Podcast Summary: "What role can the private sector play at the ‘finance COP’?"

Podcast: This Week in Global Development
Date: November 21, 2024
Hosts & Interviewers: Kate Warren, Adva Saldinger, David Ainsworth, Rumbi Chakamba (Devex)
Guests: Matias Berninger (EVP, Public Affairs, Sustainability & Safety, Bayer)
Barry Parkin (Chief Sustainability Officer & Chief Procurement Officer, Mars)

Episode Overview

This special "Climate Plus" edition, reporting from COP 29 in Baku, explores the evolving and contested role of the private sector at the so-called "finance COP." The episode features in-depth interviews with leaders from Bayer and Mars, who discuss how large multinationals are contributing to climate finance, food system resilience, agricultural innovation, and sustainability—while grappling with skepticism about business involvement in global climate negotiations. The discussion dives into the pragmatic challenges and promises of public-private partnerships, financing models, supply chain decarbonization, packaging innovation, and the impact of political shifts on corporate sustainability drives.

Key Discussion Points & Insights

1. Why the Private Sector is at COP (Bayer)

• Regular Participation: Bayer is a frequent participant in UN climate and biodiversity negotiations (03:12).
• Innovation Pipeline: “We have a huge contribution to make from the innovation that we have in our pipeline to decarbonize agriculture.” – Matias Berninger, Bayer [03:13]
• Climate, Health, Food Nexus: Bayer’s core business spans agriculture, health, and food—directly connecting to climate outcomes [03:17].
• Climate Commitment: Bayer sets aggressive goals aligned with the Paris Agreement [03:23].

2. Navigating Political Change & Backlash

• Farmer-Centric Reality: Regardless of political shifts, climate change is deeply impacting farmers globally—large and small (04:52).
  • Quote: “The vast majority of farmers tell us that climate change affects their livelihood...that is true for large farms in the U.S. and for a two-acre family farm in Ethiopia.” – Matias Berninger, Bayer [04:56]
• Business Case for Action: Tackling food inflation and food insecurity is not just social good but also smart business (07:13).

3. Agricultural Innovation, Micronutrients & GMOs

• Micronutrient Focus: Bayer leverages its knowledge in seeds and nutrition to tackle “silent” issues like micronutrient deficiency (07:58).
• Balanced Approach to Tech & Agroecology: Berninger advocates moving beyond the dichotomy of “agroecology vs biotech.”
  • Quote: “Regenerative agriculture...is sort of the offspring of a love affair of biotech agriculture and agroecology or organic farming...we need to replace the word ‘or’ with the word ‘and’.” [11:58]
• Technology & AI Integration: Advances are driven by intersecting AI, biology, and chemistry (10:02).

4. The Role of Business in Climate Finance

• Limitations of Traditional Finance: Relying solely on government transfers is inadequate and politically difficult (13:51).
• Innovative Coalitions: Example—Bayer’s participation in “Leaf Coalition,” a $1.5B public-private partnership to protect rainforests, generating both carbon credits and conservation value [15:00].
• Pragmatic Interventions: Advocates for concrete solutions like developing crop insurance for smallholder farmers, instead of abstract financial debates (16:27).
  • Quote: “I’d much rather ... talk about these very concrete things than abstract financial transfers that will lead to a lot of debate, but much, much less action.” – Matias Berninger, Bayer [16:41]

5. Making Public-Private Partnerships Work

• Alignment on KPIs: Private sector must understand public sector priorities (e.g., World Bank’s shift to focus on food insecurity) (17:19).
• Shared Value vs CSR: “More and more it’s very clear the investment we are making needs to make good sense for us as a business … NGOs and banks need to be happy with people making money by solving some of our most pressing problems.” – Matias Berninger, Bayer [19:13]
• Reducing Food Loss: Practical interventions (e.g., curbing food loss in Nigeria) can have outsized impact [18:27].

6. What’s at Stake at COP 29?

• Operationalize Carbon Markets: Need for a global agreement on the fungibility of carbon removals to unlock nature-based solutions (20:00).
• Dual Focus—Mitigation & Adaptation: Both must be prioritized; adaptation gaining ground since COP Sharm El Sheikh [21:44].

7. Mars Perspective: Long-Termism & Stakeholder Capitalism

Sustainability as Core Corporate Value

• Historical Origins: Mars traces its sustainability roots to a 1947 letter emphasizing “mutuality of benefits” for all stakeholders (24:25).
  • Quote: “The purpose of the company is to create a mutuality of benefits with all stakeholders... He was writing about stakeholder capitalism in 1947. Imagine that.” – Barry Parkin, Mars [24:37]
• Performance Metrics: Mars weights societal impact, including greenhouse gas reduction, equally with financial returns in executive compensation (26:15).
  • Quote: “Greenhouse gas reduction is as important as earnings...that sets the platform for then doing great things.” [26:21]

Why the Private Sector Must Lead

• Comparable to Countries: Major corporations have carbon footprints rivaling nation-states.
  • Quote: “Our carbon footprint is just under 30 million tonnes. That’s the same size as Finland. And we’re by no means the largest company in the world.” [28:26]
• Need for Collective Action: Many businesses have made net zero commitments, but few are on track—transformation is “extremely hard.” (29:54)

Deep Supply Chain Engagement

• Smallholder Empowerment: Mars works directly with ~1 million smallholder farmers, focusing on income, crop resilience, and alternative livelihoods (31:44).
• Women’s Economic Empowerment: Highlights success of VSLA programs fostering women’s entrepreneurship (32:13).

Decarbonizing Products and Packaging

• Radical Changes Needed: By 2030, Mars wants to halve their products’ footprints while maintaining quality and flavor (29:54, 31:08).
• Plastic Packaging Transformation: Ongoing efforts to redesign 10,000 packaging items; regulatory challenges differ by geography [33:31].
  • Quote: “We’re taking something that has been optimized over 20, 30 years and changing the packaging materials, changing the packaging design... It’s a monumental task.” – Barry Parkin, Mars [34:03]
• Honest Acknowledgment of Gaps: Admits that answers for sustainable packaging in emerging markets are still lacking (34:40).

Political Backlash and Long-Term View

• Insulated from Policy Swings: Mars takes a generational approach, undeterred by changing governments or anti-ESG sentiment (36:07).
  • Quote: “Presidents come and go, governments come and go… So we have to take a long-term view and just keep doing what we think is right.” [36:43]

Partnerships, Regulation, and Collective Industry Action

• Industry Collaboration: Mars co-chairs industry coalitions (e.g., Plastic Waste Coalition), advocating for global standards and regulatory solutions (37:08).
• From Voluntary to Mandatory: Push for UN Plastics Treaty illustrates how voluntary industry agreements can inform regulation [38:05].
• Regulation as Accelerator: Advocates for legislation on plastics and deforestation—industry often leads and governments catch up [39:35].
• Technology for Transparency: Emphasizes AI and tech to trace complex global supply chains, especially for materials like cocoa [41:25].

Hopes for COP Outcomes

• Building Partnerships, Sourcing New Ideas: Focus is on building networks and finding innovative approaches, given skepticism about imminent governmental breakthroughs (40:37).

Notable Quotes & Memorable Moments

• On the inevitability and business relevance of climate adaptation:
  “Farmers … just can’t have a reliable income when weather is unreliable and their experience doesn’t matter anymore.” – Matias Berninger, Bayer [04:54]

• On reframing the food security challenge:
  “Food inflation moves from a seasonal problem to a structural problem.” – Matias Berninger, Bayer [06:56]

• On the need to move past dichotomies:
  “Regenerative agriculture … is sort of the offspring of a love affair of biotech agriculture and agroecology … we need to replace the word ‘or’ with ‘and’.” – Matias Berninger, Bayer [11:58]

• On the scale of corporate climate impact:
  “Our carbon footprint is just under 30 million tonnes. That’s the same size as Finland.” – Barry Parkin, Mars [28:25]

• On corporate leadership and executive incentives:
  “Our top thousand executives are remunerated … on greenhouse gas reduction alongside financial performance. And that makes my job incredibly easy, because we’ve said this is as important.” – Barry Parkin, Mars [27:13]

• On regulation:
  “Voluntary action only takes you so far … at some point you have to regulate and raise the bar for everybody.” – Barry Parkin, Mars [39:38]

Timestamps of Key Segments

• [03:13] – Bayer explains rationale for COP participation and climate innovation.
• [04:56] – Impact of climate change on farmers globally.
• [07:13] – Food inflation reframed as a business and societal crisis.
• [10:02] – Ag innovation, AI, chemistry—an “ABC” story.
• [13:51] – Limitations of government-only climate finance; need for private sector solutions.
• [15:00] – Bayer-lead public-private partnership with the Leaf Coalition.
• [19:13] – Discussing shared value and the evolution from CSR.
• [20:00] – COP goals: Carbon markets & adaptation.
• [24:37] – Mars' stakeholder capitalism roots.
• [26:21] – Executive remuneration tied to emissions reduction.
• [28:25] – Corporate carbon footprints vs countries.
• [29:54] – Decoupling growth from emissions at Mars.
• [34:03] – Packaging transformation challenges.
• [36:43] – Mars: “Governments come and go—we take a long-term view.”
• [38:05] – Push toward a UN Plastics Treaty.
• [41:25] – Technology and supply chain traceability.

Conclusion

This episode highlights the private sector’s indispensable yet complicated place in climate negotiations and finance. Both Bayer and Mars position themselves as solution-oriented, pragmatic players, making a virtue of innovation, partnerships, and measurable business value aligned with climate action. They underline the difficulty of meeting climate goals without private investment and ingenuity, but also acknowledge the hard limits of voluntary action, the need for regulatory frameworks, and the challenge of shifting public skepticism. As COP 29’s “finance COP” label suggests, the expectation and pressure on industry have never been higher—and leaders from companies like Bayer and Mars aim to prove they are up to the task, even as they seek new ideas and honest discussions about what works.