This episode features a conversation between Phil Dillard, Founder of Thruline Networks, and Coco Zhang, Vice President of ESG Research at ING, a pioneer in digital banking and on the forefront being one of the most innovative banks in the world. Coco talks about her current role at ING, her background in ESG, the recent trends in the market today, and ESG trends in different countries around the globe.
This episode features a conversation between Phil Dillard, Founder of Thruline Networks, and Coco Zhang, Vice President of ESG Research at ING, a pioneer in digital banking and on the forefront being one of the most innovative banks in the world.
Coco actively provides analysis and engages with stakeholders on energy transition, climate change, sustainable finance, clean technology adoption, and environmental, social and governance regulation topics.
Prior to joining ING, Coco held positions with Eurasia Group, as well as United Nations agencies in New York, Geneva, and Paris. She has also done consultancy work for the Mexican Energy Regulatory Commission to optimize Mexico's Clean Energy Certificate reform plan.
Coco earned a bachelor's degree in government and film studies from Smith College, and a dual Master's degree in energy and the environment from Columbia University, and in international public management from Sciences Po Paris.
In this episode, Coco talks about her current role at ING, her background in ESG, the recent trends in the market today, and ESG trends in different countries around the globe.
“Learn more about what's going on in the climate change, sustainability, and ESG area. There’s a lot of good information sources for people to get more informed, but it also requires active thinking to filter out the noises that can be misinterpreted flying around the markets, but to get the essence of ESG and sustainability. On top of that, there is a great role for consumers to play as well. We might not be always incentivized to spend a premium to purchase a very sustainable product, but I think the trend is happening and a lot of the companies are indeed communicating with us to really build their brand, that puts accessibility at a center stage and as consumers we can eventually grow more of a willingness and habit to choose products in a very systematic way and ultimately live in a more systematic way. I think the demand side from consumers is something that's going to have a great impact on the economy as well.” - Coco Zhang
(02:07) Coco’s role at ING
(07:05) Coco’s background in ESG
(11:50) Recent trends in the market
(19:54) ESG around the globe
(27:48) Final thoughts
[00:00:00] Phil Dillard: Hello, and welcome to Thruline to the Fourth Sector, where we're exploring fourth sector capitalism and impact investing as an invitation to innovation and changing the world.
This episode features a conversation between Phil Dillard, founder of ThruLine Networks, and Coco Zhang, Vice President of ESG Research at ING, a pioneer of digital banking and on the forefront of being one of the most Innovative banks in the world.
Coco actively provides analysis and engages with stakeholders on energy transition, climate change, sustainable finance, clean energy adoption, and environmental, social, and governance regulation topics. Prior to joining ING, Coco held positions with the Eurasia Group, as well as United States agencies in New York, Geneva, and Paris. She's also done consultancy work for the Mexican Energy Regulatory Commission to optimize Mexico's Clean Energy Certificate Reform Plan.
Coco earned her bachelor's degree in government and film studies from Smith College, and a dual master's degree in energy and the environment from Columbia University. Also, she earned an international public management from Sciences Po Paris.
In this episode, Coco talks about her current role at ING, her background in ESG, the recent trends in the market today, and ESG trends in different countries around the globe.
Now please enjoy this interview between Phil Dillard and Coco Zhang.
Hello, everyone, and welcome to another episode of Thruline to the Fourth Sector. I'm your host, Phil Dillard, here today with Coco Zhang, Vice President of ESG Research at ING. Great to see you today, Coco. How's things going?
[00:01:44] Coco Zhang: Things are going well. Thanks, Phil. And I'm very excited to be here today.
[00:01:49] Phil Dillard: Yeah, very excited to have you. Thanks so much for making the time. I love your background. I love your, your history and the different places where you work that brought you here. You seem to have like a really, a really holistic perspective or really global perspective that you could bring to a really interesting institution. So I like to start though with a really easy softball question. When people ask you what you do, How do you describe what you do every day?
[00:02:15] Coco Zhang: Yeah, that's not an easy question to ask. And I tell people I do ESG research, but because of how broad the ESG term is, I really do need more explanation to actually let them know what I do. So I focus more on the Macro side of ESG research and ESG refers to environmental, social, and governance.
So from the E side of things, I focus a lot on the industry trends of different sectors that need decarbonization. I focus on how emerging technologies can help those sectors decarbonize themselves. I also focus Um, environmental policies and climate related policies that can shape businesses and investment decisions.
And from the S, the social side of things, um, a lot of my focus is on how companies themselves can come up with it better. overall strategy to enhance a diverse and inclusive work culture, how they can better position themselves to really build up a healthy and inclusive workforce that would retain talent.
And from the GE side of things, it's very generic, but I look at, you know, how companies are structured. And from a higher level, what kind of governance practices can really help companies stand out in the ESG space? Yeah, so, um, very interesting stuff to do in a very challenging time as well. Oh,
[00:04:04] Phil Dillard: yeah, it definitely is.
I mean, there are ESG wars going on, no pun intended, right? Politically, though it seemed that the business world has really come to understand the benefits of it, pursuing an ESG practice and understanding how it can make companies better in the policy world and in the world of public opinion, where people I think are not as well informed about what it's about.
It can be really challenging. So, a difficult question to answer. How do you define ESG in a really simple way? Like, how do you explain it to your grandmother or to a little kid?
[00:04:40] Coco Zhang: There are two ways to look at this. And I'm first going to give you a very normal answer to it, which is how a business or an investor should be looking at their decision making.
Processes that factors in environmental, social, and governance prospects so that they can not only Better manage risks that can stem from related ESG factors, but also harness opportunities to really help them either leapfrog in the clean energy technology space or to future prove themselves against challenges such as climate change.
I think these are the factors that should be naturally looked at already. So I would say that in a very ideal world, the ESG term might not even exist because that's what we should be looking at things from the get
[00:05:42] Phil Dillard: go. Sure, in a world that runs on a circular economy versus a linear one, you know, ESG is business as usual, right?
But looking at things through an ESG lens and citing a risk Mitigation approach is I think where a lot of folks kind of, kind of start. So I know you're not like analyzing companies directly as an equity analyst might, but can you talk a little bit about the industry segments or company types that you actually might cover in some of your research?
[00:06:13] Coco Zhang: Yeah, of course. So I actually cover a lot of the sectors, including transportation, for example, where I look at the development outlook of electric vehicles. I also look at some harder to abate sectors, including petrochemicals to see what are the potential Pathways are for them to decarbonize. I also cover food and agriculture companies, which is an industry that's really starting to enhance sustainability practices.
I also do look at some emerging technologies that are not really sector specific, such as hydrogen and carbon capture and storage and biofuels, which can be actually applied to different industries.
[00:07:01] Phil Dillard: That sounds amazing. You get to get into all the really good stuff. We definitely want to come and get into more detail about this as we get later, but one of the big things we try and do in all these conversations is really get to know the person a little bit so people can affiliate with you and maybe they'd be inspired to do some similar types of work.
So, can you tell us a little bit about how you first got involved in this field? Like, how did you get here?
[00:07:25] Coco Zhang: I have always been very interested in climate change and sustainability related issues. I remember as like a younger person, um, following the United Nations Climate Conferences. And with that, you know, interest in mind, I've actually had working experiences, both in more of like a public sector.
namely the United Nations, where I spent some time analyzing different kinds of topics. And then I went into a political risk consulting firm where I focused on the energy market, sustainability issues as well. And then I moved to where I am, ING, which is a very interesting move in the sense that I think the private sector, the financial institutions, they have great power in Working with other parts of the economy, such as governments or companies, to actually facilitate the change towards a cleaner energy economy.
And, um, the fact that I am able to analyze all these markets from a very macro, high level perspective really gives me a large picture point of view as to where we're headed and where we still need to do. And
[00:08:55] Phil Dillard: is that what you really like about this role that kind of stands out? You get to look at the big picture from a perspective of a big financial institution.
Is that what you really like about the role?
[00:09:04] Coco Zhang: Yeah, I would very much agree with that.
[00:09:06] Phil Dillard: And who is it that you are writing for? Like, who consumes the work that you do?
[00:09:11] Coco Zhang: I think we have multiple layers of audiences. The first, of course, is our internal teams, where I would provide tailored research to better help our teams serve their clients who are Indeed, in the fields that I just mentioned, and, uh, we're trying to advance in the sustainability field.
On top of that, I have external audiences, just the general public. And I think it makes me happy to be able to see my work being published publicly as well, so that there could be Potentially more discussion surrounding the topic that I read. Yeah,
[00:09:55] Phil Dillard: I could totally understand that. When you can reach people and you can inform people and they will act or they will reference it, it's got to be very fulfilling.
And then I'm curious like how the organization uses, how people in the organization have used the information to drive change or to influence markets. Do you have any examples of
[00:10:13] Coco Zhang: that? I think in general, clients in the sectors that I mentioned, they really do want to advance their sustainability practices.
And also they come to financial institutions like us to get financing sources for their sustainable practices as well. And I think my role would be to provide them with the information about their industry on how the accessibility trends have been going and companies have been doing, what technologies have been explored in the specific industry.
So for example, we have companies in the petrochemicals field, we have companies in transport and logistics, and they're really keen to hear about The kinds of practices that we are seeing, the trends that we're seeing in the industry, and also very importantly, how policies such as the Inflation Reduction Act can affect their different sectors and, you know, also the lack of specific guidances.
In some cases, can mean for their company's actions.
[00:11:33] Phil Dillard: So if I'm hearing you right, you know, people want to know trends. They don't have the same sort of perspective you do, or they don't have the same sort of resources you do to try and figure it out. And they're leaning on you to help them really, um, understand that.
And that seems, it seems like a really good position to be in. Do you have some like work that you've done recently that you're really excited about or that you felt like was, really allowed you to be, to showcase some of the trends that you're seeing or some of the opportunities that these companies have that they didn't
[00:12:03] Coco Zhang: see before?
Of course. So I think one of the research topics that I was pretty excited about was the electric vehicle space. And I think this also is not only a trend that happens in electric vehicles, but also other sectors as well, which is a increasing. Vertical exploration of decarbonization efforts along the entire value chain.
And that creates opportunities that also creates potential competition and supply issues as well. So in the electric vehicles industry, for example, you need a lot of batteries to power those electric vehicles. And what the Batteries are made of, are rare earth metals, which cannot just be found everywhere.
So now China dominates the majority of electric vehicle, rare earth metal production and processing. And that's going to add a lot more difficulties for countries that are looking to decarbonize themselves to produce more electric vehicles. At the same time, to have secured supply in the long term. So, in the U.
S. specifically, what we're seeing is that companies are starting to, and by saying companies, I mean car manufacturers, they're starting to collaborate with companies that can produce batteries, companies that have operations to mine those rare earth metals, and through those partnerships, that's their way of securing the supply chains.
And we're seeing this from the policy side as well. So the Inflation Reduction Act or the IRA, it really specifies that for you to get the highest level of tax credits for electric vehicles, you need to fulfill some very specific sources of origin requirements. And a lot of those are indeed tied to tax credits.
the origin of batteries. So that could, in the long term, lead the U. S. to build a more resilient domestic supply chain, but at the same time, it's not easy or cheap to do so. Before we actually get there, there needs to be a lot more collaboration both along the value chain and across different geographies for us to do it.
Yeah, and
[00:14:43] Phil Dillard: it seems like a pretty good synopsis of the current state and trends and challenges in a critically important industry. You put the ESG lens over top of that, it seems like it might add another layer of maybe complexity or thought that the U. S. automakers have to consider. What do you see them doing and how does it change how they go about their business?
[00:15:05] Coco Zhang: I think, as I said, a lot of them are... Starting to partner with companies that are not only their horizontal compilers, but also their suppliers or their consumers to really have more management power along the supply chain, I think. That's what I've been saying.
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I would expect that the US manufacturers have a tougher time than the Chinese manufacturers because the Chinese aren't under the same level of scrutiny for energy metrics, right? And they also have more access to natural resources. So a US manufacturer They really wanna showcase how they're making more environmentally friendly batteries than the Chinese company, for example, or how they're sourcing their material in an equitable way, for example, or how they're including their employees in their manufacturing process so that it's more engaging.
Way to work and that they would try and differentiate out there. But those are again, hypothesis of, of what I'm seeing that, of how they might differ from the E s G perspective. But
[00:17:22] Coco Zhang: yeah, I think that's a very valid premise, although I would also argue that I. Do actually expect an eventual convergence of standards, disclosure, requirements, and everything across the world because now you could say that regulations are different in different jurisdictions, which can lead to companies practicing different standards of ESG.
And that's inevitable now. But what we're seeing that are emerging are also, one, more jurisdictions are looking to require mandatory climate related data disclosure. You know, Europe already has this corporate sustainability. Sender's directive that's going to come into implementation very soon. At the same time, we also have the climate disclosure bills that have passed California legislature, requiring companies that do business in California to require scope one.
emissions, as well as their climate related financial risks. And we also have the US Securities and Exchange Commission who are in the works to require climate related disclosure as well. So these seem like just numbers that are. companies are going to put out, but more profoundly, companies will need to more actively think about their ESG practices and their supply chain sustainability management for them to actually put those numbers on.
Because now with the numbers being transparent, what you do is going to be more transparent. So you got to be And we do see, you know, at ING Research, a convergence around those standards as well, so that eventually companies, no matter where they are, will be subject to a much similar set of rules. And before we get there, there are actually other policies that are under development.
For example, the... EU's carbon border adjustment mechanism, which actually just says that we need to maybe impose more tariff on imports that we have from other jurisdictions that don't really have our climate standards yet. So, We are seeing some of development like this, which can potentially lead to a greater harmonization of practices and companies who want to stand out might also want to more proactively be more sustainable regardless of what the policies are.
So maybe I'm being really optimistic, but that's where I would see things go.
[00:20:39] Phil Dillard: Well, I mean, it's a logical thread, and you cited some really good legal and policy precedents that are being established across the U. S. and Europe, and it makes me think, you know, that that's a logical conclusion to come to, that the more teeth that certain countries in the global north put out there, the Likely it's going to be for more of a global standard.
Have you been hearing any commentary on these sort of issues around out of Asia or India or Africa? Cause I mean, those are the areas where we expect to see a lot of growth of EV, a lot of growth of desire for people to have, you know, the transit and lifestyles that maybe you saw in the West and they're going to be climate impacted.
Have you seen any of those major regions of the world putting out or starting to put out similar
[00:21:26] Coco Zhang: policy? I mean, my research doesn't really go that deep into the specifics of different emerging economies, but just from my own personal perspective, I think that China, for example, is really Focusing a lot more on developing clean energy technologies with a strong government policy direction and, you know, in China, because the resources are abundant and the country can also achieve You Economies of scale at a relatively not that difficult place.
What we're seeing is really that China is leading in a lot of the areas, for example, EV battery chemistry. So China is trying to develop new kinds of electric vehicle batteries with various kinds of chemistry combinations. That can potentially be better suited for the Chinese market. And China is also developing electric trucks, as well as electric vehicle battery swap programs, where you produce electric vehicles, but the batteries can actually be taken out.
And you can switch the depleted battery with a new fully charged battery at a public Infrastructure. So a lot of interesting and exciting developments in those economies as
[00:23:06] Phil Dillard: well. Yeah, that's definitely a really good description of some of the most, you know, China gets this, sometimes gets a bad rap or at the very least is in a tough position, right?
Very big. country, very populous country, lots of manufacturing, but then also being innovative in trying to improve, like you described in the batteries. So I don't study China all that much in this, but I wonder how much credit China should get for actually improving along the lines of the batteries and the uses of alternative materials, because it's got to manage a big growth challenge, a big manufacturing challenge, but also consider the environmental ones as well.
[00:23:45] Coco Zhang: It's a very valid debate because China has a very large population in the world and whatever the country does is going to have a huge impact on the global economy, on the global process of fighting climate change, and on our general effort in transitioning to a net zero economy. So that being said, I think China China does deserve the credits of pushing the new technologies forward, lowering the cost of doing so, and bringing those technologies to a scale where more companies can use them.
And since the population is so large, this adoption is really meaningful on a global level. At the same time, I also admit that China as a world leader, you know, it's always better for A leading economy to do more in decarbonizing themselves, and I think that's where I stand, and there's always more to do, there's more aggressive policies that China can
[00:24:58] Phil Dillard: take.
And ING is a big global institution that has a role in this, right? I mean, I remember from the sustainability statement talking about how the company focuses on climate action and how they collaborate with clients, um, how you manage environmental and social risks in the work that you do. Do you inform that?
Do you participate that? Do you have a, an interesting opportunities to kind of work with people on how the company itself goes about doing this? Or is it a lot more focused on the client perspective? It definitely
[00:25:30] Coco Zhang: has that spin where my research publications are read by the sustainability teams at ING.
And I think with my articles as general. Informative source that puts sense to business, investment, and sustainability development. It definitely has its own contributions to what ING does. Since I'm not really quite the sustainability team, I won't really comment. What they do, but what I would say is that they definitely read my stuff and I think research is appreciated at a very pan ING level with its contributions to ESG and other areas.
[00:26:23] Phil Dillard: That's got to be a pretty good feeling. Um, so if you were going to suggest to people, suggest to our readers, a person to follow or a resource that you think is really helpful in helping getting people up to speed, or even some of the research reports that you've done that give a good perspective of how to think about ESG and how to start to dive deeper, where would you guide people?
[00:26:46] Coco Zhang: We do have A lot of interesting research that's published on our website called think. ing. com, and there you can find research articles that are on different kinds of technologies, on different industries, and it's very interesting to read, even from a very young even as a person who doesn't really work in this space.
And I think what we do is also trying to use easily acceptable, easily comprehensible terms to explain a very, very complex system of
ESG and I think there are good Podcasts that people can listen to, uh, one that I go to often is the Columbia Center on Energy Policy. They also have a website where they publish some very technical articles on the energy transition. And I think it's also interesting to just read whatever book that's climate related that you find interesting.
Um, I'm not specifically recommending. Any, but, uh, what I did enjoy reading a couple years ago was how climate change could induce forced migration in the large scale in the future. And that, you know, that's a very valid challenge to the world as a whole, because people. With the increasing impact of extreme weather events, as well as sea level rising, we could potentially be looking at a lot of climate refugees in the future.
I guess those would be my suggestions.
[00:28:39] Phil Dillard: Well, I really appreciate those suggestions. I looked at your, your research already and found some really good stuff there. We'll pop some links into some things that we think are helpful in the, in the show notes and really appreciate you sharing that with us and with the folks who are out there.
I know we're running close on time. So I'm just curious if you have any sort of final thoughts you'd want to share with the listeners of like how they might be able to think about ESG, learn from what you've got, or, or engage to, to lead in the marketplace.
[00:29:10] Coco Zhang: I think a big part is to learn more about what's going on in the climate change, sustainability, and ESG area because there are a lot of good information sources for people to get more informed, but it also requires Active thinking to filter out the noises that can be, you know, flying around the markets, but to get the essence of ESG and sustainability.
And on top of that, there is a great role for consumers to play as well. We might not be always incentivized to spend the premium to purchase a very sustainable product, but I think the trend is happening and a lot of the companies are indeed communicating with us to really build their Brand puts accessibility at a center stage and we as consumers can eventually grow more of like a willingness and habit to choose products in a very sustainable way and to live in a more sustainable way.
And I think the demand side from consumers is something that's going to have a great impact on the economy as
[00:30:35] Phil Dillard: well. In a lot of the conversations about ESG and impact and sustainability, people talk about the need to move the consumer and also the role of young people. There are a lot of folks who are later in their lives and their careers who say, you know, we need to shift things and that they're optimistic about the younger generation.
As someone in the, probably more like in the younger generation, what would you ask? From people who are farther along and looking for you, I don't know, you're the CEOs, the EVPs, the SVPs, the, you know, people who've been in the, in the game for a long time, like, what sort of things could they do that would be helpful to you in advancing the work that you do in reaching the consumers to kind of drive the changes that we want to see?
Do you have any thoughts on
[00:31:20] Coco Zhang: that? So I think if a person is at a very high executive level, um, If a person from that role can send out a positive, confirming message from a company's perspective, I think that's going to have not always tangible, but very important impact on the consumers and would also help a lot for those people to actually talk to the sustainable teams more.
Because there needs to be executive level buy in on the sustainability issues for a company to actually implement the strategies on ESG. The more they communicate amongst themselves, um, the more They can be aligned on how to get the business strategies together with ESG strategies. And I think that would be an effective way to improve the efficiency of companies implementing the ESG practices.
[00:32:28] Phil Dillard: That's a really good point. And I really appreciate your thoughts on that. Well, thank you so very much for your time and sharing some of your experience and insights with us. I really appreciate the work that you do and look forward to, to seeing how we can incorporate more of that into the messaging that we share with people that we work with around the world. And thanks again for making the time. Thank you too. And thanks everyone for joining. We'll see you next time. Please take a moment to rate and review the show and join us each week for a new episode. Thank you for listening.
Thank you for listening to this episode of Thruline to the Fourth Sector. I'm your host, Phil Dillard. If you enjoyed the show, please leave a rating and tell a friend. To learn more about the four sector economy, visit ThrulineNetworks. com, that's T H R U L I N E networks. com. Thanks again, and we hope to have you with us in the next episode.