Why I Joined a Young Climate Tech Company - Kristina Wyatt
Published March 07, 2022
James Carville famously coined the slogan for Bill Clinton’s 1992 Presidential campaign: “it’s the economy, stupid.” Now, in the context of climate change, it’s the data.
I have spent most of the last decade working in climate change – first at the law firm Latham & Watkins, helping to launch its sustainability program and ESG practice. More recently, I served as Senior Counsel for Climate and ESG in the SEC’s Division of Corporation Finance. There, I focused on climate policy and rulemaking, and worked with government officials across the US government and around the world. I have been fortunate to have been at the forefront of climate change disclosure practice and policy and have been guided in my career by my sense of where I can have the greatest impact. That decision calculus led me to join the climate tech company, Persefoni AI.
Why join a climate tech company at this moment in time? It’s the data. Tackling climate change has become a data problem. We have reached a point at which there is a clear direction of travel and companies in all sectors will be compelled – by regulators, investors, lenders, business partners, and other stakeholders – to disclose their greenhouse gas emissions. The challenge is that climate data is enormously complex and calculating greenhouse gas emissions is a daunting task without the right technology tools to ensure accuracy, consistency, and transparency.
Companies need reliable data to understand their climate-related risks and opportunities, to build strategies, determine where to deploy resources, and to track their progress. Investors need transparent disclosures, grounded in reliable data, to enable them to understand the climate-related risks and opportunities in their portfolios and to allocate capital accordingly.
The good news is that there is a clear will to make the transition to a lower carbon world. In the last decade, we have seen a monumental shift in thinking about climate change. In 2015, the Paris Accord represented a commitment by nearly every country in the world to mitigate and adapt to climate change. In 2017, the publication of the landmark recommendations of the Taskforce on Climate-Related Financial Disclosures (TCFD) gave companies a framework to integrate climate-related risks and opportunities into their financial planning and reporting. In 2020, Larry Fink’s publication of his annual letters to CEOs and to BlackRock’s shareholders was another important inflection point. Declaring “A Fundamental Reshaping of Finance,” Fink made it clear that Blackrock expected companies across sectors and geographies to incorporate climate change into their governance, strategies, and reporting.
Fink’s letters arguably marked the point at which climate change became a mainstream investor concern. The question still to be resolved was what companies should report. Companies were awash with different reporting standards, which were dubbed the “alphabet soup” of sustainability reporting frameworks.
In the last 18 months, remarkable progress has been made toward convergence of disclosure standards. Five of the most prominent sustainability organizations (the Climate Disclosure Standards Board, Global Reporting Initiative, CDP, International Integrated Reporting Council (IIRC), and the Sustainability Accounting Standards Board – which has since merged with the IIRC to form the Value Reporting Foundation) jointly published a prototype climate-related financial disclosure standard building on the TCFD framework. That prototype was provided to the newly formed International Sustainability Standards Board, which is expected to draw from the prototype in its standard setting process. The United States is also working on climate disclosure rules and the EU, Brazil, Hong Kong, Japan, New Zealand, Singapore, Switzerland, and the UK already have announced TCFD-aligned reporting requirements (see the TCFD’s 2021 status report) .
Net zero commitments by countries, financial institutions, and corporations have also skyrocketed in the last year. According to the United Nations, more than 130 countries, including the United States, have set or are considering net zero commitments by the middle of this century. Further, the Glasgow Financial Alliance for Net Zero reports that more than 450 financial firms representing more than $130 trillion in private capital have committed to net zero emissions by 2050.
This is all extremely positive. The direction of travel has been set and governments around the world and the private sector have committed to massive decarbonization. Disclosure rules and standards are converging on key baseline climate-related financial disclosure principles. We now know the “what.” The next pressing question is “how.” How can countries, companies, and financial institutions meet these ambitious commitments? How can they understand their carbon footprints, build reduction and mitigation strategies, track progress toward their goals, and ensure the information they report is reliable and sound?
The only way I can imagine is through the use of technology tools that can handle enormously complex processes on the back end and provide clear and actionable information for users on the front end.
That is why I joined Persefoni.