Bernadett Papp Of Pact Capital AG: 5 Things We Must Do To Inspire The Next Generation About Sustainability And The Environment
An Interview With Martita Mestey
Parents can and should always show alternatives to their children. Of course, in most cases there are no clean choices. Like not everybody can move without a car or follow a plant based diet, but parents can tell the upsides and the downsides of the different options.
As a part of my series about what we must do to inspire the next generation about sustainability and the environment, I had the pleasure of interviewing Bernadett Papp.
Bernadett Papp is the Head of Market Analysis at Pact Capital AG, in Geneva, Switzerland. She has an MA in economy and pedagogy. Bernadett covers the carbon markets with a special focus on compliance markets for more than a decade. Besides preparing price and emissions forecasts, she provides market comments to media outlets specialized on environmental markets. With a background as a teacher Bernadett is an enthusiastic educator about sustainability and about the role of carbon markets. She organizes workshops and records podcasts.
Thank you so much for doing this with us! Our readers would love to “get to know you” a bit more. Can you tell us a bit about your background?
Thank you so much for having me today! In my young ages I had an insatiable hunger for information and accumulated a couple of certifications. I graduated from the ELTE University in Budapest as a teacher of German and Spanish, but then I studied economics and accounting at the Budapest Economic University and got my MBA from the Jean Moulin III University in Lyon. I started my career at a local brokerage firm as a risk analyst and then switched to equity analyst at the brokerage arm of the Austrian bank, Erste. As my task was to provide recommendations for esco (or energy saving) companies, I started to understand the relevance of renewable technologies, energy efficiency and the profits companies can make by applying them. From here, it was just one jump to analyze carbon markets. I have been doing this for more than a decade by now, but have not regretted any second of it. This is a field that is constantly evolving and filters into the everyday life of individuals, businesses and societies.
Was there an “aha moment” or a specific trigger that made you decide you wanted to become an environmental leader? Can you share that story with us?
I remember that moment very well and I think my ex-colleagues do as well. As I was raised in the countryside and my family worked in agriculture, I’ve always had a special connection to nature. I saw it in its beauty, but also realized the changes. With time there were more and more summers when our crops were destroyed by hail and the hard work of more than 6 months has been annulled. I pretty much liked the idea that carbon markets can contribute to the dampening of the negative effects of climate change, but there was a moment when I wanted them to work much better. After the 2009 financial crisis the markets were struggling as well and there was a day, when the price to emit one ton of CO2 in Europe fell below 3 euros after the industry committee of the European Parliament rejected the reform of the system. The vote was broadcast live and when the result was shown on the screen, I could not keep my tears. I sat there on the trading floor crying because I knew that only a meaningful carbon price can force big polluters to reduce their emissions and I wanted to do everything I could to contribute to this goal.
Is there a lesson you can take out of your own story that can exemplify what can inspire a young person to become an environmental champion?
Since that vote, the European compliance market underwent several reforms, the price started increasing and companies began elaborating their emission mitigation strategies. Many companies that listened to me saying that carbon prices have to be and will be higher, acted early and applied modern technologies. Many of them even received EU grants to implement the new processes and others now have a surplus in allowances they can sell and raise funds to make the next step towards net zero emissions.
Can you tell our readers about the initiatives Pact Capital is taking to address climate change or sustainability for larger businesses? Can you give an example for each?
Of course! We have many tangible examples.
Besides being active in carbon trading, the most important strength of Pact Capital is the development of emission reduction projects via the implementation of renewable technologies and energy efficiency measures. Let me highlight three types of projects.
One of the first and maybe the simplest projects was changing old, incandescent light bulbs for LED lamps in Gujarat, India. Although electricity in the region is still mainly produced from fossil fuels, the more efficient LED lamps consume less power. An incandescent lightbulb requires 60 watts of power to emit around 700 lumens of light whereas an LED bulb can emit 700 lumen by consuming just 9 watts. About 95% of the energy in LED is converted into light, and only 5% is wasted as heat. The project not only contributes to the reduction of electricity consumption, but also creates jobs for local people and contributes to the growth of local businesses.
After several running projects however, I’m proud to say that our specialty is biogas. It is a less known way of producing electricity and heat than solar, wind, hydro or even geothermal energy, but it has a huge additional advantage: it uses the waste from agriculture or from landfill. Some of our plants are even able to produce fertilizer, contributing this way to a circular economy.
Last, but not least, we started an afforestation project in Pakistan last year, after the floods. The initial project covers an area of 5,000 hectares which can be expanded to 20,000 hectares in the future. I know that forestry projects received a lot of criticism this year, but we are in the lucky situation that by knowing these we can address them all when implementing the project. Our team works in close cooperation with the local community and we make sure that their life circumstances are improved for example by extending the irrigation system to provide water also for their gardens. In addition, a certain amount of credits generated from the project will be set aside to cover unexpected losses of trees.
What are 3 lifestyle tweaks that the general public can do to be more sustainable or help address the climate change challenge?
It would be hypocritical to recommend steps I do not follow myself, so let me share some of my hacks.
I’ve been vegetarian for a couple of years by now, but I’ve just recently started to replace the exotic fruits and vegetables that travel thousands of kilometers to get on my table with local species with similar nutrients. In Hungary for example we do not grow chia seed, but we have linseed. Going to the local farmer’s market is a nice program too. In addition, they can tell you a lot about how climate change affects their crops.
Another step I took was selling my car. I know, not everybody can do that, but I’m in the lucky situation that public transportation just works perfectly where I live.
And a new thing I’m just introducing into my everyday life is minimalism. The concept is often misunderstood. I do not oppress myself, but before I purchase a new product — be it a new top or something for the kitchen as I’m a passionate cook — I just ask myself, if I really need it. I’ve also learnt a simple trick: I delay my purchase for two days. If after two days I still feel like I need that product, I buy it but in 80% of the cases the craving evaporates by the next day.
The youth-led climate strikes of September 2019 showed an impressive degree of activism and initiative by young people on behalf of climate change. This was great, and there is still plenty that needs to be done. In your opinion, what are 5 things parents should do to inspire the next generation to become engaged in sustainability and the environmental movement?
Parents are the first and primary models for their children, their responsibility therefore is huge. If I look back at my childhood, I’m grateful to my parents for teaching me how to live in harmony with our environment. Once you realize how beautiful the world around us is, you want to take care of it. So, let’s put down the mobile phone and just go out.
The behavior of the parents can impact their children’s future decisions. If the children see that mom and dad are buying the latest gadget every year, they will do the same. Here I’m returning to my idea about cutting back consumism.
Parents can and should always show alternatives to their children. Of course, in most cases there are no clean choices. Like not everybody can move without a car or follow a plant based diet, but parents can tell the upsides and the downsides of the different options.
It is also important to empower kids to speak up. Let them explain how they see the world, what their choices are. I think that this kind of freedom unlocks kids’ creativity which can result in life transforming innovations. My personal example, although I’m not a kid anymore: I didn’t tell people for years that I’m vegetarian. But since all my friends know, some of them not only adopted my recipes but developed even healthier versions with less sugar.
Last, but not least, let the teacher escape from me and emphasize the relevance of education. We need more researchers in battery technology, agriculture, sustainable fuels and many other sectors to make our life sustainable. It is important that children who show interest in these topics get access to education and programs where they can develop their skills.
How would you articulate how a business can become more profitable by being more sustainable and more environmentally conscious? Can you share a story or example?
In the beginning of my career, I analyzed the operation of power plants and district heating companies. Often, these were managed by municipalities with a very tight budget. Sourcing the fuel for their operation was the highest cost item in their books and almost consumed all the revenues they made in the previous heating season. The implementation of smart meters and other efficiency tools resulted in significant savings of the fuel used and there was more cash left with the plants.
If we include carbon trading, companies can even earn extra revenue either from selling surplus allowances as mentioned in the example about early movers in the EU ETS or by selling energy attribute certificates when switching from fossil fuels to renewables.
Another aspect I would like to mention is the financial advantage companies enjoy if they can prove that they have a sustainability strategy and that they have started taking steps to put it into action. Credit institutions have introduced new criteria when deciding about granting loans and those companies with a strong sustainability strategy are preferred and they can also expect better terms for the loan.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?
I was lucky enough to have the best mentors all my life. The person I’m most grateful for everything I know is my grandma. I’ve spent a lot of time with her and learnt something new every day. I got used from a very early age to take responsibility for my decisions and acts. When I wanted to have pets, I had to learn that animals always eat before humans, because they put their life in my hands and they cannot open the fridge to have something to eat.
She also showed me that we always have options to choose from. When I helped her grow potatoes and wheat, she told me that I can decide if I would like to do the hard physical work or I study and work in an office. None of the options is better or worse than the other. I just had to find out what I’m good at and how I can contribute more to the world. I still know how to grow grapes, but I know that my market analysis is better than my wine would be.
What is the best way for people to continue to follow yoru work online?
After many years in the business, we’ve accumulated a lot of knowledge and experience about carbon projects and emissions trading we think is worth sharing. Pact Capital therefore uses social media platforms very consciously to promote our webinars or podcasts or to invite people to conferences where they can meet us and we can discuss cooperation opportunities.
Pact Capital’s Carbon Age Fund X has been established to channel financing into breakthrough technologies and we sometimes find new methodologies that have not reached the industrial scale yet on social media. These platforms can connect a brilliant idea with the financial support it needs.
This was so inspiring. Thank you so much for joining us!
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