The central theme of a panel discussion at the recent Nordea Sustainability Summit was not what you might expect from a conference hosted by a bank for business clients. World-class speakers with resumes containing Fortune 500 companies, the UN Global Compact and even the British military were invited to discuss the role of courage in making the transition to a new, sustainable economy.
Moderator Alasdair Ross from The Economist kicked off the discussion by noting that, from an investor perspective, the transition would seem to require a combination of commercial pragmatism and visionary thinking.
“How do you draw the balance between the commercial imperative of making money and the more visionary side of what you’re trying to turn the world into,” he asked panellist Harald Mix, chairman of Vargas Holding and founder of Altor Equity Partners, who has been involved in sustainability-related ventures including Northvolt and H2 Green Steel.
“I actually think there’s no contradiction between the two. You don’t have to sacrifice one for the other,” Mix responded.
A tremendous market opportunity
Mix noted that frameworks such as the Science-based Targets initiative have helped provide a clear roadmap, spurring many large companies to make commitments and set climate-related targets.
“That creates a tremendous market opportunity,” he said. He referenced the steel industry as an example, drawing from his role as chairman of H2 Green Steel. He noted that 70% of steel today is produced through blast furnaces, releasing significant amounts of CO2. Around 1.4 billion tons of virgin steel will have to be decarbonised over the coming decades.
“If you take that market opportunity and engage with key customers, from the automotive industry, the white goods industry, the construction industry, and look at it from a purely commercial point of view, there’s actually a tremendous opportunity,” he said.
He described such investing not as “impact investing,” which implies subsidised returns, but rather “industrial scale-ups.” While the previous era has been all about tech, software and data, this one is “going to be about real capex spending, building renewable energy infrastructure and transforming industries,” he said.