Season 2, Episode 7 - Game Changers and Transition Makers: Engineering a more sustainable world

Elena:

Hello and welcome to ESG Matters at Ashurst. I'm Elena Lambros, the Climate Change and Sustainability partner at Ashurst Risk Advisory. You are listening to the second season of Game Changers and Transition Makers. In this series, we meet global entrepreneurs who are embracing disruption to boost business performance and drive the sustainability agenda.

In today's episode, you'll hear my conversation with Joan Ko, the Australasia Climate and Sustainability leader for Arup. Arup is a global collective of designers, engineers, and technical experts. They use imagination, technology, and rigour to shape a more sustainable world. And so without further ado, let's jump in and hear the discussion. Well, welcome to the podcast, Joan. It's so lovely to have you join us today.

Joan:

Thank you, Elena.

Elena:

I thought it might be nice if we could just start by talking about where have you come from, what's your background and what's kind of your role in terms of at Arup and designing a climate positive world, I guess?

Joan:

Oh, where have I come from? Well, I studied in Australia during the height of the Millennium drought, and that had a big effect on, I think, myself and anyone else who grew up in Australia at that time when you couldn't really remember playing a high school, primary school because it never rained, you'd never played in the rain. And so I did environmental engineering and I'm very passionate about water security, about salinity, about rural and regional farming. I did that for the first couple of years of working as an environmental engineer, but then my boyfriend, future husband, had the nerve to move to the UK, so I followed him.

When I tried to recreate my career in the UK and worked in water, they said, "Water just falls out of the sky here. There is nothing to do. There is nothing to do." They've changed their mind now. But at that time they said, "Why don't you work in carbon and climate?" And I said, "What's that?" And this was before Kevin 07. Back then Australia wasn't quite sure climate change was a thing. But I did get a lot of really amazing professional experience in the UK that was just a couple of years ahead of Australia in thinking about climate change and decarbonisation.

By the time I came back to Australia after the global financial crisis, we were ready to look at climate change, pink bats, stimulus, time to think about precincts and places. And so I started doing sustainability consulting work for Arup. So transferred over with Arup.

Elena:

Would you like to give us a little bit more detail around what Arup is and what it does?

Joan:

I think Arup is a very unusual company. It's a professional services firm, a sustainable development consultancy is the way we've expressed it. The reason why it's unusual was its ownership structure. So we're set up as a trust, a trust owned on behalf of its employees, charitable trust, I understand, where the beneficiaries of the charity are its employees. And so that means everyone who joins Arup gets a share of the profit. It doesn't matter if you're the chair, the receptionist. And the members of Arup, we elect our board of trustees and then they appoint our management. What that means is that you have a lot of people with a high degree of sense of ownership. The profits that we generate, half of it go into research and development or providing our professional services to organisations that otherwise wouldn't be able to take on that kind of advice. And then the other half is completely distributed to its employees.

One of the really strange unusual things about Arup is we are a single global cost centre, and that means there is quite a strong culture and incentives for knowledge sharing. And so when someone needs help in Ireland, we send someone in New Zealand. When we have a client who's struggling with their peers... Well, I had a reach out from a water company in Washington, D.C who wanted to talk to someone in Australia, we're able to make that connection. And so the people around Arup are deeply, deeply invested and interested in this human network that we've created.

The ownership structure attracts the kind of people who are generous. And then the incentive systems and rewards are for generosity. And we extend that generosity to the people that work around us. And now I'm the climate and sustainability leader for Arup in Australasia. There are four other equivalents of me around Arup world. Our job is basically to be a kind of information super highway. Whatever we learn in the UK gets to Australia as quickly as possible through a phone call. Whatever we're learning in the US is moving over to East Asia. What we're doing in New Zealand is passing back up to Europe. So that information and that acceleration is pretty much the function of the job.

Elena:

So you've described it in a way that sounds very easy to kind of flow information around the world, and I'm sure it's not quite as simple as that. And obviously there's quite some different nuances in terms of the regions and things that you would do. Maybe just explain a little bit more for this as, if you think about precincts or people or places, how your role encourages that to think about climate positive outcomes.

Joan:

So I really enjoy working in places and precincts. If you are in New South Wales, a lot of the policy settings are around that, but it's fairly unusual for a place like Australia, which doesn't really have local government as a specific regulated level of government. So the thing about place-based thinking is you have to treat the whole city or neighbourhood as the whole patient. So you have to think about its infrastructure alongside its social networks, alongside its economic networks and break down the kind of silos between the different systems. And that's what you need to do when you do a big change like decarbonisation. The things that we set up are really efficient at doing that one thing that they were set up in the first place. If we're trying to decarbonise, which is a new thing, you have to start gently breaking those systems apart and reconnecting them. Being able to do that in a place really takes the problem down to a tangible level.

So for a lot of people that we work with like an energy company, or we're helping quite a few energy companies shut down their fossil assets, for example, it's the first time that they've had to think about who they are as people in places or companies in places. They've got enormous fixed assets, they've got land, they need to deal with water, they have to address climate change, and they have to engage with government at the local government level and not the state government level. It's a new capability for them, but it is a very necessary part of making decarbonisation really tangible for cities and places.

Elena:

Yeah, no, I think that's a really interesting point, particularly around making it tangible because you can talk around climate much, you can talk about future and you can talk about goals that are many, many years away. But if you're actually talking about a specific precinct or community or place and asset, you really need to understand what does that mean for that place and how do you need to adjust or change your investment or whatever that might be.

Joan:

Yeah. And so I'll give you an example. A lot of climate solutions are about making better use of what we've got already. So you can get a really low carbon outcome and very cost-effective outcome if you don't have to build whole new things.

Elena:

Nothing new.

Joan:

Something new. And so, one of the very shocking things is something like there's a statistic, like 70% of buildings are underutilised during business hours or something very high. And there is no classic place like the university campus. So the campus is a place, most of its facilities are empty half the year when the students are around when things aren't running. And at the same time, on the other side, there's a local government that desperately needs a swimming pool, a community centre. They need something, and they'll either have to expend a lot of precious carbon or take up a lot of very important nature space to create these new things.

Or if they could somehow come up with a deal with the university campus next door so they can get someone to help life their assets, generate demand for their onsite cafes and their shops. If only they could overcome some very straightforward but complicated things like health and safety, the contracts, the legals, the sharing of risk, the sharing of information, all of those human systems that go alongside hard systems. So I'm very, very passionate about a lot of the keys to decarbonisation are really simple, cheap ones if only we could break ourselves out of normal patterns.

Elena:

Yeah, that's right. Well, we can just think about it from a really kind of practical-first, principles approach to some of these issues, which are not really that complicated if you actually think about it like that.

Joan:

Yes. Yep. So Arup, so we're full of, say, engineers who are really motivated by making things happen in real life. And so when I talk to an engineer about this kind of climate problem, he said, in a Scottish accent, I'm thinking about him right now, "It's really simple, Joan." I say, "Do we need to build it? If we do need to build it, can it do two things" if we do need to build it and it can do two things, can it be very passive so we don't have to spend heaps of effort looking after it? And the very last one, can we do it with new materials?"

And so usually when people say carbon climate solutions are expensive, they've zoomed straight into that new materials, new technology sense. But the first three things are actually... It is actually quite simple. People tend to skip over it really quick. They're not too comfortable.

Elena:

Yeah, absolutely. It's a pretty simple framework to run through, right? Well, it sounds very simple. I'm sure there is a lot more technical. But the concept sounds very simple. So in terms of thinking through, you've spoken a little bit around the need that you need to be addressing in terms of that kind of places, people, precincts, what does success look like for you in terms of what you want to achieve in your role or what you think Arup is trying to achieve?

Joan:

My role is to transform Arup from the outside in, which is to generate the ask and the demand for people looking to solve climate sustainability solutions so that all of our work is tackling a sustainable development problem.

Now, to generate that demand, you have to harness all the business incentives to make the whole of the business enterprise head towards sustainable development. And so there's a kind of market transformation. For me, that's success, market transformation, big changes that make the right sustainable solution, the right business solution. And some of that is about new business models. Some of it is about changing signals and incentives. Some of it is about getting research that's in the lab up into actual built examples with track record that people can kick the tyres of. And some of it's about storytelling and getting some strong leaders saying, "Come on, everyone, if we do it all together, it will make business sense." So all of that work outside of Arup means that all the work that comes into Arup is meaningful.

Elena:

Yeah, absolutely. Which would be very motivating for not only you, but obviously for the whole team to think that the work you're doing is really kind making that difference. So given that, what do you think would be the key to reimagining that current system? And as I always ask people, what is changing the game look like to you?

Joan:

We are very lucky in the built environment, is that a lot of funding is put into major infrastructure projects. So if you think about a big port upgrade, big water drain, big underground metro investment, those things, as we were talking about places, they transform a place, but they also transform the economy because they're huge economic signals about what is required. And so with a little bit of planning, you can use the spending and infrastructure to signal what the economic transformation needs to be.

So as an example, we've been working on the recycled content programme via our role in major infrastructure projects. And by proving up that recycled content is a sensible thing from a technical performance point of view, the clients or the government, the private operators, can ask for it well in advance because these pipelines are huge and people can spring up industries around that. So that really clear market signalling is possible when there is someone directing millions and billions of dollars of investment.

Elena:

Yeah, absolutely. I think that flow of capital around investment and using it as this incentive and also trying to help people kind of think around what they can put around that is probably a pretty key game changer.

Joan:

Yeah. Someone said, and I believe them, procurement is the cheapest way to achieve policy outcomes. If you're going to spend a million dollars anyway, a million dollars plus 1% to achieve a policy outcome could work a lot better than throwing millions of dollars just a policy programme.

Elena:

That's pretty good.

Joan:

Yeah. But it does mean that, say, the transport side of government needs to solve a waste problem, or the planning side of government needs to solve a health problem. And that amount of coordination and, "We'll bear the cost you bear," the policy outcome, that kind of discussion is something that people struggle with.

Elena:

Yeah. And I can see why. And also because when you're really focused on one area, it's really hard to broaden your mind and think about how you can shift another area as well. It's quite a different kind of mindset to think about that.

Joan:

We did work for, it was a water utility, and they said, "We want to understand why our projects can only achieve one thing at a time. We've got all these great policies and strategies. We need to generate multiple benefits from our capital investment. Why can't we do it?' And a lot of it is because the people we work with, they're essentially engineering companies. Engineering is very efficiently set up as a sausage machine to produce the sausages that we've asked for ages.

And so everything is sequentially dependent. We don't have this feedback loop, which a lot of these big system problems about nature, about social equity, about decarbonisation, they're required. And so we come up with some... There're obviously big cultural change efforts that need to happen alongside, but simple things like every capital investment work has to be sponsored by at least two parts of the organisation or a common data platform so that you can see what everyone else is working on. And those won't change things, but they start setting the expectation about collaboration.

Elena:

It's an expectation, and they start changing people's minds around how you approach a problem and how you think through a solution, I guess.

Joan:

And then they can be hard coded into your investment pipeline. So with gateways. They can be hard coded into the data frameworks and the data platforms, so the behaviour and the systems that support that multi-benefit perspective.

Elena:

Yep. Absolutely. Now, just changing tack slightly, and I do ask everybody this question, but what is your own personal commitment to net zero in the next 12 months?

Joan:

Oh, throwing down the gauntlet, Elena. That's a good question. I live inner Melbourne without a car, walking everywhere. So it's not transport. I do fly a reasonable amount, and that's something Arup has a carbon budget. We're signalling very clearly about what a good flying trip would look like. And so every time I fly, it's for an extended trip with multiple reasons to go. The behaviours are changing.
And so the thing that really remains is food on a personal level. So I've been vegetarian in the past, probably a bit more. But yeah, it's a question of changing my husband's awesome cooking. So that's the personal level.

The politics is quite interesting as well. I think a lot of people, if you have read anything about carbon footprinting for example, some people would say it was a large, say, fossil fuel company trying to distract people by individualising the problem, right? A lot of the things that we have impact on when you allocate it is the roads and the hospitals and the defence that we all have a share in. And so climate and carbon is a big system-wide problem. And so there's a certain amount you can do as an individual, but it's about politics. As a lot of people in government have told me, if we can make it really easy for the government to do the difficult things by speaking with one voice, then they will be able to do it.

Elena:

It's a good perspective, right, what you can do at the individual level versus what is very significantly sized projects or policies that make a difference.

Joan:

Yeah. So I think now on reflection, there is a lot of work to be done in our professional lives, if you have that opportunity, to build the coalitions and have arguments in a room before you come out in public and speak with one voice. If we can do that groundwork for then the people who have to really put their head above the parapet, a lot of our policy makers to do it, and give them cover, I'm personally engaging with that from a transport, particularly transport, point of view.

Elena:

And then my final question is going to be, if you could provide our listeners with one takeaway, what would it be?

Joan:

A lot of the reasons why people hesitate to take action on net zero carbon climate is because of what they think will be too expensive or too risky. Actually, at the moment, climate and carbon is the less risky option, or the cost isn't as high as you'll think. Well, there are low cost options. So remove that as your base assumption and just have a look at whether or it is something more about your habits and your pattern and how much cognitive load you have. So really questioning yourself about why I might not be doing that thing or might not have got around to it. And then once you get going, you'll find that it's actually very easy and straightforward. Get off the couch, couch to 5K, build those muscles to decarbonise. And you'll find especially quite a lot of young people who are going to help us along.

Elena:

That's great. I love it. I love kind of removing that base assumption and then everything will just flow from there.

Joan:

Yes.

Elena:

That's perfect. Well, I'm going to wrap it up there, but thank you so much for joining us. Really loved the conversation, and thanks again for coming on.

Joan:

You're very welcome.

Elena:

Thank you for listening to this episode of ESG Matters at Ashurst. I hope you found this episode engaging and inspiring. To subscribe to future episodes of Game Changers and Transition Makers and to hear previous episodes, click on the link in the show notes or search ESG Matters at Ashurst on Apple Podcasts, Spotify, or wherever you get your podcasts. And while you're there, please feel free to leave a rating or a review. And finally, to learn more about all Ashurst's podcasts, visit ashurst.com/podcasts. In the meantime, thanks again for listening and goodbye for now.

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