Start with exactly how the world changed because of those huge initiatives. I understand you have 450 institutions so they took
one hundred and thirty trillion dollars and assets represented. But if I work at one of those institutions an asset management
firm or a bank. How are the decisions I make today different from the ones I made yesterday.
Well first off David thank you for having me on. You know I love the show. You're an absolute institution and I'm going to take
it if you will from a Wall Street perspective and what it's going to mean for people working there. And a number of them are
already doing this but it's going to go across the organization is they're going to look when they're making a loan or they're
making an investment or buying a bond even trading a derivative. They're going to start taking into account the underlying credit
the underlying company whereas it on the transition towards net zero because after all what I mean we're here in Glasgow. The
objective of one hundred ninety five countries is to get to net zero
greenhouse gas emissions. And so this is going to become a competitive advantage for companies that are moving faster
towards that companies that are part of the solution. And it's gonna be a challenge for those companies who have it. So this
lens on climate and climate competitiveness if you will is going to be applied across
virtually all assets. And that's going to be part of the skill set of the individuals who are making those portfolio decisions.
So you know this industry so terribly well distinguish if you would defense from offense. And this is what I mean by that.
It's one thing to say if I'm working for a bank or an asset management firm I'm going to really shy away from some of the
fossil fuel companies. I understand that. I call that defense. But does this encourage companies to go on the offense for
example to invest in green steel. Look David. Absolutely. And that's the big shift here. I think
that we've been aware of the risks around climate. And
the most obvious ones are you know when New York gets hit by extreme weather event and there's big property losses or supply
chains are disrupted by by another event on the other side of the world. And we have those effects and we have to manage
those. But there are huge huge opportunities in being part of the solution. And so the offense here is very very broad. It of
course it includes and you know in my professional life I do a lot of this at Brookfield the one largest renewable producers in
the world. It includes building up wind solar hydro eventually hydrogen and other technologies that produce electricity with no
emissions and or part of very much central to our future. But just as interesting and really more valuable is going to
companies that have high emissions today. You rightly mentioned the steel industry or the auto industry or the cement industry
the building industry commercial real estate others and helping them get emissions down. Now it takes a lot of capital in order
to do that but it's going to pay off in terms of a huge amount of value and so on the range of solutions and investment
opportunities here. You have technologies that are just going to take existing activities whether it's age back heated
ventilation cooling in buildings or a grid optimization for electricity grid and just get the emissions down from existing
plant. Next to that he is putting in place new technologies new investment that itself gets emissions much more dramatically
down and then farther out the risk spectrum. Are those technologies though very much part of. I I referenced green
hydrogen a moment ago and that would be a classic example. The more extreme breakthrough technologies I put it in the
venture capital cap our technologies around for example direct air capture sustainable aviation fuels. So the whole range of
the investment spectrum is available. And look your question is very on point. This is much much more about offense. It's much
much more about getting capital to solution. And candidly that's why we need it in like one hundred and thirty trillion dollars
to be focused on addressing this issue so to speak to those investors. As you describe this what we're calling offense
investing in things like green steel and the like. Do investors have to get used to lower returns. As a practical matter.
No I don't think so and certainly not on a risk adjusted basis. One of the things now for a moment David I must speak about
defense unfortunately which is one thing investors increasingly will need to do is think about terminal value. Think about where
certain assets are going to lose value and potentially lose value quite rapidly because they're not decarbonising fast
enough or they're just not suited for a low and zero carbon economy. You referenced a part of the energy sector fossil
fuels. There's elements of that which will not either or certainly can't be there if we're going to get to where we need
to go. So investors need to look at that. Mark you are part of your spearheading if I could put it that way a major
transformation in transmission of the light switch. I can't think of a like in history frankly. You can't have that big a
transformation without some costs along the way. There's no such thing as a free lunch. You say perhaps returns will not be
reduced in this area. What about costs. Because as we make this transition there's got to be disruption somewhere.
Yeah. Look David they're transforming the energy system.
You know it's better to start early in order to have a smooth transition but it's a you know there's a pivot but we haven't
started early. Let's let's be candid. We've left this very light certainly for the one and a half degree objective. So there
needs to be a very rapid ramp up in renewable power. But at the same time we need to get it right on the fossil fuel side and
have those bridge fuels that are necessary in order to keep the lights on literally and keep the industry humming as as as as we
build up the other side. And there's lots of ways to get that wrong to have too little too early and and have the type of
volatility we've seen in energy markets. That's one risk in terms of a bubble.
You know another risk is look I in terms of this decade. There is a very large number of highly economic technologies
where the real issue too is just rolling it out at scale slightly easier said than done. You got to get planning
permission. You need the right companies et cetera. But it's not yet.
It's not technology risk for what we need to do to get emissions down sharply this decade.
In the 20 30s it is some technology risk. You know there will be a lot of bets on I suspect on elements of hydrogen that don't
work out. There will be some big venture capital effectively bets on capturing carbon from the air. Did director capture of
carbon that don't work out is as the nature of any RTS. So there will be there will be volatility. And you're right to emphasize
the scale of it although last point relative to doing nothing which is more or less the strategy the world has been pursuing
up until recently these bumps are nothing compared to the costs that would come.