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The Actuary The magazine of the Institute & Faculty of Actuaries
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Q&A: Michael Sippitt: Power management

Michael Sippitt is Clarkslegal's managing partner, head of the firm's employment team and a director of Forbury People Ltd. He trained at Clarkslegal and became a partner in 1978. He is a member of the Employment Panel of the Confederation of British Industry (CBI) and the Employment Lawyers Association (ELA). He has also previously been a part-time university lecturer and speaks on employment topics. Michael is also a past Advisory Board member of TAGLaw, the international legal network of which Clarkslegal is a founder member.

What is the reason for Forbury Investment Network’s existence? How receptive have you found investors, specifically in light of recent global financial challenges?
Forbury Investment Network (FIN) exists to facilitate investments in early stage technology businesses in the cleantech, medtech and social/digital media sectors, but our heritage was in the environmental sector. FIN works with entrepreneurs in helping them achieve their funding goals through the development and refinement of business plans, pitches and slide decks followed by facilitated introductions to a range of relevant investors.

Investors are definitely receptive to receiving deal flow despite recent global financial challenges. From their perspective, there is perhaps now more focus on nurturing existing portfolio businesses that have also been affected by the downturn. There is also plenty of money out there seeking good investment opportunities. There is certainly more investor wariness generally than there was in the relatively good times before 2008.

What does being the chairman of Forbury Environmental entail?
This is an important part of our strategic development of multi-disciplinary skills, and Forbury Environmental grew out of the environmental work of our law firm, Clarkslegal. We have replicated this concept also in the human resources sector with our HR consultancy Forbury People. I see my role as assisting our legal and other professional services to develop in synergy.

You have a legal background with a history in employment matters for which you are Clarkslegal’s practice leader. Explain the connection with environmental issues.
Although I am a lawyer without significant scientific education, I am experienced in commercial life and in developing teams, so doing that across lawyers and scientists is a welcome challenge. My legal practice is also oriented towards strategic planning for workforces, restructurings and change management. We have seen a synergy between our role in helping on workforce matters and the importance of cultivating an awareness of environmental issues. This enables progress towards sustainability in businesses of all sizes.

Human resources need to drive employee engagement to the challenges of our times, and pressures from energy and environmental concerns could gradually destroy those that do not adapt.

Also, fundamentally, I believe that whatever our different disciplines in a multi-disciplinary practice, we have got to understand what is happening to our world, where that leads, and do what we can in our different ways to make a difference for the better.

To what extent are you working with developing nations?
We work closely with several countries across the Commonwealth, both developed and developing, to cultivate in collaboration with the Royal Commonwealth Society, the Commonwealth Environmental Investment Platform (CEIP), a network of hubs designed to increase the efficiency of the corporate finance process on a global scale with a focus on sustainability and environmental technology.

The aim of the CEIP is to make it as easy as possible for investors to find the right opportunities with the right risk profile and geographical need, as well as for entrepreneurs to efficiently find money for their ideas and businesses.

There is a crucial need to deploy vital new technologies in countries with the greatest need of economic growth, to enable such growth as far as possible on a low carbon footing. It is like mobile phone technology in Africa — with the right approach, we can enable growth without going through the old world’s bad ways of destroying the world’s climate balance and eco systems in the process. Developing countries with access to technologies helps everyone, thus enabling the developed world to build its own industries trading with emerging economies more effectively.

Power managementSouth Africa will be hosting the COP17 United Nations Framework Convention on climate change in Durban in December. Name and explain one key outcome on your wish list.
COP15 in Copenhagen was a real letdown, partly because there was so much anticipation that we would reach a global deal as a result of the Bali road map. Cancun for COP16 was then seen as building on the few small victories that came from Copenhagen and some good progress was made on payment mechanisms for forestry protection, called REDD+. However, COP17 in Durban is the last chance that we have to get an overriding agreement before the first phase of the Kyoto Protocol expires.

Unfortunately, it wasn’t a well-written document so it’s unclear what actually happens in 2012 when it does expire. Durban is about reconciling the views of developing nations and the EU that Kyoto should continue and economies such as the USA that want no part in it.

A massive part of the deal will be formalising a transfer of funds and technology to developing nations to help them combat climate change and its effects. It will be a huge challenge to get all of those politicians to agree on anything and so, unfortunately, I think that it is the private sector that must lead the transition to a low-carbon economy. Anything that advances the deployment of funding for low-carbon growth in developing countries will be good.

How is the Commonwealth initiative to build a global environmental investment network progressing?
Building on what I said earlier and the transition led by the private-sector that I think will be the driving force of change, promoting investment opportunities in the sector around the world is hugely important. We have been encouraged by numerous early discussions and strong interest from a number of Commonwealth countries.

We are engaging with both public and private sectors, and the general response has been warm. We should be able to have a viable pilot scheme functioning within the next few months. We do not yet have external funding or sponsorship for this initiative, and if that were available then the whole process could be considerably accelerated.

During your travels and your many experiences you will have encountered a number of interesting innovations in technology. What will change the way that we consume energy in future?
The key breakthroughs are all around energy consumption as you have identified. In the short term, it is about reducing our consumption and automatically time-shifting it. This is about smart grids and home energy displays enabling people to see real-time consumption. One issue with this recently has been how to engage consumers and the big breakthroughs here will come from showing and sharing consumption patterns.

In the longer term, energy storage will aid this time-shifting and the balancing of an increased amount of renewable energy being fed into the grid. Unfortunately, we seem quite a few years away from commercial-scale energy storage and some massive breakthroughs are required. On the positive side, though, we are due one since it's been over 25 years since the first lithium-ion batteries arrived.

The issues highlighted with climate change and the environment are sometimes dismissed by sceptics as scaremongering. Can you illustrate some statistics that will be of relevance to all?
Despite the efforts of these sceptics and the unfortunate incidents such as ‘Climategate', there is unequivocal evidence that climate change is happening today, right before our eyes. The Northern Hemisphere has seen a 10% decrease in snow cover since the 1960s; we have lost approximately 40% of arctic sea ice; permafrost is thawing; sea levels have risen by up to 25cm since 1900; extreme weather events are occurring more frequently.

These are just a few of the direct impacts to the environment. What we can't prove beyond doubt is that human activity is responsible, but with the vast majority of the scientific community backing the evidence, a few loud dissenting voices are all it takes to confuse matters for the public. There are already signs of impacts on humans in developing countries who have contributed the least to the problem but will be affected the worse. We are coming closer to a point where climate refugees will be a reality. A massive 20-30% of plant and animal species globally face extinction if global temperatures continue to rise at current rates.

We are coming closer to seeing large-scale migration driven by climate-related problems. We now have CO2 levels higher than they have been for a million years. We don't really know what happens in that situation, and it is a mistake to think climate change always happens slowly - abrupt climate change is the norm, not the exception. In short, anything could happen if we don't reduce CO2 from current levels. There is a good argument that we need to cut CO2 from 385ppm to 350ppm, not just stop it going higher.

What role do you believe actuaries can play in this area? And the public at large?
A full and holistic approach to analysing the risks of climate change is required. There are initiatives to introduce climate reporting and sustainable investing into certain markets. However, it is needed across the board of investment products.

The actuarial profession has long been driving analysis of climate change at a local or regional level, identifying changes in trends of, for example, health patterns, property prices or frequency of adverse weather events. With the inevitability of climate change increasingly having a global impact, actuaries should continue to innovate in its response to identifying climate risk by monitoring holistic trends in climate risk, for example - will a country be able to honour its debt obligations as exposure to climate change affects it?

It would be good to hear from any actuaries reading this who can offer to help in some way in our development of the Commonwealth Environmental Investment Platform. There is no obstacle to any well-informed professionals getting involved in this to help build hubs in suitable Commonwealth locations. Good links with professionals in each location are a key requirement.

You are a managing partner at Clarkslegal LLP, having been a partner for more than 30 years. What is your top tip for career success?
Enjoying what you do and being sustained by talented colleagues!

How do you measure your success?
Outcomes, seeing results achieved. I have long believed in a balanced scorecard approach that also takes a holistic view of what success looks like. I therefore prefer we measure outcomes across a range of measures. What you plan for a few years down the road is as important as what you did last month, and building broad competencies and commercial understanding among our staff is as vital to our long-term success as honing specialist skills.

What has been your greatest professional challenge to date?
There have been many interesting challenges, and my work on strategic change with numerous organisations over the years has generally involved a lot of careful planning and legal risk assessment, but I think the one I am now facing in endeavouring to create an investment platform for the Commonwealth that will alter the dynamic of trade and investment for the benefit of developing countries is probably the most daunting.

What are your pastimes?
There isn't a lot of time left to pass, but seeing our family, battling round the golf course, walking our dogs in peaceful places, or escaping somewhere with a good book all rank pretty high!

Power management