Cleantech Investor

First published in Cleantech magazine Issue 4 2011. Copyright Cleantech Investor Ltd.

Leo Johnson is Co-Founder of Sustainable Finance, advisor to over 50 global banks and businesses - and now part of PwC. He is also author of Beyond Risk and winner of the IFC Corporate Award for his work with the financial sector. He lectures at a number of academic institutions from the LSE to the Cambridge Programme for Industry.

by Anne McIvor

I met Leo Johnson at the new head office of PwC at More London Bridge. Leo is a Partner in PwC’s Sustainability and Climate Change team – and the building is appropriately ‘sustainable’: it was the first in London – and the first major office in the UK – to be awarded the BREEAM ‘Outstanding’ rating. It generates 25% of its own heat and power on-site through solar thermal panels and a generator which runs on recycled cooking oil. In addition, 35% of the light fittings are LED and a complex lighting control system, which interacts with the hot desk schedules, optimises the control of lighting in the open plan office areas.

Leo joined PwC over two yearsr ago when the firm acquired Sustainable Finance Ltd., a company which he co-founded. So he hasn’t been around for long enough to take credit for the building. But I did discover over coffee (or, to be precise, English Breakfast tea for him and hot chocolate for me) that he was part of the inspiration behind another iconic London sustainability initiative, the Transport for London Barclays Cycle Hire Scheme. The scheme is known colloquially as ‘Boris Bikes’, after Leo’s brother, Mayor of London Boris Johnson, who introduced the bikes to London. I discovered that Boris got the idea from a similar scheme in Paris – which Leo pointed out to him when Boris was visiting his brother there.

Leo believes passionately that we must focus on building cities where people want to live, with good public transport. He points to the example of Curitiba in Brazil – designed in order to improve the quality of life – as an example for cities around the world.

Leo was awarded the IFC Corporate Award for his work on the Equator Principles in 2004 and helped establish the Financial Times Sustainable Banking Awards in 2006. He is a Business Fellow of the Smith School of Enterprise and Environment at Oxford and his current focus is on identifying global environmental and social mega trends and making business sense of these.

He tells me that we have much to learn about policy on sustainability from the ‘Arab Spring’. Environmental constraints, in the form of rising crop prices and drought, causing environmental damage, played a role in the uprisings in the Middle East earlier this year. They were combined with social constraints such as increasing unemployment, which laid the foundations for political unrest. The spark was ignited, however, by the overlay of social media. Leo refers to the description by Hilary Clinton’s advisor of social media as the “Che Guevara of the 21st Century”. He adds that the difference is that social media companies have bigger IPOs…

So according to Leo Johnson, models for ‘green’ growth are not necessarily the same thing as models for ‘good’ growth. Simply working to avoid CO2 emissions will not necessarily be enough. The ‘Arab Spring’ has highlighted the necessity of addressing the social crash around GDP distribution. What we need, he argues, is “distributed green growth”.

In practice, one of the things this means is that our emphasis should be on basic needs, rather than luxury goods. Leo comes down hard on ‘eco bling’ – such as biodegradable designer eco-stilettos as an unsustainable business. He questions whether we – as a society – can sustainably focus on both luxury goods and meeting basic needs.

Leo hosts the BBC World programme ‘Down to Business’, which profiles the role that small businesses from around the world can play in sustainable economic development. Down to Business has featured companies producing ‘Green Gold’ in the Colombian jungle and biogas from waste in Kenya. He has a keen interest in the potential for micro carbon and is focusing on the potential for businesses to deliver into basic needs – from micro irrigation in India to the role of telecommunications in promoting development (with opportunities for solar powered recharging packs, for example).

He points out that there are big opportunities for UK companies to grow through delivering on these basic needs: there is a $38 billion market globally in kerosene lanterns so the opportunity for these to be replaced with more sustainable alternatives such as solar powered lanterns is enormous. Yet, with the notable exception of pioneers such as Jeremy Leggett of Solar Century, this opportunity is not yet being grasped by companies or entrepreneurs.

An appealing aspect of ‘micro finance’ markets for investors, Leo points out, ought to be that they rank as the opposite of the discredited ‘sub prime’ model. Sub prime investment, as has been demonstrated, was ultimately unsustainable. Micro finance, in contrast, creates new markets and develops existing markets. Leo sees this as the opportunity of the future.

I am confident that Leo is not an owner of a pair of stilettos, of the eco variety or otherwise. I can reveal, however, that he’s hoping he’ll be chosen to drive one of the eco sports cars in the Bridgestone Eco Rally – despite a niggling feeling that he ought to lead by example and drive one of the eco public transport vehicles. This small personal dilemma underlines the issues being raised through his research. There is perhaps a case for arguing that some of the technological research which goes into luxury eco cars like the Tesla has spin offs for mainstream applications. But Leo is a man with a bigger mission than the identification of spin-off benefits: he aims to change the way we address sustainable business – with game-changing implications for both the impoverished populations of less developed nations and those UK businesses which have the vision to address these new markets. You’ll be able to see him at the Bridgestone Eco-Rally – but Leo’s life is an eco marathon!

Read Leo’s blog post on ‘The Two Types of Twitter’ at www.huffingtonpost.co.uk