geology though, without the organic matter. So just like in a cake or a brownie, you need something to stick everything together, like the butter or the eggs. And to give that cake a nice crumbly feel. So soil is really similar to that. Just a final progress from that is I like to think of soil as a biological structure. There's a really, really good description of soil in George Monbiots book, Regenesis, talking about how the structure and properties of soil are so transformed by the influence of the organisms that live in and on it, that really it is kind of like a coral reef and that that structure is formed by the biology. Lily Billings [00:08:19] Great, I mean, it is fascinating. I mean, yeah, like I said, so many of us are starting only now to really learn about soils and their importance. And obviously you've been looking into this particular topic for quite some time now. So how would you say that our understanding of soil has changed and would you say, would you recognise as well that actually that understanding has changed quite a lot in recent years? Mark Mason [00:08:42] Yeah, definitely. I think I've seen some big changes in the nearly 20 years, I think now since I did my Ph.D., which is a bit scary and there are plenty of live debates at the moment too. So one way to think about it is to think about the models that we use to predict the weather and to predict how the climate is going to change over time. Because if we know enough about soil, then we can produce models that attempt to predict how soil will form over time. And actually, that's really, really important because climate and soil formation are really strongly linked. So it's important for us to understand how soils will influence the climate and how the climate will influence soils. So when I first started learning about soil, I think there was often a big focus on how the chemical composition of the plant material that goes into soil, like again, the leaves that fall in the autumn and the roots below ground, there's a big focus on how that composition affects how long the materials last for in soil. So we know, for example, that some substances like simple sugars and proteins are really tasty to the micro-organisms in soil, so they'll be eaten quite quickly. If you've ever put a big load of grass clippings in your compost heap and it's heated up really quickly within the first week, that's because of all of that biological activity of the bugs eating all of those really available substances. Lily Billings [00:10:03] I always wondered what was going on there. Fascinating how hot the bin gets. Mark Mason [00:10:07] Yeah, no, it's fascinating. But then we thought that the bigger and more complicated bits of plants might last a bit longer or the things that decompose from them might last longer. So think about lignin, which is the substance that makes wood, woody. So there's quite an emphasis on thinking about the chemical composition of the materials that go into soil and how that might influence the rate of formation of the organic matter in soil. And all of that is still relevant. But I think what I have seen shifting, and the models that we use to predict how soil forms have been revised to reflect this, is our understanding of how important living plant roots are, and particularly the relationship that they can form with organisms in the soil, like the mycorrhizal fungi that live on the ground. I think it's that bit of soil science that really excites me because it's dynamic, like studying the physiology of the processes within an organism rather than just where the organs are located. So we know the plant roots and the organisms that they communicate with and form relationships with produce a huge range of different compounds for lots of different purposes, like physical protection and guarding against disease, competing with each other and even mining nutrient elements to make them more available. And I think the newer models of soil formation consider those substances to be really important in determining the structure and properties of soil. But there are plenty of interesting research questions that remain. So which of those substances are particularly important and is the plant more in control of the process than the microorganisms? And how does that relationship work? And so, for example, Isabella Tree popularised in her book Wilding, a particular compound called glomalin, which is kind of a bit tricksy to pin down exactly what it is. But we know that these glomalin-like substances are produced by certain fungi and that they're particularly important or may be particularly important in gluing mineral components together to give the structure of soil. Lily Billings [00:12:04] Okay. So that actually leads me onto my next question. So obviously, we know that soil is a great way to sequester carbon, it's great kind of carbon sink. Could you explain really what carbon stabilisation in soil really means? I mean, that would be quite useful term, because we're, it's something that we're looking at the moment because many people will know that we've invested in forest assets. So we own quite a number of forests now and afforestation projects, which is great. But we are also going through a process where we starting to better improve our emissions reporting. And so one of the things we've been looking at is soil disturbance. Whilst we obviously plant these new trees, and trying to better understand that and obviously carbon stabilisation is part of that. Yeah, if you could explain that to us, that would be helpful. Mark Mason [00:12:56] Yeah, absolutely. And there's a lot of interesting research in this area because there are questions that we haven't quite answered yet because carbon is an element and about 60% on average of the organic material in soil is made of carbon. And it's really important that we understand how soils can hold on to carbon, how they could sequester it, which means accumulating more. But I think even more importantly, how we can keep what's already in the ground protected and avoid releasing it unless it's completely unavoidable. So one reason the plants and the fungi so important is because those substances that they produce help to glue the mineral particles together, like those crumbs in the cake, and we call those aggregates. And that relationship between the organic and the mineral parts of the soil seems to be particularly important for holding onto it and keeping it in the soil. So you can see this in your back garden. You know, if you pull up a plant in the garden and you look at the roots, you can see how there are these little crumbs, these aggregates forming on the roots of plants. And I kind of think they're almost like glaciers or icebergs that calve off a glacier into the soil. And one of the central problems that we face is that we too often manage our soils in such a way that disturbs that process, either by physically disrupting the soil and breaking up the aggregates or by removing the plants and the fungi from the system, providing that glue that's helping to stick everything together. Lily Billings [00:14:30] Okay. Thank you for explaining that to us. So I think it would be great as well if we can talk a little bit about just how important is soil. So we're now touching on the carbon element of soil, but also the fact that it can support ecosystems and actually good quality soil can lead to really great biodiversity just as much as great carbon sequestration. So yeah, it's quite an open ended question. But to you Mark, just how important do you think soil is? Mark Mason [00:15:03] I'm hopelessly biased obviously, but it's fundamentally important to our existence. You know, there's no life, there's no food, there's no biodiversity without soil. It's effectively a non-renewable resource, and we don't tend to treat it in that way. It varies depending on the environment, how long it takes for soil to form. But typically we think that an inch of topsoil might take 500 years to form and seconds to destroy. So we also now know that soil contains more carbon than there is in the atmosphere as greenhouse gases like carbon dioxide. So there's no way that we can fix climate change if we don't protect soils and manage them in such a way that they are accumulating carbon rather than releasing it. Imagine we disturbed all of the soils and released all of that carbon that's contained within them that would kill us as a species and as a planet. And yet many of the practices that we adopt in in agriculture and construction, are meaning that our soils are releasing more carbon than they are sequestering it. So I think that's almost the elephant in the room. We talk about carbon sequestration and there are things that we can do to promote that and it's really important to do so. But we have to be really mindful that we protect the carbon that is already stored in our soils because it takes a long time to measure changes in carbon accumulation in soil. And I think our new understanding of how soil forms is really important for that. So for example, if we realise that soil fungi are important and that they help glue everything together and stabilised some of those carbon compounds in soil, then what effect will using fungicides in agriculture have on the ability of soil to hold on to carbon? Perhaps there's a a different angle there that we need to be considering our use of some of those chemicals. Lily Billings [00:16:55] Yeah, completely. And it's definitely something we've been looking at about reducing chemicals in our business processes because we're setting ourselves targets to improve biodiversity and obviously reduce our emissions. And the only way really we can do that effectively in certain parts of our business is by heavily reducing chemicals that have been just traditionally used as standard, completely lawfully. And we're starting to now challenge that status quo and look for other ways of managing land. So yeah, that's really interesting. That leads me on to ask then, so what would you say a healthy soil looks like? I mean, you said about how, you know, some of these top soils can take, you know, 500 years to get to the quality that they are. But what does that look like? What does a healthy soil like? And is it possible for us in a shorter space of time to make soil more healthy, whether that be in one of our forestry sites, for example, or even just at home in our gardens? Mark Mason [00:18:00] Yeah, definitely. So there's about four questions there. Lily Billings [00:18:03] Sorry. Mark Mason [00:18:05] I mean, the million dollar one there, is what does soil health mean and whats a healthy soil look like. And it's been a surprisingly contentious debate, actually, because there are a wide variety of different soils and we expect soil to do lots of different things for us. It's only actually in the last couple of years, believe it or not, that we've come up with shared definitions of healthy soil. So we have one that was proposed by the UN, and that is that healthy soil has the ability to sustain productivity, diversity and environmental services in terrestrial ecosystems. So if you want to determine whether you soil is healthy, then you're going to need some things to measure, some indicators. And there's no one indicator because they might be different in different systems. So for example, the fertility of soil or the availability of nutrients is one factor that determines how diverse a plant community is above ground. And in agriculture and horticulture, we might want more available nutrients to support the productivity that we need for crops, and we rely on the soils to produce those crops. But, in natural systems to maintain biodiversity in a grassland or a heathland for example, then actually we need lower fertility. So we can come up with different things that we can measure. We need to acknowledge that it depends on what we want from that soil, but we definitely agree that living soil is more likely to be healthy. So we're interested in how we can measure the activity and the diversity of the organisms that live within the soil, particularly because they're so important for doing a whole load of things we talked about, you know, the formation of aggregates, the stabilisation of organic matter with the carbon in it, but they're also essential for recycling nutrients in the soil, for providing natural disease suppression and making sure that the plants get the water and the nutrients that they need. So I think techniques that we can use to measure the activity of organisms within soil, and the diversity of organisms within soil, are quite good indicators of the health of soil. Lily Billings [00:20:06] It's an interesting point you raised that she and I associated notice, but you kind of forget. So the fact is certain species of plant and animal thrive in different areas, and therefore soil quality will be completely different. So, you know, you often had wild flowers, for example, actually quite like low quality soil. And so if you want an immediate quick fix when it comes to biodiversity, often people lean on wildflowers because, you know, they can be quite hardy and they can grow almost anywhere. So it's actually still important to have a spectrum then of different quality soils. Mark Mason [00:20:43] Yeah, absolutely. Lily Billings [00:20:45] Obviously, you mentioned as well around construction being a particular activity and agriculture, that are a threat to soil in the way that we're managing those two activities. What would you say are some other threats to soil? We touched on chemicals as well, obviously. Yeah. What would you say are some major threats to soil and therefore major threats to climate change and nature recovery as well. Mark Mason [00:21:11] Yes. So, and there's a really good book actually by Richard Bardgett called Earth Matters that I recommend. And he summarises some of the threats to soil in there. And so we talked a little bit like disturbance and that disturbance can be when we plough a field or when we excavate soil in construction. And we know that that releases carbon from the soil. We know that there's a whole range of different contaminants and metals, organic pollutants, microplastics and even the depleted uranium that is used in weapons. And I guess the other one that is of particular concern is soil sealing. So that's where we cover the ground with something impermeable like concrete or tarmac. And the reason that that's bad, is that it's removing the plants from the system and all of the substances that they can produce through photosynthesis, through taking carbon from the atmosphere. And then another thing that we've learnt relatively recently is, is that quite a high proportion of that carbon that they suck up from the atmosphere is then pumped below ground and a lot of that is used for all of the purposes that we've been talking about and to maintain those relationships with other organisms in the soil. So when we put something impermeable down on top of the soil, then that area of land is not taking up any more carbon from the atmosphere. It's not fixing any more carbon. And so whilst there might be a certain amount of carbon that's protected in the soil, one of the first things that will happen is that the microbes in the soil are going to be hungry, so they're going to start breaking down some of the carbon containing compounds, the ones that they can get to and release that carbon back from the atmosphere too. So I think there is what we call an opportunity cost for sealing soil and that you're taking that land out of being able to have plants in it and therefore there's no carbon being put back into the soil in that area. Lily Billings [00:22:58] Okay. So I was thinking, if you're looking off soil and essentially you'd be protecting it, the carbon from not being released, but actually it can have the opposite effect, which is quite interesting. Mark Mason [00:23:09] Yeah, you know, it might be that there might be carbon in the soil that is stored, but it can't sequester anymore. It can accumulate anymore because you've stopped those, because you know you need living organisms in the system for more carbon to be put into it. Lily Billings [00:23:24] Yes. Recently, Mark, you visited one of our UK solar sites. And so I wondered just as a quick one, what were your thoughts on how a bog standard solar site, for example, could improve soil quality and how? I mean, the fact is this would be different in different locations. So focusing on the UK and what we know of the UK. What would you suggest are your thoughts on how we can improve that? Mark Mason [00:23:47] I think solar farms are a great opportunity actually. I think they're really interesting. It takes a while to be able to measure changes in the total carbon content of soil, although we can look at specific pools and how they change more quickly. But what we do know, and it's quite logical really, is that the diversity of plants that you have above ground is linked to the diversity of organisms that you have below ground. So as a general rule, if you've got more diversity in the species of plants, you know, in a meadow compared to a monoculture in a pasture or in arable system or something, then you've got more compounds being put into the soil, you've got different rooting depths, and that is going to give you more biodiversity below ground too. And the other general rule that we know is that more biodiverse environments are likely to be more resilient to a changing environment. So how on earth does that relate to solar farms? I think one of the opportunities for solar farmd is that alternating pattern of shade and light that's provided by the panels. It's definitely important when we install the panels to disturb the soil as little as possible. Once they are installed, you're then going to get a different microclimate beneath the panels. And that's what I saw in Sandridge. You know, it's slightly cooler, and slightly drier underneath the panels. And different plant species are adapted to different environmental conditions. So if you've got more of a range in the soil conditions on the site, then that will support more biodiversity in the plants too. And the other reason that's relevant is that solar farms are often put onto former agricultural land. So a constraint to establishing biodiverse habitats is often that those lands have been enriched with fertiliser over time or other chemicals have been used. So over time, some of those things will work their way out of the system. But where you have these slightly barer patches, this slightly different microclimate underneath the panels. I think there's quite a good opportunity for putting some interesting native species in there to provide some islands of biodiversity, which then gives you more food sources, for example, for pollinators. And even it might be possible to put species like yellow rattle in there, which we know is called a meadow maker, because it helps to parasitised the ryegrass that you would have in pastures and reduce its dominance. And then that helps us to create more biodiverse habitats too. So I talked quite a lot about plants. I think that's because healthy soil is a biodiverse soil and if you've got a biodiverse habitat and that range of compounds, then you're keeping the soil healthy and you're maintaining those those carbon inputs there too. Lily Billings [00:26:26] Of course. I mean it makes sense that the more biodiverse the plants are, the better it is, and also therefore the more resilient soil on the plants can be just through being more diverse. So, conscious of time. I'm wondering actually whether it's worth thinking about, you know, you've talked about business, you've talked about solar and what we could do potentially to improve a solar site. What could people just do at home? What are some easy, quick wins that you'd suggest that anyone could do in their garden, perhaps starting to improve their soil? Mark Mason [00:27:00] Yeah. So I think just acknowledging that healthy soil is alive and that means that ideally it will be covered and it will be fed and it can be fed by having living plants in it. Or we might think about how we produce our own compost or spread clippings as mulch that help to keep the soil protected and keep those inputs. And I think we can encourage more biodiversity above ground. So for example, by sowing wildflowers in our gardens and then that will help us to improve diversity below ground too. If we are growing veg, then we can think about where we can work the soil less. And I think, thinking about that problem of soil sealing, I think we have an opportunity to reflect on on whether or not we need the paving and the decking and where it might even be possible to remove some of that and put plants back into the system to restore some of those inputs of carbon into the soil. Lily Billings [00:27:57] Yeah, I've actually been quite interested in a new phenomenon. Or maybe not so new, I'm not sure. But of moss lawns. So rather than having, you know, your traditional lawn, if you really must have one, the carbon sequestration properties of moss are pretty impressive. And yeah, I've just got this dream one day of having a moss lawn. Yeah. So a quick question there on that one. So obviously every location will have different species that will thrive better in those locations. So would you also suggest that it's important to make yourself aware of species that are native to your location? And not just to mean country, because it can be more specific than that. Like lots of local authorities, for example, who have a biodiversity action plan and will suggest that if you want to proactively try and improve nature in your area and therefore soil quality and biodiversity, it's important to plant things that are known to thrive in your particular area. Mark Mason [00:28:58] Yeah, so I think it's interesting because we talk about restoration and habitat creation as being from the ground up. So in nature, soils will co-evolved with the community of plants and animals that are supported by them. So they influence what will grow there, but they're also altered by the plants that grow there. So if we, for example, want to create habitat on a site that's been used for something else, then we need to think about whether the properties of the soil are appropriate for the target species. So we'd want to at least measure things like the acidity, the pH, the water holding capacity. We've already talked about the fertility and the levels of nutrients. And then we can identify a habitat type that might be most appropriate. And in all cases, we then need to monitor how that develops over time to determine whether it will ever approach being fully self-sustaining or whether we need to manage it and enhance it by our own actions, like cutting and grazing of a meadow. And there's lots of guidance on that that's produced by organisations like the Woodland Trust for woodland creation, and Magnificent Meadows for meadows. But I think we also need to keep a close eye on how things change over time, particularly where the soil we started with might have been used very differently for the decades before we attempt to create a habitat on it. Lily Billings [00:30:22] So am I right in thinking, you know, you mentioned about finding out the acidity levels of the soil. That's something that is actually quite easy for, you know, the general person to do. You can quite easily pick up like, you know, little kits can't you, so that you can test your own soil at home. Mark Mason [00:30:36] Yeah, absolutely. So you can get pH test kits from most garden centres. And then you can find online, you know, most providers of seed mixes will indicate the type of acidity that they will most likely be successful under. Lily Billings [00:30:51] Great. That's really good to know. It's probably worth asking you then. It's been a really interesting discussion with so many kind of offshoots of this conversation that we could go down because, you know, the topic of soil links with so many other important topics. And, you know, you mentioned fungi earlier as well. I mean, that's a whole new world that we're learning in the mainstream about. You know, you just have to go into Netflix and see how many documentaries there are about it, and so many books as well. So I think it would be, you know, where you are such an expert in this particular field. What's one thing that you'd like our listeners of this podcast to walk away with today? Mark Mason [00:31:31] I think an awareness the soil is a dynamic and living system, so it responds when we poke it basically. So anything you do to soil will have an impact. But there are simple things that we can do to protect it and improve it. And I think that particularly means keeping plants growing in it. Lily Billings [00:31:52] Thank you. Yeah, I really thank you so much for your time today. I think if you've got any suggestions, Mark, of where people can go to get more information on this, yeah, please do say so now. Mark Mason [00:32:03] Yeah, no, I will, because there are some really good resources out there and and it also gives me an opportunity to plug the CIEEM spring conference. That's being held in March. And we've got some fantastic ecologists and soil scientists talking about the role of soils in nature recovery. So check out the CIEEM website for details of the spring conference. And then there's also a load of really good resources provided by the British Society for Soil Science. From experiments for kids, up to policy and science notes for for decision makers. So definitely check out the CIEEM and the BS-cubed, as we call it, websites. And then for information from a more global perspective. You can find lots of resources on the on the UN Food and Agricultural Organisation around soils. And there's lots out there. I mean, also check out the Soil Association. Lily Billings [00:32:53] Great. Well, thank you so much Mark. It's been a fascinating discussion. Yeah. We really appreciate your time today coming to talk to us on this podcast. Thanks very much. And thanks to our listeners as well. Mark Mason [00:33:03] No problem. Thank you.

In this episode, Molly Galloway, Sustainable Investment Associate at Foresight Group discusses the importance of engaging, enabling and empowering people and organisations to work together in the pursuit of social, economic and environmental wellbeing with Guy Battle, CEO of Social Value Portal. Key Takeaways include: Understanding what social value is, and how this differs from the 'S' in ESG Addressing the controversial shelving of the EU's proposed Social Taxonomy Understanding why quantifying social value in financial terms will accelerate capital toward sustainable outcomes Guy Battle is the Chief Executive of Social Value Portal – an online solution that allows organisations to measure and manage the contribution that their organisation and supply chain makes to society. The podcast is for information purposes only and without limitation, does not constitute an offer, an invitation to offer or a recommendation to engage in any investment activity. Listeners should not construe the content of this podcast as investment advice and no reliance may be placed upon the content. The opinions of speakers are their personal opinions and not necessarily those of their respective companies. Foresight Group LLP is authorised and regulated by the Financial Conduct Authority (FRN 198020). Foresight's registered office is at The Shard, 32 London Bridge Street, London, SE1 9SG. {TRANSCRIPT} Molly [00:00:04] Welcome to Foresight Sustainability Podcast, a series that explores the sustainability themes that will play a crucial part in shaping our world in the current period of accelerated change. In this series, we will be sitting down with industry experts to explore some of the major developments in sustainability-related fields and consider the challenges facing businesses in a new decade of climate action. With these sessions, we aim to inform and promote dialogue around the mainstreaming of sustainability. I'm your host, Molly Galloway, I'm a Sustainable Investment Associate in the infrastructure team at Foresight Group, an Infrastructure and Private Equity Investment Manager. Today I'm joined by Guy Battle. Guy is the Chief Executive of the Social Value Portal, an online solution that allows organisations to measure and manage the contribution that their organisation and supply chain makes to society. Welcome Guy, would you like to begin by introducing yourself? Guy [00:00:57] Good afternoon, everybody. Or good morning. My name is Guy Battle, I am the Chief Executive of the Social Value Portal. Molly [00:01:05] Great. Thank you for that. Let's jump right into it then with our first question. So the topic of this podcast is social value, but what do we actually mean by the term social value and what's the difference between social value and the social aspect of ESG, which stands for environmental, social and governance, or sustainability? Guy [00:01:26] There's a lot of jargon, alphabet soup of terms and terminologies and acronyms. So, you got ESG, as you mentioned, environmental, social governance, we've got sustainability, we've got social value, we've got social impact, we've got CSR, which stands for corporate social responsibility. There's so much jargon in this space, but I will try and explain where social value sits in it in simple terms. So if you imagine sustainability as being the overarching definition, overarching term, and that kind of comes from the Brundtland report way back in 1987, that defined sustainability as the social, economic and environmental well-being or impact, if you like. So the first takeaway from all of this is that social value and everything else is all about three elements - social, economic and environment. Within that, you've then got ESG, and ESG grew from a sort of investor analyst, and really ESG is all about risk analysis. What risk sits in your supply chain or in a business you might be investing in with respect to environmental, social and the governance side of things? Next to that, we have social values. So if ESG is about the risk or the downside, social value is all about the upside. So what value does a organisation create or an asset create in terms of social, environmental and economic value created? And that's where social value sits. Now we have the other term, which is social impact, and that is more about the long-term impact. So we have the value created over the short term and then we have the impact created over the longer term by an asset or by a business for society. And within all of that, we've got CSR, corporate social responsibility, which is a kind of subset of social value. So a business that is embracing social value as a way of doing its business will have a CSR program. It'll be thinking about what additional activities can it deliver to the communities that deliver sort of value locally. Molly [00:03:29] Great. Thank you for that. I think within the sustainability space, there are so many different terms and acronyms that get thrown around, so it's really useful just to clarify the differences there. And I think the key point that I took away was that ESG is sort of more about risk mitigation, whereas social value is specifically about the additional value created in terms of social, economic and environmental impacts. Guy [00:03:50] Yeah, that is correct. And it's probably worth just noting, Molly, that there is a piece of legislation because what you might some of your listeners might ask is how come we're all talking about social value? It seems to have come from nowhere. And I would agree it sort of has sort of emerged from nowhere. And the reason is that out of all the terms that I've mentioned, the only term that has a piece of legislation sitting behind it is social value and it's called the Public Services Social Value Act, and it was published in 2012. It became law, if you like, implementable in January 2013. And it is a piece of legislation that's specifically aimed at the public sector and requires them to consider social value in all of their procurement decision making. And as a result of that over the past ten years, it's ten years old now. That term social value has sort of started out in the public sector, but leeched into the private sector where they want to win work with local government and central government. And so they're having to address it now in sort of meaningful terms. Molly [00:04:53] Thank you. That's really interesting. And as the Chief Executive of the Social Value Portal, could you tell us a bit more about what the Social Value Portal is and what its purpose is, and how the Social Value Act sort of plays into that as well. Guy [00:05:07] Yes. So we were set up on the back of the Social Value Act and specifically we've developed an online platform that helps organisations measure their social value. So when you go to an organisation, you ask it, you know, what's your purpose? And prove to me the social good that you do? Well, that's what our business does. We can help measure that. But what's important about the measurement framework that we developed is that it also allows organisations to put a pound sign on it. So we talk about the wider social, environmental and economic benefits, but then we say it is worth X pounds to society. And so that's the big step that we've moved or developed as a business. And if the business is, or the platform is all about helping organisations measure, manage and also report social value. But within that the platform is also used extensively by both government and also private sector organisations to manage their supply chains, so in procurement . So we help manage the procurement process and so people bid through our platform for work or an organisation wanting to maximise the value created by its supply chain might manage its supply chain through the portal as well. And that kind of cuts to our purpose. So our purpose is to maximise social value through all the customers that we are working with, and taking that number, I've set the business a big audacious goal. Call it our bag, big, audacious goal. And it's to unlock £100 billion worth of social value by the end of 2025. We've so far, Molly, delivered £14.5 billion. We are - we've still got a long way to go, but we have started, which is great. Molly [00:06:47] Wow, some big goals there, but I'm sure achievable. So could you tell us a little bit more about, I assume you're talking about the national comms framework there. Could you tell us a little bit more about it perhaps, and sort of how you maybe might expect it to be used in practice? Maybe an example and you mentioned sort of public and private. Which sort of industry does it apply to? Guy [00:07:10] So, yeah, the National TOMs. So we developed the framework, the National Social Value Measurement framework, and it's called the National TOMs because it's structured around a series of themes, outcomes and measures. And there were five themes, the five themes being jobs and skills or creating jobs and skills, the second theme being support for regional or local business. The third theme being supporting our communities, the fourth theme being protecting, regenerating our environment, and the fifth theme being promoting social innovation. Within those themes, we have a series of outcomes. So for instance, outcomes might be more jobs for those who are disadvantaged, or it might be action taken on climate change, or it might be more support for communities. So those are kind of objectives, outcomes. And then of course, what we're trying to do is we need to measure it and put a value to it. So following that more jobs theme for disadvantaged people, different cohorts might be given new opportunities. So long term unemployed people, young people coming out of care, could also be offenders who want to rehabilitate, so we'll count the number of offenders, for instance. And then we will put a value to that to society. So we pick up the fiscal saving to government and the economic benefit. The fact that this individual is no longer committing an offence, they are no longer a burden on our courts and our prison system and they have money to spend in the community. So we then put a value to that in sort of pounds, shillings and pence, and all of that creates this National TOMs. And so an organisation use the National TOMs almost like a menu. So it looks down the list and it's a prescribed list and it says, okay, what are we doing? And then it counts what they're doing and then you put a value to it and all that sort of is logged into the portal. Now that framework then, the National TOMs, is used in many different ways, it's integrated into the portal, so you can use it for procurement. So the public sector in the first instance will say we've got a contract award that's £1,000,000 and we want to award it for waste management, let's say. And so you'll get four organisations bidding for waste management, they'll bid their price in, they'll bid their technical approach in, then they have to by law, submit a social value statement and that's worth a minimum of 10%, in some cases 20% of the overall score. And so they use the TOMs and say we'll do five of those, ten of them, twenty of those, whatever it is, and that will form part of the score. And then that is used as part of the way of assessing which organisation to employ. And so from a procurement perspective, Molly, we are agnostic in terms of industry. We are just trying to get the maximum out of the bidders, if you like, and so yes, we've done waste management contracts, we've done buildings. We've even done grave digging, believe it or not. I mean we are just, we don't mind. So, what additional value can the grave digger bring? And it might be around their environmental credentials, for instance, or they might be doing an apprenticeship. So any business can do that. And so that started with the public sector and it's agnostic to sector. But now, of course, it's being picked up by the private sector who are saying, look, we want to maximise the value we're creating for society and they might be doing that because they're trying to bid for work with the public sector, but they might just be doing it because it's the right thing to do and proves their purpose. And so we're seeing that a lot of large organisations are now embedding it into their own decision making. So for instance, we're working with Roche, who one of our sort of big customers and how do we help them in their supply chain, deliver more social value through the jobs they create in local, or perhaps they're using local businesses to deliver some of the services, You know, in some of those local businesses might be social enterprises or voluntary organisations or do that people volunteer in the community or do they provide expert time to the community? And so we pick up all these elements and put a value to it so we can then measure that social value. Now the additional thing that's important about the National TOMs is that it's been endorsed by government, in particular local government, and is probably the most widely used framework that's out there, certainly in the UK. Molly [00:11:17] That's fantastic. I think lots of the challenges sort of surrounding social value and the integration of it are probably data related. You know, how do we connect and measure, how do we know which data to sort of focus on. And that's why having a framework like the National TOMs that sort of allows you to actually quantify your social value add, in a way that people can sort of put into context and actually understand as well is sort of so important. And it gives those people making the decisions, the tools that they actually, they need to decide how to allocate resources in a more sustainable and impactful way. So I think it's a really fantastic resource. Guy [00:11:55] Yeah, that's right. I mean, it has such great success and and what's important about it is that it is repeatable. And what I mean by that is that you can compare what one organisation is doing against another organisations against another organisation. So that means we can create benchmarks. So we have a benchmarking tool. So we've probably measured something like 6,000 or 7,000 individual projects that are being delivered by companies at the moment, and we've got 250, 300 members on the portal. And so we can compare how they're performing against each other by sector, and by year, and by project. And so what this really means is that if you can measure something, you can manage it, and then you can improve what you're doing. And that I think, it cuts to the core of what we're all about in our business. Molly [00:12:43] Absolutely. And quite often we think of social value being sort of most relevant at the local community level. So sort of local employees, local suppliers. In your opinion, do you think this is true or is it equally as important at regional and national levels as well? Guy [00:13:01] So I think it's really important to recognise or remember where social value is delivered and lands. So, ultimately, social value is all about people, and so it is always in a place and that place is always local to someone, right? So it's always, you know, whether it's in Dundee or it's in Cleethorpes or it's all the way down in St Austell, in Cornwall. You know, there might be a regional strategy for Cornwall that's being dictated by Cornwall County Council, but it is always delivered in a place and there might be likewise a national approach. So for instance, HS2, national piece of infrastructure, we've done some work for them on social value and whilst it's national money paying for a piece of national infrastructure, it is delivering social value and jobs for people all the way up. It's the length of it. And so I think that it's always important to remember that social value's about people and it lands somewhere and whilst you can have a national strategy for it, you always have to focus on how to maximise it for communities. And what's really important is two words we must remember that we do with are not do to. And what I mean by that, it's fine saying, look, we want to support communities, but don't tell me I'm going to do to communities. I'm just going to give them some social value. Let's ask them what they want and make sure that we maximise the benefit and make sure it's something that is real and needed in that place. Molly [00:14:26] Yeah, that makes complete sense. And thinking about at the broader level, the EU has recently shelved that proposed social taxonomy, which was the planned classification of economic activities that contribute to the EU's social goals. And its aim was to provide guidelines for investors, businesses and regulators about what is and is not sustainable from a social perspective. Could you tell us your thoughts on why it's been paused, any sort of implications that might arise from this and whether you think it potentially could be picked back up again at some point in the future? Guy [00:15:02] So it's disappointing it's been paused, without a shadow of a doubt. And if you read around it, then they're saying it's been paused because they think measuring it's too complex. And all I can say is I wish they'd spoken to us first, because that's what we do. We measure it. And it is true that the S in ESG has the reputation of being difficult to measure and complex. But, you know, we've been doing it now since 2015 and we have rafts and rafts of data. And so we know that it's not complex and that it can be done and you can break it down. And I think probably they just tackled it at the wrong level. And what is difficult around the social piece is to measure impact and remember the, right up front of this conversation, I spoke the difference between value and impact. So value is what's delivered there and then, it's hard numbers, it's fiscal saving, it's economic benefit, it's the additional money someone might have in their pocket to spend or the value money you spend with the charity or whatever. If you then want to understand the longer term impact of investing in that charity over three, four, five years time, then that is harder to do. It takes time. So I think probably what they did is just try and expand their envelope of measurement just into, with time, to too long, they should have just kept it more to the inputs and the outputs that can be created rather than the long term benefit, because that just makes it much more difficult and I can understand why they retreated from it. Does it matter? Well, yes, it does sort of matter to investment community, because I think the key reason for these taxonomies was to avoid the greenwashing or the, you know, just the investors pretending they were to do this stuff, but not really following through. So it does actually matter. And I do think that investors shouldn't be claiming social impact unless they have a proper way of measuring it and reporting it and improving performance over a period of time. And I think that's fundamental. And if that is not done, then there's a real chance, unfortunate chance of the whole investment community around ESG and impact being undermined. So we must get there. Having said all of that, what's interesting is that there is EU procurement regulation that exists already that effectively covers social value, otherwise the Social Value act in this country couldn't have been delivered because when it was done, we were part of the European Union. And so that does exist. It just doesn't cover investment. So there are frameworks, or there is a knowledge out that we can use. So I do think it's going to come back. It just seems inevitable. We're doing the green stuff. Let's not forget people. I mean, it's really important. Molly [00:17:42] Absolutely. And it's great to hear that there are sort of potential other sort of initiatives or regulations that will help to promote and sort of drive forward social considerations. And over the last few years, we've sort of seen ESG as a whole shift from being something that, you know, just a few are aware of to being sort of very much mainstream. And historically, the focus has tended to be purely on the environmental side. But is the sort of social aspect, or the S in ESG, becoming sort of more prevalent? I think I already know the answer to this, but I guess more more to the point, is it at the point that it needs to be or is there more to be done? Guy [00:18:16] Yeah. So what's interesting is I don't know if any of your listeners picked this up, but at Davos, Larry Fink, some of you will know Larry Fink, CEO of BlackRock, and he, for the past few years, he's been putting this environmental message out there. And I understand and read a little bit of it, is that he was given a really, really hard time at Davos over this. And because, you know, everyone's saying you can't go for net zero, it's going to be too costly. There's a whole sort of issue around investment. And funny enough, I think the S avoids all of that because the S is all about people. And so even if you were to go to some of the most sceptical places in America and you were to say, look, let's not call it ESG, let's just call it, why don't we call it America first? Why don't we say we're going to focus on businesses that are local, that are creating local jobs, that are supporting local businesses? How about that? Is that a problem? And they'll go no, that's what MAGA's all about, isn't it? So, you know, I think what's really interesting that everyone's got really, this whole climate thing, is everyone sees numbers and cost associated. But the people piece, I think is, I think it's a relatively simple thing to do. We just have to get on and do it. So I think it is important to your question, Molly, I think we've got momentum going and let's really, you know, whilst everyone has their eyes on the climate bit and arguing over that, let's get people into the equation. Let's get all our investors, let's get any business, let's get all the buyers thinking about the S in ESG and really making that happen. And, you know, obviously the TOMs is one way. There are other options out there to do the measurement, of course. But the TOMs we know, are a really good way of understanding and measuring. And it's simple. And what's important is not, does it cost money? And I think what a lot of businesses will be surprised about is that they're probably doing a lot of this stuff anyway. They're probably thinking about apprenticeships or graduate schemes. And I bet, you know, most businesses they're volunteering time, dedicate it, allowed for their people. You know, so it's just a matter of just putting this into practice and measuring it and doing more. Molly [00:20:25] Yeah, absolutely. And like you say, it's exactly why the National TOMs was created. And how do you think awareness and sort of the importance of creating and measuring social value can be driven forward? Because it seems like sort of that's the next big thing that needs to happen. It needs to continue to be really put at the forefront of considerations. Speaker 2 [00:20:42] Yeah, so I think it's all about the money. So money needs to be more demanding. And so let's think who has the money? So the simple one that's already happening is public sector money. So that's our taxes, right? So any public sector organisation spending money needs to demand more from their supply chain, and that's happening through the Social Value Act, right? We then have investors who are putting money into businesses or infrastructure or whatever it might be. They should be asking for a social report. Tell us what the social impact is. Tell us not only the long term, but also tell us about the social value you're creating through how this money is being developed. That's not different. So obviously, when you're investing into renewables, right, you might be investing into wind generation. So the social value piece doesn't pick up the energy saving or the carbon reduction that comes out of the turbine. That's about the longer term impact. What it picks up is how are those turbines made and how are they maintained? What comes out of how that investment is managed? And that's the longer term social value or the social value that I think organisations need to be thinking about and investors need to be asking about. And then it all goes all the way down to us. Most of us hopefully are thinking about pensions and we should be asking all of our pension managers, pension funds, about what good our money is doing. Yes, of course we want a rate of return, but actually we - I think we can expect and demand a social return on our investment. And if we can make social return on investment become just part of the way investors think about how their money's being used, then we can begin to shift this dramatically. Won't happen overnight, but that then will bring the S in ESG right to the forefront. And so ultimately we'll be able to judge investments, not only on their financial return on investment, but also their social return on investment, which is the place we need to get to. Molly [00:22:46] Absolutely. I completely agree with you there. And there have been instances where the roll out of sustainability initiatives in other countries have sort of failed or not gone as well as hoped because they haven't been culturally sensitive. And we know that obviously different cultures and different demographics will have a big impact on how social value is defined and measured. So, with this in mind, are there equivalent international organisations building similar frameworks to the National TOMs, which is, to my understanding, sort of more UK focussed? Guy [00:23:20] Soon to be global, Molly. So yes, the National TOMs, at the moment are UK focussed. We ought to be calling the UK TOMs. This year, we're developing the Global TOMs, so we are developing a framework that will allow any organisation anywhere in the world to measure the social value they are creating in any territory, in any region. Now what's interesting about this is that we are discovering that there are some universal outcomes, that it doesn't matter where you are in the world that remain constant. So for instance, back to what I mentioned earlier, jobs for those who are furthest from the job market, disadvantaged. Okay. Now I don't care where you are in the world, if you're a business and you're operating responsibly, you're going to be interested in that issue. How can I help an organisation? How can I help my community do that? Now, it happens in the UK. We define that as disabled people, ex-offenders, children coming out of care, and long term unemployed, and mothers coming back to work after a period of time out. If you were to go to Canada, they would be talking about, yes, ex-offenders, but actually they'll be talking about indigenous people. If you went to Australia, they'd be talking about Aboriginal people. But the definition of disadvantaged people is the same. It's just defined as a measure slightly differently. And so I think this is where the culture needs to come in. And so the Global TOMs is all about developing a sort of overarching framework made up of universal outcomes that can be interpreted in different territories and in different places within each territory, because we must reflect the cultural differences. And indeed the different needs of each area. We kind of get this anyway in the UK, in as much that what's useful and needed in London, in Southwark, actually is quite different to what's useful and needed in Manchester. And so whilst the language is the same, the needs need to be nuanced to reflect, also the measures need to be nuanced, to reflect the needs. I think it's a bit more the nuancing as you go global, but I do think there's a way of doing this and as far as I'm aware, I don't think anyone else - this is where the UK's leading. I think there's nowhere else that has the social value act. And you know, we are one of those leading organisations who've got the framework out there. So I think we've got a real opportunity, as you know, UK, to go out there and set the standard. Molly [00:25:47] And is the aspiration for the National TOMs then within the UK to sort of go that one step further and produce a value separately for Manchester and London, for example. Guy [00:25:58] We already have that in the UK. And so it's interesting, let's take - I've mentioned offenders quite a few times. So when we look at the value created, the fiscal saving, you have to take into account the probability that that individual will not re-offend, because that's part of the value, because you can't just take an average, you've got to take probability because plainly some people will re-offend. So you can't just take the full saving to the courts, for instance, or the police because some people go back to re-offend. The percentage probability of re-offending is different in Newcastle, Manchester and London. And so we already take that into account as it happens. As you start going globally, then those will change again. So we need to find a way of having proxies or values that reflect local conditions. Molly [00:26:49] That make sense. And there's absolutely no doubt that having one global standardised framework will sort of be incredibly helpful for those looking to benchmark and for those looking to sort of develop their overall approach to social value. And I think that probably draws us about to a close. Thank you for such an interesting and educational conversation. It's been fantastic having you on the podcast Guy. Guy [00:27:11] My pleasure Molly. Thank you.

As corporations set net zero targets, they must demonstrate credible science-based strategies to reduce the carbon footprint of their activities. To do this, many companies are buying carbon credits to offset unavoidable and residual emissions on their decarbonisation journeys. As interim emission reduction targets are approaching, corporate demand for carbon credits is increasing. In response to this, the London Stock Exchange launched the Voluntary Carbon Market ("VCM") in October 2022 to facilitate financing at scale into projects that mitigate climate change and generate carbon credits. The VCM designation will be applied to funds or operating companies that are admitted to the London Stock Exchange's Main Market or AIM and which are intent on investing into climate change mitigation projects that are expected to yield voluntary carbon credits. In this episode Managing Director of Foresight Group LLP ("Foresight") and Co-Lead of Foresight Sustainable Forestry Company Plc, Richard Kelly, discusses the climate challenge we face and the VCM with the CEO of the London Stock Exchange, Julia Hoggett. Key Takeaways include: Understanding what the VCM is and who it is for Addressing the controversial history of carbon credits and the reputational challenges Determining what a quality carbon credit looks like Understanding the future demand and supply issues The podcast is for information purposes only and without limitation, does not constitute an offer, an invitation to offer or a recommendation to engage in any investment activity. Listeners should not construe the content of this podcast as investment advice and no reliance may be placed upon the content. The opinions of speakers are their personal opinions and not necessarily those of their respective companies. Foresight Group LLP is authorised and regulated by the Financial Conduct Authority (FRN 198020). Foresight's registered office is at The Shard, 32 London Bridge Street, London, SE1 9SG. {TRANSCRIPT} Richard: [00:00:05] Hello and welcome to Foresight Sustainability Podcast, a series that explores the sustainability themes that will play a crucial part in shaping our world in the current period of accelerated change. In this series, we will be sitting down with industry experts to explore some of the major developments in sustainability-related fields and consider the challenges facing businesses in a new decade of climate change. With these sessions, we aim to inform and promote dialogue around the mainstreaming of sustainability. My name is Richard Kelly and I'm the host for this episode. I'm a managing director at Foresight Group and I'm also the co-lead and co-founder of Foresight Sustainable Forestry Company, a listed investment company on the London Stock Exchange, FSF The Ticker. We are the first and only listed investment company focused on natural capital. We are also the first and only listed investment company to have received the London Stock Exchanges' voluntary carbon market designation. Today I'm joined by Julia Hoggett. Julia is the CEO of the London Stock Exchange. A warm welcome to you, Julia. Perhaps before we begin with you, perhaps like to give a brief introduction to yourself. Julia: [00:01:18] Yes, thank you. Well, firstly, thank you for having me. It's a delight to be here. So, my background is a varied one. And I would say I am an African development sociologist who had a career in the last 25 years in finance and still hasn't quite figured out what I want to do when I grow up. But I've worked in the capital markets all my career, first as an investment banker, then I ran a funding program for bank, then ran a bank and back to being an investment banker, and then my role before I came to the stock exchange was as a supervisor and a regulator at the Financial Conduct Authority, and most recently I was director of Market Oversight at the FCA before I came to the LSE. Richard: [00:01:50] Fantastic, fantastic journey. Okay, well I have a few questions for you about climate change and perhaps we'll just kick off with - what is your view on the scale of the climate challenge that we currently face? Julia: [00:02:01] It's huge, and I think it's a really important thing to, in a sense be able to say that out loud and to recognise the scale of the challenge, but to use that as a trigger for action rather than inertia. Sometimes I think one of the challenges with the climate crisis is that it feels so big and amorphous and the approaches that we need to take are so vast that it can almost be easier to not think about it. I actually think it's the responsibility of all CEOs of companies to think about it both in terms of directly addressing climate change, but also thinking about what they need to do and can do to be good stewards of their institutions to manage it. But it is an enormous challenge. But I think the nature of the challenge also correlates with the nature of the responsibility we have at the LSE. I always say that our job is as a convenor of capital, it's to bring together those who have capital with those who need capital in service of an objective. And I can't think of a more important objective than the just transition to net zero. And so I think the onus is actually on us to make sure that our pipes and plumbing work in service of doing everything we can to direct capital into the investments that need to take place to achieve the transition that we will have to achieve. Richard: [00:03:09] Absolutely. And in the spirit of that, it's exciting to see that the London Stock Exchange has recently launched the voluntary carbon market, or 'VCM' as it's known. What is the VCM? Who's it for and how is it different? Julia: [00:03:22] Right. How long have you got? This is a bit of a passion project of mine, so I'll try and make the explanation as quick as I can. So, the voluntary carbon markets are the loose term for the markets that generate voluntary carbon credits, and that's actually the thing that's most important. Voluntary carbon credits are credits that represent tonnes of carbon either removed or reduced from the atmosphere as a consequence of the activity taking place. That activity has to be genuinely additive and not economically viable in its own right, and that therefore is something that has been hugely important in the construct of what we've been seeking to do. We have always described the carbon market challenge as a chicken and egg problem, which is that because the value from the investment comes from the value of the credits, then how do people have the confidence to invest in projects that generate voluntary carbon credits unless there is a deep and liquid market for voluntary carbon credits? How do you get a deep liquid market for voluntary carbon credits unless you have an active supply of credits? And an awful lot of exchanges have focused on trading voluntary carbon credits, whereas we have very much focused on how you solve that chicken and egg problem and how you do everything you can to direct capital into investments that will give rise to a voluntary carbon credit. And it is very much designed as a mechanism by which individuals, institutions and corporates that are on their own journey to net zero can have an asset that they can invest in that gives them that ability to get to net zero. And that is one of the remarkable things actually about really engaging with the transition. Value is changing. Understanding of value is changing. You could say it's a proxy ultimately for a carbon price because in some regards it is. But as people commit to science-based targets to get to net zero, then the ability actually to be able to invest in the things that will facilitate you getting there becomes more and more critical. And I think that's where pipes and plumbing and responsibility that we have as a venue comes in, in order to make sure that we've facilitated the mechanism to do that. Richard: [00:05:26] So the key difference I was picking up there was that the LSE focuses on the flow of capital to projects that are creating carbon credits, whereas many others are focused on the trading of credits created. And that seems to be the key difference. Julia: [00:05:40] It is absolutely. It's founded on a philosophical difference, which is the most important thing that we can possibly do is generate a rigorous flow and scale flow of capital into projects that reduce the amount of carbon that is in the atmosphere. That is what gets us to net zero. The trading is a by-product of having done that, but it isn't doing that in its own right. And I have always been fundamentally focused on the fact that stock exchange is doing a real-world job. The capital that is raised every day is in scales and volumes that most people think of as outside of their sense of understanding. But at the end of the day, it goes to building factories, it goes to investments in research, it goes to forestation in your case, that has a direct real-world impact and it produces jobs, employment, wages and livelihoods. And this is just another illustration of a market deliberately focusing on doing that thing. Richard: [00:06:36] I just to pick out another point you made around connecting retail investors, financial institutions and corporates with investment companies who are creating these carbon credits. The last of those buckets - Corporates haven't traditionally invested in investment trusts much today. Do you see a big opportunity there. Julia: [00:06:53] I do. And it is a transition in both sectors, both in terms of the transition to net zero and the psychological and investment transition for these corporates. Let me take a step back. One of the other things that I thought was so important about the structure that we've created, the designation for a voluntary carbon market, for a fund or an operating company that is meeting the requirements and genuinely investing in voluntary carbon credits, is that we also wrap the rest of the structures around it and capital markets are brilliant at investing at scale, but they also produce rules and regulations and standardisation and disclosure that produces transparency for the market and transparency for investors. And the voluntary carbon market at the moment is pretty small in terms of the total amount of carbon credits that are out there. That in itself is a problem compared to the future demands of these credits. But it's also not as transparent because there isn't standardised expectations of disclosure and it doesn't fit within the existing disclosure regimes that we have, for example, for UK capital markets. By creating a designation for existing listed funds or operating companies, what we have done is basically bring the entire voluntary carbon market within scope of listing regime, transparency regime and indeed the market abuse regime to increase the level of scrutiny, discipline and disclosure that happens around that market. And I hope that also gives investors of all types of institutional retail corporates even more confidence to invest in these projects because they are receiving the scrutiny and the discipline and the transparency that they would from any other investment that they make in the capital markets. And that, I think, is a critical piece of it. The next piece for corporates is how they think about this in the round. And let me tell you the reason why we have the confidence to generate the voluntary carbon market in the UK at this time. Even prior to COP26, the UK had made mandatory the use of TCFD for UK-listed companies. So you already had to disclose according to TCFC stance in terms of how you're thinking about climate change risk, how you're thinking about governance, etc.. When you layer on that we're increasingly moving towards a world in the UK where companies will also have to publish their transition plans, then how they are going to meet the science-based targets that they commit to externally has a level of scrutiny and disclosure and discipline around it, actually, to be honest, doesn't exist in other parts of the world. The challenge for the voluntary carbon markets and the criticism that they've received from a range of different parties has been that they are a substitute for companies doing the hard yards of the direct investment in their supply chain and their production processes to decarbonize those. And our view has always been – no, this is a complementary piece of the puzzle. Companies, of course, need to make sure they are decarbonising their supply chains in their production processes. But when it gets to scope one, scope to scope three, depending on how they have identified their science-based target, there are and will be challenges that they cannot address yet. Either the technology doesn't exist or there are things that they cannot yet take out of the production processes. Or there are things that are outside of their control, depending on how they've articulated the scope that they want to apply. And voluntary carbon credits are a brilliant mechanism of companies being able to invest today in that piece of the puzzle that they can't resolve directly themselves and therefore on a net basis, getting to net zero but with the level of scrutiny and disclosure that they wouldn't have in any other form of route to get to that point. But it is because in the UK we have that complete package together that I hope you generate the most credible way of having a voluntary carbon market that you could. Richard: [00:10:20] It really feels like a breakthrough, a massive step forward in terms of scaling the voluntary carbon market in one go. What is your ambition for the voluntary carbon market? Julia: [00:10:31] My first ambition is that it works and it's used. I am a massive fan of real-world KPIs and that applies whether it's in the number of jobs or the new products that get created by capital that is raised on the market or the capacity that a company has to have the right access to working capital in the middle of Covid, which is one of the critical things that the LSE did during COVID. In this case, to me the key measure of success is how many tonnes of carbon have actually been removed or reduced from the atmosphere as a consequence of this market. That's its final, most enduring KPI, and the thing that I hope when we look back in many years to come, and it will be many years because an awful lot of the lead time in these things is serious time. But if we can see the amount of capital that's going in today, then we can see the value of the incremental investments in reducing carbon from the atmosphere that is facilitated through this market. That to me is the most fundamental KPI achievement. Richard: [00:11:25] So could you perhaps just explain how the scheme can help investors and corporates to actually meet their decarbonisation ambitions. Julia: [00:11:34] So I touched on it a bit, but if you have made a science-based target, then there will be direct work you need to do. But in terms of reaching the rest of that, then investing in a voluntary carbon market asset today will give you the potential for a future flow of carbon credits that will go to the total amount that you have offset. And that fundamentally is the mechanism that corporates can use to get that. One of the tricks that unlocks this in our initial thinking about it was the idea that we would facilitate these funds paying a dividend either in cash, but most importantly a dividend in specie as a voluntary carbon credit so that the companies would actually know they had this forward flow of anticipated voluntary carbon credits that they could set against the other targets that they had set themselves and be able to demonstrate to the market who will increasingly be holding them accountable for them for how they're meeting their transition plan, that they have actually made those investments to achieve that outcome. And the structure around the funds and the operating companies that requires the disclosure of the anticipation of the voluntary carbon credits that will be released and disclosure around the discipline of that, is part of contributing to that ecosystem and enabling people to be able to see the tangible impact that their investments are making today on their own science-based mechanism to get to net zero. Richard: [00:12:52] So companies can invest today, elect to receive and in specie carbon credits dividend in the future and then they can because these funds and investment companies are traded on the LSE, they can presumably buy and sell more or less shares in order to adjust that due to yield requirements. And that's important, as companies don't have a crystal ball understanding exactly how much they're going to be able to decarbonise by and when. Julia: [00:13:18] Exactly, and I think making it, in a sense, much closer to a classic treasury asset, when you spoke to a lot of companies about voluntary carbon credits, they sort of didn't quite know how to account to them and where to account for them. And this is an illustration of something that is classically in the space of a treasury asset or another asset on your books. It has a mark to market, it has a value, and exactly as you say, if you suddenly find that your route to the target that you've set yourself, you're falling short on, this is a mechanism of also investing incrementally to enable yourself to get there. And crystal ball piece is entirely right. And I think that is the other thing we feel quite strongly about as an exchange. It's actually our duty to advocate for the complexity of this. Many conversations, including around climate change get reduced to very binary things. This is complicated. If the transition to net zero was easy, we would have done it right. And the simple reality is we will learn a lot about what is most effective and what works as we make direct and the greater level of direct investments into this approach, and therefore recognising that the system will iterate and learn and that this is also a mechanism for potentially exploring technologies etc, is a really important part of the market. Richard: [00:14:28] The carbon credits have had a somewhat controversial history and they're not particularly new assets or thing. How is the voluntary carbon market addressing some of those sort of historic reputational challenges? Julia: [00:14:42] And this goes back to the thing I was saying about the sort of brickbats that they receive from civil society. And I understand that because it is important that actually we all take accountability, whether personally or from an institutional point of view, on our direct impact on the planet, because that's ultimately how you get to net zero and stay there fundamentally. But I think it has been badged as kind of, you can keep doing this bad stuff over here and offset it by doing this nice stuff over here. And therefore, it's a bit of a fudge at best, I think is probably a polite way of paraphrasing some of the bad stuff. And that's why I said what I said about the importance of the UK framework. When you have the foundation of TCFD disclosure, you then layer onto it transition plans. You have an increasing number of corporates who are setting science-based targets. Then exactly where the voluntary carbon credit fits within that transition is absolutely transparent. So that I think addresses quite a lot of the 'it's a polluters' kind of option to pay off, as it were. That is one piece of it. The other piece is that this produces as I said, the market disciplines around disclosure and scrutiny that give confidence to the quality of the credit. And one of the things I'll be honest, I worried about when seeing lots of different exchanges set up trading of voluntary carbon credits, is the risk is that you seek to kind of win market share on price? To be blunt, we're trying to set the market standard on quality such that actually it becomes harder for people to justify buying voluntary carbon credits that don't have the level of scrutiny that our market will produce. Because that level of scrutiny is the confidence that that activity is genuinely offsetting activity. Money is genuinely going where it needs to go, and the companies that are interacting in this market have the right credibility, the right controls, the right disclosure disciplines in order to fulfil that requirement. Because again, it's all in service of one thing, just taking carbon out of the atmosphere. And that to me is why we've started from this route, because the London market is a great market for standards and discipline and regulation. And in this case it's an incredibly powerful thing that this month that the carbon market needs. Richard: [00:16:58] So the VCM is looking to sort of facilitate a market in the creation of high-quality voluntary carbon credits. And what does the LSC think are high-quality carbon credits? Julia: [00:17:08] Well, we've set standards around the standards bodies that we would accept, and that was part of the process that we took around developing the market in the first place. We took a reasonably unusual step, actually, which was rather than just saying, here's a new market, we're opening it today. We announced that we intended to open the new market, which was a relatively unusual thing for the LSE to do. And the reason for doing that was to then engage with market participants on how best to structure it, and that some of that discussion was on the standards bodies that we would approach. And we've used a company to set some of the initial standards. But obviously, we will get to a point where we have the legacy of the task force on the scale of the voluntary carbon markets, setting core carbon principles. It's now the Integrity Council and the voluntary carbon market and we can increasingly, as those standards articulate and evolve, we can incorporate those by reference into our rule set as well. The intention is make it very clear what standards any listed entity is applying, the accounting methodology that they're using and that they've audited it as well. So it's making sure that the rules that set some of those expectations out so that it's very clear. What we didn't want to be was to be too didactic and say it has to be this set of rules and none other, because you actually want people to be able to determine the one that is best for the nature of the activity they're doing, but make it crystal clear that it's of sufficient standard and that they're disclosing to those standards. Richard: [00:18:31] So we've seen corporates increasingly making net zero pledges and science-based targets. Net zero pledges are almost on an exponential rise, they've more than doubled in number to over 4000 companies making a science base pledge in the last year. How do you see that translating into the future demand for voluntary carbon credits and also the pricing of them? Julia: [00:18:53] There are lots of studies on what the price could be or should be. I haven't seen one that says it goes down if I'm honest. The way I frame it is in quite simple terms, which is that if you have set a net zero target of 2050, then if you start thinking about voluntary carbon credits you need to invest in 2040, A it'll be too late and B it will be really difficult to find them because the lead time to generate credible, legitimate credits is not insignificant. Therefore, fundamentally, unless we address the supply problem, we will have a massive demand problem. And I don't think even at the rate that we feel we can grow a market, we'll be addressing the supply problem as quickly as we need to existentially. And therefore, the upward pricing pressure on carbon credits I think will only increase and my instinct is that we'll see both demand and price go up. I think we are at a bit of a turning point and I do think that implementing transition plans is one of the pivot points for that, because that's where the kind of final accounting of the pathway really is where the rubber hits the road. Increasingly, investors will demand evidence from the people that the companies are investing in to show me your glide path to get there. Show me all the steps you're going to take. And what is your unknown bit right now that you haven't solved? And that will become increasingly tangible and cogent as a challenge for certain issuers with the corporates and make the need to engage and invest in the voluntary carbon market increase. I don't think we should also underestimate the retail problem. So one of the challenges that you quite often see from retail point of view is that retail absolute demand and desire to focus and invest in assets which have a really direct kind of transition benefit - but also additive. And one of the challenges often is, is this activity that would have been happening anyway or is this activity that is genuinely new and additive to the sum total of direction of travel that we're taking? And if you think our risks are that our current pathway is at least 2.6, 2.7 degrees and nowhere near one and a half degrees, then the need for additive activity is crystal clear. This is one of those markets that absolutely does that thing in a way more than almost any other green asset because of the nature of what a voluntary carbon credit is in and of itself. So, I hope that increasingly that dynamic will become part of people's focus as well. But if I'm blunt, I can only see demand and price going up with the current dynamics we have with the market. It's one of the reasons why the quality of the credit is so important. Because in those circumstances you don't want low quality, actually not delivering credits to flood the market. You want a steady stream of capital flowing to high quality credits. Richard: [00:21:36] It's all about high-integrity credits. The London Stock Exchange launched the voluntary carbon markets at the beginning of October. How do you see it progressing and evolving? Julia: [00:21:46] Well, as I said, I think we have been thrilled by the pace at which it's actually evolved. We've been thrilled by the engagement we had with the community across capital markets to develop the standards in the first place. It's been great to see the first funds, first company come to market and get the designation. It's wonderful to see. It was a very joyous day in the exchange I think, the day that that happened. And I do see more coming. I mean we see fund managers looking at this interestingly, we see sovereigns looking at this because they're sitting on a lot of these assets and thinking about how to make sure that they, in a sense, use them to benefit future generations. So it is one of those unusual markets where, given the direction of travel and the absolute need and commitment to get there and the need to re-engineer pipes, so that capital can flow in service of that objective, you can see a growing emphasis and energy behind it. So I can only see it going from strength to strength. But then I, I operate on the basis that you need to be kind of ruthlessly frank in terms of your - I describe it's a scrupulously honest mark to market about the problem. And I think we have to be when it comes to climate change, but intensely optimistic about our capacity to resolve it once we're pragmatic about the understanding of the problem. And I think there is a level of focus and momentum now around addressing it and making sure that the capital markets play their part in addressing it, that I hope that we've hit the right point to harness and accelerate the focus. Richard: [00:23:11] Yeah, it feels like the market has hit something of an inflexion point and it's a sort of an inevitable drive whether we'll get to one and a half degrees exactly. But it feels that there is sufficient momentum now with corporates, governments behind this. Well Julia, thank you so much for joining us on this sustainability podcast. It's been an absolute pleasure to have you on this and many thanks. And congratulations on the voluntary carbon market. It really does feel like a breakthrough in the UK's fight against climate change. Julia: [00:23:39] Well, thank you and congratulations to you as well for being a first recipient of the designation. I think it's a testament to the focus and the nature of the work that you do. But also, I hope that we can both look back in years to come to say that that was the starting point against which thousands of tonnes of carbon was offset, and we got closer to one and a half degrees and that wouldn't be a bad way to look back on the future of work in the capital markets. Richard: [00:24:05] Yeah, absolutely. Julia, thank you so much.

As demand for ESG investing spreads across geographies and investor types, the role of the investment manager and their ability to drive change for the future of the planet is in the spotlight now more than ever. In this episode, Hugi Clarke, Partner at Foresight, talks with Simon Holman, Partner at Castlefield, an employee-owned investment and financial advisory group, with a focus on ethical and sustainable investments. The pair discuss the key questions arising around sustainable investment today, and how advisers can be best equipped to help their clients invest with impact, without compromising financial returns. Key Takeaways include: Understanding what ESG means in investment How investors can deliver a greener, fairer future without compromising on financial returns Navigating the risks of greenwashing Addressing some of the issues in the sector including regulation, jargon and reporting The opinions of speakers are their personal opinions and not necessarily those of the company.

In this episode, Natasha Frost, Investment Manager at Foresight, is joined by Rachael Nutter, Director of Nature-Based Solutions at ClimateCare, to explore some of the latest developments in carbon markets, and to provide an introduction for those looking to get to grips with this exciting new field for the first time. ClimateCare is a leading B-Corp which finances and delivers a wide variety of carbon reduction projects across the globe. Today, voluntary carbon markets are experiencing a boom as the wider private sector embarks on a net-zero journey. In this episode, the pair consider carbon credits, the distinction between different carbon markets, and potential challenges and opportunities to future carbon market development. Key Takeaways: What the carbon market is and how it functions A distinction between Voluntary Carbon Markets and the Compliance Market The investment case for carbon credits How the mainstreaming of carbon credits will drive trends in the different carbon markets Some of the risks to the carbon markets The opinions of speakers are their personal opinions and not necessarily those of the company.

Dan Wells, Foresight Infrastructure Partner, talks to social entrepreneur and writer Jeremy Leggett, about the global climate challenge, evolving climate policy in 2021 and his work championing sustainability and more recently rewilding. Jeremy is a leading figure in the global climate movement. He founded Solarcentury and founded and Chairs SolarAid, a charity that builds solar lighting markets in Africa. Jeremy has also written five books that address the energy transition and the pathways to decarbonisation. Jeremy will be joining us at our inaugural Foresight Sustainability Week, hosted in partnership with the Goodwood Estate, later in the year. This episode was recorded in the days leading up to Joe Biden's inauguration. The opinions of speakers are their personal opinions and not necessarily those of the company.

Andrew Norris, the Founder of The Alpha Adviser, a recruiter of leaders in energy and infrastructure, joins the podcast to explore the concept of a 'just transition'. With over 20 years of experience recruiting, he has witnessed the sustainability transition and its impact on working lives close up and gathering pace. What you can expect in this episode: Insight into the often overlooked human impacts of the energy transition, on both labour supply and demand as the market evolves An overview of what it takes to be an active job searcher looking to enter a career in sustainability The opinions of speakers are their personal opinions and not necessarily those of the company.

Julia Dreblow, Founding Director of SRI Services and Fund EcoMarket, joins us to discuss developments within responsible investing, as the movement gains momentum, and explore the rise of greenwashing. What you can expect in this episode: An overview of 'greenwash' and ESG ratings Advice for investors wanting to play an active role in managing their finances and avoid greenwashing We discuss regulation and who is responsible for driving greener standards as the investment landscape evolves The opinions of speakers are their personal opinions and not necessarily those of the company.

Simon Whistler, a Senior Specialist from the Principles for Responsible Investment, joins us to discuss the global uptake in ESG investing and explore some of the factors that are affecting the pace with which ESG is being embraced by the investment world's international community. What you can expect in this episode: An in-depth overview of the uptake of ESG investing explored regionally and in terms of drivers and barriers We explore leadership in this space and consider how advanced investor practices are driving regulatory reform We discuss what movement is taking place in emerging markets and how this is reshaping the conversation around responsible investing The opinions of speakers are their personal opinions and not necessarily those of the company.

Dan Wells, Infrastructure Partner at Foresight Group articulates what is meant by 'sustainability' and shares his views on some of the trends that are set to shape both businesses and, more broadly, society over the course of the coming years. What you can expect in this episode: Language is a key barrier to the wider integration of sustainability considerations into business; we set out key industry terms We explore the role sustainability has played in shaping business agendas We consider the significance of 'sustainability' when addressing grand challenges like climate change, poverty and health equity, that threaten systems and demand cross-sector engagement The on-going health crisis has highlighted the need to approach grand challenges holistically. To ensure long-term industry resilience, sustainability and ESG considerations will need to be mainstreamed into business strategies. The opinions of speakers are their personal opinions and not necessarily those of the company.