April 21, 2020

The Green Investing Revolution Is Coming: BlackRock's Brian Deese on ESG Investing

April 22 is Earth Day. Do you know if your favorite corporate behemoth is observing the holiday? Chances are...they aren’t.

April 22 is Earth Day. Do you know if your favorite corporate behemoth is observing the holiday? Chances are...they aren’t.

Spoiler alert: That’s a terrible decision.

By letting climate concerns simmer quietly on the back burner, companies are not only opening themselves up to unmitigated risk but also leaving returns on the table. That’s according to Brian Deese, global head of sustainable investing at BlackRock (yes that BlackRock—the world’s largest money manager).

This week on Morning Brew’s Business Casual podcast, Deese (who was also an architect of the Paris Climate Agreement following a stint in the Obama White House) explains why investing with the climate in mind leads to stronger returns. 

Deese also illustrates the important roles both 1) big data and 2) the federal government play in determining how and when corporate America prioritizes sustainability. Because all those returns we were talking about up there? They won’t matter if the world’s on fire in 30 years.

And unlike some investors focused on sustainability, Brian’s about more than just good press. Listen now to hear for yourself.


Transcript

Kinsey Grant, Morning Brew business editor and podcast host [00:00:06] Hey, everybody, and welcome to Business Casual, the Morning Brew podcast, answering your biggest questions in business. 

 

Kinsey [00:00:12] I'm your host and Brew business editor, Kinsey Grant. And now, let's get into it. 

 

Kinsey [00:00:17] If you've had a birthday in the last few weeks, chances are you've gotten a text that reads something along the lines of this: Happy birthday, love you so much. Can't wait to celebrate when quarantine is over. I'm sorry that a) you're probably an Aries and b), you probably didn't get the celebration you deserve. But, there's one important day happening this month that deserves more than just a half-birthday celebration in six months, and one we can all observe from afar, and frankly, should think about every other day as well. Earth Day, Wednesday, April 22nd, is Earth Day, the 50th Earth Day, to be exact. 

 

Kinsey [00:00:48] The theme is climate action and the issues being brought to light. Could it be more important? Even as we wade through the depths of uncertainty all around us in a COVID-19 world, there will be a time that comes after this—a time when we all begin to heal, both physically and economically. But we want to make sure that there's something left to sustain us when we embark on that healing. As Earth Day's organizers say, climate change represents the biggest challenge to the future of humanity and the life support systems that make up our world. And the future of these deep-pocketed people most capable of organizing the kind of institutional change necessary to protecting the planet? Well, that future is in dollars and cents. 

 

Kinsey [00:01:27] So today, I'm diving into the depths of sustainable investing. How and why sustainability-focused and environmentally minded investing strategies both make sense and do good—and maybe even mitigate risk. So today I am excited to welcome to Business Casual Brian Deese, the global head of sustainable investing at BlackRock, which also is the world's largest money manager. 

 

Kinsey [00:01:49] Brian, welcome to Business Casual. 

 

Brian Deese, global head of sustainable investing at BlackRock [00:01:51] Happy to be here. 

 

Kinsey [00:01:52] I am excited to talk. We were just chatting that you're a new Morning Brew subscriber, so we'll maybe put your referral code in the show [Kinsey and Brian laugh] to get you some of those referrals, get some swag. 

 

Kinsey [00:02:03] But in addition to being a new Morning Brew subscriber, you also have a very interesting background, a very storied resume, I would say. You worked in the White House under President Obama. You were the senior advisor for climate and energy policy, helped negotiate the Paris climate agreement and other big national and international initiatives. And the deputy director of the National Economic Council and deputy director of the Office of Management and Budget. So you were definitely not busy at all. [Brian laughs] Just a real slacker type, aren't you, Brian? 

 

Brian [00:02:35] You know, lots of titles. But they mean less than meets the eye. 

 

Kinsey [00:02:43] OK. [laughs] We'll let the listeners be the judge of [Brian laughs] that after this interview. But like I mentioned here in this intro, I want to learn more about what BlackRock is doing to focus on sustainable investing, what that sustainable investing means, and how we should think about that as everyday people who are watching the business world and people who are investing as well. So let's get started here just better understanding what it means from a business perspective—sustainable investing means. BlackRock says that it is, on the site: Sustainable investing team is focused on identifying drivers of long-term return associated with environmental, social, and governance issues, integrating them throughout BlackRock's investment processes and creating solutions for clients to achieve sustainable investment return. So my question here is, why? Why is this kind of investing important in BlackRock's view? 

 

Brian [00:03:35] Yeah, well, look, I'm glad we're starting here and this is the right question because a lot of the conversations around sustainable investing, I think have been hampered in the past by a basic confusion, that why are we talking about this issue? And what even is the issue? So we try to start from that very simple premise, which is that if you take the best of a traditional investing approach, and you actually build into that considerations about what we refer to as sustainability factors about how the environment or climate change is going to affect investment, about how a company is managing its stakeholders, that you can actually generate a better long-term outcome, a better long-term financial outcome for your client. 

 

Brian [00:04:27] And so to your point, why is that important? Well, it's important in two respects. One is, if you're a fiduciary, if you're managing investment and your obligation is to try to generate the best long-term outcome, then if integrating sustainability considerations can do that, then it should be core to what you do. And at BlackRock, what we have articulated is a view that because we now have growing conviction that these issues are material—they do matter to how companies perform and how assets perform—it does have to then be at the core of what we do. And the important part about that is what that means is that sustainable investing should no longer be viewed as this kind of other thing that is in the province of people who are really motivated by a particular cause or a particular advocacy issue or a particular issue associated with their values. 

 

Brian [00:05:24] That if you're focused on value, financial value, then if you're not paying attention to sustainable investing, that you're actually missing something important. So that's why we've tried to center this around saying sustainable investing is not some other thing that increasingly, you know, the way we articulate is we want to make sustainability the new standard for how we invest. We want this to increasingly become the way we invest. And we joke that maybe my success is I'll put this whole enterprise out of business, in that if across time there's just broader and growing recognition that these factors must be part of how you invest well, that's really the goal. Now we're a long way from there. So [chuckles] we have a lot of distance to travel. But that's the basic idea. 

 

Kinsey [00:06:10] So, Brian, this sounds simple enough—that good investing should also be sustainable investing. How come BlackRock has kind of been lauded as the the first mover in this? You guys got a lot of headline attention earlier in the year for this commitment to sustainable investing. I just wonder if this makes so much sense, why isn't every asset manager doing the same thing? 

 

Brian [00:06:31] Well, look, I think there are elements of this that aren't new. And there has been a long focus on the idea of socially responsible investing and a trend that has its roots in the divestment movements, the socially oriented divestment movements from decades past. 

 

Brian [00:06:50] And you've seen leaders and, in this field, often sort of smaller investor or asset management shops, that have tried to innovate in this space. I think what is new is a couple of things. One is, we have seen over the last couple of years, a huge increase in the quantity and quality of data around how companies manage these traditionally non-financial aspects of their business. So traditionally, a big barrier to this has been, OK well maybe we believe these issues might be material how a company manages its employees or how a company engages in the communities it operates. And maybe those are material. But how do we measure those? How do we benchmark those? 

 

Brian [00:07:39] We're in this period of massive revolution in terms of how much data is available. We've gone from five, eight years ago, 20% of the S&P 500 companies reporting sustainability data to now close to 90%. So that opens up lots more opportunity to actually understand and integrate this. And the second is, we're seeing changes in fundamentally how investors and consumers and citizens—what they expect of companies. And that is rapidly changing the view of what a company really needs to do to position itself for long-term profitability. 

 

Brian [00:08:18] And the ability to actually re-up and reinvigorate your license to operate has become increasingly important. We've seen lots of examples of companies who failed to do that and have destroyed a ton of value in the process. But those trends that I'm mentioning are relatively new. So this question of how do you bring sustainable investing into that mainstream and into the core of how we invest? That part is relatively new. And it is still hard. 

 

Brian [00:08:47] I don't want to suggest that this is somehow the easiest or the most straightforward thing to do. As in most areas of finance, if that was true, then every —. 

 

Kinsey [00:08:58] Everyone would do it. 

 

Brian [00:08:59] Everyone would do it. But certainly the tools and the rationale and the impulse for this have really changed in recent years. And I think that's what is giving rise to much more focus on the issue. 

 

Kinsey [00:09:13] I think one of the big shortcomings of this so-called move toward sustainability is that it's hard to quantify exactly what the risks are in this situation—that we know that being sustainable, being climate-minded is a good thing. But it's hard to understand what happens if you aren't that way. What are the risks for a company that doesn't think about sustainability? And like you mentioned, we have more data. There is more transparency now, I would argue, than ever before in a lot of these arenas. But at the same time, I wonder what you think the bigger risk is. Is that a company that isn't thinking about the future in a sustainable way opens itself up to litigation or to, I don't know, some big oil spill [laughs] or something like that? Or is it that consumers are exercising more control over the products that they use, the companies that they buy stock in, what they support based on their own convictions? 

 

Brian [00:10:03] So I think that there are multiple channels through which the risks associated with its sustainability can affect a company. One of them that's in there is their operational elements. And the governance of sustainability issues becomes important for operational reasons. So are you focused on your internal stakeholders, your employees? 

 

Brian [00:10:30] Do you actually have a strategy to create an inclusive and diverse workforce, an environment where employees want to engage and stay attached to your company? Do you have a strategy for your external stakeholders? Do you have a resilient supply chain? These are issues where if a company fails to focus sufficiently on these issues, it can create operational challenges and they can be positioned negatively vis-a-vis their peers. 

 

Kinsey [00:10:59] I'm curious to hear what kinds of companies you and your team think are doing the best job in terms of achieving these goals towards sustainability or at least putting those goals in place. Are there any specific sectors that you think are moving ahead or moving the ball down the field faster than others? 

 

Brian [00:11:17] Well, one of the things that we spend a lot of time thinking about is actually how do you make an assessment of the relative performance of companies versus their peers within sectors? And part of the reason for that is traditionally in sustainable investing, there's been a kind of an exclusionary or a divestment impulse, which is to say that the right way to express a perspective or a view that is in the sustainability space is to exit an entire sector. And that's grown traditionally—that sort of more traditional SRI ways of investing have been ex-tobacco, ex-firearms, ex-fossil fuels, etc. 

 

Brian [00:12:05] And one of the things that we are very interested in is in saying, before you get to that question, can you look and say within a particular industry or within a particular sector, what are the companies that are relative overperformaners and relative underperformers? And there's two reasons for doing that. One is that we think that actually that enables you to identify with more granularity which companies are better positioned. And number two, if you're then thinking about how you build a portfolio—if you've started without excluding any sector or any companies, then you can spend more of your risk budget on those companies that you think are relatively better versus, you know, worst positioned. 

 

Brian [00:12:56] So to make that concrete, if you think about something like climate change and more generally the transition to a low-carbon economy that we know is happening, that is going to create winners and losers, and important winners as well. So the companies that are on the losing end of that transition may lose value, but companies that are positioning themselves for new technologies, new carbon-efficient technologies, they should be on the winning it. 

 

Brian [00:13:22] When we look at that issue, what we find particularly interesting is to say, for example, within traditional energy sector, not do you want to be out of that sector entirely, but where within that sector do you see companies that are shifting more of their R&D and their forward CapEx into those carbon-efficient technologies in the future, which is an indication that they will be better positioned five years from now to actually take advantage of those opportunities. So conceptually that's a lot of the way we tend to approach the question of where the better or worse position companies. 

 

Kinsey [00:13:55] So does that mean BlackRock would never completely divest from, say, oil and gas? 

 

Brian [00:14:01] Well, look, it's a great question. It goes to, you know, earlier this year, we put out a set of announcements that tried to frame our approach to sustainable investing and sustainability. One of those was a letter from our CEO that articulated a view around why sustainability was taking on the prominence that we believe it is. 

 

Brian [00:14:23] And in particular, why the issue of climate risk is one that we think the markets are not fully appreciating and will help to drive a very significant reallocation of capital. We also talked about then what were we gonna do as a result? As a general rule, we have the portfolios where we have discretion, where we actively manage the portfolios and we can move in and out of a position or security. In those portfolios, we did indicate there are some areas, and in particular companies, thermal coal companies where they derive more than 25% of their revenue from thermal coal mining, where we believe the risks are so pronounced that we don't think it makes sense to hold that category of risk in our active portfolios at all. 

 

Kinsey [00:15:11] OK. Speaking of risks here, when you think about what percentage of your business is derived from thermal, coal, how does a risk like that in 2020 with this new focus on sustainability—how does the risk like that stand up to something like liquidity or debt load, or the more traditional financial risks that we're so used to reading about and hearing about? 

 

Brian [00:15:31] Yeah. From BlackRock's perspective, we have to think about risk. We have to think about risk in multiple ways. Principally, the way we think about it is the management of risk in the portfolios that we that we manage for our clients. 

 

Brian [00:15:45] And there, part of what we're trying to do in 2020, is build into our core risk framework where, as you say, something like liquidity is a kind of a really important fundamental risk factor that we look across all of our portfolios and build sustainability risk, and particularly climate-related risk, as, you know, build it into the risk framework in exactly the same way. One of the things that we have a lot of conviction on is that the existing tools that are out there to try to measure and parameterize climate risk are often insufficient to actually capture what the risks actually are. So in a lot of places, what we found is you really have to build new tools altogether. 

 

Brian [00:16:32] If you look at the risk that municipal bonds face because of the physical location of different geographies, to really understand and measure what the physical risks are down at the local level or even at the building level, you need tools that are really capturing and then downscaling a huge amount of data into these more precise measurements. Once you have them, you can then build them into your risk processes in the same way you would consider any other risk. Now, if you're managing a portfolio that doesn't happen to have exposure to significant physical climate risk, then you've done the risk assessment, and it turns out that it's not particularly pertinent to that strategy. 

 

Brian [00:17:17] But there's other strategies where, once you really are able to apply those tools, you see that there is more risk than you may have recognized. So our real focus is trying to build it in as a risk factor equal to any other that you would think about, and then invest in building the tools and the capabilities that really allow you to get at what you think those risks are. 

 

Kinsey [00:17:39] So your day to day seems like it is based, in large part, on these discrete, highly specific risk calculations about investments. But to me, so much of what we talk about, especially—and I know that sustainable can encapsulate so much more than just climate—but when we talk about companies that are actually thinking about climate change in a meaningful way, it doesn't feel very discreet. It feels very much broad strokes. It's BP saying we want to be carbon neutral by 30 years from now. These are big headlines that we write about in Morning Brew. But I'm curious how much these individual companies are actually contributing to the future of this more sustainable economy when they do make announcements like that, that do seem very broad and very far reaching and that are less specific in terms of here's X, Y, and Z and what it means for our investors. 

 

Brian [00:18:33] Well, I think we are seeing—and part of this is the feedback—of the clear change in societal expectations and investor expectations of what companies actually need to do in order to sort of reaffirm their purpose. And we're seeing in the wake of that, this is a fast moving space, companies moving quickly. And as you say, announcing in some cases very aspirational and long-term targets and in other cases, very specific short-term targets as well. I think that one way we tried to connect the aspirational with the concrete is to focus on the quality and the consistency of disclosure that companies are putting forward. 

 

Brian [00:19:21] So, for example, in the space of climate change, we've really tried to reinforce our expectation that companies will disclose consistent with a framework called the Task Force on Climate Related Financial Disclosure, which is a task force initially created by Bank of England governor—Foreign Bank of England governor Mark Carney—and tried to lay out a framework to say here are the categories of climate-related risk that, as a company, you should be reporting on and disclosing on. 

 

Brian [00:19:50] That is very helpful for an investor like BlackRock because it allows you to disentangle what is the aspirational long-term commitment from what is the sort of concrete reality of your business today? 

 

Kinsey [00:20:02] Right. It's like the Instagram versus reality of sustainable [Brian laughs] investing. OK, Brian, I want to talk more about what some of these companies specifically are doing to execute on these climate goals. But really quickly, let's take a short break to hear from our partner.  —

 

Kinsey [00:20:18] And now back to the conversation on sustainable investing with BlackRock's Brian Deese. Brian, people say, and by people I mean one of my econ professors in college in my environmental econ class, said the biggest thing that an individual person, you or me, could do to impact the environment in a positive way is to stop eating meat. That that is proven to be the most impact an individual could have. But I'm curious if there's an equivalent for business. Is it saying we'll be carbon neutral by this date, like we were just talking about? Or is there something else that businesses should be doing that's actually going to effect change? 

 

Brian [00:20:55] Well, I think that that's a question that you really have to take at the business and the sector level. That there is no sort of one-size-fits-all answer to that question, number one. And number two, I also think that in some ways, I would almost turn the premise to the question on its head. Which is that question is almost asked, I would say, from the perspective of the old school view of sustainable investing, which is you start from the premise that you want to change the world, and then how can you, as a person or as a business, change the world.  

 

Brian [00:21:35] And I would flip it on its head and say, if we believe that the transition to a low-carbon economy is happening, and in fact happening faster than people might anticipate, what are the things that businesses must do in order to actually win and be the most profitable? And what are the things that if they fail to do that, they actually may be left behind. So —

 

Kinsey [00:21:58] Interesting. So it's like everybody is going to be at this certain point by a certain time, who's going to be the farthest [laughs] ahead when we get to that point in time? 

 

Brian [00:22:07] Yeah. You know, it's funny. We used to think about this in policy terms, in the context when we were negotiating the Paris Agreement, and saying the real pivot that happened among countries was this view that the conversation on climate change used to be like a soccer match where people are playing against each other. 

 

Brian [00:22:33] And it's like, well, if I do something—if I move—I'm not going move forward unless I see you moving forward, and I'm going to move backward. It was all sort of us versus them. And what pivoted was this idea that we're actually now in a global race, that the economy is going to decarbonize, that ultimately the winners long term are going to be those that position themselves to take best advantage of that. That's true for countries. It's also true for companies. And so the question is, how do you best position yourself to actually win in that world, [indistinct] in the future. 

 

Kinsey [00:23:08] So it needs to be more than just a marketing ploy. It needs to be a reckoning. 

 

Brian [00:23:12] Yeah. And fundamentally, that's where I think we're seeing this shift from the whole conversation around sustainability being principally either a marketing or corporate social responsibility element, where the question is how can you get some credit for being seen as a better global citizen, to the question of what are the core risks to my business if I don't actually position myself to be ahead of my peers with respect to the transition to a low-carbon company? 

 

Kinsey [00:23:48] So if we're thinking about this in terms of a race instead of something like a soccer game, that there is ostensibly a finish line to be crossed. What matters more when companies, economies, countries are crossing that finish line? Is it who gets there first or is it who has the best policies in place when they do cross that finish line? Speed or accuracy? 

 

Brian [00:24:09] Well, look, I think that ultimately, to unfairly explode the analogy that I myself put on the table — [laughter]. You know —

 

Kinsey [00:24:19] You love doing that. [laughter]

 

Brian [00:24:22] I think that ultimately what is going to matter most is those both on the policy side, countries, and in the business environment, companies, that can credibly demonstrate that they can move quickly, more quickly than their competitors or their counterparts. And so I think that we're seeing in the market right now that the speed question is increasing. You know, companies are running faster, and as a result, your ability to differentiate in the space of sustainability will require you running faster. 

 

Brian [00:25:06] But, because of the issues we talked about earlier around the proliferation of data and the ability for consumers and employees to access much more quickly and easily information, it's gonna be much more difficult do this on the cheap or have an approach that is principally oriented in marketing as opposed to the sort of changes and demonstrated commitment in your core business operations. So in some ways, you know, I think the answer is going to be the winners will be those that are able to move the fastest with the most credibility. And so I think that, ultimately, it'll be a combination of both. 

 

Kinsey [00:25:51] OK. So it's like a relay. Don't drop the baton, but cross the finish line first. [laughter] All right. All about the analogies here. OK. Brian, I'm interested now to talk more about the role of government. Obviously, this is something you have spent a lot of time thinking about and working on. But before we get into that, I'm curious to better understand if you think the general population cares enough about this issue. A big criticism of the world in general is that we don't care about something until it's staring us in the face. Right? 

 

Kinsey [00:26:25] That we don't think about something like what the world will look like in 2050, because why would we unless we start thinking about, like, our 30-year mortgage? This is a criticism that is widely criticized—I don't know. But do we care? Like, do we actually exercise enough care over what we buy, what we invest in, to make a difference right now in terms of sustainability and more specifically, climate change? 

 

Brian [00:26:51] Well, let me start from the perspective of investors, including individuals as investors in their 401(k)s or otherwise. And I'm an optimist, so I see sort of the—I'll give my own sort of glass half-full version, which is I think that we have seen over the last—even over the last 18 months—just an extraordinary increase in awareness, attention, and focus by investors across the world in sustainability as a core issue that they are interested in, not just a peripheral issue. And so I think I am very heartened by that increase, and I think it's driven by some of the broader societal trends that we've we've talked about. 

 

Brian [00:27:42] The second thing I'm heartened about is that we find ourselves in the midst of a unprecedented and unexpected global pandemic that has us doing this podcast remotely and creatively the way we're doing it. And even amidst this crisis, both in terms of investors and their flows into sustainable strategies, but also the questions we're receiving from our clients, these issues continue to be front of mind. Now, that's just a portion of your question. The broader question—the broader question around do we as a sort of global community have enough attention and focus and wherewithal to actually address proactively big global structural problems before it's too late—is one where, I think, as a global community, we have some significant work to do. 

 

Brian [00:28:36] And I think that one of the things that this coronavirus crisis will do, frankly, is raise the prominence of this set of questions around how prepared are we, as a global community, for big global interconnected physical threats, because there's lots of ways in which climate change in this current [indistinct] crisis are not similar. But one way that they are is that they create physical threats that could only be remedied by understanding and addressing the physical costs. 

 

Kinsey [00:29:15] I like this idea of trying to take what we've learned in the past several weeks and months with this pandemic. Take the lessons from this era of history, moving them forward to apply to future issues that will undoubtedly pop up. All right, Brian, I want to take a quick break, but when we come back, let's talk more about these countries' specific responses to sustainability and what the role the government should be. Quickly, a short break to hear from our partners. —

 

Kinsey [00:29:44] And now back to the conversation on sustainable investing with Brian Deese. Brian, I've said it before. You worked in government. [laughs] What should the role of the government be in creating a path to a more sustainable business world? 

 

Brian [00:29:59] The speed and the trajectory of the transition to a low-carbon economy will be defined by government action. And I think that there is an obligation on governments globally to set the rules of the road and long-term incentives that help to drive investment and finance in the direction of lower-carbon solutions, more carbon-efficient technologies. And the way you do that is complicated. But the good news is we know a lot about how to efficiently set those long-term incentives in ways that don't create really perverse incentives. 

 

Brian [00:30:43] And it's also really important that governments do that in a way that is very cognizant of how the transition affects the economic welfare and the livelihoods of people across the country. One thing that people often fail to recognize is that climate change itself is extraordinarily aggressive. That means is that the physical impacts of climate change have the most negative impact on the people who have the fewest resources. That's true within the United States. It's true between countries globally. That said, when you think about the policy that you want to put in place to actually help to meet this crisis, you have to make sure that you are mitigating that and not creating or exacerbating other inequalities. 

 

Brian [00:31:28] And so I think for the global policy community, the good news is there is a global framework in the Paris Agreement. It is deeply inadequate in all sorts of ways. But it's by far the best global framework that we've got to try to motivate and inspire action. 

 

Kinsey [00:31:49] So if the Paris Agreement is our last, best hope, basically, what does it mean that the Trump administration is in the process of withdrawing from that agreement? 

 

Brian [00:31:58] Well, look, I think this conversation is a global conversation. And if you look at the Paris framework and if you know, if you asked me when we were there in 2015 and then you had said to me that in the intervening years, we would have seen the kind of disruptive and unprecedented political actions that have happened, not just in terms of the U.S. election, but also Brexit and lots of fracturing of the global order, the upending of a global trading system, you know, lots of global systems of coordination being fundamentally questioned. 

 

Brian [00:32:37] If you had told me all that was going to happen and then outlined to me where the Paris Agreement would be, I would have thought that was too optimistic a scenario. That's a long way of saying that actually, if you look outside the U.S., the global recommitment to the Paris framework among all the major emitting economies, and the fact that this conversation has really moved on in all major economies, is a signal, I think, of where long term the global community is going to move. 

 

Brian [00:33:09] I think diplomatically and practically speaking, it creates a big complexity to have one of the major emitting economies and the largest economy in the world, not at the table and not engaged. But I think that ultimately, I think in the investment community, in the global community, it's clear where the direction of travel is. It's clear where the conversation is going. 

 

Brian [00:33:34] And a lot of that is the economics are driving it—that in some ways the politics are being dictated by the economics and that increasingly more resource-efficient, lower-carbon solutions are winning. And the question is how quickly that will happen. 

 

Kinsey [00:33:49] So let's say, and at the risk of taking a U.S.-centric view, as people who are living in the U.S., working in the U.S., what should the role of the government be, in your view, to create the kind of environment in which companies are their most sustainable versions of themselves? Is it just rejoining the Paris Agreement or are there other things that a government can and should be doing? 

 

Brian [00:34:13] No. I think the government should have a clear long-term framework that provides the incentive to decarbonize the economy across sectors. And if you have that in place and you give the stability for that policy framework and you do it in a way that is to the greatest degree possible technology-neutral, then you can unleash extraordinary amounts of private investment to help drive greater innovation. And so I think that at a very, [laughs] very high level is the sort of right framework for government policy. And as I said before, while you can get into lots of complexity, and having served in government during a period when we were trying to achieve a lot of that goal through regulatory policy without legislative action, it can get very complicated very quickly. But at a high level, you know, setting a long-term framework with a clear and ambitious target for decarbonization is a way to unleash enormous amounts of private capital. 

 

Kinsey [00:35:32] OK. All right, Brian. I've forced you to answer some heavy ones here. So on the way out, let's lighten things up a little bit. We'll do some rapid-fire questions with Morning Brew's wheel. I'm going to take it for a spin here [sound of wheel spinning] and see what we land on. [sound of a ding]

 

Kinsey [00:35:49] Day in the life. So, as you might be able to hear, anybody listening out there, we're recording this [laughs] remotely. But Brian, I'm curious, as we're all adjusting to this new normal of quarantining and social distancing, what is a typical day in the life look like for you? 

 

Brian [00:36:03] Like a quarantine day? 

 

Kinsey [00:36:05] Yeah. Yeah. 

 

Brian [00:36:06] Oh, well, I have a 4-year-old and a 7-year-old. They're home. And so it's my wife and I and the two of us, the two kids, in the house. And so a typical day, we run a home school here. [Kinsey laughs] We get up every day and we walk to school, which involves walking around the block and coming back into our house. But we do that every day. 

 

Brian [00:36:36] And then both my wife and I attempt to work throughout the whole course of the day and have the repeated experience that probably a lot of people are having, where my door opens and one or two little people come in here, [Kinsey laughs] and we are trying infinite creative ways to try to make that balance work. As I say, it's wonderful and harrowing all at the same time. 

 

Brian [00:37:06] But I would say, you know, the big picture, we're extremely fortunate. Everybody's safe, everybody's healthy. And compared to the trials that so many people around the country and the world are in, we're in quite a fortunate position. 

 

Kinsey [00:37:18] What is the hardest homeschool subject to teach, in your experience? [laughs]

 

Brian [00:37:24] Well, the good news is because it's preschool and first grade, I'm not yet bumping up against —. 

 

Kinsey [00:37:31] You've grasped most of the content. [laughs]. 

 

Brian [00:37:30] Most of it, although [laughs] you don't want to take that for granted. I think the hardest, frankly, is music, because my daughter has already gotten to the point where she can read music better than I can. And so I'm not very useful in keeping her focused on [indistinct chatter]. My wife, fortunately, is much better than me in that account. But if I'm left alone and having to guide her through her piano lesson, we quickly get to the point where, like, she's looking at me like, Dad, come on. [Kinsey laughs]

 

Kinsey [00:38:08] All right. One last spin around the wheel [sound of wheel spinning] and we're gonna land on [sound of a ding] oh, shit. [Brian laughs] Has there ever been a moment in your career that has made you say, oh, shit, either in a good way that you were super-excited about something or in a bad way where either you realized everything was gonna change or you messed up. 

 

Brian [00:38:28] Yeah, yeah, yeah. [indistinct chatter] Yeah, that happens with more frequency than I guess I would like to admit. Look, you know, the one—we had a number of oh, shit moments in 2008 and 2009 during the financial crisis and they've been kind of resonant recently given the other crisis that we find ourselves in now. 

 

Brian [00:38:53] When I was on the campaign in 2008, then candidate Obama won the election, I was still living in Chicago. It was November. We had a very skeletal team. And, you know, at the time, they said, well, your job is to go figure out what we're gonna do about the auto industry and its failing, figure out what we might do to keep it from failing. And I sort of came back and realized the magnitude of the problem. And also the fact that we were sitting in Chicago, we didn't have any staff. I had to get my car and drive overnight to get back to Washington, D.C. 

 

Brian [00:39:32] I've had, over the course of a short period of time, a number of quite significant oh, shit moments about how we were going to navigate our way through that crisis and how I was going to navigate through that particular crisis. But I also have found that those moments where you're most terrified professionally end up oftentimes being the ones where you learn the most and you have the most sort of profound professional experiences. 

 

Brian [00:40:01] So that was maybe a little bit more terror than you want to have, but in general, I embrace the oh, shit moments because in hindsight, almost all of them are connected to moments where I've learned the most or we're able to have the most profound impact. So not necessarily trying to avoid the oh, shit, [Kinsey laughs] but certainly with a [indistinct]. Yeah, exactly. 

 

Kinsey [00:40:28] OK. Yeah. I imagine you learn quite a few lessons when crafting a bailout plan that will eventually become one of the biggest economic stories of a generation. OK. [laughs] Well, Brian, thank you so much for coming on Business Casual. I really enjoyed this conversation and learned a ton and I'm grateful for you taking the time. 

 

Brian [00:40:47] Absolutely. Thanks for doing it. And stay safe. 

 

Kinsey [00:40:49] All right. You too. 

 

Kinsey [00:40:54] Thank you so much for listening to this episode of Business Casual. Is there a company whose approach to sustainability you really admire? Maybe a business that's doing impressive and really meaningful work to help solve the global climate crisis? Let me know by emailing me at Kinsey@morningbrew.com. That's k i n s e y@morningbrew.com.

 

Kinsey [00:41:15] And maybe we'll publish them for the world to see. I'll see you next time!