EP 48: Future-Proofing Capital in an Age of Climate Risk

Ella Williamson: Welcome to Sustainable Intelligence, where we discuss all things sustainability for the private markets. Today, I’m joined by Margot Brandenburg, a senior program officer at the Ford Foundation. She is a leader at the intersection of capital, governance and impact, who has worked across philanthropy and markets, from designing impact investing strategies at Rockefeller to building resilience finance solutions for homeowners in climate exposed regions. And now she is shaping mission investments at the Ford Foundation. 

Margot has spent over two decades thinking about how capital responds to social and environmental risk, and that’s what we’ll be discussing today. Because regardless of political cycles, the laws of physics don’t change. Insurance markets respond. Capital reallocates. Extreme weather disrupts operations and workforces in very real ways. 

So Margot, great to have you here. If we could start by talking about, when companies talk about sustainability risk today, how do they define it and how would you define it?

Margot Brandenburg: Hello Ella, and thank you so much for having me. I’m thrilled to be here. It’s quite an honor. So, when companies talk about sustainability risk, I interpret it quite broadly including more than just say, a company’s carbon footprint, although that is certainly in scope. I think about sustainability risk as a company’s ability to future proof itself, or at least to future ready itself. Maybe future proofing is too high of a standard. But really it encompasses any factors that threaten a company’s long-term profitability, value, or frankly, its license to operate. Meaning its reputation among consumers, workers, regulators, and other stakeholders. So there’s really a wide variety of issues that I consider as falling under the sort of sustainability mantle or umbrella.

And that’s at the company level. I think if you go a level further out and think about the way that investors are thinking about company performance and company risk, you hear more and more investors, particularly asset owners speaking in terms of systemic risk or systems level risk, and that is the risk not only to individual companies and their portfolios, but to the portfolio as a whole. And so at that point we hear investors really talking about externalities, about costs that frankly may not be captured or internalized by the company, but that are accruing across their portfolio. And so that, I think, broadens even further the kind of aperture of what sustainability means. And we’re seeing that kind of systemic risk language from pension funds from everywhere, from the UK to Japan. And so I think it really behooves us to cast sustainability opportunities and sustainability risks in broad terms, rather than narrow ones.

Ella: I like the way you also talked about the opportunities there. I think that’s a really important way to reframe it. Now, I know you are based in New York, and for anyone listening later on, we are in February 2026. Recently you have had crazy, crazy snow, which I know, extreme weather is now increasingly a lived experience across the globe. How do you see physical climate risk affecting workplace stability and culture as we move forward?

Margot: That’s such a good question, and I think extreme weather is a very tangible and present and often personal example of sustainability risk in the way that you were describing. I do live in New York City and the extreme snowfall we’ve had in recent days has meant that the subways were greatly delayed. And I was late for work today, for example, which has a clear cost to my employer. 

Two days ago there was a travel ban, you literally couldn’t travel on the streets, which meant that parents were home with their children who didn’t have school and whose caregivers weren’t able typically to get to the homes where they work. And if anyone has tried to concentrate on Zoom calls while their children are running around unsupervised in the background, you’ll know intuitively before we even bring data to bear that is not a moment when productivity is at its highest. And so that’s just in a personal lived experience sense of the word.

In terms of aggregate risk to property and business disruption, the costs really are becoming staggering. And in the US alone, over the past decade, there’s been a dramatic rise in billion dollar weather disasters, which is the threshold at which NOAA and other entities are collecting data. Over that decade there were 190 events that caused $1.4 trillion in damage and over 6,000 deaths. And the frequency of those billion dollar weather events has increased dramatically from an average of three events per year in the 1980s to an average of 20 events per year in the past decade. And seeing the costs born, not just by each of us in our individual lives, but at the aggregate level and in particular, sectors like insurance and utilities and logistics and transport are being particularly impacted, which then creates costs that the rest of us need to absorb. And so I think from the micro to the macro level, extreme weather is just a great example of how sustainability issues are showing up in our lives and in our businesses and in our economy.

Ella: And thinking about it from a company level for investors and boards, how do they think about workforce disruption as part of sustainability risk or just risk in general?

Margot: I gave a very personal example of what it might cost employers whose workers are impacted by extreme weather. But I think the opportunities and the risks of good workforce management, or what we often call human capital management, extend far beyond extreme weather. Gallup does quite a good annual poll and we know from Gallup’s polling that about 20% of workers are actively disengaged at work and some subset of that are actively working against their employer’s best interests. That comes at a huge cost to productivity, to retention, to foregone innovation and customer service. And conversely, workplaces where employees feel valued, right, that have a strong culture are reaping the benefits of innovation, of retention, of employees’ general willingness and desire to go an extra mile and to feel invested in the success of their companies.

And so I think those companies that aren’t managing their human capital well are incurring costs and foregoing a competitive edge. And conversely, those companies that are actively managing their talent as an asset and as a resource are reaping the benefits. And that is something that is cultural. It’s something that shows up in wages and benefits and retention. There’s a combination, I would say, of qualitative and quantitative measures that a company can look to to understand where it is today, how its current state of play compares to that of peers and can track their progress over time when they see the value in that.

Ella: So there are obviously those things that you just spoke about there that a company can control themselves. Then you have the external risks like extreme weather, for example. So it is a very, very complicated landscape to navigate. And I think another layer on top of that is that the sustainability risks that we’ve been talking about can sometimes be framed differently as say, compliance or disclosure. 

How do you think those conversations would shift when leaders and boards start connecting them to physical risk? Or, maybe reframing them as business resilience, which I know is a big topic of conversation at the moment.

Margot: Yeah, I think the story of sustainability disclosure over the past few years can sometimes feel like, two steps forward, one step back. Five years ago it was a bit of a wild west, right? There were no standards. There was complete fragmentation, which made it impossible for a company or an investor or another stakeholder to understand how one company was performing against benchmarks, against its peers over time. And I think fortunately, that has been changing with the creation of the International Sustainability Standards Boards (ISSB) and a host of other kind of regulation and voluntary standards that have really created a common baseline, which allows for that apples-to-apples comparison and a bit of a standard above the noise. So I think all of that is for the better and is setting us up for long-term success in this arena.

I think the risk in that and what we’re seeing in some instances now is that then becomes framed as a compliance issue, right? There is a standard. At its worst, it’s a box checking exercise, which means it’s purely a cost center, right? Someone needs to be retained or hired to satisfy the regulators or the standard setters at the sort of minimum viable level of quality and assurance required. That is not creating value for companies, for the most part. I think to see the value of those data and those disclosures and to see the opportunity, companies and investors need to use the data, actively use the data to manage operations, to inform decisions about capital allocation and so forth. And that means that the standard setters need to focus on decision-useful data. Not getting as much as humanly possible, but getting the right types of data from companies. And the sort of ecosystem of service providers, like Novata, have a huge role to play in innovating to reduce friction, to make this easy and to take what could otherwise be a compliance exercise and turn it into easily digestible, decision-useful data that are accessible to the stakeholders and the people within companies and within investment houses that need the data and that want the data. And that’s what the opportunity of the ISSB and of these other sorts of global standards creates, it’s just, it’s necessary but not sufficient to make sure that these types of data are connected to drivers of value and to active risk mitigation. And so I think it’s incumbent, we all have a role to play in making sure that those data, once they’re available, are actually translated into decision useful and material factors.

Ella: I love the way you just frame that “a standard above the noise.” So almost a standard above standards for companies that are absolutely nailing it. And I think at the moment, the companies that are doing this best are controlling the narrative. 

Now, working in this space, reconciling short term cost pressures with long-term risks, both across assets and people, can be a real challenge. How would you suggest that people look at this and manage this in a successful way for their business? 

Margot: Yeah, I think there’s a lot of noise right now. There’s a lot of rhetoric, unfortunately it can be heated rhetoric. A lot of conflicting prognostications and pronouncements and there’s just a lot happening in the world legitimately, right? There’s the noise that is purely noise and then there’s the distractions that come from material events and material developments and our global political economy. And all of those things, both sort of substantive and rhetorical, I think conspire to distract us all from our North Star and the actual drivers of performance and success that will get us toward that North Star. And where companies don’t get distracted by the 24-hour news cycle and continue to keep their eyes on the prize and maintain an authentic commitment and a consistent set of decisions in pursuit of their North Star, which should be, of course, good for the business, good for its investors, and frankly, good for all of its stakeholders, those are the companies that certainly are rewarded by consumers.

We work with partners who do lots of focus groups with consumers, and brand authenticity, let’s say, and consistency are hugely valued. Even when consumers don’t necessarily agree with the decisions that companies are making, they appreciate authenticity and consistency, and that’s obviously most relevant for B2C companies. But I think there’s a consistent theme there across really all types of companies. Those that stay the course, that have made informed, enlightened decisions, and obviously are open to new information and to pivoting as needed, but are playing a long game, those are the companies that are gonna fare the best.

Ella: And then I think you also have that added element, which I guess is shining more of a light on that authenticity of the growth of AI and that therefore lack of human interaction that many are feeling. So those companies who can still retain that authenticity, it’s going to be so key to business stakeholders, society, and ultimately who succeeds in the long run.

If we can go back to the part you talked about around the 24-hour news cycle, things being politically charged. Is there anything that leaders should keep an eye out for in terms of getting lost in conversations or what drops off first around workforce resilience and culture in particular?

Margot: Unfortunately, there’s a tendency to cast issues of workforce culture in zero sum terms, right? A focus on looking at the percentage of female executives has to necessarily come at the expense of male executives, just to pick one example. This assumption, which I think is misguided and incorrect, that let’s say issues of diversity and inclusion are zero sum, is just wrong. The culture of value and belonging that allows women and really all employees to thrive and to have a chance at promotion and mobility, those are the same things that men want. And so if we can move away from this idea that we are privileging one group above another or what’s the word that you used to hear a lot here, not greenwashing, but the performative acts in service of Women’s History Month or pick your topic, right. If we actually just think holistically about how to create a workplace culture and environment where everyone can bring their best and everyone can thrive, and everyone can contribute to company culture, that’s going to be good for people who’ve historically not thrived in workplace cultures. And it’s going to be good for everybody. And so I think, really focusing on the fundamentals of what we all as humans want is going to get to the same ends and is going to be ultimately less polarizing and something that everyone can see the value in and get on board with.

Ella: Everyone, everywhere, always. I really love that as a motto for companies rather than, you know, making little groups and defining strategies per group. I think that’s a really good way to think about it. And if you had to give sustainability leaders one anchor at this very busy moment in time, what would you say they should pay attention to within their organization in particular?

Margot: Yeah, again, it’s so easy in our hyper connected, hyper fast news cycle to focus purely on what’s happened in the last 24 hours and to lose track of the big picture. Just everything in our media and our social media and our other ecosystems drive toward that short-term thinking. And I think it behooves us all to really not lose sight of where value is being created, will be created, will be rewarded not only tomorrow, but next quarter, next year, next decade. And on a personal level, you know what our kids or our grandkids or our nieces and nephews are gonna look back on and how they’re gonna judge us for how we managed when the stakes were quite high and the environment was very fluid. And, thinking in terms of what my colleagues would say, being a good ancestor, what in retrospect will have proven to be the right set of choices, can be helpful, at least for me personally, in terms of lifting above the fray and trying to remain focused on what matters. And what matters over time, not just what matters in the current hour.

Ella: Yeah. It’s so easy for you personally, for companies, for everyone in their day-to-day role to get sidetracked by the here and now, but like you said, it’s going to be what happens over the next five to 10 years that really has an impact on history. And if I could ask you, looking back, what’s one moment that has really shaped how you think about sustainability today?

Margot: Gosh, there have been several moments. Maybe I’ll name two moments that have shaped the way I think about sustainability. One was relatively early in my career, I was working in microfinance and I was in Mauritania doing a training on Sharia-compliant financial services delivery systems. In a small town that was eight hours from Nouakchott , which is the capital of Mauritania, and it was right after Hurricane Katrina had taken place in the United States and obviously had huge and devastating impacts on communities across Louisiana and the Gulf Coast. I was working with a group of women who were so far off grid, so to speak, but who nonetheless had been hearing in this case on the radio this terrible event called Katrina, and about the thousands of people in the United States who were without homes, without belongings, that were completely stranded. Several of them asked me why I was in Mauritania and not helping the people affected by Katrina. And that was striking to me on many levels. It led to me pivoting in the next phase of my career and working domestically in what we call the community development finance space. So a domestic analog to international microfinance. But this idea that really communities are connected. Topics are global even as they’re also very much local. And, whether it’s benefits or threats, they’re rarely contained to the site where they start. And so there’s either like a virtuous or a vicious cycle and ripple effect that can happen in response to one, what seemingly can be a place-based event. And so just that sort of thread that led from the Gulf Coast of Louisiana to the middle of the Sahara Desert was quite striking for me.

And then about, gosh, 10 years later, I had been really moved by Superstorm Sandy here in the Northeast to focus on business model innovation to drive resilience to extreme weather. And so I started a company called My Strong Home that fortified houses to be more resilient against hurricane and extreme weather risk, and financed those improvements with insurance discounts. So it’s a sort of a take on the pay-as-you-save model that underpins energy efficiency finance or solar finance, but in this case, we were looking at insurance and insurance discounts,in exchange for home fortification. And we operated across the southeast and again, the Gulf Coast of the United States. And my whole team was in those states. I was the only one kind of coming in and out of New York City because I couldn’t, for family reasons, relocate. 

And so on my first trip, I was really struck by the disconnect in jargon. Like I showed up talking about climate change and family sustaining wages and using these terms that were frankly, just second nature to me living in New York City. And I was met with a fair amount of skepticism. Oh, you’re coming from New York City with your climate change. I’m not sure about this. And on my second visit, I started talking about it in terms of extreme weather and found that everyone was totally up in arms and totally motivated to think about what we needed to do to address extreme weather. Because again, they were living the costs and the vagaries and the vulnerabilities, so we were talking fundamentally about the same things. I just happened to show up and use a different label for it. 

But if you can move away from the labels, which I think are too easily captured and commandeered and polarized or even weaponized, and talk about fundamentally what is happening in people’s lives and to their property and to their livelihood, there’s a ton of commonality and that was really hopeful for me. And it was really fun actually to spend those years with folks that were leading the charge. Like even today, the state of Alabama leads the rest of the United States in terms of homes that have been fortified against hurricane risk. And that’s not a story that often makes it to New York City, but I think it’s a really important one. And yeah, that was very yeah, formative for me as a professional and as a person.

Ella: Absolutely. And the more we give things labels, the more it alienates certain groups. So where we can find those commonalities, it just means that these programs and ways of working get taken up more by more groups. Thank you for sharing that. And along the same thread, is there any particular belief about sustainability that you once had that you’ve potentially changed your mind on over time?

Margot: Gosh, so many learnings along the way. I won’t say that I’ve changed my mind about the value of data, but I have changed my mind about the things that need to happen alongside having better and more accurate data. So I’m a data junkie, right? I’m a quant person, and so for me, that tells a really important story that is impossible to turn away from. But, over time, I’ve recognized that there are limits for most of us to what data can do to change human behavior. And those data, again, need to be distilled into their most decision-useful form and presented in the most accessible way. But they often need to be accompanied by stories that bring those data to life and by moral courage, right? By a commitment to doing the right thing when it’s popular and when it’s less popular. And so it’s this combination of qualitative and quantitative factors that are gonna get us where we need to be. And so the singular story about data is not wrong, but it’s also not complete. And so I have a lot more appreciation, I would say, for the narrative component and the kind of behavioral component that I think need to go along with it.

Ella: Yeah, because we’re all very good at collecting data, storing it somewhere, especially in spreadsheets. But how can you take it to the next level and really use that data in a way that’s going to drive things forward. Last but not least, the sustainability space can often feel really noisy and busy. We all know that working in this space day in, day out. What helps you stay grounded in your work day to day?

Margot: Honestly, it is often my kids who are eight and 11, and who have lots of questions about how I spend my time and what I’m doing and why the world works the way it does. And I derive an enormous amount of comfort and satisfaction from being able to explain to them what I do and why I do it. And for me to hear that intuitively, they think that’s the right, and sometimes the only thing to do. They don’t really understand why we would do something different. And so going back to this idea of trying to put our current context in a sort of long-term perspective and the arc of our longer lives, and to think about what it will take to be a good ancestor and not just what it takes to get through today. I find that is very grounding and really allows a bunch of the noise and the tweets and whatever else to fade into the background. 

Ella: An amazing note to end on, and I think we should all take that away when things are feeling tough, when things are feeling hard, and we’re not sure what to prioritize. As long as we are all working towards that shared goal of a better future, that’s really what should ground everything we do, every day.

So thank you so much, Margot, for all your insights today. The things that really stood out to me were setting a standard for yourself and for your company that’s above the noise and above this bar, so you are set up for the long term. Maintaining an authentic commitment to your business, yourself, and to society. And then also thinking about that big picture. Where is the world going to be? Where is this decision going to take the company in five to 10 years? And how are we setting up the next generation for success? So thank you so much for all your time.

Margot: Ella, thank you so much for having me. This was so fun, and I am really grateful for the opportunity. 

Ella: It’s been absolutely wonderful having you. Until next time, let’s keep building sustainable intelligence together. Find out more at Novata.com.