Founded in 2016 by Jeremy Oppenheim and Martin Stuchtey, who were leaders in McKinsey’s sustainability practice, SYSTEMIQ was established to drive the implementation of the Paris Agreement and the UN Sustainable Development Goals. With the aim of transforming markets and business models in land use, materials and energy, SYSTEMIQ now employs about 170 people across London, Munich and Jakarta.
Irena Spazzapan joined SYSTEMIQ two years ago after a 13-year career in commodities at Goldman Sachs. Here, she talks to Jenita Riat, Director of EMEA Power, Gas & Energy Transition at Human Capital, about the evolution of SYSTEMIQ, her role, and the importance of commodities skillsets to energy transition.
First, can you tell us a bit about SYSTEMIQ – what does the business do?
IS: SYSTEMIQ is a relatively young company set up three and a half years ago off the back of the signing of the Paris Agreement. Understanding this fundamental shift in the debate about climate change and what we need to do to achieve widespread transition in the economy, the founders took the view that to really achieve the pace of change that the science says we need to achieve, it was necessary to bring together investors, policymakers, corporates and other leaders to accelerate this shift.
Fast forward to today, SYSTEMIQ now employs about 170 people and works with a number of senior advisers around the world. The company has been profitable from its first year of operations, starting with an advisory business that has now grown into a portfolio of activities that falls into four broad buckets.
First, is our work building and supporting coalitions, where we bring together corporates, NGOs, investors and public entities/governments to shape policies and strategies. Then there is our advisory work with pioneers, where we support well-established companies that have decided they are on a transition path and help them with both strategy and implementation.
Third, we create new business models through demonstration projects, taking them from the initial non-commercial phase towards a commercial path. A primary example is Project STOP, which designs, implements and scales circular economy solutions to marine plastic pollution. In Indonesia, Project STOP works with city governments to eliminate leakage of plastics into the environment, increase recycling, create circular systems that are economically sustainable, unlock social benefits, and support wider systemic change.
Finally, there is the investment side, which I now lead. We have raised our own permanent capital and we are using that to back early-stage ventures – typically investment funds and companies – with the biggest potential to drive rapid system change. Because of the work we do across SYSTEMIQ’s portfolio of activities, we are typically in a position to target interventions that we think can maximise the required change in a particular system that we understand well, hence maximising the support we can extend to our portfolio ventures. We typically come in relatively early, in the case of supported third funds during the seed phase; in the case of companies around Series A.
What is your background, and how did your career lead you to this business?
I joined SYSTEMIQ from Goldman, where I had been focused on gas and power. I have always been a big fan of wilderness and nature but I am not like some of my colleagues here who have been passionate environmentalists from their teens. I started feeling very uncomfortable about fossil fuels and I wanted to focus on clean energy rather than oil and gas. This wasn’t possible to do at Goldman when I was there so I decided to move on.
Soon after I first met one of the SYSTEMIQ founders, I joined the company at a dinner where our affiliate partner Sir David King spoke specifically about the science behind climate change. I thought I was a relatively well-informed person but that just blew me away – how big the problem was and how fast we needed to act.
I joined SYSTEMIQ to head energy across the firm’s activities and that was a fantastic intellectual challenge, which I loved. Then after about a year ago it became clear to me that I am most passionate about making deals and driving change through closing transactions and working with other counterparties. So, I now focus 100% on investments, which is the best possible use of my professional skills. I’m working with some of the smartest people out there, it is very entrepreneurial, and we can go after profoundly disrupting investments that can truly make a difference whilst also generating commercial returns. SYSTEMIQ can truly help new funds get off the ground and support portfolio companies to grow faster.
What have been the highs and lows of the SYSTEMIQ story so far?
In such a young company that is growing so fast, it is hard to point to any lows. The business was 47 people when I joined, and now it’s 170. We sit on almost infinite demand, so the only limit to our growth is the number of people that we have.
What is very special about SYSTEMIQ is that the two founders have allowed for very different people to come into the company. We are not homogenous or working towards the sole target of profit maximisation, which we were at Goldman – we have people trying to find the next big company, people in Indonesian rainforests helping local start-ups to get off the ground, people advising CEOs and boards of some of the world’s most influential corporates and people working with the European Commission to draft the right new policies. We are creating a common platform for diverse talent.
In terms of the highs for SYSTEMIQ, I would point to three or four very influential reports that we have published that are being used by policymakers around the world, looking at how we get to net zero in heavy industry, for example. And then there is Project STOP, which is an incredible success.
On the investment side, I would point to our backing of ZeroAvia, a hydrogen aviation company that we helped to bring to Europe with an Innovate UK grant and our seeding of Capterio, a gas flaring capture development company. We now have 13 investments in our portfolio and are speaking to a number of new funds as we want to help them to reach financial close.
Where would you like to see the business in five years’ time?
The big objective is to start seeing emissions going down, and to contribute to this. That is mission critical and we have totally failed if we do not deliver that. We need to conserve the few tropical forests that are left, move to electrification a lot faster, change current agriculture and food systems and overall move to a more circular use of resources. As for SYSTEMIQ Solutions (this is the internal name we give to the investment side) I would like us in five years’ time to grow our investments through an extensive network of entrepreneurs out there changing the world, who can say we have really helped to get to a place that they could not have got to without SYSTEMIQ. I would also like us to contribute driving a faster shift change among institutional investors. Today, ESG investing is still a fraction of the market and impact investing is a small part of that. More than half of people working in the financial industry still associate impact investing with sub-market returns, and I hope that in five years that will be over and mainstream finance will have embraced sustainability and long-term investing. Shifting the investment community is the most important lever we have today to achieve the required change fast enough.
What talent challenges have you faced in building SYSTEMIQ?
We have three offices in three different labour markets – London, Munich and Jakarta – and we are hiring a very diverse group of people, from policy backgrounds, NGOs, banking, corporates, start ups and so on. We need those people to all work together and we cannot afford to have silos.
The type of people we attract are highly intellectually capable and can go and take on projects that may take years to deliver. They can build coalitions of people and stakeholders to work towards shared goals.
Every person working at SYSTEMIQ is going to say that at some point in their career before they felt like an outlier in a company, caring for the environment in places where this was not necessarily mainstream. But here we all have the same view of the environmental emergency we are facing, and our challenge is to remember that we are still in a bubble and we must work with clients that are not there yet to accelerate the transition.
People working in finance have a lot to offer a business like ours, and many get to a point in their careers where they want to do something with more purpose. Some of them will have the courage to do it, but most will not. Our issue is not about finding talent but bringing in talent with the right values; a person who doesn’t fundamentally believe in what we are doing here is not going to get on well.
What value has the business gained from the addition of commodities talent, given the focus on energy transition?
Commodities are really pretty key to what we are doing at SYSTEMIQ. More and more, we are realising that the common denominator in all we do is the need to empower demand by giving consumers the ability to choose. Efforts so far have been very much focused on the supply side but without shifting demand you cannot drive change. At the moment, consumers have no idea of their real CO2 footprint and that’s also because commodities markets have been moving towards standardisation. That is the bit that has to change.
It is all about issues of certification and how we treat green commodities that have a different carbon footprint through the supply chains. That is at the heart of transition. And better commodities markets can only happen with technology and data. In the end, we will all be taxed on carbon and it will become critical to know how much carbon there is in the various forms of consumption. For example, we will need to know what the impact has been of the steel in our car, or the impact of the natural gas used to heat our home.
We have brought in some commodities talent and have created partnerships to build carbon offset markets and to address energy efficiency and renewable energy sourcing. So, commodities talent has a big role to play in energy transition and SYSTEMIQ has gained a lot from bringing in those skillsets.