1 00:00:00,240 --> 00:00:02,600 Speaker 1: This is Tom Rowland's Reese and you're listening to Switched 2 00:00:02,640 --> 00:00:06,240 Speaker 1: on the BNF podcast. Every year, b ANDAF releases its 3 00:00:06,240 --> 00:00:10,160 Speaker 1: annual report on Energy Supply Investment and Bank Financing Activities, 4 00:00:10,200 --> 00:00:13,120 Speaker 1: where we use public and commercially available data to assess 5 00:00:13,119 --> 00:00:16,320 Speaker 1: banks energy sector financing to generate a ratio of their 6 00:00:16,320 --> 00:00:19,720 Speaker 1: allocation between low carbon supply and fossil fuels. This year's 7 00:00:19,720 --> 00:00:21,840 Speaker 1: report takes a look at twenty twenty three, where we 8 00:00:21,880 --> 00:00:24,840 Speaker 1: found the energy industry investing more capital into clean sources 9 00:00:24,880 --> 00:00:27,960 Speaker 1: of supply, with bank financing for low carbon energy technologies 10 00:00:27,960 --> 00:00:30,680 Speaker 1: reaching eighty nine percent of that of fossil fuels. This 11 00:00:30,880 --> 00:00:33,839 Speaker 1: rising energy supply banking ratio of zero point eight nine 12 00:00:33,920 --> 00:00:36,040 Speaker 1: to one may be moving in the right direction, but 13 00:00:36,120 --> 00:00:37,760 Speaker 1: given that we need to hit four to one by 14 00:00:37,760 --> 00:00:40,440 Speaker 1: twenty thirty to meet a one point five degree scenario, 15 00:00:40,479 --> 00:00:43,159 Speaker 1: we're still a long distance from the target. Further positive 16 00:00:43,159 --> 00:00:44,920 Speaker 1: momentum can be found when we look at our energy 17 00:00:44,920 --> 00:00:48,280 Speaker 1: supply investment ratio, which for the first time surpassed fossil fuels. 18 00:00:48,320 --> 00:00:50,519 Speaker 1: But what does all this mean in geographic context and 19 00:00:50,520 --> 00:00:53,680 Speaker 1: which banks are performing best. On today's show, I'm joined 20 00:00:53,680 --> 00:00:56,880 Speaker 1: by Clean finance analyst Trina White, who brings us findings 21 00:00:56,920 --> 00:01:00,000 Speaker 1: from our third annual Energy Supply Investment and Banking Rate, 22 00:01:00,440 --> 00:01:03,040 Speaker 1: which BNF clients can find at BNF go on the 23 00:01:03,080 --> 00:01:06,800 Speaker 1: Bloomberg terminal on BNF dot com. Now onto the pod. 24 00:01:17,160 --> 00:01:19,959 Speaker 1: So welcome Trina, Thank you for joining us today. 25 00:01:20,000 --> 00:01:21,440 Speaker 2: Thanks for having me, tom So. 26 00:01:21,800 --> 00:01:25,039 Speaker 1: Fun fact for people who are not at BNF and 27 00:01:25,080 --> 00:01:26,920 Speaker 1: who would have no way of knowing this, but I 28 00:01:26,959 --> 00:01:29,720 Speaker 1: actually sit next to Trina in the New York office. 29 00:01:29,920 --> 00:01:30,600 Speaker 2: It's a great time. 30 00:01:30,840 --> 00:01:32,800 Speaker 1: It is a great time, and we talk about cats 31 00:01:32,800 --> 00:01:36,560 Speaker 1: and plants. But one of the things I have noticed 32 00:01:36,640 --> 00:01:41,080 Speaker 1: lately is that Trina has often been working late. You know, 33 00:01:41,120 --> 00:01:43,720 Speaker 1: as I'm leaving the office, Trina, you've still been there, 34 00:01:43,920 --> 00:01:46,440 Speaker 1: So you've been working hard on something. So tell me 35 00:01:46,520 --> 00:01:48,800 Speaker 1: what is it you have been working so hard on lately? 36 00:01:49,240 --> 00:01:50,000 Speaker 2: Thank you, tom So. 37 00:01:50,160 --> 00:01:53,280 Speaker 3: I have been working on what we call our energy 38 00:01:53,280 --> 00:01:57,320 Speaker 3: supply ratios, so both our energy supply investment ratio and 39 00:01:57,360 --> 00:02:00,240 Speaker 3: our energy supply bank financing ratio as well. 40 00:02:00,560 --> 00:02:02,840 Speaker 1: So what are these two ratios and what is the 41 00:02:02,840 --> 00:02:03,720 Speaker 1: difference between them? 42 00:02:03,880 --> 00:02:05,720 Speaker 2: Yeah, so both are actually quite important. 43 00:02:06,120 --> 00:02:09,320 Speaker 3: So our report analyzes both capital investment in what we 44 00:02:09,440 --> 00:02:11,840 Speaker 3: call the real economy, and this is really just kind 45 00:02:11,880 --> 00:02:14,600 Speaker 3: of a strange term that we tend to use in 46 00:02:14,639 --> 00:02:18,160 Speaker 3: the financial world to describe actual infrastructure spending and what 47 00:02:18,200 --> 00:02:21,800 Speaker 3: corporates in actual utilities or energy sector are spending. 48 00:02:22,040 --> 00:02:25,079 Speaker 1: So, wait, the world of finance doesn't consider themselves to 49 00:02:25,160 --> 00:02:27,480 Speaker 1: be part of the quote unquote real economy. 50 00:02:27,520 --> 00:02:28,839 Speaker 2: Isn't that hilarious? Yeah? Yeah. 51 00:02:28,840 --> 00:02:32,160 Speaker 3: It kind of separates financing and moving capital around and 52 00:02:32,200 --> 00:02:34,640 Speaker 3: moving money around from what's sort of going on on 53 00:02:34,680 --> 00:02:37,639 Speaker 3: the ground. So investment is what's being spent on infrastructure, 54 00:02:37,720 --> 00:02:40,920 Speaker 3: and financing is how are those corporates actually funding that 55 00:02:41,200 --> 00:02:41,520 Speaker 3: got it? 56 00:02:41,560 --> 00:02:44,040 Speaker 1: So the real economy is where money is actually going 57 00:02:44,120 --> 00:02:46,360 Speaker 1: into stuff in a way that is not just like 58 00:02:46,520 --> 00:02:49,600 Speaker 1: being shifted around between banks and financial institutions. It's like 59 00:02:49,760 --> 00:02:51,440 Speaker 1: now it's gone there and it's not coming back. 60 00:02:51,520 --> 00:02:52,359 Speaker 2: That's exactly right. 61 00:02:52,400 --> 00:02:54,760 Speaker 3: And they're closely linked because if you think about it, 62 00:02:54,840 --> 00:03:00,840 Speaker 3: those corporates are financial institutions clients, so closely mirrored somewhat separate. 63 00:03:01,400 --> 00:03:03,560 Speaker 3: So this report is our way of assessing how the 64 00:03:03,680 --> 00:03:07,040 Speaker 3: energy transition is playing out in the underlying economy and 65 00:03:07,160 --> 00:03:11,440 Speaker 3: also how financial institutions are facilitating the energy transition or 66 00:03:11,480 --> 00:03:14,280 Speaker 3: not so on both sides of the energy system, both 67 00:03:14,320 --> 00:03:17,200 Speaker 3: the low carbon or the clean and the dirty or 68 00:03:17,200 --> 00:03:20,120 Speaker 3: the fossil fuels. Previously, a few years ago, a lot 69 00:03:20,160 --> 00:03:21,880 Speaker 3: of the work that you would have seen on this topic, 70 00:03:22,000 --> 00:03:25,760 Speaker 3: particularly on the banking side, would have come from NGOs 71 00:03:25,880 --> 00:03:28,920 Speaker 3: so civil society, and it really focused heavily on fossil 72 00:03:28,960 --> 00:03:32,000 Speaker 3: fuel financing, so it kind of hammered those banks on 73 00:03:32,040 --> 00:03:34,960 Speaker 3: what they were still doing on the climate problem. And 74 00:03:35,080 --> 00:03:37,520 Speaker 3: this sort of ended up framing a lot of banks 75 00:03:37,640 --> 00:03:41,880 Speaker 3: role in climate as a shrinking problem, so cutting financed 76 00:03:41,920 --> 00:03:45,320 Speaker 3: emissions for example, and cutting their support for heavy emitters. 77 00:03:45,480 --> 00:03:49,640 Speaker 3: At BNF, we've long understood that addressing climate change is actually, 78 00:03:49,880 --> 00:03:52,560 Speaker 3: in large part a growth problem and a transition to 79 00:03:53,040 --> 00:03:56,960 Speaker 3: replace those sources of emissions with cleaner alternatives, So not 80 00:03:57,080 --> 00:04:00,120 Speaker 3: operating from the assumption that we're going to shrink and 81 00:04:00,200 --> 00:04:03,520 Speaker 3: really reduce energy demand, but actually meat energy demand with 82 00:04:03,560 --> 00:04:06,560 Speaker 3: cleaner sources. And so this energy transition, we view it 83 00:04:06,600 --> 00:04:10,240 Speaker 3: as a massive financing and investment opportunity. And what we've 84 00:04:10,280 --> 00:04:12,720 Speaker 3: really come to understand is, as we've really expended our 85 00:04:12,720 --> 00:04:15,560 Speaker 3: knowledge of the role of banks and financial institutions, is 86 00:04:15,600 --> 00:04:18,200 Speaker 3: that while they definitely are important, and they have sway, 87 00:04:18,440 --> 00:04:20,960 Speaker 3: and they definitely can be more strategic about this as well. 88 00:04:21,080 --> 00:04:24,320 Speaker 3: They largely tend to reflect the underlying conditions in the 89 00:04:24,320 --> 00:04:27,360 Speaker 3: economies in which they operate, so those companies that are 90 00:04:27,400 --> 00:04:30,120 Speaker 3: their clients and are coming to them to raise financing. 91 00:04:30,320 --> 00:04:33,640 Speaker 3: So when it comes to energy supply ratios, we're accounting 92 00:04:33,680 --> 00:04:36,159 Speaker 3: for both the phase down of the climate problem or 93 00:04:36,160 --> 00:04:39,200 Speaker 3: the fossil fuels, which is the denominator of both ratios, 94 00:04:39,240 --> 00:04:41,920 Speaker 3: but also very very key is the scaling and the 95 00:04:41,920 --> 00:04:43,400 Speaker 3: replacement of climate. 96 00:04:43,080 --> 00:04:44,520 Speaker 2: Solutions in the numerator. 97 00:04:44,600 --> 00:04:47,400 Speaker 3: So the low carbon energy sources is always kind of 98 00:04:47,400 --> 00:04:49,599 Speaker 3: the numerator, and we're putting that in the context of 99 00:04:49,720 --> 00:04:50,920 Speaker 3: continued fossil fuels. 100 00:04:51,040 --> 00:04:53,960 Speaker 1: So you mentioned enumerator and denominator, So I just want 101 00:04:54,000 --> 00:04:56,280 Speaker 1: to really spin it out to make sure I've understood 102 00:04:56,320 --> 00:05:00,159 Speaker 1: this correctly. Ultimately, you know, all these different considerations translate 103 00:05:00,200 --> 00:05:03,839 Speaker 1: themselves into a number, and that number is for a 104 00:05:03,880 --> 00:05:09,520 Speaker 1: particular institution how much it has invested into clean energy activities, 105 00:05:09,800 --> 00:05:14,039 Speaker 1: divided by how much it has invested into fossil fuel. 106 00:05:13,880 --> 00:05:19,000 Speaker 3: Activities, exactly, both for individual institutions and then also macro level. 107 00:05:19,040 --> 00:05:20,000 Speaker 2: So globally as well. 108 00:05:20,320 --> 00:05:24,160 Speaker 1: So then the ratio, the energy supply investment ratio and 109 00:05:24,279 --> 00:05:27,080 Speaker 1: the bank financing ratios. What's the difference between the two? 110 00:05:27,360 --> 00:05:30,720 Speaker 3: Investment ratios are what we track in terms of capital 111 00:05:30,720 --> 00:05:34,240 Speaker 3: expenditures on infrastructure, so think at BNF. This is very 112 00:05:34,240 --> 00:05:38,000 Speaker 3: similar to our energy transition investment trends. The bank financing 113 00:05:38,080 --> 00:05:41,320 Speaker 3: ratio is the total amount of capital being facilitated for 114 00:05:41,360 --> 00:05:44,760 Speaker 3: companies and infrastructure through banks. So that's the sum of 115 00:05:45,000 --> 00:05:49,360 Speaker 3: debt issuances so debt capital markets, bonds, loans, equity capital 116 00:05:49,400 --> 00:05:54,160 Speaker 3: markets so IPOs, and additional share issuances and also entails 117 00:05:54,240 --> 00:05:55,680 Speaker 3: project financing as well. 118 00:05:55,920 --> 00:05:58,640 Speaker 1: So the energy supply investment ratio am I right in 119 00:05:58,680 --> 00:06:01,920 Speaker 1: saying that is a sort of a macro indicator across 120 00:06:02,000 --> 00:06:03,919 Speaker 1: all institutions, whereas. 121 00:06:03,640 --> 00:06:04,360 Speaker 4: The banking one. 122 00:06:04,440 --> 00:06:06,839 Speaker 1: I mean, you could have an average across the entire sector, 123 00:06:06,960 --> 00:06:08,360 Speaker 1: but you also have it applied. 124 00:06:08,080 --> 00:06:09,560 Speaker 4: To individual institutions, correct. 125 00:06:09,640 --> 00:06:11,960 Speaker 1: And it makes sense actually because going back to what 126 00:06:11,960 --> 00:06:13,880 Speaker 1: you're saying is if we were taking the approach of 127 00:06:14,160 --> 00:06:16,400 Speaker 1: you know, let's call out all the banks by the 128 00:06:16,440 --> 00:06:18,800 Speaker 1: amount of fossil fuel financing that they're doing, and then 129 00:06:18,839 --> 00:06:22,159 Speaker 1: that's also congratulate banks by the amount of clean energy 130 00:06:22,200 --> 00:06:24,240 Speaker 1: funding they're doing. What you'd find at the top, near 131 00:06:24,279 --> 00:06:26,720 Speaker 1: the top of the both lists would just be the biggest. 132 00:06:26,400 --> 00:06:29,240 Speaker 2: Institutions exactly, so like the best. 133 00:06:29,080 --> 00:06:30,880 Speaker 4: And the worst, if you want to look at it. 134 00:06:30,800 --> 00:06:33,560 Speaker 3: Like that, exactly, we're putting those numbers into context. And 135 00:06:33,600 --> 00:06:37,320 Speaker 3: that's actually what's happening is that on the one hand, externally, 136 00:06:37,360 --> 00:06:39,440 Speaker 3: a lot of banks are sort of getting hit on 137 00:06:39,480 --> 00:06:42,520 Speaker 3: their fossil fuel numbers, which by an absolute volume perspective, 138 00:06:42,680 --> 00:06:44,840 Speaker 3: some of the largest banks and those that operate in 139 00:06:44,920 --> 00:06:48,080 Speaker 3: like oil and gas exporting markets end up looking the worst. 140 00:06:48,240 --> 00:06:51,760 Speaker 3: But also internally, from the bank's perspective, they've been putting 141 00:06:51,760 --> 00:06:54,600 Speaker 3: out these sort of ambitious climate financing targets on the 142 00:06:54,640 --> 00:06:57,479 Speaker 3: low carbon side. But equally, it's difficult to put those 143 00:06:57,560 --> 00:07:00,640 Speaker 3: numbers into context because if you've got XYZ Bank saying 144 00:07:00,640 --> 00:07:03,719 Speaker 3: we're going to put one trillion dollars towards sustainable finance, 145 00:07:03,800 --> 00:07:06,480 Speaker 3: it's really hard to know if that's actually meaningful compared 146 00:07:06,480 --> 00:07:08,279 Speaker 3: to what they're doing on the fossil fuel side. So 147 00:07:08,320 --> 00:07:12,160 Speaker 3: the ratio helps us compare across banks regardless of their size. 148 00:07:11,840 --> 00:07:13,840 Speaker 1: And the thing I love about it is that one 149 00:07:13,920 --> 00:07:16,160 Speaker 1: day there's going to be a bank that gets a 150 00:07:16,240 --> 00:07:18,560 Speaker 1: ratio of infinity, and. 151 00:07:18,680 --> 00:07:19,520 Speaker 2: There actually are some. 152 00:07:19,880 --> 00:07:22,640 Speaker 3: There are there are a few banks, particularly development banks, 153 00:07:22,640 --> 00:07:23,760 Speaker 3: that have no fossil fuels. 154 00:07:23,960 --> 00:07:26,320 Speaker 1: Okay, oh well we can hear about who's that infinity. 155 00:07:26,520 --> 00:07:28,320 Speaker 1: That must be a pretty they must be pretty happy 156 00:07:28,360 --> 00:07:32,960 Speaker 1: about that. So obviously infinity if from an energy transition perspective, 157 00:07:33,320 --> 00:07:36,360 Speaker 1: from a environmental perspective, infinity is the ideal. I'm assuming 158 00:07:36,440 --> 00:07:40,080 Speaker 1: that not everyone can be at infinity. So what does 159 00:07:40,120 --> 00:07:42,960 Speaker 1: good look like? You know, what does the ratio across 160 00:07:43,000 --> 00:07:45,800 Speaker 1: the whole economy need to look like? And where are 161 00:07:45,800 --> 00:07:46,480 Speaker 1: we right now? 162 00:07:46,560 --> 00:07:50,000 Speaker 3: So actually, interestingly, we're not looking for infinity. We are 163 00:07:50,040 --> 00:07:53,680 Speaker 3: actually putting this in grounded in climate scenario analysis, which 164 00:07:53,760 --> 00:07:56,520 Speaker 3: is not necessarily say that in the near term fossil 165 00:07:56,520 --> 00:07:58,600 Speaker 3: fuel investment needs to go to zero, it needs to 166 00:07:58,680 --> 00:08:02,120 Speaker 3: approach zero. In reality, there will be some lingering fossil 167 00:08:02,120 --> 00:08:04,440 Speaker 3: fuel investment for the things that are very very difficult 168 00:08:04,440 --> 00:08:07,200 Speaker 3: to decarbonize. But in fact, when we look at seven 169 00:08:07,240 --> 00:08:10,840 Speaker 3: of the most commonly cited one point five degree consistent scenarios, 170 00:08:10,880 --> 00:08:13,840 Speaker 3: So these are put together by organizations like the IBCC 171 00:08:14,240 --> 00:08:17,400 Speaker 3: or the IA or the network for greening the financial system. 172 00:08:17,520 --> 00:08:20,520 Speaker 3: These scenarios, which are all consistent with limiting warming to 173 00:08:20,560 --> 00:08:23,600 Speaker 3: one point five, but they take into account very different assumptions, 174 00:08:23,960 --> 00:08:27,720 Speaker 3: so about the level of investment required, the energy demand, 175 00:08:27,920 --> 00:08:30,840 Speaker 3: the price of renewables, et cetera. They sort of on 176 00:08:31,120 --> 00:08:34,760 Speaker 3: average tend to converge in terms of the energy supply 177 00:08:34,880 --> 00:08:38,360 Speaker 3: ratio that is consistent with these scenarios this decade at 178 00:08:38,400 --> 00:08:40,920 Speaker 3: four to one, so four times as much low carbon 179 00:08:41,000 --> 00:08:44,560 Speaker 3: investment as fossil fuels to be consistent with decarbonizing in 180 00:08:44,600 --> 00:08:47,120 Speaker 3: line with one point five degrees. That increases over time 181 00:08:47,160 --> 00:08:49,679 Speaker 3: as fossil fuels shrenth so six to one in the 182 00:08:49,720 --> 00:08:52,280 Speaker 3: twenty thirties and ten to one in the twenty forties. 183 00:08:52,600 --> 00:08:54,880 Speaker 3: And that of course is an average, So there's quite 184 00:08:54,880 --> 00:08:57,920 Speaker 3: a range by which scenario you tend to take as 185 00:08:57,960 --> 00:08:58,600 Speaker 3: most realistic. 186 00:08:58,679 --> 00:09:01,720 Speaker 1: Got it okay, but one this decade that seems like 187 00:09:02,080 --> 00:09:05,240 Speaker 1: a not crazy number. So given that we've got that 188 00:09:05,480 --> 00:09:08,040 Speaker 1: as our north star, four to one is. 189 00:09:08,480 --> 00:09:11,040 Speaker 4: Where ideally we would be, where are we actually? 190 00:09:11,440 --> 00:09:14,000 Speaker 3: We've seen quite a bit of movement in this energy 191 00:09:14,040 --> 00:09:18,199 Speaker 3: supply investment ratio globally, particularly over the past ten years. 192 00:09:18,280 --> 00:09:21,320 Speaker 3: We've seen the ratio double, so from just under half 193 00:09:21,360 --> 00:09:23,959 Speaker 3: as much low carbon investment as fossil fuels in the 194 00:09:24,000 --> 00:09:27,800 Speaker 3: late twenty tens to actually reaching more clean investment than 195 00:09:27,920 --> 00:09:30,680 Speaker 3: fossil fuels for the very first time in twenty twenty three. 196 00:09:30,800 --> 00:09:33,280 Speaker 3: So the ratio is about one point one point one 197 00:09:33,280 --> 00:09:35,000 Speaker 3: times as much low carbon. 198 00:09:34,720 --> 00:09:35,720 Speaker 2: As fossil fuels. 199 00:09:35,920 --> 00:09:37,960 Speaker 3: When we chatted last year, we looked at the twenty 200 00:09:38,000 --> 00:09:41,040 Speaker 3: twenty two ratio and had just reached parity at one 201 00:09:41,080 --> 00:09:42,920 Speaker 3: to one for the first time. So it's great that 202 00:09:42,920 --> 00:09:45,160 Speaker 3: we're seeing this continue to move in the right direction. 203 00:09:45,360 --> 00:09:48,199 Speaker 3: But if we remember that sort of north star or 204 00:09:48,320 --> 00:09:51,720 Speaker 3: one point five degree consistent benchmark, that's an average of 205 00:09:51,840 --> 00:09:55,160 Speaker 3: four times as much low carbon this decade, and we're now, 206 00:09:55,240 --> 00:09:57,960 Speaker 3: of course already in twenty twenty five. If we just 207 00:09:58,040 --> 00:10:02,280 Speaker 3: assumed a really simple linear trajectory, we would need an 208 00:10:02,320 --> 00:10:04,439 Speaker 3: average of eight to one by twenty. 209 00:10:04,160 --> 00:10:06,320 Speaker 2: Thirty, or a minimum of four to. 210 00:10:06,240 --> 00:10:08,400 Speaker 3: One by the end of the decade, so at least 211 00:10:08,520 --> 00:10:11,640 Speaker 3: quadrupling in just a few years, and every year of 212 00:10:11,679 --> 00:10:15,679 Speaker 3: course that goes by without seeing significant growth in this metric. Intuitively, 213 00:10:15,760 --> 00:10:18,040 Speaker 3: the more steep the trajectory would need to be in 214 00:10:18,160 --> 00:10:19,360 Speaker 3: order to get us on track. 215 00:10:19,640 --> 00:10:21,920 Speaker 1: This is so interesting because it's like, this is a 216 00:10:22,040 --> 00:10:24,960 Speaker 1: narrative that I think is the narrative right now in 217 00:10:25,000 --> 00:10:29,280 Speaker 1: the energy transition is that everything is getting better, Opportunities 218 00:10:29,280 --> 00:10:32,320 Speaker 1: are growing, the industries behind the energy transition are all 219 00:10:32,360 --> 00:10:35,640 Speaker 1: expanding at you know, really remarkable rates, but there's still 220 00:10:35,640 --> 00:10:38,560 Speaker 1: a big gap to goal. It's like, from an environmental perspective, 221 00:10:38,640 --> 00:10:40,400 Speaker 1: it's not nearly enough. 222 00:10:40,600 --> 00:10:44,960 Speaker 3: Right, and some might start to feel like that's becoming 223 00:10:45,040 --> 00:10:48,240 Speaker 3: less and less achievable each year that goes by. We're 224 00:10:48,240 --> 00:10:51,640 Speaker 3: actually starting to hear as we discuss this with a 225 00:10:51,679 --> 00:10:54,560 Speaker 3: lot of different stakeholders and in particular banks, we begin 226 00:10:54,600 --> 00:10:58,439 Speaker 3: to hear rumblings of one point five degrees being perhaps 227 00:10:58,720 --> 00:11:01,840 Speaker 3: a little bit too ambitious and not necessarily credible. And 228 00:11:01,920 --> 00:11:05,520 Speaker 3: so this then becomes a discussion of of balancing ambition, 229 00:11:05,880 --> 00:11:08,480 Speaker 3: because clearly we know the consequences of climate change are 230 00:11:08,480 --> 00:11:13,200 Speaker 3: extremely severe, but balancing that with achievability and realisticness. So 231 00:11:13,280 --> 00:11:16,880 Speaker 3: actually translating this to something that's practical for institutions, and 232 00:11:16,920 --> 00:11:20,960 Speaker 3: so this framework is scenario neutral, and when we think 233 00:11:20,960 --> 00:11:24,160 Speaker 3: about a quote unquote nor star, we really can substitute 234 00:11:24,200 --> 00:11:27,240 Speaker 3: what we might think is believable. So, just as an example, 235 00:11:27,440 --> 00:11:30,320 Speaker 3: at BNF, our new Energy Outlook modeling and our net 236 00:11:30,400 --> 00:11:33,240 Speaker 3: zero scenario could only really credibly get to about one 237 00:11:33,240 --> 00:11:36,199 Speaker 3: point seventy five degrees given what we know about projects 238 00:11:36,200 --> 00:11:39,160 Speaker 3: in the pipeline and cost curves for various technologies. And 239 00:11:39,200 --> 00:11:41,760 Speaker 3: if we were to use that BNF net zero scenario 240 00:11:42,400 --> 00:11:44,880 Speaker 3: instead of the ones that I just cited, the comparable 241 00:11:44,960 --> 00:11:47,160 Speaker 3: ratio would be an average of three to one for 242 00:11:47,280 --> 00:11:49,959 Speaker 3: the remainder of the decade. So depending on the kind 243 00:11:50,000 --> 00:11:52,520 Speaker 3: of world in which you believe in, you can substitute 244 00:11:52,559 --> 00:11:55,200 Speaker 3: in a scenario that you think best matches your view 245 00:11:55,200 --> 00:11:55,680 Speaker 3: of the world. 246 00:11:56,000 --> 00:11:56,800 Speaker 4: Yeah, and I suppose. 247 00:11:56,840 --> 00:12:01,160 Speaker 1: I mean, obviously, this ratio is a metric which we invented, 248 00:12:01,440 --> 00:12:04,280 Speaker 1: so I don't want to sort of overly weight this point. 249 00:12:04,320 --> 00:12:06,760 Speaker 1: But there's two ways it can change. One is more 250 00:12:06,760 --> 00:12:09,840 Speaker 1: investment into the energy transition, which is really kind of 251 00:12:09,880 --> 00:12:12,680 Speaker 1: getting a lot more money flowing. And then there's the 252 00:12:12,760 --> 00:12:16,960 Speaker 1: denominator shrinking a bit less investment in fossil fuels, and 253 00:12:16,960 --> 00:12:20,760 Speaker 1: that ratio shoots right up yep. So it's not like 254 00:12:21,160 --> 00:12:24,360 Speaker 1: it's getting from one point one one to three. I 255 00:12:24,360 --> 00:12:26,720 Speaker 1: could see it happening in a way because there's two 256 00:12:26,800 --> 00:12:28,720 Speaker 1: things that can change to make it happen that can 257 00:12:28,760 --> 00:12:29,600 Speaker 1: be complementary. 258 00:12:29,840 --> 00:12:30,720 Speaker 2: That's exactly right. 259 00:12:30,720 --> 00:12:33,880 Speaker 3: And even within those two things, there's so many things 260 00:12:33,920 --> 00:12:36,960 Speaker 3: that can happen with individual technologies. And one thing that's 261 00:12:37,040 --> 00:12:39,439 Speaker 3: really important to remember is that the ratio is an 262 00:12:39,480 --> 00:12:44,000 Speaker 3: interesting tool and it helps us standardize and compare across institutions, 263 00:12:44,000 --> 00:12:47,600 Speaker 3: but the actual volume of that numerator and denominator do matter. 264 00:12:47,800 --> 00:12:49,599 Speaker 3: And what we really find when we look at the 265 00:12:49,640 --> 00:12:53,280 Speaker 3: actual volumes is that actually limiting warming and being consistent 266 00:12:53,320 --> 00:12:57,439 Speaker 3: with these scenarios. It hinges really critically on scaling clean 267 00:12:57,520 --> 00:13:02,160 Speaker 3: energy extremely rapidly in order to stateably enable the phase. 268 00:13:01,880 --> 00:13:02,880 Speaker 2: Out of fossil fuels. 269 00:13:02,920 --> 00:13:06,040 Speaker 3: So if we're just divesting from fossil fuels and or 270 00:13:06,080 --> 00:13:09,760 Speaker 3: withdrawing financing from fossil fuels, but we're not scaling that replacement, 271 00:13:09,800 --> 00:13:12,680 Speaker 3: we end up in a really severe energy security issue. 272 00:13:12,720 --> 00:13:15,440 Speaker 3: And so actually in the short term, it really is 273 00:13:15,520 --> 00:13:19,360 Speaker 3: scaling that numerator in order to overtime phase down that 274 00:13:19,440 --> 00:13:21,520 Speaker 3: denominator that really gets us where we need to be. 275 00:13:21,640 --> 00:13:25,560 Speaker 1: So let's talk about banks, you know, because to use 276 00:13:25,600 --> 00:13:27,800 Speaker 1: the terminology that we've established we've been talking about the 277 00:13:27,800 --> 00:13:30,360 Speaker 1: real economy. So far, we're one point one one in 278 00:13:30,440 --> 00:13:33,760 Speaker 1: the real economy in twenty twenty three versus four or three, 279 00:13:34,040 --> 00:13:35,840 Speaker 1: depending on how ambitious we want to be. 280 00:13:36,040 --> 00:13:38,040 Speaker 4: But how do they fit into all of this? 281 00:13:38,440 --> 00:13:38,680 Speaker 2: Yeah? 282 00:13:38,720 --> 00:13:42,280 Speaker 3: Great, We really have barely mentioned banks so far, and 283 00:13:42,360 --> 00:13:44,960 Speaker 3: so what we wanted to do after we developed this 284 00:13:45,040 --> 00:13:47,480 Speaker 3: kind of energy supply investment ratio is to take this 285 00:13:47,600 --> 00:13:50,880 Speaker 3: concept and then apply it to financial institutions. So really 286 00:13:50,920 --> 00:13:53,960 Speaker 3: we wanted a better metric than just shrinking our way 287 00:13:53,960 --> 00:13:57,079 Speaker 3: through financed emissions or net zero targets, to actually look 288 00:13:57,080 --> 00:13:59,840 Speaker 3: at the role that banks play and enabling and capital 289 00:14:00,240 --> 00:14:02,320 Speaker 3: on the transition, So really thinking in the way that 290 00:14:02,400 --> 00:14:05,560 Speaker 3: banks think, which is through growth, right and opportunity. And 291 00:14:05,640 --> 00:14:08,600 Speaker 3: so first we looked at banks through the energy supplied 292 00:14:08,600 --> 00:14:09,360 Speaker 3: banking ratio. 293 00:14:09,760 --> 00:14:11,880 Speaker 2: I say first because. 294 00:14:11,679 --> 00:14:13,560 Speaker 3: We've always envisioned this as a way to look at 295 00:14:13,600 --> 00:14:16,880 Speaker 3: different types of financial institutions, and we are also actively 296 00:14:16,880 --> 00:14:19,920 Speaker 3: working on asset managers and funds, but for now let's 297 00:14:19,920 --> 00:14:22,560 Speaker 3: really focus in on banks. And so for banks, that 298 00:14:22,720 --> 00:14:25,400 Speaker 3: ratio is comprised of the capital that they're facilitating for 299 00:14:25,560 --> 00:14:29,720 Speaker 3: energy sector companies and infrastructure primarily through debt, so mostly 300 00:14:29,720 --> 00:14:32,920 Speaker 3: through bonds and loans, to smaller extent through IBOs and 301 00:14:32,960 --> 00:14:36,440 Speaker 3: equity issuance, project finance and tax equity here in the US, 302 00:14:36,800 --> 00:14:39,920 Speaker 3: so low carbon financing relative to the finance that these 303 00:14:39,920 --> 00:14:42,240 Speaker 3: banks are facilitating for fossil fuels. 304 00:14:42,720 --> 00:14:46,080 Speaker 1: So overall, the energy supplied banking ratios that moving in 305 00:14:46,120 --> 00:14:46,840 Speaker 1: the wrong direction. 306 00:14:47,160 --> 00:14:49,240 Speaker 3: We actually saw it move in the right direction in 307 00:14:49,280 --> 00:14:52,080 Speaker 3: twenty twenty three. So in twenty twenty two we were 308 00:14:52,080 --> 00:14:54,960 Speaker 3: at about zero point seven four to one. In twenty 309 00:14:54,960 --> 00:14:57,440 Speaker 3: twenty three we're at zero point eight nine to one. 310 00:14:57,640 --> 00:15:00,560 Speaker 3: So for every dollar that was facilitated for fossil fuel 311 00:15:00,600 --> 00:15:04,200 Speaker 3: companies and projects, banks enabled about eighty nine cents for 312 00:15:04,440 --> 00:15:05,600 Speaker 3: low carbon solutions. 313 00:15:05,720 --> 00:15:07,440 Speaker 2: It's important to note, though. 314 00:15:07,280 --> 00:15:09,600 Speaker 3: Because we just touched on, you know, that volume of 315 00:15:09,600 --> 00:15:12,640 Speaker 3: the numertor versus the denominator, the increase in the banking 316 00:15:12,760 --> 00:15:15,960 Speaker 3: ratio actually came not from a dramatic increase in low 317 00:15:15,960 --> 00:15:19,120 Speaker 3: carbon financing, which actually fell about just one percent, but 318 00:15:19,280 --> 00:15:22,880 Speaker 3: instead by a drop in fossil fuel financing, so about 319 00:15:22,880 --> 00:15:25,400 Speaker 3: an eighteen percent drop that we measured, and that's kind 320 00:15:25,400 --> 00:15:27,800 Speaker 3: of the opposite of what we're saying needs to happen 321 00:15:27,920 --> 00:15:31,120 Speaker 3: in order to scale climate solutions really rapidly in the 322 00:15:31,120 --> 00:15:34,240 Speaker 3: short term, and to put some numbers around this. In total, 323 00:15:34,280 --> 00:15:37,040 Speaker 3: in twenty twenty three, banks underwrote about one point six 324 00:15:37,120 --> 00:15:40,360 Speaker 3: trillion of energy supply activity, and that broke down in 325 00:15:40,520 --> 00:15:43,160 Speaker 3: seven hundred and seventy six billion for low carbon and 326 00:15:43,200 --> 00:15:45,680 Speaker 3: about eight hundred and seventy billion for fossil fuels. 327 00:15:45,760 --> 00:15:48,840 Speaker 4: I'm slightly curious because obviously it's great. 328 00:15:48,640 --> 00:15:51,320 Speaker 1: That it increased in twenty twenty three, but we know 329 00:15:51,400 --> 00:15:54,120 Speaker 1: that the ratio in the real economy was one point 330 00:15:54,200 --> 00:15:57,320 Speaker 1: one one, So there has to be money coming from 331 00:15:57,360 --> 00:16:01,040 Speaker 1: somewhere else that is at a much higher ratio. So 332 00:16:01,080 --> 00:16:04,680 Speaker 1: where is this sort of higher ratio finance coming from. 333 00:16:04,960 --> 00:16:07,760 Speaker 3: Yeah, that's a really great point, and we spend quite 334 00:16:07,800 --> 00:16:10,360 Speaker 3: a bit of time as a team, and then portions 335 00:16:10,360 --> 00:16:14,760 Speaker 3: of the report discussing the difference between capital investment and 336 00:16:14,840 --> 00:16:18,960 Speaker 3: bank financing. So broadly speaking, banks tend to mirror trends 337 00:16:19,080 --> 00:16:20,360 Speaker 3: in the underlying economy. 338 00:16:20,480 --> 00:16:22,000 Speaker 2: Again that's their client base. 339 00:16:22,120 --> 00:16:25,040 Speaker 3: But as we might expect, these are actually different measures, 340 00:16:25,080 --> 00:16:28,040 Speaker 3: and there's a few factors that differentiate bank financing from 341 00:16:28,080 --> 00:16:30,480 Speaker 3: real investment, and it can get a little bit confusing, 342 00:16:30,480 --> 00:16:31,680 Speaker 3: So maybe let's break it down. 343 00:16:31,960 --> 00:16:35,160 Speaker 2: One huge factor is interest rates. 344 00:16:35,240 --> 00:16:37,600 Speaker 3: So of course interest rates is a very direct input 345 00:16:37,760 --> 00:16:41,040 Speaker 3: into whether or not companies are looking to raise financing, 346 00:16:41,080 --> 00:16:43,680 Speaker 3: whether or not it's more expensive or more costly to borrow. 347 00:16:43,880 --> 00:16:47,040 Speaker 3: So you'll recall that interest rates rose really steeply around 348 00:16:47,040 --> 00:16:49,280 Speaker 3: the world in twenty twenty two as we addressed post 349 00:16:49,360 --> 00:16:52,600 Speaker 3: pandemic inflation. Those stabilized quite a bit in twenty twenty three, 350 00:16:52,680 --> 00:16:55,960 Speaker 3: but remained very high. At the same time that borrowing 351 00:16:56,040 --> 00:16:59,600 Speaker 3: costs remained high, we also had really high energy prices, 352 00:17:00,120 --> 00:17:03,880 Speaker 3: continued record cash flows, particularly for oil and gas companies, 353 00:17:04,000 --> 00:17:06,359 Speaker 3: and so we saw oil and gas companies continue to 354 00:17:06,400 --> 00:17:08,920 Speaker 3: pay down their debts and reduce the amount of financing 355 00:17:08,920 --> 00:17:11,720 Speaker 3: that they were raising. But that doesn't mean that both 356 00:17:11,760 --> 00:17:15,280 Speaker 3: fossil fuel companies and low carbon companies stopped spending money 357 00:17:15,359 --> 00:17:18,399 Speaker 3: stopped investing. It can come from their balance sheets or 358 00:17:18,400 --> 00:17:21,240 Speaker 3: their cash flows and their own books, as opposed to 359 00:17:22,080 --> 00:17:24,520 Speaker 3: raising financing through the capital markets. 360 00:17:24,720 --> 00:17:26,520 Speaker 1: So wait, let me just just clariff make sure I've 361 00:17:26,560 --> 00:17:30,320 Speaker 1: understood this correctly. So what you're saying is the organizations themselves. 362 00:17:30,600 --> 00:17:33,360 Speaker 1: If you are a clean energy supplier of some sort 363 00:17:33,640 --> 00:17:36,359 Speaker 1: you were probably you know, across the whole economy investing 364 00:17:36,520 --> 00:17:39,639 Speaker 1: at a higher rate than your counterparts in the fossil world, 365 00:17:39,760 --> 00:17:44,280 Speaker 1: like the companies themselves, like fossil fuel, if you're an 366 00:17:44,280 --> 00:17:47,080 Speaker 1: oil and gas expiration company in twenty twenty three, you 367 00:17:47,119 --> 00:17:49,639 Speaker 1: were investing less than maybe you usually do. Not just 368 00:17:49,680 --> 00:17:52,040 Speaker 1: banks for investing lessons your sex, but you yourself were 369 00:17:52,040 --> 00:17:53,000 Speaker 1: holding back more. 370 00:17:53,680 --> 00:17:57,159 Speaker 3: Actually, I think I would say it's the opposite on 371 00:17:57,240 --> 00:17:59,800 Speaker 3: both the low carbon and the fossil fuel sides these 372 00:18:00,080 --> 00:18:02,480 Speaker 3: but he's had really high cash flows, which means that 373 00:18:02,640 --> 00:18:06,600 Speaker 3: they're not necessarily scaling back their investment. They're spending, but 374 00:18:06,920 --> 00:18:10,520 Speaker 3: they're spending from their own financing, from their own balance sheet, 375 00:18:10,520 --> 00:18:12,960 Speaker 3: as opposed to raising a bond or taking out a 376 00:18:13,000 --> 00:18:14,520 Speaker 3: loan in order to spend capital. 377 00:18:14,560 --> 00:18:16,200 Speaker 2: Does that make sense, Yeah, it makes sense. 378 00:18:16,400 --> 00:18:17,879 Speaker 1: I guess it kind of comes back to the question 379 00:18:17,960 --> 00:18:21,040 Speaker 1: of there must have been some segment that was investing 380 00:18:21,119 --> 00:18:24,320 Speaker 1: at a higher ratio than the banks, because if we've 381 00:18:24,320 --> 00:18:26,919 Speaker 1: got one point one one across the entire economy and 382 00:18:27,000 --> 00:18:30,560 Speaker 1: banks are at a zero point eight something, so someone 383 00:18:30,560 --> 00:18:32,399 Speaker 1: else has must have been at like, I don't know, 384 00:18:32,440 --> 00:18:33,720 Speaker 1: one point five, you know. 385 00:18:33,800 --> 00:18:37,080 Speaker 3: Yeah, there's other actors that contribute to the energy supply 386 00:18:37,119 --> 00:18:37,960 Speaker 3: investment ratio. 387 00:18:38,080 --> 00:18:39,200 Speaker 2: So this is a good point. 388 00:18:39,320 --> 00:18:43,120 Speaker 3: In addition to just energy sector companies spending money, we've 389 00:18:43,160 --> 00:18:47,640 Speaker 3: also got households and consumers, and so another important factor 390 00:18:47,720 --> 00:18:50,760 Speaker 3: in the investment number is small scale solar. Small scale 391 00:18:50,760 --> 00:18:53,919 Speaker 3: solar grew sixty six percent between twenty twenty two and 392 00:18:53,960 --> 00:18:56,480 Speaker 3: twenty twenty three and is also growing as a share 393 00:18:56,520 --> 00:18:59,400 Speaker 3: of the total low carbon investment. Small scale solar tends 394 00:18:59,440 --> 00:19:03,119 Speaker 3: to be financed either by households or if banks are involved, 395 00:19:03,359 --> 00:19:07,320 Speaker 3: typically through their retail arms, so through their consumer lending arms, 396 00:19:07,359 --> 00:19:09,520 Speaker 3: and that's not what we're tracking here, So we have 397 00:19:09,600 --> 00:19:13,800 Speaker 3: very little visibility into what's going on between households and banks, 398 00:19:13,800 --> 00:19:17,200 Speaker 3: and we're really looking at corporate financing and investment banking, 399 00:19:17,359 --> 00:19:19,880 Speaker 3: and so we do miss quite a bit of what's 400 00:19:19,880 --> 00:19:22,800 Speaker 3: really important on the low carbon side of investment. One 401 00:19:22,840 --> 00:19:26,119 Speaker 3: other important factor in terms of the decrease that we 402 00:19:26,240 --> 00:19:29,840 Speaker 3: measured in fossil fuel financing is actually what we think 403 00:19:30,080 --> 00:19:33,800 Speaker 3: is a measurement problem as opposed to what's actually going on, 404 00:19:33,960 --> 00:19:37,600 Speaker 3: and that's in China. So China saw a huge decrease 405 00:19:37,600 --> 00:19:40,000 Speaker 3: of about one hundred and sixty billion dollars of fossil 406 00:19:40,000 --> 00:19:42,760 Speaker 3: fuel financing between twenty two and twenty three, and we 407 00:19:42,840 --> 00:19:46,080 Speaker 3: think that this measurement is quite a bit larger than 408 00:19:46,119 --> 00:19:50,119 Speaker 3: what actually occurred. And the reason behind that is in China, 409 00:19:50,400 --> 00:19:53,919 Speaker 3: we saw a lot of large utility, power generation and 410 00:19:53,960 --> 00:19:58,280 Speaker 3: oil and gas companies shift their financing away from bonds 411 00:19:58,520 --> 00:20:01,800 Speaker 3: and toward loans in twenty twenty three. And the reason 412 00:20:01,800 --> 00:20:05,640 Speaker 3: why that flows through to missing data on our end 413 00:20:05,960 --> 00:20:09,480 Speaker 3: is that private bilateral loans, just a loan between a 414 00:20:09,520 --> 00:20:12,480 Speaker 3: company and a bank, is very very opaque, so that 415 00:20:12,600 --> 00:20:13,560 Speaker 3: is not disclosed. 416 00:20:13,600 --> 00:20:15,440 Speaker 4: We have no visibility on that exactly. 417 00:20:15,520 --> 00:20:18,200 Speaker 2: So we are missing quite a bit of financing in China. 418 00:20:18,080 --> 00:20:18,399 Speaker 4: Got it. 419 00:20:18,480 --> 00:20:21,320 Speaker 1: So China maybe sort of skews the numbers a bit, 420 00:20:21,520 --> 00:20:25,280 Speaker 1: But how does all of this breakdown some geographically elsewhere? 421 00:20:25,560 --> 00:20:29,240 Speaker 3: So finance volumes fell slightly in most regions, but a 422 00:20:29,320 --> 00:20:32,840 Speaker 3: few saw an increase in the ratio. So in North 423 00:20:32,880 --> 00:20:37,800 Speaker 3: America financing remains somewhat level, dropped slightly and also remains 424 00:20:37,920 --> 00:20:40,440 Speaker 3: the largest region in terms of volume, with about six 425 00:20:40,520 --> 00:20:42,960 Speaker 3: hundred and eighty two billion in twenty twenty three total. 426 00:20:43,040 --> 00:20:45,680 Speaker 3: And that really reflects the role that the US, Canada 427 00:20:45,720 --> 00:20:48,399 Speaker 3: and Mexico continue to play in an oil and gas supply, 428 00:20:48,560 --> 00:20:51,159 Speaker 3: so a ratio of zero point five or half as 429 00:20:51,240 --> 00:20:54,400 Speaker 3: much low carbon as fossil fuels. In North America. Europe 430 00:20:54,520 --> 00:20:57,280 Speaker 3: leads by far in terms of ratio. We did see 431 00:20:57,280 --> 00:20:59,480 Speaker 3: a slight drop in the ratio in twenty twenty three, 432 00:20:59,600 --> 00:21:03,919 Speaker 3: but still Europe is financing low carbon in a ratio 433 00:21:03,960 --> 00:21:06,520 Speaker 3: of two times as much as fossil fuels, and that 434 00:21:06,560 --> 00:21:09,960 Speaker 3: really reflects, you know, a long time legacy policy environment 435 00:21:10,040 --> 00:21:13,159 Speaker 3: that's favorable for renewables. And also Europe is not a 436 00:21:13,160 --> 00:21:16,720 Speaker 3: major oil and gas exporterer outside of China. In APAC 437 00:21:16,960 --> 00:21:19,920 Speaker 3: we actually saw the ratio increase from zero point eight 438 00:21:19,960 --> 00:21:22,760 Speaker 3: to one to one. So parody and flight increases as 439 00:21:22,800 --> 00:21:25,280 Speaker 3: well throughout Africa and the Middle East and latt Am, 440 00:21:25,359 --> 00:21:28,720 Speaker 3: but much smaller portions of overall global financing. 441 00:21:29,119 --> 00:21:31,800 Speaker 1: So one of the things I noticed, you know, as 442 00:21:31,840 --> 00:21:34,000 Speaker 1: someone who's been at BNF for a while, apart from 443 00:21:34,040 --> 00:21:36,919 Speaker 1: thinking about the energy transition, we think, we fixate on 444 00:21:36,960 --> 00:21:39,480 Speaker 1: all sorts of random little things like how we format 445 00:21:39,560 --> 00:21:40,920 Speaker 1: stuff and the way we. 446 00:21:40,840 --> 00:21:41,840 Speaker 4: Title our documents. 447 00:21:41,960 --> 00:21:43,520 Speaker 1: One thing that was kind of interesting to me about 448 00:21:43,560 --> 00:21:46,480 Speaker 1: this is you didn't call it the twenty twenty five 449 00:21:46,560 --> 00:21:49,720 Speaker 1: Annual EsBr or of twenty twenty three or twenty twenty 450 00:21:49,720 --> 00:21:52,000 Speaker 1: eighty four, depending on whether we call it by when 451 00:21:52,000 --> 00:21:54,200 Speaker 1: it's published or when the data relates to you called 452 00:21:54,240 --> 00:21:58,040 Speaker 1: it the third Annual EsBr, kind of like the ninety 453 00:21:58,080 --> 00:22:01,200 Speaker 1: sixth Academy Awards or something like that. You know, there's 454 00:22:01,200 --> 00:22:03,520 Speaker 1: a real sort of I don't know whether you're consciously 455 00:22:03,560 --> 00:22:05,879 Speaker 1: you're trying to create this grandeur. And I always thinking like, 456 00:22:05,880 --> 00:22:09,440 Speaker 1: maybe this is like the oscars, but for banks investing 457 00:22:09,680 --> 00:22:11,359 Speaker 1: in in the. 458 00:22:11,400 --> 00:22:12,760 Speaker 2: Energy to expose us too. 459 00:22:12,840 --> 00:22:16,400 Speaker 1: Watch because some people come out on top in these 460 00:22:16,480 --> 00:22:18,280 Speaker 1: ratios and some people not so much. 461 00:22:18,440 --> 00:22:22,760 Speaker 4: And I say people, I mean banks. So the big 462 00:22:22,840 --> 00:22:26,240 Speaker 4: question is who's winning here? Who's got the best ratios? 463 00:22:26,280 --> 00:22:30,359 Speaker 1: Apart from the development banks that are sitting at infinity, 464 00:22:29,560 --> 00:22:33,840 Speaker 1: they have like they're they're untouchable. But among the mortals, 465 00:22:34,040 --> 00:22:34,920 Speaker 1: who is doing well? 466 00:22:35,200 --> 00:22:39,320 Speaker 3: So as researchers, we don't take a huge stand side, 467 00:22:39,720 --> 00:22:42,399 Speaker 3: you know who we would consider it to be winners 468 00:22:42,600 --> 00:22:45,560 Speaker 3: or losers, but we do provide some rankings in order 469 00:22:45,640 --> 00:22:48,760 Speaker 3: to help inform which players are, you know, capitalizing on 470 00:22:48,800 --> 00:22:51,960 Speaker 3: this energy transition more than others and individual banks can 471 00:22:52,000 --> 00:22:56,280 Speaker 3: also use this as you know, a strategic marker of 472 00:22:56,320 --> 00:22:57,600 Speaker 3: where their peers. 473 00:22:57,320 --> 00:22:59,719 Speaker 2: Might be playing and where they can be picking up 474 00:22:59,720 --> 00:23:00,879 Speaker 2: more deals as well. 475 00:23:00,960 --> 00:23:03,919 Speaker 3: The market is pretty concentrated by large players like you 476 00:23:04,000 --> 00:23:07,080 Speaker 3: might expect. So the top ten banks in our data 477 00:23:07,119 --> 00:23:10,959 Speaker 3: set facilitated about five hundred billion of the energy supply 478 00:23:11,040 --> 00:23:13,560 Speaker 3: financing that we saw in twenty twenty three, so almost half. 479 00:23:13,600 --> 00:23:17,280 Speaker 3: And among those top ten, the ESPR the energy supply 480 00:23:17,359 --> 00:23:21,600 Speaker 3: banking ratio does range quite widely, so from under half 481 00:23:21,840 --> 00:23:24,840 Speaker 3: to more than three times as much low. 482 00:23:24,640 --> 00:23:25,840 Speaker 2: Carbon as fossil fuels. 483 00:23:25,960 --> 00:23:28,720 Speaker 3: So it is very interesting to look at individual banks 484 00:23:28,720 --> 00:23:32,320 Speaker 3: that play in very different markets. JP Morgan remained the 485 00:23:32,440 --> 00:23:35,639 Speaker 3: largest unwriter of energy supply financing. It has been for 486 00:23:35,720 --> 00:23:37,720 Speaker 3: every year that we've been looking at this, with a 487 00:23:37,800 --> 00:23:40,919 Speaker 3: ratio of zero point eight to one, so eighty percent 488 00:23:40,920 --> 00:23:43,600 Speaker 3: as much low carbon. That's a very slight increase from 489 00:23:43,720 --> 00:23:47,600 Speaker 3: seventy seven percent in twenty twenty two. Like the majority 490 00:23:47,800 --> 00:23:50,600 Speaker 3: of top banks, there actually is like very little movement 491 00:23:50,680 --> 00:23:51,480 Speaker 3: across years. 492 00:23:51,480 --> 00:23:53,000 Speaker 2: This is a pretty sticky measurement. 493 00:23:53,200 --> 00:23:55,040 Speaker 1: It's kind of what you would expect, is that say, 494 00:23:55,080 --> 00:23:59,080 Speaker 1: the biggest bank in energy investment would sit somewhere near 495 00:23:59,160 --> 00:24:01,199 Speaker 1: the average. Sounds like where the ratio is. 496 00:24:01,400 --> 00:24:05,400 Speaker 3: That's exactly right, and particularly because a bank like JB 497 00:24:05,480 --> 00:24:08,000 Speaker 3: Morgan and some of its beers are really global, so 498 00:24:08,040 --> 00:24:10,840 Speaker 3: they're kind of hitting that average as they're financing companies 499 00:24:10,840 --> 00:24:13,159 Speaker 3: globally and reflecting that share. And we see some of 500 00:24:13,200 --> 00:24:16,640 Speaker 3: these differences regionally. So a European bank like BNP pri 501 00:24:16,760 --> 00:24:19,160 Speaker 3: BO that really does most of its business in Europe 502 00:24:19,280 --> 00:24:23,080 Speaker 3: had the highest energy supply banking ratio by far among 503 00:24:23,160 --> 00:24:25,640 Speaker 3: the top banks, at three point one eight to one, 504 00:24:25,840 --> 00:24:29,000 Speaker 3: and that's actually within you know, within B and P itself. 505 00:24:29,119 --> 00:24:31,240 Speaker 3: That's up from one point four to two in twenty 506 00:24:31,280 --> 00:24:33,400 Speaker 3: twenty two, so more than doubling. 507 00:24:33,520 --> 00:24:37,080 Speaker 1: Wow, they've gone from being off the pace like everyone 508 00:24:37,119 --> 00:24:42,320 Speaker 1: else to actually that is consistent with BNF's net zero scenario. 509 00:24:42,920 --> 00:24:46,000 Speaker 3: Yeah, that's a great callback and that is exactly right. 510 00:24:46,040 --> 00:24:48,920 Speaker 3: Although I will say it's important to take a look 511 00:24:48,960 --> 00:24:51,439 Speaker 3: at what's going on with BNP pri bomb because this 512 00:24:51,600 --> 00:24:54,600 Speaker 3: is quite uncommon and the way in which it got 513 00:24:54,600 --> 00:24:58,400 Speaker 3: there is not necessarily a strategy that will work across 514 00:24:58,440 --> 00:25:01,360 Speaker 3: the board for global banks. So now that we have 515 00:25:01,600 --> 00:25:04,159 Speaker 3: three years of data globally and for each institution, we 516 00:25:04,200 --> 00:25:07,840 Speaker 3: can really start to unpack those trends. For BNP Parri Bob, 517 00:25:07,960 --> 00:25:12,080 Speaker 3: it's ratio doubled in large part because it decreased or 518 00:25:12,119 --> 00:25:16,600 Speaker 3: reduced it's fossil fuel financing instead of seeing a massive 519 00:25:16,920 --> 00:25:19,960 Speaker 3: increase in low carbon financing. Now, they've always been a 520 00:25:20,040 --> 00:25:24,280 Speaker 3: leader in sustainable finance, particularly in the labeled sustainable debt markets, 521 00:25:24,440 --> 00:25:28,399 Speaker 3: and they did do a huge deal about nine billion 522 00:25:28,440 --> 00:25:32,439 Speaker 3: dollars loan with a grid operator in the Netherlands in Germany, 523 00:25:32,520 --> 00:25:34,440 Speaker 3: and that makes up about a quarter of their low 524 00:25:34,440 --> 00:25:37,520 Speaker 3: carbon financing in twenty twenty three. So those outliers are important, 525 00:25:37,520 --> 00:25:40,000 Speaker 3: But really, really what's going on is that they decrease 526 00:25:40,040 --> 00:25:43,600 Speaker 3: their fossil fuel financing by about fifty percent between twenty 527 00:25:43,600 --> 00:25:46,119 Speaker 3: twenty two and twenty twenty three, and the reason for 528 00:25:46,160 --> 00:25:49,119 Speaker 3: that is actually strategy as opposed to what's going on 529 00:25:49,119 --> 00:25:52,480 Speaker 3: in the underlying market. The Bank set several targets to 530 00:25:53,000 --> 00:25:56,119 Speaker 3: phase down its financing for fossil fuels and ramp up 531 00:25:56,119 --> 00:25:59,160 Speaker 3: support for clean energy. Most importantly, in twenty twenty three, 532 00:25:59,480 --> 00:26:02,080 Speaker 3: the bank now that it would no longer underwrite bonds 533 00:26:02,080 --> 00:26:04,840 Speaker 3: for oil and gas expansion, and we're really starting to 534 00:26:04,840 --> 00:26:07,399 Speaker 3: see that flow through to the actual data and what 535 00:26:07,440 --> 00:26:09,880 Speaker 3: they did in terms of deal flow. They also set 536 00:26:09,920 --> 00:26:12,399 Speaker 3: a target for their loan book to reach ninety percent 537 00:26:12,440 --> 00:26:15,520 Speaker 3: low carbon by twenty thirty. So this is quite strategic 538 00:26:15,600 --> 00:26:17,480 Speaker 3: for BNP pie Bar And the reason I say it 539 00:26:17,560 --> 00:26:20,080 Speaker 3: might not apply to all banks globally is because we 540 00:26:20,160 --> 00:26:23,560 Speaker 3: still live in a fossil fuel dominated economy and most 541 00:26:23,640 --> 00:26:26,840 Speaker 3: banks do not operate in such conditions as BNP PII 542 00:26:26,880 --> 00:26:29,760 Speaker 3: bon in Europe. And so again we've been hitting this 543 00:26:29,840 --> 00:26:33,240 Speaker 3: point all morning, but phasing down support for fossil fuels 544 00:26:33,359 --> 00:26:36,800 Speaker 3: is not going to help us sustainably meet energy demand 545 00:26:36,920 --> 00:26:40,360 Speaker 3: unless we drastically scale low carbon solutions. 546 00:26:40,119 --> 00:26:40,439 Speaker 4: Got it. 547 00:26:40,440 --> 00:26:42,160 Speaker 1: So it kind of speaks a little bit more that 548 00:26:42,440 --> 00:26:45,399 Speaker 1: I mean, because there's very little opportunity to invest in 549 00:26:45,440 --> 00:26:48,080 Speaker 1: fossil fuels in Europe because the just the resources aren't 550 00:26:48,080 --> 00:26:51,320 Speaker 1: there under the ground. So European banks are always going 551 00:26:51,359 --> 00:26:54,359 Speaker 1: to come out looking a little bit better and because 552 00:26:54,359 --> 00:26:57,920 Speaker 1: of just their clients aren't asking them for fossil fuel investments. 553 00:26:57,960 --> 00:27:00,159 Speaker 1: So is that something that we expect to see in 554 00:27:00,240 --> 00:27:02,800 Speaker 1: future is that you know, maybe certain regions of the 555 00:27:02,800 --> 00:27:05,920 Speaker 1: world will have easier than others in terms of increasing 556 00:27:05,960 --> 00:27:06,520 Speaker 1: their ratio. 557 00:27:06,760 --> 00:27:07,800 Speaker 2: That's exactly right. 558 00:27:08,119 --> 00:27:11,399 Speaker 3: We already see large regional differences in North America. A 559 00:27:11,400 --> 00:27:14,399 Speaker 3: lot of the ratios tend to be, particularly in Canada, 560 00:27:14,480 --> 00:27:17,399 Speaker 3: less than fifty percent as much low carbadi as fossil fuels. 561 00:27:17,720 --> 00:27:20,040 Speaker 3: You know, of course, Canada's economy is very dependent on 562 00:27:20,080 --> 00:27:21,200 Speaker 3: fossil fuel exports. 563 00:27:21,320 --> 00:27:23,240 Speaker 2: As regions of the world are. 564 00:27:23,240 --> 00:27:26,919 Speaker 3: Continuing to develop, we will you know, probably see lower 565 00:27:27,000 --> 00:27:30,959 Speaker 3: ratios for a while in apac for example, as as 566 00:27:31,000 --> 00:27:34,080 Speaker 3: parts of the world continue to develop their economies, and 567 00:27:34,240 --> 00:27:37,639 Speaker 3: particularly with coal, the vast majority, about sixty six percent 568 00:27:37,760 --> 00:27:40,760 Speaker 3: of coal financing is happening in China, so there's there's 569 00:27:40,840 --> 00:27:42,080 Speaker 3: real regional differences. 570 00:27:42,520 --> 00:27:44,360 Speaker 1: I mean, it's kind of interesting given all of that. 571 00:27:44,359 --> 00:27:48,440 Speaker 1: That actually and their ratio was considerably lower than b 572 00:27:48,600 --> 00:27:51,639 Speaker 1: INPs but at one point zero four. But it's actually 573 00:27:51,720 --> 00:27:54,320 Speaker 1: a North American bank, Bank of America that was second 574 00:27:54,359 --> 00:27:57,119 Speaker 1: on the list. So that's quite a standout given everything 575 00:27:57,119 --> 00:28:00,640 Speaker 1: you've just said. That's because there's no shortage of demand 576 00:28:00,680 --> 00:28:02,600 Speaker 1: for fossil fuel investment in the US. 577 00:28:03,000 --> 00:28:05,080 Speaker 3: That's absolutely right, and I think Bank of America is 578 00:28:05,119 --> 00:28:08,200 Speaker 3: another great example of a bank that has long had 579 00:28:08,359 --> 00:28:12,520 Speaker 3: a strategy for sustainable finance and in particular for BAA 580 00:28:12,840 --> 00:28:16,560 Speaker 3: things like tax equity, where together with JP Morgan it 581 00:28:16,640 --> 00:28:19,720 Speaker 3: leads the tax equity for renewables market in the US. 582 00:28:19,840 --> 00:28:22,440 Speaker 3: They're also a really large player in the labeled sustainable 583 00:28:22,480 --> 00:28:25,320 Speaker 3: debt market as well. So that really is I think 584 00:28:25,600 --> 00:28:29,720 Speaker 3: largely I mean both market conditions but also a strategic 585 00:28:29,840 --> 00:28:31,000 Speaker 3: push by BAVA. 586 00:28:31,000 --> 00:28:34,359 Speaker 1: And who else stood out for having particularly high ratios. 587 00:28:34,880 --> 00:28:37,119 Speaker 3: Yeah, So we also look at the top large banks, 588 00:28:37,119 --> 00:28:39,360 Speaker 3: so we define that as those that did more than 589 00:28:39,360 --> 00:28:41,520 Speaker 3: ten billion dollars of financing in. 590 00:28:41,480 --> 00:28:42,280 Speaker 2: Twenty twenty three. 591 00:28:42,520 --> 00:28:45,120 Speaker 3: Among that cohort, BNP did come out on top, and 592 00:28:45,240 --> 00:28:49,320 Speaker 3: other than BNP we also saw NatWest and Santander come 593 00:28:49,320 --> 00:28:52,200 Speaker 3: out with very high ratios. Santander was our number one 594 00:28:52,280 --> 00:28:55,320 Speaker 3: last year, their ninth this year at one point two four. 595 00:28:55,800 --> 00:28:58,720 Speaker 2: Among the large banks. 596 00:28:58,560 --> 00:29:02,160 Speaker 3: The lowest ratio was Bank of Montreal at zero point 597 00:29:02,200 --> 00:29:05,640 Speaker 3: two six to one. And again that's very much in 598 00:29:05,680 --> 00:29:08,160 Speaker 3: line with a lot of what we're seeing in Canada. 599 00:29:08,280 --> 00:29:12,040 Speaker 3: To your point earlier about infinite ratios, about five hundred 600 00:29:12,040 --> 00:29:15,320 Speaker 3: banks only underwrote low carbon finance egg most of those 601 00:29:15,400 --> 00:29:18,000 Speaker 3: tend to be small, so the largest ones really are 602 00:29:18,040 --> 00:29:20,680 Speaker 3: the multilateral development banks. Most of the other players that 603 00:29:20,720 --> 00:29:23,600 Speaker 3: we saw only do low carbon, where we're quite small 604 00:29:23,600 --> 00:29:26,560 Speaker 3: and really just collectively represent about thirty billion of financing. 605 00:29:26,840 --> 00:29:30,480 Speaker 1: I want to talk about how banks are responding to 606 00:29:30,840 --> 00:29:34,720 Speaker 1: these ratios, because obviously this is about them for them, 607 00:29:35,040 --> 00:29:38,120 Speaker 1: do you see them sort of making plans of how 608 00:29:38,160 --> 00:29:41,120 Speaker 1: they will improve their ratio? What has this response with 609 00:29:41,200 --> 00:29:42,000 Speaker 1: banks being to this. 610 00:29:42,640 --> 00:29:45,880 Speaker 3: Yeah, so we've seen quite a few different versions of 611 00:29:45,920 --> 00:29:48,520 Speaker 3: a response, but one that I think is really important 612 00:29:48,600 --> 00:29:51,000 Speaker 3: is actually in the past year, we've started to see 613 00:29:51,000 --> 00:29:54,360 Speaker 3: a push for bank level disclosure of these ratios, and 614 00:29:54,400 --> 00:29:57,240 Speaker 3: this really started from investor presher So. The New York 615 00:29:57,280 --> 00:30:01,360 Speaker 3: City Comptour's Office, which oversees New York City's pension funds, 616 00:30:01,480 --> 00:30:04,720 Speaker 3: filed shareholder resolutions with some of the largest North American 617 00:30:04,760 --> 00:30:07,840 Speaker 3: banks last year asking that they disclose a version. 618 00:30:07,560 --> 00:30:10,120 Speaker 2: Of this ratio, and they were quite successful. 619 00:30:10,240 --> 00:30:13,760 Speaker 3: So climate related shareholder resolutions don't tend to get a 620 00:30:13,800 --> 00:30:16,400 Speaker 3: ton of support, particularly in the first year that they 621 00:30:16,400 --> 00:30:20,520 Speaker 3: are filed, but before they even went to a vote, JP, Morgan, City, 622 00:30:20,600 --> 00:30:23,760 Speaker 3: and RBC all committed so agreed with the New York 623 00:30:23,760 --> 00:30:27,479 Speaker 3: City Controller's Office to publish their own energy supply ratio, 624 00:30:27,640 --> 00:30:29,800 Speaker 3: so to use this metric and also to make it 625 00:30:29,840 --> 00:30:34,280 Speaker 3: public to investors and other stakeholders. JP Morgan actually already 626 00:30:34,280 --> 00:30:38,160 Speaker 3: released its own ratio and its methodology in November last year. 627 00:30:38,320 --> 00:30:41,200 Speaker 3: Their ratio is somewhat different from ours, and we do 628 00:30:41,320 --> 00:30:44,320 Speaker 3: break down the key differences in methodology and our report, 629 00:30:44,400 --> 00:30:48,240 Speaker 3: but their reported ratio for their own business was about 630 00:30:48,280 --> 00:30:49,800 Speaker 3: one point twenty nine to one. 631 00:30:50,080 --> 00:30:53,160 Speaker 1: So just to be clear, you know, in future iterations 632 00:30:53,320 --> 00:30:56,560 Speaker 1: of our report, we're not going to just be asking 633 00:30:56,600 --> 00:30:59,880 Speaker 1: the banks, oh, what was your ratio, We'll be calculating 634 00:31:00,120 --> 00:31:01,560 Speaker 1: it for ourselves exactly. 635 00:31:01,640 --> 00:31:04,440 Speaker 3: There's a lot of value in having a standardized methodology 636 00:31:04,560 --> 00:31:08,080 Speaker 3: across all banks so that things are comparable. But as 637 00:31:08,120 --> 00:31:12,160 Speaker 3: an internal tool for banks to be using this framework 638 00:31:12,160 --> 00:31:14,360 Speaker 3: for thinking about their role that they play in the 639 00:31:14,440 --> 00:31:16,960 Speaker 3: energy transition, I think it's great to see some of 640 00:31:17,000 --> 00:31:21,040 Speaker 3: them be calculating this. Some are doing this without even 641 00:31:21,240 --> 00:31:24,360 Speaker 3: you know, disclosing it to shareholders or to the public. 642 00:31:24,360 --> 00:31:26,840 Speaker 3: They're just beginning to use this and adopt this as 643 00:31:26,880 --> 00:31:27,880 Speaker 3: a tool internally. 644 00:31:28,080 --> 00:31:29,000 Speaker 4: That's really cool. 645 00:31:29,040 --> 00:31:32,760 Speaker 1: I mean, something that started its life on a spreadsheet 646 00:31:32,840 --> 00:31:35,520 Speaker 1: on your computer, someone on your team's computer. 647 00:31:35,600 --> 00:31:36,920 Speaker 2: I don't know my computer. 648 00:31:37,040 --> 00:31:41,840 Speaker 3: It actually evolved from a spreadsheet to a huge script, 649 00:31:41,880 --> 00:31:43,600 Speaker 3: and along the way, I learned how to code. 650 00:31:43,640 --> 00:31:47,239 Speaker 1: You learned how to code. Banks adopted the ratio, and 651 00:31:47,280 --> 00:31:49,920 Speaker 1: you finally got to go home at some point. So 652 00:31:50,200 --> 00:31:55,120 Speaker 1: everyone everyone was winning in this scenario. So all in 653 00:31:55,160 --> 00:31:58,960 Speaker 1: a day's work. What's next for the authors? But yeah, 654 00:31:59,000 --> 00:32:01,520 Speaker 1: where do you and your wealth us plans? What do 655 00:32:01,520 --> 00:32:03,120 Speaker 1: you plan to do next with these ratios? 656 00:32:03,640 --> 00:32:07,000 Speaker 3: A few things, So number one right now, in order 657 00:32:07,040 --> 00:32:09,560 Speaker 3: to estimate how much of financing is going toward low 658 00:32:09,600 --> 00:32:12,280 Speaker 3: carbon or fossil fuels. For you know, a bond raised 659 00:32:12,280 --> 00:32:15,160 Speaker 3: by a given company, we use the breakdown of their revenue, 660 00:32:15,240 --> 00:32:17,920 Speaker 3: and revenue tends to be you know, backward looking. Where 661 00:32:17,920 --> 00:32:21,560 Speaker 3: are those companies actually already making money from the energy sector. 662 00:32:21,840 --> 00:32:24,800 Speaker 3: What would be forward looking and better reflect where we're 663 00:32:24,840 --> 00:32:27,800 Speaker 3: moving would be CAPEX. So how are those companies actually 664 00:32:27,800 --> 00:32:30,440 Speaker 3: spending the capital that they're raising? So we are in 665 00:32:30,520 --> 00:32:34,760 Speaker 3: house developing capital expenditure based estimates for a suite of 666 00:32:35,040 --> 00:32:37,720 Speaker 3: you know, hopefully about one hundred thousand companies to look 667 00:32:37,760 --> 00:32:39,880 Speaker 3: at where they're where they're investing capital. 668 00:32:39,560 --> 00:32:41,480 Speaker 2: And we know that's going to be higher for low 669 00:32:41,480 --> 00:32:44,440 Speaker 2: carbon solutions. That's one really important project. 670 00:32:44,680 --> 00:32:47,160 Speaker 3: Another is I mentioned we're looking at this for funds, 671 00:32:47,280 --> 00:32:50,560 Speaker 3: so for asset managers, and that's really my colleague Ryan Lockhead. 672 00:32:50,760 --> 00:32:53,480 Speaker 3: And then the last component is we're trying to help 673 00:32:53,640 --> 00:32:56,040 Speaker 3: develop a suite of resources for the banks that are 674 00:32:56,040 --> 00:32:59,040 Speaker 3: looking to do this internally, and that includes kind of 675 00:32:59,280 --> 00:33:01,760 Speaker 3: a how to go or a step by step tutorial 676 00:33:01,960 --> 00:33:04,080 Speaker 3: along with you know, if you want to make different choices, 677 00:33:04,160 --> 00:33:05,880 Speaker 3: these are some of the variations that you could make 678 00:33:05,920 --> 00:33:06,880 Speaker 3: on our methodology. 679 00:33:07,160 --> 00:33:09,040 Speaker 4: Cool, so it's like a toolkit. 680 00:33:09,240 --> 00:33:12,440 Speaker 1: Well, the future is very bright for at least for 681 00:33:12,480 --> 00:33:15,160 Speaker 1: the ratios themselves, and you know, maybe they will get 682 00:33:15,200 --> 00:33:17,680 Speaker 1: to three, maybe they'll get to four this decade, and 683 00:33:18,040 --> 00:33:20,600 Speaker 1: you know, to ten by twenty fifty, who knows. It 684 00:33:20,680 --> 00:33:23,080 Speaker 1: kind of comes back to the thing I said earlier. 685 00:33:23,160 --> 00:33:25,400 Speaker 1: It's almost become like a truism of being in this 686 00:33:25,480 --> 00:33:28,600 Speaker 1: space that the numbers and the energy transition. 687 00:33:28,240 --> 00:33:30,240 Speaker 4: Always go up. It's just the question is are they 688 00:33:30,280 --> 00:33:32,680 Speaker 4: going up fast enough? From an environmental point of view? 689 00:33:32,760 --> 00:33:35,320 Speaker 1: And this is a great way of measuring that that 690 00:33:35,440 --> 00:33:38,680 Speaker 1: it applies to very specific types of institutions and helps 691 00:33:38,720 --> 00:33:40,440 Speaker 1: them figure out how they're doing so. 692 00:33:40,480 --> 00:33:41,720 Speaker 4: I think it's really cool work. 693 00:33:41,880 --> 00:33:45,560 Speaker 3: Low carbon solutions are better than fossil fuels in almost 694 00:33:45,600 --> 00:33:47,760 Speaker 3: every way in the long term and pose a really 695 00:33:47,880 --> 00:33:49,720 Speaker 3: great opportunity for these institutions. 696 00:33:50,200 --> 00:33:51,760 Speaker 4: Trina, thanks for joining me today. 697 00:33:51,840 --> 00:33:53,640 Speaker 2: Thank you so much. Tom, it's great to talk to you. 698 00:34:02,520 --> 00:34:05,640 Speaker 2: Today's episode of Switched On was produced by Cam Gray 699 00:34:05,840 --> 00:34:09,520 Speaker 2: with production assistance from Kamala Shelling. Bloomberg NEIF is a 700 00:34:09,560 --> 00:34:12,680 Speaker 2: service provided by Bloomberg Finance LP and its affiliates. This 701 00:34:12,800 --> 00:34:15,480 Speaker 2: recording does not constitute, nor should it be construed as 702 00:34:15,520 --> 00:34:19,239 Speaker 2: investment a vice, investment recommendations, or a recommendation as to 703 00:34:19,320 --> 00:34:22,000 Speaker 2: an investment or other strategy. 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