WEBVTT 1 00:00:00.900 --> 00:00:04.520 I could see a world in five years 2 00:00:04.520 --> 00:00:07.970 where ESG is meshed in every asset class 3 00:00:07.970 --> 00:00:09.850 and everything we do, 4 00:00:09.850 --> 00:00:12.460 and I believe that's where it's going. 5 00:00:12.460 --> 00:00:16.060 We have seen billions and billions of dollars 6 00:00:16.060 --> 00:00:18.380 moving into more sustainable strategies. 7 00:00:18.380 --> 00:00:22.380 So this tectonic shift of capital is just beginning. 8 00:00:22.380 --> 00:00:23.850 And so for the companies 9 00:00:25.010 --> 00:00:27.520 that you are advising on transition risk, 10 00:00:27.520 --> 00:00:29.150 if they're not moving fast enough 11 00:00:29.150 --> 00:00:32.110 and another company in their industry is moving faster, 12 00:00:32.110 --> 00:00:36.350 they're going to have outflows in their ownership 13 00:00:36.350 --> 00:00:38.110 and the outflow is going to go into 14 00:00:38.110 --> 00:00:40.170 a company in their same industry. 15 00:00:40.170 --> 00:00:41.820 And that's what we're seeing, 16 00:00:41.820 --> 00:00:44.463 that is what to me is the "aha moment." 17 00:00:46.230 --> 00:00:47.930 I do believe in the next five years 18 00:00:47.930 --> 00:00:50.490 we're going to create more sustainable strategies, 19 00:00:50.490 --> 00:00:54.540 we're going to create more customized portfolios. 20 00:00:54.540 --> 00:00:56.730 And through analytics and modeling 21 00:00:56.730 --> 00:01:00.410 we can create a hybrid portfolio 22 00:01:00.410 --> 00:01:03.700 that closely, let's say mimics an S&P or a Russell. 23 00:01:03.700 --> 00:01:07.250 And it has X, Y, Z of tracking error 24 00:01:07.250 --> 00:01:08.850 but we will be able to eliminate 25 00:01:08.850 --> 00:01:13.850 let's say 10, 20, 30, 40% of the worst offenders in the S&P. 26 00:01:16.520 --> 00:01:20.710 It is a form of greenwashing if the traditional companies 27 00:01:20.710 --> 00:01:24.810 sell off their hydrocarbons or the worst offenders 28 00:01:24.810 --> 00:01:26.740 to some private equity firm. 29 00:01:26.740 --> 00:01:29.650 The net carbon footprint of the world does not change. 30 00:01:29.650 --> 00:01:32.240 We need holistic solutions with government, 31 00:01:32.240 --> 00:01:36.280 with investors, with companies, how to evolve. 32 00:01:36.280 --> 00:01:38.410 Maybe we could create a liquidating trust 33 00:01:38.410 --> 00:01:41.910 to the hydrocarbons managed by those traditional companies. 34 00:01:41.910 --> 00:01:44.440 Maybe we could create like a good bank, bad bank 35 00:01:44.440 --> 00:01:46.330 like we've done in financial services 36 00:01:46.330 --> 00:01:48.263 for traditional companies. 37 00:01:49.800 --> 00:01:52.370 It is urgent that we have conversations 38 00:01:52.370 --> 00:01:56.100 with the most traditional hydrocarbon companies 39 00:01:56.100 --> 00:01:57.700 and working with them. 40 00:01:57.700 --> 00:02:00.080 They actually have some of the greatest scientists 41 00:02:00.080 --> 00:02:02.990 in this business, and it's going to be those companies 42 00:02:02.990 --> 00:02:03.830 probably are gonna create 43 00:02:03.830 --> 00:02:07.090 the best alternatives to the green hydrogen. 44 00:02:07.090 --> 00:02:08.700 We need to have a just transition. 45 00:02:08.700 --> 00:02:10.540 The best way to create a just transition 46 00:02:10.540 --> 00:02:12.960 is to be working with the traditional companies 47 00:02:12.960 --> 00:02:15.840 and helping them move hopefully faster, 48 00:02:15.840 --> 00:02:17.083 but more productively. 49 00:02:18.530 --> 00:02:22.650 The number one thing we have to do as investors 50 00:02:22.650 --> 00:02:25.210 is to be investing with these traditional companies 51 00:02:25.210 --> 00:02:29.500 and investing in new companies on finding new technologies 52 00:02:29.500 --> 00:02:31.260 to bring down the green premium. 53 00:02:31.260 --> 00:02:32.520 It took us 30 years 54 00:02:32.520 --> 00:02:34.900 to bring down the green premium from solar and wind 55 00:02:34.900 --> 00:02:37.610 to make it more competitive than coal today. 56 00:02:37.610 --> 00:02:39.290 We don't have 30 years. 57 00:02:39.290 --> 00:02:42.610 We need to find a solution for biofuels. 58 00:02:42.610 --> 00:02:46.300 We need to have a solution for all these different products. 59 00:02:46.300 --> 00:02:49.310 Right now, 10% of the carbon footprint 60 00:02:49.310 --> 00:02:51.410 is created by cement and steel. 61 00:02:51.410 --> 00:02:53.430 Are we going to stop building? 62 00:02:53.430 --> 00:02:54.540 Of course not, 63 00:02:54.540 --> 00:02:56.520 but we're going to have to create new technologies. 64 00:02:56.520 --> 00:03:00.570 And so I look at transition risks, not really as a risk. 65 00:03:00.570 --> 00:03:02.647 I look at transition as an opportunity. 66 00:03:02.647 --> 00:03:05.230 (gentle music)