Sir David King is that rare creature who can happily straddle the academic, government and business worlds. In fact, his aim is to encourage them all to move in tandem in dealing with environmental problems. He talks to Geraldine Lambe.

Sir David King may now be responsible for advising UBS on all of its environmental issues, but ‘green’, in relation to the environment, is not a word he likes. Now senior scientific adviser to UBS, but until the end of last year the UK government’s chief scientific adviser and head of the Government Office for Science, Sir David believes that prefacing an initiative or service with the word green smacks of green-washing.

“It is too easy to marginalise ideas by simply labelling them as green. Instead, we need to embed environmental consideration into every area of business and education. It must become integral to what we do, not just be an add-on,” he says.

If advising a bank and its clients seems a long way from advising the UK government then Sir David thinks otherwise. While one half of his brief was to advise the UK and to work with other governments, the other half was to enrol the private sector. Getting them on board is critical, he says. “Many of the problems surrounding climate change and the reduction of greenhouse gases can only be resolved if we take business with us. We will never reach emission reduction targets or renewable energy commitments without [the business community].”

Times of change

Because the world will have to decarbonise, this will force a huge change in energy, in the utilities sector, in mining, to name but a few, says Sir David, and the most obvious way to help meet such targets is to develop alternative technologies. “Companies need to see the risks [associated with reducing carbon emissions] as an opportunity. The companies that grasp this fact will be the winners.”

To that end, Sir David was instrumental in founding the Energy ­Technologies Institute, announced two years ago by Gordon Brown, then the UK’s chancellor for the exchequer, and formally constituted in September last year. Jointly funded by the UK government and British industry, it aims to bring together the best research and development, and take to market new clean-energy technologies.

In fact, much of Sir David’s work (outside his ‘real’ job, in which he is both professor of the surface science group at Queen’s College Cambridge and director of the newly formed Smith School of Enterprise and the Environment at Oxford University) has always been heading in the same direction: towards breaking down the barriers between academia and business.

Central to this is the notion of making the academic/business relationship a more fruitful one. According to analysis by Sir David, figures for citation in international research reveal that the UK’s academic sector is second only to the US (the figures also show that the UK’s influence – i.e. the number of citations – is still growing while the US’s is shrinking).

Helping business

However, this academic authority does not translate into the kind of business growth that it should. “In the UK, companies get to a market capitalisation of about £70m ($136.8m) and they either wither and die or they get snapped up by a big foreign company. We need to help the small UK businesses develop into big UK/multinational companies,” says Sir David.

So, despite the fact that Britain also has the largest small to medium enterprise hi-tech sector in the world, Sir David sees little evidence that the City’s financiers are aware they are sitting on such a wealth of opportunities.

“Historically, small hi-tech businesses have not been seen as a big opportunity in the City. The UK sees itself as good at innovation but not good at exploiting it. One part of my brief [while advising the UK government] was to find out how we could convert this wealth of knowledge into wealth creation.”

That role is clearly ongoing. It was while giving a series of presentations to the City as part of this brief that Sir David met UBS; his new role – in which he will advise the bank and its major clients on all environmental matters – has evolved from there. Moreover, City connections will mesh very well with the aims of the newly founded Smith School.

Sir David is just as certain that there is a role for financial markets and ­institutions in the fight to reduce emissions. He believes that those who are cynical about the efficacy of market-based mechanisms – such as the EU’s ­emissions trading scheme – to encourage polluters to emit less carbon, fundamentally misunderstand its nature.

Capping emissions

“It is a cap-and-trade system between nations that imposes year-on-year reductions. It is a fiscal process through which governments can impose emission caps on domestic companies. This locks countries into a process of carbon dioxide reduction. Those who ignore it will have to pay a price. This can only help to drive change.”

Sir David is supportive of the other market mechanisms that were established under the Kyoto Protocol. He says that the clean development ­mechanism (CDM), which enables companies in developed economies to fund projects that reduce emissions in developing countries – as an alternative to more expensive emission reductions in their own countries – is a critical part of the equation.

He says: “This does more than help companies in developed countries to meet their reduction commitments; there was also a need for a fiscal process to enable developing countries to leapfrog old technologies and to engage new, clean technologies. CDM does that. To meet the kind of emission reduction targets that we are setting ourselves, we need to use every lever at our disposal.”

Similarly, through their own policies and through their relationships with clients, banks can – and should – play a crucial role in encouraging the wholesale shift in mindset needed to decarbonise our economies, says Sir David.

Bank advice

As both lender and adviser, banks play a pivotal role. Industry efforts such as 2003’s Equator Principles (a set of ­voluntary guidelines for managing ­environmental and social issues surrounding project financing) and this year’s ­Carbon Principles (climate change guidelines for advisers and lenders to carbon-heavy industries) are a good starting point, says Sir David. Now “banks need to embed such ­principles in the firm’s DNA”.

Yet that is easier said than done. The Equator Principles, for example, were lauded at launch stage for incorporating these ideas into loan covenants; the idea being that if borrowers fail to comply, they will be judged to be in default. But it is unclear how many lenders have so far levied any penalty on their clients for defaulting in such a way. So, is it up to banks to play the role of the environment’s global policeman? “It does not have to be about banks taking a moral stance; it is about looking at hard-headed returns,” says Sir David.

“It is part of being a good adviser to point out the weaknesses of any client’s business strategy. So, if a firm is looking for financing to build a coal-fired plant, then its bank should point out that the returns on such a project, usually earned over 40 years, would be in jeopardy because of increasingly tough emission legislation. But, similar advice could be appropriate to car makers, cement manufacturers and aluminium smelters: their bankers should be suggesting alternative energies or low emission strategies that would yield the same returns on investment.”

The financial sector is full of creative people who have leaped with enth­usiasm on many new areas of ­environment-related business. Now all that it has to do is put the environment at the heart of every business strategy and client relationship, and Sir David’s job will be done.

CAREER HISTORY

2008: Currently president of the British Association for the Advancement of Science. Appointed director of the newly formed Smith School of Enterprise and Environment at the University of Oxford. This year he also became senior ­scientific adviser to UBS.

2006: Instrumental in the foundation of the £1bn Energy Technologies ­Institute, a government/ business ­initiative.

2002: Awarded the Rumford Medal by The Royal Society.

2000: Appointed chief scientific adviser to the UK government and head of the Government Office of Science.

1998: Founded the Unilever ­Cambridge Centre for ­Molecular Infomatics.

1995: Created Master of Downing College, University of ­Cambridge; and he remains director of research in the department of chemistry.

1993: Appointed head of the chemistry department at the University of ­Cambridge.

1988: Appointed 1920 Professor of physical chemistry at the University of Cambridge.

1987: Founded the Leverhulme Centre for Innovative ­Catalysis at Liverpool.

1974: Appointed Brunner professor of physical chemistry at the University of Liverpool.

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