Francesco Mazzagatti Of Viaro Group On How They Are Helping To Break the Cycle of Non-Renewable Consumption
An Interview With Monica Sanders
It is not easy to strike the right balance between the necessity for fossil fuels and renewable energy sources.
Although the United States has had a long trend of non-renewable consumption, the tides are turning. Many companies are working hard to break this cycle, moving towards renewable consumption. In this interview series, we are talking to business leaders who are sharing the steps they are taking toward renewable consumption. As part of this series, we had the pleasure of interviewing Francesco Mazzagatti.
Francesco Mazzagatti is the CEO of the UK-based Viaro Group, which has interests in energy, investments, and real estate. Mazzagatti has been operating in the energy sector since 2012 and he established Viaro Energy as a vehicle to facilitate the wider Viaro Group’s expansion into the North Sea basin. Mazzagatti has spearheaded several highly value-accretive acquisitions with the objective of making long-term investments in the North Sea.
Editorial Note: This interview was done in April 2023. As of July 27, 2023 Mr. Mazzagatti has been accused of financial misdealings that are being litigated in court. Mr. Mazzagatti denies the allegations.
Thank you so much for doing this with us! Before we dig in, our readers would like to get to know you a bit. Can you tell us a bit about how you grew up?
I grew up in a small town in the south of Italy, where I learned the most important value of all — the value of family. This was the first thing that shaped my character and remains a core value for me to date. South of Italy is not a particularly wealthy area and like in any place of that kind, people tend to have big dreams about escaping their circumstances, but few go very far. I became aware of this as a young child, before I even had the language to formulate the thought, and I think this is what gave me a restless kind of hunger to chase achievements throughout my life. By the time I would reach a goal I’d set for myself, I was already chasing the next one, even higher and more difficult, and I have kept going that way through my entire life, without breaks or limits.
For as long as I can remember, I have been more interested in the world of adults than my own peers. I spent a lot of time around my father and his friends, listening to their conversations about their businesses and politics. I was curious about the many different factors, big and small, that go into why some businesses succeed where others fail. As a teenager, I was more passionate about helping my father do the accounting for his business than I was about going out and partying. I remember I would finish school and run straight back home to help my father with his work. I had a strong sense of duty towards my family, and helping my father improve his business would improve my family’s entire financial position.
In that sense, family and business have always come hand-in-hand for me. For my eighteenth birthday, I asked my family to pay for the incorporation of my first company and two days later I was a business owner. Fast forward to today, almost twenty years later, I run Viaro Group, which operates out of London, UK and has interests in oil and gas, investments, and real estate. So, I guess you could say it has been a long chase and my hunger is yet to be sated.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?
There are numerous business associates and advisors that are deserving of thanks for helping me get to where I am today. Without them, I might have taken a different turn at certain stages, reached certain goals more slowly or ended up on an entirely different path. But there is only one person without whom I cannot quite imagine what the path would have looked like at all and that is my mother, Maria Rosa. If you think about where I started out from, you could say that I did not draw inspiration for my ambitions from my environment, I did not find my goals reflected in the lives of the people around me.
Getting to where I am required a great deal of vision and trust in my instincts, often with no way of knowing if I was even working towards something tangible or just dreaming big. It is a special kind of challenge to chase the things that you have not seen. My mother is the only one who has always had unwavering belief in me and who supported all my ideas, even the things that everyone else around me told me not to pursue because they were impossible. She believed in me and I believed her until I started achieving my goals and gained confidence in myself.
She raised me to be determined and disciplined, and to always stay humble. She used to tell me that good manners will open any door for me. “With good manners you will be able to pass through the needle’s eye,” she would say. To this day, I still apply everything she taught me to my life, but on a bigger scale. My auntie Lina, who is a high school teacher, is another person that I have always gone to for advice on all important life decisions and who has never given me bad advice. She remains an important pillar in my life to this day. I think for me, my family has been essential in helping me get to where I am — more so than the business associates with the right kind of professional experience — ultimately because they know me.
What is the mission of your company? What problems are you aiming to solve? What is your “why”?
My company, Viaro Energy, is a UK-based upstream oil and gas company that operates exclusively in the North Sea. Our mission is to contribute to the energy security of the UK and the Netherlands by investing in existing producing oil and gas assets, as well as the development of new fields, in order to increase the reservoir. We are seeking to build a legacy that ensures the continued growth of social wellbeing and the economy for the generations to come, as oil and gas remains a keystone of the global economy and the primary source of energy production. While it is undisputed that an energy transition to more sustainable solutions is necessary, my main concern is that not enough importance is given to the energy security problem. This is what we are looking to address and what largely drives the future direction and growth of Viaro Energy.
In my view, any solutions that jeopardize energy security are short-sighted and will have the opposite effect of what we are all seeking to achieve. Politicians everywhere are advocating for a drastic reduction in the dependence on hydrocarbons as a mark of meaningful change. However, without a modular and properly structured shift, we are at risk of creating an energy supply shock. We have already seen evidence of this in the winter of 22/23, when numerous countries had to turn to coal plants due to a shortage of hydrocarbons, which had a massive negative impact on CO2 emissions. If we do not account for energy security in the transition, the soaring hydrocarbon prices and the shortage of energy for households and businesses will not only set us back on reaching our sustainability goals, but also have serious implications for the economy.
Can you share the most interesting story that happened to you since you began leading your company or organization?
My company mostly has non-operated assets, which means that our focus is on identifying the right investment opportunities in the North Sea. For me, it has always been most interesting to analyze the different market dynamics in order to recognize the right opportunity at the right time, especially when its potential is not immediately apparent and requires a bit of imagination. One time, my business development team brought a potential deal to my attention, but advised me not to pursue it because it was not a good one. The seller was having financial difficulties, which could have had a major negative impact on one of the stakeholders if someone did not bail them out immediately, so the company was considered financially unstable. When I looked at the deal, I saw immense potential because the urgency of the matter provided us with a unique chance to acquire an otherwise viable asset for a really good price and turn over significant profit. We bought the company for EUR 1 million and it now has a value of EUR 40 million. On top of that, it allowed me to establish a strong relationship with the stakeholder, who is now my good friend, so it makes the thing even more gratifying.
Do you have a favorite life lesson quote? Can you tell us how that was relevant to you in your own life?
The early bird catches the worm. It is simple, but effective. Once you have defined your goal, remain focused and work towards it diligently until you achieve it. It makes you disciplined, you waste no time, and you give yourself the best chance of success. And even if things do not go your way for some reason that is beyond your control, you have no regrets because you know you have done everything you could on your end. This has held true for me every time and in every aspect of my life.
Let’s now shift to the main part of our interview. Can you tell our readers about the initiatives that you or your company are taking to help break the cycle of non-renewable consumption? What specific problems related to non-renewable consumption are you aiming to solve?”
My company’s work is in energy production and as such, it does not directly contribute to breaking the cycle of non-renewable consumption. However, I do not think we can look at these issues in isolation from each other, as the measure of impact that energy consumers can have in the transition to renewable energy sources also depends on the producers. We have a responsibility to provide consumers with less harmful energy sources in the transition by systemically working to lower our CO2 emissions, as well as balance out our carbon footprint with the right ESG policies and investments in renewable projects. Most importantly, our main duty is to preserve the security and affordability of the energy supply and ensure that it remains uninterrupted while transitioning to more sustainable solutions.
It is certainly commendable that significant efforts have been made to ensure that renewable energy sources are more accessible, and that major corporations are increasingly supporting renewable consumption. However, the fact remains that fossil fuels represent more than 50% of the world energy supply, followed by over 20% of coal, with renewables still at around 12%. The majority of the supply of electricity, fuels, plastics, rubber, and other fundamentals that keep every other segment of the world economy running are still sourced by hydrocarbons. In fact, the consumption of hydrocarbons has actually increased in the past 5 years.
This means we still have a long way to go in the transition and a concentrated effort is definitely required to see real results, but it is equally important to retain the focus on energy security throughout. Instituting radical policies to cut down the use of hydrocarbons without ensuring sufficient energy supply from renewable sources and proper planning is counter-productive and a threat to the stability of the global economy and the quality of people’s lives. This is especially true when geopolitical factors are considered as well, as COVID-19 and the Russian war in Ukraine have shown us. Transition to sustainability requires equally sustainable, long-term solutions, and policy-makers and oil & gas companies both have a part to play in setting the right foundation for consumers to make more effective contributions to the net-zero future.
Can you give a few examples of what you are implementing to help address those issues?
The majority of our portfolio consists of natural gas assets, which has been a conscious decision on our part in the effort to lower our carbon footprint. Out of all the fossil fuels, gas is considered “relatively clean” because it contains significantly fewer CO2 emissions than other hydrocarbons. It is half of what is in coal, for example.
We have also hired an advisory company to help us put together a robust ESG program, which will include a policy for a transition to renewable consumption within our organization. As part of my company’s environmental responsibility, we have been putting in efforts to balance out the impact of our carbon footprint by looking for the right environmentally sustainable projects to invest in. This is part of our ESG program and the report will be ready later this year.
When it comes to preserving the stability of the energy supply, Viaro Energy is a British company and so our focus is on contributing to the security and affordability of energy in the UK. We have made significant investments in existing gas assets and the development of new fields in the North Sea reservoir in recent years, which has contributed to the UK’s reduced dependence on gas imports and less severe inflation of gas prices compared to various other European countries. As such, the UK did not have to resort to increasing the use of more CO2-intensive products.
How do you measure the impact of your company’s sustainability initiatives, both in terms of environmental benefits and business growth? Can you share any key metrics or success stories?
As in the anecdote I mentioned about that seemingly bad deal that ended up being a very profitable acquisition, I recognized that consistently investing in the North Sea despite the economic uncertainty that came with COVID-19 and the war in Ukraine was the best way I could contribute to preserving local energy sources and more sustainable energy solutions overall. When the gas crisis hit Europe as a result of sanctions against Russia, I started pushing our partners to increase gas production. Having a larger domestic supply of gas allowed for more affordable gas prices, which made gas more widely accessible for families and businesses despite the inflation.
As I mentioned, this has had a positive impact on the overall stability of the economy in the UK during the geopolitical turmoil, which has in turn enabled my company to remain profitable and allowed for continued investments. Unlike many other countries in Europe, coal demand in the UK has continued decreasing steadily in 2022 — consumption was down by almost 20% compared to 2021 — while natural gas and renewables were the main energy sources last year. I think this shows the true significance of energy security in the transition, as it is directly connected to economic health, which ultimately dictates the scale of the contribution that a country will be able to make.
Once our ESG program is ready, we will be able to implement initiatives that have direct benefits for the environment and provide a certain degree of counterbalance to the carbon footprint that comes with our business growth.
What challenges have you faced while implementing sustainable practices in your company, and how did you overcome them? Can you share a specific example?
The main challenge we have faced has been the UK government’s decision to implement the Energy Profit Levy (EPL) legislation in 2022. In the span of about half a year, the existing 40% taxes went up to 65% in May 2022, and have risen to 75% as of 2023. This has not only had a significant impact on the cashflow of my company and others in the North Sea, but the policy also serves to discourage investments in renewable initiatives. According to the EPL, the taxes on the revenue generated from hydrocarbons can be offset by new investments in oil and gas, but not by investments in renewables. This is in direct contradiction with the efforts to drastically reduce the use of hydrocarbons and push oil and gas companies to commit to working towards the net-zero target. It also goes to show that policy-makers are well-aware of the extent of the overall dependence on fossil fuels, but instead of tackling the issue systematically, they opt for radical gestures and loopholes in legislation to keep the spotlight on oil and gas companies alone.
Another challenge that we have faced in our attempts to support sustainable initiatives is equally baffling. A while ago, I charged our ESG team to find an organization that specializes in tree plantation and make a donation to support their efforts. Multiple organizations of this kind have rejected us because they do not wish to be associated with an oil and gas company, as they are seeking to contribute to better quality of air and the environment overall. While oil and gas companies can and should invest more effort in not actively hindering the sustainability transition, environmentally friendly groups do not seem to always welcome attempts to mitigate at least some of the negative effects to the environment. Nevertheless, we are still trying to find a suitable project to support.
How would you articulate how a business can become more profitable by being more sustainable and more environmentally conscious? Can you share a story or example?
As is the case with everything else you do for your business, it is a matter of determining which sustainable solutions make sense for your specific business setup and can meaningfully improve it, and then implementing them in the right way and at the right time. For example, a paperless company would not be considered an efficient and economic operation in most industries 20 years ago, but today this is almost a requirement in an office setting.
Business is a cycle and you need to stay inside the wheel and keep pace with the changes. Rushing to introduce changes that do not make sense for your business in that moment for the sake of doing them will be a burden and they will not last. Delaying too much after the need for certain changes becomes clear will put you behind the curve and constantly trying to catch up. In order to see the potential of becoming more profitable by being more sustainable, you have to evaluate the technology that is available in the market, explore the options that would work for your business, and begin implementing them at the right moment for your company.
On a smaller scale, it is important to continue raising awareness about the fact that any kind of business can and should be more environmentally conscious and introduce more sustainable practices with no significant disruptions. This is not unlike any other workplace culture that has been identified as harmful and in need of change to date — pay gaps between genders, lack of diversity, etc.
This is the signature question we ask in most of our interviews. What are your “5 things I wish someone told me when I first started promoting sustainability and climate justice” and why? Please share a story or example for each.
As an oil and gas executive, I can hardly call myself a promoter of sustainability and climate justice. However, as a person and a father at that, I do feel responsibility for the state of the world that future generations will inherit. While the necessity for oil and gas remains a given for the foreseeable future, I think we need to at least have an awareness of all the unnecessary ways in which we cause harm to the planet and work to rectify them accordingly, as well as stay alert for ways to consistently improve our practices and reduce or counterbalance the harm. Acting as though sustainability and fossil fuels cannot co-exist will hardly bring us closer to a net-zero future. In any case, these are some of the challenges that I have observed:
1 . It is not easy to strike the right balance between the necessity for fossil fuels and renewable energy sources. There simply is no clear way to retain full integrity when promoting sustainability, given that fossil fuels permeate every aspect of our lives, and adequate sustainable alternatives are yet to be found in numerous categories or are otherwise still too expensive for widespread use.
2 . If you are too aggressive with sustainability, you might cause the opposite effect on climate justice in the short term. As I mentioned, trying to implement sustainable initiatives overnight without proper planning for uninterrupted supply or contingencies in case of external disruptive factors/geopolitical impact might lead to a need to resort to even more harmful alternatives in the immediate future.
3 . In order to make an impact on sustainability overall, you need to ensure that you have the right foundation for meaningful long-term changes. This pertains to all the different stakeholders in the matter — the government, whose policies should be coherent and encourage the changes it advocates for instead of producing the opposite effect; the environmentalists, who should not operate in a vacuum with like-minded groups alone but be more inclusive of the different ways in which everyone can have a positive contribution, large or small; and oil & gas companies that should be conscious of how they can help most effectively and where they can avoid causing unnecessary harm.
4 . Educate yourself on the matter and do your own research before you form an opinion. The full facts are often misrepresented in the media to cater to a specific objective or popular stance. If you care about sustainability, you should ensure you have your facts straight and are advocating for the right things.
5 . Markets drive demand. By working to make sustainability a more efficient or profitable choice in more different business segments rather than solely an environmental cause that people should care about, it is more likely to become adopted widely, as people will see immediate benefits to their own interests.
You are a person of great influence and doing some great things for the world! If you could inspire a movement that would bring the greatest amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. :-)
Basically, it would be what I already represent in my own line of work in a way — that the healthier alternatives of the bare necessities in people’s lives are made accessible to the wider population, and not just those privileged enough to afford them. It is not a new concept, but given the passion that goes into advocating for clean food and energy, for example, we should find a way to acknowledge that the associated costs often make them unsustainable for widespread use and put more effort into working around that.
What is the best way for our readers to continue to follow your work online?
That would be my LinkedIn page: https://uk.linkedin.com/in/francesco-mazzagatti-b91032101
This was very meaningful, thank you so much. We wish you only continued success on your great work!
About the Interviewer: Monica Sanders JD, LL.M, is the founder of “The Undivide Project”, an organization dedicated to creating climate resilience in underserved communities using good tech and the power of the Internet. She holds faculty roles at the Georgetown University Law Center and the Tulane University Disaster Resilience Leadership Academy. Professor Sanders also serves on several UN agency working groups. As an attorney, Monica has held senior roles in all three branches of government, private industry, and nonprofits. In her previous life, she was a journalist for seven years and the recipient of several awards, including an Emmy. Now the New Orleans native spends her time in solidarity with and championing change for those on the frontlines of climate change and digital divestment. Learn more about how to join her at: www.theundivideproject.org.
