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Welcome to The Executive Exchange, a premier podcast series for on-the-go senior executives. Each episode features short, impactful podcasts where industry leaders share key insights and experiences from the water industry.
[00:00:00] Piers Clark: Welcome to the Exec Exchange, 15-minute podcast in which a leader from the water sector shares a story to inspire, inform, and educate other water sector leaders from around the globe.
[00:00:10] Piers Clark: My name is Piers Clark, and my guest today is Nerina Di Lorenzo, the Managing Director at Melbourne Water in Australia, and we're gonna be talking about partnerships with purpose, those partnerships that you need if you're to run a successful modern water utility.
[00:00:26] Piers Clark: Nerina, brilliant to have you with me today.
[00:00:29] Nerina Di Lorenzo: G'day, Piers. Thank you very much for having me today.
[00:00:33] Piers Clark: I love that the first word out of your mouth was "G'day," that classic Australian greeting.
[00:00:38] Piers Clark: Nerina, how long have you been managing director at Melbourne, and what were you doing before you started that?
[00:00:44] Nerina Di Lorenzo: I completed a double degree in civil eng and business admin. And in fact, my first roles were with ExxonMobil, or Esso as it was known back then in Australia. I was working on the oil rigs in Bass Strait. It was technically interesting, and I learnt a huge amount, but I also really wanted to explore some other fields before knowing what I wanted to do.
So I accidentally got a job with my local council. I say accidentally because I was running their competitive tendering and contract performance and procurement functions which was not something I had experience in before. I thought I'd be there for three or four years, but I stayed for nearly 20 in the local government sector. I'd been bitten by the public purpose bug.
[00:01:25] Nerina Di Lorenzo: Some of that time was business improvement. Some of that time was asset management. Some of that time was executive roles, running infrastructure portfolios for the different cities I worked for. And then the last five years was as CEO of Merri-bek Council.
[00:01:38] Nerina Di Lorenzo: Again felt that need to keep learning. So I took the opportunity to step across into Melbourne Water in 2019, taking up an exec role running service delivery in the asset management portfolio. And then took up the MD role in 2021, coming onto five years now.
[00:01:52] Piers Clark: I didn't know your background was in oil and gas but you are one of the pioneering leaders around the drive towards net zero and how utilities can get to net zero. Yet you started life, and I know I'm pantomiming this, but you started life on the other side.
[00:02:09] Nerina Di Lorenzo: Well, isn't it interesting? My language then wasn't developed because I was a young engineer and just learning things. As I've gotten older, I've now understood what my values are really about, and it's been quite interesting to see how that's shaped up through the course of the different roles. And in fact, it's public purpose, it's global benefit and it is very much about decarbonization, and the kind of work that we get to do in the water sector.
[00:02:32] Piers Clark: Brilliant. Now, let's talk about Melbourne Water. You're obviously around Melbourne, but how many people do you serve and what sort of activities does Melbourne Water do?
[00:02:42] Nerina Di Lorenzo: Melbourne Water looks after over five and a half million people in terms of water and sewage needs. We look after the bulk water and the bulk wastewater treatment as the wholesaler, and so we work with three retail water companies who get the water to people's homes.
[00:02:57] Nerina Di Lorenzo: We are also the floodplain manager which involves a whole lot of urban planning work. It involves 23,000 permits a year, modeling, working with the rivers in a different way in the floodplains. And we look after 25,000 kilometers of waterways as well from a biodiversity perspective.
[00:03:15] Nerina Di Lorenzo: And we're the CMA, the Catchment Management Authority, across our region, so we look after land management practices in a lot of places as well.
[00:03:21] Nerina Di Lorenzo: So we touch every part of the water cycle, and that gives us a very interesting opportunity to work with the whole system and to work with many different groups within this domain.
[00:03:32] Piers Clark: Brilliant. So you're one of the big beasts in the Australian water sector.
[00:03:36] Piers Clark: A modern water utility is a very complicated business, and we can only meet the challenges before us if we work in partnership with the organization and the supply chain.
[00:03:46] Piers Clark: I believe you've got a few interesting examples which you wanted to share that could highlight the importance of that relationship.
[00:03:54] Nerina Di Lorenzo: I just wanna hit you with the proposition before I talk about the examples.
[00:03:58] Nerina Di Lorenzo: Working together is one of the fundamental human characteristics that has helped humans overcome challenge across millennia. It's one of the things we do well. And if we zoom out and we look at what's happening globally, but also locally in Melbourne, we're affected by the climate, we're affected by population. We have legacy assets that have been in place and served us well for over 100 years.
[00:04:20] Nerina Di Lorenzo: But we're also operating in greater extremes, so needing to provide reliability, and at the same time, needing to drive a once in a generation transition for future supply in all of our services. It's not incremental improvement that will help us meet these big challenges.
[00:04:37] Nerina Di Lorenzo: And just as one example, 70% of Melbourne's water comes from surface water. By 2050, we expect that to be more like 30 or 40%. With that sort of complexity, it all means more novel solutions. It means reconfiguring systems, it means working with regulation or legislation. It means working together with the community over an extended period of time, and building trust. And you build that well when you build it together.
[00:05:02] Nerina Di Lorenzo: And so into stage left, the partnerships. So the three that I'd like to talk about, first and foremost, our partnership with First Peoples and traditional owners. We work across five traditional owner groups, the Wurundjeri, the Bunurong, the Wadawurrung, the Taungurung, and the Gunaikurnai. We have been progressively setting up partnership agreements to work together on country with our traditional owner partners, which has meant lots of collaboration in land and natural resource management.
[00:05:31] Nerina Di Lorenzo: But the flagship collaboration is called Burndap Birrarung Burndap Umarkoo, or the Yarra Strategic Plan. The Yarra is our major river in Melbourne, and the health of this river depends on so many entities working together. And so the cut-through here in this partnership was really the supporting legislation that led to this key piece of work. It's the first legislation in Australia that acknowledged the river as a living entity, and requires us to produce nature positive outcomes, and it set up Melbourne Water as a key coordinating role.
[00:06:03] Nerina Di Lorenzo: It led to the creation of a plan that's now been endorsed by eight local councils, seven state government agencies, six committees of management, all in partnership with traditional owners of the country.
[00:06:13] Nerina Di Lorenzo: And an independent report is produced and tabled in Parliament each year that provides public accountability for how we are working together to improve the Yarra. And more importantly than that, an annual yarning circle discussion where we as leaders are talking to the elders and holding ourselves accountable to the elders for what we've done.
[00:06:32] Piers Clark: An annual yarning circle? What on earth is an annual yarning circle?
[00:06:36] Nerina Di Lorenzo: You're not dealing with wool. It's not that type of yarn. It's a conversation. And it's a mode of engagement which comes from First Peoples in Australia, and it's a way of working through and solving complex things and forming consensus together.
[00:06:52] Piers Clark: And what's the balance between it being a talking shop where everyone gets to be able to share their voice and feel like they've been heard versus it being something where there is practical outputs that actually change decisions and influence what you do on the ground?
[00:07:07] Nerina Di Lorenzo: Well, this yarning circle is the chance for elders to ask us what we've done. So there's quite a lot of personal accountability. And it holds you to account because you value the relationship.
[00:07:17] Nerina Di Lorenzo: And that's the beauty of a partnership and the developing of these bonds that really mean people care for it and care for it together.
[00:07:25] Piers Clark: That's a brilliant first example.
[00:07:27] Piers Clark: What's your next one?
[00:07:29] Nerina Di Lorenzo: Well, the second one is one called The Accord. This is a partnership across Melbourne Water, the three retail water corps in Melbourne and Barwon Water, based in Geelong, and it covers the whole Melbourne and Geelong region.
[00:07:42] Nerina Di Lorenzo: We formed up to collaborate, initially on water security, supporting the water transition over the coming 10, 20, 30 years. We've got strong growth in the west and the north, which is changing the shape of our city. We've got change in future water sources. We've got change in the way we move water around the network.
[00:07:59] Nerina Di Lorenzo: And so as a group of MDs, we developed The Accord in 2022. And the cut-through principle that has helped this partnership is this overarching principle we all committed to, which is the best overall community outcome prevails.
[00:08:14] Nerina Di Lorenzo: It means that if there is a change we need to make that is better for the overall community, then we support it. And if any of the individual organizations is sub-optimized by the change, then we all agree to help lessen that impact.
[00:08:26] Piers Clark: Just imagine if governments ran like that, that not everyone had to win everything. The outcome of what you just described is that sometimes people are consciously accepting that they're not going to get the optimal solution that met their particular needs. They're doing something for the greater good.
[00:08:41] Nerina Di Lorenzo: Exactly. And so this is where that overarching principle was the cut-through. Greater overall community benefit prevails.
[00:08:48] Nerina Di Lorenzo: And it provided the tools and the trust because as we worked out, okay, well, I understand you'll be sub-optimized. How are you sub-optimized? What now shall I do to minimize that impact?, meant we then could solve the things that were barriers to progress in the past.
[00:09:04] Nerina Di Lorenzo: So far we've worked together with government on reforms to a thing called the South Central Pool, which is to do with water entitlements to make them fit for the future. We're using it to modernize bulk supply agreements that have been in place for 30 years.
[00:09:16] Nerina Di Lorenzo: We've been working together with government to inform the long-term water security plan. And we're working with a bipartisan task force on water security which will develop up those future options for our city.
[00:09:28] Piers Clark: Can you give me an example of something where Melbourne Water in that partnership has had to step back from what might have been your primary goal in order to achieve the greater good?
[00:09:38] Nerina Di Lorenzo: We've sometimes needed to change the timing of some of the revenue stream over the coming five years in order to make sure the customer in the end experiences a smooth price path.
[00:09:49] Nerina Di Lorenzo: Accord partnership meant we could understand what else may occur in future pricing and ensure that we're again putting the customer first, and take on a little more risk in the short term.
[00:10:01] Piers Clark: Excellent. All right, and your third partnership.
[00:10:04] Nerina Di Lorenzo: The third and the last one, which you had a hand in starting, Piers. It's the NetZero Partnership.
[00:10:10] Nerina Di Lorenzo: This is one that has the most global focus. We're all on a journey to carbon emission management and capture from particularly our sewage services. A particular challenge is the measurement and capture of nitrous oxide emissions, which is 300 times worse in its global warming impact than carbon.
[00:10:27] Nerina Di Lorenzo: We put the call out through you, Piers, I think it was one of your forums or exchanges. And we utilized that opportunity and spoke about this work that we were doing and seeking some partners to work with us, in particular on nitrous oxide and more generally, decarbonization.
[00:10:42] Nerina Di Lorenzo: And what you set up there, Piers, set us up then with Aarhus Vand in Denmark and Severn Trent in the UK, who were doing similar research on nitrous oxide, but also similar work on broader circularity and decarbonization technologies. And so we created the NetZero Partnership in 2022 which targeted our joint carbon emissions tonnage of around a million tons a year.
[00:11:04] Nerina Di Lorenzo: So we've been pooling our research ever since, and we've most recently been joined by Gruppo CAP in Milan. So we've learnt more about the way we can optimize processes in the short term to reduce its production on our way to bigger and better capture and avoidance strategies than we could have done by ourselves.
[00:11:23] Nerina Di Lorenzo: And the partnership has been also a really great contributor to the work of the Global Water Research Coalition, which recently was presented in Singapore by Professor Lu Yi from University of Queensland.
[00:11:34] Nerina Di Lorenzo: And they've been working to create the first practical protocol to monitor and quantify nitrous oxide emissions from full-scale wastewater treatment plants, with an expectation that they're likely to launch this in Glasgow at the IWA Congress.
[00:11:47] Nerina Di Lorenzo: And I think the key cut-through in this partnership was actually the relational bond between our people and the commitment to sharing each other's information. These partnerships are some examples, but the overall concept of working in partnership is actually what makes me optimistic for the future. It's a key pathway to finding these solutions to the complex problems we're all faced with.
[00:12:07] Piers Clark: Brilliant. And that last partnership, the Net Zero one, the thing that's sort of magical about it is whether you can build a relationship with a utility partner that's in a different part of the world, where when they do something and learn from it, you take that learning without having to go through the time and expense and distraction of having to physically do the learning yourself. That's where the real power of that partnership comes together. You're standing on the shoulders of giants, and that takes brave leadership to do.
[00:12:38] Piers Clark: But investing in partnerships isn't something you can do lightly. There's an enormous resource that's required to do that properly, and a vulnerability within the organization to be able to say, "Hey, we might not know the answer here. We need to lean on other people." How's that culturally been accepted within Melbourne, both at the board level and at the operational level?
[00:12:58] Nerina Di Lorenzo: I think it's been strongly supported, mainly because the partnerships we've worked on are partnerships that help us work on the things we needed to work on anyway.
[00:13:07] Nerina Di Lorenzo: Our people see a strong utility in being able to do that with others. Our board are incredibly supportive.
[00:13:15] Nerina Di Lorenzo: The three partnerships I talked about, they're in three key areas that are massive, mighty challenges that if we weren't doing this in partnership, we'd be doing this alone. So it's a little bit of a no-brainer to do that together. And it's interesting because often people who are in science or engineering backgrounds can sometimes be labeled as people who might be a little bit protective of the information. But actually, people who are in science and engineering-based backgrounds are really curious, and curiosity wins out every time.
[00:13:44] Nerina Di Lorenzo: If you can learn faster and grow quicker, I often see that as the guiding reason why people anchor to these partnerships and build that trust and empathy with each other.
[00:13:53] Piers Clark: Wonderful examples of how you can solve some of today's really thorny, gnaw-y challenges by working with others.
[00:14:01] Piers Clark: Now, we're running out of time. We like to finish with the question of what advice would you give your younger self? We did touch on it, obviously, at the beginning, that you had this epiphany journey. Let's go back to that late-teen Nerina where you were at the start of your career with everything before you.
[00:14:17] Piers Clark: What advice would you give her?
[00:14:19] Nerina Di Lorenzo: I would say stay open to experiences because it's worth it, and sometimes that detour is more beneficial than what you would have thought. Don't worry if it's off plan sometimes.
[00:14:29] Nerina Di Lorenzo: Trust your nose and your gut more. Pay attention because it's worth it. Trust that when you bring that broad set of diverse voices to the table, that's when you get really magical things happening 'cause you've got different skillsets and thinking. And that whenever that's happened, it's always paid off.
[00:14:44] Piers Clark: You have been listening to the Exec Exchange with me, Piers Clark, and my guest today is Nerina Di Lorenzo, Managing Director at Melbourne Water in Australia.
[00:14:54] Piers Clark: Thank you to our sponsors, and until next time, keep asking questions, keep sharing, and keep safe.