Brookfield just announced that it reached a final institutional close for its Brookfield Global Transition Fund, raising a record $15 billion.
The colossal fund size (Brookfield says it was "oversubscribed" as well) is the latest signal that investors have no intention to decelerate their commitment to the transition toward cleaner portfolios.
The trend comes even as some have made ESG-investing the culprit for the high energy inflation. The critique is that focus has been diverted to cleaner sources, while the world remains dependent on fossil fuels, therefore thwarting investment, which may have helped boost supply.
We sat down with Mark Carney, who co-heads Brookfield's Global Transition Fund, in Berlin last week. He previously served as the governor for the Bank of England and Bank of Canada, making him an expert in inflation mandates as well.
He said the real issue is that there was a historical lack of capital discipline among the "financial markets, private equity world and the debt world" and as a result, they got "burned in U.S. shale in 2014, 2015." Carney believes that because so much capital was destroyed then, they withheld capital from the sector. And then, the industry as a whole didn't invest or add barrels during COVID, he said. And then, of course, the war exacerbated matters.
But Carney doesn't believe the opportunity requires excluding fossil fuels entirely from the portfolio.
He said the plan is to be "going to where the emissions are, getting those down and helping wind down emissions in sectors that aren't going to run to their whole economic life."
The firm's Global Transition Fund has already deployed $2.5 billion, including the acquisition of a U.S. and German solar power and battery developer and an investment in a carbon capture and storage creator.
Carney's also spearheaded the Glasgow Financial Alliance for Net Zero, with managers for more than $130 trillion worth of assets committing to the idea that their portfolios' total emissions are negligible by 2050.
He said given the scope of investment required to meet those goals, there are "actually some big positives," through this "process of transition that has a big multiplier for growth and, of course, for jobs."
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