Jeremy Oppenheim left a top job at the management consulting firm McKinsey&Co in 2016 to become a Founding Partner of and build SYSTEMIQ, at the high water mark of climate optimism. Then came Trump and Brexit. Ten years on, Joe asks him what the movement got right, and what it got badly wrong, from ignoring the politics of decline to vilifying the very incumbents it needed. And most importantly, what does this mean for how we think about what comes next?
Jeremy Oppenheim left a top job at the management consulting firm McKinsey&Co in 2016 to become a Founding Partner of and build SYSTEMIQ, at the high water mark of climate optimism. Then came Trump and Brexit. Ten years on, Joe asks him what the movement got right, and what it got badly wrong, from ignoring the politics of decline to vilifying the very incumbents it needed. And most importantly, what does this mean for how we think about what comes next?
Conversations with a CE/O is a new series on The Circular Economy where the Ellen MacArthur Foundation’s CEO Joe Murphy sits down with leaders whose decisions are shaping the economy and asks one question. We’ve been working on the circular economy for more than a decade, the next 10 years will look nothing like the last, so how does the work itself need to change?
Part 2 of this conversation will be available next week. Subscribe to the podcast and never miss an episode.
Links:
SystemIQ at 10 - https://www.systemiq.earth/systemiq-at-10/
Blue Whale Enquiry - https://www.systemiq.earth/reports/bluewhale/
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[00:00:00.000] - Jeremy Oppenheim
We paid insufficient attention to the hard realities of political economy. We did not think hard enough about what happens to, if you will, the system that needs to shrink.
[00:00:15.200] - Joe Murphy
Hello. Welcome to The Circular Economy Show. My name's Joe Murphy. I'm the CEO of the Ellen MacArthur Foundation. In this mini-series, I'm speaking to leaders whose decisions matter. They can have an influence on the future of the economy.
[00:00:30.680] - Joe Murphy
Really, we're trying to understand, how does the work need to change? We've been at this for a decade, and the next 10 years are going to look really different. What have we learned that we can put into practice now to have a maximum impact?
[00:00:43.550] - Joe Murphy
In this first conversation, I sat down with Jeremy Oppenheim, who 10 years ago left a big job at McKinsey and founded a scrappy little consultancy called Systemiq. As they mark 10 years this year, Jeremy has seen so many different initiatives come and go, successes and failures, and he's spent a lot of time reflecting on what has worked and what needs to change.
[00:01:07.320] - Joe Murphy
One of the bits of the conversation was maybe a shift from this idea that being right isn't enough. We can have the analysis and the facts and the data. Ultimately, it's about demonstrating how these changes and these interventions make people's lives better. What are the real benefits to people living and working in the world today?
[00:01:30.000] - Joe Murphy
Thanks, Jeremy for-
[00:01:33.820] - Jeremy Oppenheim
Thank you so much for having me.
[00:01:35.910] - Joe Murphy
We're in the mainframe, the heartbeat of Systemiq.
[00:01:40.980] - Jeremy Oppenheim
Indeed. Engine room.
[00:01:42.460] - Joe Murphy
The engine room. You've just celebrated 10 years, which is a massive milestone. I'm sure this conversation is going to meander back and forth-
[00:01:55.640] - Jeremy Oppenheim
In a few circles?
[00:01:56.860] - Joe Murphy
A few circles, exactly. I think coming in, my central question I have for you is how has the work changed that organisations like Systemiq and EMF are doing, have done? What does that mean for the future? But obviously, because it's a 10-year milestone, there's a bit of past, present, future it would be good to do.
[00:02:20.180] - Joe Murphy
So 10 years ago, when you started Systemiq, why? Why did you do that? Because at the time you were at McKinsey, having a pretty big job and influence, and then exiting and going on a new path with Systemiq. What were the hopes then, and what was the actual trigger in 2016 to do it?
[00:02:43.870] - Jeremy Oppenheim
First, huge appreciation for the chance to share the story and actually to have a conversation about what's working, what's not working, what do we have to get better at. It has been a roller coaster over the past 10 years. It has also felt like a roller coaster with some of my best friends. What's not to like about that? No seat belts, of course, on this one. The genesis of Systemiq, three things. Of course, three things, right?
[00:03:21.660] - Joe Murphy
The McKinsey core.
[00:03:23.240] - Jeremy Oppenheim
Can't let go of some of it.
[00:03:25.020] - Joe Murphy
Don't worry. It's well and truly run its way through the MacArthur Foundation as well.
[00:03:30.390] - Jeremy Oppenheim
Excellent. One piece is, of course, there was a moment in time, where the world was in 2015 at its high point of multilateralism. It's not just that we had the Paris Agreement, and we also had the Sustainable Development Goals. There was a sense of being able to operate in a highly cooperative, positive sum international environment.
[00:03:57.080] - Jeremy Oppenheim
There was a lot of hope around all of that and conviction that actually there were some different ways in which we could bring public and private together. If we did that, goodness knows what might be possible. The run-up to Paris had been an important part of that.
[00:04:14.620] - Jeremy Oppenheim
There was a strong sense of an opportunity out there in the world to bring together, if you will, public and private players and build something different, build a different economy that would work better. Big opportunity, big sense of external hope.
[00:04:35.680] - Jeremy Oppenheim
Number 2, I had taken a year's sabbatical from McKinsey in 2013, '14 to head up something called the New Climate Economy Project, which is very much about rethinking modern economics and applying modern economics to the way in which one could shape growth pathways for economies around the world.
[00:04:59.040] - Jeremy Oppenheim
This was at the invitation of Nick Stern and a whole series of the great and good. I worked on that project in a very, if you will, multi-stakeholder commission way. We created this Global Commission on the Economy and Climate, and everybody and their brother was involved. We, I think in that work, not only drove, I think, some of the substance that fed its way into the Paris Agreement.
[00:05:30.140] - Jeremy Oppenheim
It was designed to be an economic manifesto for the Paris Agreement, but it was the way of working that we do this on a multi-stakeholder basis, that we can work collectively and drive to real results. These were not, oh, collective action is what the people do in abstract and real people get on and do their competitive things. It was a real sense that we built this commission, we translated it into programs of work in countries with businesses.
[00:06:01.940] - Jeremy Oppenheim
We had Shell and Unilever and a whole series of Bank of America, all sorts of people involved along with countries, and that this was a way of working that could solve the really tough collective action problems by bringing people together. The proposition was, let's turn this from being a one-off commission into something that is an engine for economic transformation.
[00:06:28.540] - Jeremy Oppenheim
Full clarity, we'd spent a year after that work back at McKinsey having a debate about whether McKinsey was the right host of that, if you will, program of work in that approach to working. McKinsey, I think in a very thoughtful way at the end said, "This is great stuff. We need an engine of transformation that can bring all these actors together and work on end-to-end system change that involves policy and finance and value chain and entrepreneurs. But it's not where we are best suited to be," if you will, the host of this engine, "because we really just don't do policy stuff, for example. It's too political. It's not who we are. Go and, if you want, build it yourself."
[00:07:23.520] - Jeremy Oppenheim
That took me to the third point, which is I think I was in my early mid '50s, I know I don't look a day over 40, so thank you for saying that.
[00:07:33.030] - Joe Murphy
It's been a very kind 10 years.
[00:07:34.620] - Jeremy Oppenheim
A very kind 10 years. I think there was a bit of me that just wanted to be the entrepreneur and not play safe and get out there and see what happened. I think the same was true for Martin. What if we went from, in a sense, being advisors to being principals for once and took some risk, and got out there and stood for something?
[00:07:56.540] - Jeremy Oppenheim
So somewhere between opportunity out there, real sense of the models of collective action and what we need to solve problems like climate, and an urge to be the entrepreneur and to have more agency and more voice, all came together and resulted in us setting up Systemiq.
[00:08:17.660] - Joe Murphy
Thank you. There's a lot of hope there in the system.
[00:08:24.600] - Jeremy Oppenheim
Then we got hit by Trump 1.0 and Brexit in 2016. We hit this high watermark in 2015 of multilateralism, and we could all come together. We were really blessed in the first half of 2016 because Paul Polman and I had been talking about the idea that we should take this whole new climate economy approach to multi-stakeholder work that we did on climate and apply it to the business community.
[00:08:57.740] - Jeremy Oppenheim
We set up this thing called the Business and Sustainable Development Commission. At the very heart of that was if the world were to take on the SDGs, the Sustainable Development Goals properly, what would be the big new market opportunities that could grow out of that in clean energy and health care and education and food and agriculture? How could the world economy transform?
[00:09:25.120] - Jeremy Oppenheim
We laid out in another of these big coalition efforts with 20 different CEOs who had the courage and the confidence to put their head above the parapet and say, "We're in, we're coming on board." My real appreciation to Paul and to Mark Malloch-Brown, who were the co-chairs. We wrote this report that was $12 trillion of economic value creation and 370 million jobs.
[00:09:52.900] - Jeremy Oppenheim
It was such a different time, Joe. The idea that you would put these things together, that they would… We saw ourselves as not writing a report, but writing something that could catalyze capital investment and skills development into a whole series of new markets and value chains and ways of working. We had this naive confidence that all of this stuff was going to happen.
[00:10:20.070] - Jeremy Oppenheim
Actually, funny enough, some of it really has happened. That was the spirit with which we walked into the world, and we kicked off this new little entity called Systemiq.
[00:10:33.320] - Joe Murphy
Not so little anymore, is it? But I think there's some of the points that you mentioned there are multilateralism, CEO commitments, reports with big numbers in them that we galvanize around, trillions. We've had a few trillions floating around reports over the years. That feels very familiar to me in terms of the origin story of EMF, or at least when I joined in 2015.
[00:10:58.060] - Joe Murphy
Fast forwarding to where we are today, in terms of how that work has changed and evolved, what do you think are the big lessons from what you got right or what we collectively got right at that time, and where there were some mistakes made potentially, or not mistakes, but just wrong insights or wrong judgments? Could be mistakes.
[00:11:19.970] - Jeremy Oppenheim
Yeah, those happen. You learn from those as well. Look, I think, first of all, we should give ourselves a bit of credit. We got a lot right. It's not that the analysis that we did or the approach that we took or the belief that building markets and value chains with the right policy settings was the wrong approach. I think it's easy to go, "Oh, my goodness, we got all that stuff wrong."
[00:11:50.500] - Jeremy Oppenheim
Much of it was and remains fundamentally right. I understand that this is the territory of those of us that live in the "radical center".
[00:12:01.120] - Joe Murphy
Where we live.
[00:12:02.330] - Jeremy Oppenheim
Yeah, we live. We are pragmatic progressives. We are all of those things. That is where good politics happens. That is where, and I'll pick the example for a moment, but much of what we've seen grow up in the last decade in China comes from good policy, capital allocation, commitment to a long-term strategy, building new value chains.
[00:12:26.550] - Jeremy Oppenheim
The idea that China is monolithic is, of course, completely wrong because they compete the hell out of each other at home. There are many, many different factions operating. But look what's growing out of, in some version, the application of that approach at massive scale. That's extraordinary.
[00:12:45.680] - Jeremy Oppenheim
First thing to say is there are some things that are clearly working and that we just need to, if you will, not just stay the course, but we shouldn't abandon the belief that good policy, the right pricing, if you will, of capital, taking into account the proper economics of different, if you will, parts of the system, and understanding things end-to-end is a good thing. So these are all good.
[00:13:16.320] - Jeremy Oppenheim
What did we get wrong? I think we obviously played insufficient attention to the hard realities of political economy. So we did not think hard enough about what happens to, if you will, the system that needs to shrink. We were preoccupied with the system that needs to grow.
[00:13:40.820] - Joe Murphy
The incumbents, the oil and gas companies.
[00:13:44.320] - Jeremy Oppenheim
I understand why we talk about oil and gas, but we could talk about coal. We could talk about the car companies. What was it that led the German, in particular, car companies to retain such a, if you will, singular focus on their existing business models and to find the idea of transitioning to something that was 100 years of world-class German engineering?
[00:14:13.170] - Jeremy Oppenheim
It's not just that we ignored the political economy, or we didn't put enough attention to it. We did not put enough attention to the pride that people have in Aberdeen of being part of a thriving energy economy up in Aberdeen. I think as a movement, I don't think we did this as Systemiq, particularly, but I'm sure we fell into the trap from time to time.
[00:14:40.420] - Jeremy Oppenheim
But we found our way into looking at the German auto companies, looking at Dieselgate, looking at the oil and gas, and a little bit of vilifying these guys, as opposed to figuring out that they, too, have a stake in the future story, that they, too, come with pride and identity. How do we make the tent big enough to genuinely, authentically, on the one hand, figure out where and how they can be part of that next story, but also be honest and tough enough to say, "These are things that don't work."?
[00:15:16.270] - Joe Murphy
Because you spanned so many initiatives, Jeremy, but are there examples where you've seen initiatives do that, actually expand the tent and have a bit more of a diversity of voices around them, where that has actually worked?
[00:15:28.880] - Jeremy Oppenheim
I think one of the initiatives that we're proud of, and it's still with us, is the Energy Transitions Commission. It started off with Shell as the first anchor member, and BP as a close second, and then Schneider Electric joined in and a whole series of other companies joined in. It consciously started off as being a platform which would work on the hardest problems in the energy system and in the energy transition.
[00:16:07.280] - Jeremy Oppenheim
Everybody that signed up for it had to be committed to well below two degrees. At the time we set it up, it wasn't a 1.5. It was set up in 2016. I think it was actually set up in 2015. It was a well below two degrees. The conviction that we walked into that, if you will, room with, and all the players had was, we all need to be part of the solution.
[00:16:32.200] - Jeremy Oppenheim
You cannot just throw out the engineering capability set, the incredible balance sheet, the resources, the know-how that sit within the oil and gas companies. They need to be part of the solution, not part of the problem. Even through to… We still have, Shell is still a member. We have, I think, Petronas may still be a member. BP has temporarily, I hope, moved out. There are now 50 members of the ETC, and it involves…
[00:17:03.220] - Jeremy Oppenheim
What's really interesting, of course, is that we have a whole set of Chinese players that have come in to be part of it because they are trying to make sense of what's going on in the world. I think it's a good example. All the way through, Joe, to the fact that just before the COP that was held in Dubai, I'm losing track of numbers at this point, but 27 or something like that, we did this work on how to think about fossil fuels in transition.
[00:17:31.520] - Jeremy Oppenheim
I think both Shell and BP signed off at that time on a report that talked about the managed decline of their upstream businesses and how that would work in practice. So that's the thing that I think we've got to get a lot better at.
[00:17:50.860] - Joe Murphy
I think, may just to do a selfish plug of EMF's work, of plastics work. You mentioned part of the problem, part of the solution. That's something that we talk about a lot in all of our programs. In terms of the new plastics economy work and the global commitment, actually having the brands that are putting on market such a large volume of the packaging around the table, aligning with the sense of direction and actually committing to report, transparently, progress towards that.
[00:18:21.600] - Joe Murphy
The limitation that we've seen is there's been a huge amount of commitment and investment within the brands themselves, but there are just some fundamental barriers that exist that are holding everyone back when it comes to actually scaling some of the secondary supply of PET, for example. I know you've talked about this a lot in the Blue Whale Inquiry and in other reports, just that importance of understanding what it really takes to move markets rather than just focusing on individual company commitments.
[00:18:56.280] - Joe Murphy
Even in a coalition form, we're still looking often at an individual company making progress against a shared target. Where do you think, if you could elaborate, on what you think needs to be true to really see markets move? Where do you see examples of that work coming together to align business action, investment, policy, storytelling? I think you've talked a lot about.
[00:19:23.660] - Jeremy Oppenheim
I think the starting point is actually the demand side, not the supply side.
[00:19:28.900] - Joe Murphy
In that last conversation, we reflected on where we've come from. It's remarkable to think that the year Jeremy decided to set up Systemiq in this new organization that was going to change the way that we worked economically and politically, we had the Brexit referendum in the UK, and that must have just been a crazy moment to be beginning an organization like Systemiq.
[00:19:53.940] - Joe Murphy
Coming up in the next conversation, we'll be looking forward. What have we learned from the past 10 years that we need to apply to the next 10? Thanks for listening and join us on the next one.