Speaker 1: This is Masters in Business with Barry Ridholts on Bloomberg Radio.
Speaker 1: This week on the podcast, I have an extra special guest.
Speaker 1: His name is Brian D's. He is head of sustainable
Speaker 1: Investing at black Rock, which now manages somewhat over seven
Speaker 1: trillion dollars. Brian has a fascinating background both in the
Speaker 1: White House and Washington, d C. Where he helped draft
Speaker 1: the Paris Climate Accord, as well as worked on the
Speaker 1: bailout of GM and Chrysler for the Obama administration and
Speaker 1: now working in black Rock. Uh, this is really a
Speaker 1: fascinating conversation about what is driving sustainable investing, how we
Speaker 1: can think about climate change and e s G investing
Speaker 1: not so much as a value play but as a
Speaker 1: form of risk analysis. Uh. It really just this conversation
Speaker 1: went to places you probably wouldn't expect it would and
Speaker 1: I found it to be absolutely fascinating and I think
Speaker 1: you will too. So, with no further ado, my conversation
Speaker 1: with Black Rocks Brian Diese. This is Masters in Business
Speaker 1: with Barry Ridholtz on Boomberg Radio. My special guest this
Speaker 1: week is Brian Diese. He is the global head of
Speaker 1: sustainable Investing at black Rock, where he focuses on identifying
Speaker 1: drivers of long term returns associated with E s G issues. Previously,
Speaker 1: he was President Obama's Senior Advisor for Climate and Energy Policy,
Speaker 1: where he helped to work on the Paris Climate Accord.
Speaker 1: He also was one of the key architects of the
Speaker 1: resurgence of the auto industry, participating in the design of
Speaker 1: the bailout of General Motors and Chrysler. He has been
Speaker 1: Deputy Director at the National Economic Council as well as
Speaker 1: at the Office of Management and Budget. Brian Diese, Welcome
Speaker 1: to Bloomberg. Thank you, happy beer. So Brian, let's jump
Speaker 1: right in. I'm kind of intrigued by your background. Your
Speaker 1: j d is from Yale. How does a legal background
Speaker 1: help someone in the field of sustainable investing. Well, you know,
Speaker 1: the joke about people who work in policy is if
Speaker 1: you don't have the attention span to go get a PhD,
Speaker 1: then you get a law school. That's fair, but well, look,
Speaker 1: I I might most of my background professional focus has
Speaker 1: been on economics and economic policy. Uh, the legal training
Speaker 1: and the law degree have been extremely helpful for me
Speaker 1: in helping have a framework to how to think about
Speaker 1: issues and break them. Down and put them back together.
Speaker 1: But I am one of those people who's got a
Speaker 1: law degree but is not deploying it directly in the
Speaker 1: practice of law. I want to say the stats, so
Speaker 1: I too have a law degree that I do not deploy,
Speaker 1: But I want to say, it's after seven years, it's
Speaker 1: something like fifty of us are not practicing laws something
Speaker 1: like that. Pretty pretty realistic number. So let's talk a
Speaker 1: little bit about the Obama White House. You were Senior
Speaker 1: adviser for Climate and Energy policy. What's it like working
Speaker 1: on those issues in the White House. Well, it's um complicated, scary, thrilling, fun, frustrating,
Speaker 1: all of those things. Everything you would amend. I worked
Speaker 1: all eight years in the during the Obama administration. Most
Speaker 1: of that time I was part of his economic team
Speaker 1: in a variety of different roles and really came at issues.
Speaker 1: So worked in the post crisis era, worked on housing, finance,
Speaker 1: the Dot Frank, and the restructuring after the financial crisis,
Speaker 1: and through it all I had a focus on energy
Speaker 1: and climate issues, but from an economic perspective. The last
Speaker 1: couple of years, the President came and said, I really
Speaker 1: want to make this a central focus on my second term.
Speaker 1: We're not moving fast enough. How do we bring all
Speaker 1: of the different agencies of government together to try to
Speaker 1: orient internationally and also domestically to do as much as
Speaker 1: we can. That was my role. Involved a lot of coordination,
Speaker 1: lot of work internationally and a lot of work with
Speaker 1: regulated industries domestically as well, to try to chart a
Speaker 1: path forward given the tools that we had. So before
Speaker 1: we delve deeper into sustainable investing and climate change, I
Speaker 1: have to roll back and ask about the bailouts of
Speaker 1: GM and Chrysler sort of antithetical in some ways to
Speaker 1: sustainable investing or maybe not. What did you do in
Speaker 1: that space? And how insane were those years posts oh nine?
Speaker 1: It had to be crazy. Yeah, it was a pretty
Speaker 1: insane period. I was helping to run then candidate Obama's
Speaker 1: economic policy during the campaign and around end of August
Speaker 1: early September two eight, what went from economic policy in
Speaker 1: a campaign context got devastatingly serious, very quickly, with the
Speaker 1: cascading failures of a g and putting Famion Fedding conservatorship,
Speaker 1: and then you know, the the escalating series of failures
Speaker 1: over the course of the fall and when we came
Speaker 1: in even during the transition. This question of what to
Speaker 1: do about the auto industry generally and GM and Chrysler
Speaker 1: that we're quickly running out of cash was front and center.
Speaker 1: So I was part of a small team that was
Speaker 1: tasked with trying to figure out what to do. Number one,
Speaker 1: did we have a way to step in and back
Speaker 1: stop them? Should we? And three? If the answer to
Speaker 1: both of those was yes, then how could we actually
Speaker 1: execute and get this done? So I have a pet
Speaker 1: theory that if the UM Treasury Secretary is an industrialist,
Speaker 1: they're very happy to bail out industry and let finance
Speaker 1: banks and stuff go the restructuring route and vice versa.
Speaker 1: There a financi air, then the industries can go through bankruptcy,
Speaker 1: but they bail out banks as too big to fail.
Speaker 1: So you guys ended up inheriting the Bush bailouts of
Speaker 1: the banks and then doing your own industrial policy bailout
Speaker 1: ten years later. How did it turn out? Well, there's
Speaker 1: actually surprising consistency between the end of the Bush administration
Speaker 1: our view on they need to do something to backstop
Speaker 1: these companies because of the second and third order effects.
Speaker 1: I think the you know, the conservative estimates were a
Speaker 1: million plus jobs on the line, because it wasn't really
Speaker 1: about the specific direct employees of GM and CHRISTI, although
Speaker 1: there were tens of thousands of them, but the suppliers,
Speaker 1: the dealers that the the auto industry touches UM a
Speaker 1: lot of communities and a lot of jobs. So we
Speaker 1: were pretty focused in the depth of such a economic downturn,
Speaker 1: if we could do something that was targeted UH and
Speaker 1: effective and that did require sacrifice from all different stakeholders.
Speaker 1: The stakes were pretty high, and so we should give
Speaker 1: it a shot. And that was the sort of the
Speaker 1: core animating these is behind it. But we did ultimately
Speaker 1: decide that the way to actually get the level of
Speaker 1: um sacrifice necessary, that the level of changes in these
Speaker 1: companies was going to require them going through bankruptcy, and
Speaker 1: so both companies ended up going through bankruptcy. It was
Speaker 1: a harrowing and lots of respects, but in hindsight, I
Speaker 1: believe it's one of the most effective economic policy interventions
Speaker 1: at the height of our recession, and I think we
Speaker 1: saved more than a million jobs. At the end of
Speaker 1: the day, we got back more money than the obadministration invested,
Speaker 1: and as a whole, in the government, UH, the entire
Speaker 1: effort cost about ten billion dollars, and so if you
Speaker 1: look at the jobs in the economic impact that we
Speaker 1: were able to protect and solve, I feel like it
Speaker 1: was a an effective and reasonable use of tax payer resources.
Speaker 1: So then you transition from a government employee effectively even
Speaker 1: though you're on the policy side of it, to one
Speaker 1: of the biggest investment firms in the world. What is
Speaker 1: that transition like? Well, you know, in some ways, uh
Speaker 1: both large complicated organizations that have a global reach and
Speaker 1: that uh so in some ways less difference than you
Speaker 1: might think between the complexity of the executive branch and
Speaker 1: the complexity of a big, uh complicated organization. But on
Speaker 1: the other hand, you know, very different in the sense
Speaker 1: that the same set of issues that I was thinking
Speaker 1: about and we were working on from the policy side
Speaker 1: around how do we create the right conditions for private
Speaker 1: capital to move into lower carbon solutions and accelerate the
Speaker 1: transition of low carbon economy. There's what we think about
Speaker 1: at black Rock, but with a very different lens, the
Speaker 1: lens being how do we actually deliver for our clients,
Speaker 1: for our the end h end investors, most of whom
Speaker 1: are uh you know, our our our pensioners and who
Speaker 1: have a long term orientation and are trying to save
Speaker 1: for long term goals. So, you know, similarities, but really
Speaker 1: a different focus on how do you bring the lens
Speaker 1: of sustainability and sustainable investing to that ultimate goal of
Speaker 1: delivering financial return. Ultimately quite fascinating. Let's talk a little
Speaker 1: bit about climate change and what we're doing in response
Speaker 1: to it. You helped to actually draft the Paris Climate Agreement.
Speaker 1: What was your reaction to seeing the current administration withdraw
Speaker 1: from that and how dangerous is it for the United
Speaker 1: States to not be a part of that. Well, look,
Speaker 1: I think it's in the the economic and national security
Speaker 1: interest of every country to be finding a coordinate solution
Speaker 1: to this issue. You know, I think the impacts both
Speaker 1: the physical impacts that we're seeing that you know, we
Speaker 1: were seeing with our own eyes. Californians are seeing at
Speaker 1: people in the Midwestern seeing Australia and you know, up
Speaker 1: and down the East coast of the United States. Uh,
Speaker 1: we're seeing that everywhere. And we're also seeing the risks
Speaker 1: from a financial perspective of what it means to actually
Speaker 1: move toward a low carbon economy. Pressure on fossil intensive
Speaker 1: business models, more economic opportunity for low carbon solutions, and
Speaker 1: I think that's the piece that is is missing from
Speaker 1: this conversation. Sometimes you think about Paris and you think
Speaker 1: about a global effort. What Paris really did was climate
Speaker 1: change internationally used to be this big debate between two teams.
Speaker 1: It was like a soccer match, developed countries on the
Speaker 1: one hand, developing countries and the others fighting about who
Speaker 1: was in charge of having to solve this problem. What
Speaker 1: Paris did was changed that from head to head fight
Speaker 1: into a race. We're all working together, and now the
Speaker 1: question is which countries can actually get ahead in being
Speaker 1: the clean energy superpowers of the twenty one century. Who's
Speaker 1: going to actually capture the economic opportunity, the enormous economic
Speaker 1: opportunity that's going to colm from this transition in these
Speaker 1: new industries. And so at the end of the day,
Speaker 1: every country should want to be part of that race
Speaker 1: because of the economic dividends that it creates. So I
Speaker 1: saw a chart yesterday from Torsten Slock of Deutsche Bank
Speaker 1: basically showing the US gets only about ten percent of
Speaker 1: our energy supply from renewables, and I remember that more
Speaker 1: or less correctly, that's from wind and solar. If you
Speaker 1: look at zero carbon including nuclear and hydro, the number
Speaker 1: is the numbers closer before you, right, But oh, really
Speaker 1: that much because we've had pretty robust nuclear and hydro,
Speaker 1: not as much as France has on the nuclear side
Speaker 1: or hydro, so dependent on the local geology. But we've
Speaker 1: had that for decades. And so what has been the
Speaker 1: marginal increase in low carbon or zero carbon energy sources
Speaker 1: over the past decade or so? Well, So, the two
Speaker 1: big things that you've seen happen in the U S
Speaker 1: energy mix are one, the rapid increase of renewables bringing
Speaker 1: onto the grid and the the rate of change and
Speaker 1: adoption of renewables is very fast, even though we're still
Speaker 1: you know, we're still moving up at a relatively low base.
Speaker 1: And the second is the adoption of and build out
Speaker 1: of natural gas as a baseload, cheaper baseload energy source
Speaker 1: to coal, which is primarily manifesting itself in the transition
Speaker 1: of the big electrical generation plans that used to be
Speaker 1: mostly coal fired and now have seemed to dramatically move
Speaker 1: towards gas. Is that fair correct? So those are the
Speaker 1: two the two big dynamics is gas driving coal out
Speaker 1: of the energy mix and renewables coming onto the grid rapidly.
Speaker 1: That's that's the story of the last decade. I think
Speaker 1: the story of the next decade is really going to
Speaker 1: be about what happens not the future of utilities, but
Speaker 1: the utilities of the future, because we're gonna move increasingly
Speaker 1: toward a scenario where we are electrifying everything, and so
Speaker 1: the grid and the grid applications are going to become
Speaker 1: less straightforward of you have a point source where you
Speaker 1: generate a bunch of electrons and then you figure out
Speaker 1: a transmission and distribution system. We're going to have increasingly
Speaker 1: distributed generation. You're gonna have sources, you know, sources of
Speaker 1: power and sources of storage that are plugging into the
Speaker 1: grid in different ways, which will create new stresses, but
Speaker 1: also a bunch of new opportunities different That will be
Speaker 1: one of the things that make the next decade different
Speaker 1: from the last. So we converted to natural gas about
Speaker 1: two or three years ago. Not only do we do that,
Speaker 1: I ran a backup generator on top of that, and
Speaker 1: I noticed, not only am I not burning home heating
Speaker 1: oil on burning gas, the price is a fraction of
Speaker 1: what it was. And if you live anywhere north of
Speaker 1: the Mason Dixon line and want to heat a pool,
Speaker 1: Oh my god. I used to get thousand dollar oil deliveries,
Speaker 1: it seemed every other day, And now it costs me
Speaker 1: two bucks to keep the pool at eighty six degrees
Speaker 1: into November. It's so incredibly cheap. Why hasn't this transition
Speaker 1: taken place faster or are we going as fast as
Speaker 1: we can? Well, the good news is that the transition
Speaker 1: has both economics and physics on its side, and so
Speaker 1: the reason why you're seeing that and the reason why
Speaker 1: zero carbon renewable energy is increasingly the lowest cost source
Speaker 1: of generation to add into the grid in places around
Speaker 1: the world from India to Chile, where new solar beats
Speaker 1: on a levelized cost the build out of new coral
Speaker 1: or other sources. That's amazing. So the market is driving that.
Speaker 1: But also the zero carbon energy sources are technology, and
Speaker 1: so part of the reason why is you've seen this
Speaker 1: rapid reduction in the cost of wind and solar and
Speaker 1: battery storage because the technology is just advancing very rapidly,
Speaker 1: and so the zero carbon energy sources have technology at
Speaker 1: their back as well. That's the good news. The bad
Speaker 1: news is that even though this transition, it's not moving
Speaker 1: nearly fast enough to put us on a trajectory that
Speaker 1: would keep the increase in global temperatures to the rate
Speaker 1: that we identified in the Paris Agreement, or to the
Speaker 1: rate of even a more ambitious set of targets that
Speaker 1: are what the global body of science is telling us,
Speaker 1: you need to avoid the worst impacts. So what aren't
Speaker 1: we doing that we should be doing? And what I
Speaker 1: mean by that is not just hey, everybody go by
Speaker 1: a tesla or a GM vault, but what is the
Speaker 1: government not doing to provide incentives to accelerate what's already
Speaker 1: taking place on an economic and market driven set of functions. Right, Ultimately,
Speaker 1: what's going to drive the speed of the transition is
Speaker 1: government policies that provide long term stability in prioritizing more
Speaker 1: sustainable source of energy and more sustainable sources of economic activity.
Speaker 1: And you know, around the world we're seeing less than
Speaker 1: a coherent global coordination policy, and so we're a long
Speaker 1: way from that being the case. But the other thing
Speaker 1: that's gonna help accelerating it gets to the work we're
Speaker 1: really doing. A black rock is a greater understanding and
Speaker 1: a greater clarity within financial markets about the magnitude that
Speaker 1: of the risk that actually already exists or is coming.
Speaker 1: And our view is as that becomes clearer, we're going
Speaker 1: to see a big reallocation of capital based on risk
Speaker 1: and based on financial markets fully reflecting those risks in
Speaker 1: the market. So let's focus on that for a moment.
Speaker 1: We've seen in the insurance space more than anywhere else,
Speaker 1: big increase in rates, big set of changes as to
Speaker 1: who insures will cover, and I'm not just talking about
Speaker 1: residential waterfront property across the board. And then the reinsures
Speaker 1: also showing a giant uptick in their premiums. So while
Speaker 1: a big chunk of the marketplace maybe dawdling or not
Speaker 1: paying attention to it, it's clear in the insurance sector
Speaker 1: they are clearly well aware of the risks that are
Speaker 1: taking place and have already acted on that. How long
Speaker 1: do you expect it to take to transition from insurance
Speaker 1: as a frontline recipient of the impact and costs of
Speaker 1: climate change to the rest of the sectors in the marketplace. Well, look,
Speaker 1: I would say you're starting to see that insurance, but
Speaker 1: I think we're going to see it accelerate much more
Speaker 1: significantly as well. Most of the financial models and the
Speaker 1: financial approaches that we've taken are either backward looking or
Speaker 1: they rely on this assumption of climactic stability, that the
Speaker 1: basic stability we've seen around physical impacts and threats will
Speaker 1: accelerate the way it has in the past. And that's
Speaker 1: no longer a viable option, which is going to require
Speaker 1: us to rethink a lot of basic questions about finance.
Speaker 1: So you raised the question of mortgages and waterfront property. Well,
Speaker 1: you know, an important year in lots of respects, but
Speaker 1: one think about the thirty year mortgage. It's kind of
Speaker 1: the you know, one of the centerpieces of our modern
Speaker 1: financial system is the first year where if you're issuing
Speaker 1: a thirty year mortgage, that's going to touch which we've
Speaker 1: always thought of as a sort of long out, long
Speaker 1: term area mile marker for impacts of climate change. Well,
Speaker 1: today we a thirty year, you know, a thirty year
Speaker 1: fixed touches that. What are the implications of that? You're right,
Speaker 1: we're starting to see it in insurance, But what are
Speaker 1: the implications when there are big areas of the country
Speaker 1: where even if you can get a thirty year mortgage.
Speaker 1: You can't get mortgage insurance that that that resets annually.
Speaker 1: What are the implications for municipal finance If risks that
Speaker 1: felt like they were long term twenty thirty years, I'll
Speaker 1: start to get pulled forward. And our you know, our
Speaker 1: our sense having looked at this, is that we're gonna see.
Speaker 1: One thing the financial markets are good at is pulling
Speaker 1: forward risk once they can identify and measure it. And
Speaker 1: so what you're starting to see in isolated areas in
Speaker 1: insurance and otherwise is likely to move much more quickly
Speaker 1: as bigger, you know, bigger elements of the financial market
Speaker 1: starts to recognize and identify these risks as real, and
Speaker 1: even if they are fifteen years forward, that's going to
Speaker 1: affect duration quite fascinating. Let's talk a little bit about
Speaker 1: sustainable investing. Your boss, Larry Fink made a pretty big
Speaker 1: splash with his annual letter on sustainability. What does Blackrock
Speaker 1: want to accomplish with that sort of communication. What was
Speaker 1: Larry trying to say, Well, we wanted to communicate our
Speaker 1: view as a fiduciary, as an entity that our principal
Speaker 1: goal is to try to think forward on behalf of
Speaker 1: our clients to what will be important to delivering them
Speaker 1: their long term financial goals. And in that context, we
Speaker 1: wanted to communicate two things. One, our view that climate
Speaker 1: risk is investment risk, and that's going to have big
Speaker 1: implications on how we think about a lot of these
Speaker 1: core questions of how we think about duration assets, how
Speaker 1: we think about risk going forward. And the second is
Speaker 1: that there is a larger societal shift right now toward
Speaker 1: a focus on sustainability and changing expectations of companies that
Speaker 1: we believe will escalate that their structural drivers behind that
Speaker 1: that will escalate across time. And therefore companies that are
Speaker 1: not thinking forward to what that means for their business
Speaker 1: model and trying to get ahead of that are going
Speaker 1: to struggle to deliver long term profitability because this is
Speaker 1: going to become an increasingly important part of the financial conversation.
Speaker 1: So this seems to be an evolution and thought at
Speaker 1: black Rock. I think has written a number of different
Speaker 1: letters over the years. He's talked about this as an issue.
Speaker 1: He sent letters out to various CEOs and other things,
Speaker 1: but it seems that this year is really a tipping point.
Speaker 1: The content and the tone of his letter is urgent
Speaker 1: the right word and much more emphatic. In the past
Speaker 1: it was almost mentioned as part of it. This time
Speaker 1: it was front and center, and I think that reflects
Speaker 1: that there were a lot of things in twenty nineteen
Speaker 1: that we saw escalating come together to really enforce the
Speaker 1: conviction in this view and the urgency of the view one.
Speaker 1: You saw, you know, an escalation in the physical impacts.
Speaker 1: We talked about un worlds on fire. To this idea
Speaker 1: about where regulatory body is going to really step in
Speaker 1: went from the future tense maybe they will in the
Speaker 1: future to the present tense. You saw the Bank of
Speaker 1: England begin to actually regulate financial entities, requiring stress tests.
Speaker 1: You see pension regulation across the globe. Obviously in the
Speaker 1: United States as an outlier in that respect, but if
Speaker 1: you're a global company and you're operating Europe, for example,
Speaker 1: integration of these types of issues into your disclosure and
Speaker 1: your investment process will become in a sort of required reading.
Speaker 1: That changed in twenty and we saw these sets of
Speaker 1: issues culminate and spill over into the global geopolitical scale.
Speaker 1: At the g twenty you saw a citizen movement of
Speaker 1: six million in a student's grassroots um walking out in
Speaker 1: demanding action. There's an escalation and focus on this that
Speaker 1: we assess again from an investment perspective, as being durable
Speaker 1: and and actually this being the front of something that
Speaker 1: is going to be a significant shift in investor preferences
Speaker 1: over time. So let's talk about another shift. Sustainable investing
Speaker 1: used to be pitched as, hey, here's how to align
Speaker 1: your capital investments with your morals, your ethical beliefs, your values.
Speaker 1: Now it's really being contextualized as look at how well
Speaker 1: E s G funds have done over the past few years.
Speaker 1: This is a source of alpha, This is a source
Speaker 1: of market beating performance. How do you see this being
Speaker 1: talked about by Black Rocks investors. I think one of
Speaker 1: the most significant things we communicated in the set of
Speaker 1: communications earlier this year was this view as a fiducier,
Speaker 1: as a view of looking at the long term financial
Speaker 1: interests of our clients first and foremost, that we believe
Speaker 1: that sustainability and integrating sustainability is likely to be the
Speaker 1: best way to position you for long term finitial return.
Speaker 1: And you're right, that is different. That's different than the
Speaker 1: traditional conversation which always came with an implicit assumption that
Speaker 1: you were trading value for values. Our view is that
Speaker 1: that's in the rear view mirror. Now the question of
Speaker 1: how you integrate sustainability and how you do that in
Speaker 1: ways that actually capture material insights and and not noise.
Speaker 1: It's hard, it's complicated like any other area of investing.
Speaker 1: But our view increasingly is that you can build a
Speaker 1: portfolio integrate sustainability and at least do as well and
Speaker 1: likely position yourself to do better over the long term
Speaker 1: because of all the structural elements we're talking about, and
Speaker 1: that underlies the conviction of everything we're doing across risk
Speaker 1: and integration products and services were offering. Is that underlying
Speaker 1: core view? So here's the pushback. I've read not my view,
Speaker 1: but I've read, Hey, you know, e s G has
Speaker 1: been out performing because really it's a closet technology index
Speaker 1: and if you own a lot of Apple and Google
Speaker 1: and Microsoft and Netflix, hey, of course your portfolio is
Speaker 1: killing it. What's the response to that claim? First, our
Speaker 1: conviction around the materiality these issues is not based principally
Speaker 1: or solely on limited period of performance over over a
Speaker 1: limited period of time. It's based on thinking about what
Speaker 1: are the underlying drivers of these changes, climate change, the
Speaker 1: physical and the technological risks, the change and investor sentiment
Speaker 1: that is connected to you know, the largest transfer of
Speaker 1: wealth and human history from the Baby boom to the
Speaker 1: millennial generation, and so we don't principally pin it on that.
Speaker 1: The second, more specifically though, is you know, there's been
Speaker 1: a lot of talk about is it sort of a
Speaker 1: closet tech play, is it just a momentum play, that
Speaker 1: there's a sort of an E S G momentum trade
Speaker 1: on and the like. And I think our view on
Speaker 1: this is that elements of that may all be true
Speaker 1: in the market today, but we believe that those structural
Speaker 1: factors are going to actually sustain this shift for some
Speaker 1: significant period of time. And so the true sational view
Speaker 1: that says, look, um uh, these you know, uh, if
Speaker 1: these if these, if these assets, are these stocks actually
Speaker 1: are getting greater demand than you'll actually have a sin
Speaker 1: strock premium and maybe you'll see some bounce back. What
Speaker 1: that misses is if we're on the front end of
Speaker 1: a long term structural trend. If you believe that structural
Speaker 1: trend is fully priced into the market today, then of
Speaker 1: course um uh, then of course you wouldn't see these
Speaker 1: relative changes in value. There's a lot of reasons to believe,
Speaker 1: including from financial literature around other long term structural trends
Speaker 1: like demographics, that this is that the transition itself will
Speaker 1: be a period where you'll see this sort of lack
Speaker 1: of a tradeoff persist for some significant period. That is
Speaker 1: absolutely fascinating. Let's talk about a quote that I really
Speaker 1: like from your team. Quote the sustainable Investing team is
Speaker 1: focused on identifying drivers of long term return associated with environmental,
Speaker 1: social and governance issues, integrating them through out Black Rocks
Speaker 1: investment processes, and creating solutions for a clients to achieve
Speaker 1: sustainable investment return. What I'm reading between the lines there,
Speaker 1: or maybe it's more explicit, this isn't just about the
Speaker 1: s G portfolios. You are looking at E s G
Speaker 1: as a potential risk factor across the full portfolio, whether
Speaker 1: it's E s G or not. Well, I was a mouthful,
Speaker 1: but I'm glad you picked up on that, because that's
Speaker 1: exactly how we are thinking about it. Fundamentally, we if
Speaker 1: we come at this from the perspective of risk, then
Speaker 1: our view is we need to integrate this in our
Speaker 1: core risk processes the same way that we think about
Speaker 1: any other core element of financial risks. So what that
Speaker 1: means is if we identify that, for example, the physical
Speaker 1: risks of climate change that you can pinpoint to an
Speaker 1: asset or you can pinpoint to a company based on
Speaker 1: the geographic footprint, are measurable and real. We want to
Speaker 1: integrate that into how all of our active investors are
Speaker 1: thinking about building their portfolios. Which doesn't mean that the
Speaker 1: end output of a particular strategy has a dedicated sustainable focus,
Speaker 1: but it does mean that this is risk and so
Speaker 1: like any other element of risk. So let me give
Speaker 1: you a concrete example. We built a tool internally that
Speaker 1: allows us to stress test all of our portfolios for
Speaker 1: different carbon price scenarios. What happens in the future if
Speaker 1: you see a carbon price imposed at certain different levels.
Speaker 1: We run those stress test scenarios on all of our portfolios.
Speaker 1: Not because all of our portfolios have us dedicated sustainable
Speaker 1: injective objective, but because that's a risk factor that all
Speaker 1: of our portfolio managers should think about and have the
Speaker 1: tools in data in front of them to know is
Speaker 1: there risk in my portfolio that I might not see
Speaker 1: if I'm not using this lens. So we're focusing a
Speaker 1: lot on the E. Let's let's move forward and talk
Speaker 1: about the S and the G for a moment. I've
Speaker 1: had people who are not sustainable investors. I've had portfolio
Speaker 1: managers who were not E s G investors tell me
Speaker 1: they still focus on the governance aspect because, according to them,
Speaker 1: it's a risk factor. If you have a diverse board
Speaker 1: of directors and uh pretty close to gender parity both
Speaker 1: in pay and executive hiring, you're much less likely to
Speaker 1: have a me too scenario or any other governance risk
Speaker 1: that seems to have affected a number of companies, both
Speaker 1: tech startups and and more season traditional companies. Yeah. Look,
Speaker 1: part of the way I think about this is I
Speaker 1: don't start a D S G. We start at risk,
Speaker 1: and we start at where can we develop confection that
Speaker 1: sustainability related factors are material? And if you do that,
Speaker 1: then you can build out. And by the way I
Speaker 1: think about E S G, it's just a way of
Speaker 1: bucketing those risks. So um, the conversations that I think
Speaker 1: are actually the least helpful are, well, is that a
Speaker 1: G risk or any risk right? If you're if your
Speaker 1: board has effective management, risk management practic is that include climate?
Speaker 1: Was that a G or any doesn't matter if it's
Speaker 1: risk and you believe it's material. You want to understand
Speaker 1: if a company is thinking about that. Similar to your example,
Speaker 1: if we know that diverse groups of people make better
Speaker 1: decisions across time, they may take a little longer to
Speaker 1: make them, but they make better decisions across time. We
Speaker 1: want to understand how a company is structured in terms
Speaker 1: of their governance and in terms of their employment practices
Speaker 1: to actually encourage more diversity of thought across their their
Speaker 1: company and management. We come at it and say that
Speaker 1: sustainability of related risk and then ultimately you know E,
Speaker 1: S G is In some ways, it's a kind of
Speaker 1: a naming convention to try to identify these and bucket
Speaker 1: them in ways that you know helps people understand. So
Speaker 1: so let's talk about that naming convention. One of the
Speaker 1: pushbacks I've heard is who gets to decide what the
Speaker 1: E and the S and the G is. They all
Speaker 1: mean different things two different people. How do you operate
Speaker 1: in that sort of nebulous area? What definitions matter? What
Speaker 1: are you looking at when you're looking at let's say
Speaker 1: S for social or G for governance. Sure, it's definitely
Speaker 1: the case that there are too many frameworks out there
Speaker 1: and we will all benefit from bringing greater coordination consolidation
Speaker 1: into as we get better at measuring and identifying these issues.
Speaker 1: On the other hand, I think that it's also important
Speaker 1: to to put in perspective. You know, it took eighty
Speaker 1: years to get GAP to be like you know, completely right,
Speaker 1: and we can't let the enemy the perfect be the
Speaker 1: enemy of the good. With the disclosure that is out
Speaker 1: there and the data that is out there, we can
Speaker 1: measure a lot about how companies are managing material sustainability risks,
Speaker 1: and that as a as a as a finuciary and
Speaker 1: an investor, that's our responsibility. So you know, when we
Speaker 1: think about these issues, we talked a lot about EVE,
Speaker 1: when we talk about S, you know, a lot of
Speaker 1: this really is about effective management of what we think
Speaker 1: about effective management of your internal stakeholders, your external stakeholds.
Speaker 1: Who are your internal stakeholds, mostly your employees, So diversity inclusion, pay,
Speaker 1: flexible workplace practices, those are places where we know that
Speaker 1: contributes to employee retention, employee engagement. Those are connected to
Speaker 1: drivers of return. External stakeholders, about the communities you operate in,
Speaker 1: and about the stakeholders that who are your customers, right UM,
Speaker 1: and that that is principally about how you manage your
Speaker 1: supply chain and how you manage the impact of your
Speaker 1: operations in communities. So that's really how we think about
Speaker 1: the s distilled down. Obviously, there's very specific metrics under
Speaker 1: each of US. So technology obviously pays a big role
Speaker 1: in UM, clean air, clean water, dealing with recyclables as UH,
Speaker 1: and of course energy. As an investor, how do you
Speaker 1: look at the role of tech impacting sustainable investment. Well,
Speaker 1: one of the most interesting things about UH, the the
Speaker 1: issue of the decarbonization the economy is that when you
Speaker 1: when you talk about that issue in the energy transition,
Speaker 1: people's minds principally go to windmills, solar panels, electric electrical ours.
Speaker 1: But also you know a lot about UM energy production,
Speaker 1: the energy production system. The actually the lowest cost and
Speaker 1: most significant opportunities for decarbonization today operate in the broad
Speaker 1: space of efficiency and in efficiency. It's technology place that
Speaker 1: have the greatest opportunity for scale. So think about how
Speaker 1: do we make the buildings we live and work in
Speaker 1: more energy efficient. How do we reduce the the efficiency
Speaker 1: of the materials we use, whether it's an industrial processes
Speaker 1: or consumer processes. Literally, there was a giant article I
Speaker 1: want to say it was out of U. C. L
Speaker 1: A about cement production is a huge producer of of
Speaker 1: CEO two and a new technology came up with a
Speaker 1: way to turn cement into a carbon sink. And that
Speaker 1: sort of stuff is kind of fascinating. We don't think
Speaker 1: about cements the concrete you walk on on the sidewalk
Speaker 1: as oh, it took a lot of CEO to to
Speaker 1: produce this. Right, So, if you think about technology and
Speaker 1: efficiency coming together and the opportunities both for UM emissions
Speaker 1: reductions but also UM breakthroughs that can improve the improve
Speaker 1: the efficiency of industrial processes, make you money, that can
Speaker 1: reduce the energy consumption of a business, which is an
Speaker 1: input cost in a number of businesses, that is a
Speaker 1: meaningful UM the balance sheet, right UM. The ways in
Speaker 1: which technology can be disruptive UM are really are really exciting.
Speaker 1: And that's also why this question of how the economy
Speaker 1: moves toward more carbon efficient activity touches every element of
Speaker 1: of our economy. This is not just about oil companies
Speaker 1: and utilities. This is about you know, if you if
Speaker 1: you run a business like like Bloomberg, right, and uh,
Speaker 1: how are you thinking about how technology can help make
Speaker 1: your business more efficient, make you operate with lower carbon footprint,
Speaker 1: help you save money, help you you know, help you
Speaker 1: engage your employees. Those are all things that every business
Speaker 1: should be thinking. It seems pretty pretty universal. Let let
Speaker 1: me uh, let me switch up on you a little bit.
Speaker 1: You've been lecturing at the Kennedy School um about sustainable investing,
Speaker 1: and you've been providing advice to institutions. When you're speaking
Speaker 1: to an institution or you're speaking to a bunch of young,
Speaker 1: fresh scrub grad students, do you get the same questions?
Speaker 1: You get the same pushback? How do those two wildly
Speaker 1: disparate groups look similar and how are they so different?
Speaker 1: That's interesting. So look, um, a lot of the conversations
Speaker 1: in kind of trag in more traditional financial circles among
Speaker 1: our clients and otherwise do start from a presumption of
Speaker 1: of skepticism because there has been this dominant overhang in
Speaker 1: finance that has assumed that as soon as you hear
Speaker 1: the word sustainability, we're talking about that trade off that
Speaker 1: that trade off between value and values. I think a
Speaker 1: lot of that skepticism is healthy because it forces this
Speaker 1: space to be very rigorous about where do you actually
Speaker 1: see UM, real meaningful material impact as opposed to just noise.
Speaker 1: But that skepticism is often kind of UM overhangs a
Speaker 1: lot of conversations in those types of UM UH. For
Speaker 1: a you know, among among younger people and students, I
Speaker 1: think that they're you what you you know you hear
Speaker 1: is UM a degree of urgency and bordering on panic
Speaker 1: on this set of issues that is forcing, that forces
Speaker 1: a kind of questioning of a lot of basic assumptions
Speaker 1: of how finance works, about how institutions work. And I
Speaker 1: think that that's UM. It's a different perspective UM, but
Speaker 1: it's also relevant to this conversation because UM, you know,
Speaker 1: society tends to shape institutions as opposed to the other
Speaker 1: way around. And so I think we all would do
Speaker 1: well to pay attention to that UM and that impulse
Speaker 1: because it's likely to get louder rather than UH than software.
Speaker 1: Quite fascinating. We have been speaking with Brian des He
Speaker 1: is the head of UH Sustainable Investing at black Rock.
Speaker 1: If you enjoy this conversation. We'll be trying to stick
Speaker 1: around for the podcast extras, where we keep the tape
Speaker 1: rolling and continue discussing all things E. S. G. Related.
Speaker 1: You can find that at iTunes, Google Podcasts, at your Spotify,
Speaker 1: wherever your final podcasts are found. We love your comments,
Speaker 1: feedback and suggestions right to us at m IB podcast
Speaker 1: at Bloomberg dot net. Check out my weekly column on
Speaker 1: Bloomberg dot com. Follow me on Twitter at rit Halts.
Speaker 1: I'm Barry Riholts. You're listening to Masters and Business on
Speaker 1: Bloomberg Radio. Welcome to the podcast, Brian, Thank you so
Speaker 1: much for doing this. I've been looking forward to this
Speaker 1: conversation for a while, and I was saying off, Mike,
Speaker 1: I thought, a decade ago we should have done a
Speaker 1: Manhattan Project like approach to the fundamental sciences of alternative energy.
Speaker 1: How do we make solar panels more efficient? How do
Speaker 1: we make battery storage more effective? We're doing these really
Speaker 1: incremental improvements, and the ironic thing about that is a
Speaker 1: decade later, hey, one percent here, two percent, they are
Speaker 1: do that for fifteen twenty years. It really compounds and
Speaker 1: becomes a significant change, and you already see it in
Speaker 1: the cost of solar, like you could put solar panels
Speaker 1: on a roof and have them be very cash flow
Speaker 1: positive in most of the country. I mean, if you're
Speaker 1: in the northernmost parts, it may or may not pay
Speaker 1: for itself quickly. But most of the country it's now
Speaker 1: pretty reasonable, isn't it. Well. I would say two things.
Speaker 1: The first is part of the reason why solar and
Speaker 1: wind have gotten so cheap. As we did a version
Speaker 1: of what you said coming out of the financial crisis
Speaker 1: in two the US, with the U S and the lead,
Speaker 1: we made an extraordinary almost ninety billion dollar investment in
Speaker 1: in basic and applied R and D into clean energy sources.
Speaker 1: The biggest, you know, the biggest mistake because we did
Speaker 1: it once and we didn't we had didn't sustain it
Speaker 1: over over over, over a decade or more. But we
Speaker 1: know that actually effectively allocating dollars into the basic R
Speaker 1: and D space in this area does pay dividends. You
Speaker 1: can draw a line between those types of basic uh
Speaker 1: UM research efforts and innovations that then flow through and
Speaker 1: you know, we're gonna it's gonna take continuing to to
Speaker 1: to double down and double down on that because one
Speaker 1: of the points that you're making is as as the
Speaker 1: installed solar gets cheaper, as you get more intermittent UM
Speaker 1: sources of power on the grid, we're gonna need more
Speaker 1: and more innovation in storage and in distributed structures of
Speaker 1: energy delivery to get over that UM. And we're gonna
Speaker 1: have to come down the cost curve sort of again
Speaker 1: and again to get that right. So let's talk about
Speaker 1: automotive and aviation and trucking UM. Clearly companies. I know
Speaker 1: you don't want to talk about specific companies, but when
Speaker 1: I look at the space, it's not just Tesla, it's
Speaker 1: just about every manufacturer either has a hybrid or an
Speaker 1: all electric today or plans for it. By is this
Speaker 1: argument about electrical cars over We're going to be electrified
Speaker 1: and there isn't a whole lot of UM lifespan left
Speaker 1: in the internal combustion engine, or am I overstating that? Well? Look,
Speaker 1: I think the I think that the I think that
Speaker 1: the that the direction of travel is clear toward electrifying everything.
Speaker 1: The question of that the pace of that is gonna
Speaker 1: be an intersection between technology and the innovation that comes
Speaker 1: out of companies and also policy, including for example, you know,
Speaker 1: the how much foresight, is there into austing forward in
Speaker 1: the infrastructure to enable electric vehicles to become more ubiquitous.
Speaker 1: One thing I'll say that we're not thinking enough about
Speaker 1: and that we didn't you know, when I was back
Speaker 1: in UH in policy in the middle of the tens,
Speaker 1: we didn't think about the policymakers in theies we'll have
Speaker 1: to think about is the intersection of electrification and autonomy. Yeah,
Speaker 1: that's that's pretty obvious. Is I knew you're going to
Speaker 1: go there? Because you have these self driving cars relying
Speaker 1: on you know, signs and paint. Why aren't there RF
Speaker 1: devices implanted across all the highways United States? Think about
Speaker 1: how much more efficient we're going to be if autonomous
Speaker 1: driving cars can can safely follow two feet behind and
Speaker 1: put a bunch of people in a larger vehicle and
Speaker 1: move it more efficiently, and if and look, there's there's
Speaker 1: an infrastructure element and the complexity of autonomy. You know,
Speaker 1: I wouldn't I wouldn't. I wouldn't understate that. But in particular,
Speaker 1: when when what happens when you bring electrification and autonomy
Speaker 1: together is you can drum ramatically reduce the giobradically increase
Speaker 1: the competitiveness of an electric vehicle, because an electric autonomous
Speaker 1: vehicle is a multiple uh more cost effective than electric
Speaker 1: vehicle compared to a to a conventional powered vehicle. And
Speaker 1: so my my, my sense is that the path towards
Speaker 1: towards electrification in the transport sector is not going to
Speaker 1: be straight. There. We're going to see some discontinuities when
Speaker 1: you see those types of technologies come together and you know,
Speaker 1: potentially disrupt the traditional modes of transport in a more
Speaker 1: fundamental way. So we're seeing trucking move towards both electric
Speaker 1: and autonomy. What about aviation, there have been some small
Speaker 1: um money they almost look like big drones or small
Speaker 1: personal craft that have been playing with electrification. Is it
Speaker 1: is the technology even imaginable that we can one day
Speaker 1: fly across the Atlantic in an electric plane? Or is
Speaker 1: the physics to imposing look that that technology is hard
Speaker 1: And I think it's farther. It's it's farther afield, it
Speaker 1: doesn't exist today. The point that I think is important
Speaker 1: for context is that today globally, airline emissions represent two
Speaker 1: percent of global emissions, so not a giant so uh technologically,
Speaker 1: ultimately that's something that will need to be solved. Um,
Speaker 1: it's not a it's it's it's not a near term
Speaker 1: thing that the technology is pretty complicated. On the other hand,
Speaker 1: in terms of looking at the big categories of emissions,
Speaker 1: it's not it's not something that has to be at
Speaker 1: the immediate or top of your list to really accelerate
Speaker 1: the decarbonization. So so what's the top three on that list?
Speaker 1: The top three are efficiency. You gotta massively reduce the
Speaker 1: footprint of our built environment in ways that to the
Speaker 1: point you're making earlier, are already in the money. You
Speaker 1: just gotta figure out ways to overcome barriers. Second is
Speaker 1: you've got to carbonized the electricity production system. Um, the
Speaker 1: economics are already pushing in that direction, but it moves
Speaker 1: more quickly. And Third, electrify everything in transport. Transport quite
Speaker 1: quite fascinating. All right, I want to get to my
Speaker 1: favorite questions before we have to wrap up. Um, we
Speaker 1: ask these of all our guests and kind of think
Speaker 1: of this as our speed round. That's revealing of who
Speaker 1: you are. Uh, tell us what you're streaming these days?
Speaker 1: What are you what are you listening to, either Netflix
Speaker 1: or podcast or whatever? So I am I am catching
Speaker 1: up um on Game of Thrones. I'm almost done. I
Speaker 1: know that I'm I know I'm a little I'm way
Speaker 1: behind you, So don't don't feel that I'm a little
Speaker 1: behind the curve. I just finished breaking bad, so you
Speaker 1: know that gives you a sense that I've sort of
Speaker 1: my queue is a little dated, but I'm working through it. Um,
Speaker 1: what tell us the most important thing people don't know about?
Speaker 1: Brian D's uh that people don't know? Well? Uh uh
Speaker 1: the most important, the most important thing in my life
Speaker 1: is that I've got two kids. I've got a seven
Speaker 1: year old uh and a a four year old and uh,
Speaker 1: I can I can measure my kid's age by um
Speaker 1: by milestones in policy my my my daughter was born
Speaker 1: right after the reelect in twelve and my son was
Speaker 1: born two weeks before we left for Paris to try
Speaker 1: to negotiate the paras agram. That's pretty good. So who were, um,
Speaker 1: some of your early mentors who influenced the course of
Speaker 1: your career? Uh? Well, I was I was fortunate. I
Speaker 1: had to have a great professors in college who really
Speaker 1: brought out me and the way that I thought about things.
Speaker 1: I UM, I had an early mentor, a woman named
Speaker 1: Nancy Birdsall is a great economist who thinks about UM,
Speaker 1: how developing economies fail and succeed in increasing human potential.
Speaker 1: Who really helped me think in different ways. And I've
Speaker 1: been I've been blessed across several people who have been
Speaker 1: at the height of American economic policy, from UH Gene
Speaker 1: Spurling to Larry Summers to UH near A Tandon and others.
Speaker 1: I've I've I've had a I've had a string of
Speaker 1: pretty great bosses. What about on the sustainable investing side,
Speaker 1: what investors influenced how you look at the world through
Speaker 1: the lens of E. S. G. Well, you know, for me,
Speaker 1: coming to black Rock and the both the diversity of
Speaker 1: thought and the diversity of investment approaches at black Rock
Speaker 1: really is a kind of UM. A is a UM
Speaker 1: unmatched privilege to actually just be able to work. You know,
Speaker 1: if you think about black Rock is often thought of
Speaker 1: for the scale, the seven trillion and and the large
Speaker 1: index business, But we have one point eight trillion dollars
Speaker 1: and active mandates across UH fixed income and equities alternatives
Speaker 1: uh UM, almost every geography UM and almost every asset
Speaker 1: class in investment style. So I have I have learned
Speaker 1: an enormous amount in this period from just from the
Speaker 1: the the the the the leaders and the innovators across
Speaker 1: the board and inside the firm. What are some of
Speaker 1: your favorite books? What do you like to read? Uh?
Speaker 1: What are some of your favorite authors? So I I
Speaker 1: tend to like I have. I have, up until somewhat recently,
Speaker 1: been more of a nonfiction guy. Most of my guests
Speaker 1: seem to say the same. I really like John McPhee. UM,
Speaker 1: and he's a he's a sort of nature nature writer
Speaker 1: who's written some incredible histories, including of Alaska and how
Speaker 1: how transportation works in the US. UM. I'm reading right
Speaker 1: now though, UM, a book called The Overstory by Richard Power,
Speaker 1: which is a it's it's dense, but it's an incredible
Speaker 1: it's a beautiful book. That's that's that's in the fiction category. UM.
Speaker 1: Give us a John McPhee book, Uncommon Carriers. It's a
Speaker 1: set of vignettes from him traveling across the country with
Speaker 1: people who transport things from barges that go up and
Speaker 1: down the Mississippi River to UH, chemical tanks, chemical tank
Speaker 1: trucks that or coal trains. UH. Pretty weedy, but fascinating,
Speaker 1: but quite interesting. What do you do for fun? What
Speaker 1: do you do when you are not thinking about sustainable investing? Uh?
Speaker 1: Mostly spent time with my family. Uh. And we like
Speaker 1: to get outside. Uh get get to either to the
Speaker 1: mountains or the ocean hik ski uh or otherwise does
Speaker 1: sound like fun? Tell us about a time you failed
Speaker 1: and what you learned from the experience. Uh. I failed
Speaker 1: enough this morning to fill up the uh that uh
Speaker 1: that category. One would imagine policy and politics is just
Speaker 1: a constant battle of winning and losing. Yeah, you know.
Speaker 1: I mean if you think about, um that for every
Speaker 1: major achievement you know, we uh we had in you know,
Speaker 1: uh we uh in the same year at the administration
Speaker 1: past the Affordable Care Acts, something I thought was a
Speaker 1: great achievement, and at the same time I failed to
Speaker 1: get a climate and cap and trade legislation done. And
Speaker 1: so you get used to this sort of this give
Speaker 1: and take of trying to understand that there's a bigger picture.
Speaker 1: You're not going to get everything. Uh. And one of
Speaker 1: the things I learned there very directly is if you
Speaker 1: can advance progress incrementally, and you can do it in
Speaker 1: a way that doesn't violate the hippocratic oath. You should
Speaker 1: grab that and take those opportunities, because ultimately, while you
Speaker 1: have to have a big vision, the world moves in
Speaker 1: you know, lots of incremental steps along the way. So
Speaker 1: here's the most challenging philosophical question. What are you most
Speaker 1: optimistic about today relative to climate change and sustainable investing
Speaker 1: and what has you most pessimistic? So I would say,
Speaker 1: you know what, what I'm optimistic about the fact that, UM,
Speaker 1: if we if we look back a decade and we
Speaker 1: had said, what do we think the rate of change
Speaker 1: in technological innovation would be partly in these areas that
Speaker 1: we've talked about that are driving UM carbon efficient solutions,
Speaker 1: we would have consistently underestimated the degree to which human
Speaker 1: innovation technological innovation can come together to change things. UM.
Speaker 1: And I'm also optimistic frankly that UM, we're seeing a
Speaker 1: degree of UM focus energy, including a lot of fear
Speaker 1: and a lot of anger, but energy around this set
Speaker 1: of issues where UM, I think that that's going to
Speaker 1: drive in a durable way this to the front and
Speaker 1: center of conversations and financial markets, in politics as well. UM.
Speaker 1: The thing that I'm the most worried about, or the
Speaker 1: most pestimistic is that we've got to you know, we
Speaker 1: we have a we have a more fundamental or you know,
Speaker 1: existential challenge right now around whether institutions, whether they be
Speaker 1: institutions of in uh, in the private sector, or institutions
Speaker 1: and particularly in government, can actually effectively drive change, particularly
Speaker 1: in democracies. And we were facing some some real, you know,
Speaker 1: existential challenges, not just in you know, not just in
Speaker 1: any particular country. And I think that those have to
Speaker 1: do with complicated social and global dynamics. But UM, we're
Speaker 1: gonna have if we're going to actually get on the
Speaker 1: right side of this issue. UM, we're gonna have to
Speaker 1: have a degree of coordinated action with institutions actually working
Speaker 1: together that Um, it's easy to get a little dark
Speaker 1: about that. And our final questions, what sort of advice
Speaker 1: would you give to a recent college grad who was
Speaker 1: interested in sustainable investing. Uh, that's great, it's a growth area. Uh.
Speaker 1: Study up um, uh and and and the and the
Speaker 1: The advice I would say is study up with a
Speaker 1: degree of skepticism and rigor around this set of issues,
Speaker 1: because what we need is more people who are really invested,
Speaker 1: really passionate, but also come at it with a dispassion
Speaker 1: and our final question, what do you know about the
Speaker 1: world of sustainable investing today that you might have wished
Speaker 1: you knew ten fifteen years ago, that uh, that you
Speaker 1: can you can unlock a lot of progress by just
Speaker 1: uh putting facts in data out there and being clear
Speaker 1: about the implications that that ultimately we're gonna need policy
Speaker 1: solutions to get this done. But there's a lot uh
Speaker 1: that finance can do by being clear about risk and
Speaker 1: data and analytics. Quite fascinating. Thank you, Brian. This has
Speaker 1: really been very, very interesting. We have been speaking with
Speaker 1: Brian Deese. He is the global head of sustainable investing
Speaker 1: at black Rock. If you enjoy this conversation, well, be
Speaker 1: sure and look up an intro down an Inch on
Speaker 1: Apple iTunes, where you can see any of our previous
Speaker 1: three hundred such conversations we've held over the past five years.
Speaker 1: We love your comments, feedback and suggestions right to us
Speaker 1: at m IB podcast at Bloomberg dot net. Leave us
Speaker 1: a review on Apple iTunes. Be sure and check out
Speaker 1: my weekly column on Bloomberg dot com slash Opinion. Follow
Speaker 1: me on Twitter at rid Halts. I would be remiss
Speaker 1: if I did not thank the crack staff that helps
Speaker 1: put this together with me each week. Michael Batnick is
Speaker 1: my head of research. Sam Chivraj is our booker producer.
Speaker 1: Nick Falco is our engineer. I'm Barry rid Halts. You're
Speaker 1: listening to Masters in Business on Bloomberg Radio.