WEBVTT

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We're joined by Greg and Rich.

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Welcome, Greg.

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Tell us about the work that HSBC
is doing on climate and

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sustainability.

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Well, look, the biggest
opportunity we've got is

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infrastructure financing in the
middle income countries.

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That's our footprint, Southeast
Asia, South Asia, North Africa,

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the Middle East and there are
trillions of dollars needed to

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finance the transition to a low
carbon economy.

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That's the biggest focus that
we've got, trying to deploy

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crowd in other partners,
governments, MDBS, industrial

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companies to finance this
substantial infrastructure

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investment as needed.

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And Rich, how should financial
institutions be thinking about

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their role as Greg was just
saying, in effectively leading

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the change that's needed?

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A couple points I'd add.

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You know the 1st is that we have
a massage financing shortfall

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right now.

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Probably we're financing about
half of what we need to finance

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to drive the decarbonization at
the speed we need and that's

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going to create several
elements.

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First, banks play an enormously
important role in educating

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their customers about the kind
of requirements that they're

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going to be facing in the
future.

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Many smaller and mid sized
companies don't really

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understand the magnitude of the
decarbonization challenge and

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what their customers are going
to expect from them.

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So it's an opportunity to really
be not just providing finance,

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but education.

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Second, banks are incredibly
creative about putting financial

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packages together.

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And in many cases, we're going
to need multiple layers to the

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capital stack, Some more
tolerant of risk, some may be

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related to the private sector,
others more classic debt

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instruments and, and banks can
can really help with that.

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And then third, I think banks
have this incredibly important

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role to be managing not just the
green build of the new economy,

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but the grade A green
transition, though some of the

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most important progress we need
to make is with companies that

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emit a lot of carbon today and
just need to get better when

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they're under a lot of pressure
from society to not put money

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into those sectors.

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Those sectors need a lot of
money and that's a very

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difficult tightrope to walk.

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But we're really depending on
banks sort of working through

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how to do that.

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Why I was just a rich makes a
great point, which is, you know,

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these middle sized and SME
companies, which are really the

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drivers of the economy and lots
of the parts of the world,

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particularly middle income
countries, they don't have the

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resources of the Fortune 100 of
the biggest companies in the

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world to invest in
decarbonization skill set.

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And so I think consulting firms
like BCG, banks like HSBC, we've

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got a, you know, an obligation
to educate these companies and

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then help them with the
techniques and the, and the

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initiatives that allow them to
decarbonize.

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And what are the financing
challenges, but also the

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opportunities over the next five
years?

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We've touched on one of the big
ones, which is there's this gap

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between equity risk capital and
commercial capital that will

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flood into projects that are
clearly have off take agreements

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and have good political support.

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And so this gap is something
that we're working very hard to

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try to fill.

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And there are a number of
different ways we go about that.

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One is catalytic capital.

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We do that in the expectation
that ultimately the projects are

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going to be commercial and
provide high returns

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governments, multilateral
development banks and then

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industrial companies that get
the need for the transition and

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make investments in order to get
the ultimate off take from the

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projects.

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I mean that's one of the big
challenges that we've got.

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The second one, Rich touched on
this, which is talent to to

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bring the intellectual capital
to find those pathways to

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decarbonization.

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And again, it's not just in the
OECD countries.

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We've got to do it in the
countries around the world that

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need more energy, that are
deploying more cement, that are

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deploying more steel.

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And I would just add, it's the
intellectual capital to

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understand how to do the
transitions in those sectors.

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It's also the sophistication to
know how to build lower risk

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requests that can attract more
capital with lower return

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expectations.

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And so how to build first of a
kind projects.

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That's one of the things we're
working on together as a part of

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Breakthrough Energy Catalyst is
really getting smaller companies

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more sophisticated on first of a
kind kind of projects, not

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because it it's easy, but
because it's hard.

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But if you do it well, then you
make it much easier for

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infrastructure funds, others to
want to provide financing at

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lower returns, make it easier
for banks to provide capital.

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So I think both the elements of
the sector requirements and the

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elements of the finance stack
requirements, young companies

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have a lot of knowledge of their
technologies, but they're often

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missing the knowledge of all
these other elements that are

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required to really build
scalable successful projects and

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businesses.

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Greg Rich, thanks so much for
joining us today.

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Well, thank you very much.

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It's a pleasure.