What would success at COP 26 look for. What are you looking for the politicians to achieve.
In the end the clearer the roadmap we can get from politicians about what they're going to do the more that the private capital
markets can actually make the transition happen. In the end there's a lot of good words are going to come from government
and regulation is going to come from government. But a lot of the capital that's required to make the transitions
has to come from the private markets. And so really it's about what's the what's the roadwork. We're working with Dani Burger.
What is the role of the hedge fund industry within that in fixing this. They see enormous challenge. Sure. Look I think the
key area around hedge funds is and this is really anybody that's investing in liquid stocks. So you're an owner of a company you
know and that gives you the chance to engage with management and to make sure that they have a serious plan not just a sort of
fluffy handwaving plan. And we've seen lots of those around. And I would imagine there'll be an awful lot of hand wavy fluffy
noise over the next few days. What matters is people with actual plans actual moving actual things going on. And you know hedge
funds do a good job can do a good job of engaging with companies. Okay. And a lot of investments with a lot of that in
mind. A lot of investments are are now labeled with sort of greener labeling and ESG labeling. And regulators in various
parts of the world are just starting to ask questions about whether that ESG labeling really is what it says on the tin.
What are you doing man. What precautions are you taking to make sure that anything you label is green. Really. OK I think that's
incredibly important. If you make a commitment to your client that you are doing
something that's green that you are it's either an impact fund or it's an engagement fund.
You actually really have to do that. And I think we've seen obviously in the US a public situation. I'm amazed there hasn't
been one yet in Europe. I'm sure there will because there's an awful lot of people chucked Article Eight labels on everything
they're doing. For us it has to be about doing something actual real actual significant. There's an interesting opportunity here
for people like us can manage the data. There's an awful lot of data around in this space. It's a bit messy data separate.
You can use that to actually make interesting both short term and long term decisions and then to engage with companies. But
it is so important that you do what you say you're going to do. It's what you do what you say. Are you finding the ESG assets
really do provide alpha. We need to outperform other assets. What's the latest thinking on that. I think you've got two
different things. So you have the fact that there is large amounts of capital going to the space and therefore some of the
securities have been outperforming just because of flow of money. And some of them are now at valuations. You know you look
at some of the electric vehicle manufacturers. The valuations are really quite eye watering type of thing. But
then then you get to the sort of the question clients are looking for. So we have found clients find it slightly difficult
to sort of ESG is a big broad label company but it's a bit too again fluffy for most people.
When you start talking about I want a portfolio that is designed to help the transition to make sure we don't get more than one
and a half percent of warming people can get their head around that. And then it's about delivering a portfolio that does that
now over a long term that will have Alpha over a short term. That just is about money flows. And also you know for a lot of
clients it's like this is the conditions I want to invest in. So I don't really care whether that outperforms against an oil
company that outperforms against the tobacco company because that's not what they're doing. They're investing for the long
term. You mentioned that the difficulty of labelling some of these investments are you having conversations with regulators
to make sure you get the labeling right. You stay away from certain labels like ESG for example.
So we are being very careful. That's our normal approach right. Rather than this sort of.
Well let's just call everything. I mean we are trying to engage with every company we invested but we wouldn't say that every
fund we run is an Article 8 or an Article 9 fund. It's clearly not. That's one thing. If you engage it's another if you
actually get stuck into specific ESG topics. And so you know we try to be conservative in what we say so that
our clients know if they ask for something that's what they're going to get. Are you concerned at all that we don't necessarily
have all the market mechanisms we need to make sure that fossil fuels get the funding that they may be need as we run into the
transition and through the transition. Are you concerned that because of investors very good intentions
that perhaps we cause price spikes like like have been seen in recent in recent weeks not just because of that reason for many
complicated reasons but are you concerned about that. Yes. Look I mean we it's it's an energy transition that's going to take
time. You know I think that green energy is super important. I think getting to green hydrogen and using green hydrogen is
effectively the battery mechanism. So when you have excess wind power when you have excess solar you. It into green hydrogen.
Then when you don't have enough wind as we had last month what you can do is burn the hydrogen
to ask that hydrogen is the future battery. If you like for for the energy production. But it's going to take time to get all of
that infrastructure in. And it is important that we finance enough
oil and so on to keep us going through all of that. And I think one of the other things that's really important is that what we
don't do because the public markets are so visible that what we do is we force public companies to sell assets to private
companies where they get financing without it being visible. And suddenly you actually take you know there was a recent example
where one of the oil majors who is a good owner of an on assets sold an oil asset in Alaska to somebody who's well-known as a
bad owner of that asset. That may make the score on said oil major look better but it doesn't make the planet doesn't make
the planet any greener. Just while I have you here just got to get your thoughts on the inflation environment that we that we
find ourselves in at the moment. Last week we spent a lot of time talking about how central bank guidance is maybe not being
trusted and maybe in places being tested by the market. Do you think the markets are right to test that central bank guidance.
Do you think the markets are right to think that actually inflation will lead to tighter policy sooner than expected. I
think the market is going to continue to push in till they get movement. I would say so. There is a very strong belief across
the market that central banks are behind the curve. Know I think the move last week in Australia was very striking. At the moment
the Aussie central bank stopped intervening. The two years went from 10 basis points to 60. You know that's now the interesting
thing is I hear a lot in markets about people saying these are enormous moves and they're enormous moves. So what we've got
used to the last few years but 25 50 basis points is really not that big a change. But at the moment the first relative to
growth is negative. So we've got good growth but it's slowing. The first derivative of the inflation side is still positive. So
we've got higher inflation and each print is a bit higher and a bit higher. And we could see reasons it might go. And that is
going to create pressure on central banks and the markets is definitely of the view that they need to raise rates. And so you
get this thing where the front end is going up at the back end isn't going up because that that situation describes that
stagflation or not quite there. I think that the worry is whether that it pushes central banks into such a big move that
it creates a problem. Right. I mean that that's we don't have that sort of stag side of that at the moment at all. But if we
raise rates too much.