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Episode 1: Discussion with James Close · Unfolding: a circular economy podcast

• Wayne Hubbard: Hello, welcome to Unfolding, a podcast which is going to unfold the circular economy. We're going to explore the current state of circularity progress and crucially, how we can all be part of accelerating the transition and take action to combat linear lock-in, whether we are policymakers, businesses or citizens. And in the first series of episodes, we will be focusing on the upcoming COP31 in Turkey. later this year where the circular economy has been highlighted as one of the core focus areas for action in the battle to reduce climate emissions. And we'll be talking to a range of experts with knowledge of the process who will give us their take on how national governments can incorporate circular economy principles into climate mitigation strategies. And then we're going to actually go to the COP to try and put into practice what we have learned. in the episodes and try and influence the COP outcome itself. So thanks for tuning in and why don't you join us in this journey on the road to Antalya. So I'm Ian Gulland, former CEO of Zero Waste Scotland as well as past president of ACR Plus, a pan-European network of cities and regions promoting sustainable resource management and the circular economy. And I'm Wayne Hubbard, former CEO of Reel London and former member of the UK government's Circular Economy Task Force. And together we have, I don't believe this, over 60 years experience working in waste and the circular economy. Is that true? You've done the additions, so I think so. Yes, it does make us feel very old though. But yeah, we'll go with 60 till somebody can challenge that. So myself and Wayne are going to be talking to some really exciting guests in the run up to COP to understand a little bit more about the COP process and what we could expect or what we should expect by way of agreements or implementation plans for the circular economy specifically, as well as getting into a wider discussion around circular economy transition overall. And there will be an opportunity for listeners to feed in your thoughts and questions as we go along. We'll provide an email. in the show notes. And yes, even to suggest future guests we might like to include, we are keen to make this as interactive and as interesting as possible. So to kick us off, we have our first guest, James Close, former colleague of mine at Reel London, but better known, I think, for the work he did at the World Bank and then laterally at NatWest. James has been to 11 cops. That's like a third of all of the cops. So if anyone knows anything about the process and what to expect, it's James. So without further ado, let me introduce James Close. Great to have you with us, James. ⁓ Would you introduce yourself, please? Yeah. Hi, Wayne. Hi, Ian. Hi, everybody. My name is James Close. I was, until December, the head of climate change at NatWest Group, where I had responsibility for embedding our approach to climate in the bank strategy. And prior to that, I was director for climate change at the World Bank and also your colleague Wayne at ReLondon, which was a great experience. I've currently just taken on a role as a senior visiting fellow at the London School of Economics. ⁓ I've been to 11 of the last 12 COPs and experienced the highs and lows of being part of some of these engagements. I'm really looking forward to sharing my experience and thoughts with you in the audience. Thanks, James. Well, maybe on that, you could kind of give us your understanding of the, I guess, a potted history ⁓ of the treaty. What a COP is. Maybe talk about Paris, because I know you're involved in Paris, and then link that to kind of COP 31. Yeah, great. Thank you. ⁓ Well, the COP process, which is effectively the United Nations Framework Convention for Climate Change. came out of ⁓ the Rio ⁓ Summit, which was just over 30 years ago. And that kicked off this process and it went through some ebbs and flows really in terms of Kyoto, where there was going to be almost a top-down approach to reducing emissions to Copenhagen, which failed really in coming to any sort of agreement, to being reinvented effectively in Paris with a ⁓ a framework that ⁓ had common and differentiated responsibility to the parties, which are the countries involved in the COPs, and then really pushing this down to individual countries' obligations and commitments to implement the Convention through their nationally determined contributions. I think one of the sort key things about Paris was ⁓ Article 2.1c, which sometimes gets forgotten about, but that was It's very significant because it expects all financial flows to be consistent with sustainable development. So that's really the license that ⁓ you have to get the investment in to create this new, more resilient future that has a trajectory towards net zero by 2050, which was the other commitment that effectively came out of Paris as well. And then in Glasgow, where we were together, that really was almost the finance cop and the whole kind of essence of the Glasgow Financial Agreement for net zero came about. And that was to commit to getting to net zero through financing through to 2050. And then, of course, we've had a six cop since then and Antalya will be cop 31. And I think that's going to be a really interesting time to take stock of what's being done. the previous COPs, but I think the Turkey presidency have talked about this, making sure that this is really an implementation COP. We're well over halfway through the decisive decade of the 2020s. ⁓ And ⁓ we really need to see that implementation taking place because emissions are plateauing. ⁓ And if we're to get them down rapidly so that we're at net zero by 2050, we need to start seeing seeing that happen through both fossil fuel reductions, but also through some of the other things that we're going to talk about in terms of reframing and reshaping the future economy. Just before you come in, on the actual nuts and bolts of how this works, because I suspect there are people out there who just don't really understand the term net zero in relation to how it applies. the treaty. Could you just unpick that for us and maybe just differentiate territorial emissions and then what we call consumption-based emissions or what other people might say carbon footprint? Yeah, so the real objective of the Harris Agreement is to keep temperatures significantly below two degrees and as close to one and half degrees as possible. So then the scientific work goes on that says, well, what's required to achieve that? And of course, if you're continuing to produce emissions, then the parts per million of global greenhouse gases will continue to go up, which means that warming will continue. So you need this balance between what we emit and what we absorb. And that's what net zero is, when you get to a point where we... absorb as much as we emit through also the whole kind of natural cycle of the way emissions are produced and reduced as well. But what that really means most significantly is a rapid reduction in fossil fuels. And Paris started that by ⁓ looking at how to reduce coal consumption, which of course we in the UK have managed to do. But as a result of some of that activity, what we've done is shifted what we call our territorial emissions, which is the emissions we produce in the UK over to other countries, particularly China, where we import a lot of goods and products from China. And so our consumption emissions have reduced ⁓ much, much less. So think our territorial emissions are now 70 % below than they were in 1990. that's by a process of deindustrialisation, is it? So of the UK deindustrialization, but of course, obviously, we've seen that industrialization take place in China and other emerging market countries. And that's so so I think in many ways the the challenge, the thing that happened between, if you like, Kyoto, where you're looking at total emissions across the globe and ⁓ Paris, where you're looking at individual country emissions, is you lose this kind of netting out effect. which is required to be able to say that we're actually all collectively producing net zero emissions. So we're absorbing as much as we're producing. And that's where you have to look at this through the lens of ⁓ consumption emissions rather than territorial emissions. I mean, that's interesting. I mean, two points just from listening to you, James. I mean, one on that latter point, I mean, it is, as you say, it is about you know, the UK's progress is all kind of measured by territorial emissions and that's the same for everyone. But is there an opportunity to think differently about that and bring in that idea of measurement of consumption emissions? mean, don't know, suggestion. Well, yeah, but there has to be really. mean, because otherwise... When's that going to happen? guess because that does feed into the discussion we're going to have around circular economy and consumption and what we're really trying to achieve rather than just increase recycling levels. But unless you're measuring consumption emissions, even at a local level, it feels that, yeah, you've got one hand tied behind your back when you're really bringing in these other types of approaches that would actually take a much more broader systemic view of what we need to do in terms of tackling climate change. But I think what it really is trying to say is that in order for us all collectively to reduce emissions to net zero, we've got to figure out, you know, what both the supply and demand side of that equation. So effectively, you think about the UK is the demand side of emissions that are supplied by China. So what are we going to do to reduce the demand side ⁓ and send that demand side signal? And that's really where the weakness in the system has occurred. Because if you listen to a lot of the fossil fuel producing companies, say, well, there's demand for our product, so we'll continue to produce it. ⁓ And everybody goes, yeah, but we are shifting to renewables, but we're not doing it quickly enough. And we're not doing it in a way that sends that signal that investing in more oil and gas production is actually going to be a stranded asset. And therefore the cost of capital for that investment should go up, making it less feasible. And that's sort of where we are at the moment in this dynamic, if you like. ⁓ And the tension is that ⁓ everybody's a bit reluctant to send that demand signal, both through policy and through consumer action, onto the supply side in a way that aligns towards that trajectory of net zero. I think... Yeah, go on. Well, I was going to say there's a couple of interesting things that maybe come back on the point you're about to make, but the Climate Change Committee, think it's the sixth carbon budget, the last carbon budget, it really kind of brought the issue of consumption or what they called, I think, I guess they called it offshoring emissions and emissions leaking out of the system. They really kind of had that ⁓ as a focus and even talked about establishing consumption benchmarks. But in the last kind of ⁓ climate change committee update to parliament, it seems to me that's been watered down a bit. And they now talk about working with partners to deindustrialize and the whole. the whole issue of benchmarks gone away. Do you think, I mean, I don't know if you know what's happened there, but is that a trend that other ⁓ countries are following? Is that a trend that we're following? Is that likely to be reversed, especially given Miliband's now declared focus on climate and development? Yeah. Well, I think the, you know, ⁓ I suppose we've done quite well not to mention this until now, but the elephant in the room around all this is, of course, the US. And when the US were on board, it was pretty clear that the global north could reduce its emissions initially through ⁓ electrification. firstly, electricity production through renewables and solar and nuclear and other forms. shifting then towards electrification of everything, of kind of mobility and of heat and ⁓ industrial decarbonization, which is the really big bit because that is very heat intensive and it requires, and fossil fuels are very, very effective at doing that. And all of that's maybe 80 % of total emissions. But then you've got other big chunks of emissions, which are the natural capital cycle, so land use and food production. And again, know, what you have to do is sort of think of this as a system in terms of how each of these aspects link in to the other and how you increase the level of ambition across the whole system to facilitate that. And what that requires then is investment from developed countries into developing countries to help them, you know, rapidly reduce their emissions so that they're, you know, the industrial... processes that they have are much lower carbon and therefore we're consuming less carbon. And, you know, in a virtuous circle, that's how it all should work. mean, the problem is that the virtuous circle breaks down because, you know, by and large, fossil fuels have been much cheaper than renewables or other forms of energy. And, you know, a lot of that is also quite heavily subsidized. So you've got to get to that point where we are now in terms of the production of electricity, where there's grid parity between renewables and fossil fuels. And similarly on mobility for electric vehicles are now cheaper to run than fossil fuel vehicles and also more predictable in their pricing because you don't get the big swings that happen when the Straits of Hormuz are closed and things like that. And that goes all the way through to materials as well. And I think that that's where you start to get into the cement and steel conversation. And what does it take to to really figure out what some of those solutions might be. And I'm working with an asphalt producer that's got some really interesting technology that reduces carbon emissions and actually produces a more efficient product. And you've got to get the capital there so that they can scale up and produce that lower carbon materials and deploy it in a way that enables us to keep our roads nice and smooth without loads of potholes in them. ⁓ But those sorts of things are quite challenging. ⁓ because there's so many vested interests for the way we produce stuff at the moment. So just follow it. Did you want to come in? You come in here. No, was just going to go. Sorry, I was going go back to another point. This is how it's going to go, isn't it? Yeah. I think that's interesting. That last point, because I think we do want to talk about that in terms of more on the ground financing and that challenge between, you're right, the circular solution for a better world and the linear state of school and how we get. I guess banks and other finance institutions to really think about that. So let's go back to that. I was interested, just sorry, James, going back to one of the points you said in your kind of overview of COPs, particularly the one in Turkey at the of the year is the fact, yeah, Turkey being quite clear about this, this is an implementation COP. And I guess, absolutely, you know, fantastic to hear that. But guess as ever, what does that actually mean? mean, what does that mean in practice on the ground? I know, because I guess, you know, from my point of view, you know, you know, Zero With Scotland is very much an implementation organization in terms of delivery programs to actually deliver policy or targets that government had set. It was very much about implementation. So, and I think I recognize that that's a different. I'd say a discipline delivery is very different from policy making, advocacy and all these other things. And yeah, and I just wonder whether even from your own thinking you've been to 11 corps, ⁓ seeing the particular people who are there, the actors that turn up at these events, will we see some implementation people at Cork 31 who are actually there to help? follow that implementation because that, yeah, I kind of feel it is a different discipline. So it does feel that you would need a different type of audience even for a better word, a different participation or what, how does that feel? mean, maybe that's just. Yeah. Well, think, think, you know, COP20 was when there was a sort of separation between the negotiators and, you know, what were known as the non-state actors, which is everybody else. And the negotiations really are setting the targets. And I think in some ways, Paris Agreement as a framework for those targets and how they should flow, a lot of it has been figuring out how to implement the specific elements of the negotiations, like for example, carbon markets, really tricky technical negotiations. I think there's a lot of work being done on the just transition that needs to be negotiated. And then there's sort of continuous conversations about the precise nature of the language in terms of phasing down or phasing out of fossil fuels. ⁓ you know, that came out of Glasgow ⁓ and also, I think, the precise language in Dubai around tripling renewables and doubling energy efficiency. So those all set the targets, which are done, if you like, in the negotiating rooms, but then in the implementation side of the COP, which is the huge trade fair that sits around it where all the kind of implementation folk go. And, you know, also, let's be honest about this, the fossil fuel lobby hanging out, making the case for continuing production of fossil fuel as well. But that, think, is really where the, if you like, the mindset of the ⁓ Turkish ⁓ co-presidency sits is, what are we doing to shift those negotiations into implementation so that we can start to see that rapid reduction in emissions that's going to be required to get us anywhere near net zero by by 2050. we maybe just have a look at the ⁓ COP agenda or the things that are on the COP agenda? In particular, obviously, and I are interested in the zero waste and methane reduction agenda item. Underneath that, there is this target of reducing global waste growth by half by 2035. And then there's the wider kind of issue of how do you reduce emissions? And both of those things seem to be about reducing demand. You could argue it's about reducing resource efficiency, but maybe to get to 50 % growth, you actually have to sort of reduce demand. So how do you reduce? I mean, we would say the circular economy, but how do you think they think? you reduce demand, but at the same time, don't kind of send the world into a global recession. Well, think there's two things I've learned around this. One is what the policy signals are from governments, and they have sovereignty around their own policy and what they're doing to support the implementation of their NDCs. But those policy signals are only really a function of what the population are prepared to. ⁓ to support and you know, there's been that long held phrase, we know exactly what to do, we just don't know how to get reelected when we've done it. So there's a real sense that you've got to take people along with you here ⁓ and that the mindset needs to shift from us needing to own ⁓ everything to being much more prepared to do things in a regenerative and circular kind of way. And I think, you know, so if the top apex of that, if you like, is food waste, is a huge contribution to greenhouse gas emissions and methane in particular, methane's a really attractive thing to deal with because it has a relatively short life, increases heat significantly. So if you can reduce methane emissions rapidly, then you can get temperature a bit more under control more quickly. And I think the point around food waste is it is a bit of a demand ⁓ problem. People need to think about how they buy just enough for their consumption rather than so much that they're throwing a whole bunch of this stuff away. But it's also a bit of a system question, which is, from, if you like, farm to fork, how do you produce more efficiently so that at each stage of the supply chain, you take out that food waste. And again, know, emerging markets, developing economies, doing some great work around this, particularly around cold chains, where, you know, many years ago you wouldn't be shipping anything with any cold chain and half of it would rot and you'd get, you know, half of it into its destination. And now through cold chains, much, that's much, much more efficient. Now there's lots still to do around all of that, but I think that's a good example of how you can really sort of focus on implementation, know, spot some of the good practice that's going on. I think the UK's done a pretty good job on raising food waste awareness and reducing food waste and supporting other countries to take similar types of action. mean, you're right. Food waste is a ⁓ really knotty problem and, you know, people like Rapp have done it. incredible work on that. And Liz Goodwin, actually, who were at the World Resource Institute, who used to be my boss. But it also really speaks to the point you've made, because food is wrapped up in identity and culture. And, you know, I was reading a report just this morning around the claim that organic eggs are worse for the environment than battery eggs. And it's that point about efficiency. It's much more efficient to cage an animal and make it lay eggs. But would we accept that from a food standards and welfare perspective? So food is a really difficult issue. And I would sort of put it to as a tricky issue on its own, a significant issue that's going to be a barrier to reducing emissions on these other things. On the more technical side, it seems to me that the circular economy offers us a least friction way of reducing that demand before you come up against popular uprisings that you might have if you're asking people to eat less or have less access to the things that they enjoy. And then I just want to come to the... the global equity perspective, because going back to food, some people need to eat more food, just to be kind of stupid and blunt about it, rather than, and some people probably need to eat less of a certain type of food. it's globally complex. Yeah. But all of this is, isn't it? I mean, if it was simple, we'd have kind of figured it out by now. And this is in many ways why we like working on it, because it is genuinely complex. And that's why, despite all its frustrations, the COP process has an important role to play, because it gets the best and the brightest thinkers to come together and think about these problems systemically and work out what some of the trade-offs are and do it in a conversation that involves representatives of the global north and the global south in a way that builds a far more resilient ⁓ planetary system for us. And I think, again, that's where circular economy has such an important role to play because it looks at the physical side through the materials, but also through the natural side, which food systems and land use, etc. And the two come together in a way of thinking about operating within planetary black boundaries, but also ⁓ giving everybody the social welfare that they need. And you're right at the heart then of the Donut economics concept that Kaye Rayworth has advocated for so brilliantly. So we then just, for a minute or two, just focus in on that, the circular economy being on the agenda at Coq. Because I think, like we said, it's not really been, well, it's not been a priority action. And it is now set out, thanks to the government of Turkey, primarily, they really put zero waste and the circular economy on that agenda. And guess I was at an event in Turkey, few months ago and it was very clear that, you know, through presentations and conversations that everybody understands that this is a great opportunity, but it's not, it shouldn't be seen as just, you know, how do we improve recycling and ultimately, you know, improve waste management infrastructure at a global level, which we need to do. I'm not gonna hide from that, you know, we do need to, we need to take that forward as well. But this is a real opportunity, as we've said to. to think about that consumption piece and think about, and even the equity thing, how do we bring equity at a global level to the issue of resources and materials? And obviously that now has played into that climate agenda. I guess I'm just interested in your own views on having circular economy on the agenda. Is this a real genuine Trojan horse to get... ⁓ that upstream circularity embedded in the kind of global economy, or is there a fear that it could just end up being talking about downstream waste management by default? And what do we need to do? What do we all of us need to do to ensure that we get that kind of upstream conversation, which is more challenging for all the things you've said, not just at an individual level in terms of on the ground, but politicians, think Wayne's already said that, it's a challenge in terms of the political. it's fair to talk about this, but yeah, I guess I'm just interested in what do we need to do to ensure that we get that Trojan horse? Yeah, well I think so, you know, what's worked when you sort of boil the UNFCCC process down and it's also replicated in the biodiversity convention as well to an extent, it's having very clear objectives like in the biodiversity convention it's 30 % land and sea production by 2030. In the climate convention, it's net zero by 2050 and halving emissions by 2030. ⁓ And I think the challenge a bit for the circular economy is to figure out what that means, what implementing a circular economy principles means in a very small set of reasonably well-defined metrics. And I think if I look at For example, the transmission mechanism between the ambition level, which is what COP's all about, and the implementation level, which is the nationally determined contributions that are developed and implemented in each individual country. It's really how do the metrics stack up from one to the other? And I think that's where, I think there's about a quarter of ⁓ NDCs have reference to the circular economy, but very few. have any specific measures around it in terms of what it means. And in the UK, we've tried some of these things, ⁓ but I'm not sure they've really stuck in the way that gives you a very clear link between what you do at a policy level, what you expect in terms of commitment or an authorizing environment, if you like, from your citizens, and what that means as a signal to business in order to implement some of these things in a way that that flows through because I think what we've also recognized from the COP process is if it doesn't hurdle, you can't invest. So you've got to find ways of making that ⁓ investment into the circular economy, which is like most of the decarbonizing technologies, capital intensive. And you've got to figure out how you're swipaging from OPEX to CAPEX in a way that can be reflected in the financial system and then rewarded through the returns that come to that capex. And that's the bit I think we've got wrong so far. That's very interesting. We could have a whole separate discussion about that. But I just wanted to come back to the point about targets, meaningful targets. I actually think the reduction in global growth by 2035 is a good start. It's a good target. I remember having this discussion at a real underbord around about the time that you and I were working together because I'd been to the C40 mayor's conference in Copenhagen in 2019 and I came back kind of, you know, like really galvanized by the need to do something and was impressed by the C40 urban consumption in a 1.5 degrees C world. report and we went to see Arup and we tried to get data and we were trying to figure out what the pathway that they'd set out in consumption meant for waste. that would give us a, you know, if you reduce waste by X amount, that will help you be on your consumption pathway. But we couldn't, we never really got that figure. It seemed very difficult to work it backwards. But that seemed to me to be a good ⁓ benchmark. The problem was that the detail of that report talked about privation, really, and it became politically unacceptable because there was no ⁓ alternative to ⁓ consumption that was suggested in the report other than having less stuff. Yeah. know what I mean? It was restricting buying two garments of clothes a year. It eight new items of clothing a year, I think, that stuck in my mind. But of course, now with vintage, you know, days. Buy lots of secondhand, but you can only buy, you know, presumably those eight new items are eight new pairs of pants. But also then, but then you think about how you shift away from the throwaway economy. That's when, you know, you need to get the incentives right for people to produce higher quality, longer lasting things that may cost more, but actually last longer. Or may cost less. The new item may cost more. But the second or third life, you cascade the value of the item is still there, but the price is still there. have that second or third life, you need to have built something with sufficient resilience so it doesn't fall apart. Design for durability is a And the problem with fast fashion, it isn't. You can't sell it on vintage because it's fallen apart after you've worn it two or three times. Well, to go back to your capital intensive point, there is a... I think an assumption in the finance market that the circular economy is capital intensive because what has been sold is this bit of kit, which does something to this waste stream and turns it back into a product that you can then put back into making a new item. And that is capital intensive. Whereas here are some clothes. Let's sort those clothes and resell them. Arguably is a lot less capital intensive. Maybe it requires investment into AI or some digital platform, some peer-to-peer platform. But you see what I mean. So there's an interesting discussion there because the next, the linear economy, seems to me, automatically defaults to recycling as opposed to anything that's not new. Yeah. Well, and I think also just thinking about that point as well, it's how are you going to invest in people? to be able to do this in a way that actually continues to add value. I mean, that's the definition of circular economy, keeping its highest value for the period of time as long as possible. And you get that combination of financial capital and human capital working in a way that is most productive. And I think, given that we're about to face a really kind of challenging discontinuity in the global economy as a result of AI, ⁓ How are we thinking about redeploying labor so that it can continue to be productive in ways that are socially useful? And that's where I think you get into the keeping some of those materials lasting at the highest value for the longest period. And I think that's also really where ⁓ actually the whole kind of global concept of developed countries and developing countries plays even better because You can then start to think about how you're getting the resources to where they need to be, and particularly in emerging markets and developing economies. And also how they're sort of deploying their resources in a way which adds most value, which quite often they just export the raw materials. Well, ⁓ build the added value closer to where the raw materials are. And you've got less raw materials being produced because you're consuming less. but actually the value added is staying in that developing market, which is really positive then for the people who live in that place. And then I think that starts to both environmental resilience into the system as well as social resilience. And I think if there's one thing I think the circular economy community can make an argument about is a circular economy is much more resilient than a linear economy. And in a world where we're going through ⁓ great amounts of disruption, building that resilience in through design, I think is really, really powerful. And again, that signal can come from the Cobb and then it can be picked up through the parties and through business in terms of the way in which it gets implemented. And that I think would be the great story of COP 31 if it can be kind of engineered that way. Maybe there's a point and maybe there's my naivety in the kind of finance thing. But it's picking up on that last point about a lot of the circularity that we see, particularly in individual businesses, isn't capital intensive. So it's not big wind turbines. It's reorientation of the supply and demand to lease, to rental, and stuff like that. And AI is enabling that. So it's interesting that you've seen a lot more, I think, happening in that space than we've probably imagine because of AI enabling that to happen. So guess the naive point though is, so the earlier point about this is about more resilience, circle economy brings more resilience to the economy. Yeah, absolutely. You make that to politicians all day long and they get it. But then the thing that they struggle with is then what are we investing in then? Because to attract investment from, with every aspect, the big banks and the global markets. They find that difficult. They want to invest in stuff, don't they? They want to invest in capital infrastructure. And you can see investing in offshore wind and all these sort of things and electric vehicles is, you know, they can get that. Thinking about previous co-ops, mean, the Glasgow finance initiative, you know, are we looking for something different to come out of this for circular economy, you know, in zero waste, a different type of finance mechanism? Because actually adding it, Adding that into the other ones feel like we're still going to be competing against big turbines, big infrastructure. All of that needs to happen. Don't get me wrong, it's not an either or. But actually, do we need something very specific? Isn't going to be looking for big capital gains? Yes, there is equipment required on us, but it's going to, as you even said, it's about investing in people. It's investing in social outcomes as much as big economic outcomes. Well, think, huge question. Here's two thoughts really around that, think Ian. The first is, you what I learned from GFan's experience was, I mean, brilliant conception. was in the room when Mark Carney and Gianna Jellon and everybody else signed up to it. But there was almost this sort of collective sigh of relief that the banks and asset owners and fund managers are going to take on the responsibility for getting to net zero. And then the politicians sort of said, well, okay, that's fine. They're going to do it. you know, finance is rational. It follows the signals that it sends to it. And I think then, so that tension then became exposed, which is you need policy leadership as well as a long term commitment. And when you bring those two together, you do see change. You look at the way many asset owners are thinking about their investments and they are much more aligned with, you know, more resilient net zero long-term economy and insurers are coming on board because it's in their interests to make sure they don't get hugely exposed to climate breakdown. ⁓ I think the, so that's the kind of macro financial piece. And alongside that sits the role of public capital alongside private capital and how we, there's only limited amounts of public capital. So you have to be catalytic about how you stimulate private capital. And then I think the other thing that follows on from that is, what's the difference between debt and equity? So if you look at, for example, the vast sums of money that are being deployed to scale up AI extremely rapidly, this is a kind of winner takes all game in theory. everybody's prepared to bet massively on it. It's all effectively equity. I there is a bit of sort of secured ⁓ investment coming on it, but most of it is based on future cash flows. Whereas debt historically has all been secured on asset security, know, in dematerializing circular economy, you don't really have asset security anymore because there are much less assets. And the other thing is, it's also been tied to historic financial performance. But actually, you're looking at new business models emerging that are going to fuel the growth in the circular economy. They're not going to have track records of historic financial performance. So you're going to have to make some assumptions about what future performance would look like. And that's when debt starts to look more like equity. But I think these are questions that the credit committees need to be starting to think about. And they need to be working out what that means in terms of how you banks deploy their capital and bank capital generally through debt can be quite a lot more less expensive than equity or some of the other forms of capital. So again, I think if you can build that into the conversation around the financing piece of the COP and how it links to circular economy, I think you can drive it towards implementation and an expectation that you can mobilize the funding for investments in the circular economy. That's fascinating. I mean, I think we've got the basis for our second season really, financing of the... But I mean, there's so much in that and it's so complex. But if you get it right, you could really solve the problem. Yeah. It's interesting because I mean, we could go into this around, yeah, is that a separate, is it a separate conversation within banks thinking about your NatWest experience around funding the circular economy? So it needs to be something standalone in terms of products, or is it, is it part of your wider equity versus debt financing stuff, or if it's left within the kind of sustainable finance side, does it end up having to compete with things like turbines and infrastructure and the more general stuff that is being deployed from net zero? I mean, that to me is an interesting question. If you were strategizing within a bank, where would you take the circular economy? Where would you try and position it? I mean, I don't know whether that would evolve over time. I mean, it seems to me that ⁓ that national governments, when they invest in this space, what they're looking for always is unicorns. They'll say, we want scale. But when they say scale, they mean, I think they mean we want a unicorn. Yeah. Well, that's where I think it needs to flow through to the regulators. I regulators obviously get their mandate from government. And, you know, it's interesting that the UK financial regulators, the Bank of England, the PRA, the FCA, have all got a mandate around growth. And I think that ⁓ is where you can start to think about things like, highly technical things like risk-weighted assets. How do you incentivize banks to lend to more circular economy businesses, many of which can be SMEs because they're fast growing, many of which you're actually building resilience into them through their commitment to circular economy. Therefore, they're becoming more credit worthy. Therefore, should actually be, you're effectively taking less risk onto your balance sheet as a result of supporting those businesses to become circular. their assumption is to go. That's right. The assumption I think is there are too many moving parts because you, they're thinking of a new piece of waste kit where you've got input risk, technology risk, and output risk, like risk all the way along the chain and then integration risk. that simply doesn't, that's probably true for a new piece of know, recycling infrastructure, but it's not necessarily true for a new business that wants to do sharing or peer-to-peer, whatever, or reuse. And then you've got to think about how they leverage the assets that they've got that are much more intangible, their customer base, their technology, you know, the mindset. I mean, a lot of this is about mindset. You know, we built this mindset that is cheaper to throw stuff away and buy new. And if your mindset becomes, actually it's more valuable to retain the stuff that I've got and keep it at its highest value for as long as possible, then you have a different way of thinking about how you run your business. Well, then you're back into linear locking and that's the problem. And so when you talk to government, they say, or when you talk to the finance industry, they'll say, give us a good business case and we'll fund it. Right? But if the business case doesn't stack up in a linear system, they can't fund it. So that's where you need the policy signals to kind of make this virtual circle happen. Yeah. And the concessional finance, know, the sort of creativity from, you know, what the UK have called the public financial institutions, the pop-ins to facilitate and enable that. Yeah. And they need direct, they need permission from government to do that, I think. And that's problematic. expectation really, and it is probably a better way of thinking about it. Right. So we've sorted it. That's good to know. ⁓ I think we've, I mean, we've had a fantastic conversation, James. I actually, I've learned a lot. we're going to, we'll, ⁓ dissect this, I think in our outro. The last question to you really is do you have any kind of recommendations for specifically on the circular economy side, you know, that we, you think that that could, should come out of cop, like any kind of policy. Yeah, well, think we talked about the halving the rate of growth of waste. I mean, if you can make that a sort of catchy phrase that sends a metric through the system, then that's great. So that would be where I'd start in terms of the overall goal. The second thing I would say was, what's the transmission mechanism around this? And that's where I'd get into the nationally determined contributions and invite. ⁓ countries to be more granular about their expectations around circular economy in their NDCs. And again, UNEPFI and UNEPF have done some work to support countries doing more of this into their nationally determined contributions. So that's, think, a positive signal. ⁓ And then I think third is, you know, is the finance piece, which is how can we stimulate this conversation to say that we've got to think about the way finance flows differently? to support resilience in a world in which it's becoming highly disruptive and where circular design builds in that resilience. then fourthly, I'd say you've got to make it about people as well. What are the benefits for the individual here? You can have a better life if you commit to being more circular in your mindset and your aspirations. You can save money by reducing food waste. by going and buying some of your clothes are vintage, there shouldn't be anything other than a, know, we should be regard people who do that sort of thing with respect rather than, you know, thinking that they've had to do it because they're poor or something like that. And then I think the other bit, and we touched on this as well, is how do you do this in a way that is consistent with the expectation of common and differentiated responsibilities, which means supporting developing and emerging markets to make the transition. in a way that works for them, but also works for the system as a whole. Brilliant. Very, very good. Very useful. Thank you. Ian, did you have any last comments before we... No, no, that was really good. Really good. I liked those five things. Well done. Yeah. And it was just such a great conversation. We could have gone on more and more. A high benchmark, James. Thank you. A high benchmark. I enjoyed it. Very good. Very good indeed. There we go. Good, good. ⁓ it was good. You happy with that? Yeah, mean, yeah, I mean, I'm very happy with that. I guess it just shows you the challenge. mean, the people we're bringing on are going to be like James, they're going to help us to develop the conversation. I feel like an idiot really compared to James. feel like... And the clock goes really quickly as ever. You know, we've probably done that. both of us been on a platform, you start and you suddenly think, ⁓ we've been only talking for three minutes and the next thing you know, it's 23 minutes. Yeah, but I mean, didn't, I mean, I could have said artificially, right, we've had half an hour, but I felt like let's just keep going until. Totally, totally. You know, because there was some really, there was some just beautiful nuggets that a bit about finance at the end, it really nailed it. For me, that was, I mean, it was all very ⁓ instructive, but I think that bit at the end was really interesting because I don't. you again, you know, I'm not a finance person, you're not a finance person, but when you listen to somebody like James explain even the difference between equity and debt and how, and you're right, you know, I think that was really a great message. And he's five at the end. that's good. Really good five. So we started out really thinking about the framework, the NDC framework, unless I'm still not entirely convinced ⁓ about the NDC, the kind of framework as a mechanism for reaching net zero globally without some other thing, which I mean, you and I will probably agree that it needs to be a circular thing, but The COP itself, COP 31, is obviously thinking about this and talks about greening industry. So there's a technical, there's a demand, and then there's a systemic change. So it seems to me the technical greening of industry is going to be expensive and slow. The demand side reduction is going to Well, mean, the global south, you know, massively generalizing the global south probably needs more rather than less. And the global north probably needs less rather than more. So how on earth do you do that in an equitable way without causing a global recession and politically acceptable? think that's impossible. So that only leaves systemic, which is ⁓ some kind of circular transition. And that, seems to me, is the only way to square that particular circle for the other circa 45. percent of emissions. And James did talk about that. But maybe we, in future episodes, we can dive into that dilemma a bit more. think genuinely people understand this now. I think it's not as black and white. People are saying, look, we're not measuring. We're just measuring territorial emissions. We're just trying to decarbonize. I think generally everybody understands exactly what you said, that there's a bigger thing that we need to address here in terms of global emissions. We need something. And perhaps the NDCs as they stand aren't the thing. ⁓ And mean, James talked about metrics, which feels like that is a podcast on its own. Because we're all struggling with how do we measure circularity, both at a global level, at a national level, and even in businesses saying, how do I measure circularity? How do I play that back to whether it's investors or policymakers that we're becoming more circular? ⁓ So maybe there is a conversation that we should be having around what does the future frameworks actually look like to allow circularity, which everybody feels is the right path, whether it's for resilience, whether it's for climate change, whether it's for social equity, and a global social equity, not just at a local level. So yeah, I definitely feel like that. definitely feel, like I said, even talking to the UN, UN people, think, yeah. we need to do something different. guess that's what's coming through. And maybe the fact that circularity is on the agenda, maybe I keep going back to that analogy of the Trojan Horn, which seems really topical at moment. It's just apt. Maybe that's why I thought about it. But is this a way, because if we can get circularity, conversations around circularity, it kind of helps accelerate that conversation that people are having, I think. It is a systemic thing that needs to be addressed here rather than just looking individually in countries and doing all the things they're doing. They all need to do it in terms of decarbonization, electrification, all of that needs to happen. Don't get me wrong, but it's only 50 % of it. I think I regard it as the low hanging fruit of climate mitigation. That's not to say it's easy. None of this is easy. So just want to... put that out there. But the hard to abate stuff is definitely not easy, right? The harder to abate stuff. Because that requires some kind of behavior change. And typically, it seems to me at least, behavior change has been interpreted as if only people would buy less, or if only people would buy recycled products, which I think kind of victim blames really, it's your fault people. that's, you know, that's, don't... I don't subscribe to that. think there's an overproduction issue here. I wonder if when COP31 agenda talks about ⁓ greening industry, part of that is investment into recycling. And I think that would be, if it was, I think that would be completely acceptable. But on the wayside, with where circular economy is in there, going back to what James was talking about and differentiating ⁓ that quite nuanced conversation between debt and equity and the role of high street debt really versus project investment. And that's what I think government talks about. It talks about project investment. We're talking about equity and then high street debt. And that's completely different. And that requires a different understanding of scale, a different understanding of how this works. It means scale at breadth, I think. And it would be interesting if in the finance bits around COP, that was a discussion that could be had with finances. But who goes to COP, like from the finance side? Is it the banks or is it BlackRock? who guys to call? ⁓ yeah, yeah, Black Rock. yeah, those types of people. mean, I guess that's, yeah, they are all their banks, big banks, know, global banks, world bank, you know, European investment bank, all of these people. And I'm sure some of the bigger investors, private equity, venture funds will be there as well. Yeah, they're an important part. I mean, absolutely. I mean, it was great just to me going to the whole thing about implementation, about who's in the room. the implementation room, the kind of trade fair that operates at the beginning of the heart of COP, you kind of think, well, yeah, but at the same time, the lobbyists are in there. You can argue they're not part of the implementation because actually what they're trying to do is stop the implementation or something, lobby against it or lobby for it to be slowed down or, know, so I wonder whether, yeah, I mean, I guess that was the point I trying to make. Who is actually? Who else needs to be there? Who are the people who are going to be the implementers? Because a lot of the people I've met in Glasgow, I in the trade fair, there were businesses with ideas, with solutions to a particular problem. But that's only part of implementation. You know, it's actually how do you implement that? How do you create the market for that? How do you create the right investment and the right investment over a period of time to... to allow that business to scale or to bring other partners into it. mean, it's not, know, so ideas are great. you know, I'm not suggesting we've got all of the ideas, but yeah, we have got loads of ideas, you know. We have, yeah, I suppose. But that Ashford company, we've all got, you we could all list 10, 15, 20 companies quite quickly that we've worked with that have the solution or a solution to a particular problem. But as you said, we're not seeing them at scale or we're not seeing them replicable across. the high street or whatever at scale that we need. So that's about implementation for me. That's about how do we deliver that, that new solutions. maybe that's me, I'd still feel that that's a different, that's a different skill set, it's a different approach or different discipline than simply just innovation and policy and, you know, I mean, you know, the businesses are there, aren't they? I mean, that's what gets me, a lot of businesses go to court. saying critical, but businesses are usually represented by their public affairs teams, not their project management teams, not their implementers, not the people who actually deliver for those businesses. Yeah, no, it's interesting. When I was on the circular economy task force, the UK government circular economy task force, we would speak to lots of companies. typically, the person you'd speak to would be the director of sustainability. And you realize quite quickly that they are wearing two hats. One hat is their passion to do something genuinely transformative for the planet. And the other hat is their company hat. And you're never quite sure which hat they're speaking wearing. And to be honest, at the end of the day, it's the CFO or the CEO who makes those decisions. It'd be interesting. So this podcast series is going to be about us. having conversations and learning. then our intention is to be a cop, isn't it? And it'd be interesting to see how near the blue zone we can manage to get. That's all. I mean, I guess it will be a fairly good KPI ⁓ for the success of our podcast to see how close to the blue zone we can get. I doubt we'll get anywhere near the blue zone, you never, you it's always good to have aspiration, isn't it? Yeah, yeah. And maybe the other thing is, you know, I don't know what the metric would be. How do you measure the degree of implementation this corp is going to be, you know, which is absolutely a great objective to have. Well, I think, I think, you know, for us, if we can, if we can, you know, somehow talking to key people come up with a great you know, a great list of ideas and policy suggestions. We've had five great ones today from James. You know, if we can come up with, you know, I was going to say our top five, but maybe we need top 10, you know, if they keep coming on at this rate and somehow, you know, input those into the discussions somehow, whether that's, you know, meeting people in the green zone or talking to the policymakers in the blue zone, then I think that would be, you know, that would be a measure of success. My early prediction is that you get a ticket to the Blue Zone and I don't. That's my early prediction. Okay. All right. Well, that sounds good to me. Good. I'll pass out the food. Yeah. Well, I hope it's suitably vegan. Yeah. Okay. All right. Brilliant. Let's call it a day.