Marisa Drew, Chief Sustainability Officer at Standard Chartered, discusses their plan to become the ‘world’s most sustainable and responsible bank’. Explaining the importance of avoiding greenwashing, building ESG frameworks, and on driving sustainability both internally and externally for and on behalf of clients.
Marisa Drew is, in her own words, a ‘classic Wharton trained Finance MBA’. It is still the best Master of Business Administration degree money can buy according to the Financial Times’ 2022 ranking, but best practice has changed somewhat since Drew was a student.
“In that classic wisdom of my day, you were taught that the private sector was in business to answer to really just one category of stakeholders – your shareholders,” Drew tells Sustainable Future News. “Today, it is acknowledged that companies observing best practice serve a much wider universe than that.”
When I entered the field of sustainability, I couldn’t have envisaged how important this was going to be, how transformational, how profound to be a part of reshaping the way we think about finance.
Drew is the inaugural chief sustainability officer (CSO) at Standard Chartered, a role she stepped into earlier this year after a near two-decade stint at Credit Suisse, where the last four years were spent as CSO and global head of the financial services firm’s sustainability strategy, advisory and finance group.
Prior to 2017, when she moved into her sustainability leadership role ‘in earnest’, Drew was a career investment banker. While the surroundings have stayed largely familiar, the focus has shifted.
“I feel incredibly privileged to have in some way stumbled into the world of sustainability,” she says. “I don’t think, at the time, I could have envisaged how important this was going to be, how transformational; how profound it is to be part of what I call the movement of reshaping the way we think about finance.”
Drew’s stakeholders are now wide-ranging, from civil society and regulators to employees – “they are our future, especially in a services business” – to non-governmental organisations (NGOs). “NGOs challenge us and I think that it can be a very good, healthy thing,” says Drew. “They not only can be the pressure point for us to raise our game, but we’re increasingly finding that they can be fantastic collaboration partners with us.”
Standard Chartered has committed to a vision to be the ‘world’s most sustainable and responsible bank’, with net zero portfolio emissions by 2050 and interim targets for 2030 for its most carbon intensive sectors.
The bank faced potentially embarrassing scenes at its AGM in May which, alongside Barclays, was targeted by protesters from Extinction Rebellion. 17% of Standard Chartered investors voted against the bank’s net zero by 2050 policy, while a shareholder resolution to impose more aggressive net-zero targets won only 11% support.
Yet, a lot of the work is perhaps lesser seen. Drew is keen to point out that turning a big ship around takes both effort and capital, but also notes that the key role of organisations like Standard Chartered is to facilitate the flow of capital.
One such example is in the creation of voluntary carbon markets, where carbon emitters can offset unavoidable emissions by purchasing carbon ‘credits’ created by projects targeted at removing greenhouse gases. In February, Standard Chartered was one of four banks who launched Project Carbon, which looks to develop a new technology platform for the voluntary carbon space.
This practice has been criticised as greenwashing by some; Greenpeace called it a ‘get out of jail free card’. But if you are a believer in working within business to create lasting change, then sometimes perfect can be the enemy of good and time is not on our side to wait for solutions that do not exist today.
“To get to global net zero in the timeframe we need to, we must have a mechanism to deal with the last but impossible-to-abate tail of emissions. And if we’re going to do it in the right way, we’ve got to ensure that the carbon credit-generating projects designed to take carbon out of the atmosphere have integrity and are of high quality,” says Drew. “For the markets to function properly and at scale, we need transparency and a set of standards to ensure first of all that the projects are happening. Secondly, that they are delivering what they say they’re delivering, and finally, that we create the support infrastructure to allow the markets for the credits to function seamlessly.”
Drew’s role encompasses teams that are focused on driving sustainability both internally for the bank and externally for and on behalf of its clients.
What can we be doing ourselves? Are we really driving the sustainability agenda throughout our organisation and embedding it in everything we do?
One part of her organisation houses client-facing sustainable finance teams, which provide advice and capital to help companies invest in transitioning their business models to those that are more sustainable. “A lot of [clients] are looking for good advice,” says Drew. “They want to know best practice; they want to understand and invest in processes and technologies to help them transform.”
Another, more inward facing, involves building the company’s ESG frameworks and policies and setting the bank’s sustainable strategy and implementation of its net zero commitment. “So that’s really looking at us as a company,” says Drew. “What can we be doing ourselves? This includes decarbonising our real estate footprint and our supply chain. Are we buying from sustainable sources? Are we really driving the sustainability agenda throughout our organisation and embedding it in everything we do?”
For scope 3 emissions – indirect and financed emissions across an organisation’s wider value chain – this means that, long-term, customers and counterparties need to be singing from the same hymn sheet and aligned in driving toward net zero. Drew notes that this is not easy, but intimates that she would be assertive in business selection if push came to shove.
“A lot of sustainability is a long-term investment, and if you’re a public company, you’ve got short-term pressures,” Drew explains. “So, how do you balance these things? Or we have a high carbon-emitting client with no transition plan. How do we manage that in the context of our own commitment to net zero? Our goal, and the opportunity for us, is to support our clients’ transition journeys in navigating these issues. If we are able to partner with them in mission alignment, this should coincidentally help defend their long-term sustainability and attractiveness as a counterparty.
“On the other hand, if a client says, ‘I don’t care, I’m just going to keep doing things the way I used to do them and you don’t have any right to tell me what to do’, it will be hard to defend the allocation of capital in that direction, so maybe we won’t be able to have a long-term continuing relationship in that instance.”
It’s not just the syllabuses that have changed over the years, but the students too. “20, 30 years ago, when we were recruiting at the top schools in the world and looking to attract the best talent, the students didn’t ask purpose-driven questions,” explains Drew.
“They might ask if they were considering investment banking, ‘how many IPOs did you do’, or ‘how many M&A deals did you do?’. Today, when we’re recruiting the top talent, they’re asking us questions about our environmental footprint and ESG policies. Will you finance coal? Are you supporting single-use plastics?
“These sustainability-oriented, probing questions are very much driven by, I think, the world that they’re inheriting,” Drew adds. “They want their job to be change making and have impact and they certainly don’t want to be affiliated with organisations that don’t have a purpose that they can identify with.”
You should try to educate yourself, decide what works for you, and then use your individual power to try to drive behaviour change.
As for greenwashing itself, Drew notes there is no universal definition of green, and therefore ambiguity often creates misalignment. “I think, generally speaking, most people are well-intentioned, but sometimes it can go awry in the execution.” But broadly, anything labelled green as a marketing exercise with no substance behind it would be her definition.
“The best way to avoid greenwashing is to be very transparent and clear with the methodology for why a product or investment is labelled ‘green’ or ‘sustainable’ and let the buyer decide if those products meet their own sustainability expectations”, Drew says. “I always use the case of the electric vehicle industry. Half of my clients will tell you that EV is green and belongs in their sustainable portfolio because of its comparison to the combustion engine’s emissions profile. Half will say it’s not, because of the input chain which goes into producing the batteries for electric vehicles, which is based on mining scarce materials, often from sources without a strong environmental or social track record.
“I think the best thing that you can do is educate yourself,” Drew adds. “You should try to educate yourself, decide what works for you, and then use your power to try to drive behaviour change.”
