EY’s Global Vice Chair on Sustainability, Steve Varley, speaks to LUX’s Leaders and Philanthropists Editor, Samantha Welsh, about EY’s approach to sustainable investing, the future of sustainability and the steps that need to be taken to fight the climate crisis

LUX: What do you consider to be the principal drivers behind the EY approach to sustainable investment?
Steve Varley: Sustainability is right at the top of the agenda at EY. We announced in October last year that EY has become carbon negative, which means we have reached our target to reduce our absolute emissions, and then offset or remove more than the remaining amount of our emissions, every year. It’s a crucial step forward in our sustainability journey and a key milestone as we work towards reaching net zero in 2025.

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Steve Varley

EY people share our commitment to the environment and to driving long-term, sustainable growth. We want to not only transform EY to become more sustainable, but also help EY clients do the same. This means reframing how business approaches sustainability and putting it right at the centre of how value is created and protected.

Creating a sustainable future requires all of us to be at the table. It demands involvement across borders, services, and teams, across all business functions. It requires alliances between governments, enterprises, and industries. As we like to say: It’s everybody’s business.

LUX: How does a sustainable approach foster growth and add value?
SV: EY clients are increasingly seeking ways to drive value from sustainability. Our Value-Led Sustainability approach focuses on helping clients capitalise on the commercial opportunities presented by sustainability and decarbonisation, but it is motivated by much more than just financial gain. It is central to how we will safeguard and generate new sources of value for everyone on the planet – our people, the society we serve, and the world in which we live.

This means leading a wide range of projects, from helping consumer goods companies drive more growth by developing new business models for greener products to collaborating with financial institutions to calculate carbon emissions from the companies they finance, and from this develop new financing solutions to help these companies decarbonise. We want to keep building on this kind of work and continue to develop services that help our clients find value in becoming more sustainable.

LUX: What is the role of the next generation/Gen Z – what are they looking for when it comes to ESG?
SV: The next generation is driven by purpose and expects more from ESG. This is hardly surprising given that both generations Y and Z have lived through a variety of systemic crises, including the 2008 global financial crisis, climate change, and the COVID-19 pandemic. While previous generations may have seen comparable crises, members of these new cohorts are more sceptical of traditional financial services than older generations and they have higher expectations of authentic and ethical behaviour from the organisations for which they work, buy from, and invest.

Gen Z is emerging as the sustainability generation. They want to work for companies that have a positive impact on society and the environment, and they want to see increased transparency and greater corporate accountability for ESG ratings. At EY, a large percentage of our workforce come from this generation, and we are really encouraged by their high standards and expectations. They are certainly holding us accountable, as well as holding clients accountable, and we are all the better for it. We need the next generation’s innovation and solutions if we are to solve the climate crisis and deliver future growth that’s truly sustainable.

LUX: Which leaders are the winning in the time of the climate crisis?
SV: Denmark, in my opinion, is a world leader in wind and solar power generation. Most of its energy is presently derived from renewable sources, with the goal of reaching 100% renewable power by 2030 and becoming carbon neutral by 2050. Similarly, the United States has a sizable venture capital ecosystem that funds renewable energy and electric vehicles, and the United Kingdom has enshrined its 2050 net zero aim in law, placing us second in the world in terms of influence.

While this is extremely encouraging, there is a ‘Green Power Gap’ that has been emerging, with only a small group of developed markets leading the way in terms of climate research, innovation, and public funding, and not enough ‘green money’ flowing to the emerging markets, where the effects of climate change are felt most acutely. EY’s Green Money Report outlines clear recommendations for action to help accelerate a green transition that is truly global and where all countries can take part. I really can’t stress the importance of this enough – the opportunity to avert climate catastrophe must be seized by everyone now, not just by a small handful of countries.

LUX: Can you tell me about the S30 forum?
SV: The S30 is part of the Sustainable Markets Initiative (SMI) led by HRH The Prince of Wales and it comprises Chief Sustainability Officers from some of the world’s most influential companies, all with the joint aim of accelerating business action on sustainability. The forum was launched in 2020 and I proudly serve as co-chair of the group, alongside the CEO of freuds, Arlo Brady.

Members have been drawn from the most influential businesses in the world covering a wide range of sectors, including consumer and industrial products, energy, financial services, life sciences and technology. At its core, the S30 is a space for members to come together, share learnings and best practices, and explore the successes and challenges they are experiencing in their roles. Most importantly, we are focused on outputs and driving collective action that will benefit not only the business community but protect the world at large.

LUX: What can public policymakers learn from business when it comes to sustainability?
SV: Governments cannot address the climate crisis alone; business must play an important role, and public-private partnerships are crucial. Businesses can help the world accomplish its climate change targets by doing three things: mobilising resources to finance the green transition, leveraging clean technology and innovation, and effectively measuring and reporting on sustainability.

In particular, the financial services sector, in collaboration with governments and regulators, can identify legislative and regulatory adjustments to facilitate financial product and service innovation, simplify rules, standardise taxonomies, and track green money flows to guarantee that transition needs are fulfilled globally.

Governments are providing much-needed policy momentum as we approach COP27, but business will play an incredibly important role in the green transition. The private sector can play an even bigger role at COP and companies across different sectors will need to continue to work hard to help achieve the world’s climate goals. In doing so, they will position themselves for green growth in the years to come.

Read more: Coming Together To Save Our Coral

LUX: How optimistic are you about the progress made at COP?
SV: I’m an optimist, but an optimist that seems to worry a lot. Sustainability has gone mainstream, and after COP26 it really does feel like everybody’s business. We are seeing a lot of CEOs now putting the planet at the heart of their business strategy and looking for ways to create value from becoming more sustainable. What is exciting to see is business applying its skills at innovation, embracing disruption and problem-solving to tackle the biggest issues we face, and doing so while creating value for their stakeholders.

The COP26 debates raised the issue of keeping companies accountable to the climate pledges they make, and the current frameworks in place not being subject to the same level of rigour as financial reporting. It was fantastic to see this topic on the agenda, and the establishment of the International Sustainability Standards Board was widely welcomed. We all know it will be a challenging road ahead, but leading organisations are already reaping the benefits of implementing clear and transparent sustainability targets into their corporate strategies.

The COP27 climate summit is fast approaching in November and it’s clear that major changes must happen quickly right across business and society. We’re ready to help lead the charge.

Find out more: ey.com

When the pandemic grounded air travel in 2019, it also brought grounding of a different kind: a chance to reflect on the aviation addiction which now constitutes 2 percent of all global carbon emissions. Far from settling into the flight-shaming craze, however, cleantech entrepreneur Val Miftakhov decided to find a solution. His company, ZeroAvia, is working to enable safe, zero-emission aviation by replacing conventional fuel engines with hydrogen-electric powertrains – and now counts Jeff Bezos, Bill Gates and British Airways among its investors. Here, Miftakhov speaks to Ella Johnson about how decarbonising aviation poses both a challenge and an opportunity, and why Elon Musk is missing out

Val Miftakhov, Founder, ZeroAvia

LUX: What has your cleantech journey looked like so far?
Val Miftakhov: My first company, eMotorWerks, was in the EV charging space. We developed the world’s leading platform for EV battery aggregation to provide grid services, and the company was acquired in 2017. I then started looking at the next big opportunity for electrification, which was aviation. It fascinated me because I am a pilot myself, but also because I am a passionate believer in the enormous societal, cultural and economic benefit that aviation has brought to the world over the last century.

The aviation industry contributes less than 3 percent of global carbon emissions, but due to non-carbon climate forcing mechanisms (particulate emissions, nitrogen and sulphur oxides, and water vapour emission) the actual climate impact is somewhere between 5% and 10% already. That’s only set to worsen given that aviation is one of the fastest growing emission sources, and 5-10% could quickly become 25-50% by 2050 – especially as all the other pollution sources get cleaned up. Aviation, a truly majestic feat of human ingenuity and achievement, is under threat because of this. So, as a physicist by training, I started looking for the solutions.

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LUX: So, what solution has ZeroAvia come up with?
Val Miftakhov: Naturally, as a successful EV start-up founder, I probably had a bit of a bias towards batteries at first, but the energy-to-weight ratio just makes it practically impossible to fly conventional fixed wing aircraft with any decent volume of passengers over any commercially useful distance. We quickly landed on hydrogen fuel cell technology as the answer. We believe it to be the best possible solution for tackling not just carbon emissions, but also the full climate impact of aviation.

LUX: How does it work?
Val Miftakhov: This approach converts hydrogen fuel into electricity in the fuel cells onboard the aircraft to power motors. This retains the benefits of zero emission that we have in battery electric vehicles, but with the required range and payload. Plus, a hydrogen-electric plane does not burn any fossil fuel, so there are no climate harming emissions, and the water vapour emissions can be very effectively managed due to a much lower vapour temperature compared to any combustion technology.

LUX: Hydrogen fuel cells have been in commercial use since the 1960s. Why has no one successfully brought it to aviation before ZeroAvia?
Val Miftakhov: Society didn’t really see jet fuel as a big problem until relatively recently: we had already invented the jet engine, we had cheap fuel, so what was there to worry about?

Hydrogen fuel cell technology has also developed a lot since the first introduction, and especially in the last 5-10 years. The first commercial hydrogen car was introduced to the market by Toyota just 6 year ago, and hydrogen heavy duty vehicles – trucks and buses – are just starting to be deployed. All of this very recent progress makes it possible to consider aviation applications that are even more advanced.

Another reason for accelerated adoption now is the progress on green hydrogen production technologies. Electrolysis equipment is now maturing and entering a rapid cost reduction phase – not unlike the solar panels 15 years ago. Already today, large scale electrolysis production results in the equivalent fuel costs below that of jet fuel for sub-20 seat planes.

LUX: How will ZeroAvia continue to achieve green electrolysis as the company grows from conceptual to commercial scale?
Val Miftakhov: Hydrogen to fuel aircraft can be created on the ground by splitting water (H2O) into hydrogen and oxygen using electricity to power an electrolyser. If the electricity used here is generated through zero-emission sources like solar or wind, the fuel itself can be created with zero-emissions as well.

The level of investment in both renewable energy and hydrogen infrastructure is positive and we are optimistic that the price of hydrogen fuel for aircraft will soon match jet kerosene even for larger aircraft and large operators. This will mean we can significantly lower operating costs for airlines, making adoption a no brainer. Of course, it is highly important that industry and government work together to ensure renewable supply and green hydrogen production can scale as quickly as possible and achieve price parity and beyond.

Read more: Dimitri Zenghelis On Investing In The Green Transition

LUX: How are you overcoming problems of hydrogen storage and fuel cell transportation?
Val Miftakhov: There are definitely challenges to overcome, but they are engineering challenges versus fundamental physical constraints, so it is achievable and exciting to be involved in. Storage is definitely one of the big issues and we believe we have designed appropriately for that with gaseous hydrogen for our initial models.

As we get beyond 40 seats, however, we will use liquid hydrogen fuel to overcome the space constraints of H2 gas. We intend to do this with existing airframes up to the very large, long haul jets when we believe that fundamental aircraft redesign will be necessary. Liquid hydrogen as a fuel also produces some fuel storage and infrastructure challenges we need to overcome in partnership with the aviation industry at large. As we expect the hydrogen-electric powertrains for these larger vehicles to become available around 2035-2040, new aircraft designs become quite possible on that timeframe.

Image By Victoria Primark

LUX: Why isn’t Sustainable Aviation Fuel (SAF) a long-term solution for the industry?
Val Miftakhov: These drop-in fuels are certainly critical to reducing carbon emissions today, but they are fundamentally a bridge technology as they cannot eliminate most of aviation’s climate impact, especially as the industry grows in line with demand. SAFs still rely on combustion which causes nitrogen and sulphur oxides, particulates, soot and high temperature water vapour at high altitudes. It’s still a cocktail that will have a huge impact on climate change. We need to invest and give room for true zero-emission technology to come through.

LUX: Elon Musk has described hydrogen fuel cell vehicles as ‘mind-bogglingly stupid’. Why do you think he is not backing them, and why should he be?
Val Miftakhov: He has plenty of other technologies that he is invested in! When you have created an automotive company that’s the most valuable in the world on the premise of battery-electric, it’s very easy to say that to people who champion fuel cell cars. And for the light duty personal vehicles Elon very well may be right. Hydrogen favours higher energy intensity, higher utilisation applications with more concentrated fueling infrastructure. Aviation fits the bill perfectly.

LUX: Are you planning to bring the hydrogen-electric powertrain model to cars in the future?
Val Miftakhov: At this point, we are focused 100 percent on aviation applications. It’s an easy choice: with Tesla and now all other major automakers pushing the EV revolution, it’s fairly certain that we will have rapid transition to EV ground vehicles. In contrast, aviation is at ground zero today, and while it constitutes a smaller part of emissions, it’s harder to abate, and growing quickly. It will be a much larger slice of the pie in 20-30 years.

LUX: What advice do you have for other cleantech entrepreneurs?
Val Miftakhov: My advice is to look at the challenge and find the most impactful, practical solutions based on the first principles and the real physics of the problem, and try to shed yourself of any bias you might bring into the endeavour.

Val Miftakhov is the founder of ZeroAvia 

The Göscheneralpsee reservoir west of Andermatt is fed by the Dammastock glaciers.

Climate change is creating challenges for mountain resorts the world over. In Switzerland, a new luxury resort is leading the way in incorporating ecologically sound design into every aspect of their development. Jenny Southan discovers the innovations and advances being made in Andermatt

We all know that climate change is a problem, but for ski resorts, which rely on consistently sufficient snowfall, the challenge is particularly pressing – as snow, especially at lower altitudes, decreases, many will be forced to shut down (hundreds have already been abandoned across the Alps). And as the number of ‘snow-certain’ destinations dwindle, there is the added problem that by 2050, half of Switzerland’s 4,000 glaciers are forecast to have disappeared.

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However, the good news is that humans are incredibly innovative, and if serious steps are taken now to combat carbon emissions, the negative effects of climate change could be mitigated. Leading the way in Switzerland is the Andermatt Swiss Alps (ASA) development project, which is one of just a small handful of resorts that is taking serious steps to up its eco credentials and ensure its longevity as an outpost for winter sports.

Stefan Kern, head of PR and communications for ASA, says: “The project is heavily dedicated to sustainability. This is a core value of all our activities – from energy consumption to construction and gastronomy. We are proud to be on the way to being a fully carbon-neutral holiday destination.”

Looking down into the Ursern valley from Schneehüenerstock. Image by Valentin Luthiger

Demonstrating its commitment to the cause, ASA teamed up last year with the Swiss branch of American NGO Protect Our Winters (POW), which is helping it to devise sweeping, longterm initiatives to reduce its carbon footprint, as well as consumption of single-use plastic (none is sold at resort sites). At the beginning of 2020, ASA also launched Andermatt Responsible, a platform that “looks at the whole company’s footprint from heating to energy to water,” as Nicholas Bornstein, head and founder of POW Switzerland, explains.

Read more: Van Cleef & Arpels CEO Nicolas Bos on the poetry of jewellery

A political scientist with a Ph.D in Swiss environmental policy, there are few people better equipped than Bornstein to discuss combatting climate change in mountainous regions. He says that POW “allows me to combine my love of the outdoors with meaningful action”. He explains that his organisation works to “mobilise our community to implement climate change protection measures” via groups of local activists, professional athletes, companies and mountain guides, who act as ambassadors.

The Andermatt golf course. Image by Martin Wabel/Bildsektor.

How is climate change affecting Alpine ski resorts? In addition to making ski seasons shorter, Bornstein says: “The snow line has risen approximately 300 metres in the past 40 years, and is predicted to go up a further 500 to 700 metres by the end of the century, and this is putting a lot of ski resorts out of business.”

He also notes that conditions are becoming more dangerous. “We have seen avalanches in mid-winter of the kind that we would expect in April and May. They are becoming harder to predict.” Why? If the ground isn’t cold enough when it starts snowing, an insulating layer is created by the snow where heat is trapped and snow can slide off more easily. “We call these ‘fish mouth’ avalanches,” says Bornstein.

Read more: Jason deCaires Taylor on underwater art & ocean conservation

ASA has identified key contributors and is taking steps to reduce their impact. Bornstein says that approximately 50 to 70 per cent of CO2 emissions in Andermatt are from people coming to the resort by car so they are putting on extra trains from Zurich at weekends, offering discounted ski passes for people who don’t drive (driving in general here is restricted and there is a good bus system for those who don’t want to walk, including an electric bus). Andermatt Reuss is for pedestrians only.

Andermatt seen from the Gütsch ski lift

Food production and logistics are also big polluters, especially in Switzerland which imports a lot of goods. Bornstein says that POW has been working with restaurants in ASA to
put a more regional and vegetarian cuisine on menus. Andermatt’s gourmet restaurants are also reducing the amount of plastic-wrapped ingredients they buy.

Even more impressive is the fact that the entire SkiArena of Andermatt (from homes to ski lifts) is 100 per cent powered by hydroelectric and wind-powered energy supplied by Ursern electricity works, which exclusively serves the Gotthard region. (On the Graubünden side of Andermatt, Energia Alpina also provides 100 per cent renewable energy.) Not only that but all the buildings are heated in a totally carbon-neutral way through the burning of locally sourced wood pellets and surplus heat captured from Swiss army computers buried deep in secret bases in nearby mountains.

Read more: How Gaggenau is innovating the ancient art of steam cooking

“People want to see companies stepping up to the challenge and we believe it is going to become more important to position yourself with a ski resort that cares about the future of the environment,” says Bornstein. Even during the summer when people play golf surrounded by green meadows, ASA has ensured that its 20-plus species of birds have plenty of areas to nest around the course – in fact, there are more birds here today than there were before the course was built, demonstrating that being responsible can benefit both nature and mankind.

RING IN THE NEW

Arve Chalet Apartments

Arve Chalet Apartments
Arve is a five-floor block of 17 residences (73–116 sq m in size), each with open-plan living and dining spaces, and window seats offering views of the mountains.

Enzian Alpine Apartments

Enzian Alpine Apartments
Enzian  is a modern, three-floor Alpine villa housing 12 apartments measuring from 62 sq m to 136 sq m. Some come with saunas, private roof terraces and gardens.

Find out more: andermatt-swissalps.ch

This article was originally published in the Summer 2020 Issue.