NextEnergy Solar Fund Ltd (LSE:NESF) director and head of ESG committee, Josephine Bush, talked with Proactive about the company's latest initiatives and sustainability strategies. In this insightful interview, Bush shares her background and journey from a lawyer to an accountant, emphasizsng her long-term focus on renewable energy.
Proactive: I'm joined by Josephine Bush, director at NextEnergy Solar Fund Ltd (LSE:NESF) and also head of its ESG committee. Josephine, very good to speak to you today. As a non-executive director of NextEnergy Solar Fund, could you tell us a bit about yourself and also your background, please?
Josephine Bush: I'll give you a little bit of a potted history of my background and how I got to where I am today. I started life as a lawyer and moved over to the accounting world about two years post-qualification. From there, I decided very early on in my career to specialise in renewable energy. I was part of EY’s renewable energy team, helping to build that practice in the early days of renewables when it was very much an alternative asset class.
It was very exciting to be part of a business build and an industry that was in its early days of development. I grew with that business, and eventually ended up as a partner at EY for 14 years within our renewables practice, part of a successful team. When I left EY, I took on a number of board roles as a non-executive director and chairing the ESG committees, one of which is NextEnergy. It's been a fantastic role, working with the investment advisory manager in the development of sustainability strategy.
Proactive: You mentioned your chair of the NextEnergy Solar Fund ESG Committee. What does this role involve, and what does ESG sustainability mean to you?
Josephine Bush: Well, I mean, everybody will know or investors will know that it's an incredibly challenging operating environment within climate change at the moment. That's against an ever-changing regulatory backdrop and disclosure frameworks, as well as pressures on organizations to adopt meaningful voluntary action within this, you know, about what they're doing within climate change and biodiversity loss. I think not all of our ecosystem is working at the same pace.
Part of my role is to really help the board navigate those complexities and work with the investment advisor and manager to really develop a meaningful sustainability strategy and execution disciplines that help us and contribute to the climate change decarbonization program and our net zero goals. That's not without its complexities.
Part of the role, in summary, is to help develop the strategic approach, the execution disciplines, approach to risk management, and really importantly for disclosure, how do we disclose in a meaningful way that our investors can understand, but also hold our investment advisor and manager to account to deliver on our stated strategic objectives and that wider contribution to the energy transition.
Proactive: NextEnergy Solar Fund recently released its 2024 standalone sustainability and ESG report. Can you take us through an overview of what the report looks like and what it sets out to achieve, and how it's different from previous years?
Josephine Bush: So we have recently issued our 2024 sustainability and ESG report. At a glance, it follows the core strategic pillars of TCFD as adopted by the new ISSB standards one and two. Importantly, we set ourselves some very high ambitions this year to be early and voluntary adopters of the ISSB standards. Also, we introduce and position our new sustainability framework. This report, as opposed to previous years, is disclosing against standard one and standard two of the new International Sustainability Standards Board standards. So, we're probably one of the first funds, as I am aware of, to adopt these standards.
You'll see that in our report. It's more detailed and a little bit more complex in how it's disclosed, but we've sought to make it as readable and user-friendly as possible. It has provided us with an opportunity to go deeper into the many objectives and fantastic initiatives that the fund has adopted to evidence its contribution to climate change and biodiversity loss.
Proactive: You mentioned ISSB. What is ISSB, why is it important, and what does it mean?
Josephine Bush: ISSB stands for the International Sustainability Standards Board. It falls under the umbrella of the IFRS. Two new standards have been set out: Standards One and Two, as I mentioned. Standard One relates to general disclosures as it relates to sustainability, and Standard Two is specific to climate change. The International Sustainability Standards Board has sought to be a convening force around all the different frameworks that are out there, to try and bring some consistency in global reporting. It's managing to do this really successfully by working with other frameworks that are out there, such as the Global Reporting Initiative.
We've mentioned TCFD, and we will come on to talk about TNFD too, but there are a whole raft of different standards out there, including European standards, CSRD, all these acronyms. You can see how complex it is for people to wrap their arms around this. The ISSB standards are really a great convening force to standardise globally sustainability reporting.
So, we, as a board, saw this as a real opportunity to early adopt the standards to really be leaders and provide and use our influence to empower others and ourselves to disclose against these standards and really make a difference as we move forward into this globally consistent approach to reporting.
Proactive: NextEnergy Solar Fund's ESG focus and the report is on climate change, biodiversity, and human rights. Why are these so important, and why is the fund so well-positioned to achieve meaningful change in these areas?
Josephine Bush: The fund decided to pick three pillars where we can make the biggest difference. Clearly, climate change, biodiversity loss, and human rights within our supply chain are areas very aligned to our operations. When we chose those three pillars, they were areas where we knew we could meaningfully set targets and metrics against and could really influence and exercise our organizational power to make a difference. It really was as simple as that, picking three initiatives that were at the heart of what we do as an organization.
Proactive: The fund's one of the only ones in its peer group to be classified as an Article 9 fund. What does this mean, and why is that important?
Josephine Bush: Essentially, what an Article 9 fund means is that we have sustainable investment at the heart of our strategic objectives. There is a very rigorous qualifying criteria to assert that you're an Article 9 fund. You have to assert and evidence that your economic activities have a sustainable end under the EU taxonomy and that there is no significant harm as a result of that economic activity. This gives investor confidence as to how capital is being deployed and a level of accountability that follows capital deployment aligned to sustainable objectives.
Proactive: NextEnergy Solar Fund has been a signatory of TCFD for some time now, but TNFD is something quite new. What does being an early adopter of TNFD mean?
Josephine Bush: TNFD, the Task Force for Nature-related Financial Disclosures, is akin to TCFD, another acronym for Task Force for Climate-related Financial Disclosures. It follows many of the same pillars of disclosing your governance, your strategy as it relates to nature, risk management as it applies to nature, and setting metrics and targets that are meaningful and that help investors understand what contribution you are making to nature restoration and biodiversity loss.
As an organization committed to the enhancement of biodiversity within our landed footprint, we wanted to signal our commitment to and contribution to nature restoration. Being early adopters of TNFD enables us to do that. There are many programs that we have adopted as a fund that signal and make a huge contribution, as you'll see from our sustainability report, to nature restoration. This includes not just land richness or biodiversity enhancement but also the preservation and stimulation of bird populations and invertebrates within our land footprint.
Proactive: Investing in NextEnergy Solar Fund directly leads to climate mitigation via the clean green energy produced. What other ESG benefits are gained by investing in NESF?
Josephine Bush: Our sustainability footprint and impact are quite diverse. We generate 852 gigawatt hours of energy per year, equivalent to energizing over 300,000 homes per annum and avoiding nearly 280,000 tons of carbon. That's a huge contribution to the decarbonization agenda.
In addition, there are many initiatives you'll see in our report, ranging from our diversity and inclusiveness program, where we have a majority of women on our board, to our approach to health and safety and our community programme.
We contribute over £400,000 per annum to local communities and, through the NextEnergy Foundation, we contribute to solar initiatives in the developing world. Our reach and ESG impact are well beyond decarbonization.