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Brookfield sees ‘massive’ opportunity for investors in renewable energy assets

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The transition from old forms of energy to new forms of energy is prompting investors everywhere to bet on the technologies that will emerge as dominant forms of power.

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Investors face a historic opportunity to invest their money in renewable energy assets given the global consensus that now exists around the urgent need for decarbonization, according to Brookfield Asset Management Inc.

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“The market opportunity is really huge,” said Connor Teskey, managing director of renewable energy and co-head of transition investments at Brookfield, at the Bloomberg Sustainable Business Summit on Thursday.

The transition from old to new forms of energy is leading investors around the world to bet on the technologies that will emerge as the dominant forms of power in an era dedicated to the elimination of hydrocarbons and the fight against global warming. Estimates of the amount needed to eradicate greenhouse gases over the next three decades range from $ 100,000 to $ 150 trillion.

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“The majority of this capital will have to come from private capital,” Teskey said. “General government balance sheets simply cannot support this level of investment. But private markets can.

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If the stakes are high, so are the potential rewards. “Given the very attractive business opportunities to invest in renewables and invest in the transition, we would expect this capital to emerge from the private sector and come in spades,” Teskey said.

Impact Fund

Brookfield, which oversees US $ 650 billion, hired former Bank of England governor Mark Carney last year to boost its environmental, social and governance investments. Earlier this week, the asset manager said he now plans to raise more than US $ 15 billion for his new impact fund, beating previous guidance of US $ 12.5 billion.

CEO Bruce Flatt said on Wednesday the amount raised “could have been higher” but the company capped the size of the fund, indicating “interest in the bridging investment.”

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Speaking at the Bloomberg summit, Michael O’Leary, managing director of Engine No. 1 investment fund, said investors need to play a bigger role in holding companies to account for their sustainability claims.

In May, Engine No. 1 successfully lobbied for three climate-friendly directors to be added to the board of Exxon Mobil Corp., in one of the most astonishing upheavals for a shareholder vote.

Many leaders say it’s important for them to serve their workers, their communities, and the environment, but they don’t always match that rhetoric with transforming their businesses as needed, according to O’Leary.

Climate commitments

“Every company now makes the same commitments,” O’Leary said. While the responsibility will come from regulators and standard setters, “the responsibility through investors is ultimately where the responsibility ends,” he said.

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O’Leary said climate change is increasingly becoming a “big tent” problem among investors, citing how nearly a dozen climate-related resolutions were passed in the last proxy season, against none two years ago.

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As investor sentiment changes, global banks are also increasingly trying to show their shareholders that they are adopting more climate-friendly business models, though data suggests some still have a long way to go.

Wells Fargo & Co. is one of the US banks that is committed to achieving zero net greenhouse gas emissions. For now, the company ranks as the largest provider of loans to fossil fuel companies since the Paris climate agreement in late 2015, according to data compiled by Bloomberg.

“We work across the company, from our lines of business and our risk organization to our own operations, to truly embed climate change and sustainability into the corporate culture,” said Mary Wenzel, Head of Sustainability and ESG Integration at Wells Fargo. , speaking at the top. The aim is to be “a leading voice in the fight against climate change, and to work and collaborate to develop solutions to climate change,” she said.

As an example, Wenzel said Wells Fargo has created an energy transition group to work with customers.

Bloomberg.com

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