Lewis Jackson: COP26 ended a week ago today, and to help Australian investors unpack the summit I'm joined by Stewart Investors' Pablo Berrutti. He is specialist in the sustainable investing space.

Pablo, thanks for joining me.

Pablo Berrutti: Thanks, Lewis.

Jackson: Let's start with the conference. So, from the perspective of a fund manager, what were you looking for going into it, and what were some of the really important takeaways for Australian investors?

Berrutti: Sure. So, I think that it's important with all of these conferences to look at them in the context of the 25 years of climate change negotiations. The fact that emissions have increased significantly over that time, temperatures have increased over that time, and so, the urgency has continued to build. And so, with this particular conference, there's been some positives, but we're still a fairway short of where we need to be to reach the goal of 1.5 degrees.

Some of the takeaways I think is that – there were some people which really needed to be around the table that weren't around the table. So, we had because of COVID and logistical challenges some African nations and Pacific Island nations weren't able to be represented, and they've really been the types of countries who have contributed the least to the problem but are going to suffer the most as a result of climate change, and they've really pushed the more ambitious 1.5-degree goal in prior conferences. And so, it was good to see that even in their absence there's still a commitment to try and strive for that goal.

Quite interesting to see fossil fuels being called out for the very first time in the agreement text. And so, you'd think that that would have been an obvious part of many past agreements, but this is the first time that we've actually seen a commitment to reduce coal power to reduce fossil fuel subsidies. And so, I think that sends a pretty big signal about where things are going.

The other aspect that I'd just probably point to is deforestation and climate finance, both getting quite a big run at the conference. And so, in both those cases, again, not enough to get us to where we need to be, however, some positive signals.

Jackson: And what should investors take away from that? The conference failed to deliver on all the ambitions. There's a lot of enthusiasm growing around sustainable investing. ESG is really important for many investors now. How do we bridge that gap?

Berrutti: Well, I think for us, we're long-term investors. So, we're thinking a decade or more out. And the gap between where the conference got to, which is progress although not enough, and what needs to happen to get to a 1.5-degree goal, there is a space for a lot of opportunities for investors who are really committed to and understand the benefits of sustainability in a business context and in an investment context to find great companies that are going to be really well positioned for that transition to a zero carbon economy and particularly, to transition faster than perhaps markets and some would expect that we will need to.

Jackson: And where are some of those areas where the market or particular companies are moving faster than policymakers at this point?

Berrutti: So, I think, well, clearly in energy, we've seen a lot of discussion, whether it's in relation to fossil fuels and the renewable energy technologies that are coming through. Some of the areas that I'm quite interested in and that I like to think about more is in the food sector, in agriculture, because food waste could – reducing food waste could be one of the highest top five contributors to reducing our emissions. And so, there are a whole range of companies that are really well positioned to help contribute to that. The whole range of big consumer goods companies, of course, have a really important role to play. So, I think, it's sort of stepping back not just thinking about renewables and energy and looking at other areas where businesses really need to make that transition to a zero carbon business model.

Jackson: And could you walk us through a few selection of those companies that are working, for example, in the space of food waste to kind of push the agenda forward?

Berrutti: Sure. So, one I'd point to is Tomra. So, those of us in Australia and particularly, in New South Wales would perhaps know Tomra because they do the reverse vending machines that we put our cans and our bottles into. However, Tomra also have a food sorting business, where funny examples where you wouldn't think that they'd contribute much, but they do add up. And so, their potato peeling technology saves a percent of the potato that would otherwise be discarded in regular peeling of potatoes. And so, they're able to keep that food in the system, those potatoes in the system. And also, their food sorting technology is sophisticated enough so that you don't see rotting and other things being transported across and therefore ruining whole batches of fruits and vegetables. And so, those things are being able to be picked out early. And so, that's one example of a company.

And another example would be Chr. Hansen who do a lot of enzymes, yeast, microbes that are helping to make the food system overall more sustainable, so whether that's at the agricultural end and helping to displace fertilizers and other kinds of agricultural inputs. But also, on the food waste side, in the dairy segment, for instance, they're able to add by using their products a week or more of shelf life to yogurts, which they estimate will save tens of thousands of tons of yogurt being thrown out. And so, there's a range of different ways to look at opportunities in something like food waste.

Jackson: Fantastic. Pablo, thank you for your time.

Berrutti: Thank you.