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055 – Green Finance

Introduction

Mairead Taylor is an active supporter and advocate of businesses across the doorsets consoling area, having been part of Northwest for over 30 years and working with small, medium and large businesses for the past 20 years. Married brings experience knowledge, and has built a strong internal and external network that helps deliver a better customer experience. She’s an active member of the bank’s Southwest regional board and chair of the regional sub board, sponsor, the Southwest gender network, and governor and chair of the audit committee for Eastleigh college. and invests time in learning and developing herself and others.

Show notes

Katherine Ann Byam  0:03  

Welcome to Where Ideas Launch

Mairead Taylor  1:03  

Thank you very much, Katherine, it’s very nice to be here.

Katherine Ann Byam  1:06  

Really wonderful to have you. I think I’ve been in the space of Finance, actually, most of my listeners probably don’t know. But I started as an accountant, and I became disillusioned with it and moved out of the field around 2012. But ESG is the first time I’ve actually gotten excited about the field of finance in general, again, because I think it brings a lot of hope, it presents a new way to look at finance. And I’m really excited to have this conversation because I think green finance is going to be all of the noise very soon, it already is.

Absolutely. 

So we are now on the sort of recovery side of the global pandemic. I say that generously because I know that at the end of this month, things are going to go a little bit crazy again, as we see the furloughs disappear, etc. First off, how his banking then permanently changed by the pandemic,

Mairead Taylor 1:55  

Banking has definitely been permanently changed. And I would say significantly for the better. What it’s bought in is an immense amount of confidence in our ability to be agile. And our ability to be flexible, known from the sometimes myth of people not being able to work from home or work from home effectively, were absolutely blown out of the water to our ability to set something up in days that would normally possibly take 18 months to two years. So a new product or solution, but we had to get money out our door to customers as safely and responsibly as we could. But really quickly, it was really important that money gots businesses to help our clients and their families and their staff. So we were able to do that. We did that by taking teams off projects, we took teams that were doing roles in the back, which were absolutely important. But suddenly, we had to divert an awful lot of staff and upskill them, teach them the new systems, new processes, what we did was transformational. 

What was good was we were experiencing that along with all of our clients, because, you know, our clients have very, very similar issues. I mean, yes, we were responsible for providing funding, but you know, our customers were responsible, providing food and you know, all different services. So we were going through it together, we were learning, I think the bank have become much more agile in testing and learning. Things don’t have to be perfect 

But we needed to get it out there we needed to be able to support our clients. And then as things evolved as the government schemes evolved, and we fed into that, to try and help more clients, our team’s had to learn and keep updated on changes all the time. And we did it. And he said in my introduction, I’ve been in the bank for 30 plus years. And I’m very proud of some of the things we’ve done. But I don’t think I could be more proud of what we achieved in supporting our customers and providing funding that was absolutely critical to them.

Katherine Ann Byam  4:00  

Now this is a really important part of the story. I think there’s been a toll on everyone. There’s been a huge toll on everyone. Everyone’s had to pivot to make adjustments from the entrepreneurs to the big corporations as well. And as we look at the comeback now, it’s interesting to see how much adjustment people are willing to continue to make as we move into sort of Cop 26. And you know this, this is a sustainability podcast. So we’re going to talk about get into the green finance topic. But as we move into cop 26, what do you see as the bank’s role in sort of supporting the netzero agenda, first of all, and also looking wider at the Sustainable Development Goals and how banks enable sort of progress to happen across the plane.

Mairead Taylor  4:47  

 All financial institutions our role is vital. If we don’t do this, and if we don’t do this right, it could be severely damaging to the world’s economy. So us Doing nothing or us doing a bit is just not enough. We have to be leading on this, we have to be providing support. And our biggest mission is supporting our customers to help them transition to a carbon reduced world. And we want to take our client with us. That’s absolutely imperative. And therefore, shrinking to those targets is not a sustainable world. So we need to really support customers as they transition, and some customers are way ahead in that. And some customers are still wondering, you know what, what to do and how to do it. But we have to take all our customers, we also have to get our own house in order. And we’ve made that commitment by 2030, we will have all our financing activity by having the climate impact, sorry, of our financing activity by 2030. So I think that’s absolutely key, because that’s where we have the biggest responsibility, the biggest challenge, but also the biggest opportunity.

 So I think, yeah, really key being part of all the, you know, we’ve joined a coalition of organisations in the race to net zero, we signed up to the science based target initiatives, there’s so many organisations that we’ve we’ve been founders of or, you know, at the start of that journey, and I think that is key, because going to the sort of broader SDGs we need to do this in a fair and balanced way. And we need to be supportive, that customers won’t be able to get there on day one. So we’re actually what that transition journey is, is a key risk for businesses. And that’s when we need to be at our most supportive of how we help them to get there. So I think banks have a really vital well, and part of that is through education, education of our colleagues and education with our customers, US learning from them being brave, being courageous, this is transformational for the whole world. No one’s been here before. So we will make mistakes, our customers will make mistakes. But actually, it’s to bring back that agility. 

And that learning fast, it’s okay not to get things right. And I think one of the big things is that we won’t have all the answers on day one, and all the solutions will keep evolving and changing. But that doesn’t mean let’s wait until we’ve got this nice gold plate framework to go through, we actually all need to start doing it now.

 And then as we learn, things will evolve more technology will come in more technology changes in the way that consumers want to buy things, our own behaviours, what our own expectations are, how we invest our money, and pensions, all of that will help to make a really systematic change in what our customers expect from us, and what we expect from us as individuals on planet earth really. 

So I think that’s really important. And I think, you know, from a bank’s perspective, we are particularly focused on three Sustainable Development Goals, affordable and clean energy SDG, number seven, climate action number 13, and partnership for goals number 17. But it’s really key that we look at all of the SDGs because you could make some short and medium term decisions, but if it’s at the cost of some of those other critical SDGs, we’re not building a sustainable economy, we’re not building a sustainable world, it’s not going to address the unfairness and the imbalance that we have. I think, you know, that’s really important. And that’s why climate sustainability ESG has to be at the core of our strategic thinking, not like this is what we want to do. Okay, now let’s put an SDG lens on it, or let’s put a climate focus lens on, we can’t make those decisions without that being our overall decision tool.

Katherine Ann Byam  9:00  

Absolutely agree. What do you anticipate will change for SMEs as a result of the new ESG guidelines. And I focus on SMEs in particular, because the means to do things differently is different for smaller businesses, and there is a sense that a lot of smaller businesses may not even be able to operate in the same way once we really start to make changes to these rules. So what are your thoughts on that?

Mairead Taylor  9:27  

So if I take a little step back, I was given some interesting information. Well, it just shows you how critical it is that we get this SMEs right, and according to the World Economic Forum, they represent 99% of the world’s 125 million companies. They contribute more than 50% of the global GDP. And in the UK, SMEs have been responsible for 70% of all job creation since 2010. There are 6 million UK SMEs accounting for 99.9% of them. Is 61% of employment and 52% of turnover, you have to focus on SMEs. Doing anything else is just nonsensical. And also history tells us SMEs, yes, they can have restrictions because of resource, and maybe not the wider networks that some, some bigger organisations can benefit from. But they’re agile, they are innovative, they often are very brave, very courageous. And actually, they can see things and how we can either create new things, or reapply existing technologies and automation and systems and use it in a totally different sector or a totally different way.

I think it’s fundamental that we do work and support SMEs, I think the changes that will come in the 20 2050. net zero target is legally binding. But we’re yet to see significant legislation or regulation that is forcing or encouraging incentivizing all businesses, but particularly SMEs. So I think that will evolve. And I think that’s really important that on the lead up to cop 26, and particularly after 26, I think it’s really important that SMEs do engage, because there will be changes and therefore being ahead of those. And having made some progress on areas that we’re focusing on clean transport, clean energy, green finance, carbon tracking, and behaviours, clean buildings, and I’ve got a top 10 sort of help guide for SMEs that I can happily share afterwards.

 And it’s not covering everything, but actually it shows us the knees, the things that they can do, that’s within their control that they don’t need in house expertise, that number of them don’t need money, it’s actually just a change of how you might do something or approach something. So I think there will definitely be changes, I think there will be a lot of incentives. But ultimately, there will be tax implications for not doing things you know, higher tax, carbon tax and that kind of thing. I think it’s how we can work with big corporations, and government and grants maximising what we can do in order to then help provide it for people that are unable to help themselves. Currently, if we change our mindset, there’s an awful lot we can do with what we’ve got. And I think that can make a big difference. 

But an example of one that’s currently in is the measuring of the carbon footprint. So I think it’s very hard for an SME to make changes until they know where they are, what’s their base point, and so bringing out tools that will help them so you know, we’ve partnered with Cogo and Microsoft Cogo for SMEs up to six and a half million in Microsoft for six and a half million more, just in order to start actually to help businesses know exactly where they are, I think also is using the resource, the capability and the knowledge that large corporates and non government organisations have to help those SMEs that supply chain up and down Intel flowing and support I think is key. 

So SMEs can help corporations be much better, and corporations will be able to help SMEs by taking people with us, big corporations taking SMEs on their supply journey, not leaving them behind. And banks, absolutely supporting all of those. So I don’t know if that really answered your question. But I think there are more changes afoot. And it’s better to try and be ahead of what the way you can be so that you’re more leading the way rather than having to be told, well, now you have to do this. And you’ve got to do it by then, you know, the the diesel, the diesel cars in it, you know, an example of that,

Katherine Ann Byam  13:49  

That brings me to a topic that I probably didn’t tell you about beforehand, but it’s really around stranded assets. Right? So we’re going to be facing a lot of that. Definitely. It’s been a topic of conversation. Before the pandemic, the pandemic actually accelerated the conversation in many ways. What are your thoughts on how people deal with that?

Mairead Taylor 14:09  

Big question, and I think this is where it’s fundamental. So the insurance companies produced a report quite a few years ago on this that insurance will, you know, there will be assets that will be uninsurable in our lifetimes, if we do nothing, or if we get to a 4% to four degree rise. And that’s obviously unsustainably worldwide that you just know, the implications of not being able to insure an asset.

So, insurance companies and banks absolutely have to be doing something here, stranded assets help nobody. So, I guess if you’re talking about bigger assets that suddenly you know, if you’re moving from oil to hydrogen, or actually it’s not having that transition plan as to how are you going to do it and in the smaller SME space, it’s being aware that’s all of our incentives to do something. So I’d like to think, you know, everybody cares about the planet and everything. But if you just look at it purely from an economic viewpoint, you think about all the hard work and everything that you’ve built your business up for, and why you’ve done it to suddenly, then being told that you can’t sell it, or it’s not insurable is unimaginable. 

And therefore, that’s the reason you know, the reason that everybody needs to start taking action and doing and doing something will never move away from not having some stranded assets that but actually, if you’ve if you’re well on a journey to pivot what you do to an order that your reliance on that stranded asset has actually changed. and the value of that is no longer there. Because the demand for it isn’t, but actually, you’ve created a new asset in what you do, or how you do something, I think is key. But yeah, it’s a big, big, big topic.

Katherine Ann Byam  15:55  

into just massive, I mean, some bolts involving from your car to the building that you live in, I live in an apartment building. And you know, when I think about the complexity of all of this change, I know it’s not, it’s not necessarily the most suitable of buildings. So what happens to this building in a few years, you know, these things do create a lot of anxiety, actually.

Mairead Taylor  16:15  

Depending on where you’re living. And now, you know, I was listening to a call yesterday where they said, Sicily  we’re recording heat up to 50 degrees, you think of all the natural hazards that can happen as a result of that. So it’s, you know, North Africa, not it’s not just in the Middle East. Now, it’s spreading all over the world, that the physical risks, and the transition risks of climate change are huge, and both mitigating and adapting for those is what we all have to do. But we all can do something and that I had the benefit of going on a course with a bank at Edinborough University, and absolutely the best course. And I didn’t really know anything before that. I still declare myself a real novice now. But actually, it’s amazing. The different things that you can just do in your household, the different things of how you can do things at work. And if you’re, you know, I will say to staff, you don’t need your employer to be the one to lead you, you can lead your employer, if you’re very good at what you do bring that to your workplace and demand, more demand better.

Getting it right, definitely attracts talent, it retains talent, benefits, both from a well being fulfilment, and from an economic viewpoint of you know, while absolutely proven so I think Yeah,

Katherine Ann Byam  17:44  

I have another question, because we’ve talked a bit about the potential for there to be sort of penalties/taxes coming on stream for your carbon output. We’ve also talked about the sort of natural, intrinsic incentive for us to do something about the problem. But are there also some sort of positive incentives that are being put in place to encourage SMEs who are greener than others? Who aren’t who are net positive? For example? Are there things that we’re putting in place to sort of reinforce that as a behaviour?

Mairead Taylor  18:17  

Absolutely, so I think there will be Why do I think there will be tax benefits and there’ll be things that you know, outside of the bank, but I can talk about NatWest and I know that, you know, green mortgages we’ve had our green mortgage product is going really well. All those clients that have got the green mortgage, are benefiting from a lower lower rates because they’re generating less carbon and recognised for that we’ve got green bonds, and both the issuer of the bond and the benefits of the bond are benefiting from that the proceeds are being used to support the Sustainable Development Goals. 

We’ve got a green loan coming out later this year, which we specifically for SMEs, which will again, they’ll benefit from reduced rates because proceeds have been used to reduce their carbon footprint there will be more it will continue to evolve with partnership with Octopus customers are benefiting from getting EV points and charging points in at a lower cost than it would normally cost. We’ve got an app we’ve just launched EV, eight switch thinking it just helps you monitor what you’re using, when you will say your diesel car and to work out then how beneficial it would be to have an electric car. And so that you can actually see the financial and economic benefits to you over a period of time. And there’s loads of different tools, some of the some are products, some are solutions, and some are just tools that will actually help make decisions and of course, as we all change our behaviours then the benefits and the costs of these things will will reduce and it will become easier for everyone to To make Yeah, make the biggest changes.

Katherine Ann Byam  20:02  

Absolutely. So I’m going to change tack a little bit now because I don’t usually get bankers to come onto my show. So I’m really curious about some other things. And the main one is around digital acceleration and the growth of sort of alternative currencies, etc. What further changes can we sort of expect in banking in light of the sort of modernisation of financial tech.

Mairead Taylor  20:28  

A lot? succinctly, so I think technology will continue to evolve digital automation, the way that you make your ecommerce payments, how you use your bank and other financial institutions will continue to evolve and change in some respects to a way that we can’t, you know, potentially picture at the moment. But I think what’s really important is knowing, keeping the balance between technology, digital and automation, with relationships, I think that’s the key to to lose sight of relationships, to not be their customers in their moments of truth, and have that ability to have face to face and be able to talk to somebody, you lose that at your peril. And I think so it’s that happy ability to have multi channels for customers to choose how, when, and why they interact with you at different moments of time, it’s banks using data to really make sure that we don’t just generalise offers of support, but we actually really do make that fun, that personalization, so that anything that we are sharing is really relevant for you at that particular moment in time

So there’s lots of great ways we can use technology and automation and AI to really transform a customer’s experience and improve it, but balanced with human relationships. And that is important, our CEO calls it sort of marriage that both are really important. And knowing that as an example so I think I haven’t suppose he’s got the exact percentage, but our over 70s that used, our online app in the last 18 months was huge increase, and possibly some of them never would have done that. If we hadn’t had the past 18 months that we’ve all experienced, a number of them wouldn’t ever go back. And we’ll continue to see demand and change as technology and how things become more simple and safe. You know, because you’ve always got that convenience versus privacy concern. 

But I think the main thing is knowing that it’s being able to offer all of the options, all of the solutions at the right time in the right place. I think, you know, if you take crypto currencies and think if they become regulated, then that will bring further changes in. And there’s words in our language now that probably weren’t there a few years ago, and there’ll be words in our language in a few years time that aren’t here now, that ongoing focus on what our customers want, what can we do to improve their experiences? And how can we add value? If there’s a lot of services that we currently do that can be done differently without involving banks and other financial institutions? So what value are we going to add? How are we going to make a difference to create that value for our customers?

Katherine Ann Byam  23:31  

Now, I’m totally with you on that. So I want to ask you one last question, which is, what are you telling your children

Mairead Taylor  23:38  

My youngest is 22, nearly 23. And then I’ve got a 34 and a 30 year old and I’ve got three amazing grand daughters. So one of the things I did is that when I signed up to the cogo app, I obviously reduced as much carbon as I could in house. I’m still on a journey because Rome wasn’t built in a day. But I’ve used Cogo app to help me do some positive offsetting through critical offsetters. And I’ve just used that and then you get a certificate. So I’ve put my granddaughter’s names on, I’ve given it to them for birthdays and Christmases. And now they’re young, but the idea is actually just that the eldest will be three in December, but they’re always seen that it’s something that’s really important to me. 

And interestingly, there’s a couple of books out now that are really good that you can actually bring alive. So I’m learning all the time, you know, you’ve got a mixture of friendship groups and family and you talk to people and it’s important not to lecture and it’s taking people with you, but it is something that is very close to my heart and I am passionate about it. We put climate in all our money sense programmes, which we’ve been doing for over 30 years. As we’ve added time to modules, we bought into what’s called our business builder, which is a free digital online for entrepreneurs. Anyone can sign up to it. That’s all we’ve got a lot of Climate modules in it. So it’s about education, keeping on the agenda, a customer and a banker, and neither might have the answer at the moment. But that doesn’t mean we shouldn’t talk about it, or try to connect people to who can help. So

Katherine Ann Byam  25:15  

Thank you so much for joining me, my readers and I think it’s, it’s a conversation that we’re probably going to have again, there’s going to be a lot coming out of cop 26. So I really look forward to continuing to engage with you. And thank you for joining us on the show.

Mairead Taylor  25:31  

Oh, thank you very much for having us, Katherine. And as you say, I think the cop 26 it’s the actions and what we do afterwards is going to be the real key. Thank you.

Katherine Ann Byam  25:41  

Thank you so much. This episode was brought to you today by the Eco business group Club by Katherine Ann Byam and by the space where ideas long, the Eco business group club supports positive impacts. SMEs with coaching new health, and community support toward achieving the impact and reach they set out to meet. You can find out more by connecting with where ideas launch on Instagram or following the hashtag where it is launched across all of your social media.