Episode 45: Climate Week NYC 2026 - Building trust to advance the energy transition

Linden Edgell  

Welcome to another episode of the ERM Sustainable Connections podcast. Today's episode comes to you from Climate Week in New York City. As you may be able to see and hear, I'm not Mark Lee. My name is Linden Edgell, and I'm ERM's Global Sustainability Director. I'm happy to be stepping in for Mark today.

Climate Week in New York City is one of the most significant events during the business year, the Climate Year, and the Sustainability Year. This year's conversations are taking place against a backdrop of uncertainty, energy vulnerability, energy security, intensifying climate impacts, and many geopolitical topics going on in the world, across sectors and across geographies. Focus is moving beyond setting targets and really to thinking about implementation and how we go forward from here.

Today, I'm joined by two great guests: Michael Regan, the former administrator of the EPA, the Environmental Protection Agency here in the United States, and Sabine Hofnagel, the CEO of ERM. So, it's the early part of the week for New York City, the climate week's been going, and we've already been at many events. We've been around town. We've been listening. We've been convening. We've been hearing what's going on. I'm really interested in your initial takes of what you're picking up from Climate Week this year.

Sabine Hoefnagel  

I think one of the biggest shifts is that the debate has become so much broader and wider. It's not just about emissions reduction. It really is about the energy trilemma. Beyond energy transition, we're talking about affordability, security, but also topics like resilience, adaptation, AI, and the role that it plays within all of this. I think what we're really seeing is also the aftermath of the physical climate impact that we've seen in many places in the world this summer. I think predictions now are that losses due to climate change are going to get into a region of $450 billion a year, only half of which will be insured losses, and I think the predictions showed that the missed economic opportunity in Europe after all the heat waves that took place, that I very much experienced myself, are in the range of $50 billion. So that is really becoming real for many people, and you can really feel that in conversations.

As you said, this morning we were at this event, really great discussions with many people from different industries, and this topic of trust really sits in the middle of all these challenges. On the one hand, we're seeing many more impacts of climate change. On the other hand, we're seeing some businesses pulling back on some of their commitments. In some regions in the world, we're seeing a massive acceleration with regards to renewables, and other places a little bit less so. And within all of that, I think trust plays a really key topic. I'm sure we'll talk more about that in this podcast.

Linden Edgell  

Michael, from your position, we've gone from the ambition now to implementation. You're speaking to business leaders, investors, and communities. What’s your perception? What are you hearing and seeing as you move about the community?

Michael Regan 

Interestingly enough, I'm seeing a little bit more excitement than I thought I would see. We're no longer talking about the why or should we? It's more about the how, and I'm really experiencing these conversations where business leaders, community leaders, and some governments are thinking about how we are going to execute these ambitious goals. And one of the interesting things that I noticed this morning is, we are trying to have this conversation be more relatable, more like kitchen table issues. If we're going to move fast, it's not necessarily that there isn't the capital to do so. There's obviously the technology to do so. The question is, who benefits from these investments? How are these investments done? And what is the level of interaction that should happen between government, business, and communities? We are learning that neither government can drive alone nor business can drive alone, and communities have a very, very powerful voice. So, the last two days have really been insightful and encouraging. That there is optimism, but there's also this understanding that we need all three: government, business, and communities to come together if we're going to win the future.

Sabine Hoefnagel 

For years, sort of this finger pointing, like “no business needs to do more”, or like “government needs to do more”, or “it really is the public”. I think there is an understanding that everyone needs to be part of this debate, and the action is really coming to the fore in the conversations.

Michael Regan 

Communities, business, and government maybe haven't been working together as closely as they should. And with any relationship that evolves, trust needs to increase to optimize those relationships. And so, it's been very insightful, and I have to say optimistic. I know that there's a lot of doom and gloom globally and domestically, but the leaders that we're conversing with here in New York are coming with enthusiasm, ideas, and solutions, and recognizing that the ways of yesterday are not going to win the day.

Linden Edgell 

This morning we had the biggest utilities in the U.S. all in the room, which I found really quite remarkable. And the investors who were saying this is what’s going on for us, and other parts of the sector, we had people from upstream in mining and energy, but one thing that they kept talking about was this paradox. At the very time we seem to need more energy, it's getting harder to actually deliver on that energy. We heard some things like, "Well, okay, we could optimize what we have now. It's not all about building new”.

With that backdrop, that question of trust, I think is what we really tried to get at. We heard some solutions coming from industry in the room today. What are some of your reflections on the solutions that they were offering around partnerships, collaboration, an understanding of what we're actually trying to achieve here?

Michael Regan 

I heard it translate into, there needs to be some rules of engagement, some certainty, some frameworks, and that typically happens through policy and some level of regulation. We can all agree or disagree on the stringency of regulations, but regulations are required. I think many in the room today expressed a desire to have some framework, some regulations, some policies, that are consistent for more than two and four years. We need consistency for long-term investments. I have to say, it was a little bit surprising but also rewarding to hear some of the regulated communities say that we need regulations in order to compete. We need certainty. I think that's what we're hearing in the AI space as well. It seems and sounds good to let everyone compete and see who wins, but at the end of the day, competition thrives when you have some rules of engagement, and that's what we heard this morning.

Linden Edgell 

Sabine, the business community were sharing with us some of the challenges around that, and we see it in our work. It's different in different parts of the world, but we see it in our work every day. What are you specifically hearing this week from your conversations?

Sabine Hoefnagel 

Just to come back to that point of trust. Some of the conversations this morning really spoke to the importance of collaboration and really thinking about eco ecosystems. It's really hard for companies on their own to set their targets and to just to go and meet them. So that means within industry there needs to be a lot of collaboration within one sector, but also across sectors because this is a systemic issue. We talked a lot about trust vis-a-vis communities, and pushbacks that we're seeing in many different places where infrastructure is being built out, either energy infrastructure or data centers, etc. and communities not quite understanding, who is this for? What's in it for us? There were quite a lot of examples of how to start tackling that. I think there are lots of lessons also from other industries, and we had some in the room, from mining and oil and gas who have been through some of these many years many years ago. And you're still seeing that cross-sectoral and cross-value chain learning to be very much in its infancy. I think that's one space where there are some solutions.

The second was on how the messaging is done. Language really matters. Honesty really matters. Authenticity matters, and perhaps being also honest about failures that that have occurred, and really using plain language to explain what certain things mean for people, but also making sure that it's not just words, that there actually are benefits for communities because you can talk all you want, but if you really want to convince communities to come along with you, you also need to be able to show what's in it for them.

Linden Edgell 

Over the years Michael, you've worked a lot with communities. What are the success factors? Where have you seen it work well? What can we learn from that?

Michael Regan 

I have had a lot of experience working with communities. The first thing is, I think as administrator, as companies, we believe we have the answers and solutions, and there is a slight bit of paternalism in that. Engaging with communities before the projects are mature, really soliciting their thoughts. I think is very critical because these individuals have been thinking of solutions for decades. They've just been waiting for the resources. We have an opportunity to pair those resources with some very innovative solutions, and it may require that we alter the course a bit to accommodate those. But at the end of the day, you get a better product.

I think what I saw this morning was ERM's power to convene. We saw these individual industries say we need to have partnerships and collaborations across multiple industries: investors, bankers, mining, utilities. I think communities would welcome the power of convening to bring all of these ideas together, so that they can do one-stop shopping, they can share their ideas, their vision, match it with these very important and timely solutions, and this is how we can remain competitive as a society. I'm very delighted that we had such a strong focus this morning on the importance of communities, but I also think industry is seeing the power of communities as of late, especially in the data center space. We have to coexist. We have to work together if we're going to put these meaningful investments to work.

Linden Edgell  

I think what struck me, you made a really good point today, that if you're a community sitting in Virginia or Malaysia or somewhere in the UK, maybe the developer does one lot of consultation, and then the then maybe it’s the hyperscaler, and then maybe it's the utility, and then maybe it's the government agency, are all coming at these communities. The communities are not feeling like they're getting one picture. They're getting inconsistent information, inconsistent promises. We all live in communities. We know what that feels like. I think it was a great point, and it seemed to resonate with the audience we had in the room today.

Michael Regan 

I hope so. It's from experience. Most of us want some level of transparency, some level of accountability, and some belief that the process is fair and equitable. I think that's a human characteristic. I believe if we can do those things with the proper messaging and be sincere and genuine, I think we will see infrastructure projects begin to pick up a bit. Because at the end of the day, the capital and the expertise is there. We just need collaboration and partnership with our communities.

Linden Edgell 

We heard today from some of the investors about uncertainty equals risk, and that they're really pricing in in risk. Physical risk, they're used to pricing and there's models. Social risk is harder for them to price in, and so of course they price it in at a higher level in that level of uncertainty. Some of what you've just talked about helps lower the risk, lower the cost of capital, enable some of these projects to move forward.

Michael Regan 

I believe so. We talked about complexity and these are complex topics and complex projects, but there's some simple things that we can do to connect all of us to tackle that complexity together.

Linden Edgell 

Sabine, we were at a session yesterday where they reminded us to go with the doom and gloom narrative that often ends up. Yes, we've got to recognize there are lots of really tough things and lots of ways the climate is impacting on the world and humans today. But there is positivity as well. What are you seeing around that gives you hope this week?

Sabine Hoefnagel 

I consider myself a stubborn optimist, so there are plenty of things to look at that give me optimism and hope but also confidence. I do think that the role that energy security is playing in a transition is really important. Even if we're looking at things like the situation in in Iran, how that is pushing investment in in renewables. For example, ERM is supporting the largest renewable project in France that has ever been developed. It's a 1.5-gigawatt project, and that is very much part of the energy transition but is also part of energy security.

Similarly, we're working with businesses who are really worried about the cost of their energy, and we're helping them rethink how they might cross that, but through investment in clean energy, etc. There is a lot of cost efficiency to be had there. And governments are also responding. We see the EU launched Accelerate EU, which is another plan to look at how they can become less dependent on fossil fuels through providing big subsidies, etc. I think the other thing that's playing a really big role is that the relative cost ability of renewables compared to fossil fuels is tremendous. I think the relative cost of solar and onshore wind have gone up six and two percent respectively in the last few years.  Whereas the price of Brent crude in the last year has gone up 50%. So, it may sound like it comes from a negative place, but it is really driving action.

Linden Edgell 

Michael, what do you think really has to change with business, government, and investors, so that we can make the progress we need on infrastructure development, with the appropriate safeguards in place? What are some practical changes that can be made?

Michael Regan 

I think that the realization that there has to be an integration of solutions, meaning businesses can no longer sit in their silos, or industries have to think about other industries that are reliant on infrastructure needs. I think more conversation, with a more diverse constituency of business partners, is absolutely needed. When we think about the energy needs globally, but in this country, everyone in some shape, form, or fashion is relying on water infrastructure and electricity infrastructure, or energy infrastructure. As we build this out, I think that it requires all voices at the table to think about what is needed, what is going to be used, and how that benefits their specific businesses and portfolios. But more importantly, collectively, what investments are they required to make to communities, cities, counties and states that house these very important assets. If we can begin to solve these infrastructure projects, I believe it lessens the pressure that we see on our natural resources. Whether those natural resources are for conservation purposes, or when we think about fossil fuels, when we think about water scarcity, scarcity. These things exacerbate global conflict. So, we have an opportunity to have businesses speak across industries and sectors, come together, optimize infrastructure, the latest and greatest technologies, which happen to be cheaper, produce less pollution, increase healthier communities and outcomes, but also create jobs in places that jobs have struggled. This coupled together does exactly what Sabine just touched on, which is it increases our security and our comfort. 

Linden Edgell 

One thing I really liked from our conversation this morning was you talked about a leadership question. We need the leaders of our businesses, civil society, and government to get together and have these conversations, and get away from the models and spreadsheets and the boardroom to engage with communities. I thought that was a really powerful reminder to us all.

Michael Regan 

It would be great to see our government leaders, business leaders, and community leaders actually sit down and have conversations about the future. I think a lot of the time they talk past one another. There isn't an opportunity. It's not malicious, but there isn't the opportunity created for them to convene and have this conversation. It's why ERM is so powerful. The power of convening and bringing different voices together to solve complex problems is exactly what needs to be happening.

Sabine Hoefnagel 

That was what was interesting this morning because we had utilities, power companies, mining, some chemicals, but also finance sector, and you still so rarely see corporates mixing with finance in the same room. So, people really appreciated that. What I thought was interesting as well from that debate is you’re seeing these sustainability topics becoming so much more than sustainability topics. It's really about resilience and security of the businesses. Investors are really taking an interest in these topics, not just through a pure sustainability lens, but really to understand whether the investments that we're making are actually going to allow these businesses to thrive. If you think about climate adaptation, it's really becoming a proper issue also for investors, and they want to price in that risk. They want to see what the impacts of that would be on a company's supply chain, on their assets, etc. So the debate has really shifted, and it's become really at the heart of business strategy.

Linden Edgell 

I thought one great example of that was a utility talking about how at the same time that they're having to build more climate resilient infrastructure, the transmissions lie on the generation, so they're trying to factor in the climate impacts on that new infrastructure. It’s a 30-year investment in this. They’re talking to banks and investors about 30-year horizons. Yet the insurance players come in and say we'll give you a one-year policy, and maybe it's not going to be insurable for the long term because of the climate impacts on the very thing that they're trying to help address by providing new renewable energy. It's an interesting kind of dilemma and that's the reality. I think that's an example of why we need people in the room, isn't it? If the insurers aren't talking to the investors, who aren't talking to providers, then we're just going to end up tripping ourselves. Michael, you must see that a lot?

Michael Regan 

I do because we're not in the same rooms, we're not having the same conversations, we're not using the same vernacular. We were talking about the utilities having trouble being the messengers, but it comes down to kitchen table issues, and the utilities provide uninterruptible power, so that during times of extreme heat, people are cool. That reduces asthma attacks, it reduces hospital visits. We provide electricity for lighting for our small businesses and for our communities. We need that to be resilient, we have to make the case to our communities that if you're going to thrive economically, physically, mentally, and socially, electricity is a core part.

Having a conversation with utilities and investors and communities to talk about these very kitchen table issues is so important. I also think this morning proves, when we talk about climate and adaptation, we have to be honest, and we should be proud to say that there are economic prosperity opportunities here for companies and for communities. This is an opportunity to seize the moment, and investors are not interested just because they're curious. They believe that we can do good and do well at the same time. That's what we need to see more of and have more conversations about.

Linden Edgell 

I think we're seeing the economic data coming out of some of these countries who are heavily investing in the energy transition. They have the data about new jobs, new technology, and new economic growth are happening in those in those regions. I think we've got to share those stories more.

I’ll give you a chance to provide a final thought on the energy transition and the trust problem. What's your takeaway Sabine?

Sabine Hoefnagel 

I think what becomes really clear is that the solutions exist. This is so much less about innovation now than it is really about bringing all the different stakeholders along, and that has to happen in in a collaborative way with partnerships in an ecosystem type thinking. It really is a lot more about people than about technology.

Michael Regan 

We have all the tools. We have all the tools in the toolbox, with the exception of messaging, and a more collaborative approach with our communities. So absent political leadership, I think that there is a huge opportunity for the folks we had in the room to understand that there's a leadership role for them, and we don't have to wait. Now is the time to seize the opportunity, and so I'm really excited to hear those conversations, ranging from Main Street to Wall Street, about the opportunities that are before us. There were individuals that left that room after our conversation that I felt had a renewed step and will take a little bit more ownership and leadership for their sectors to engage and try to get some things done. 

Linden Edgell 

I agree. I think the first message really came strongly about humans. We're all humans. We're all people. We're all part of this transition, and it's real for all of us. The more that we can bring that humanity back into some of these conversations in communities as leaders in business and government and so on, I think the more important.

Thank you both for your insights from the heart of New York Climate Week this year. Really appreciate that, and that brings us to the end of today's session. I've been speaking with Michael Regan, the former administrator of the Environmental Protection Agency in the U.S. and Sabine Hofnagel, ERM's CEO. I encourage you all to take time to tune into other editions of the Sustainable Connections podcast and look forward to the next edition.