Ahead of his appearance at Engineers Australia’s Climate Smart Engineering conference, Brett Mitsch, Managing Director at Steam Plains Capital, argues engineers and investors need to understand each other when it comes to sustainable investment.
The plenary session I’m chairing at the Climate Smart Engineering conference is all about bringing together the money side of the business with engineering.
Through the lens of the United Nations Sustainable Development Goals (SDGs), there is clearly a role to play for the engineering community in understanding what the investor universe is looking for and how it thinks about monitoring and measuring sustainable investment.
There are two major parts of the investment arena: equity and debt. In the session, we’ll have representatives from major Australian superannuation funds, as well as ANZ’s Head of Sustainable Financing and an engineer from GHD.
The idea is to give an understanding of the importance of the SDGs to the investor community, and to then relate why it’s important to understand that those SDGs must have clear targets and indicators supporting them.
A lot of those targets that are built around the SDGs are deeply connected to engineering. The engineering community has a vital role to play in finding solutions and in measuring, reporting and monitoring against clearly defined SDG targets.
In many cases, this is about breaking down the silos that exist between the investment community and the technical professions. It’s about being able to understand the language of the investor from the engineering perspective. This assists in understanding the whys, the hows, and the tools required to ensure that the SDGs are a well-understood standard.
Investors are increasingly moving away from what has become relatively ambiguous environmental, social and governance (ESG) language. Because of the ambiguity in ESG language, they are moving towards SDGs because these more clearly indicate how and whether targets are being met.
Investors are now beginning to say, “I’m a responsible investor, so I’m using the SDGs to frame how I think about where to put capital.”
It’s a framework that allows all stakeholders to measure success.
A classic example is SDG 6, which concerns access to clean water and sanitation. That’s a classic engineering challenge.
What is the baseline of who has access to clean water today? What is the capital required to improve that, to meet a new goal? What is the best technology to put to work to reach the target? Who is going to fund it?
If you understand these conversations you can begin to have a powerful discussion around investments — and a discussion that is tied to a clear target and the precise language of engineering.