Greg Irwin  0:18

Our monthly topic for the SETC is ESG compliance. This is our interactive forum. So I am very happy to have Emma Mundy, environmental compliance specialist that WWT here with us, as well as Marcia Narine Weldon, sorry, Director transactional skills programs, and Narine will, Marcia will give some of her background. She is a law professor and an advisor here on ESG compliance. We let me just remind you all some of the basics here of SBTC. We are a group that drives practical steps towards sustainable enterprise technology. So all elements of driving a smaller carbon footprint programs to drive awareness programs to drive measurement, and understanding and just gradual single step improvements around your technology stacks to meet, you know, small steps to very big goals is is the idea we have. If you haven't, please join the mailing list over on the on the website SETC sustainable enterprise tech.com. And I'll drop that email. And actually, John, if you could just drop that email in the chat, that would be wonderful. We're doing research. So we've got our survey work going out. And we're driving these dialogues together with WWT. And they're, they're the executive sponsor for for the community. And it's time for me to introduce Brendan Walsh. So Brendan, great to see you. Again, we're back for a month late. Give a little intro to the group and a little intro on the topic, please. Thank you,

Brendan Walsh  2:20

Greg. Good afternoon, everyone. And good evening, when appropriate. They're really excited about this topic, because I think ESG complaints as a subject is definitely an emerging area. And it's very timely, that we're talking about it today, given what we're seeing as emerging regulations, like for example, tcfd. Now enacted in the UK and other jurisdictions, and here in the US, we're waiting for the SEC rulings in terms of what that will look like. I'm sure that the Tim will talk more about that today. Irrespective of what this what we see in the regulations is not a focus in that a heightened level of disclosure, typically around the carbon footprint, your emissions, and everything that goes with it. Clearly this group has been focused on the technology aspect of things, but ESG, as I'm sure you'll hear, is a wide area. And it encompasses many different aspects of things. So I'm very excited to have Marcia and Emma here. And without further ado, let me turn it over to them. I think they're gonna introduce themselves. Why don't we do that?

Greg Irwin  3:45

I think that that'd be appropriate. I'm gonna drop their links here on to the end of the chat. So you can all check out their backgrounds. But Emma, why don't why don't you take take a lead here, give a little intro talk. Tell us a little bit about your day to day involvement here around ESG compliance. Sure,

Emma Mundy  4:01

and glad I'm going first and not following Marcia. Thank you for that. So my name is Emma Mundy. I am the global environmental compliance specialist at worldwide technology. I have worked in the environment and sustainability industry for about just over 11 years now. I graduated from the University of Warwick and I am a qualified practitioner of the Institute of Environmental Management and assessment. And if you can't tell by my accent, I am located in the UK. So it's lovely and dark here because it's eight just gone 8pm So, I work for WWT at AMEA. I'm at the business but my job role does cover global compliance. I thought I'd just give a little bit of background on my work experience just so you know what to expect from me today when I'm answering questions. I have a very niche specialised area within environmental compliance. I have have worked in a few different industries. But my background is mainly tech. I have represented several working groups in the UK for things like renewable fuels and chemical use, as well as plant protection policy and farming. I have also worked with some quite high profile MPs and MEPs, including ones from the Environmental Audit select committee. And I've worked with group sessions and Q and A's through the Houses of Parliament and the European Parliament as well discussing environmental policy and helping influence key governmental decisions when it comes to legislative proposals on environmental policy. So a bit of background on the legislation side, I've also trained pro Europe compliance schemes across Europe on international extended producer responsibility, which is my niche area. So my background is in compliance for packaging, waste waste electricals, and waste batteries. And I've also written industry articles on these subjects, and also other subjects to do with chemicals, compliance and protection policy. And then, as a side to that, I've also written articles for The Huffington Post on consumer green choices as well. So a bit of business and a bit of consumer writing there. And then, my last role was part of started as part of a tech startup where I essentially agreed the compliance team from the ground up, so started with me. And then when I left, actually, because I was headhunted by WWT left, there was a team of nine of us, I was running that team, and we went from zero basically to contributing to the profit, and the company growth. And also, as we were consulting team, we were tracking the money, we were saving our customers on environmental compliance and the fees they were paying through our reviews of their data processes and their regulatory reviews as well. So I am very passionate about the environment and sustainability. So I work with our local community. I'm part of our local altogether greener group. I educate our local community on waste and recycling regulations from a UK perspective, and how they can how consumers and householders can also lobby or comment on environmental legislative proposals, which is a massive issue in the UK at the moment, as I'm sure it probably is in the US with energy prices and as householders not just as businesses as how we pay for those bills and reduce our consumption. And then from a tech perspective, I now have experienced from both sides of the table so working for a software company that developed and wrote piece of software to help companies streamline their environmental reporting and ensure data accuracy, and things like plastics reduction as well because obviously, back in it was a few years ago now that plastics issues became at the forefront of media and consumer attention. And then also working on the other side of the table. Now internally for WWT working on our internal ESG team, our internal processes, how we can ensure that WWT are compliant with any applicable environmental laws. So as I started with my role is very environmental compliance focused I am responsible for all our extended producer responsibility reporting and registrations at WWT, anything to do with recycling and waste disposal and our KPIs for reuse and recycling as well as any circular economy initiatives. Any auditing in this area, and any policy requirements enter environmental compliance. And I tried to also cover wider sustainability, but we have subject matter experts in those areas as well.

Greg Irwin  8:47

And we can we can tell you're not winging this. This is your first this in your first gig here. Alright, I love that. Thank you so much for for joining us. We're gonna get into some of the q&a. And folks, you know, I love to use the chat. So do me a favour. I'd like everybody warm up your fingers. And before we we have a Marcia give her intro. Everybody share with us one question. One question you've got either of Emma or Marcia or each other that you'd like to hear about ESG compliance, and we'll try and focus and make sure we hit on the points that you don't care about. Alright, Marcia you’re up.

Marcia Narine Weldon  9:27

Hi. Emma said she didn't want to go after me, which is crazy, because now I don't wanna go off to her. And I'm gonna try to be brief so that we can get to the questions. Good afternoon from right now sunny Miami but in a tornado warning situation. So hopefully I don't get cut off. I am multi hyphenate. I'm a full time law professor. I'm also the general counsel of a startup which is has a sustainable technology component to it, but I'm not going to name it because there's some issues right now as we're dealing with that so I'm gonna leave that to the side. I also advise companies on E Gene matters. And I used to be a deputy general counsel, Chief Compliance Officer and Chief Privacy Officer for Ryder, a fortune 500 company, now worth 11 billion with 6 billion when I was there. So I don't know what happened not to my left, revenue doubled. But I'd like to think it's because the great things I helped put in place, but part of what I had to environmental use to report up under me, I also had to do with the pack the lobbying and compliance around the world in 12 different countries. So that experience and it's Ryder is a company that has logistics and helps manage other companies supply chains. So I'd like to focus in when I think about ESG. Because we have Emma here, she is going to be the E expert. And I'll focus on the S and the G and also really, in particular, the importance of understanding who and what is in your supply chain. Because the biggest area that I see where this comes up a lot is in the disclosure regime. And a lot of the issues that are coming up are what do you disclose? And how do you disclose with different regimes that may have completely contradictory standards? And before we get into the, to the questions, I just want to do a little level setting because I think this group really understands the E issues when I talk about the SMBG issues. And I think that's one of the biggest challenges. It's so all encompassing, right, the issues, we're talking about working conditions, child labour, child slavery, forced labor, we're talking about diversity, equity and inclusion, both within the companies and on company boards. We can be talking about conflict regions, health and safety, employee relations, those kinds of things. And in the GE, we have people here from all over the world. But the G, we're talking more about corporate governance, what about executive pay, and you're actually finding some analysts are expecting executive pay to be tied now, to ESG metrics. We're looking at political contributions, bribery, and corruption. So there's so many different areas that can come under the s and the G. And I want to help this group kind of understand some of the big pitfalls that come if you focus only on the E, which is getting the most attention and not on the S and the G. And there have been a number of tech companies and others that have gotten Supreme Court cases dealing with what their responsibility is throughout the supply chain. And that's the sad part. So I'll leave it there and get started with questions.

Greg Irwin  12:15

Let's get into it. And by the way, great work, we already have the chat window going. And I'll encourage people reply to these questions. If you have an opinion, or a story, or, or an additional thought, just reply at somebody, so they know who it's going to. And they'll Dawn and we can, we can chew, chew bubble gum and walk down the street at the same time, we're going to do both. So feel free to respond and engage in the chat as we go. Marcia, my first question is I you said there is so much involved with the the social and the governance aspects of the initiatives. If you're a small team, which everybody is limited on resources, once, how do you prioritize what are the most important things you see your clients doing? To make sure they get right? You know, how do they carve up the responsibilities and pick pick some projects to pursue?

Marcia Narine Weldon  13:15

Well, here's the thing, most companies large or small, the biggest companies will have a sustainability group and groups of people but most companies don't including some of the biggest, I became involved in ESG background call CSR, which was a slightly different version of it. And it was just, You're the lawyer, you can figure this out, you can figure out what regulations are you doing? And that's what happens with a lot of companies. And that's when things get to be difficult. So I think if I was advising a small company, it really is a matter of risk. Alright, what kind of enterprise risk management work are you already doing to figure things out? Do you know where you are in some other company's supply chain? And who's in your supply chain? So if you are a technology company, right, you're going to be obviously worried about environmental issues. But on the S issues, you've got to worry about, you know, child labour and supply chains. Where are you getting your minerals? Are you dealing with Dodd Frank conflict minerals, the EU conflict, minerals regulations, which looks at where you're getting your sources, whether it's from a failed state, a failing state, Microsoft, Tesla, Apple, Google were sued on December 2019, because of the allegations that they were there was child labour being used to get cobalt in DRC, Democratic Republic of Congo, that case was dismissed, and a lot of money to get that to happen. And that was bought under a human trafficking statute. So most companies are not thinking this applies to me. They're saying I don't employ slaves, but who's in your supply chain. So that's one of the areas is I would say devote your time to really knowing you know, who your tier one suppliers because you gotta write checks to them. Who are your tier two, your tier three. And when you're dealing with some of these issues, you might have, you know, 100 people or 100 organisations in the supply chain. I'd also try to make sure you look at where are you operating? are you operating in the EU? Are you a US company operating in the EU, there is legislation that's coming out in the next couple of years that's rolling out based on size of company. But that is going to affect us companies that operate in the EU. But if you aren't aware of this big area, it's difficult. So dealing with trade groups, industry groups, others who can keep you educated, because it's, you know, you have to have pretty much a spreadsheet to figure out what's going to apply to you. But you have to take a risk based approach, right? Are you going to be more likely to have an issue with the SEC than with, you know, the Brazilian government or the UK Government? And we talked a lot about the EU, but we also think about with Brexit, what UK rules may apply, and what what UK rules may not apply? So if I was going to tell somebody to organise, I'd have them to figure out, where are they operating, and what's the biggest risk based on the current and potential legislation. But most important, really figure out where your data is and how you get it. Because almost all of the regulations now are really focusing on a disclosure, and either a complier explain regime, and if you don't know how to get your data. I mean, I know Emma will talk about this likely. But, you know, I think I saw statistic a couple of days ago, only 19% of companies can can report on scope three emissions, because they don't know, you know, whose way down in the supply chain and what they're doing. And, you know, that's, that's a certain industry. So it gets to be very difficult. So where's your data, and then what data is going to be relevant? The benefit, even though it's expensive for companies to do this, is often when companies have to deal with these kinds of disclosures. They end up optimising their supply chains, because they end up figuring out, wait, we should not be spending money on this, or now that we have to get this data. Why are we doing this? So sometimes there is a cost savings, but it can be expensive in the beginning.

Greg Irwin  16:41

Yes, Marcia. We have a lot of good questions more than we can take a shot at, but we're gonna try a couple of them here. So I'm gonna go to the question from Nancy and Sydney relating to rating agencies, MSCI and DJSI. First question, what is the greatest return on MSCI or DJSI? And then Sydney later on? What agencies do you see of priorities? Who's who carries the standard for measuring governance compliance?

Marcia Narine Weldon  17:14

I tend to look at MSCI but there's so many. And usually when I do stuff like this, I have a slide and I have a slide that has about 30 different rating agencies and it becomes ridiculous. And that's the problem, right? Because there are not, there's a lack of harmonisation. Among the standards, right. There used to be SASB with a society sustainability, Accounting Standards Board, GRI G. And I there's so many different and what you're now finding is that there's efforts to try to harmonise what the standards are, and who you should care about. But if you're a public company, you're also got to care about your institutional investors, right. And you've got to look at things like ISS International shareholder services, or Glass Lewis proxy advisory services, because they're the ones telling your largest investors how they should vote on what they should ask you about. So I think sometimes we look at these different rating agencies, whether it's s&p, etc. But also what is the SEC saying? So there's so many different things. And I think that's the problem. You know, like I said, if I could show you this chart, it's crazy to see, and I sit on the US when I can the US Chamber of Commerce, corporate governance, working call Working Group on Wednesdays, and I've missed the past few, but this is the topic, how do we know who to listen to? Should we pay attention to our institutional investors who are asking this if this information, these other NGOs and others were coming in saying please disclose this? Larry Fink with his from Blackrock with his letter to CEOs that he comes out every year, and he's talking about ESG. So the problem is, there's a lot of noise, and it's hard to say, Okay, who do I really listen to? So I'm sure that's a completely unsatisfactory answer.

Greg Irwin  18:48

There's never a lot of them but I heard a couple in there, you might start I heard, you know, MSCI have carrying real real relevance I hear is carrying real relevance. Mark, do ask the question. Is there an outline available? Or where would you look for an outline, that you could be used as a starting point to help onboard partners and suppliers, Marcia, any any place you'd point people as a reference for for onboarding, it was right along with your your comment of know who you're working with? Oh, sorry. We, we like,

Marcia Narine Weldon  19:25

I'm not sure that there's a good outline. I think that the key is, there are a number of so the EU is really good at this. The EU provides lots of plain English practical guidance on all of these different kinds of issues. And they do it by industry size by you know, if you're small and medium sized enterprise, I would probably look there. I tend to tell people to look at their primary source, but also, and I develop trainings, I'm not trying to sell it. I'm just saying to tell you where I look, I'll look at what the regulations are, but since you guys are lawyers, you don't want to do that. But often, you'll see Ian, why Price Waterhouse a lot of the big, the big four have really spent a lot of time on this. As a matter of fact, I saw a statistic from 2021. That price PwC said they were going to hire 100,000 people over the next five years to deal with ESG, and data gathering and data analysis. So you're finding that a lot of those companies are putting out plain English, practical ways that you can start thinking about it. But again, when you say, how do I onboard somebody in ESG? If you're a chemical company, I'm going to tell you something totally different if you're a manufacturing company, but I tell you something totally different. Because there's, there's so many things that are industry specific. And you know, and country specific. Where are you operating, where your subsidiaries? What's your general revenue, because there's some things may say, you don't have to worry about this. If you're part of somebody's supply chain, I'm gonna say you are going to have to worry about this. I'm going to put a couple links in the chat for some some rating agencies and guidance. While Emma takes on the next question.

Greg Irwin  20:57

No Marcia. I've got one more for you. There's a great question from Jessica. And I want to touch on. She said, Do you see ESG regulations evolving? With the shifts in the US political landscape? Yes. And do you think more states will adopt ESG focus regulations ahead of the federal entities? Love that question.

Marcia Narine Weldon  21:18

So in the US, and I definitely do want to make this US centric? Because I know we have people from all over the place. So the Biden administration has made it very clear that ESG is a factor. The SEC has also made it very, you know, the SEC has got an ESG czar, there's a few areas that you're thinking about. Right, you have the issue of and I know there's talk about greenwashing, right. So you've got the concerns that certain kinds of assets and funds are are greenwashing by saying that they're what they're holding, and their investments are actually more green than they are. So the SEC has gone after being why Mellon, you've seen raids in Europe, with Deutsche Bank, etc. In terms of what they're saying, this becomes an issue in terms of investments, because people are saying, well, I can't invest in this company, because it's not green. And so you have the states of Florida included, saying you got to be careful about pension funds and others being invested in companies that are using an ESG approach, because by definition, they're going to exclude or screen out certain kinds of things. But I think where you're really seeing it as the disclosure area, and the Biden administration is, especially with the SEC and the climate change disclosures and the comment period, that's that's happening. There. I just saw an article right before I came on this call with the midterm elections. And the concern about whether Republicans if they take over both houses of Congress will put put the kibosh on a lot of the proposed SEC climate change disclosures, what so what the US you really have to think about yesterday at the Biden administration, but you've also got the power of the Congress, which is why the United States, you know, has so many issues when it comes to climate change and legislation, because we have to worry about every two years, you've got new congressman, every six years, you've got new senators, and it becomes difficult. So it is a political landmine right now,

Greg Irwin  23:02

it's fair, it's, it's reasonable to say, You know what, let's see how the midterms work out. And yes, the Biden administration is pushing pushing these disclosure requirements, but there's no way they're gonna stick because they're gonna lose the house. And we'll be back at under a different regime with a new administration,

Marcia Narine Weldon  23:20

is that back in back in the day when I was in charge of I pack a political action committee? That's exactly what we would think about. I remember some of you guys might remember years ago with ergonomics regulations with OSHA was coming with ergonomics regulations, and we spent a tonne of money and then nothing ever happened. So I think you're finding now is some companies are saying, let's see. But if you're a multinational company, or you're part of a multinational supply chain, you can only think about what the Biden administration is doing. If you're doing business. If you know doing business in California, you got to worry about the California transparency supply chains Act, which looks at forced labour around the world, depending on how much you earn. Obviously, if you're an EU company, or you have operations of a certain size and the EU, there are disclosure requirements that you're going to have to deal with on environmental, social and governance factors that are going to be probably finalised in 2023. And will start taking effect for some companies in 2024 2026, depending on the size. So a wait and see approach works if you basically are you know, a company in Wisconsin and don't have any customers outside of Wisconsin, but I don't and I just picked the state. But I don't think that that necessarily works if you are either a global company or you are a customer or supplier or vendor to a global company. Great.

Greg Irwin  24:30

Marcia and Brian Penn. Thank you very much. I feel like we haven't even scratched the surface on the s&p s and the j and we have to go here and let's let's spend some time on the E. Tell us about program. Tell us about a trend that you're seeing in terms of the environmental handling of waste and recycling. Is this a large? Is this a large trend? Are we seeing a pause? I think there's such big moving pieces here. I'd love to Understand, maybe from your perspective and the clients that you're supporting, what are some of the major trends you're seeing on waste and recycling, particularly of electronic components. So,

Emma Mundy  25:13

I mean, when I first started in this industry 11 years ago, it was what I would deem very sort of basic compliance requirements. And whilst we were having to submit data on different areas of say, packaging, or waste electronics, there has never been so much information required, I think, from companies these days on waste and recycling as there is today. And I think, looking back, the shift came around 2015, with the introduction of the EU Circular Economy package, which then spread to sort of a global movement. But the real shift, I think, was around 2018, when there was a really, really big focus major attention on plastics and plastic waste, and how we get rid of our waste and how we recycle or don't recycle, because not enough is recycled. And having seen the shift from the data we had to report back in 2010 2011, to now is just unbelievable. When we are audited and the sheer volume of information and data that is required of us is all these new requirements are coming in, and they're coming in now. And they're only getting more onerous. So, for example, with electronic waste electronic submissions, a lot of the compliance schemes or a lot of the legislation is now mandating that we need to know the recycled content that's contained within these products, because we need to be able to report on that we need to be able to report on energy ratings, because if we can't get data on those things, then we pay more money, because essentially, that's sort of to push us in the direction of okay, we need to have energy labeling, we need to have energy efficient products, and we need to have products that contain recycled content. Because if we don't, then we're gonna have to pay more for the tape back and recycling of them. And so it's pushing to more of a, from a linear economy to more of a circular economy. And we're not just seeing it with waste electrics, we're seeing it with packaging, and we're seeing it with batteries, as well as the new EU battery directive coming in, which is looking at the whole lifecycle of a product. And that's where we're seeing the shift as opposed to just reporting what we've placed onto the market paying a fee. And paying into the recycling system, we're now seeing a shift to actually we need to know more about the lifecycle of the product. And, and looking at things like Marcia mentioned about conflict minerals, actually, there's a push towards we shouldn't be mining for new minerals, because actually, there's so much electronics out there that can be taken back and reused or recycled. That's where we should be looking rather than mining for minerals to make these products and taking resources out of the ground. And same with batteries as well, when actually we should be looking at a circular process. And it's sort of all links together. But obviously, I'm working at the end of the chain on the finished product that is placed onto the market. And then obviously the contribution to the Take Back and recycling of that. And like I said, obligations getting more onerous, we have to set KPIs in some countries on reducing our consumption and showing how much we're recycling certain products and packaging. And we have to, you know, track the data on those things. And we have to write methodologies of how we go about it, how we gather the data, the different steps in the process, to submit to the governmental authorities.

Greg Irwin  28:50

And where can we talk about it? And this is what I service the WWT will offer to, to an enterprise? Can Can you tell us about one company, don't tell us their name. But tell us roughly what's involved in their electronics, waste management. process in terms of team in terms of costs, a little bit about how much? You know, one organization has committed to be able to handle the requirements of filing and providing information and actually handling the returns of the of the electronics?

Emma Mundy  29:33

Yeah. So it depends on I guess the type of company the size of the company and where they're located. If it's a global company, and you're looking at several different locations, then obviously, the obligations can be very big because you're looking at a different piece of legislation for every single country that you're operating in. Even in the EU. We have EU directives but every single country has transpose that directive into their own registration. So

Greg Irwin  30:01

let's pick a 10,000 person organization with operations in North America and Europe.

Emma Mundy  30:06

Okay. Yeah, so you're probably looking at potentially, I think there's about 26 states in the US with some sort of way regulation, but the scope is much smaller than the EU. So again, it depends on the types of products you're selling as to whether they're in scope. And then you're looking at every single EU country. And you're also looking at the UK as well, because we still, despite Brexit do follow the EU, the EU rules and regulations. So if you're talking about electronics products, you're likely also going to be obligated under packaging regulations and batteries, because if they contain batteries, and also they will be packaged, so you're likely going to be obligated under all three pieces of legislation, which is potentially three registrations in every country you are selling into. The registration itself is a massive admin burden. And often you have to collect forecast data or past data if you've not been reporting when you should have been. Sometimes each registration can also need to be done twice because you need to register with a compliance scheme and an authority and then it's down to what type of products you sell. So do you only sell business to business? Or do you sell business to consumer products? Or do you sell both? Now, at WWT as an example, we are purely business to business, but our products are classed as dual use. Because we have things like laptops and monitors, they can be used by a household, they're classed as household products. Even though we don't sell anything to households, we therefore have to have two registrations or sometimes two different reports because the compliance process for b2b and b2c and electronics is completely different, because the Take Back and recycling from businesses is different as it is from householders. So, again, different compliance processes. So it really depends on types of products you are selling as to how you scope them, how many you're selling. Once you've done your registration, and gone through that process and your forecast data or your historic data, you then will, I would then be working with the product data management team, the logistics teams, the quality teams within WWT, huge amount of collaboration between lots of different teams to be able to get the data, I need to submit these reports. So I'm looking at every product and putting it into a bucket of each category, but electronics, so is it consumer? Is it business? Does it go into a computer? Or an IT category? Does it go into a small consumer, large consumer, so I need to know the weight, I need to know the size because I need to know if it's small or large. So all that information that goes on in the background, I might need to weigh every single product and document the weight, I might need to get the technical specifications, get the information off those from our suppliers to make sure I have all that information.

Greg Irwin  33:04

I'm gonna guess I'm thinking what everyone is thinking? How the heck does an average company do this? And so I'll ask you, if I were just to walk down the street and check out 100 companies? How many of them do you think are reasonable? We take a reasonable shot at compliance.

Emma Mundy  33:25

I would say

all of the global big names definitely are and I you know, I've worked with a lot of different companies in the past. So I know a lot of companies who are and aren't doing it. I think it's the smaller companies that midsize companies that don't have that. You know, the members of staff that capacity to be able to deal with something like this. And and often it's outsourced. Because, you know, sometimes there is value in using a consultant if you don't have the resources in house to be able to do this, there's absolutely value in using expertise. If if you can find someone that can do it. And you know, you have to weigh up the cost of that because for us, it was much better to be able to do it in house and use a consultant but it's different for every company. So yeah, I think there are different options. But it's it's not an easy process. There are many companies that are registered and there are registries with the authority. So you can usually do a quick check to find out if a company is registered or not. And sometimes they're not public. But you know, in the UK, if someone isn't registered, that's a risk. I would say UK regulations risk wise is a big one because we publish non compliance in the media and we make a big song and dance about it. So it's really bad for you know your marketing efforts if you are on there as non compliant whereas some countries don't. So you know that there are ways of being able to find out but I would Most of the big names footsie 100, you know that that are obligated are doing this now because these regulations have been in place for 1520 years. So it's it's quite a well known.

Greg Irwin  35:12

And well, let's let's touch on Molly Bruce's question. Thank you for this, Molly, how should we think about organizational reporting boundaries? Particularly with the SEC yet to confirm guidance? Is there any, is there an expectation that this will change existing Net Zero commitments? If the baseline change?

Emma Mundy  35:34

I think I mean, again, it depends on the company where your priorities are and where your biggest risks and, and I guess where your biggest emitters are, as to what you're already doing. We found as a company that, because a lot of the time we've been doing these things, even though we haven't had to, legally we've been doing them, because our customers have asked that we are already well on the way to getting to those points. And often it isn't a known if legislation hasn't been passed, because obviously it can change or, or something, you know, you might not have the final detail. But I'm quite a big believer in, you know, starting very early research, reach that research, getting through these regulations. And you know, the comment periods making sure that you are involved in the comment periods in any feedback sessions, to getting to know the policymakers, if that's something that is feasible, I don't know how easy that is within the US, because I've only ever worked with policymakers on on plastic laws in the US. So with regards to the FCC proposal, I can't comment. But I think if you already have an ESD ESG process or sustainability, or you're doing sustainability reporting, I think that is always a really good start with these regulations, and the same with the EU sustainability reporting directive as well. Mining versus recycling, I think it's often very material specific, because you can get a lot of money for some materials, through recycling and others. It just isn't a moneymaker. And so it, it does depend on the material. And I think a lot of the point of these regulations that are coming in or how they're changing is to ensure that actually recycled material is more economically viable. So I know it's not really it's not focused on batteries. But if you look at plastic as a packaging material, actually a lot of countries now are charging a plastic tax for Virgin plastics. So if your plastic contains 30%, or more recycled content, then you won't have to pay this plastic tax. So there are lots of ways they're looking at penalizing producers who are using raw virgin or virgin materials. So I think we will see a lot more of that in the future. And it will be more expensive to mine versus recycling. But it is a tricky one because recycling markets constantly fluctuating. So sometimes the material can be worth a lot. And then at other times not so much. So there's a lot of up and down in the recycling market. And also it's about these regulations enhancing takeback collection and recycling because a lot of the time they don't have the they just don't have the items to take back. So for example, last week, the island Environmental Protection Agency emailed me and said, they are not taking back in a b2b we in Ireland, they are not meeting the EU target. Therefore, they are asking us as a company to write to all our customers find out if they were they our end users and or distributors and write to them and tell them if you are an end user, this is how you need to take back and recycle your products and giving them that information. So in the hope that they can increase those collection targets, and make sure that they are recycling enough material to then increase the demand and you know, improve the prices. And then on the other side of things, you know, mining materials is another issue of conflict minerals, and the mines themselves and human rights and labor issues with that as well. So there's an economic perspective and also a sustainability perspective to think about. I met a guy who owned a mine in South Africa and some of the stories he told me about the children that were sent down the mines very recently, to mine that material, it really gets your brain working about actually, you know, mining raw material versus versus recycling. And just this is a whole sustainability topic to do with that as well. So I think I know that doesn't really answer your question because it is very dependent but there is definitely regulatory He's pushed towards recycling now. And over the next sort of five to 10 years, we will see a much bigger push more personalization of any raw materials costing manufacturers a lot more. So I would expect in the not too distant future, that recycling is seen as the better option to mining raw materials. I don't know if I'm the best person to answer this, because this is I think, just in general, for UK citizens. This

has been a major, major stress, there is a lot of things going on in the UK at the moment. I think, obviously, with the change of Prime Minister, there's a lot of talk about Liz truss and her Cabinet and her history and credentials. She used to work for Shell. So there's a lot of talk of actually is she really focused on the green economy and green energy. And Boris Johnson, we did have a very extensive document published on green energy and how we were going to meet that our targets by 2050. I can't remember how many pages it is I think I got to about page 50. And I had to give up because it was hundreds of pages long. But there is there is a plan. And as far as I'm concerned, that's not been changed yet. But I yeah, I don't know if I'm the best person to answer about tax cuts, because I don't, it's not really my area of expertise. So I think it's it's maybe a wait and see. And actually, maybe Brendan is a good person to talk about that with your background in energy.

Brendan Walsh  41:35

Thanks so much. I don't know why I'm actually I think here's what I would say one that because I've been following this quite closely. Because it was rumoured prior to being announced, I think all you need to do is look at the market reaction in terms of the foreign currency markets, the equity markets, and so on and so forth. I mean, I was reading some of the headlines today, coming out of the UK. And basically, there is concern right now that it's potentially falling off a cliff, it's as serious as that the UK borrowing rate is currently higher than the borrowing rate in Greece, and Malta, and all the southern European countries who, you know, have that reputation have been, you know, less economically stable, if you will. So I actually think the common sense will prevail to push these tax cuts through at this point in time and borrow massively against it, I think will cause some economic dislocation and the UK? Well, let me just leave it

Marcia Narine Weldon  42:42

at that. In terms of due diligence. You know, I'm not sure that it changes things that much, because a lot of the things that you would have had to look for, right, so when you're doing the due diligence, or trying to sit there and say, what's the risk I'm going to deal with in acquiring this company? Am I going to get the stock, I gotta take all the liabilities and just take the assets? And then at some point, you know, am I gonna have to worry about some kind of compliance failure, we always had to worry about that you always had to worry about if I buy this company, is there going to be some UK Bribery Act issue, some Foreign Corrupt Practices, act, issue, etc. And so there's that level of due diligence. And I think this goes for due diligence in general, I think ESG is is difficult, because it's so big, but it really covers things that companies already should have been thinking about. Anyway, if you look at the gift, the G factor, the G deals with things like bribery, corruption, corporate governance, diversity, etc, you should already have that information, you might ask a little bit more about it. But if I'm going to acquire a company that has lots of ties to corruption, that was always going to be an issue, where I think you're gonna see more of it is in the s factor, because the E was always because the E is, even though it's difficult to measure. It's quantifiable, we kind of know what the standards are the s part, how do you measure what the value is? Or is not or what the potential liabilities could or could not be when acquiring a company that has for a poor record on board diversity or employee diversity, or those kinds of things? Right. So in a typical due diligence, you're going to look at the employment law, liabilities, how many lawsuits do we have? What is this going to cost us, etc? are there government investigations? But how do you measure the intangible of employee engagement, employee satisfaction? I think that's where, again, that s factor, the safety issues that are going to be more important. And because there's so many different metrics I had read, I wrote it down because I was going to talk about it, that there is the European banking authority set 79 ESG metrics, right. So what metrics are you going to look at and half of them deal with the environment, but there's a bunch that deal with the S and the G. So I think what you're going to find more of is when the when the parties are getting together, they're going to have to sit there and decide what is material and the US will use a concept of materiality in terms of what would the reasonable investor want to know and the mix of all available in front Asians, right. So that's part of the issue with ESG. In general, many of the critics say some of these things we're looking at aren't material. Right? So I think you have to have that meeting of the minds of is this information material to us as we choose to acquire this company? And if so, how do we measure some of the more intangible things that can come into play. But if health and safety as part of the S Factor, you should already know what those health and safety issues are, you should know your injury records, your workers compensation records, those kinds of things, you should know, your bribery and corruption, to the extent that you can, if you don't, if you can't do due diligence, right now, you can't do due diligence on ESG issues. So I don't see it as much of a bigger thing, because I think a lot of it is already been baked into what people should be looking at whether they are looking at it as a whole other thing.

Greg Irwin  45:49

We're seeing an MO, I have a follow on here. It kind of weaves through this. There's a lot to be done. In terms of meeting ESG compliance standards. The question is, what's the reality in terms of fines and compliance and adherence to the rules? In other words, is it scare tactics where you see one one company find meaningfully? And, you know, you probably get away with it? Or, you know, how strict is enforcement of the standards? But any anecdotes or, you know, getting getting a sense of how it plays out would be really helpful.

Marcia Narine Weldon  46:34

Let Emma chime in first. Yeah, sure.

Emma Mundy  46:37

So I think with the regulations, I work with the spirit of the regulations, and the authorities is to try and help you comply, which is why they let you do historic reporting. So if you come to them and say, Look, I have not been reporting for the last five years that I've been selling into this market, and I've just realized that I should have been actually, they want to help you, they will make you pay back fees, and you will pay what you owe. But that's sort of the end of it. And it varies per country, I have worked with customers that have been fined a lot for non compliance, or even they are complying but they haven't actually reported accurate data. And because of that, they've been fined a lot. So it's sort of a mixture of both, I have seen a number of fines. And like I said, the UK have very, very strict. If you are not complying with the packaging, waste regulations in the UK, you can go to court and you will be fined. You can either you can do civil sanctions now, which is a charitable donation. But previously in the past, you could be fined a lot of money for non compliance. So I think I'd say it depends on the country and the authority and the specific regulations you're looking at. And I think more so now than ever, they are trying to help companies comply, because they see the bigger picture. And actually we want to progress. And and we want to, you know, we obviously want to fund this system. But we also want to make sure that we're not using scare tactics, and maybe stopping other people from coming forward. Because they're scared, they might have to pay really big fines. So it's a mixture of both and the regulations I work with. And maybe Marcia and Brendan have had different views with the regulations they've worked with it might be it might be slightly different.

Brendan Walsh  48:21

So just very briefly, you know, Greg, I think the issue here is, number one, the fines and the magnitude of the fines. In Europe, they can be quite significant for their own privacy related breaches. In certain instances, you can be looking at veins on 10% of global revenue. So for Google, Microsoft, Apple is enormous. They take them very seriously. The other aspect, clearly is obviously the reputational risk that goes along with it. Let me, let me remind you, Marcia, I'm sure she'll love your answer. Yeah, so I'll just

Marcia Narine Weldon  49:01

say this. And I know we're in the last five minutes, I have nothing different to say other than when Emma said, other than it really depends on the size of the company. And I put a comment in the past, you know, Mehta slash Facebook, Google, these companies have been fined hundreds of millions, in one case, you know, almost $5 billion in fines. But if your market cap is so high, that it almost doesn't matter. It's not that it's negligible. But it's, it doesn't have the same impact as it would have on a small a much, much smaller company. And in the US, right? political contributions, go toward the people who are going to write the laws. And I used to be the person that would write those checks as to the people in Congress, so I understand it, right. And so it is an inherently it's a system that is inherently based to not have significant fines or penalties, because you're not going to get the political contributions from the companies and I that's just the way of the world and I am sceptical about the reputational risk shouldn't be perfectly honest. I think companies say that a lot. But at some point, if you are standing in a in Walmart, we're about to buy a Nintendo game for your child. And Nintendo, and I'm just making it up may or may not have the best record on conflict minerals, you're still going to buy that Nintendo for little Johnny, because little Johnny doesn't care about the name and shame, the disclosure regimes etc. And there's a lot of data on what consumers say they care about versus what they actually do when it comes time to making buying decisions, institutional investors probably have a lot more impact on on on what companies do. Because if they say, I'm going to pull $400 million out of your company, that's a big difference. So I think it really depends on who's going to be able to influence the debate, the fines and penalties haven't been for the big companies, they haven't been significant enough, in my view, and probably this may or may not be a good thing to really change behave in the way that should happen. But what you are finding, though, on the other hand, is these companies hiring a lot more people as experts to make sure they can avoid fines in the future. And I think that's, that's where it is. So more people. And if you're hiring experts to deal in this area, then hire people with a scientific background, who really understand what it means. When you're dealing with packaging, or recycling or or, or the environmental issues, hire people that are good in data analytics, so they can crunch the data so they can have a meaningful apples to apples comparisons. And then make sure that you're affiliated with either good lawyers or group good industry groups that can keep you up to date. Because what businesses want is certainty. And the problem in the ESG area is the such a lack of certainty, a lack of concreteness in terms of what am I supposed to do by when. And that makes it much more difficult to plan I found on the clients that I have, as long as they know what they have to do. They may not like it, but if you say I've got to do this by 2026, they'll do it. But if I've got to worry, I've got to do this here for France this year in Australia this year in China, this year in the US, it's very difficult to make practical business decisions.

Greg Irwin  52:00

Emma, Brendan, Marcia. Boy, that was a past hour. And that's that's a good sign of of a good event. The questions we didn't we didn't get fair shake too. So let's take it as an opportunity to do some follow up here. I think we have contact info direct everybody again, www.sustainableetc.com. Go there. I'll put it I'll put it back in there. Login if you don't or if you're not already signed up for the newsletter, please do. That's a good way to kind of keep abreast of, of what what we have coming up. And then. So I can just see here in terms of the events that we've got on the schedule today. You know, we meet back on October 27 for Net Zero construction, net zero emissions construction. And then we're back on November 16, for another session around ESG compliance. But I don't think we necessarily need to wait for these webinars to have conversations and we have contact info here and we're happy to connect and help drive forward. Any Projects initiatives you got? Again, Marcia, Emma, Brendan, thank you all very much. And we're going to wrap it up here. Thank you all and thanks, everyone. Thank you. Thank you. Thanks. Take care. Bye bye. Thanks, everybody. Bye bye