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Dan Barclay & Hiro Mizuno Discuss the Green Revolution

Disponible en anglais seulement

“I'm a genuine believer of the free economy, of free markets but when it comes to climate crisis, we just cannot let the market solve it because it might take time, and it may come up with the other wrong solutions. Because as you look back, the capital market for the long term, they are usually correct, but the short term, they make a lot of mistakes. So when it comes to the climate change, I've been calling for the government intervention, particularly setting the rule book so that the private businesses or private investors can really invest in the direction of the net zero goals,” says Hiromichi Mizuno, Special Envoy of U.N. Secretary-General on Innovative Finance and Sustainable Investments.

On this special episode of Sustainability Leaders, BMO’s Dan Barclay joined Hiro to discuss the role of finance and banking in the battle against climate change and the transition to a low carbon world.

In this episode:

  • Why COP26 can be identified as both a success and failure

  • The importance of COP26 focusing on how to get the job done rather than just talking about the theory

  • How putting pressure on the developed countries changed the dynamics, created momentum and provided hopefulness

  • Why the government, private sector, and NGO or civil society have never been so close to pushing the agenda in the right direction

  • Why the other financial sectors have to play a more proactive role in the Green Revolution like our predecessors played during the Industrial Revolution


Sustainability Leaders podcast is live on all major channels including AppleGoogle and Spotify

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Disponible en anglais seulement

Hiro Mizuno:

I'm a genuine believer of the free economy or free markets, but when it comes to climate crisis, we just cannot let the market solve it because it might take time. And it may come up with the other wrong solutions because as you look back, the capital market for a long term, they are usually correct.

Hiro Mizuno:

But the short term, they make a lot of mistakes. So when it comes to the climate change, I've been calling for the government intervention, particularly setting the rule book so that the private business, as a private investor can really invest in a direction of the net zero goals.

Michael Torrance:

Welcome to Sustainability Leaders. I'm Michael Torrance, Chief Sustainability Officer with BMO Financial Group. On this show, we will talk with leading sustainability practitioners from the corporate, investor, academic and NGO communities to explore how this rapidly evolving field of sustainability is impacting global investment business practices and our world.

Speaker 3:

The views expressed here are those of the participants and not those of Bank of Montreal, its affiliates, or subsidiaries.

Dan Barclay:

Welcome to our Sustainability Leaders podcast. I'm Dan Barclay, CEO of BMO Capital Markets. And today, I welcome Hiro Mizuno, special envoy of the UN secretary general on innovation, finance, and sustainable investments. I had the pleasure of meeting Hiro at the Global Milken Conference in October, where we both spoke on a panel about investing in a sustainable business transition. It's truly an honor to be speaking with you again today. I'm looking forward to what I'm sure will be a fascinating conversation.

Dan Barclay:

Coming on the heels of the COP26 global climate conference in Glasgow, the roles of government, non-government, and private sector actors have never been so in the spotlight as they are today, and they will be going forward. I'm hoping today we can speak frankly about climate change, net zero, and what role different sectors will have to play to successfully guide us toward a more sustainable world. Hiro, welcome. It's great to have you today.

Hiro Mizuno:

Thanks, Dan. It's my pleasure to join this podcast, and it's also my honor to have a discussion again with you on this sustainable finance topic.

Dan Barclay:

That's great. Well, why don't we dive into the conversation. For the benefit of our listeners, Hiro, why don't we get an introduction for you, and about your role at the UN, and how it fits in with the global fight against climate change, and a push for a more sustainable planet?

Hiro Mizuno:

Sure. My role as a special envoy is to help the secretary general to promote the sustainable development goals, but by mobilizing more finance. And particularly, there is a notion at the secretary general that the financial industry has to be a little more innovative to provide more capital to the sustainable development goals. And also, we have been talking about the importance of ESG in the investment and in the financing operation of private, the financial institutions.

Hiro Mizuno:

Again, the UN has been aware that just mobilizing the public sector money is not going to be good enough. So we need the private capital to really accelerate the transformations to sustainable society and sustainable world. So my role is helping the secretary general by involving the financial sector leaders and encouraging them to come up with some more innovative, financial scheme to mobilize capital more quickly and more widely to finance sustainable development goals.

Dan Barclay:

And did you see anything at COP? Did you feel like it was a success? What were your big takeaways?

Hiro Mizuno:

Well, that's the difficult question to answer in one word, because it was obviously a success, in terms of the ambitions. We heard a lot of global leaders came up as the new NDCs nationally at the time in the contributions. Also, some people call it this COP26 was the private sector COP because we saw so many CEOs, including yourself, come to Glasgow and made the commitment to net zero transition. So in terms of ambition and a commitment, I should call it's a great success. Particularly, as I attended last two COPs where we had big player America was absent, and China was not really there.

Hiro Mizuno:

Also, there was a lot of skepticism among the private sector leaders, whether net zero is something they should use it for their business planning or maybe 2.0. So this time I must call it a success because there is a more widely agreed pathway we need to work for is at 1.5 not 2.0. So I must say the COP25, there's a very, very strong skepticism among the private sector leaders about the 1.5 degree scenario. So it was a success from that perspective. I can feel also sympathetic to the younger people protesting outside, calling it the failure, because there are some area that we couldn't even deliver long term, long time promise.

Hiro Mizuno:

The climate financing from developed countries to developing countries. We agreed six years ago, actually 10 years ago to deliver $100 billion annual climate finance for developed countries. In 2021, we still have like a $20 billion shortfall, which was a bit embarrassing, to be honest. And then it didn't help to create the trust or mutual trust between the north and the south, so we failed on that. The milestone that we agreed to deliver a long time ago, we still haven't been able to deliver. So I think it's fair to call it the failure from that perspective.

Hiro Mizuno:

But at the end of the day, my answer to your question is I don't know yet, because if the ambition is not backed by the real actions, we probably should call it the real failure. I think it's been less than a month since the COP26 and so many, like the government leader now, agreed that they have to strengthen or improve their NDCs not every five years, but annually, right? So we have 12 months to work on it, each country. Sorry, each government. When it comes to the private sectors, we made a big announcement including G funds. I'm sure that BMO was part of it, Glasgow Financial Alliance for net zero.

Hiro Mizuno:

And more than 450 financial institutions ranging from the banks, to asset owners, asset managers, and the consultant and service providers, they are now saying we commit to net zero. And the Marconi says $130 trillion is now ready to invest in the climate finance, but we really don't have an actual plan how to do it. I think probably it's too early for anybody to call it the success or failure. There's a possibility to fall into both. It's really up to us, whether we can actually just come up with actual action to make it a success.

Dan Barclay:

Yeah. I think you covered off a very wide list of great topics there, Hiro. My observation was it felt very practical, right? And that people were actually talking about how to get it done, where in the past it felt like we were talking about the theory. And I very much appreciated that, including some real conversation on the barriers to actually make change happen. Inside a big bank, data issues, scope three, how do we actually change the portfolio and invest in what I'll call better outcomes, has been the real dynamic over the last little while. And what I had in the meetings that I was in COP were I would call them realistic conversations about how to move those barriers and then where to go. You and I spoke about this when we were at Milken. It feels like the world's a very different place now than it was 18 months ago.

Dan Barclay:

Very, very different. We have real, real momentum. BMO put up a commitment for $300 billion in sustainable finance over five years. We're way through two-thirds of that now and accelerating. And so when I think about the dynamic and the conversations we're having internally. When I think about the goals we've set as a net zero company, in some ways those goals were, as you said, not definable when we set it other than we knew we had to find a way to get there. But now that we've set it, things are in motion here.

Dan Barclay:

You're probably aware we have a Climate Institute we set up inside BMO, which was really to have a good set of conversations and data around what does it mean and how does it mean? And when you take a look at your various pathways, what changes do you have to have overall, in terms of your business while still supporting the economy to go forward? So I'm actually quite encouraged with the amount of progress we're making. But like you, I can understand how big chunks of those that are looking for climate change say even with that amount of change, it's not enough.

Hiro Mizuno:

Absolutely. And let me add one more thing, or the big change I observed. After COP25, every time we listen to the developed countries, they're almost like saying like, "Oh, it's not our fault. We need to really grow our economy." And they are meeting other people, who has no access to the internet or have no access to energy. We cannot shift to a sustainable infrastructure, but it's actually helped actually some of the country or the companies, who are willing to sell more obsolete or a non-sustainable technology infrastructure to those developed countries saying like, "Oh, they cannot afford it and they want that."

Hiro Mizuno:

But this time, I was surprised to see, as you probably, Dan, noticed, that the typical countries in Southeast Asia and also South Africa, they are now saying... Although, look at South Africa, they still depend on the call. I think 80% or 85% of their energy come from the coal, but they commit to net zero. They said, "We are willing to change, but you guys have a responsibility to help us to do that." It totally changed the dynamics. And I heard a lot, like from the Vietnam committed to the coal phase out. There's a lot of things, which the country if we used to be on the other side and just asking for the help and insisting they need to focus on the domestic growth opportunities.

Hiro Mizuno:

But this time, they're actually putting pressure on the developed country side. And the other change in the dynamics I noticed was until COP25, political leaders always use the private sector as their excuse, not so that or they're not making ambitious commitment saying like, "Oh, our industry leader doesn't agree that we can do that," but this time it's totally opposite. Dan, as you just pointed out. There are hundreds of the private sector leaders calling for government leadership to set the rule of the game so that the private sector can really focus on the transition and the transition to the sustainable society.

Hiro Mizuno:

So I think those changing the dynamics on the two of them really created the momentum. And it made me most hopeful when I started feeling that change in the dynamics is now setting the stage for COP27 and COP28.

Dan Barclay:

Yeah. I would make the same observation on the private sector. Three years ago, two years ago, I had lots of conversations where people would say the science isn't there, or we're not going to do it, or it's not a priority for me. I've got other priorities. Today when I tour, particularly North America now, I can't think of a meeting in the last 18 months with a senior company official where this wasn't in their top three priorities. And you and I talked about incentive versus penalty when we were together last. And the dynamic that I'm watching now is we're moving from put a set of rules in place and I'll try to meet the rules, to I'm actually going to change my business.

Dan Barclay:

I'm going to change the way my fleet works. Instead of having fossil fueled fired forklifts in my factory, I'm going to change that into EV forklifts. I found out I can actually run them cheaper than I could before. And therefore, I'm actually making money by doing the right thing. And when you start to have that, those types of incentives in someone running their business, whether they're small enterprises or large enterprises, they will make change happen even faster. I call it a flywheel. And once the flywheel starts to spin and things are going well, and you're improving, and you don't view it as a cost to you, but you view it as a benefit, then things really move.

Hiro Mizuno:

Yeah. It's just from the people's perception on the climate change in relative to their business strategy, change from the cost to investment, risk to opportunities.

Dan Barclay:

Correct.

Hiro Mizuno:

And that really drives the change. And that's how the capital market and the capitalism really designed for. So once that people agree on the risk and opportunities, the system starts spinning very quickly. And that's another positive aspect of the outcome of this COP.

Hiro Mizuno:

I really started seeing that, but as you, Dan just mentioned, over the last two years, every meeting I have with the corporate executive, to some extent reflecting my background and my specialties, but it's just impossible to have any conversation without talking about ESG.

Dan Barclay:

That's right. I really don't see them anymore. I was going to reflect back on your opportunity for a company. One of the things for BMO is we've taken a hard look at climate, and we started the journey like most people, right? What are the risks? How do we expose? What do we think about? Then you've got a different pillar, which is, who are we as a corporate citizen? We've been carbon neutral since 2010. We started funding all of our power last year with renewables. But as we went through a strategic planning process this summer, climate change climate transition really, came up as the number one revenue opportunity for the bank.

Dan Barclay:

And when you start to say, "Okay, that's our best opportunity in the next five years, let's get our resources mobilized. Let's chase it, let's help our clients." And again, we're in a client business. Often, people think about banks as the floodgate on this, but we're really just an intermediary between our clients and capital. And once you get to a place where you're starting to put your resources and your thought process around how big that opportunity can be, then magic starts to happen. One of the things that I'd like to get your perspective on is based on your background, you were the CIO of the government pension fund in Japan.

Dan Barclay:

So you managed, I think, it was at the time and maybe still is the largest sovereign wealth fund, or at least a top five at best. You probably have better knowledge than I do. When you start to think about how banks sit into a low carbon of the transition economy, how do you think about that? What's your perspective from where you are and ways that we can do? And a lot of people that'll be listening to this podcast are the employees at BMO. How do we think about that?

Hiro Mizuno:

Yeah, sure. I used to manage $1.7 trillion probably at the time, probably now, still one of the largest pension funds. But I grew up actually in commercial banking when I was young and I moved into the asset management. I have a strong view on the importance of the bank in this sustainability transition of the world. You probably know that when I started this, my advocacy for ESG was almost five years ago. The discussion, it's just all about divesting. We had a huge pressure from the people, who are more sort of like aggressive in ESG saying a GPIF, which is my pension fund, should divest from fossil fuel and some other, the socially problematic industry like tobacco.

Hiro Mizuno:

And then I always say for us, it's easy because it's just a click away or phone call away to divest because institutional investor, we can actually sell or buy stock on a bond just by clicking or picking up a phone call to the broker. But when it comes to the bank, your financing relationship is quite often bilateral, and you really involve the real relationship, human relationship. And also, you carry the relationship with the community their business is operating. And also, in many cases, you are sort of a last resort for the SME, a smaller, medium enterprise because they have no access to the capital market. Also, let me just tell you one thing.

Hiro Mizuno:

I always have an opinion against a divestment because divestment doesn't really make any difference because when we sell it, somebody will buy it, right? So even the bond, as well. When we sell the bond, somebody will buy it and they actually hold it for the better dividend or higher return, so just that their change of ownership. But bank relationship or bank loans, most of the cases, particularly when it's a bilateral financial relationship, when you cut the finance, you actually, possibly give them a death sentence. I think the bank have to deal with more human way to just make sure that what's the consequence of each of your financial decision.

Hiro Mizuno:

But at the same time, the bank has more direct responsibility to make sure the society or the other industry they are operating in will survive. So I always see and tell that the people working for me like, "Your job is much, much less painful, much easier than the bank, because the bank, they really have to deal with individual relationships. They have to make sure that particularly, they are the only one financial resource for the borrower." The bank has to make sure when to stop the financing or how to educate them. So the bank has the handful of the job to do. So I must say, I sometimes feel very sorry, and I always feel like investor job is much easier. But at the same time, the bank is very, very important.

Hiro Mizuno:

And we are probably going to talk about later, what I call it, the Green Revolution and sustainable revolution. When we look back, what kind of play or responsibility, what kind of role the bankers played during the Industrial Revolution? They are the ones, who really took the risk and drive the change. I always say a banker should be very proud of being in that position, but I can really sympathize. It's going to be very hard and painful role to play, but it's a very important role.

Dan Barclay:

Yeah. I look at someone let's say, like a BMO in Canada, right? We're actually just a slice of the entire economy, right? Our retail bank, our wealth management franchise, our commercial franchise with SMEs, my franchise, which is large borrowers. And really, what we are is a slice of all of Canada. And so when you think about the economic growth, the economic policy, your policies really reflect that entire economy. I think that's the fundamental challenge we have. Like BMO thinks of itself as a community-based bank, right? We invest in the communities we live and work in. We're fundamental to a prosperous economy.

Dan Barclay:

You can't have a prosperous economy without prosperous banks. And at the same time, I'm with you. We carry a responsibility to make sure that we invest our shareholders' capital and for the benefit of the country and the shareholders. We've got a purpose at BMO called to boldly grow the good in business and life. And that purpose is really meant to underpin the way we approach these types of decisions, and having the responsibility to make the right choice. And at the same time, you use the word divestment, we get lots of pressure on divestment. I'm not sure that's actually a smart, economic strategy.

Hiro Mizuno:

Also, I don't think that it's a very responsible strategy for the other banks in many situations.

Dan Barclay:

Well, especially in countries that have a large percentage of GDP comes from natural resources. To just pretend that they're going to get turned off, I don't think is responsible to the community that you live and work in. I really don't. One of the things that comes into this, so you've got the private capital, you've banks. We've got governments. How are you feeling about government policy these days that are actually helping and accelerating the transition? I think of them as going together, right? They're not separate, business commitment, policy commitment.

Dan Barclay:

As we did our focus on our targets to meet our commitments on our net zero, what you find very quickly is your targets will be highly dependent on public policy. And if the policy is in some part of the world benign and not willing to make change happen, it's very hard for a bank to meet its targets. And conversely, if the public policy is very aggressive, you can actually meet your targets. And so anyways, your thought process today around where governments are, how they're thinking, whether that's undeveloped or less developed.

Hiro Mizuno:

Yeah. Well, I think first of all, I'm a genuine believer of the free economy, of free markets. And I also believe in the market force usually lead us to the right solution in the end. When it comes to climate crisis, we just cannot let the market solve it because it might take time and it may come up with the other wrong solutions. Because as you look back, the capital market for the long term, they are usually correct but the short term, they make a lot of mistakes. So when it comes to the climate change, I really don't think we just cannot afford to just simply depend on the market force or the perfect market hypothesis to solve it.

Hiro Mizuno:

So from that perspective, I've been calling for the government intervention, particularly setting the rule book so that the private businesses or private investors can really invest in a direction of the net zero path and net zero goals. And then I think some governments like EU has been ahead of us and just came up with a lot of new guidelines so that it makes the private sector, I think, both feeling comfortable to play, and also feeling arched to play differently. I think that compared to EU, Asian countries, including Japan and North America has been a little bit slow. But as I touched upon earlier, at this COP26 there's a very clear message, which from private sector, we want the government intervention, particularly coordinated one.

Hiro Mizuno:

Dan, you and myself grew up in the financial industry. And it's been very rare for the financial industry to crying for the government intervention so I think the government heard it. I think they probably just feel more encouraged to come up with the regulation or the guidelines. And then the other thing, which I think is very important, is NGOs and financial industry. NGO and a border have never been this close. We actually, just when I was running a GPIF, we used several, like the ESG indices. And some of them actually get the information for them to create the index or construct the index from the NGOs. I think now, NGO is becoming a very critical player for us to shift our financial ecosystem.

Hiro Mizuno:

Then also, sometimes they play the role of this time I don't know how many exactly. But if you listen to, well, the leader's speech, many of them mentioned about the young people protesting and the young people very frustrated about progress. Not only showing political will to listen to them, but I think they used it to actually push their agenda. I think the government and the private sector, and even NGO or civil society never been this close trying to push the agenda in the direction. I think the government will continue to play bigger role, at least out of like all the SDGs. At least where the climate crisis or climate change is concerned, there is a very, very clear consensus. We want the government to coordinate and the government to take a leadership.

Dan Barclay:

Yeah. I think about the practical applicability of that, there's lots of different places. So one is around carbon accounting, which you and I have seen in some good conversations around trying to get some global standards on that, or at least even North American standards. European and Asian, if you got to even three different but similar, you'd be a far ways ahead. The other one is the price of carbon. I think that's probably one of the thorniest issues out there, which is different models where there's cap and trade, or set price or whatever.

Dan Barclay:

But even in Canada, I think we've got 12 or 13 different ways to think about it across the country, where the price of carbon's set provincially, not federally. In the US, it's not set, I think, other than maybe what two markets or three markets, whereas in Europe, I think they're trying to harmonize that. And it's that harmonization role, which I think is going to be the toughest for governments, because they typically get into a room and go to the lowest common denominator, as opposed to the most aggressive.

Dan Barclay:

And that one for me, when I watched there's some disappointing things at the end of COP where they couldn't get consensus. And yet we need governments to drive some consensus, and some transparency, and transferability amongst markets.

Hiro Mizuno:

Yeah. Well, but I'm not that pessimistic about the carbon pricing. I've never been hopeful about the global carbon taxation.

Dan Barclay:

No, no.

Hiro Mizuno:

It's just we never agreed on any global universal taxation system. How could we just all a sudden succeed on this one? But when it comes to carbon pricing, I agree with you, Dan, they're a different country or a different market, they are trying to come up with their own pricing or own trading mechanism. I sat on the board of Tesla and people know that Tesla received quite a significant amount of money from the other automakers, as a carbon tax credit.

Hiro Mizuno:

Because in Europe, they just need if they cannot sell enough of the zero emission vehicle, they need to buy it from somebody, who has more capability or room for the carbonization. So Tesla sold a lot of the carbon credit to some other automakers and that's effectively, carbon pricing within the industry, right?

Dan Barclay:

Correct.

Hiro Mizuno:

I think there will be a lot of carbon pricing within the industry, within the country, or within the very different ones. But here I don't underestimate the power of Wall Street or power of the financial institutions. We always come up with a way to an arbitrage.

Dan Barclay:

We could call that create change. We could call it create change, you call it arbitrage.

Hiro Mizuno:

Yeah, exactly. So even just a crude oil, we have several markets, several, different pricing but we have thousands of people trying to make money by creating arbitrage. I think the carbon pricing, I'm actually don't underestimate the financial market will start pricing carbon, and it will be traded or priced accordingly in the global financial system. So I think the carbon pricing is going to happen.

Hiro Mizuno:

Once again, it's very important because financial leaders raise the voice in Glasgow. We want carbon pricing. I think there's no reason any stock exchange to start it. I met with several of the CEOs of the stock exchange in Tokyo and the other places. They are all talking about how to list their carbon. I think this is where I can count on the market force.

Dan Barclay:

Yes, I agree. I think your oil example is a very good one, which is we have two or three big benchmarks around the world and then everything else that's not the benchmark is priced relative to that. But you actually have enormous liquidity, both financial and physical because of that.

Dan Barclay:

I think that's a great parallel to how you could see the market evolving. I wanted to go back to something you mentioned earlier, which is your sustainability revolution or your Green Revolution. Why don't you take us through your thesis there and what you've been observing in the last little while?

Hiro Mizuno:

Well, I heard that from the vice president Al Gore about five years ago at the Milken Global Conference. And my first reaction is, "Well, I understand why he wants to talk about the climate change, but is it worse than the Cold Revolution?" That's my first reaction. And then because my sort of definition of revolution is it should really change our lifestyle. It should change every aspect of our society and our businesses. And at that time, I didn't feel like climate change is going to be that significant or that impactful. I had to change my opinion just one year later when I attended the Milken Global Conference.

Hiro Mizuno:

I sat down, several of the panel discussions starting from education to bioscience, and then like a national security, and et cetera. And then probably five or six panels. I just know this, there's at least one panelist mention sustainability in their panel discussion across the different topics. Then just started feeling like, "Oh, revolution is happening because sustainability is really affecting every different type of business." And then I started thinking about it because when the Industrial Revolution finished, people's lifestyles totally changed.

Hiro Mizuno:

And I started picturing once we now get all the renewable energy to power our lives, and we recycle more, and everybody just managed to find a way not to exploit the resource, and we stop the frustration, and et cetera. I just felt like, "Oh, actually our life will be very, very different." And then I started saying like, "Oh, actually we are now getting into the green or sustainable revolution." And then the reason why I recently started emphasizing that was, again, I just want to stress the important role the financial industry can play. Unfortunately, we grew up when there is not a big, industrial change because it's about 100 years ago.

Hiro Mizuno:

So I grew up in the asset management industry. My job is to sit on the fence and I pick the good one and dump the bad one, that kind of a job. He has no responsibility in what's going on the ground. I think the Green Revolution, the sustainability revolution, I think the other financial sectors has to play a more proactive role like our predecessors played during the Industrial Revolution. That's the reason I started using this revolution, as to describe we have to wake up. Look at what the financial, together professional played to accelerate the Industrial Revolution.

Hiro Mizuno:

They took a lot of risk. They really accelerated a change. That's what I think we need to take as our responsibility as an industry.

Dan Barclay:

Yeah. I agree with that. I think we've seen a lot of it this year, in terms of pushing the industry to think about new things. I had a lot of really, interesting conversations at COP26 on the demand side, as opposed to supply side. And supply meeting, we can try and get them to stop producing fossil fuels, but in the world where you have that influence public companies, Western economies that works. But in places where you have no influence, whether it's the Middle East or other places, if you're not stopping the consumption of oil and gas, you're not changing the problem.

Dan Barclay:

You're just bringing it from a different place. And so the whole dynamic around how do we create, and I like your word revolution, because it's probably the right thesis is actually a change in the way we think and operate. I don't know what the right definition for revolution is, but it's got to be close to that. So BMO has an impact investment fund, Hiro, that we've set up. And the goal was to deepen our knowledge. That was the fundamental goal. It's meant to be venture capital. It's meant to be early stage. It's focused on ESG. There's definitely some climate in there, as we've been talking about. We're focused on new technologies in lots of ways.

Dan Barclay:

We're trying to find things that have a good chance of commercialization. I wouldn't say it's true science, but working for a while on commercial. I've been struck with so many conversations in the last little while about when we think about energy transition, there has to be new things. And whether they're new business models, new operating models, or they might be new technologies. I'm curious in some of the things you've seen in the last while that got you really excited about investing in innovation, investing in change around the energy transition.

Hiro Mizuno:

I always feel like throughout our history, humanity solves most of the social programs with innovation. And that's how we manage to keep the economy growing while improving quality of our life. Now we are talking about that, we just need to solve this climate crisis to first of all, maintain a quality of our life because it's going to be threatened by a lot of natural disasters. But if we manage to really pull things together to achieve sustainable development goals, our quality of life will be better. And then to achieve that, I think innovation will be a key driver. But one thing I just wanted to say is given the urgency of the climate change, we just cannot invest in innovation hoping some innovation will solve the problem.

Hiro Mizuno:

We just need to get our hands dirty and are trying to change the existing system. And we probably need to make the other painful transition of the infrastructure we have been depending on. I'm very hopeful that throughout the human history, we always come up with an innovation to solve it. I think what we should hope for is even without innovation, we should be able to draw our trajectory to net zero. And if the innovation really happens, it will happen quicker or less painfully. So I think that's what I'm expecting from the innovation. The area of innovation I'm very interested in, like I'm very excited is obviously, there are a lot of innovation in sustainable energy and sustainable transportation.

Hiro Mizuno:

Tesla is leading the transformation of that in the auto industry. And then now, all the other car maker guys are following the pursuit to shift the transportation to electrified one. And then I also have sat the emission board of Danone, which is the French food conglomerate and we talk about that. We hear a lot about the bioscience trying to make the agriculture farming less polluting. I think the innovation is ranging from the biochemical to actual, physical science. So there are a lot of different ways that the innovation can surprise us, and really reduce our pain in our transition to sustainable society.

Hiro Mizuno:

But as its innovation, it's harder for me to say this is the area we will get the really big innovation. But so I think your approach of creating a venture capital and putting hands in several different areas is going to be the only way for us to really get the better sense of where we can get the innovation to really save us.

Dan Barclay:

Well, like you, Hiro, I'm an optimist. I also believe in innovation. We'll find the right answer. And I also believe, as you just said, that the pace isn't fast enough. And so how do we spur more innovation? How do we take more risk? In addition to the things you talked about, I've been spending some time in the construction industry. Things like putting more carbon density in the concrete, which when you think about how much concrete we use every year, has a magical ability to capture things like that. And so the net extraction we actually need eventually.

Dan Barclay:

And so for me, that's one I've been focused on a fair bit. Let me wrap up with a big thank you. I think it's been great to hear your thoughts. Great to see you again. I love that we closed our call on innovation and the need to change pace. It's been great to have you. It's great to see your leadership. Thank you for what you've been doing. Please keep doing it. And it's been great to have you on our podcast and look forward to seeing you again, somewhere, somehow in the race to a net zero world.

Hiro Mizuno:

Thank you very much. Looking forward to continuing discussion with you. I'm really looking forward to seeing like BMO's leadership in sustainable finance.

Dan Barclay:

That's great. Thank you.

Michael Torrance:

Thanks for listening to Sustainability Leaders. This podcast is presented by BMO Financial Group. To access all the resources we discussed in today's episode, and to see our other podcast, visit us at bmo.com/sustainabilityleaders. You can listen and subscribe free to our show on Apple Podcasts or your favorite podcast provider.

Michael Torrance:

We'll greatly appreciate a rating, and review, and any feedback that you might have. Our show and resources are produced with support from BMO's marketing team and Puddle Creative. Until next time, I'm Michael Torrance. Have a great week.

Speaker 3:

The views expressed here are those of the participants and not those at Bank of Montreal, its affiliates, or subsidiaries. This is not intended to serve as a complete analysis of every material fact regarding any company, industry, strategy or security. This presentation may contain forward-looking statements. Investors are cautioned not to place undue reliance on such statements as actual results could vary.

Speaker 3:

This presentation is for general information purposes only and does not constitute investment, legal or tax advice, and is not intended as an endorsement of any specific investment product or service. Individual investors should consult with an investment, tax and/or legal professional about their personal situation. Past performance is not indicative of future results.

 

Dan Barclay Chef de la direction et chef de BMO Marchés des capitaux

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