Tom Burke is the Chairman of E3G, Third Generation Environmentalism, and a Visiting Professor at both Imperial and University Colleges, London. He is a Senior Associate at the Cambridge Institute for Sustainability Leadership. Tom was Environmental Policy Advisor to Rio Tinto plc (part time) 1996 -2016 and served as Senior Advisor to the Foreign Secretary’s Special Representative on Climate Change from 2006-12. He was an environmental advisor (part time) to BP plc from 1997-2001. He was a member of the Council of English Nature, the statutory advisor to the British Government on biodiversity from 1999-2005. He was Special Adviser to three Secretaries of State for the Environment from 1991-97 after serving as Director of the Green Alliance from 1982-1991.
Well, I divide risk into two broad categories. There are a whole set of risks, exogenous risks that are a function of what companies either do or don’t do themselves. Your pollution risks, your waste resource risks, all of those risks. They’re in your control. The more you deal with those risks, the less exposure you have, the better you’re managing them. The more you don’t deal with them, you put off reducing your air pollution, or put off dealing with a local community in a collaborative and effective way, the higher your risk is. Those are all in your control. The big risk for business going forward is what I think of as exogenous risks. That’s the risks of what other people do or don’t do but might interfere with your ability to generate revenues and value. It can be anything as simple as if you have a water intake and somebody upstream is polluting that water intake, what do you do about that? Or how do you get something done about that? In the case of something like climate change, what on earth are you going to do about the fact that you’re trying to run a water-intensive mining operation in a part of Chile that has no water. Climate change is going to make that worse and put your costs through the roof. How on earth do you think about managing that risk?
Having a much more comprehensive sense of the risks to the business including what are often thought of as soft risks and beginning to understand that they’re not soft. Soft tends to mean we can’t easily quantify them. That doesn’t mean they can’t actually destroy the business pretty quickly and effectively as we’re seeing. A lot of businesses today who are discovering that the exogenous risk of a virus somewhere is putting them out of business. That’s a rather dramatic example. You need to think, especially if you’re in any kind of business that’s looking for long-term value creation, you need to think about how you manage the context in which the business works, as well as the actual operations of the business itself. That requires a wider breadth of knowledge and a wider understanding of the world than is typically available to most corporate executives.
This document may not be reproduced, distributed, or transmitted in any form or by any means including resale of any part, unauthorised distribution to a third party or other electronic methods, without the prior written permission of IP 1 Ltd.
IP 1 Ltd, trading as In Practise (herein referred to as "IP") is a company registered in England and Wales and is not a registered investment advisor or broker-dealer, and is not licensed nor qualified to provide investment advice.
In Practise reserves all copyright, intellectual and other property rights in the Content. The information published in this transcript (“Content”) is for information purposes only and should not be used as the sole basis for making any investment decision. Information provided by IP is to be used as an educational tool and nothing in this Content shall be construed as an offer, recommendation or solicitation regarding any financial product, service or management of investments or securities.
© 2024 IP 1 Ltd. All rights reserved.
Tom Burke is the Chairman of E3G, Third Generation Environmentalism, and a Visiting Professor at both Imperial and University Colleges, London. He is a Senior Associate at the Cambridge Institute for Sustainability Leadership. Tom was Environmental Policy Advisor to Rio Tinto plc (part time) 1996 -2016 and served as Senior Advisor to the Foreign Secretary’s Special Representative on Climate Change from 2006-12. He was an environmental advisor (part time) to BP plc from 1997-2001. He was a member of the Council of English Nature, the statutory advisor to the British Government on biodiversity from 1999-2005. He was Special Adviser to three Secretaries of State for the Environment from 1991-97 after serving as Director of the Green Alliance from 1982-1991.