We're joined by Jonathan Hackett. Jonathan, tell me, what
does BM and what should other financial services companies be
doing to encourage the energy transition?
Yeah. I think the real challenge that we have is that the energy
transition today exists in a world that is really on
exception.
I know it's strange to say I believe that financial
technology is the most important technology in the energy
transition. But if you look at the evolution of solar panels as
an example,
photovoltaic cells have gotten better and better. But it's
truly
project financing, structured finance that's accelerated that
space. And when I think about the ability to drive the energy
transition, banks, financial institutions have a massive role
in taking the tools that we use to make the rest of the economy
accelerate, go faster and faster every year and apply those to
the technologies of the energy transition. And I think if we
get that right, financial institutions will play a
critical role in driving the energy transition. And what sort
of financial structures are having the greatest impact in
that world?
It's interesting. I think there's kind of a bifurcation.
You've got scaled solutions like structured finance, like project
finance, something that allows
solutions that are better, solutions that are able to
provide a benefit to scale up by taking small equity investments,
pairing them with large amounts of debt at a low cost, and align
those projects to be deployed over and over and over again. On
the other side, you've got really solutions that are
bespoke, that are extremely impactful on the adoption of
technologies. So things that really look at how you can bring
together catalytic capital, things like Breakthrough Energy
Catalyst, or in the case of Canada, things like the Canada
Infrastructure Bank
alongside traditional capital and use those to push the
boundaries of what's possible. So we see opportunities where
you work with that catalytic capital and say, if we're going
to drive a solution, how do we drive a greater adoption? How do
we drive greater decarbonization when we're doing it, and use
those learning points to then drive adoption across the
broader economy by showing what's possible. And so if you
had any advice for financial leaders who want to drive
change, what would it be? So I think one piece is to think
about
how you can do
countered what I just said things not always on an
exceptional basis. The reality is when we look at the energy
transition, you're talking about trillions of dollars a year in
financing that needs to occur. That's only going to occur if
people invest in looking at the real underpinnings of how
financings happen and change them. So if you talk to your
risk team and you talk to how you measure capital, how you
measure risk, if you talk to your compliance team, understand
where these things are actually happening, and then really look
at your business
strategy and say, how do I take a change in how I drive that
business so that these solutions are in scope. So these solutions
get the appropriate treatment that allows us to really
accelerate them. That's where you're going to see a bigger
change versus telling somebody, hey, try really hard and I'm
sure something will happen. Jonathan, thanks for joining us.
Thanks for having me.