Welcome to Sustainability in Motion!
Join the ED4S team as we engage thought leaders in sustainability, uncovering the latest trends and their practical implications.
Discover how various sustainability factors influence businesses and finance in a rapidly changing world. Our expert guests share actionable strategies and best practices for professionals, investors, entrepreneurs, and sustainability enthusiasts alike.
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Wai-Shin Chan joins us to discuss the complexities of advancing sustainability and managing climate risk across Asia. As Sustainability Advisor to Metis ESG, Director of Research at Asia Research and Engagement, and former Global Head of ESG Research at HSBC, Wai-Shin brings deep expertise to the conversation.
We explore:
The challenges of sustainability in a region with diverse cultures, languages, and legal systems
Where Asian markets are leading on climate action
Key areas where progress is still needed
Tune in for insights on ESG trends and climate risk in one of the world’s most dynamic regions.
Episode 22: Greenwashing
Season 1 · Episode 22
Tuesday, June 10, 2025 • Duration 33:26
We talked with Helen Neal, Founder and CEO of HN Communications, a sustainability communications company that helps companies effectively navigate a complicated sustainability landscape. We discuss greenwashing, greenhushing and how companies can best tell their sustainability story.
Episode 21: Managing Sustainability Risks
Friday, May 9, 2025 • Duration 34:03
In Episode 21 of Sustainability in Motion, Matt Orsagh and Maria Maisuradze speak with Jo Paisley, President of the GARP Risk Institute, about the evolving landscape of sustainability risk in the financial sector. With deep experience from the Bank of England to HSBC, Jo brings a unique lens on how financial professionals can better prepare for climate and nature-related challenges.
We cover:
Jo’s journey from economist and regulator to sustainability thought leader
What GARP and the GARP Risk Institute are doing to advance risk literacy in sustainability
Key findings from their Nature Risk Management surveys—what’s shifting in how institutions assess and respond to nature-based risks
Common misconceptions in the industry around sustainability risks and how to bridge the knowledge gap
The most pressing sustainability risks on the horizon for the financial sector—and how to manage them effectively
At ED4S, we believe that understanding and managing sustainability risks is no longer optional—it’s essential. That’s why we design company- and role-specific sustainability training programs that are efficient, relevant, and outcome-driven. Our goal is to close critical knowledge gaps and empower professionals to take meaningful action—without wasting time on generic content.
Episode 20: The Boardroom Illusion
Tuesday, April 8, 2025 • Duration 32:58
In this eye-opening episode, we unpack the quiet crisis in corporate governance: how boardrooms are often shaped by personal networks over real skills, leaving major ESG blind spots at the top. Guest Matt Moscardi, Co-founder of Free Float Analytics, joins us to explore signals that companies send by backtracking on their commitment and why treating investment stewardship as a cost center may be a costly mistake. We dive into the DEI backlash, flip-flopping climate commitments, and how surface-level sustainability reports (complete with curated optics) reveal more about a company’s culture than they realize. Plus, what makes a great sustainability analyst? It's not just the data—it’s the curiosity, context, and ability to challenge the narrative. Perfect for anyone building ESG skills, delivering corporate sustainability training, or decoding the signals behind the statements.
Episode 19: The Wellbeing Economy
Season 1 · Episode 19
Tuesday, March 11, 2025 • Duration 32:36
We talk with Victoria Hurth, a Pracademic (practitioner and academic) to help define and describe a well-being economy. We discuss how to get to a wellbeing economy from our current state, and what companies and investors need to do to move in that direction.
Episode 18: Income Inequality
Season 1 · Episode 18
Wednesday, February 12, 2025 • Duration 47:37
We talk about the issue of income inequality and why understanding income inequality is important for investors. We discuss the causes of inequality, the ways that inequality impacts our economy and investments. Listeners can learn ways to measure income inequality, and how to integrate inequality analysis and analysis of other systemic issues into the investment process.
Episode 17: 2025 Outlook
Season 1 · Episode 17
Wednesday, January 22, 2025 • Duration 46:36
In this episode, Matt, Maria, and Nawar reflect on their 2024 sustainability predictions and look ahead to what’s coming in 2025. They discuss the ESG backlash, evolving sustainability regulations, and key trends shaping the future. Tune in as they analyze past forecasts and make bold predictions for the year ahead! 🎙️🌍
Episode 16: Systems Change Through Investing
Season 1 · Episode 16
Tuesday, December 10, 2024 • Duration 32:34
In this episode of the Sustainability in Motion podcast, hosts Matt Orsagh and Maria Maisuradze engage in an insightful discussion with William Burckart, CEO of the Investment Integration Project (TIIP), which helps investors integrate systems thinking in the investment process. The conversation explores the transformative concept of systems-level investing, a forward-thinking approach that integrates financial, social, environmental, and economic systems to address systemic risks such as climate change, inequality, and resource scarcity.
Key highlights include:
Introduction to Systems-Level Thinking: Bill explains the shift from traditional investment strategies to a holistic approach aimed at mitigating root causes of systemic risks rather than their symptoms.
Practical Applications: Examples such as large-scale infrastructure projects and innovative asset allocation strategies that address interconnected societal and environmental challenges.
Bridging Theory and Practice: How tools, techniques, and collaboration across sectors can help investors influence broader systemic change.
Building Executive Buy-In: Practical advice for sustainability professionals on initiating and sustaining meaningful organizational change through systemic thinking.
The episode underscores the importance of aligning financial investments with long-term sustainability goals, making it a must-listen for anyone interested in advancing responsible investing and fostering resilience across global systems.
Episode 15: System Level Investing
Season 1 · Episode 15
Tuesday, November 12, 2024 • Duration 36:02
Episode Overview: In this episode, Matt Orsagh and Nawar Alsaadi of ED4S sit down with Jon Lukomnik, a leading figure in sustainable finance and co-author of Moving Beyond Modern Portfolio Theory. Jon explores the limitations of Modern Portfolio Theory (MPT) in addressing long-term, systemic risks like climate change, highlighting the evolution toward "system-level investing."
Key Takeaways:
Limitations of MPT:
MPT is designed for idiosyncratic risk (individual asset variance) but fails to account for systemic risks, which cannot be diversified away. Lukomnik notes that while MPT focuses on market-relative risk, it overlooks larger economic and environmental factors that affect the entire market.
System-Level Investing:
Lukomnik advocates for a shift towards system-level investing, where investors engage in strategies to mitigate systemic risks like climate change, inequality, and biodiversity loss. This approach involves collaborative stewardship and policy engagement to reduce overall portfolio risk.
Collaboration and Collective Action:
Collaborative efforts, such as Climate Action 100+, enhance the impact of investors on global issues. Though the free-rider problem exists, Lukomnik observes that collective initiatives are crucial in addressing systemic challenges.
Practical Approaches:
Practical tools for system-level investors include investment enhancements (e.g., climate-aligned private equity and infrastructure projects), stewardship, policy advocacy, and setting clear boundaries for ESG targets. Engaging with policymakers and stakeholders strengthens the collective response to systemic risks.
The Role of Policy:
Effective systemic risk mitigation requires a synergy between investors, policy, and NGOs. Policy is critical in shaping sustainable practices, yet investor engagement and capital flow remain vital in driving actionable change.
Episode 14: Stranded Assets
Season 1 · Episode 14
Tuesday, October 15, 2024 • Duration 32:06
Hosts:
Matt Orsagh, Chief Content Officer at ED4S
Nawar Alsaadi, CEO of Kanata Advisors, Chief Advisor at ED4S
Guest:
Natasha Chaudhary, Research Fellow at The Institute for Climate Economics (I4CE)
Episode Focus: The concept of stranded assets and a shift toward "assets at risk" to better support financial institutions in navigating climate-related financial risks.
Key Takeaways:
Stranded Assets Explained:
Traditionally associated with fossil fuels, stranded assets refer to devalued resources due to regulatory, market, or physical climate changes. Current definitions often focus on oil, gas, and coal sectors, but the concept can apply across industries.
Reframing to "Assets at Risk":
Natasha advocates shifting from "stranded assets" to "assets at risk," broadening the focus to include potential asset value losses across all sectors under transition pressures. This proactive approach allows financial institutions to better anticipate risks and guide capital toward sustainable investments.
Proactive Risk Management:
"Assets at risk" encourages financial institutions to manage risks dynamically, considering the entire value chain and transition readiness of companies, thereby supporting real-economy decarbonization rather than simply divesting from risky sectors.
Sectoral Examples Beyond Fossil Fuels:
Key sectors such as real estate, agriculture, and automotive also face significant risks. For example, the EU’s building regulations for decarbonization by 2050 and the upcoming ban on internal combustion engines by 2035 present immediate risks to financial portfolios.
The Need for Regulatory Guidance:
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Transcript:
Hello, everyone! Welcome to the Sustainability in Motion podcast, brought to you by ED4S. Our focus is on the fast-moving world of sustainability, helping the business community better understand and navigate the environmental and sustainability challenges we face. I'm Matt Orsagh, Chief Content Officer at ED4S.
And I’m Nawar Alsaadi, Founder and CEO of Kanata Advisors and Senior Advisor to ED4S. Today, we’re excited to bring you a thought-provoking conversation with someone we’ve been fortunate to know for many years: Jon Lukomnik.
Jon has had a distinguished career in the financial world. He’s a former investment advisor for New York City’s pension fund, co-founder of the International Corporate Governance Network (ICGN), and an adjunct professor and Brennenmeyer Fellow at Columbia University. He’s also the co-author of several books on corporate governance and finance, including his latest: Moving Beyond Modern Portfolio Theory, which we’ll dive into today.
Jon, welcome to the podcast!
Jon Lukomnik: Thank you! It’s a pleasure to be here.
The Limitations of Modern Portfolio Theory (MPT)
Matt Orsagh: Let’s start with your 2021 book, Moving Beyond Modern Portfolio Theory, co-authored with James Hawley. In it, you discuss the limitations of MPT in addressing long-term systemic risks like climate change. Could you elaborate on these limitations?
Jon Lukomnik: Certainly. While MPT is a powerful tool for constructing portfolios with the best risk-adjusted returns based on existing market data, it has critical limitations.
First, it assumes market levels are exogenous, meaning it doesn't account for the factors that influence the overall health of the market, such as systemic risks. Studies show that 75% to 94% of variability in total returns comes from the general price level of the market—something MPT doesn’t address.
Second, MPT focuses on idiosyncratic risks—risks specific to individual securities or sectors—and manages them through diversification. However, it does not address systemic risks, like climate change or inequality, which affect the entire market.
Lastly, MPT's reliance on historical data and static assumptions can disconnect it from the real-world dynamics that drive long-term value and risk. As a result, it falls short in guiding investors on how to address risks and opportunities arising from systemic changes.
Introducing System-Level Investing
Nawar Alsaadi: Building on that, Jon, it seems like MPT encourages investors to focus on what they can control, even though what they can’t control—systemic risks—has a far greater impact on portfolio performance. This leads us to system-level investing. How does it differ from traditional approaches, and why is it essential for tackling risks like climate change or inequality?
Jon: That’s a great question. System-level investing differs fundamentally from traditional approaches in its focus. Traditional investing, as framed by MPT, focuses on relative performance—comparing investments against the market or peers. In contrast, system-level investing looks at the broader picture, aiming to improve the overall health and performance of the market by mitigating systemic risks.
For example, climate change is a systemic risk that cannot be diversified away. It creates systemic vulnerabilities that ripple through the economy and financial markets. System-level investors recognize that addressing these risks in the real world—through stewardship, policy engagement, or collaborative action—can reduce systemic risks and improve portfolio performance over the long term.
System-level investing complements MPT by first addressing the underlying health of the market and then applying MPT’s tools to construct portfolios within a more stable and resilient market environment.
Practical Steps for System-Level Investing
Matt: This is fascinating. Could you share some practical steps for investors looking to incorporate systemic thinking into their portfolios? Are there specific tools or frameworks available?
Jon: Certainly. Here are some key steps and tools:
Enhancing Existing Practices:
Stewardship: Move beyond company-specific issues to engage on system-wide challenges. For instance, participate in initiatives like Climate Action 100+ to drive collective action.
Thematic Investments: Focus on areas like renewable energy, green infrastructure, or climate solutions that align with system-level goals.
Policy Engagement: Work with policymakers to support regulations that mitigate systemic risks, such as carbon pricing or sustainability disclosure requirements.
Setting Goals and Boundaries:
Define clear investment beliefs that incorporate systemic risks. For example, PGGM, a Dutch pension fund, has adopted a “3D” approach: risk, return, and impact.
Align compensation structures with long-term, system-wide outcomes rather than short-term
Clear regulatory frameworks and standardized transition plans are essential to accurately assess transition readiness across sectors, helping institutions manage climate risks effectively.
Conclusion: This episode emphasizes the importance of expanding the stranded assets framework to support proactive and comprehensive risk management across sectors, highlighting the role of financial institutions in driving climate-aligned investments.
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Transcript:
Welcome to the Sustainability in Motion Podcast!
Hello, everyone! Welcome to the Sustainability in Motion podcast, brought to you by ED4S. Here, we focus on the rapidly evolving world of sustainability, helping the business community navigate environmental challenges and opportunities. I'm Matt Orsagh, Chief Content Officer at ED4S.
And I'm Nawar Alsaadi, Founder and CEO of Kanata Advisors and Senior Advisor to ED4S. Today, we’re thrilled to be speaking with Natasha Chaudhary, a Research Fellow at the Institute for Climate Economics, also known as I4CE.
Natasha recently authored the paper From Stranded Assets to Assets at Risk: Reframing the Narrative for European Private Financial Institutions. This paper takes a deep dive into the concept of stranded assets, a topic many of us have encountered but might not fully understand. Welcome to the podcast, Natasha!
Natasha Chaudhary: Thank you for having me!
Matt Orsagh: Let’s start by level-setting. Most of our audience has likely heard of stranded assets, but could you explain the concept as it’s used today? Where does it come from, and how is it applied?
Understanding Stranded Assets
Natasha: Certainly! Theoretically, the idea of stranded assets has been around for quite some time. However, it gained practical traction about a decade ago, particularly between 2012 and 2014, when pioneering research at the University of Oxford began to spotlight the issue.
The concept became especially relevant due to its link with the fossil fuel industry and global warming. Essentially, stranded assets are resources—such as oil, gas, or coal reserves—that can no longer be extracted, used, or sold due to external changes. These changes might be regulatory, such as a ban on fossil fuel extraction, or economic, driven by market shifts.
One critical idea underpinning this is the "carbon bubble," which suggests that a significant portion of fossil fuel reserves currently listed as assets by oil and gas companies may lose their value as we transition to a low-carbon economy. The issue arises because these risks are often not fully reflected in current valuations, creating a bubble.
Organizations like the Carbon Tracker Initiative have explored these risks extensively, categorizing them into three types:
Regulatory stranding – driven by strict policies or bans.
Physical stranding – resulting from climate events like floods or droughts.
Economic stranding – caused by market changes, such as declining demand or cost inefficiencies.
Expanding the Lens: Assets at Risk
Nawar Alsaadi: In your paper, you argue that the concept of stranded assets is too narrow, particularly when applied to financial institutions. You propose a broader framework—assets at risk. Could you elaborate on this and explain why you think it’s a better framing?
Natasha: Of course. The traditional understanding of stranded assets is heavily tied to the fossil fuel sector and focuses on quantifying losses. While this is important, it misses the broader picture. Stranding risk isn’t exclusive to fossil fuels; it can affect any sector undergoing significant decarbonization pressures.
The concept of assets at risk broadens this perspective. It acknowledges transition-driven risks across various sectors, supply chains, and financial portfolios. Instead of being reactive, it promotes proactive engagement. Financial institutions can anticipate potential risks, identify assets at risk within their portfolios, and work collaboratively with entities to mitigate these risks.
This approach shifts the focus from risk avoidance to opportunity creation. By enabling financial institutions to engage with businesses and governments, they can drive the transition from "brown to green" through strategic financing and innovation.
Proactive Risk Management in Practice
Matt: You touched on this earlier, but could you delve into what a proactive, dynamic approach to managing assets at risk looks like in practice? Do financial institutions have the capacity to implement this today?
Natasha: Great question. Financial institutions already have many tools at their disposal, such as sectoral financing policies and climate-related stress testing. However, these tools need to be more comprehensive and inclusive of non-project-based financing, which represents a significant portion of financial portfolios.
Proactive risk management involves:
Broadening sectoral policies – ensuring they encompass all financing activities, not just project-related ones.
Enhanced risk assessments – evaluating the financial soundness and transition readiness of counterparties.
Whole-of-economy lens – assessing risks across all sectors, supply chains, and transition timelines.
For example, in the real estate sector, energy performance certificates (EPCs) provide insight into building efficiency and potential stranding risks. In agriculture, outdated infrastructure may become stranded as regulatory pressures grow.
By identifying assets at risk early, financial institutions can actively work with stakeholders to retrofit, repurpose, or retire assets in a managed and efficient way.
Quantifying the Magnitude and Timelines
Nawar: What’s the scale of this problem beyond oil and gas? Do we have any sense of its magnitude, and are we looking at near-term or long-term impacts?
Natasha: Quantifying the magnitude is challenging due to uncertainties and varying methodologies. Even within the fossil fuel sector, estimates of stranded assets range from $1 trillion to $185 trillion, depending on assumptions about transition speed and policy actions.
However, we can gain insights from related metrics. For instance, the European Central Bank's stress test revealed that 40% of Euro-area bank loan portfolios are exposed to energy-intensive sectors, highlighting the scale of potential risks.
As for timelines, risks are both near-term and long-term. For instance, the EU's Energy Performance of Buildings Directive targets a fully decarbonized building stock by 2050, with significant milestones along the way. Similarly, the automobile sector faces a 2035 deadline for phasing out internal combustion engine vehicles.
Final Thoughts: Regulatory Reform
Matt: If you had a magic wand to propose one regulatory reform to address assets at risk, what would it be?
Natasha: It would be establishing clear regulatory guidelines for assessing the transition readiness of counterparties. This would standardize how financial institutions evaluate risks and align their portfolios with decarbonization goals.
By providing clear parameters and expectations, regulators could help banks better assess transition risks and identify opportunities to support a just and efficient transition.
Matt: Natasha, this has been a fantastic conversation. Your paper is a must-read for anyone in the financial sector.
Nawar: Agreed. Thank you for joining us, Natasha. For our listeners, you can find more about ED4S at ed4s.org. If you’d like to connect with Natasha, Matt, or me, we’re all active on LinkedIn. Thanks for tuning in!
