National Post (National Edition)
Brookfield pursues US$7.5B fund devoted to `net-zero' shift
Brookfield Asset Management Inc. plans to raise at least US$7.5 billion for a new climate-focused fund, as the Canadian investment firm builds out an ESG business led by former Bank of England Governor Mark Carney.
The Brookfield Global Transition Fund seeks to take advantage of accelerating interest in solutions to the global climate crisis, with a focus on renewable power and other investments that help cut carbon emissions.
It would be one of the largest — if not the largest — funds in a sector that's attracting a flood of new capital. Activist investor
Jeff Ubben is trying to raise as much as US$8 billion for an impact investing fund at Inclusive Capital Partners LP.
Roughly US$347 billion poured into ESG-focused funds in 2020, leading to the creation of hundreds of new funds to catch the money.
The investment potential is huge as governments and corporations aim to reach net-zero emissions, Carney said in an interview broadcast Wednesday at the Bloomberg Invest Talks virtual event.
“Climate change is the biggest risk to the world, but when you turn it around, if you're part of the solution, it makes it the biggest commercial opportunity in the world,” said Carney, former governor of the Bank of Canada who joined Toronto-based Brookfield last year as vice chairman and head of ESG and Impact Fund Investing.
“We're going to rewire, so to speak, the entire global economy, consistent with net-zero,” he said.
Carney, who also serves as a special envoy to the United Nations on climate action and finance, said public opinion about climate change has pushed businesses and governments to make commitments to curb emissions faster.
More than 100 countries have pledged to get to net-zero emissions over the next 30 years, with China setting a goal for 2060. The Biden administration's decision to rejoin the Paris Agreement is “hugely important” for the effort, Carney said.
“Without question, having the U.S. government — the full force of the U.S. government — behind this, they'll bring new ideas, better ideas, energy, the impact in terms of direct policy,” Carney said, citing the expertise of officials including Treasury Secretary Janet Yellen, with whom Carney wrote a paper last year about climate and policy.
There's no path to net zero without large capital investments in clean power, said Carney, adding that about three-quarters of greenhouse gas emissions can be traced to the energy and power-generation sectors.
Getting the carbon out of energy systems means replacing fossil fuels with solar and other renewable sources and will require US$3 trillion or more a year in capital investment for decades, so there is “a huge capital opportunity to catalyze that,” he said.
Brookfield Renewable Partners LP already operates renewable energy assets with a total capacity of about 19 gigawatts, the bulk of which is hydroelectric and wind.
Bruce Flatt, Brookfield's chief executive officer, said last year that the new environmental and social investing strategy could eventually grow as large as the firm's real estate, infrastructure and private equity businesses. Brookfield manages about US$575 billion.
The new fund will put money into green power generation, but the company also anticipates making investments that help industrial businesses cut emissions by changing production methods and making other efficiencies.
Global policy shifts such as carbon taxes have improved the case for climate-oriented investments, Carney said.
“We're in a position now where there's a very high degree of confidence, certainly, about where people want to go — we want to be sustainable, we need to get to net zero — and more and more confidence that regulation eventually is going to fill in consistent with that,” he said.