Speaker 1: You're listening to a share these podcast, any kind of
Speaker 1: broader trends that you see out there that are informing
Speaker 1: your portfolio.
Speaker 2: We think a lot about growth of data. We think
Speaker 2: a lot about decarbonization. The next extension of decarbonization really
Speaker 2: has been thinking more about a circular economy and what
Speaker 2: opportunities come from that, which again is not just an
Speaker 2: esg idea, it's actually also just an economic rationalist idea.
Speaker 2: Why I use things once and put them in the trash.
Speaker 2: So I give an example of a really interesting business
Speaker 2: we've invested in for one of our funds. It's called
Speaker 2: viscount Reuse. So when you go to the supermarket, we
Speaker 2: love investing in all the things that you hopefully you
Speaker 2: don't need to have heard of Morrison, You don't even
Speaker 2: need to even realize you use the products you're invested in.
Speaker 2: But when someone mentioned you go, oh that thing, I
Speaker 2: use that every day. I never even thought about the decision.
Speaker 2: So when you go to the supermarket, fruits sometimes comes
Speaker 2: in those cardboard crates which get scrunched down, and then
Speaker 2: when you're moving house you go to the supermarket and
Speaker 2: pick them up from the back. Increasingly around the world
Speaker 2: supermarkets are trying to get away from that and use
Speaker 2: reusable plastic crates. And what's the best way for a
Speaker 2: supermarket to do that. It's to have one pool provider
Speaker 2: so that all of their suppliers are using the same
Speaker 2: kind of crates. They come into the supermarket, then they
Speaker 2: get broken down, sent back to you to clean, and
Speaker 2: then you send them out to their suppliers, and so
Speaker 2: you end up with this very infrastructure like business. You know,
Speaker 2: something which is going to keep being used in the
Speaker 2: next ten years. You're locked in as the sole supplier
Speaker 2: to one of a duopoly or oligopoly the supermarket providers,
Speaker 2: and you can add on some other customers. So that's
Speaker 2: a business we've invested in that ultimately its growth will
Speaker 2: come from the world wanting to be more circular, and
Speaker 2: the supermarkets want to be more circular, partly for ESGM,
Speaker 2: partly because it increases their margins. Up with this really
Speaker 2: downside protected infrastructural like business, but something you never thought
Speaker 2: of as infratructure.
Speaker 1: It's a place comes in where there's real value in
Speaker 1: standardization exactly. It's otherwise where do you send them back
Speaker 1: to exactly?
Speaker 2: And then think of all the ways you can start
Speaker 2: improving that, like make those traceable, allow the supermarket to
Speaker 2: know what temperature that product's been at all the time,
Speaker 2: so they know that has this milk been tainted because
Speaker 2: at some point in the supply chain there's a failure,
Speaker 2: they can work out where it was. So the whole
Speaker 2: lot of ways you can use technology to keep making
Speaker 2: this dumb things smarter and add value to the customer.
Speaker 1: Well infrastructure everywhere. So we've talked a little bit about
Speaker 1: renewables and especially New Zealand's history with renewable but how
Speaker 1: do you see that transition going throughout infrastructure investment throughout
Speaker 1: Australia and New Zealand.
Speaker 2: I'll admit something to my shame, having grown up in
Speaker 2: New Zealand they moved to Australia, and having been on
Speaker 2: the board of Tilt Renewables when we created it all
Speaker 2: the way through to when we sold it, I didn't
Speaker 2: think much new renewable energy development was going to happen
Speaker 2: in New Zealand. Kind of thought, oh, well, we're kind
Speaker 2: of done. Know we're at ninety percent. And what I
Speaker 2: hadn't factored in was the rest of the electrification of
Speaker 2: the economy. So how do you go from Fonterra burning
Speaker 2: coal to turn milk into milk powder to using renewable electricity,
Speaker 2: cars running on renewabal electricity. See realized there's actually all
Speaker 2: of this demands. Even when you're at nine percent renewables,
Speaker 2: Probably in New Zealand will still double its renewable energy
Speaker 2: capacity over the next few decades. Australia has gone very
Speaker 2: slowly and is now starting to make progress at getting
Speaker 2: towards sixty seventy renewables, and that won't actually be driven
Speaker 2: by policy. That'll be driven by old coal plants breaking right,
Speaker 2: so that reaching end of life. So that's kind of inevitable.
Speaker 2: So there's a lot of opportunity in Australia. Probably the
Speaker 2: biggest constraints in the moment in Australia is just the
Speaker 2: scale of the transition required means you're rewiring the whole country.
Speaker 2: So in one of our other portfolios, Utilities Trusts of Australia,
Speaker 2: we are a shareholder in Transcrid the poles and wires
Speaker 2: of New South Wales and Electronet the poles and whis
Speaker 2: of South Australia. Those businesses are literally investing billions of
Speaker 2: dollars to rewire from a system that was based around
Speaker 2: generating in a few small coal a few big coal
Speaker 2: power plants, to one where actually there's renewable energy all
Speaker 2: over the state and you need to connect up your
Speaker 2: states to manage intermittency, so all of that stuff has
Speaker 2: to get worked through. So that'll mean there's short term
Speaker 2: difficulties friction points in Australia, but long run will look
Speaker 2: really interesting. And then you look globally, whatever happens out
Speaker 2: of the big beautiful bill that's going through at the moment.
Speaker 2: One where another US is going to build a enormous
Speaker 2: amount of renewable energy just because it needs the power
Speaker 2: in it is brood economics. The lowest cost form of
Speaker 2: power is solar or solar plus batteries in the US.
Speaker 2: Europe's got an energy independence issue, so it's not just
Speaker 2: about renewables there, it's actually how do we reduce our
Speaker 2: dependence on Russian gas, so you need to all have
Speaker 2: your own renewables. And then Asia you've got growth of
Speaker 2: demand for energy as well as you know, as people
Speaker 2: get wealth there in the economies industrialize along with decarbonization pledges,
Speaker 2: so you think all around the world you see different
Speaker 2: reasons for people to be doing a lot more. The
Speaker 2: really unidealistic way to think about renewable energy, Like you
Speaker 2: can think about it as an idealist, and I do,
Speaker 2: but the unidealistic way to think about it just as
Speaker 2: an investor is actually it's an option strategy. So you
Speaker 2: know that you can have complete confidence in the trajectory
Speaker 2: of the world. Over the next two three decades, a
Speaker 2: lot more renewables will be built. It's really hard to
Speaker 2: be certain in the next twelve months which specific solar
Speaker 2: farm or wind farm will get built because there's a
Speaker 2: change in energy prices or a change in regulation. You
Speaker 2: can have renewable energy development options in as many places
Speaker 2: as possible, with great teams working on them, and then
Speaker 2: optimize at each point which one you should be putting
Speaker 2: your two three hundred million dollars into. Actually taking from
Speaker 2: being a plan to being reality, you'll find that you're
Speaker 2: constantly surprised on the upside, rather than kind of having
Speaker 2: like a single pinpoint bet on one company or one
Speaker 2: project of that.
Speaker 1: Do you think that we can be leaders in the
Speaker 1: field of how that develops.
Speaker 2: I think we already are. Like if you think about
Speaker 2: New Zealand, had this ADVANTAGEHI built from its disadvantage artists
Speaker 2: from not having a lot of coal and gas. It
Speaker 2: got really good at wind generation. And then for Morrison,
Speaker 2: we took that idea that we've been working on the
Speaker 2: nineties in New Zealand and started getting options in Australia
Speaker 2: in the late nineties that we created Tilt Renewables, which
Speaker 2: we which an infertal investment that we sold twenty one
Speaker 2: twenty two. Out of that experience, we set up Long
Speaker 2: Road Energy for intilling the New Zealand super Fund in
Speaker 2: the US. That's been a phenomenal investment now worth several
Speaker 2: billion dollars. Took that to the Europe, took it to Asia.
Speaker 2: So yeah, and that's just really kind of slowly over decades,
Speaker 2: reinvesting in the fact that you've got to hit start
Speaker 2: on the world and something they need more of.
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Speaker 1: We recommend talking to a licensed financial advisor. We also
Speaker 1: recommend reading product disclosure documents before deciding to invest.