How social value helps us to measure sustainability

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 ...