This is Tom Rowland's Reese and you're listening to Switched on the BNF podcast. Every year, b ANDAF releases its annual report on Energy Supply Investment and Bank Financing Activities, where we use public and commercially available data to assess banks energy sector financing to generate a ratio of their allocation between low carbon supply and fossil fuels. This year's report takes a look at twenty twenty three, where we found the energy industry investing more capital into clean sources of supply, with bank financing for low carbon energy technologies reaching eighty nine percent of that of fossil fuels. This rising energy supply banking ratio of zero point eight nine to one may be moving in the right direction, but given that we need to hit four to one by twenty thirty to meet a one point five degree scenario, we're still a long distance from the target. Further positive momentum can be found when we look at our energy supply investment ratio, which for the first time surpassed fossil fuels. But what does all this mean in geographic context and which banks are performing best. On today's show, I'm joined by Clean finance analyst Trina White, who brings us findings from our third annual Energy Supply Investment and Banking Rate, which BNF clients can find at BNF go on the Bloomberg terminal on BNF dot com. Now onto the pod. So welcome Trina, Thank you for joining us today.

This is Tom Rowland's Reese and you're listening to Switched on the BNF podcast. Every year, b ANDAF releases its annual report on Energy Supply Investment and Bank Financing Activities, where we use public and commercially available data to assess banks energy sector financing to generate a ratio of their allocation between low carbon supply and fossil fuels. This year's report takes a look at twenty twenty three, where we found the energy industry investing more capital into clean sources of supply, with bank financing for low carbon energy technologies reaching eighty nine percent of that of fossil fuels. This rising energy supply banking ratio of zero point eight nine to one may be moving in the right direction, but given that we need to hit four to one by twenty thirty to meet a one point five degree scenario, we're still a long distance from the target. Further positive momentum can be found when we look at our energy supply investment ratio, which for the first time surpassed fossil fuels. But what does all this mean in geographic context and which banks are performing best. On today's show, I'm joined by Clean finance analyst Trina White, who brings us findings from our third annual Energy Supply Investment and Banking Rate, which BNF clients can find at BNF go on the Bloomberg terminal on BNF dot com. Now onto the pod. So welcome Trina, Thank you for joining us today.

Thanks for having me, tom So.

Thanks for having me, tom So.

Fun fact for people who are not at BNF and who would have no way of knowing this, but I actually sit next to Trina in the New York office.

Fun fact for people who are not at BNF and who would have no way of knowing this, but I actually sit next to Trina in the New York office.

It's a great time.

It's a great time.

It is a great time, and we talk about cats and plants. But one of the things I have noticed lately is that Trina has often been working late. You know, as I'm leaving the office, Trina, you've still been there, So you've been working hard on something. So tell me what is it you have been working so hard on lately?

It is a great time, and we talk about cats and plants. But one of the things I have noticed lately is that Trina has often been working late. You know, as I'm leaving the office, Trina, you've still been there, So you've been working hard on something. So tell me what is it you have been working so hard on lately?

Thank you, tom So.

Thank you, tom So.

I have been working on what we call our energy supply ratios, so both our energy supply investment ratio and our energy supply bank financing ratio as well.

I have been working on what we call our energy supply ratios, so both our energy supply investment ratio and our energy supply bank financing ratio as well.

So what are these two ratios and what is the difference between them?

So what are these two ratios and what is the difference between them?

Yeah, so both are actually quite important.

Yeah, so both are actually quite important.

So our report analyzes both capital investment in what we call the real economy, and this is really just kind of a strange term that we tend to use in the financial world to describe actual infrastructure spending and what corporates in actual utilities or energy sector are spending.

So our report analyzes both capital investment in what we call the real economy, and this is really just kind of a strange term that we tend to use in the financial world to describe actual infrastructure spending and what corporates in actual utilities or energy sector are spending.

So, wait, the world of finance doesn't consider themselves to be part of the quote unquote real economy.

So, wait, the world of finance doesn't consider themselves to be part of the quote unquote real economy.

Isn't that hilarious? Yeah? Yeah.

Isn't that hilarious? Yeah? Yeah.

It kind of separates financing and moving capital around and moving money around from what's sort of going on on the ground. So investment is what's being spent on infrastructure, and financing is how are those corporates actually funding that got it?

It kind of separates financing and moving capital around and moving money around from what's sort of going on on the ground. So investment is what's being spent on infrastructure, and financing is how are those corporates actually funding that got it?

So the real economy is where money is actually going into stuff in a way that is not just like being shifted around between banks and financial institutions. It's like now it's gone there and it's not coming back.

So the real economy is where money is actually going into stuff in a way that is not just like being shifted around between banks and financial institutions. It's like now it's gone there and it's not coming back.

That's exactly right.

That's exactly right.

And they're closely linked because if you think about it, those corporates are financial institutions clients, so closely mirrored somewhat separate. So this report is our way of assessing how the energy transition is playing out in the underlying economy and also how financial institutions are facilitating the energy transition or not so on both sides of the energy system, both the low carbon or the clean and the dirty or the fossil fuels. Previously, a few years ago, a lot of the work that you would have seen on this topic, particularly on the banking side, would have come from NGOs so civil society, and it really focused heavily on fossil fuel financing, so it kind of hammered those banks on what they were still doing on the climate problem. And this sort of ended up framing a lot of banks role in climate as a shrinking problem, so cutting financed emissions for example, and cutting their support for heavy emitters. At BNF, we've long understood that addressing climate change is actually, in large part a growth problem and a transition to replace those sources of emissions with cleaner alternatives, So not operating from the assumption that we're going to shrink and really reduce energy demand, but actually meat energy demand with cleaner sources. And so this energy transition, we view it as a massive financing and investment opportunity. And what we've really come to understand is, as we've really expended our knowledge of the role of banks and financial institutions, is that while they definitely are important, and they have sway, and they definitely can be more strategic about this as well. They largely tend to reflect the underlying conditions in the economies in which they operate, so those companies that are their clients and are coming to them to raise financing. So when it comes to energy supply ratios, we're accounting for both the phase down of the climate problem or the fossil fuels, which is the denominator of both ratios, but also very very key is the scaling and the replacement of climate.

And they're closely linked because if you think about it, those corporates are financial institutions clients, so closely mirrored somewhat separate. So this report is our way of assessing how the energy transition is playing out in the underlying economy and also how financial institutions are facilitating the energy transition or not so on both sides of the energy system, both the low carbon or the clean and the dirty or the fossil fuels. Previously, a few years ago, a lot of the work that you would have seen on this topic, particularly on the banking side, would have come from NGOs so civil society, and it really focused heavily on fossil fuel financing, so it kind of hammered those banks on what they were still doing on the climate problem. And this sort of ended up framing a lot of banks role in climate as a shrinking problem, so cutting financed emissions for example, and cutting their support for heavy emitters. At BNF, we've long understood that addressing climate change is actually, in large part a growth problem and a transition to replace those sources of emissions with cleaner alternatives, So not operating from the assumption that we're going to shrink and really reduce energy demand, but actually meat energy demand with cleaner sources. And so this energy transition, we view it as a massive financing and investment opportunity. And what we've really come to understand is, as we've really expended our knowledge of the role of banks and financial institutions, is that while they definitely are important, and they have sway, and they definitely can be more strategic about this as well. They largely tend to reflect the underlying conditions in the economies in which they operate, so those companies that are their clients and are coming to them to raise financing. So when it comes to energy supply ratios, we're accounting for both the phase down of the climate problem or the fossil fuels, which is the denominator of both ratios, but also very very key is the scaling and the replacement of climate.

Solutions in the numerator.

Solutions in the numerator.

So the low carbon energy sources is always kind of the numerator, and we're putting that in the context of continued fossil fuels.

So the low carbon energy sources is always kind of the numerator, and we're putting that in the context of continued fossil fuels.

So you mentioned enumerator and denominator, So I just want to really spin it out to make sure I've understood this correctly. Ultimately, you know, all these different considerations translate themselves into a number, and that number is for a particular institution how much it has invested into clean energy activities, divided by how much it has invested into fossil fuel.

So you mentioned enumerator and denominator, So I just want to really spin it out to make sure I've understood this correctly. Ultimately, you know, all these different considerations translate themselves into a number, and that number is for a particular institution how much it has invested into clean energy activities, divided by how much it has invested into fossil fuel.

Activities, exactly, both for individual institutions and then also macro level.

Activities, exactly, both for individual institutions and then also macro level.

So globally as well.

So globally as well.

So then the ratio, the energy supply investment ratio and the bank financing ratios. What's the difference between the two?

So then the ratio, the energy supply investment ratio and the bank financing ratios. What's the difference between the two?

Investment ratios are what we track in terms of capital expenditures on infrastructure, so think at BNF. This is very similar to our energy transition investment trends. The bank financing ratio is the total amount of capital being facilitated for companies and infrastructure through banks. So that's the sum of debt issuances so debt capital markets, bonds, loans, equity capital markets so IPOs, and additional share issuances and also entails project financing as well.

Investment ratios are what we track in terms of capital expenditures on infrastructure, so think at BNF. This is very similar to our energy transition investment trends. The bank financing ratio is the total amount of capital being facilitated for companies and infrastructure through banks. So that's the sum of debt issuances so debt capital markets, bonds, loans, equity capital markets so IPOs, and additional share issuances and also entails project financing as well.

So the energy supply investment ratio am I right in saying that is a sort of a macro indicator across all institutions, whereas.

So the energy supply investment ratio am I right in saying that is a sort of a macro indicator across all institutions, whereas.

The banking one.

The banking one.

I mean, you could have an average across the entire sector, but you also have it applied.

I mean, you could have an average across the entire sector, but you also have it applied.

To individual institutions, correct.

To individual institutions, correct.

And it makes sense actually because going back to what you're saying is if we were taking the approach of you know, let's call out all the banks by the amount of fossil fuel financing that they're doing, and then that's also congratulate banks by the amount of clean energy funding they're doing. What you'd find at the top, near the top of the both lists would just be the biggest.

And it makes sense actually because going back to what you're saying is if we were taking the approach of you know, let's call out all the banks by the amount of fossil fuel financing that they're doing, and then that's also congratulate banks by the amount of clean energy funding they're doing. What you'd find at the top, near the top of the both lists would just be the biggest.

Institutions exactly, so like the best.

Institutions exactly, so like the best.

And the worst, if you want to look at it.

And the worst, if you want to look at it.

Like that, exactly, we're putting those numbers into context. And that's actually what's happening is that on the one hand, externally, a lot of banks are sort of getting hit on their fossil fuel numbers, which by an absolute volume perspective, some of the largest banks and those that operate in like oil and gas exporting markets end up looking the worst. But also internally, from the bank's perspective, they've been putting out these sort of ambitious climate financing targets on the low carbon side. But equally, it's difficult to put those numbers into context because if you've got XYZ Bank saying we're going to put one trillion dollars towards sustainable finance, it's really hard to know if that's actually meaningful compared to what they're doing on the fossil fuel side. So the ratio helps us compare across banks regardless of their size.

Like that, exactly, we're putting those numbers into context. And that's actually what's happening is that on the one hand, externally, a lot of banks are sort of getting hit on their fossil fuel numbers, which by an absolute volume perspective, some of the largest banks and those that operate in like oil and gas exporting markets end up looking the worst. But also internally, from the bank's perspective, they've been putting out these sort of ambitious climate financing targets on the low carbon side. But equally, it's difficult to put those numbers into context because if you've got XYZ Bank saying we're going to put one trillion dollars towards sustainable finance, it's really hard to know if that's actually meaningful compared to what they're doing on the fossil fuel side. So the ratio helps us compare across banks regardless of their size.

And the thing I love about it is that one day there's going to be a bank that gets a ratio of infinity, and.

And the thing I love about it is that one day there's going to be a bank that gets a ratio of infinity, and.

There actually are some.

There actually are some.

There are there are a few banks, particularly development banks, that have no fossil fuels.

There are there are a few banks, particularly development banks, that have no fossil fuels.

Okay, oh well we can hear about who's that infinity. That must be a pretty they must be pretty happy about that. So obviously infinity if from an energy transition perspective, from a environmental perspective, infinity is the ideal. I'm assuming that not everyone can be at infinity. So what does good look like? You know, what does the ratio across the whole economy need to look like? And where are we right now?

Okay, oh well we can hear about who's that infinity. That must be a pretty they must be pretty happy about that. So obviously infinity if from an energy transition perspective, from a environmental perspective, infinity is the ideal. I'm assuming that not everyone can be at infinity. So what does good look like? You know, what does the ratio across the whole economy need to look like? And where are we right now?

So actually, interestingly, we're not looking for infinity. We are actually putting this in grounded in climate scenario analysis, which is not necessarily say that in the near term fossil fuel investment needs to go to zero, it needs to approach zero. In reality, there will be some lingering fossil fuel investment for the things that are very very difficult to decarbonize. But in fact, when we look at seven of the most commonly cited one point five degree consistent scenarios, So these are put together by organizations like the IBCC or the IA or the network for greening the financial system. These scenarios, which are all consistent with limiting warming to one point five, but they take into account very different assumptions, so about the level of investment required, the energy demand, the price of renewables, et cetera. They sort of on average tend to converge in terms of the energy supply ratio that is consistent with these scenarios this decade at four to one, so four times as much low carbon investment as fossil fuels to be consistent with decarbonizing in line with one point five degrees. That increases over time as fossil fuels shrenth so six to one in the twenty thirties and ten to one in the twenty forties. And that of course is an average, So there's quite a range by which scenario you tend to take as most realistic.

So actually, interestingly, we're not looking for infinity. We are actually putting this in grounded in climate scenario analysis, which is not necessarily say that in the near term fossil fuel investment needs to go to zero, it needs to approach zero. In reality, there will be some lingering fossil fuel investment for the things that are very very difficult to decarbonize. But in fact, when we look at seven of the most commonly cited one point five degree consistent scenarios, So these are put together by organizations like the IBCC or the IA or the network for greening the financial system. These scenarios, which are all consistent with limiting warming to one point five, but they take into account very different assumptions, so about the level of investment required, the energy demand, the price of renewables, et cetera. They sort of on average tend to converge in terms of the energy supply ratio that is consistent with these scenarios this decade at four to one, so four times as much low carbon investment as fossil fuels to be consistent with decarbonizing in line with one point five degrees. That increases over time as fossil fuels shrenth so six to one in the twenty thirties and ten to one in the twenty forties. And that of course is an average, So there's quite a range by which scenario you tend to take as most realistic.

Got it okay, but one this decade that seems like a not crazy number. So given that we've got that as our north star, four to one is.

Got it okay, but one this decade that seems like a not crazy number. So given that we've got that as our north star, four to one is.

Where ideally we would be, where are we actually?

Where ideally we would be, where are we actually?

We've seen quite a bit of movement in this energy supply investment ratio globally, particularly over the past ten years. We've seen the ratio double, so from just under half as much low carbon investment as fossil fuels in the late twenty tens to actually reaching more clean investment than fossil fuels for the very first time in twenty twenty three. So the ratio is about one point one point one times as much low carbon.

We've seen quite a bit of movement in this energy supply investment ratio globally, particularly over the past ten years. We've seen the ratio double, so from just under half as much low carbon investment as fossil fuels in the late twenty tens to actually reaching more clean investment than fossil fuels for the very first time in twenty twenty three. So the ratio is about one point one point one times as much low carbon.

As fossil fuels.

As fossil fuels.

When we chatted last year, we looked at the twenty twenty two ratio and had just reached parity at one to one for the first time. So it's great that we're seeing this continue to move in the right direction. But if we remember that sort of north star or one point five degree consistent benchmark, that's an average of four times as much low carbon this decade, and we're now, of course already in twenty twenty five. If we just assumed a really simple linear trajectory, we would need an average of eight to one by twenty.

When we chatted last year, we looked at the twenty twenty two ratio and had just reached parity at one to one for the first time. So it's great that we're seeing this continue to move in the right direction. But if we remember that sort of north star or one point five degree consistent benchmark, that's an average of four times as much low carbon this decade, and we're now, of course already in twenty twenty five. If we just assumed a really simple linear trajectory, we would need an average of eight to one by twenty.

Thirty, or a minimum of four to.

Thirty, or a minimum of four to.

One by the end of the decade, so at least quadrupling in just a few years, and every year of course that goes by without seeing significant growth in this metric. Intuitively, the more steep the trajectory would need to be in order to get us on track.

One by the end of the decade, so at least quadrupling in just a few years, and every year of course that goes by without seeing significant growth in this metric. Intuitively, the more steep the trajectory would need to be in order to get us on track.

This is so interesting because it's like, this is a narrative that I think is the narrative right now in the energy transition is that everything is getting better, Opportunities are growing, the industries behind the energy transition are all expanding at you know, really remarkable rates, but there's still a big gap to goal. It's like, from an environmental perspective, it's not nearly enough.

This is so interesting because it's like, this is a narrative that I think is the narrative right now in the energy transition is that everything is getting better, Opportunities are growing, the industries behind the energy transition are all expanding at you know, really remarkable rates, but there's still a big gap to goal. It's like, from an environmental perspective, it's not nearly enough.

Right, and some might start to feel like that's becoming less and less achievable each year that goes by. We're actually starting to hear as we discuss this with a lot of different stakeholders and in particular banks, we begin to hear rumblings of one point five degrees being perhaps a little bit too ambitious and not necessarily credible. And so this then becomes a discussion of of balancing ambition, because clearly we know the consequences of climate change are extremely severe, but balancing that with achievability and realisticness. So actually translating this to something that's practical for institutions, and so this framework is scenario neutral, and when we think about a quote unquote nor star, we really can substitute what we might think is believable. So, just as an example, at BNF, our new Energy Outlook modeling and our net zero scenario could only really credibly get to about one point seventy five degrees given what we know about projects in the pipeline and cost curves for various technologies. And if we were to use that BNF net zero scenario instead of the ones that I just cited, the comparable ratio would be an average of three to one for the remainder of the decade. So depending on the kind of world in which you believe in, you can substitute in a scenario that you think best matches your view of the world.

Right, and some might start to feel like that's becoming less and less achievable each year that goes by. We're actually starting to hear as we discuss this with a lot of different stakeholders and in particular banks, we begin to hear rumblings of one point five degrees being perhaps a little bit too ambitious and not necessarily credible. And so this then becomes a discussion of of balancing ambition, because clearly we know the consequences of climate change are extremely severe, but balancing that with achievability and realisticness. So actually translating this to something that's practical for institutions, and so this framework is scenario neutral, and when we think about a quote unquote nor star, we really can substitute what we might think is believable. So, just as an example, at BNF, our new Energy Outlook modeling and our net zero scenario could only really credibly get to about one point seventy five degrees given what we know about projects in the pipeline and cost curves for various technologies. And if we were to use that BNF net zero scenario instead of the ones that I just cited, the comparable ratio would be an average of three to one for the remainder of the decade. So depending on the kind of world in which you believe in, you can substitute in a scenario that you think best matches your view of the world.

Yeah, and I suppose.

Yeah, and I suppose.

I mean, obviously, this ratio is a metric which we invented, so I don't want to sort of overly weight this point. But there's two ways it can change. One is more investment into the energy transition, which is really kind of getting a lot more money flowing. And then there's the denominator shrinking a bit less investment in fossil fuels, and that ratio shoots right up yep. So it's not like it's getting from one point one one to three. I could see it happening in a way because there's two things that can change to make it happen that can be complementary.

I mean, obviously, this ratio is a metric which we invented, so I don't want to sort of overly weight this point. But there's two ways it can change. One is more investment into the energy transition, which is really kind of getting a lot more money flowing. And then there's the denominator shrinking a bit less investment in fossil fuels, and that ratio shoots right up yep. So it's not like it's getting from one point one one to three. I could see it happening in a way because there's two things that can change to make it happen that can be complementary.

That's exactly right.

That's exactly right.

And even within those two things, there's so many things that can happen with individual technologies. And one thing that's really important to remember is that the ratio is an interesting tool and it helps us standardize and compare across institutions, but the actual volume of that numerator and denominator do matter. And what we really find when we look at the actual volumes is that actually limiting warming and being consistent with these scenarios. It hinges really critically on scaling clean energy extremely rapidly in order to stateably enable the phase.

And even within those two things, there's so many things that can happen with individual technologies. And one thing that's really important to remember is that the ratio is an interesting tool and it helps us standardize and compare across institutions, but the actual volume of that numerator and denominator do matter. And what we really find when we look at the actual volumes is that actually limiting warming and being consistent with these scenarios. It hinges really critically on scaling clean energy extremely rapidly in order to stateably enable the phase.

Out of fossil fuels.

Out of fossil fuels.

So if we're just divesting from fossil fuels and or withdrawing financing from fossil fuels, but we're not scaling that replacement, we end up in a really severe energy security issue. And so actually in the short term, it really is scaling that numerator in order to overtime phase down that denominator that really gets us where we need to be.

So if we're just divesting from fossil fuels and or withdrawing financing from fossil fuels, but we're not scaling that replacement, we end up in a really severe energy security issue. And so actually in the short term, it really is scaling that numerator in order to overtime phase down that denominator that really gets us where we need to be.

So let's talk about banks, you know, because to use the terminology that we've established we've been talking about the real economy. So far, we're one point one one in the real economy in twenty twenty three versus four or three, depending on how ambitious we want to be.

So let's talk about banks, you know, because to use the terminology that we've established we've been talking about the real economy. So far, we're one point one one in the real economy in twenty twenty three versus four or three, depending on how ambitious we want to be.

But how do they fit into all of this?

But how do they fit into all of this?

Yeah?

Yeah?

Great, We really have barely mentioned banks so far, and so what we wanted to do after we developed this kind of energy supply investment ratio is to take this concept and then apply it to financial institutions. So really we wanted a better metric than just shrinking our way through financed emissions or net zero targets, to actually look at the role that banks play and enabling and capital on the transition, So really thinking in the way that banks think, which is through growth, right and opportunity. And so first we looked at banks through the energy supplied banking ratio.

Great, We really have barely mentioned banks so far, and so what we wanted to do after we developed this kind of energy supply investment ratio is to take this concept and then apply it to financial institutions. So really we wanted a better metric than just shrinking our way through financed emissions or net zero targets, to actually look at the role that banks play and enabling and capital on the transition, So really thinking in the way that banks think, which is through growth, right and opportunity. And so first we looked at banks through the energy supplied banking ratio.

I say first because.

I say first because.

We've always envisioned this as a way to look at different types of financial institutions, and we are also actively working on asset managers and funds, but for now let's really focus in on banks. And so for banks, that ratio is comprised of the capital that they're facilitating for energy sector companies and infrastructure primarily through debt, so mostly through bonds and loans, to smaller extent through IBOs and equity issuance, project finance and tax equity here in the US, so low carbon financing relative to the finance that these banks are facilitating for fossil fuels.

We've always envisioned this as a way to look at different types of financial institutions, and we are also actively working on asset managers and funds, but for now let's really focus in on banks. And so for banks, that ratio is comprised of the capital that they're facilitating for energy sector companies and infrastructure primarily through debt, so mostly through bonds and loans, to smaller extent through IBOs and equity issuance, project finance and tax equity here in the US, so low carbon financing relative to the finance that these banks are facilitating for fossil fuels.

So overall, the energy supplied banking ratios that moving in the wrong direction.

So overall, the energy supplied banking ratios that moving in the wrong direction.

We actually saw it move in the right direction in twenty twenty three. So in twenty twenty two we were at about zero point seven four to one. In twenty twenty three we're at zero point eight nine to one. So for every dollar that was facilitated for fossil fuel companies and projects, banks enabled about eighty nine cents for low carbon solutions.

We actually saw it move in the right direction in twenty twenty three. So in twenty twenty two we were at about zero point seven four to one. In twenty twenty three we're at zero point eight nine to one. So for every dollar that was facilitated for fossil fuel companies and projects, banks enabled about eighty nine cents for low carbon solutions.

It's important to note, though.

It's important to note, though.

Because we just touched on, you know, that volume of the numertor versus the denominator, the increase in the banking ratio actually came not from a dramatic increase in low carbon financing, which actually fell about just one percent, but instead by a drop in fossil fuel financing, so about an eighteen percent drop that we measured, and that's kind of the opposite of what we're saying needs to happen in order to scale climate solutions really rapidly in the short term, and to put some numbers around this. In total, in twenty twenty three, banks underwrote about one point six trillion of energy supply activity, and that broke down in seven hundred and seventy six billion for low carbon and about eight hundred and seventy billion for fossil fuels.

Because we just touched on, you know, that volume of the numertor versus the denominator, the increase in the banking ratio actually came not from a dramatic increase in low carbon financing, which actually fell about just one percent, but instead by a drop in fossil fuel financing, so about an eighteen percent drop that we measured, and that's kind of the opposite of what we're saying needs to happen in order to scale climate solutions really rapidly in the short term, and to put some numbers around this. In total, in twenty twenty three, banks underwrote about one point six trillion of energy supply activity, and that broke down in seven hundred and seventy six billion for low carbon and about eight hundred and seventy billion for fossil fuels.

I'm slightly curious because obviously it's great.

I'm slightly curious because obviously it's great.

That it increased in twenty twenty three, but we know that the ratio in the real economy was one point one one, So there has to be money coming from somewhere else that is at a much higher ratio. So where is this sort of higher ratio finance coming from.

That it increased in twenty twenty three, but we know that the ratio in the real economy was one point one one, So there has to be money coming from somewhere else that is at a much higher ratio. So where is this sort of higher ratio finance coming from.

Yeah, that's a really great point, and we spend quite a bit of time as a team, and then portions of the report discussing the difference between capital investment and bank financing. So broadly speaking, banks tend to mirror trends in the underlying economy.

Yeah, that's a really great point, and we spend quite a bit of time as a team, and then portions of the report discussing the difference between capital investment and bank financing. So broadly speaking, banks tend to mirror trends in the underlying economy.

Again that's their client base.

Again that's their client base.

But as we might expect, these are actually different measures, and there's a few factors that differentiate bank financing from real investment, and it can get a little bit confusing, So maybe let's break it down.

But as we might expect, these are actually different measures, and there's a few factors that differentiate bank financing from real investment, and it can get a little bit confusing, So maybe let's break it down.

One huge factor is interest rates.

One huge factor is interest rates.

So of course interest rates is a very direct input into whether or not companies are looking to raise financing, whether or not it's more expensive or more costly to borrow. So you'll recall that interest rates rose really steeply around the world in twenty twenty two as we addressed post pandemic inflation. Those stabilized quite a bit in twenty twenty three, but remained very high. At the same time that borrowing costs remained high, we also had really high energy prices, continued record cash flows, particularly for oil and gas companies, and so we saw oil and gas companies continue to pay down their debts and reduce the amount of financing that they were raising. But that doesn't mean that both fossil fuel companies and low carbon companies stopped spending money stopped investing. It can come from their balance sheets or their cash flows and their own books, as opposed to raising financing through the capital markets.

So of course interest rates is a very direct input into whether or not companies are looking to raise financing, whether or not it's more expensive or more costly to borrow. So you'll recall that interest rates rose really steeply around the world in twenty twenty two as we addressed post pandemic inflation. Those stabilized quite a bit in twenty twenty three, but remained very high. At the same time that borrowing costs remained high, we also had really high energy prices, continued record cash flows, particularly for oil and gas companies, and so we saw oil and gas companies continue to pay down their debts and reduce the amount of financing that they were raising. But that doesn't mean that both fossil fuel companies and low carbon companies stopped spending money stopped investing. It can come from their balance sheets or their cash flows and their own books, as opposed to raising financing through the capital markets.

So wait, let me just just clariff make sure I've understood this correctly. So what you're saying is the organizations themselves. If you are a clean energy supplier of some sort you were probably you know, across the whole economy investing at a higher rate than your counterparts in the fossil world, like the companies themselves, like fossil fuel, if you're an oil and gas expiration company in twenty twenty three, you were investing less than maybe you usually do. Not just banks for investing lessons your sex, but you yourself were holding back more.

So wait, let me just just clariff make sure I've understood this correctly. So what you're saying is the organizations themselves. If you are a clean energy supplier of some sort you were probably you know, across the whole economy investing at a higher rate than your counterparts in the fossil world, like the companies themselves, like fossil fuel, if you're an oil and gas expiration company in twenty twenty three, you were investing less than maybe you usually do. Not just banks for investing lessons your sex, but you yourself were holding back more.

Actually, I think I would say it's the opposite on both the low carbon and the fossil fuel sides these but he's had really high cash flows, which means that they're not necessarily scaling back their investment. They're spending, but they're spending from their own financing, from their own balance sheet, as opposed to raising a bond or taking out a loan in order to spend capital.

Actually, I think I would say it's the opposite on both the low carbon and the fossil fuel sides these but he's had really high cash flows, which means that they're not necessarily scaling back their investment. They're spending, but they're spending from their own financing, from their own balance sheet, as opposed to raising a bond or taking out a loan in order to spend capital.

Does that make sense, Yeah, it makes sense.

Does that make sense, Yeah, it makes sense.

I guess it kind of comes back to the question of there must have been some segment that was investing at a higher ratio than the banks, because if we've got one point one one across the entire economy and banks are at a zero point eight something, so someone else has must have been at like, I don't know, one point five, you know.

I guess it kind of comes back to the question of there must have been some segment that was investing at a higher ratio than the banks, because if we've got one point one one across the entire economy and banks are at a zero point eight something, so someone else has must have been at like, I don't know, one point five, you know.

Yeah, there's other actors that contribute to the energy supply investment ratio.

Yeah, there's other actors that contribute to the energy supply investment ratio.

So this is a good point.

So this is a good point.

In addition to just energy sector companies spending money, we've also got households and consumers, and so another important factor in the investment number is small scale solar. Small scale solar grew sixty six percent between twenty twenty two and twenty twenty three and is also growing as a share of the total low carbon investment. Small scale solar tends to be financed either by households or if banks are involved, typically through their retail arms, so through their consumer lending arms, and that's not what we're tracking here, So we have very little visibility into what's going on between households and banks, and we're really looking at corporate financing and investment banking, and so we do miss quite a bit of what's really important on the low carbon side of investment. One other important factor in terms of the decrease that we measured in fossil fuel financing is actually what we think is a measurement problem as opposed to what's actually going on, and that's in China. So China saw a huge decrease of about one hundred and sixty billion dollars of fossil fuel financing between twenty two and twenty three, and we think that this measurement is quite a bit larger than what actually occurred. And the reason behind that is in China, we saw a lot of large utility, power generation and oil and gas companies shift their financing away from bonds and toward loans in twenty twenty three. And the reason why that flows through to missing data on our end is that private bilateral loans, just a loan between a company and a bank, is very very opaque, so that is not disclosed.

In addition to just energy sector companies spending money, we've also got households and consumers, and so another important factor in the investment number is small scale solar. Small scale solar grew sixty six percent between twenty twenty two and twenty twenty three and is also growing as a share of the total low carbon investment. Small scale solar tends to be financed either by households or if banks are involved, typically through their retail arms, so through their consumer lending arms, and that's not what we're tracking here, So we have very little visibility into what's going on between households and banks, and we're really looking at corporate financing and investment banking, and so we do miss quite a bit of what's really important on the low carbon side of investment. One other important factor in terms of the decrease that we measured in fossil fuel financing is actually what we think is a measurement problem as opposed to what's actually going on, and that's in China. So China saw a huge decrease of about one hundred and sixty billion dollars of fossil fuel financing between twenty two and twenty three, and we think that this measurement is quite a bit larger than what actually occurred. And the reason behind that is in China, we saw a lot of large utility, power generation and oil and gas companies shift their financing away from bonds and toward loans in twenty twenty three. And the reason why that flows through to missing data on our end is that private bilateral loans, just a loan between a company and a bank, is very very opaque, so that is not disclosed.

We have no visibility on that exactly.

We have no visibility on that exactly.

So we are missing quite a bit of financing in China.

So we are missing quite a bit of financing in China.

Got it.

Got it.

So China maybe sort of skews the numbers a bit, But how does all of this breakdown some geographically elsewhere?

So China maybe sort of skews the numbers a bit, But how does all of this breakdown some geographically elsewhere?

So finance volumes fell slightly in most regions, but a few saw an increase in the ratio. So in North America financing remains somewhat level, dropped slightly and also remains the largest region in terms of volume, with about six hundred and eighty two billion in twenty twenty three total. And that really reflects the role that the US, Canada and Mexico continue to play in an oil and gas supply, so a ratio of zero point five or half as much low carbon as fossil fuels. In North America. Europe leads by far in terms of ratio. We did see a slight drop in the ratio in twenty twenty three, but still Europe is financing low carbon in a ratio of two times as much as fossil fuels, and that really reflects, you know, a long time legacy policy environment that's favorable for renewables. And also Europe is not a major oil and gas exporterer outside of China. In APAC we actually saw the ratio increase from zero point eight to one to one. So parody and flight increases as well throughout Africa and the Middle East and latt Am, but much smaller portions of overall global financing.

So finance volumes fell slightly in most regions, but a few saw an increase in the ratio. So in North America financing remains somewhat level, dropped slightly and also remains the largest region in terms of volume, with about six hundred and eighty two billion in twenty twenty three total. And that really reflects the role that the US, Canada and Mexico continue to play in an oil and gas supply, so a ratio of zero point five or half as much low carbon as fossil fuels. In North America. Europe leads by far in terms of ratio. We did see a slight drop in the ratio in twenty twenty three, but still Europe is financing low carbon in a ratio of two times as much as fossil fuels, and that really reflects, you know, a long time legacy policy environment that's favorable for renewables. And also Europe is not a major oil and gas exporterer outside of China. In APAC we actually saw the ratio increase from zero point eight to one to one. So parody and flight increases as well throughout Africa and the Middle East and latt Am, but much smaller portions of overall global financing.

So one of the things I noticed, you know, as someone who's been at BNF for a while, apart from thinking about the energy transition, we think, we fixate on all sorts of random little things like how we format stuff and the way we.

So one of the things I noticed, you know, as someone who's been at BNF for a while, apart from thinking about the energy transition, we think, we fixate on all sorts of random little things like how we format stuff and the way we.

Title our documents.

Title our documents.

One thing that was kind of interesting to me about this is you didn't call it the twenty twenty five Annual EsBr or of twenty twenty three or twenty twenty eighty four, depending on whether we call it by when it's published or when the data relates to you called it the third Annual EsBr, kind of like the ninety sixth Academy Awards or something like that. You know, there's a real sort of I don't know whether you're consciously you're trying to create this grandeur. And I always thinking like, maybe this is like the oscars, but for banks investing in in the.

One thing that was kind of interesting to me about this is you didn't call it the twenty twenty five Annual EsBr or of twenty twenty three or twenty twenty eighty four, depending on whether we call it by when it's published or when the data relates to you called it the third Annual EsBr, kind of like the ninety sixth Academy Awards or something like that. You know, there's a real sort of I don't know whether you're consciously you're trying to create this grandeur. And I always thinking like, maybe this is like the oscars, but for banks investing in in the.

Energy to expose us too.

Energy to expose us too.

Watch because some people come out on top in these ratios and some people not so much.

Watch because some people come out on top in these ratios and some people not so much.

And I say people, I mean banks. So the big question is who's winning here? Who's got the best ratios?

And I say people, I mean banks. So the big question is who's winning here? Who's got the best ratios?

Apart from the development banks that are sitting at infinity, they have like they're they're untouchable. But among the mortals, who is doing well?

Apart from the development banks that are sitting at infinity, they have like they're they're untouchable. But among the mortals, who is doing well?

So as researchers, we don't take a huge stand side, you know who we would consider it to be winners or losers, but we do provide some rankings in order to help inform which players are, you know, capitalizing on this energy transition more than others and individual banks can also use this as you know, a strategic marker of where their peers.

So as researchers, we don't take a huge stand side, you know who we would consider it to be winners or losers, but we do provide some rankings in order to help inform which players are, you know, capitalizing on this energy transition more than others and individual banks can also use this as you know, a strategic marker of where their peers.

Might be playing and where they can be picking up more deals as well.

Might be playing and where they can be picking up more deals as well.

The market is pretty concentrated by large players like you might expect. So the top ten banks in our data set facilitated about five hundred billion of the energy supply financing that we saw in twenty twenty three, so almost half. And among those top ten, the ESPR the energy supply banking ratio does range quite widely, so from under half to more than three times as much low.

The market is pretty concentrated by large players like you might expect. So the top ten banks in our data set facilitated about five hundred billion of the energy supply financing that we saw in twenty twenty three, so almost half. And among those top ten, the ESPR the energy supply banking ratio does range quite widely, so from under half to more than three times as much low.

Carbon as fossil fuels.

Carbon as fossil fuels.

So it is very interesting to look at individual banks that play in very different markets. JP Morgan remained the largest unwriter of energy supply financing. It has been for every year that we've been looking at this, with a ratio of zero point eight to one, so eighty percent as much low carbon. That's a very slight increase from seventy seven percent in twenty twenty two. Like the majority of top banks, there actually is like very little movement across years.

So it is very interesting to look at individual banks that play in very different markets. JP Morgan remained the largest unwriter of energy supply financing. It has been for every year that we've been looking at this, with a ratio of zero point eight to one, so eighty percent as much low carbon. That's a very slight increase from seventy seven percent in twenty twenty two. Like the majority of top banks, there actually is like very little movement across years.

This is a pretty sticky measurement.

This is a pretty sticky measurement.

It's kind of what you would expect, is that say, the biggest bank in energy investment would sit somewhere near the average. Sounds like where the ratio is.

It's kind of what you would expect, is that say, the biggest bank in energy investment would sit somewhere near the average. Sounds like where the ratio is.

That's exactly right, and particularly because a bank like JB Morgan and some of its beers are really global, so they're kind of hitting that average as they're financing companies globally and reflecting that share. And we see some of these differences regionally. So a European bank like BNP pri BO that really does most of its business in Europe had the highest energy supply banking ratio by far among the top banks, at three point one eight to one, and that's actually within you know, within B and P itself. That's up from one point four to two in twenty twenty two, so more than doubling.

That's exactly right, and particularly because a bank like JB Morgan and some of its beers are really global, so they're kind of hitting that average as they're financing companies globally and reflecting that share. And we see some of these differences regionally. So a European bank like BNP pri BO that really does most of its business in Europe had the highest energy supply banking ratio by far among the top banks, at three point one eight to one, and that's actually within you know, within B and P itself. That's up from one point four to two in twenty twenty two, so more than doubling.

Wow, they've gone from being off the pace like everyone else to actually that is consistent with BNF's net zero scenario.

Wow, they've gone from being off the pace like everyone else to actually that is consistent with BNF's net zero scenario.

Yeah, that's a great callback and that is exactly right. Although I will say it's important to take a look at what's going on with BNP pri bomb because this is quite uncommon and the way in which it got there is not necessarily a strategy that will work across the board for global banks. So now that we have three years of data globally and for each institution, we can really start to unpack those trends. For BNP Parri Bob, it's ratio doubled in large part because it decreased or reduced it's fossil fuel financing instead of seeing a massive increase in low carbon financing. Now, they've always been a leader in sustainable finance, particularly in the labeled sustainable debt markets, and they did do a huge deal about nine billion dollars loan with a grid operator in the Netherlands in Germany, and that makes up about a quarter of their low carbon financing in twenty twenty three. So those outliers are important, But really, really what's going on is that they decrease their fossil fuel financing by about fifty percent between twenty twenty two and twenty twenty three, and the reason for that is actually strategy as opposed to what's going on in the underlying market. The Bank set several targets to phase down its financing for fossil fuels and ramp up support for clean energy. Most importantly, in twenty twenty three, the bank now that it would no longer underwrite bonds for oil and gas expansion, and we're really starting to see that flow through to the actual data and what they did in terms of deal flow. They also set a target for their loan book to reach ninety percent low carbon by twenty thirty. So this is quite strategic for BNP pie Bar And the reason I say it might not apply to all banks globally is because we still live in a fossil fuel dominated economy and most banks do not operate in such conditions as BNP PII bon in Europe. And so again we've been hitting this point all morning, but phasing down support for fossil fuels is not going to help us sustainably meet energy demand unless we drastically scale low carbon solutions.

Yeah, that's a great callback and that is exactly right. Although I will say it's important to take a look at what's going on with BNP pri bomb because this is quite uncommon and the way in which it got there is not necessarily a strategy that will work across the board for global banks. So now that we have three years of data globally and for each institution, we can really start to unpack those trends. For BNP Parri Bob, it's ratio doubled in large part because it decreased or reduced it's fossil fuel financing instead of seeing a massive increase in low carbon financing. Now, they've always been a leader in sustainable finance, particularly in the labeled sustainable debt markets, and they did do a huge deal about nine billion dollars loan with a grid operator in the Netherlands in Germany, and that makes up about a quarter of their low carbon financing in twenty twenty three. So those outliers are important, But really, really what's going on is that they decrease their fossil fuel financing by about fifty percent between twenty twenty two and twenty twenty three, and the reason for that is actually strategy as opposed to what's going on in the underlying market. The Bank set several targets to phase down its financing for fossil fuels and ramp up support for clean energy. Most importantly, in twenty twenty three, the bank now that it would no longer underwrite bonds for oil and gas expansion, and we're really starting to see that flow through to the actual data and what they did in terms of deal flow. They also set a target for their loan book to reach ninety percent low carbon by twenty thirty. So this is quite strategic for BNP pie Bar And the reason I say it might not apply to all banks globally is because we still live in a fossil fuel dominated economy and most banks do not operate in such conditions as BNP PII bon in Europe. And so again we've been hitting this point all morning, but phasing down support for fossil fuels is not going to help us sustainably meet energy demand unless we drastically scale low carbon solutions.

Got it.

Got it.

So it kind of speaks a little bit more that I mean, because there's very little opportunity to invest in fossil fuels in Europe because the just the resources aren't there under the ground. So European banks are always going to come out looking a little bit better and because of just their clients aren't asking them for fossil fuel investments. So is that something that we expect to see in future is that you know, maybe certain regions of the world will have easier than others in terms of increasing their ratio.

So it kind of speaks a little bit more that I mean, because there's very little opportunity to invest in fossil fuels in Europe because the just the resources aren't there under the ground. So European banks are always going to come out looking a little bit better and because of just their clients aren't asking them for fossil fuel investments. So is that something that we expect to see in future is that you know, maybe certain regions of the world will have easier than others in terms of increasing their ratio.

That's exactly right.

That's exactly right.

We already see large regional differences in North America. A lot of the ratios tend to be, particularly in Canada, less than fifty percent as much low carbadi as fossil fuels. You know, of course, Canada's economy is very dependent on fossil fuel exports.

We already see large regional differences in North America. A lot of the ratios tend to be, particularly in Canada, less than fifty percent as much low carbadi as fossil fuels. You know, of course, Canada's economy is very dependent on fossil fuel exports.

As regions of the world are.

As regions of the world are.

Continuing to develop, we will you know, probably see lower ratios for a while in apac for example, as as parts of the world continue to develop their economies, and particularly with coal, the vast majority, about sixty six percent of coal financing is happening in China, so there's there's real regional differences.

Continuing to develop, we will you know, probably see lower ratios for a while in apac for example, as as parts of the world continue to develop their economies, and particularly with coal, the vast majority, about sixty six percent of coal financing is happening in China, so there's there's real regional differences.

I mean, it's kind of interesting given all of that. That actually and their ratio was considerably lower than b INPs but at one point zero four. But it's actually a North American bank, Bank of America that was second on the list. So that's quite a standout given everything you've just said. That's because there's no shortage of demand for fossil fuel investment in the US.

I mean, it's kind of interesting given all of that. That actually and their ratio was considerably lower than b INPs but at one point zero four. But it's actually a North American bank, Bank of America that was second on the list. So that's quite a standout given everything you've just said. That's because there's no shortage of demand for fossil fuel investment in the US.

That's absolutely right, and I think Bank of America is another great example of a bank that has long had a strategy for sustainable finance and in particular for BAA things like tax equity, where together with JP Morgan it leads the tax equity for renewables market in the US. They're also a really large player in the labeled sustainable debt market as well. So that really is I think largely I mean both market conditions but also a strategic push by BAVA.

That's absolutely right, and I think Bank of America is another great example of a bank that has long had a strategy for sustainable finance and in particular for BAA things like tax equity, where together with JP Morgan it leads the tax equity for renewables market in the US. They're also a really large player in the labeled sustainable debt market as well. So that really is I think largely I mean both market conditions but also a strategic push by BAVA.

And who else stood out for having particularly high ratios.

And who else stood out for having particularly high ratios.

Yeah, So we also look at the top large banks, so we define that as those that did more than ten billion dollars of financing in.

Yeah, So we also look at the top large banks, so we define that as those that did more than ten billion dollars of financing in.

Twenty twenty three.

Twenty twenty three.

Among that cohort, BNP did come out on top, and other than BNP we also saw NatWest and Santander come out with very high ratios. Santander was our number one last year, their ninth this year at one point two four.

Among that cohort, BNP did come out on top, and other than BNP we also saw NatWest and Santander come out with very high ratios. Santander was our number one last year, their ninth this year at one point two four.

Among the large banks.

Among the large banks.

The lowest ratio was Bank of Montreal at zero point two six to one. And again that's very much in line with a lot of what we're seeing in Canada. To your point earlier about infinite ratios, about five hundred banks only underwrote low carbon finance egg most of those tend to be small, so the largest ones really are the multilateral development banks. Most of the other players that we saw only do low carbon, where we're quite small and really just collectively represent about thirty billion of financing.

The lowest ratio was Bank of Montreal at zero point two six to one. And again that's very much in line with a lot of what we're seeing in Canada. To your point earlier about infinite ratios, about five hundred banks only underwrote low carbon finance egg most of those tend to be small, so the largest ones really are the multilateral development banks. Most of the other players that we saw only do low carbon, where we're quite small and really just collectively represent about thirty billion of financing.

I want to talk about how banks are responding to these ratios, because obviously this is about them for them, do you see them sort of making plans of how they will improve their ratio? What has this response with banks being to this.

I want to talk about how banks are responding to these ratios, because obviously this is about them for them, do you see them sort of making plans of how they will improve their ratio? What has this response with banks being to this.

Yeah, so we've seen quite a few different versions of a response, but one that I think is really important is actually in the past year, we've started to see a push for bank level disclosure of these ratios, and this really started from investor presher So. The New York City Comptour's Office, which oversees New York City's pension funds, filed shareholder resolutions with some of the largest North American banks last year asking that they disclose a version.

Yeah, so we've seen quite a few different versions of a response, but one that I think is really important is actually in the past year, we've started to see a push for bank level disclosure of these ratios, and this really started from investor presher So. The New York City Comptour's Office, which oversees New York City's pension funds, filed shareholder resolutions with some of the largest North American banks last year asking that they disclose a version.

Of this ratio, and they were quite successful.

Of this ratio, and they were quite successful.

So climate related shareholder resolutions don't tend to get a ton of support, particularly in the first year that they are filed, but before they even went to a vote, JP, Morgan, City, and RBC all committed so agreed with the New York City Controller's Office to publish their own energy supply ratio, so to use this metric and also to make it public to investors and other stakeholders. JP Morgan actually already released its own ratio and its methodology in November last year. Their ratio is somewhat different from ours, and we do break down the key differences in methodology and our report, but their reported ratio for their own business was about one point twenty nine to one.

So climate related shareholder resolutions don't tend to get a ton of support, particularly in the first year that they are filed, but before they even went to a vote, JP, Morgan, City, and RBC all committed so agreed with the New York City Controller's Office to publish their own energy supply ratio, so to use this metric and also to make it public to investors and other stakeholders. JP Morgan actually already released its own ratio and its methodology in November last year. Their ratio is somewhat different from ours, and we do break down the key differences in methodology and our report, but their reported ratio for their own business was about one point twenty nine to one.

So just to be clear, you know, in future iterations of our report, we're not going to just be asking the banks, oh, what was your ratio, We'll be calculating it for ourselves exactly.

So just to be clear, you know, in future iterations of our report, we're not going to just be asking the banks, oh, what was your ratio, We'll be calculating it for ourselves exactly.

There's a lot of value in having a standardized methodology across all banks so that things are comparable. But as an internal tool for banks to be using this framework for thinking about their role that they play in the energy transition, I think it's great to see some of them be calculating this. Some are doing this without even you know, disclosing it to shareholders or to the public. They're just beginning to use this and adopt this as a tool internally.

There's a lot of value in having a standardized methodology across all banks so that things are comparable. But as an internal tool for banks to be using this framework for thinking about their role that they play in the energy transition, I think it's great to see some of them be calculating this. Some are doing this without even you know, disclosing it to shareholders or to the public. They're just beginning to use this and adopt this as a tool internally.

That's really cool.

That's really cool.

I mean, something that started its life on a spreadsheet on your computer, someone on your team's computer.

I mean, something that started its life on a spreadsheet on your computer, someone on your team's computer.

I don't know my computer.

I don't know my computer.

It actually evolved from a spreadsheet to a huge script, and along the way, I learned how to code.

It actually evolved from a spreadsheet to a huge script, and along the way, I learned how to code.

You learned how to code. Banks adopted the ratio, and you finally got to go home at some point. So everyone everyone was winning in this scenario. So all in a day's work. What's next for the authors? But yeah, where do you and your wealth us plans? What do you plan to do next with these ratios?

You learned how to code. Banks adopted the ratio, and you finally got to go home at some point. So everyone everyone was winning in this scenario. So all in a day's work. What's next for the authors? But yeah, where do you and your wealth us plans? What do you plan to do next with these ratios?

A few things, So number one right now, in order to estimate how much of financing is going toward low carbon or fossil fuels. For you know, a bond raised by a given company, we use the breakdown of their revenue, and revenue tends to be you know, backward looking. Where are those companies actually already making money from the energy sector. What would be forward looking and better reflect where we're moving would be CAPEX. So how are those companies actually spending the capital that they're raising? So we are in house developing capital expenditure based estimates for a suite of you know, hopefully about one hundred thousand companies to look at where they're where they're investing capital.

A few things, So number one right now, in order to estimate how much of financing is going toward low carbon or fossil fuels. For you know, a bond raised by a given company, we use the breakdown of their revenue, and revenue tends to be you know, backward looking. Where are those companies actually already making money from the energy sector. What would be forward looking and better reflect where we're moving would be CAPEX. So how are those companies actually spending the capital that they're raising? So we are in house developing capital expenditure based estimates for a suite of you know, hopefully about one hundred thousand companies to look at where they're where they're investing capital.

And we know that's going to be higher for low carbon solutions. That's one really important project.

And we know that's going to be higher for low carbon solutions. That's one really important project.

Another is I mentioned we're looking at this for funds, so for asset managers, and that's really my colleague Ryan Lockhead. And then the last component is we're trying to help develop a suite of resources for the banks that are looking to do this internally, and that includes kind of a how to go or a step by step tutorial along with you know, if you want to make different choices, these are some of the variations that you could make on our methodology.

Another is I mentioned we're looking at this for funds, so for asset managers, and that's really my colleague Ryan Lockhead. And then the last component is we're trying to help develop a suite of resources for the banks that are looking to do this internally, and that includes kind of a how to go or a step by step tutorial along with you know, if you want to make different choices, these are some of the variations that you could make on our methodology.

Cool, so it's like a toolkit.

Cool, so it's like a toolkit.

Well, the future is very bright for at least for the ratios themselves, and you know, maybe they will get to three, maybe they'll get to four this decade, and you know, to ten by twenty fifty, who knows. It kind of comes back to the thing I said earlier. It's almost become like a truism of being in this space that the numbers and the energy transition.

Well, the future is very bright for at least for the ratios themselves, and you know, maybe they will get to three, maybe they'll get to four this decade, and you know, to ten by twenty fifty, who knows. It kind of comes back to the thing I said earlier. It's almost become like a truism of being in this space that the numbers and the energy transition.

Always go up. It's just the question is are they going up fast enough? From an environmental point of view?

Always go up. It's just the question is are they going up fast enough? From an environmental point of view?

And this is a great way of measuring that that it applies to very specific types of institutions and helps them figure out how they're doing so.

And this is a great way of measuring that that it applies to very specific types of institutions and helps them figure out how they're doing so.

I think it's really cool work.

I think it's really cool work.

Low carbon solutions are better than fossil fuels in almost every way in the long term and pose a really great opportunity for these institutions.

Low carbon solutions are better than fossil fuels in almost every way in the long term and pose a really great opportunity for these institutions.

Trina, thanks for joining me today.

Trina, thanks for joining me today.

Thank you so much. Tom, it's great to talk to you. Today's episode of Switched On was produced by Cam Gray with production assistance from Kamala Shelling. Bloomberg NEIF is a service provided by Bloomberg Finance LP and its affiliates. This recording does not constitute, nor should it be construed as investment a vice, investment recommendations, or a recommendation as to an investment or other strategy. Bloomberg a NEIF should not be considered as information sufficient upon which to base an investment decision.

Thank you so much. Tom, it's great to talk to you. Today's episode of Switched On was produced by Cam Gray with production assistance from Kamala Shelling. Bloomberg NEIF is a service provided by Bloomberg Finance LP and its affiliates. This recording does not constitute, nor should it be construed as investment a vice, investment recommendations, or a recommendation as to an investment or other strategy. Bloomberg a NEIF should not be considered as information sufficient upon which to base an investment decision.

Neither Bloomberg Finance LP nor any of its affiliates makes any representation or warranty as to the accuracy or completeness of the information contained in this recording, and any

Neither Bloomberg Finance LP nor any of its affiliates makes any representation or warranty as to the accuracy or completeness of the information contained in this recording, and any

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