Mark Carney | Remarkable to see big cos going green

Mark Carney, the chair of Brookfield Asset Management, and the head of transition investing and UN special envoy for climate action and finance. (Bloomberg)
Mark Carney, the chair of Brookfield Asset Management, and the head of transition investing and UN special envoy for climate action and finance. (Bloomberg)


In an interview, Mark Carney said it was impressive that some of India’s largest conglomerates are pushing ahead in the clean-energy space

NEW DELHI : The transformation under way in India is a key source of optimism for Mark Carney, the chair of Brookfield Asset Management, and the head of transition investing and UN special envoy for climate action and finance. In an interview, Carney, who was the governor of Central Bank of Canada (2008-13) and Bank of England (2013-2020) before joining the asset manager, said it was impressive that some of India’s largest conglomerates are pushing ahead in the clean-energy space. Last year, Brookfield closed a $15 billion global fund to invest in clean energy; of this, the asset manager invested $1.5 billion in India. Now, it is looking to close a second global fund that will be bigger than the first one, Carney said. Edited excerpts:

Earlier in the day, in a breakfast meeting with businessmen, you shared why you are very bullish about India and why this is ‘India’s decade’...

Well I’m not sure I used that phrase because I would rather extend it beyond this decade. There’s lots of reasons to be very positive about the country. From Brookfield’s perspective, we are a big investor and we expect to grow significantly across all our activities. I’m very positive and upbeat because I’ve been observing some of the substantive things that have been undertaken in India.

What makes global leaders like you so upbeat about India?

Well, you need multiple factors that support that success. First, when I look at the overall situation over the course of the broader sweep of the last three decades, the macroeconomic framework and the performance, you know, the foundation has been put in place. Secondly, you know, the absolute scale of the economy, the large number of middle class getting to the inflection point and the consumption. Thirdly, the diversity of the economic drivers in this economy. So, we are very enthusiastic and active in data and data infrastructure space, and that component of the economy where India is exceptionally well placed.

Now, energy security needs to transition off fossil fuels as a dependency that has existed and has been one of the challenges in terms of the balance of payments. There’s a manufacturing opportunity for the energy transition—in wind, solar, there is storage emerging in pumped hydro and, potentially, in hydrogen as well.

The scale of what’s going to be built out in India is about 40-50 gigawatts (GW) (of renewable energy) every year. These are enormous numbers. We (Brookfield) have about $3 billion in assets under management for renewables and transition in India. And we have a line of sight to 16GW with current operational portfolio of 7GW across multiple platforms. So, we’re just getting started. So, the short answer is because there are number of fundamental drivers.

Are there enough opportunities in India?

We are finding enough opportunities. We’re confident and even as we speak, we’re working on a number of things that are not yet finalized but will become public over time.

Would that mean that you could look at an India-specific fund?

Probably not, but if you ask me about a specific fund for Germany or any country, I’ll give you the same answer. The way we operate is that, we have a global real estate fund or the global transition fund or a private equity fund. We have operating personnel in all the markets we are in. Then we share that expertise with all the operating expertise across and then we can move at scale. About 14 months ago, we closed a $15 billion Brookfield Global Transition Fund and 19 different investments from that fund will potentially reduce emissions by the equivalent of combined emissions of New York, London and Toronto. Ten per cent of the $15 billion was invested in India. We’re raising a second fund that will be bigger than $15 billion. One of the relatively unique things about Brookfield is we’re always the biggest investor in our fund. Unlike many other asset managers, we have our own capital. So, in that new transition fund, we’ve committed that we will put $3.5 billion.

You have $25 billion in AUM in India. What is the growth we can expect in the next 3-5 years?

So, we have $850 billion under management globally, including $25 billion in India. We would expect that number to continue to grow. I won’t give guidance, but India will have a material share going forward. We don’t earmark a specific portion for one geography. We’re driven by the opportunities. So, I’ll give an example. We have an memorandum of understanding with Reliance Industries Ltd for more manufacturing opportunities in Australia. We expect to have many such examples.

As a former central banker, how do you look at the performance of RBI?

I’ve got a tremendous affinity for RBI and the governor, and part of the reason I say that, aside from personal respect for the institution and the individual, is that it is a hugely important institution. They have a broad range of responsibilities, and I think the proof of their acumen and their effectiveness has been in the way they have contributed. They have helped put in place those conditions to ensure that this economy is moving.

Do you think industrial houses should be allowed to set up banks?

Well, different countries have made different decisions on that. In both countries where I’ve been a governor (Canada and England), we have not been allowed to do that. In Japan, you had somewhat informal relationships (between industrial houses and banks) like that. Look, you need financial institutions. There needs to be clear lines between fiduciary and prudential responsibilities.

Is there a risk to the US dollar continuing as a reserve currency?

A multipolar world is better served by a greater reserve diversification. Now, this diversification is a very slow and gradual process. Finance follows commerce, ultimately, something that people often forget. And, anchored in commercial transactions, you know, the US dollar’s position continues to be absolutely central. So, it will be the reserve currency in my view for the foreseeable future. However, as the global economy evolves, greater diversification of reserve assets would be in the world’s interest. It just takes a long time for that to happen.

How unique is that the largest conglomerates including Tata, Reliance and Adani, are the ones that are the biggest spenders on clean energy?

It is particularly impressive when existing organizations that have established profitable positions in industries invest in the industries of the future. That is something that far too often does not happen. This is what Clayton Christensen’s Innovators Dilemma talks about - that you cling to the old for too long. It’s very impressive that there is a number of large corporations in India who are actively investing in the future and helping to determine the future. I would say as well because they’re actually doing the innovations as well.

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