Andrew Bonfield, Finance Director, National Grid addresses the Summit

Five years ago, would I have been here on this stage? Answer: no. I used to pray to God and thank the world, my sister who was actually helping to build an ecovillage down in Australia for actually offsetting my carbon footprint as an individual. So you know, I would never have been—sustainability, environmental factors didn't really matter to me. It was all about the pursuit of profit. I first became a public company CFO 15 years ago, was very young, but it was an environment where we were chasing the bottom line. The world has changed, and I think as we stand here today as CFOs, we need to recognize that we are now part of society. We can no longer sit here and be immune. First of all, the financial crisis changed things dramatically. It's our customers, it's our employees, it's our stakeholders—we still are lingering with the effects of the financial crisis today. Trust in companies are at an all-time low. We still have issues out there around how we're living in an age of austerity, and public trust in us as businessmen needs to be rebuilt. We've also seen large environmental issues like Deepwater Horizon. The fact I was actually in the U.S. at the time watching CNN for days on end with the oil seeping to the surface makes you realize that in a 24-hour news cycle, companies can no longer be immune from the reputational damage their causes. A very good friend of mine and a former colleague is the general counsel of BP, and his life has been transformed as a result of that single event. He has spent most of his time dealing with the consequences and the fallout there. Then finally, I'm actually chairman of the Hundred Group Tax Committee, and one of the things I've spent the last three or four years on is corporate tax avoidance. The only time I have ever been quoted on a front page of a newspaper is about corporate tax avoidance—nothing to do with my business, to do with our companies playing their part in society and paying fair taxes. So as CFOs, we've got to look around and say this impacts our customers—we saw that with the boycotts of certain companies as a result of tax avoidance issues. We see it in people's attitudes to us, and we see it in our employee attitudes. This is not just CSR; this is about how do we actually make sure that we deliver the bottom lines that our shareholders want. Now we can all sit here behind the silkscreen and say but investors aren't really interested in that, the CSR guys are over there, the rest of them are over here, and they only ask us questions about strategy and risk and about our business performance. What can I just say to you: if sustainability is not part of your company's strategy, how long do you expect to be around for? As institutions and bodies and companies, we need to look for the long term. Short-term, yes, we all have short-term pressures, but ultimately at the end of the day, we want to build businesses that last for the longer term, and our investors want to invest in businesses that last for the long term. So we need to manage that gap, and it's up to us as we go through our engagement with our investors to actually engage them in that discussion and debate. At the end of the day, I've never had a discussion with an investor where they've told me to take a very short-term view rather than take a long-term sustainable view of how we operate a business, because ultimately, even though they're very short-term focused, they actually want us to be there for the long term as well. That is good business; it's good investment for them, and ultimately that's really what we should be aiming our goals and targets at. So as I look out at some of the things that have changed as I think through my business activities and career, there are a couple of things that I look at and still say, well, how do we think about these things when we're actually doing investment appraisals? I worked for two years at a company called BG Group, which is an exploration and production oil and gas company. That was between 2001 and 2002. We used a base case assumption for oil prices of $18 a barrel real. What's the oil price today? $60 a barrel. What was it six months ago? $110 a barrel. Fundamentally, anybody using $18 a barrel real was not using a realistic assumption. How do we then build that risk and uncertainty into our financial projections? Second part: commodity pricing. I worked for Cadbury—you know, everybody's favorite chocolate here in the UK. Very strong need to grow into emerging markets, effectively looking at innovative products as a way of actually going into those markets because that was going to drive long-term sustainable growth. I don't know if any of you read recently, but there are recent warnings about the cocoa crop. Cocoa can only be grown in a certain number of countries in the world. Most of the crop actually grows in Ghana and the Ivory Coast. Obviously there are issues around Ebola in those particular areas as well. But at the end of the day, there is actually a drought which is potentially destroying the cocoa crop. Increases in world demand plus the fact that you have a potential shortage—your business strategy is just going out the door. If you're selling chocolate, the only way you can do it is keep resizing bars, but if you're trying to introduce people to chocolate in emerging markets where you have single bite-sized products, how can you do that in that environment? So again, we've got to start looking at these and thinking through them as the chief risk officers, which we're often considered to be, not just chief financial officers. Some of these things and questions we should be asking not only ourselves but also investment advisors and others—how do they think through these things and issues as we move forward? At National Grid, we made a couple of strides in recent years. A couple of years ago, we actually set up a sustainability summit. Stakeholders became a bigger part of our new regulation. A couple of years ago, we invited external stakeholders in, and also employees and young people, to talk to us about how do we make our business more sustainable. The output of that sustainability summit actually was a target: 100% recycling of all the old towers and wires that we operate—the pylons you see throughout the country. We never had that in the past. We never thought of it. It wasn't part of our business model, but it makes good business sense, saves customers money ultimately, and actually helps us meet some of our environmental targets. Another area is around social capital, areas of outstanding natural beauty. Many of you here in the UK may have read recently we've actually announced we're investing £500 million in taking down 67 pylons through three areas of outstanding natural beauty. We actually got a number of stakeholders involved to look at that. What were the key areas we could spend? We could spend a lot more. In fact, some of the media comments above it was actually 42p on a bill a year. Although people feel very fearful and very anti large increases in energy bills, that may be something that society is willing to pay for in order to have the visual amenity that they would see. So it is there as part of our businesses; it's there for us to go for. Often, as you know, CFOs we tend to hide behind, well, it's not in our financial accounting standards, we don't have to worry about it, it's not something we can account for, it's too difficult, it's too complex. We often hide behind that, and I'm not sure that actually now we can really hide behind that anymore. As finance leaders, we need to be party to this discussion. We can't sit back and wait. Ultimately, at the end of the day, it is going to damage our businesses for the long term, and we need to be in that situation where we can actually drive this agenda forward. And I really sincerely believe and sincerely hope that everybody here will actually take on that call to action. I think it's really important. It's not just about now and the short term—it's the long term. It's building a sustainable business model that we can all be proud of and actually then engage our customers and our employees and ultimately our shareholders because it's good for them as well. But we need to educate them. We can't just always sit back and say investors aren't interested. We need to make them interested, and that is where I have a responsibility as a CFO and all of us who are in the financial community have that. Thank you very much.