So we've heard these lofty goals everyday signing up for them. But what does it mean in the real world as you're doing deals as
you're managing assets. Is it changing what you do on the asset management side of a business. Absolutely. That that's changing
rapidly on the advisory side of the business which is arranging mergers and acquisitions. That's on the cusp so to speak. We're
seeing the beginning of it. But it's but it's not quite there yet. Let me speak to the asset management side to begin with.
One has to step back and realize this has been in play now for several years. The first thing that happened is the core
demographic that drives activity in the economy started spending their values. That was a couple of years ago and three four or
five years ago in the United States longer in Europe over the last couple of years. Everybody it is shifted now so that the
same demographic is starting to invest their values and that's playing through in the asset owners. And it's really having a
big impact on the asset management business. So when you talk about investing in assets is it defense or offense. By that I
mean this it's one thing to say I don't want to invest for example on a fossil fuels company. OK I get that. But what about
a family investing in a green steel company. I think in the beginning it's going to be defensive because at
this moment in time there's very little that that kind of ties green performance whether you are your emissions policy or
social policies. There's very little that actually ties that performance in the stock market or cost of capital. That's at
its very early stages. But scoring companies is there. So I'd say at this moment in time we're probably doing. I would say
most of asset management is investing defensively around around ESG. And I think that's going to shift over time. We had we
heard from a former vice president Al Gore this week saying that we have something of a thinking call a climate subprime crisis
coming because there's trillions of dollars in assets in coal and in fossil other fossil fuels. That may not be worth actually
what we think they're worth because they'll never get used. Is there a looming problem with that in the long run. Yes. In the
short run in the medium term we're going to have many ups and downs. You know a year or a year and a half ago when when oil
was trading at a negative value would have predicted close to one hundred dollar or oil price a year year and a half away. So
I think what we're going to see is a lot of what I would almost describe as uncertainty and cyst and an outlier kinds of
experiences over the next several years. I think in the long run he's probably right as we make that transition to
the energy transition to renewables and to more green types of energy that will happen. But in the short and medium term we
could have a lot of ups and downs. So what do you do as an asset manager in that circumstance. Because we have a short term
supply problem for example natural gas in Europe. And we've seen the prices spike up and we've seen energy company stock actually
go up. So in the short run you actually might be able to make some money because the money market may have overly discounted
the value of those stocks. Yeah well I don't think it's as black and white today as that. Asset managers can't invest in oil and
gas and energy stocks. I think we're slowly maybe even more rapidly than some would like moving in a direction where becomes
less attractive to do that. But at the moment there's still ways for people to invest and make money in the short and medium term
on those kind of spikes and and movements in price at this point. Are there enough really attractive alternatives on the
green front. Now I'm talking about the offensive part whether it's solar or whether it's new technology. I've talked to some
people who manage a fair amount of money and say you know I want to invest a lot of money. There aren't that many good deals to
be done. Well I think that's again I think it's going to evolve as as you start to build in the incentives both from the
standpoint of where a capital goes. And I mean if as an example there is a real incentive for people to invest in green projects
then the cost of capital for those projects goes down and those projects become more attractive to invest in. And I think we're
going to see more and more of that as time goes on. Also the investment that's taking place in technology everything from
storage to wind solar that have taken place over the last couple of decades have made an enormous difference in creating
opportunities in this area. And I think that's just going to continue. So so as you look at possible assets to invest in how
many things do you find that you can invest in that really have attractive returns. Do you have to get used to taking a lower
return as a practical matter to accomplish some of the ESG goals. Not necessarily. Again one has to look on one hand you
can look at what's happening in the electric vehicle space and you can see Tesla at us plus trillion dollar valuation lucid in
a couple of the other car manufacturers at 60 billion. This is an area where there's just been enormous investment and just
spectacular returns for people over a period of time. I think we're going to see
opportunities here for a long period of time. As long as people believe we are really moving to that we're really on a path for
energy transition. If on the other hand this reverses itself which frankly I don't think is going to happen because it is
what I would call this demographic this economic. Graphic that's really pushing this.
I don't think it's going to reverse but it shouldn't reverse. It changes things. But as long as people think we're on this path
then these technologies then there's gonna be an enormous investment in these technologies and the payoff is going to be
huge. That raises the question of where we are on the path. I mean all of us have learned maybe the hard way that if you can't
measure you can't manage it ourselves. How do we measure this. How do we know where we are on that path and whether we're
making progress even if we really want to badly. Well I think there are some indicators you know. Fifteen years ago one would
have or before the financial crisis it when oil and gas prices were spiking in 0 5 0 6 1 would have said there no point in
investing in renewables. How do you compete in geothermal. How do you compete in solar. How do you compete in wind.
And prices have come down 70 to 90 percent since that point in time which have made all of those technologies at a much lower
oil price in fact at a much lower natural gas price competitive today. Those technologies are very competitive and that's the
kind of investment that's going to take place. You come down the cost curve tribes that we're likely to see that over the next
decade or two around hydrogen. We're certainly like to see that. We're likely to see that around storage over the next couple of
years over the next decade as well. So that raises the question in my mind at least about the government because the markets are
taking care of. We don't need the government to do anything or do we need the government to set some of the rules for us. Well
I think there's two places the government can be really helpful. The first is in setting the rules. There are going to be
standards around disclosure that are just going to be necessary to create a level playing field for companies and also for
investors. And I think the S.E.C. as is is moving appears to be moving aggressively around that. The second and along the same
lines the accounting standards around disclosure are going to be a very important as well. So some standard setting around that
is really important. The second thing government can do is it can pick a few areas where no one else to invest can invest
efficiently to make a difference. It just as an example in the infrastructure bill there are two areas that that the Congress
is focused on an administration is focused on. One is around ISE infrastructure and the second is around the grid.
Those are two examples where if you can accelerate that or you can you make that work then it makes the transition from
electric from gas vehicles to electric vehicles just much more efficient much quicker because electric vehicles of course need
to worry about the entire structure. And ultimately you know the grid is going to become even more important than it is today
with electric vehicles foreign investor. And how important is it that there be international cooperation on this. I mean because
otherwise we can have countries competing with each other in a bad way. Absolutely. There's got to again. There's got to be
some standards because you can imagine a scenario where one one geography. Let's just say the European Union decides look we're
going to start taxing carbon differently on products coming from the United States if they don't have the right policies or from
China if they don't have the right policy. So it's so you can end up in a pretty protectionist regime pretty quickly if you
don't have common standards globally. You said when it comes to ESG for Lazard for the asset management side is a little bit
ahead of where the merger advisory side is whereas the merger advisory. Well what I would say. Well first first of all on the
asset side we've made huge investments to really position ourselves in this area on the advisory side.
We're doing the same thing. We're launching a climate center in December. And one of the first areas we're going to be focused
on is the impact of the energy transition on cost of capital and and ultimately stock price. There's very little evidence in the
market today or literature in the market today that really takes and ties those two together. That's going to be critically
important in terms of understanding how to value transactions that are either either carbon accretive carbon dilutive in an
emanate context. And I think that's going to happen over time.