1 00:00:00,120 --> 00:00:02,960 Speaker 1: This is Dana Perkins and you're listening to Switched on 2 00:00:03,279 --> 00:00:07,560 Speaker 1: the B and EF podcast. Since twenty eighteen, European oil 3 00:00:07,600 --> 00:00:11,640 Speaker 1: majors have walked a fine line between retaining cash generating 4 00:00:11,760 --> 00:00:14,880 Speaker 1: legacy oil and gas operations on the one hand, and 5 00:00:15,000 --> 00:00:18,239 Speaker 1: ramping up investment in low carbon activities on the other. 6 00:00:18,600 --> 00:00:21,360 Speaker 1: But as record high oil and gas prices on the 7 00:00:21,400 --> 00:00:24,919 Speaker 1: back of the pandemic rebound and Russia's invasion of Ukraine 8 00:00:25,040 --> 00:00:28,120 Speaker 1: has put the sector's climate ambitions in jeopardy in favor 9 00:00:28,160 --> 00:00:33,120 Speaker 1: of energy security and profitability, how should shareholders react? This 10 00:00:33,280 --> 00:00:37,080 Speaker 1: poses a dilemma for climate conscious shareholders and lenders. What 11 00:00:37,200 --> 00:00:40,839 Speaker 1: strategy should be adopted when neither engagement nor a di 12 00:00:40,840 --> 00:00:44,000 Speaker 1: investment have resulted in a meaningful impact in the face 13 00:00:44,120 --> 00:00:47,199 Speaker 1: of heightened profits, and what approaches should be taken to 14 00:00:47,280 --> 00:00:51,479 Speaker 1: keep portfolios net zero aligned through the inevitable ebbs and 15 00:00:51,600 --> 00:00:55,000 Speaker 1: flows of commodity price cycles. So in today's show, we 16 00:00:55,160 --> 00:00:57,440 Speaker 1: bring you a panel from one of B and EF's 17 00:00:57,480 --> 00:01:01,440 Speaker 1: recent summits taking place in London. Ore Sustainable finance analyst 18 00:01:01,640 --> 00:01:05,920 Speaker 1: Ryan Lockhead chaired a panel that included Onika Brauer, sustainability 19 00:01:06,000 --> 00:01:10,480 Speaker 1: specialist at ninety one Asset Management, alongside Ronan Hodge, technical 20 00:01:10,600 --> 00:01:14,240 Speaker 1: lead analyst from Glasgow Financial Alliance for net zero, along 21 00:01:14,280 --> 00:01:18,120 Speaker 1: with Tina Salvett, chief Analyst for Sustainable Finance at Nordea 22 00:01:18,120 --> 00:01:22,800 Speaker 1: Bank and Peter Taylor, Corporate Engagement program Director from Institutional 23 00:01:22,840 --> 00:01:26,520 Speaker 1: Investors Group on Climate Change. Among the topics discussed were 24 00:01:26,520 --> 00:01:29,520 Speaker 1: the approaches of asset managers who retain oil and gas 25 00:01:29,520 --> 00:01:33,039 Speaker 1: investments on their books but also have climate conscious focus 26 00:01:33,160 --> 00:01:36,679 Speaker 1: to their investment strategy. They also discuss the challenges around 27 00:01:36,720 --> 00:01:39,319 Speaker 1: divestment of fossil fuel holdings and whether or not this 28 00:01:39,440 --> 00:01:42,280 Speaker 1: is even the correct approach, especially in light a few 29 00:01:42,319 --> 00:01:45,480 Speaker 1: du shary duties, and if not, where can pressure best 30 00:01:45,520 --> 00:01:48,280 Speaker 1: be applied. And lastly, they came to the fossil fuel 31 00:01:48,280 --> 00:01:52,640 Speaker 1: companies themselves, their own varied strategies towards diversification of energy 32 00:01:52,680 --> 00:01:55,360 Speaker 1: sources and the balance that they have to strike between 33 00:01:55,520 --> 00:01:59,680 Speaker 1: energy security and the energy transition. For more information about 34 00:01:59,680 --> 00:02:02,800 Speaker 1: BEVINGNA summits taking place in cities around the world and 35 00:02:02,920 --> 00:02:05,600 Speaker 1: toy replays from some of the beanf talks and debates 36 00:02:05,600 --> 00:02:08,320 Speaker 1: which took place at our recent event in London, head 37 00:02:08,360 --> 00:02:13,560 Speaker 1: to about dot BNAF dot com Forward slash Summit. As always, 38 00:02:13,600 --> 00:02:16,160 Speaker 1: if you like this podcast, if you subscribe and you 39 00:02:16,200 --> 00:02:18,880 Speaker 1: set up alerts on your phone, you'll receive one when 40 00:02:18,880 --> 00:02:21,080 Speaker 1: we publish a future episode. And if you give us 41 00:02:21,120 --> 00:02:23,880 Speaker 1: a review, it'll make us more discoverable by others. And 42 00:02:23,919 --> 00:02:25,840 Speaker 1: now let's jump to the panel at the b and 43 00:02:25,880 --> 00:02:29,679 Speaker 1: EF Summit London, which was titled how should investors react 44 00:02:29,760 --> 00:02:32,600 Speaker 1: to oil majors reducing their climate ambition? 45 00:02:43,240 --> 00:02:46,040 Speaker 2: Since twenty eight seen, large oil and gas majors have 46 00:02:46,160 --> 00:02:49,120 Speaker 2: largely maintained their legacy assets that have kept cash flowing, 47 00:02:49,360 --> 00:02:51,920 Speaker 2: but have also been gradually trying to position themselves to 48 00:02:52,080 --> 00:02:57,240 Speaker 2: present us being climate friendly. Indeed, BNF estimated that LU 49 00:02:57,320 --> 00:03:01,040 Speaker 2: carbon capital expenditures wre thirty two billion dollars last year. 50 00:03:01,120 --> 00:03:03,160 Speaker 2: That's the eight point three percent of the industry's total 51 00:03:03,200 --> 00:03:05,880 Speaker 2: kapex in that year, which was up from less than 52 00:03:05,919 --> 00:03:10,480 Speaker 2: one percent in twenty fifteen. However, according to the IA, 53 00:03:11,080 --> 00:03:13,239 Speaker 2: the oil and gas sector was still responsible for five 54 00:03:13,240 --> 00:03:16,639 Speaker 2: point one billion tons of zero two emissions in twenty 55 00:03:16,680 --> 00:03:19,600 Speaker 2: twenty two, which was fifteen percent of the total global 56 00:03:19,720 --> 00:03:23,320 Speaker 2: energy related emissions in that year. What's more, with the 57 00:03:23,360 --> 00:03:26,840 Speaker 2: advent of higher commodity prices, mainly sparked by Russia's invasion 58 00:03:26,919 --> 00:03:30,160 Speaker 2: of Ukraine and other blocks one events such as the pandemic. 59 00:03:30,600 --> 00:03:34,160 Speaker 2: Certain oil majors, including but not limited to Shell BP 60 00:03:34,440 --> 00:03:37,360 Speaker 2: Total Exon, have taken one big step back on their 61 00:03:37,400 --> 00:03:40,880 Speaker 2: climate commitments, most often citing a duty to shareholders as 62 00:03:40,920 --> 00:03:44,080 Speaker 2: the main driving force behind that. So I'm lucky enough 63 00:03:44,200 --> 00:03:47,760 Speaker 2: today to be joined before wonderful panelists from a variety 64 00:03:47,800 --> 00:03:50,840 Speaker 2: of different backgrounds and experiences, and we're going to try 65 00:03:50,880 --> 00:03:53,720 Speaker 2: and glean as much information on different perspectives from them 66 00:03:53,760 --> 00:03:57,800 Speaker 2: as possible, So welcome. First, we're going to set the scene. 67 00:03:57,800 --> 00:04:00,600 Speaker 2: We'll establish what's actually happening within the oil made particularly 68 00:04:00,640 --> 00:04:03,600 Speaker 2: over the last five years, on their operations, how they're 69 00:04:03,600 --> 00:04:07,160 Speaker 2: reacting to changes in the commodity prices, but maybe more specifically, 70 00:04:07,200 --> 00:04:10,880 Speaker 2: on how they're approaching climate change and how their commitments 71 00:04:10,920 --> 00:04:14,400 Speaker 2: have changed in that period. And then we're going to 72 00:04:14,520 --> 00:04:16,880 Speaker 2: change and the crux of the conversation is going to 73 00:04:16,880 --> 00:04:20,400 Speaker 2: be about how financial institutions and investors, banks, insurers, whatever 74 00:04:20,440 --> 00:04:22,640 Speaker 2: we want to get onto depends how the conversation goes, 75 00:04:22,920 --> 00:04:25,240 Speaker 2: how they should react and how they can react on 76 00:04:25,279 --> 00:04:28,279 Speaker 2: what's up their sleeves in order to try and drive 77 00:04:28,520 --> 00:04:31,640 Speaker 2: climate positive outcomes. First of all, we're going to set 78 00:04:31,640 --> 00:04:34,200 Speaker 2: the scene, so I want to know from each of 79 00:04:34,240 --> 00:04:38,919 Speaker 2: you about what you see and how it pertains to 80 00:04:38,960 --> 00:04:43,200 Speaker 2: your particular role at nor Data Bank. So we're going 81 00:04:43,240 --> 00:04:45,440 Speaker 2: to start with Tina, who used to be an oil analyst, 82 00:04:45,440 --> 00:04:49,039 Speaker 2: and what have you seen happen in the oil and 83 00:04:49,080 --> 00:04:52,800 Speaker 2: gas majors on how their business strategy has developed in 84 00:04:52,800 --> 00:04:57,320 Speaker 2: the last five years and then more recently, how their 85 00:04:57,320 --> 00:05:00,560 Speaker 2: climate strategies have developed and changed and maybe not for 86 00:05:00,640 --> 00:05:01,040 Speaker 2: the better. 87 00:05:01,920 --> 00:05:05,119 Speaker 3: First of all, I think we saw a change within 88 00:05:05,200 --> 00:05:10,680 Speaker 3: the oil and gas market in twenty eighteen approximately when 89 00:05:10,880 --> 00:05:13,719 Speaker 3: many of the oil companies, although they have tried before, 90 00:05:14,400 --> 00:05:19,120 Speaker 3: started to rephrase themselves as not oil and gas companies 91 00:05:19,160 --> 00:05:24,000 Speaker 3: and longer but more broader energy companies and much more 92 00:05:24,040 --> 00:05:28,719 Speaker 3: focused when they talked about themselves also and communicated about 93 00:05:28,839 --> 00:05:32,640 Speaker 3: how they wanted to be part of the energy transision 94 00:05:32,760 --> 00:05:36,160 Speaker 3: and also how they communicated in what part of the 95 00:05:36,279 --> 00:05:38,840 Speaker 3: energy transition they wanted to work. And some of them 96 00:05:38,880 --> 00:05:42,000 Speaker 3: also highlighted if they wanted to go into solar, if 97 00:05:42,040 --> 00:05:44,680 Speaker 3: they want to go into wind power, or if it 98 00:05:44,839 --> 00:05:47,680 Speaker 3: was carbon capture and storage. So I think it was 99 00:05:47,720 --> 00:05:50,440 Speaker 3: a lot of pressure on the companies at that time. 100 00:05:51,560 --> 00:05:54,280 Speaker 3: Then for the last one and a half years, I 101 00:05:54,279 --> 00:05:57,359 Speaker 3: would say after oil and gas prices increased. Of course 102 00:05:57,440 --> 00:06:00,680 Speaker 3: that was based on the unfortunate situation and the war 103 00:06:00,800 --> 00:06:05,560 Speaker 3: in Ukraine, that this has changed a bit how the 104 00:06:05,640 --> 00:06:10,000 Speaker 3: oil companies, both how they communicate but also how they 105 00:06:10,120 --> 00:06:14,520 Speaker 3: look at themselves in my view, because a bit how 106 00:06:14,560 --> 00:06:17,760 Speaker 3: they how they talk about themselves now is and and 107 00:06:17,920 --> 00:06:21,880 Speaker 3: the market is more rather than being the in a transition. 108 00:06:22,400 --> 00:06:25,240 Speaker 3: It's more, of course there still is in the transition, 109 00:06:25,360 --> 00:06:29,520 Speaker 3: but also how energy security has you know, moved up 110 00:06:29,560 --> 00:06:33,120 Speaker 3: on the agenda, and that has also done something with 111 00:06:33,839 --> 00:06:36,920 Speaker 3: the how they're talking about where they invest and also 112 00:06:37,000 --> 00:06:40,600 Speaker 3: the amount of investments starting to increase again at least 113 00:06:40,600 --> 00:06:42,760 Speaker 3: in the short term projects. 114 00:06:43,600 --> 00:06:46,480 Speaker 4: In the oil and gas sectors, so not as much. 115 00:06:46,680 --> 00:06:48,120 Speaker 3: Of course, that has something to do with oil and 116 00:06:48,120 --> 00:06:51,920 Speaker 3: gas prices as well, but in my opinion, it seems 117 00:06:52,000 --> 00:06:55,400 Speaker 3: like it's a bit more relaxed focusing on energy security 118 00:06:55,480 --> 00:06:59,719 Speaker 3: and a bit less focus on the energy transition. And 119 00:07:00,080 --> 00:07:03,320 Speaker 3: I hope that is not going to last for very long. 120 00:07:03,520 --> 00:07:05,160 Speaker 2: Do you think or that do you think that's a 121 00:07:05,200 --> 00:07:08,400 Speaker 2: little bit short sighted from them to try and move 122 00:07:08,440 --> 00:07:10,280 Speaker 2: away from thinking about the energy transition. 123 00:07:10,960 --> 00:07:14,640 Speaker 3: I think if they're focused on the short, shorter term project, 124 00:07:14,680 --> 00:07:19,480 Speaker 3: which could be detailed projects for example, that is, projects 125 00:07:18,840 --> 00:07:23,240 Speaker 3: that could come on line very very fast. But if 126 00:07:23,280 --> 00:07:27,120 Speaker 3: they think about more the year expensive, harder to get 127 00:07:27,280 --> 00:07:30,640 Speaker 3: projects that could take on average ten to or seven 128 00:07:30,680 --> 00:07:34,520 Speaker 3: to ten years before actually from your start a project, too, 129 00:07:34,520 --> 00:07:36,520 Speaker 3: you could see the oil and gas out in the market. 130 00:07:37,040 --> 00:07:40,280 Speaker 3: I'm more worried about those projects because they won't help 131 00:07:40,360 --> 00:07:44,240 Speaker 3: anything about the energy situation now and the energy crisis. 132 00:07:44,240 --> 00:07:47,200 Speaker 3: We'll have the last year and might have a tight 133 00:07:47,320 --> 00:07:50,320 Speaker 3: market for the upcoming winter, depends on how the winter 134 00:07:50,360 --> 00:07:55,080 Speaker 3: will turn out. But the longer term project are the 135 00:07:55,160 --> 00:07:58,760 Speaker 3: more costly project. I am worried that that could turn 136 00:07:58,800 --> 00:08:00,760 Speaker 3: out to be a strat their assets. 137 00:08:01,520 --> 00:08:02,360 Speaker 2: Peter, you're nodding. 138 00:08:02,560 --> 00:08:05,920 Speaker 5: You concur, yes, very much, well, I very much concur 139 00:08:06,040 --> 00:08:08,880 Speaker 5: with the timeline that Tina laid out that sort of 140 00:08:08,920 --> 00:08:12,600 Speaker 5: there was a shift a shift of yes, a shift 141 00:08:12,600 --> 00:08:14,920 Speaker 5: of economics of the oil and gas industry between twenty 142 00:08:14,960 --> 00:08:18,400 Speaker 5: eighteen and say twenty twenty one, well twenty twenty two onwards, 143 00:08:19,280 --> 00:08:21,960 Speaker 5: but also a shift of sort of narrative and sort 144 00:08:22,000 --> 00:08:24,600 Speaker 5: of context and sort of the messaging very much so. 145 00:08:24,800 --> 00:08:26,640 Speaker 5: But a couple of other distinctions I would make would 146 00:08:26,640 --> 00:08:29,800 Speaker 5: be between I think that's very true Europe, right, So 147 00:08:29,840 --> 00:08:33,040 Speaker 5: in Europe there has been that shift, but Europe was 148 00:08:33,080 --> 00:08:35,280 Speaker 5: a long way ahead of saying North America and other 149 00:08:35,320 --> 00:08:37,000 Speaker 5: parts of the world in terms of the oil and 150 00:08:37,040 --> 00:08:39,520 Speaker 5: gas sector and remain so right. I mean, I think 151 00:08:39,600 --> 00:08:42,400 Speaker 5: to be fair is that, yes, there it is disappointing 152 00:08:42,400 --> 00:08:45,960 Speaker 5: what's happened with particularly BP and SHELL, But I don't 153 00:08:45,960 --> 00:08:47,760 Speaker 5: want to let them off the hook, but to put 154 00:08:47,760 --> 00:08:49,320 Speaker 5: them in the seene To say that they've gone from 155 00:08:49,360 --> 00:08:51,480 Speaker 5: sort of doing these interesting things two or three years 156 00:08:51,480 --> 00:08:54,320 Speaker 5: ago to doing you know that they're just the same 157 00:08:54,360 --> 00:08:57,079 Speaker 5: as say, oil companies in other parts of the world 158 00:08:57,200 --> 00:09:00,560 Speaker 5: is probably sort of an overstatement of how big U 159 00:09:00,600 --> 00:09:05,080 Speaker 5: turn was. But the other distinction perhaps is is is 160 00:09:05,120 --> 00:09:06,640 Speaker 5: the one that I mentioned the sort of the short 161 00:09:06,720 --> 00:09:09,520 Speaker 5: term versus long term, and it's I think that's perhaps 162 00:09:09,559 --> 00:09:12,239 Speaker 5: where investors really need to kind of focus their engagement. 163 00:09:12,440 --> 00:09:12,520 Speaker 1: Is. 164 00:09:12,920 --> 00:09:15,880 Speaker 5: Yes, it's not surprising in any industry that if your 165 00:09:15,920 --> 00:09:18,680 Speaker 5: product goes up massively in price, there is a rethink 166 00:09:18,720 --> 00:09:20,480 Speaker 5: of strategy. I mean, we shouldn't in a sense we 167 00:09:20,480 --> 00:09:22,920 Speaker 5: should we shouldn't be surprised, right, So the first thing 168 00:09:22,960 --> 00:09:26,760 Speaker 5: is how should investors react, Well, they shouldn't be that surprised. 169 00:09:27,160 --> 00:09:30,600 Speaker 5: But it's that long term versus short term thing, right, 170 00:09:30,640 --> 00:09:33,920 Speaker 5: And that is so much of engagement with companies, not 171 00:09:34,000 --> 00:09:36,560 Speaker 5: just on oil and gas companies, not just on climate, 172 00:09:36,600 --> 00:09:39,920 Speaker 5: but across any kind of issue. One of the key 173 00:09:40,200 --> 00:09:42,920 Speaker 5: challenges for investors is to ensure that the management of 174 00:09:43,000 --> 00:09:47,840 Speaker 5: a company have their long term, long term shareholder value 175 00:09:48,720 --> 00:09:51,240 Speaker 5: in mind. And I think that's where you where where 176 00:09:51,280 --> 00:09:53,640 Speaker 5: the focus of engagement should really be. Not sort of 177 00:09:53,880 --> 00:09:56,160 Speaker 5: is it rational to sell more oil when it's gone 178 00:09:56,240 --> 00:09:59,440 Speaker 5: up a lot in price, Well, yes, it probably is rational. 179 00:09:59,679 --> 00:10:03,320 Speaker 5: But is it rational to invest in to increase your 180 00:10:03,320 --> 00:10:06,800 Speaker 5: own capex and oil and gas when when the IA 181 00:10:06,960 --> 00:10:09,160 Speaker 5: is saying saying we're going to reach peak oil sooner 182 00:10:09,200 --> 00:10:13,600 Speaker 5: than later, When Sinopeck in China is saying that the 183 00:10:13,640 --> 00:10:16,000 Speaker 5: oil or is it maybe it's gas demand in China 184 00:10:16,080 --> 00:10:20,120 Speaker 5: is going to reach its peak really quite soon. So 185 00:10:20,200 --> 00:10:21,560 Speaker 5: there's a couple of thoughts. 186 00:10:21,760 --> 00:10:24,120 Speaker 2: Yeah, it's a very good point that the panel actually 187 00:10:24,160 --> 00:10:27,920 Speaker 2: is about what investors should be doing. And I'm going 188 00:10:27,960 --> 00:10:30,000 Speaker 2: to pick you up on this run and straight away 189 00:10:30,000 --> 00:10:34,600 Speaker 2: after Peter. You're part of the ii gc C. What 190 00:10:34,600 --> 00:10:37,640 Speaker 2: can you do what's within your scope to influence high 191 00:10:37,679 --> 00:10:42,280 Speaker 2: investors are are influencing, are engaging with the oil and 192 00:10:42,280 --> 00:10:43,599 Speaker 2: gas majors. 193 00:10:43,440 --> 00:10:45,560 Speaker 5: It's funny, actually think part of our role and we 194 00:10:45,600 --> 00:10:47,880 Speaker 5: are a membership body, so what isn't our role is 195 00:10:47,920 --> 00:10:50,520 Speaker 5: to tell them what they should be, how they should 196 00:10:50,520 --> 00:10:52,680 Speaker 5: be voting, tell them how they should be investing. That 197 00:10:52,760 --> 00:10:55,679 Speaker 5: is very much not our job. They offer the fiduciaries, 198 00:10:55,760 --> 00:10:58,400 Speaker 5: not us, and they will have different opinions on those questions. 199 00:10:58,720 --> 00:10:59,719 Speaker 5: But I think that one of the sort of the 200 00:10:59,800 --> 00:11:03,559 Speaker 5: more contextual or atmospheric things that we are working with 201 00:11:03,720 --> 00:11:07,679 Speaker 5: our investor members on is again to this question. It's 202 00:11:07,720 --> 00:11:12,160 Speaker 5: about don't overreact and don't underreact. So don't overreact and say, oh, 203 00:11:12,200 --> 00:11:15,440 Speaker 5: it's all hopeless. No, there is so much to engage 204 00:11:15,440 --> 00:11:18,680 Speaker 5: with oil and gas companies on both long term versus 205 00:11:18,679 --> 00:11:25,040 Speaker 5: short term non production emissions as well capex in other 206 00:11:25,559 --> 00:11:28,320 Speaker 5: parts of the energy sector, in renewable energy, So there's 207 00:11:28,320 --> 00:11:31,720 Speaker 5: so much left to engage with oil and gas companies on. 208 00:11:32,559 --> 00:11:35,719 Speaker 5: But equally, don't underreact, you know, don't this is this 209 00:11:35,760 --> 00:11:38,400 Speaker 5: is a time for This isn't a time for saying, oh, well, 210 00:11:38,880 --> 00:11:41,080 Speaker 5: you know oil price has gone up, what can we 211 00:11:41,080 --> 00:11:44,880 Speaker 5: do about it? So, yeah, don't underreact and don't overreact. 212 00:11:45,960 --> 00:11:48,520 Speaker 2: You would you come in on that the g funds 213 00:11:48,520 --> 00:11:51,839 Speaker 2: is an umbrella organization covering multiple different subsectors, so it's 214 00:11:51,840 --> 00:11:55,160 Speaker 2: not just banks, investors, it's insurance, it's everyone. How would 215 00:11:55,200 --> 00:11:57,160 Speaker 2: you go about engaging with those members? 216 00:11:57,440 --> 00:11:57,680 Speaker 1: Yeah? 217 00:11:57,720 --> 00:12:01,559 Speaker 6: Sure, so if those aren't familiar with g fans, it's 218 00:12:01,640 --> 00:12:06,480 Speaker 6: bringing together essentially of net zero committed financial institutions across 219 00:12:06,520 --> 00:12:11,880 Speaker 6: the entire ecosystem as owners that managers, banks, insurers, index providers, 220 00:12:11,960 --> 00:12:17,280 Speaker 6: credit warning agencies, and really similarly, we're not there to 221 00:12:17,320 --> 00:12:19,560 Speaker 6: tell tell them what to do, but we're there to 222 00:12:19,640 --> 00:12:22,760 Speaker 6: kind of support that net zero commitment they've made. And 223 00:12:22,800 --> 00:12:26,360 Speaker 6: so I guess the way we're coming at this really 224 00:12:26,480 --> 00:12:30,800 Speaker 6: is what is it that you know, one needs to 225 00:12:30,920 --> 00:12:33,880 Speaker 6: see to kind of back to Peter's earlier point about 226 00:12:34,679 --> 00:12:37,920 Speaker 6: that short term versus long term? What is it that 227 00:12:37,920 --> 00:12:41,840 Speaker 6: that that that entire financial ecosystem wants to see from 228 00:12:42,080 --> 00:12:44,920 Speaker 6: energy companies, oil and gas majors in terms of that 229 00:12:44,920 --> 00:12:49,960 Speaker 6: that that strategy and in particular recognizing that the net 230 00:12:50,040 --> 00:12:54,760 Speaker 6: zero transition is a real thing. Ninety percent of governments 231 00:12:54,760 --> 00:12:58,600 Speaker 6: have committed to it. Maybe they won't achieve it, maybe 232 00:12:58,600 --> 00:13:02,199 Speaker 6: they won't fulfill their ambition on that, but there's a 233 00:13:02,240 --> 00:13:05,640 Speaker 6: big societal demand for it, and so therefore it's something 234 00:13:05,679 --> 00:13:07,920 Speaker 6: that you know, one needs, one needs a strategy for 235 00:13:08,000 --> 00:13:12,280 Speaker 6: and that includes our current kind of energy providers. And 236 00:13:12,320 --> 00:13:14,520 Speaker 6: so you know, the what we've done really is to 237 00:13:14,559 --> 00:13:20,000 Speaker 6: help provide frameworks, guidance tools that kind of help frame 238 00:13:20,120 --> 00:13:22,280 Speaker 6: that that that question I suppose back to the back 239 00:13:22,320 --> 00:13:26,440 Speaker 6: to the companies, and so, yes, it is disappointing when 240 00:13:26,480 --> 00:13:30,199 Speaker 6: you sort of see the sense of reduction in ambition, 241 00:13:30,280 --> 00:13:35,120 Speaker 6: as you say, but I think it's about giving those 242 00:13:35,120 --> 00:13:40,120 Speaker 6: different financial institutions the the tools to kind of support 243 00:13:40,120 --> 00:13:42,680 Speaker 6: that engagement, to to kind of ask the right questions 244 00:13:42,679 --> 00:13:46,320 Speaker 6: about what what that strategy looks like. And I think, 245 00:13:46,880 --> 00:13:48,880 Speaker 6: you know, it's only once you've kind of got that 246 00:13:48,920 --> 00:13:52,800 Speaker 6: information that you can make a decision as to whether 247 00:13:52,960 --> 00:13:57,959 Speaker 6: whether investment or finance or insurance is you know it 248 00:13:58,000 --> 00:13:58,840 Speaker 6: is going to be forthcoming. 249 00:13:59,640 --> 00:14:03,400 Speaker 2: So engagement seems to be the word of the day 250 00:14:03,400 --> 00:14:07,880 Speaker 2: so far on this panel. Anyway, I'm anaga welcome. So 251 00:14:08,000 --> 00:14:11,360 Speaker 2: you're a ninety one asset management through various funds, they 252 00:14:11,360 --> 00:14:14,200 Speaker 2: are still exposed to probably more than a billion dollars 253 00:14:14,240 --> 00:14:18,400 Speaker 2: in total of oil and gas major equity. I'm not 254 00:14:18,400 --> 00:14:20,640 Speaker 2: holding you to account for the entire strategy of ninety one, 255 00:14:20,680 --> 00:14:25,400 Speaker 2: but would you concare then that engagement is the aim 256 00:14:25,400 --> 00:14:27,760 Speaker 2: of the game at the moment and just straight up 257 00:14:27,800 --> 00:14:29,760 Speaker 2: divestment is suboptimal. 258 00:14:31,080 --> 00:14:35,560 Speaker 7: I think that you have to firstly acknowledge that not 259 00:14:35,920 --> 00:14:38,400 Speaker 7: all oil and gas is created equal. I think if 260 00:14:38,440 --> 00:14:41,040 Speaker 7: you walk into this debate and you assume that all 261 00:14:41,080 --> 00:14:44,480 Speaker 7: companies are on the same trajectory, you are going to, 262 00:14:44,840 --> 00:14:46,360 Speaker 7: you know, put your feet in hot water. And I 263 00:14:46,360 --> 00:14:49,240 Speaker 7: think Peter kind of touched on that with you know, 264 00:14:49,280 --> 00:14:51,880 Speaker 7: the shells and bps of this world versus some of 265 00:14:51,920 --> 00:14:56,880 Speaker 7: the US majors where they are almost worlds apart, and 266 00:14:58,640 --> 00:15:03,240 Speaker 7: understanding the nuance of that and understanding what that means 267 00:15:03,280 --> 00:15:07,200 Speaker 7: for the short, medium and long term both from you know, 268 00:15:07,280 --> 00:15:09,920 Speaker 7: the revenue they're going to generate, what the alpha that 269 00:15:10,000 --> 00:15:13,320 Speaker 7: you can potentially generate, and the transition risk of those 270 00:15:13,320 --> 00:15:19,200 Speaker 7: companies is super super important. We are at ninety one 271 00:15:19,280 --> 00:15:22,080 Speaker 7: or a firm that you know, we committed to net zero. 272 00:15:22,120 --> 00:15:26,120 Speaker 7: We're a signature BIO GCC, we're part of g fans, 273 00:15:26,640 --> 00:15:30,360 Speaker 7: we have fifty eight percent of our assets and emerging markets. 274 00:15:31,600 --> 00:15:35,320 Speaker 7: That is important because a lot of what we discuss 275 00:15:35,400 --> 00:15:38,400 Speaker 7: here comes from the view of developed markets. But once 276 00:15:38,440 --> 00:15:42,960 Speaker 7: you get into the detail of disclosure, of target setting, 277 00:15:43,160 --> 00:15:48,000 Speaker 7: of setting robust strategies, of the whole concept of the 278 00:15:48,120 --> 00:15:51,560 Speaker 7: energy transition, the argument becomes very different when you look 279 00:15:51,560 --> 00:15:53,120 Speaker 7: at it from emerging market context. 280 00:15:53,960 --> 00:15:57,960 Speaker 4: So we have developed a view, a set. 281 00:15:57,760 --> 00:16:02,680 Speaker 7: Of tools and approach view on engagement that is very 282 00:16:03,000 --> 00:16:05,560 Speaker 7: I think, roll up your sleeves, get your hands dirty, 283 00:16:05,640 --> 00:16:09,160 Speaker 7: don't be scared, to get stuck in. And the reason 284 00:16:09,160 --> 00:16:14,520 Speaker 7: why I say that is because divestment would be the 285 00:16:14,640 --> 00:16:18,440 Speaker 7: optimal outcome if you're setting poor photio decarbonization targets, and 286 00:16:18,520 --> 00:16:20,080 Speaker 7: if I didn't want to be up on the stage 287 00:16:20,200 --> 00:16:24,520 Speaker 7: just talking about this subject. But what we know is 288 00:16:24,520 --> 00:16:28,720 Speaker 7: that that doesn't achieve the objective of real world decarbonization. Now, 289 00:16:28,960 --> 00:16:34,000 Speaker 7: the question then remains, what does you can only achieve 290 00:16:34,040 --> 00:16:38,560 Speaker 7: the outcome of transitioning these big, big oil tankers by 291 00:16:38,600 --> 00:16:44,760 Speaker 7: having meaningful conversations, conversations that are that are informed by 292 00:16:44,960 --> 00:16:48,600 Speaker 7: the frameworks that the likes of the IGCC, the guidance 293 00:16:48,640 --> 00:16:51,000 Speaker 7: of the likes of g funds. Those are the types 294 00:16:51,040 --> 00:16:56,040 Speaker 7: of institutions and guidelines that inform asset managers like us 295 00:16:56,400 --> 00:17:00,240 Speaker 7: to sit at the wardroom table with the chair of 296 00:17:00,480 --> 00:17:03,360 Speaker 7: Shell and have a meaningful conversation about their scope three 297 00:17:03,400 --> 00:17:06,600 Speaker 7: target because we have to be very clear about what 298 00:17:06,600 --> 00:17:10,399 Speaker 7: we're asking for and the implications of that, and they, 299 00:17:10,920 --> 00:17:13,080 Speaker 7: you know, when they're talking to their shareholder, have to 300 00:17:13,080 --> 00:17:16,480 Speaker 7: be very clear on what is the unintended consequence or 301 00:17:16,520 --> 00:17:19,840 Speaker 7: the intended consequence if they follow suit? 302 00:17:20,040 --> 00:17:24,080 Speaker 2: Could divestn't be a buck stop part of last call? 303 00:17:24,320 --> 00:17:26,040 Speaker 2: Should your engagement efforts not work? 304 00:17:27,119 --> 00:17:27,760 Speaker 4: Absolutely? 305 00:17:27,800 --> 00:17:32,240 Speaker 7: And I think but the point there is the timeline 306 00:17:33,119 --> 00:17:33,440 Speaker 7: on that. 307 00:17:33,760 --> 00:17:35,920 Speaker 2: What does success look like for for engagement? 308 00:17:35,920 --> 00:17:39,200 Speaker 7: Do so the way that we are sort of very 309 00:17:41,000 --> 00:17:43,200 Speaker 7: you know, we've got our own tool kit. It's a 310 00:17:43,320 --> 00:17:46,720 Speaker 7: we've got a proprietary sort of framework that we use 311 00:17:46,800 --> 00:17:49,119 Speaker 7: to assess all of our companies, specifically our oil and 312 00:17:49,119 --> 00:17:52,040 Speaker 7: gas majors, and the framework allows us to unpick the 313 00:17:52,160 --> 00:17:52,840 Speaker 7: detail of. 314 00:17:52,800 --> 00:17:54,680 Speaker 4: These companies transition plans. 315 00:17:54,720 --> 00:17:58,200 Speaker 7: Down to how much opics and cathics are being spent 316 00:17:58,359 --> 00:18:03,879 Speaker 7: on transition related at or, for instance, methane measurement. That 317 00:18:04,000 --> 00:18:06,600 Speaker 7: is important because it helps you understand the integrity of 318 00:18:06,640 --> 00:18:10,160 Speaker 7: the transition plan. Now, the output of that tool informs 319 00:18:10,160 --> 00:18:14,320 Speaker 7: our engagement. So imagine it's red ambergreen across fifty indicators. 320 00:18:15,080 --> 00:18:17,679 Speaker 7: Red is obviously this is what we need to engage 321 00:18:17,680 --> 00:18:21,880 Speaker 7: the company on. You then look at that, you lay 322 00:18:21,880 --> 00:18:24,320 Speaker 7: out your red flags, and you say, what is achievable 323 00:18:24,520 --> 00:18:27,920 Speaker 7: in one year, three years, five years, and ten years, 324 00:18:28,359 --> 00:18:30,480 Speaker 7: assuming that you're going to be a shareholder for that 325 00:18:30,560 --> 00:18:35,760 Speaker 7: long and if those milestones are not met, what is 326 00:18:35,800 --> 00:18:40,040 Speaker 7: the escalation policy in some In some instances, yes, it's 327 00:18:40,080 --> 00:18:42,880 Speaker 7: going to be divestment. Is that is a scope? Through 328 00:18:43,000 --> 00:18:45,800 Speaker 7: setting a scope through target enough to divest? I would argue, no. 329 00:18:48,680 --> 00:18:52,800 Speaker 2: Tina, we hear about engagement, and quite often most people 330 00:18:52,800 --> 00:18:56,679 Speaker 2: would associate that with equity holdings. But banks are vital 331 00:18:56,800 --> 00:18:58,720 Speaker 2: when it comes to the flu of capital into these 332 00:18:58,760 --> 00:19:02,960 Speaker 2: companies as well. So I believe you're more of the 333 00:19:03,000 --> 00:19:08,240 Speaker 2: opinion that engagement is also more worthy of a strategy 334 00:19:08,280 --> 00:19:10,760 Speaker 2: than than divestments. So how can a banker? Can a 335 00:19:10,800 --> 00:19:13,440 Speaker 2: lender go about that when they don't have the voting 336 00:19:13,480 --> 00:19:14,680 Speaker 2: powers of an equity holder? 337 00:19:16,200 --> 00:19:20,119 Speaker 3: I mean we work with We work with companies because 338 00:19:20,119 --> 00:19:23,800 Speaker 3: we think it's better to do the transition together. So 339 00:19:24,720 --> 00:19:29,439 Speaker 3: rather than throwing companies out of our portfolio from the start, 340 00:19:29,600 --> 00:19:34,280 Speaker 3: we rather set together and work set up a set 341 00:19:34,280 --> 00:19:38,680 Speaker 3: of a strategy that actually the company could reach their 342 00:19:38,760 --> 00:19:43,720 Speaker 3: one point five target for example, and of course for 343 00:19:43,840 --> 00:19:46,239 Speaker 3: us we will start based on the asset management, but 344 00:19:46,320 --> 00:19:51,560 Speaker 3: also on the lending side, we have our own strategy. 345 00:19:51,640 --> 00:19:55,159 Speaker 3: If we want to reach one point five degrees in 346 00:19:55,240 --> 00:19:58,200 Speaker 3: twenty fifty. Of course our clients have to do the same, 347 00:19:58,280 --> 00:20:00,479 Speaker 3: so we need to work with them if actually going 348 00:20:00,520 --> 00:20:03,720 Speaker 3: to follow up on our own goals. But we also 349 00:20:03,760 --> 00:20:07,239 Speaker 3: think that if you really want to cut emissions, it 350 00:20:07,280 --> 00:20:10,560 Speaker 3: doesn't help that much to throw them out of the portfolio, 351 00:20:10,840 --> 00:20:13,760 Speaker 3: but rather to push for a change. And we think 352 00:20:13,760 --> 00:20:17,920 Speaker 3: that the change is coming much or come is better 353 00:20:17,920 --> 00:20:21,919 Speaker 3: to drive through by working together. We need to do 354 00:20:21,960 --> 00:20:22,399 Speaker 3: the same thing. 355 00:20:22,440 --> 00:20:24,240 Speaker 4: It's hard to do it and we don't. 356 00:20:24,040 --> 00:20:27,159 Speaker 3: Know how to do it, but we think working together 357 00:20:27,200 --> 00:20:29,679 Speaker 3: with the clients we could do it together, find a 358 00:20:29,720 --> 00:20:33,280 Speaker 3: way together. So I think that is the most important 359 00:20:33,480 --> 00:20:34,200 Speaker 3: for us. 360 00:20:35,359 --> 00:20:38,840 Speaker 2: Yeah, Peter used the word hope, and we shouldn't give 361 00:20:38,880 --> 00:20:41,199 Speaker 2: up hope. On these companies just yet, as this is 362 00:20:41,320 --> 00:20:43,840 Speaker 2: an open question to anyone. But I'll give it back 363 00:20:43,840 --> 00:20:46,800 Speaker 2: to you, Peter, because you mentioned it is the hope 364 00:20:46,840 --> 00:20:49,480 Speaker 2: that you can turn every BP shell out on into 365 00:20:49,560 --> 00:20:53,359 Speaker 2: an Horsted and get them to completely transition or is 366 00:20:53,960 --> 00:20:57,080 Speaker 2: that slightly hopeful. 367 00:20:58,040 --> 00:21:01,160 Speaker 5: It might be unrealistic in the medium term. Let's say, 368 00:21:01,320 --> 00:21:03,879 Speaker 5: I think you know it is something that it is 369 00:21:03,920 --> 00:21:07,639 Speaker 5: an investor's job is to distinguish between different companies. You know, 370 00:21:07,680 --> 00:21:09,879 Speaker 5: that is that is at the heart of what traditional 371 00:21:10,080 --> 00:21:12,919 Speaker 5: stock picking investing is about. So it's making those distinctions 372 00:21:12,920 --> 00:21:18,960 Speaker 5: within a sector between let's say, a particular North American 373 00:21:18,960 --> 00:21:22,479 Speaker 5: oil and gas major and a different company that is 374 00:21:22,760 --> 00:21:25,439 Speaker 5: perhaps not perfect, but which is better than the other one. 375 00:21:25,560 --> 00:21:27,800 Speaker 5: But just just to pick up on one of the 376 00:21:27,840 --> 00:21:30,000 Speaker 5: things that Tina and yourself Ryan were talking about is 377 00:21:30,920 --> 00:21:34,520 Speaker 5: the other channels like bank banking for example, that when 378 00:21:34,520 --> 00:21:36,520 Speaker 5: you engage if you want to engage with a sector, 379 00:21:36,560 --> 00:21:38,679 Speaker 5: you can't you can engage with it both directly with 380 00:21:38,760 --> 00:21:42,080 Speaker 5: companies in that sector, or indeed you can engage with 381 00:21:42,320 --> 00:21:47,320 Speaker 5: the facilitators of financing to that sector, in particular banks, 382 00:21:47,359 --> 00:21:50,840 Speaker 5: but for that matter, also also insurers. And it's i 383 00:21:50,840 --> 00:21:55,000 Speaker 5: think it's quite an interesting growth area for engagement, and 384 00:21:55,520 --> 00:21:58,840 Speaker 5: there is I think, and anybody can disagree with this 385 00:21:59,400 --> 00:22:02,480 Speaker 5: or give ever the contrary. I think there's relatively little evidence, 386 00:22:03,080 --> 00:22:06,680 Speaker 5: or relatively there is little evidence full stop of divestment 387 00:22:07,160 --> 00:22:10,560 Speaker 5: achieving change with companies. However, I think there is a 388 00:22:10,640 --> 00:22:13,760 Speaker 5: very interesting alternative route is through banking or and d 389 00:22:13,880 --> 00:22:17,760 Speaker 5: through insurance that banks and insurers may have much more 390 00:22:17,840 --> 00:22:21,200 Speaker 5: leverage with the companies that they lend to the where 391 00:22:21,240 --> 00:22:25,399 Speaker 5: they facilitate financing or indeed they provide insurance than public 392 00:22:25,440 --> 00:22:27,360 Speaker 5: equities investors do directly. 393 00:22:28,000 --> 00:22:29,520 Speaker 2: We're going to take the other side of that, and 394 00:22:29,520 --> 00:22:30,800 Speaker 2: I want to see if anyone wants to take the 395 00:22:30,840 --> 00:22:35,120 Speaker 2: devil's advocate argument here that we're talking about financial institutions 396 00:22:34,960 --> 00:22:37,800 Speaker 2: as they necessarily want to drive change and that might 397 00:22:38,040 --> 00:22:42,359 Speaker 2: not be true. Is there an argument to say divestment 398 00:22:42,480 --> 00:22:45,520 Speaker 2: might be the financially sensible things if this industry is 399 00:22:46,520 --> 00:22:49,480 Speaker 2: poorly ready for the energy transition over the long. 400 00:22:49,400 --> 00:22:50,760 Speaker 3: Term, and would you be. 401 00:22:52,240 --> 00:22:56,399 Speaker 2: Responsible fiduciary to the best I. 402 00:22:56,359 --> 00:22:58,879 Speaker 6: Mean, yeah, at some point I suppose maybe is to 403 00:22:58,960 --> 00:23:01,480 Speaker 6: kind of echo bit what Anik has said and just 404 00:23:01,680 --> 00:23:05,119 Speaker 6: drawing on that. If we do think we are going 405 00:23:05,160 --> 00:23:07,359 Speaker 6: to come over the other side of the demand curve 406 00:23:07,400 --> 00:23:10,920 Speaker 6: at some point. For these fossil fuels, it does become 407 00:23:10,960 --> 00:23:13,400 Speaker 6: a question about, well, who are the winners and losers 408 00:23:13,440 --> 00:23:16,240 Speaker 6: in that space? Is it those that can get the 409 00:23:16,280 --> 00:23:18,600 Speaker 6: stuff out of the ground the cheapest or with the 410 00:23:18,640 --> 00:23:23,960 Speaker 6: lowest emissions intensity, or because they're based in geopolitically more 411 00:23:24,520 --> 00:23:29,440 Speaker 6: friendly locations, And it's all these things that I guess, 412 00:23:30,119 --> 00:23:32,680 Speaker 6: you know, financial institution is taken into account when they're thinking, 413 00:23:32,840 --> 00:23:36,160 Speaker 6: I want to lend money either perpetually for equity or 414 00:23:36,240 --> 00:23:41,040 Speaker 6: just on a one year contract for insurance into these 415 00:23:41,080 --> 00:23:45,880 Speaker 6: into these into these spaces, and so that that might 416 00:23:45,960 --> 00:23:49,280 Speaker 6: kind of, you know, alter your portfolio mix. I suppose 417 00:23:50,040 --> 00:23:51,119 Speaker 6: over time as you do that. 418 00:23:51,280 --> 00:23:52,920 Speaker 2: Just to dwell on insurance for a second, and I 419 00:23:53,040 --> 00:23:56,679 Speaker 2: knew you have thoughts about the insurance industry, particularly in 420 00:23:56,760 --> 00:24:01,760 Speaker 2: America where they're regulated up to level and like, are 421 00:24:01,800 --> 00:24:03,560 Speaker 2: some of these groups sort of hamstrung on what they're 422 00:24:03,560 --> 00:24:06,240 Speaker 2: actually able to do? And we talk about the difference 423 00:24:06,280 --> 00:24:09,000 Speaker 2: financial institutions are going to make. I mean, it's not 424 00:24:09,200 --> 00:24:13,199 Speaker 2: entirely within their remit to drive the change that we 425 00:24:13,240 --> 00:24:15,280 Speaker 2: want to see, or in totality anywhere. 426 00:24:15,600 --> 00:24:18,240 Speaker 6: Yeah, I mean, to Peter's point, insurance can be incredibly 427 00:24:18,240 --> 00:24:21,920 Speaker 6: powerful because everyone needs it to operate, whether that's directors 428 00:24:21,920 --> 00:24:24,879 Speaker 6: of a company to protect their liability versus you know, 429 00:24:25,080 --> 00:24:28,480 Speaker 6: everything down to the properties and so forth. I think 430 00:24:28,480 --> 00:24:32,840 Speaker 6: one of the interesting dynamics in that sector is that 431 00:24:34,520 --> 00:24:36,600 Speaker 6: you end up with different bits of the business kind 432 00:24:36,680 --> 00:24:41,239 Speaker 6: of interacting here. So if I'm ensuring stuff that is 433 00:24:41,440 --> 00:24:47,960 Speaker 6: facilitating a missive activity, am I this causing disruption to 434 00:24:48,080 --> 00:24:50,840 Speaker 6: my property business because they're going to be more exposed 435 00:24:50,840 --> 00:24:53,760 Speaker 6: to extreme weather events going forward. Now at the company level, 436 00:24:54,320 --> 00:24:57,320 Speaker 6: you might think, well, look, I can't really do anything 437 00:24:57,320 --> 00:24:58,960 Speaker 6: about that if the rest of the world isn't getting 438 00:24:58,960 --> 00:25:01,120 Speaker 6: on board with dealing with climate change. And so that's 439 00:25:01,119 --> 00:25:05,000 Speaker 6: why it's a collective action problem here. But you know, 440 00:25:05,920 --> 00:25:09,120 Speaker 6: if there is a collective action amongst insurers to to 441 00:25:09,119 --> 00:25:12,960 Speaker 6: to recognize that that sort of business strategy risk I 442 00:25:13,000 --> 00:25:17,520 Speaker 6: suppose from working with one bit of business not not 443 00:25:17,560 --> 00:25:22,440 Speaker 6: recognizing another, then they could be creating risks risks for themselves. 444 00:25:22,640 --> 00:25:24,320 Speaker 6: And so again it sort of points back to this 445 00:25:24,560 --> 00:25:29,199 Speaker 6: need for then to ask companies to lay out what 446 00:25:29,240 --> 00:25:33,720 Speaker 6: the strategy is for for for transition and including you know, 447 00:25:33,760 --> 00:25:36,200 Speaker 6: the the implications of that for the risks that you 448 00:25:36,400 --> 00:25:39,639 Speaker 6: need insuring in those businesses, and including in fact liability 449 00:25:41,080 --> 00:25:45,600 Speaker 6: or listigation type type liability risks that that are seeming 450 00:25:45,640 --> 00:25:49,160 Speaker 6: to be emerging ever more as well. So it's it's 451 00:25:49,200 --> 00:25:51,280 Speaker 6: a very complex picture in insurance. But I think it's 452 00:25:51,320 --> 00:25:52,160 Speaker 6: going to be really interesting. 453 00:25:52,680 --> 00:25:55,600 Speaker 2: Yeah, I mean, I think you're nodding away there. Do 454 00:25:55,880 --> 00:25:57,080 Speaker 2: you do you want to come in on that and 455 00:25:57,119 --> 00:25:58,879 Speaker 2: maybe speak a little bit about you know, it is 456 00:25:58,920 --> 00:26:01,560 Speaker 2: maybe one perhaps constry and anything that it's able to do. 457 00:26:01,640 --> 00:26:04,280 Speaker 2: I know, nearly sixty percent use of your AAM is 458 00:26:05,200 --> 00:26:06,800 Speaker 2: emergent markets. 459 00:26:07,160 --> 00:26:08,760 Speaker 4: So I'm going to touch on two things. 460 00:26:08,800 --> 00:26:12,280 Speaker 7: One was what you just the sort of challenge of divestment, 461 00:26:12,440 --> 00:26:14,960 Speaker 7: and I think what we have to remember often when 462 00:26:15,000 --> 00:26:17,919 Speaker 7: we have these conversations, there's an echo chamber, right Like, 463 00:26:18,920 --> 00:26:22,240 Speaker 7: no one's standing up throwing eggs at us, because you know, 464 00:26:22,280 --> 00:26:25,960 Speaker 7: there's it's it's we're all we all believe in doing 465 00:26:26,000 --> 00:26:29,239 Speaker 7: the right thing. The question is how now there are 466 00:26:29,280 --> 00:26:31,879 Speaker 7: a lot of rooms where people are having conversations that 467 00:26:31,960 --> 00:26:35,720 Speaker 7: don't believe in doing what we're talking about. And it's 468 00:26:36,000 --> 00:26:38,520 Speaker 7: very interesting as an asset manager to have a range 469 00:26:38,560 --> 00:26:43,640 Speaker 7: of clients, some who are ruthless about net zero and 470 00:26:43,760 --> 00:26:46,520 Speaker 7: some who see net zero on your website and want 471 00:26:46,560 --> 00:26:49,600 Speaker 7: to take you to task on it. And navigating that 472 00:26:49,760 --> 00:26:54,760 Speaker 7: space and that complexity is very interesting because ultimately the 473 00:26:54,840 --> 00:26:58,560 Speaker 7: conversation that you have with certain clients, for instance in 474 00:26:58,600 --> 00:27:04,000 Speaker 7: the States, who if you're answering an RFP and they 475 00:27:04,160 --> 00:27:06,320 Speaker 7: say are you committed to net SERA or have any 476 00:27:06,440 --> 00:27:09,320 Speaker 7: kind of climate process in your investment process or your 477 00:27:09,320 --> 00:27:12,520 Speaker 7: fundamental analysis, and you say yes, you're out of the game, 478 00:27:13,200 --> 00:27:15,120 Speaker 7: or they penalize you, okay. 479 00:27:14,800 --> 00:27:15,800 Speaker 4: So that's the reality. 480 00:27:16,320 --> 00:27:19,240 Speaker 7: The way you have to approach and articulate that conversation 481 00:27:20,000 --> 00:27:24,440 Speaker 7: is around the commercial viability of green and of the transition. 482 00:27:24,840 --> 00:27:27,640 Speaker 7: It's not about climate, it's not about doing the right thing. 483 00:27:28,000 --> 00:27:31,440 Speaker 7: It's about what is in the short, medium and long 484 00:27:31,520 --> 00:27:36,119 Speaker 7: term the most commercially viable opportunity for the sector for 485 00:27:36,200 --> 00:27:39,679 Speaker 7: this company. And it is a very similar conversation to 486 00:27:40,160 --> 00:27:43,720 Speaker 7: the companies and the clients that we have in emerging markets. 487 00:27:44,240 --> 00:27:48,600 Speaker 7: You speak to a Nigerian private equity player, they are 488 00:27:48,640 --> 00:27:52,280 Speaker 7: not talking about Africa needs to decarbonize. They are talking 489 00:27:52,359 --> 00:27:57,239 Speaker 7: about energy security, where the transition meets energy security is 490 00:27:57,280 --> 00:28:01,200 Speaker 7: where this all becomes a very easy the conversation because 491 00:28:01,200 --> 00:28:05,080 Speaker 7: there's no trade off, and I think keeping that in 492 00:28:05,119 --> 00:28:07,680 Speaker 7: mind in terms of how the narrative develops, you don't 493 00:28:07,680 --> 00:28:10,200 Speaker 7: want to buy furiicate this because then we've got two rooms. 494 00:28:10,200 --> 00:28:12,520 Speaker 7: We want to be in one room talking about the 495 00:28:12,560 --> 00:28:17,840 Speaker 7: same thing, which is allocating capital to the transition in 496 00:28:17,880 --> 00:28:20,679 Speaker 7: a way that generates you know, generates ALFA. 497 00:28:20,880 --> 00:28:23,320 Speaker 4: Our pensioners can earn their pension. 498 00:28:24,280 --> 00:28:28,040 Speaker 7: Everybody, everybody's happy. 499 00:28:28,080 --> 00:28:30,560 Speaker 4: But you're not leaving people out of the room. 500 00:28:31,880 --> 00:28:35,560 Speaker 2: Very good, I'm very I'm cognizant. One final question to you, 501 00:28:35,720 --> 00:28:38,880 Speaker 2: to you know, is there like is there a concern 502 00:28:38,920 --> 00:28:41,120 Speaker 2: about maturity as much if you have a loan that 503 00:28:41,160 --> 00:28:44,680 Speaker 2: has a five year five year tenor is that still 504 00:28:44,760 --> 00:28:47,160 Speaker 2: viable for the oil and gas industry? Are they still 505 00:28:47,200 --> 00:28:50,280 Speaker 2: credit worthy to pay back their loans nefts? So is 506 00:28:50,280 --> 00:28:52,080 Speaker 2: it not something that a buying wants to engage with 507 00:28:52,160 --> 00:28:55,560 Speaker 2: they want to provide that credit to the oil and 508 00:28:55,600 --> 00:28:58,320 Speaker 2: gus just because it's it's economically viable and it's just 509 00:28:58,360 --> 00:29:01,480 Speaker 2: mentioned commercial viability. 510 00:29:02,280 --> 00:29:05,720 Speaker 3: I guess that's the whole point. That depends on what 511 00:29:05,800 --> 00:29:09,320 Speaker 3: kind of company it is. Where it's having their operations, 512 00:29:09,840 --> 00:29:12,800 Speaker 3: for example, because if you want to go into somewhere 513 00:29:12,840 --> 00:29:19,200 Speaker 3: which is long term project or very difficult to get 514 00:29:19,320 --> 00:29:22,040 Speaker 3: the energy out in the market, that would of course 515 00:29:22,080 --> 00:29:25,000 Speaker 3: have higher risk. So is this you know, tuning in 516 00:29:25,240 --> 00:29:27,520 Speaker 3: how is the risk and how is the opportunity in this, 517 00:29:28,000 --> 00:29:30,640 Speaker 3: and that of course will have an impact on risk 518 00:29:30,680 --> 00:29:34,560 Speaker 3: premium and also either of the risk premium also the 519 00:29:34,960 --> 00:29:38,640 Speaker 3: length of how much capital you will get for the future, 520 00:29:38,680 --> 00:29:41,160 Speaker 3: So of course it has an impact. And that's changed 521 00:29:41,200 --> 00:29:45,480 Speaker 3: as well for the last ten years. It's more difficult 522 00:29:45,520 --> 00:29:48,000 Speaker 3: now for an oil and gas company to get the 523 00:29:48,360 --> 00:29:51,280 Speaker 3: loan or credit which lasts for a long time a 524 00:29:51,280 --> 00:29:54,320 Speaker 3: period of time, and especially if you don't have a plan, 525 00:29:54,400 --> 00:29:57,480 Speaker 3: and that's in Europe of course, if you don't have 526 00:29:57,520 --> 00:29:59,959 Speaker 3: a plan for how you will see the energy transition. 527 00:30:00,200 --> 00:30:04,880 Speaker 3: So I think more openness, more transparency in how you're 528 00:30:04,960 --> 00:30:08,560 Speaker 3: working within this area with the changes that's going on 529 00:30:08,600 --> 00:30:12,520 Speaker 3: in the microeconomy, and openness about that that will have 530 00:30:12,560 --> 00:30:15,600 Speaker 3: an impact on the valuation, on the risk and of 531 00:30:15,960 --> 00:30:17,440 Speaker 3: course the access to capital. 532 00:30:17,880 --> 00:30:22,560 Speaker 2: Wonderful. Could you please all show your appreciation for the 533 00:30:22,560 --> 00:30:23,480 Speaker 2: panelists they've. 534 00:30:23,280 --> 00:30:37,440 Speaker 1: Been Bloomberg n EF is a service provided by Bloomberg 535 00:30:37,480 --> 00:30:41,240 Speaker 1: Finance LP and its affiliates. This recording does not constitute, 536 00:30:41,280 --> 00:30:45,080 Speaker 1: nor should it be construed, as investment advice, investment recommendations, 537 00:30:45,560 --> 00:30:48,320 Speaker 1: or a recommendation as to an investment or other strategy. 538 00:30:48,760 --> 00:30:52,360 Speaker 1: Bloomberg n EF should not be considered as information sufficient 539 00:30:52,440 --> 00:30:56,000 Speaker 1: upon which to base an investment decision. 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