Innovations in Sustainable Finance #4 Stéphanie Mielnik | Sustainability-Linked Bonds

In this episode, I speak with Mac Zellem – a former budget director of the State of New Hampshire - about financing innovation. We explore how public finance can shape the future, why regulations can be both a hurdle and a help, and what Germany might need to get right in its planned fiscal stimulus. It turned out to be a longer conversation, mainly because I found it to become more and more interesting as we went along.My favorite takeaways from the conversation were:Government as Both Catalyst and Constraint: We talked about the delicate balance governments must strike between enabling innovation and overregulating it. Public procurement, R&D, and credit guarantees can be powerful tools—but only if used with a clear strategy and technical competence.The idea of carried interest dates back to the merchants of Venice: They rewarded risk-taking by not taxing the profits from risky maritime trade. When there is a public interest to have investors take risks, this is a politically charged but functionally interesting policy tool next to subsidies or guarantees.Culture and expertise are important pieces of the puzzle: Mac describes how it’s important to get the right skills in place for good decisions. And that there are vast differences in cultural attitudes to risk and failure, across public and private institutions, but also between the US and Switzerland.Regulations Need a Spring Cleaning: I liked the idea that a “spring cleaning” of outdated or overly complex regulations could unlock new energy in the manufacturing sector, especially for startups trying to enter the space.Germany’s Moment to Lead: Finally, we discussed how Germany’s fiscal stimulus could become a real driver of innovation—if the government provides clarity, consistency, and a long-term plan that builds trust among investors and innovators alike.For anyone interested in how policy can support innovation while managing risk, this episode is full of practical insights and experiences. Further Notes:I said on the podcast that the Swiss Procurement Budget is around 50 billion CHF. That was overstated; it is around 35-40 billion CHF.The story about carried interest in Venice is covered in a fascinating Paper by Diego Puga and Daniel Trefler.I mentioned Jean Tirole’s recommendations for innovation in Europe based on this report. 

In this episode, I speak with Paul Smeets, a professor of philanthropy and sustainable finance at the University of Amsterdam, and Dan Stein, founder of Giving Green, a research organization that helps donors maximize their climate impact. Together, we explored the intersection of individual actions, systemic change, and effective giving to address climate change. My favorite takeaways from the conversation were: Massive Carbon Savings Through Strategic Interventions: A compelling example discussed was the advocacy to keep California's Diablo Canyon Nuclear Power Plant operational. This single campaign, costing just $3 million, could save 35 megatons of carbon emissions over five years—equivalent to 10% of California's annual electricity-related emissions. It’s a striking illustration of how targeted efforts can have disproportionately large impacts on climate goals. Gut Feel vs. Voice of Reason—Do Both: Paul shared how his shift to a plant-based diet initially felt undermined when he learned that systemic donations could have a larger impact. Yet, he continues his dietary choices while also donating to climate charities, finding that both approaches can coexist. The conclusion? Embrace the emotional satisfaction of personal action and the logic of systemic impact through strategic giving. The Power of Giving Green: Dan explained how Giving Green identifies and supports the most effective climate initiatives, such as advancing geothermal energy and advocating for lab-grown meat. Their research process focuses on scalable, feasible, and underfunded opportunities. By donating to Giving Green’s recommended causes, individuals can achieve far greater impact than through behavioral changes alone. If you’re curious to learn more: Visit Giving Green’s website to explore their recommendations. Check out Effektiv Spenden (for German-speaking listeners) for efficient donation options to vetted climate charities. Stay informed about cutting-edge solutions like geothermal energy and lab-grown meat. For your convenience, I’ve linked the resources we discussed:Giving Green: https://www.givinggreen.earth Effektiv Spenden (catering to the German-speaking region): https://effektiv-spenden.org Stanford/MIT study on the Diablo Canyon nuclear power plant: https://energy.stanford.edu/news/extending-diablo-canyon-nuclear-plant-would-help-california-meet-its-climate-goals-new-study A news story about the tasting of the first lab-grown burger: https://www.science.org/content/article/first-artificial-burger-gets-tepid-reviews-billionaire-financier-unmasked 

In this episode, I speak with Annu Nieminen, CEO of Upright, a Finnish technology startup with an automated method to quantify companies' net impact on people, planet, society, and knowledge. Upright combines machine learning and natural language processing to analyze scientific data and company activities, providing an impact profile for companies worldwide.My favorite takeaways from the conversation were:Compromising the Answer, Not the Question: Annu emphasized the importance of focusing on the right question, even if the answer remains imperfect at first. Upright’s model prioritizes understanding a company's true net impact, even if it challenges traditional ESG metrics.Hidden ESG Champions and Challenges: I loved Annu’s examples of hidden impact champions like condom manufacturers and sewage infrastructure companies—both create significant positive health and societal impacts, even if they’re not traditional ESG darlings. Conversely, modern tech companies working in areas like ad optimization for tobacco or fast fashion can have surprisingly negative net impacts.Scarce Human Capital: Upright introduces the idea of evaluating companies based on the opportunity cost of the human talent they employ. This provocative metric raises critical questions about how we allocate the world’s brightest minds.The Power of Open Data: Annu’s vision for the future is to create a neutral, science-based resource for understanding a company’s impact. She hopes this could become the default source for anyone searching for "Tesla impact" or similar, allowing a common-sense starting point for discussions.For listeners who want to dive deeper, Upright offers a free version of its platform to explore company impact profiles. Check it out and see what your favorite company is doing for (or to) the world. https://uprightplatform.com

In this episode, I speak with Alex Edmans, a professor of Finance at London Business School. Many of you in the audience will have heard of Alex before. We traced his evolution of thought regarding sustainable finance, covering his extensive body of work, including the book “Grow the Pie,” his academic papers, op-eds, and TED Talks, including his most recent paper: Sustainable Investing: Evidence from the Field. My favorite takeaways from the conversation were: When I asked when he first got interested in sustainability, Alex surprised me by saying he was never interested in sustainability or sustainable finance per se. He was interested in long-term value creation but noticed that sustainability aspects are sometimes important but overlooked or misunderstood.I realized how the concept of competitive advantage is really at the heart of figuring out how a business or an individual can drive change. Focusing on what you can do very well right now can help to exit ESG compliance mode and enter an innovative mindset that helps society move forward.I asked Alex whether he is more or less optimistic about businesses solving important problems than he was four years ago. Delightfully, he is MORE optimistic, which I find so encouraging. If you like the pod, I can only recommend diving more deeply into Alex’s work, which is very nicely made accessible on his homepage: https://alexedmans.com

In this episode, I speak with Fridtjof Detzner, co-founder of the climate venture capital fund Planet A, based in Berlin. Fridtjof had early success with an internet company, went on an eye-opening trip to Asia, and came back determined to boost innovation in all climate-relevant sectors and technologies. My favorite insights of this conversation were:Climate tech investing is not narrow. It affects many different industrial processes, from alternative proteins, to plastics, to shipping fuels, to electricity storage, and software.The hard part about innovating industrial processes is that scaling is very expensive. Entrepreneurs need money to build large industrial plants, before it is 100% clear that the solution will be profitable. That opens up crucial but also challenging role for investors to enable innovation.While large incumbent companies would have advantages to support risky innovations with their balance sheet, history shows that small companies are essential to drive radical innovation.For those who want to dig deeper here is the link to Planet A, which also has links to the companies that are mentioned during the conversation. 

In this episode, I speak with Liam McGroarty, Strategic Development Manager at UEFA, about the social impacts of football. We discuss how the beautiful game improves lives and how investing in football could have substantial positive impacts. Fun fact: Liam started out as a priest but turned his professional efforts towards the “biggest religion” and is passionate about the power of sports.  My favorite learnings were:All things considered, amateur football probably adds more value to a national economy than the professional leagues. In Germany, the estimate is EUR 13.9 billion, vs. EUR 4.48 billion.Many of the benefits are health-related, but a sizable component is crime reduction. There is compelling evidence that an accessible offer to play can prevent kids from having problems with the police. The key is to bring the offer to those kids who don’t play already, for example, because their parents do not encourage it. We dive into the fascinating example of the Chances Program. In this social outcome partnership municipalities pay for outcomes such as improved school attendance, sports clubs deliver the intervention to a total of 6000 children, and impact investors provide the financing upfront. Join us for a wonderful conversation that lifted my spirits about a few things that really do work for society.

In this episode, I speak with Bertrand Gacon, Co-Founder and CEO at Impaakt. Impaakt is an impact assessment platform that crowdsources information from hundreds of contributors and thousands of reviewers. My favorite insights from this conversation were:I can highly recommend to try out the platform. You can explore company profiles, follow discussions, and put in your personal view of what is important and generate lists of companies or funds that are either “heroes” or “villains” given your priorities.The question of which companies have the most positive impacts on people and planet is simple. The answer is tricky. This platform relies on both paid and voluntary contributors to provide a nuanced answer.According to Bertrand, it should be us – the citizens – who decide what counts as socially responsible, not bankers, not corporations, and also not regulators because they tend to come too late. Power to the people!

In this episode, I had the pleasure of talking to Christoph Gosdenoz, partner and chairman of FairCapital. FairCapital is an impact investor based in Switzerland that specializes in financing solutions for Fairtrade cooperatives in the global south. My favorite insights from this conversation were: It’s the specific design and timing rather than just the interest rate that determines whether a loan helps a cooperative.  One of FairCapital’s innovations is to use existing purchase agreements from reliable buyers as collateral. FairCapital is open to retail impact investors at a minimum commitment of CHF 5’000. However, there is a plan for a token that would allow retail investors to become impact investors with very small amounts.

In this episode, I sit down with Sam Vionnet, the author of Impact Thinking, subtitled “Learn critical thinking skills to make better decisions that create societal value”. The book is based on 15 years of experience in consulting with multinational corporations, NGOs, and investors. Sam reveals that there are a lot of beliefs that don’t stand up to scrutiny. Rather than blindly following numbers and standards, he advocates for a principled approach that, first of all, establishes what should be measured. He presents a step-by-step framework for thinking about impact up and down the value chain and keeping an eye on trade-offs. I think the book is really helpful in assessing impact constructively and fighting greenwashing with intellectual rigor.More about the book here: https://www.valuingnature.ch/post/the-impact-thinking-book

Can you imagine voting yourself on who should sit on the board of a company you are invested in? Perhaps on your cell-phone?  In this episode, I discuss with Georgia Stewart, Co-founder and CEO of Tumelo, how their technology democratizes shareholder voting and explore the opportunities and risks that direct shareholder voting presents in the context of sustainable finance.  Nowadays, shareholder voting is usually delegated to asset managers, raising questions about whether the voice of the ultimate owners is heard. Georgia introduces the concept of “Pass-through Voting,” which allows investors in pooled funds to vote at company AGMs proportionate to their fund ownership. She explains how Tumelo’s technology not only aligns the interests of shareholders and corporations but also increases shareholder participation and engagement. Some of my favorite insights from this episode  Pass-through voting potentially empowers long-term thinking investors to have a say, shifting the voting power from short-term focused asset managers.Even if “Expression on Wish” doesn’t directly empower shareholders to vote, it can increase people’s interest and engagement in financial matters, including saving and investing. While there is a debate about whether “direct democracy” is a good idea in the context of shareholder voting, shareholders have a right to vote that was difficult to realize so far. New technology, such as Tumelo’s, can help realize it. Similar to a representative democracy, interest groups such as NGOs could take the role of parties that provide voting guidance, helping individuals make informed choices.