31 Mar 2023
At Barclays’ inaugural ESG Conference in New York City, Global Head of Research Jeff Meli and Senior Energy Research Analyst Lydia Rainforth recorded Episode 53 of The Flip Side live, debating whether ESG investing is helping or hindering the energy transition.
ESG investing has evolved to become mainstream for many investors, however it is now drawing a political backlash in the US and facing serious headwinds from inflation to war, complicating the path to transition. Both companies and investors are left grappling with how to continue to meet ESG requirements, while managing myriad trade-offs and unintended consequences.
Tune in to hear Jeff and Lydia’s take on what this may mean for the future of ESG investing as well as policymaking.
Authorised clients can get access to our coverage of this topic by subscribing to #ESGTransition on Barclays Live.
Jeff: Thank you all, I’m Jeff Meli, the Head of Research at Barclays, and I'm joined today by Lydia Rainforth, who is the integrated energy equity research analyst based in London. Thanks for joining me, Lydia.
Lydia: Thanks Jeff, it’s lovely to be here.
Jeff: Now, The Flip Side is the Barclays Research podcast and we usually recorded this in a studio, so today we are trying something new: and record it live here at the Barclays ESG conference. Those of you in the room can you use the QR codes on either side of me on the screens to subscribe to the podcast also available on your typical podcast sources like Apple and Spotify. Today, what Lydia and I are going to talk about is how ESG investing can better facilitate the energy transition.
Lydia: And Jeff, I think to me that sounds a pretty provocative start to a conversation to think that we can do things better. And particularly when I think about the audience here, we’ve got several hundred people across the audience representing investors, policy makers, from management teams, and as they’ve all come to New York City to attend an ESG conference I’ve got to think we already think we’re already doing a lot of good things in terms of enhancing the energy transition.
Jeff: Yes well I mean I think the framing is provocative, and I want to say up front there may be times throughout this discussion where I’ll sound anti-ESG, but I want to stress, initially, to put all concerns to rest that is not the case. We can acknowledge up front the role that ESG in general and ESG investors in particular have played to date to get us progress that we have achieved so far, but I think there are several emerging challenges to ESG in how this ‘movement’ I guess that’s how you call it evolves from here to meet these challenges, I think will be central to it’s contribution going forward.
Lydia: I am an energy analyst Jeff, so I’ll have to acknowledge up front that from my vantage point, may be a little biased, but I do strongly believe that energy and climate are at the center of the issues facing ESG and will be over the next decade. And from that perspective, I do think that ESG investing is already pushing forward the transition. Firstly, the use of fossil fuels and the energy transition are the clearest and most common topics that we discuss. Secondly, climate and carbon are increasingly showing up in the financial system. And that’s everything from new regulation, to proposed disclosures, climate stress tests and often that is related to demands from ESG investors.
Jeff: I agree Lydia. Energy is a great foil for this conversation, and as mentioned you focus a lot on the energy transition in your day-to-day Research efforts, so I’m glad to join you here. I want to start with one serious challenge that’s facing ESG investing, and that is how to respond to the emerging political backlash against ESG. I think that it’s quite serious this backlash, it’s serious enough that it risks complication further government progress that could address issues like climate change action and other issues that ESG investors are focused on and I think what’s missing in terms of the response from the ESG community is some clarity on the definition of what ESG investing is and it’s purpose.
Lydia: I can see Jeff from your perspective in the US, that is an important development. But from my seat in London, the extent of the backlash is surprising and confusing for me.
Jeff: So we can take an example of gas cooking and gas stoves, an issue that raised quite a ruckus here in the United States recently. We have some states like New York actually, which are considering banning new hookups for gas stoves. There’s actually some cities that have already taken that step. We also have 20 States that have bans on bans: so they have prohibited banning new gas hook ups. What’s confusing about that?
Lydia: So has anyone actually proposed banning bans on bans yet?
Jeff: Right. Eventually with too many negatives, it’s like I’m back in algebra class trying to multiply all the negatives back together. Look I think we saw when an official in the Biden administration went so far as hinting there were steps at the Federal level, to address gas cooking, there was massive backlash. And keep in mind that gas cooking represents something like 5% of the typical household use of natural gas, so I think it is reasonable to ask if this focus on stoves was counterproductive? It’s possible the backlash that this kicked off, will actually limit the ability to address other more consequential uses of natural gas going forward. How you heat your home, or heat your water uses quite a bit more natural gas than cook and yet that’s where we had a lot of focus and a lot of energy and created like I said, quite a ruckus.
Lydia: But surely this was a response to potential new government regulations, not to ESG investing itself.
Jeff: So I think that’s true around the specific issue that I mentioned, but taking a step back I think that the backlash is really against actions intended to make business or societal change like associated to climate change for example or meant to address climate change through non-legislative means. So in the case of the stoves it was a regulation or almost surely would not have passed Congress but that would nonetheless take effect country wide. There was no realistic proposal countrywide. It was just a hint of a consideration that caused this. But I think what further the backlash, was a sense that the motivations were somewhat blurred. So in the background we all sort of knew that the motivation was climate change, but there was also this sense that there was health concerns, I think notably in that case, it was childhood asthma could potentially be linked to the use of gas stoves, and so it was like a backdoor approach where the health concerns were going to be the piece that facilitated the passage of regulation but the goal of the regulation was really ultimately linked to climate change, and I think that blurring of the motivations was part of what kicked up the firestorm. I think that the skeptics of ESG they actively do not want investors or management teams taking costly, and I’ll emphasize that, ‘costly steps’ to achieve what they consider to be political goals, largely political goals that they don’t share and I think, I take this backlash quite seriously and I think it’s increased recently for a number of reasons, one is the energy price volatility and energy security issues that were raised around Russia’s invasion of Ukraine, and I think that raised a lot of eyebrows around what kind of energy investments are being made and what motivations do they have? Actually the volatility in financial assets that we experienced around all of that raised the specter of costs that are being imposed by virtue of having taken steps that were not sort of mandated to address these issues and I think it’s becoming more widespread. I would even point to a bill that actually passed Congress, these days that is no mean feat and it would have prohibited 401k advisers from considering ESG scores when managing their funds. That actually passed.
Lydia: It’s remarkable that it did, but the interesting part for me there is the costs associated with ESG, that you keep referring to. A lot of the definitions of ESG start with the idea that investing will help influence companies to consider a broader set of stakeholders and think about factors such as human rights, emissions and safety and then end with a claim that I really do agree with actually this makes companies and shareholders will be better off in the long run.
Jeff: So I have noticed that as well, and I think it’s premised on a very specific definition of ESG investing. I’ll paraphrase my version of that definition, that ESG provides a lens that equips investors and management teams to better assess and cope with a set of emerging risks and opportunities that are associated with ESG. I would actually classify that as a pretty benign definition of ESG investing.
Lydia: I’m not sure benign is the word I would use – for me its critical – and is exactly what I look for as an analyst. I want companies to take their long-term perspectives seriously, I want companies to think about the evolving needs of their customers and other stakeholders, and take proactive steps to prepare for a changing world. History is littered with examples of companies where they haven’t adapted and they haven’t thought that through, and now they don’t exist. And the energy world is changing and that means more adapting for companies, more low carbon spending ultimately I think that is a requirement for companies to be viable longer term for them.
Jeff: Yes, I guess I should be more specific by what I meant by the term benign not because I certainly did not intend it to be trivial, or easy to use that lens to better influence decisions. I also didn’t mean it as not important. What I meant by benign was that in my mind it is not, or at least it should not be controversial. To me, that sounds like old-fashioned investing/managing of a company. In principle, there’s nothing that says we need a new framework to consider emerging risks and opportunities or incorporate them in how we manage our portfolios or manage or business or both. Equity prices are intended to be the discounted present value of all future cash flows, they are long-term in nature, we shouldn’t need to force investors or management teams to consider long run outcomes when making their decisions.
Lydia: In principle, maybe. But the ESG framework is making us think. It codifies and measures risks that don’t otherwise get fully considered. ESG is helping us analyze new rules and regulations, focus management on the longer-term outcomes, and adjusts appropriately. This aligns with the mission statement for ESG [Research] at Barclays: it has helped us identify new skill sets we need to incorporate into the department, such as climate science and deeper policy expertise, and really integrate these insights into our investment analysis, making us better analysts too.
Jeff: So first I would say that if the framework is actually necessary to achieve the integration of these new issues or emerging issues into analysis of businesses then I would consider it to be a universal good. You would actively want 401 k manager to consider these when managing your portfolio, in fact, you’d want every manager of your assets to consider these issues when managing a portfolio. I would stress when you said it’s aligned with the mission statement of Barclays ESG, I think you meant, within Barclays Research mission statement on ESG, which is of course different from Barclays as a corporate. As someone who manages a sell-side Research department, I love the ESG framework. Explicitly because it helps achieve Lydia, all the goals that you laid out. There’s a set of new and emerging issues that are more difficult for our analysts to grapple with, primarily because they are new and different from their existing area of expertise, and so we have identified new skillsets that we need to bring into the department, to help them integrate that into their investment analysis and so when I say benign, perhaps what I should say is that is a sensible target and something we should strive for and it’s almost, not controversial, we should incorporate these issues in our investment analysis. But we also have to acknowledge what I consider to be an alternative purpose of ESG investing, that exists. It exists, but if you google ESG definition, you’re not going to find it on Investopedia or whatever you’re going to look at. It’s less formal, it shows up in the rhetoric, particularly from some very high profile investors who are supporters of ESG. I think it also is the definition that the skeptics have in mind when they think about why they critique ESG investing, and that definition and again this is my sort of loose version of it is that investors would use their investments to encourage costly steps that companies should take that potentially at odds with shareholders, but will improve the net effect a company has on society.
Lydia: Isn’t the difference one of timing? I’d argue that carbon emissions have historically been seen as an externality not considered by stock analysts, and what we need to do is develop a framework that helps us think about how to include that in valuations. We also should recognize that there are costs to not factoring in those issues as well.
Jeff: Well I think Lydia you may be at risk of trying to have your cake and eat it too. That alternative definition that I proposed is really, another term that people use for that would be ‘stakeholder capitalism’, I’m sure that most people have heard. In that which is sort of a contrary to ‘shareholder capitalism’, shareholders are one of many or several anyway, stakeholders of a company and a company must consider the net effect of its activities across these stakeholders. That means that there are times when the purely economic interests of shareholders would be at odds with the interests of those other stakeholders. That doesn’t mean that they’re always at odds, and like you said there may be many cases where taking appropriate action today actually is better in the long run for shareholders and for other stakeholders. But I believe in the idea that in the long term, those interests always converge is just wrong. There’s examples where those interests just do not converge and we need to think about what the approach is in those circumstances when those interests do actually diverge
Lydia: And maybe it’s my perspective from the energy side, but having seen the pressure on energy companies, I think it’s important that companies have a societal license to operate. Those companies who are aligned with societal goals long run should do better performing than those that ignore them and society’s goals. And let’s be clear - there are a lot of proponents of stakeholder capitalism: their most persuasive arguments to me are about the slow-moving process of [passing] new rules and regulations, which leaves companies free to pursue activities that impose serious externalities on society in pursuit of profit. Socially minded shareholders can help, or even force, companies to short-circuit this process, and ensuring sustainability.
Jeff: I agree that there are compelling arguments for a stakeholder approach: on a prior episode I discussed some of these issues with a law and economics professor. But I disagree that being proactive on these issues at least from a purely financial standpoint. My favorite example of that is the carbon tax. Carbon tax was first proposed in the US, in 1973, exactly 50 years ago. We have subsequently done a half a century of untaxed carbon emissions without any sort of action on that. I think it’s clear to me, at least financially a company that in 1973 had taken seriously the emerging climate science and realized that eventually we were going to be having conferences like this where we’re debating what to do about energy transition and decided to be proactive then, would have gone out of business a long time ago while their peers willy-nilly, pumped carbon into the atmosphere. The key term you used “short-circuit”: it is the source of the backlash comes, and that this is like an end run of around what some people consider to be the "right process", the legislative process where rules are imposed and companies are forced to impose that, the pushback is precisely that we’re trying to convince companies to short circuit that process to achieve goals that they could otherwise not achieve.
Lydia: Just on the carbon tax point, I actually disagree with that they would have underperformed – those companies that have lower emissions do tend to be more efficient and have lower costs. I’ll use Norway as an example here – the energy sector there, the carbon emissions are about one-third of the world average because of carbon pricing, and those companies are some of the best operated in the world and amongst the lowest cost.
Jeff: I guess my pushback to that critique would be that I referenced back to the 1970s and I don’t think the technology sort of existed back then to make the sort of changes that you’re talking about. But I also think it’s quite instructive that your example was Norway, which is a sovereign. The fact that it was a sovereign, not a private company made the kind of adjustments that you’re talking about, at least is suggestive that at some point in that journey there was trade off between profits and carbon that a sovereign was willing to bear, but that maybe a private company was not.
Lydia: I’ll concede that point for now, but really, I have two objections to the notion that ESG investing has catalyzed an effective political response. First, this is really a US phenomenon: there is no analogy in Europe, for example. Even here in the US, I suspect that the worst you could really say is that ESG is a convenient rallying cry for the critics: the skepticism about issues like climate change pre-dates ESG.
Jeff: Well that is certainly true, I suspect that skepticism about climate change has lasted about as long as climate change here in the US, so that part I certainly agree with. But I think it’s important to not underplay what you call a convenient rallying cry. Anti-ESG is blunt and maybe unsubtle as it is and even misplaced, is a lot easier than picking apart externality, and stakeholder, and role of government and role of corporates. You know, you summarize it all with this line of this sort of convenient umbrella. And with regards to the US point, I think that is point is taken, it does seem to be a US phenomenon. I’d also say that that’s the worst place to have this phenomenon in a sense that the US is clearly a laggard on addressing the issues associated with climate change and actually Europe, where you don’t have it is substantially ahead of us in addressing the energy transition.
Lydia: But even here, in the US we need to look at both sides here. The pressures you cite intensified just as the US passed its most comprehensive climate legislation ever, in the form of the Inflation Reduction Act, widely referred to as the IRA. And the IRA has focused the efforts on climate: not detracted from them and the US is now leading what I think will be a race to the top for low carbon technology development across the world. I don’t think you get that bill without the intense focus on climate from many stakeholders, including ESG investors. And if the net effect seems positive even if the issues seem different.
Jeff: Well I don’t want to detract from the IRA which was a marquee achievement, and will have long-lasting effects on the climate investments that happen, but I also think my focus sort of moving forward from here, I think the emergence of an anti-ESG counterweight has made that sort of achievement less likely going forward and I think has already subtly shifted the rhetoric around ESG. I would particularly cite some high-profile investors who had been supporters of ESG and if you read carefully the way they talk about it, you can sense a shift away from the “stakeholder” version and more to the “better for shareholders in the long-run” version, and that’s subtle but it’s a real change and applied across many companies over many years could have a real effect on what kind of change is forced by ESG investing. For example is the focus now “how do we make money out of the IRA?”, that’s good for shareholders as long as the bill exists there’s certain subsidies etc. that we can make money off of it, let’s figure out how to make our shareholders happy by exploiting this bill versus taking other steps that are costly that also effect change but don’t have the same sort of financial returns. What I’m trying to say is that clarity of purpose, this sort of unclear purpose I think detracts from the ability to martial a response to this emerging anti-ESG movement which has quite clear purpose actually. Otherwise I think it risks the pressure on companies changing and moving away from this ‘you need to think bigger than yourself’ and becoming more narrow.
Lydia: I agree that shift might happen, but for a different, more practical reason: the exceptional performance of energy assets over the last twelve months – particularly oil stocks.
Jeff: So money talks? Isn’t that what AC/DC said?
Lydia: Absolutely - It has been that boom in oil and gas prices in 2022 led to great stock performance, and I think that has soured sentiment on ESG funds, particularly those that exclude energy. Before that it had been easy not to own energy stocks for the best part of a decade and outperform financially and outperformed on a number of ESG scores on the emissions side particularly. That really changed in 2022 and listed companies generated close to $400bn in free cash flow last year and even this year, the numbers are set to be lower – but at closer to $250bn this will still be the second highest year ever. These are phenomenal amounts of cash flow being generated for them.
Jeff: That has tempered the enthusiasm somewhat here in the US. But I am surprised to hear that from you , as if you were seeing the same effect in Europe, where I think the notion that progress on social front comes with a trade-off seems a bit more well accepted.
Lydia: On balance I think you are right about that, and in fact I’m spending a lot of time in the US with all three of the European majors hosting important investor events this year reflecting the willingness of US based investors to still buy oil assets.
Jeff: In anticipation of doing this event, I have been paying closer attention than I normally would on financial news on energy and energy transition, and there were two articles I thought were sort of interesting very recently regarding the dialogue of investors and other stakeholders. One is pressure being raised on the Mets organisation to change the sponsor of Citi Field, because particularly the New York City public advocate who has been leading this saying that Citi has a large role in financing fossil fuels. I’m a Mets ticket holder so I pay attention to the Mets which was probably why I was reading that one. But the pressure on Citi is no different from the pressure on all other banks where there is a lot of scrutiny on lending books and the fossil fuel component of that, but it was interesting that this pressure was coming from the advocate, an activist side. And just today in the Wall Street Journal, there was an article about Shell and potentially the CEO looking to increase the amount of oil and gas development and exploration that they’re doing and explicitly citing a tension between the activist community and the investor community. And saying one was going to be rewarded and or happy with this and one less happy, it seems to be you’re actually seeing some evolution in the dialogue. I’m not sure they would have said that prior to this run up in oil prices.
Lydia: I do love those examples and it does lead me to another issue I want to discuss is the extent to which ESG investing affects the amount and type of investments made by energy companies. The Russian invasion of Ukraine exposed years of underinvestment, some of which has been caused by constraints imposed from an ESG perspective. As a society we haven’t been spending nearly enough on the energy system. To get close to net zero; spending on low carbon technologies needs to be 3x higher than what we spend now and in order to avoid a disorderly transition oil and gas capex needs to be 30-50% higher than where we are today. So this is one way in which we need to think about how ESG investing evolves particularly that dialogue in how do we prevent that chronic underinvestment in the energy system.
Jeff: You know what’s been interesting about investment in energy that has been a puzzle that we have spent some time in Research thinking about, is that it’s remained low despite the extraordinarily high level of profits that you have talked about. In any other cycle, that would not have been the case. All that free cash flow that you talked about, that’s not being invested. It’s getting returned to investors, either in the form of share buybacks or through deleveraging, so paying off debt.
Lydia: That is the motivation for rethinking the approach that markets and ESG funds have taken to the energy. I want to be clear that this transition needs to happen, and we need scale, and big, well-run energy companies need at the front of that. The narrative has changed though from ‘can we do it all with renewables?’ to it being about multiple sources of energy, so we need oil and gas and wind and solar and hydrogen and carbon capture and biofuels and I think what we’re going to hear more of this phrase of “and not or”. It doesn’t need to be one or the other, we’re going to have a lot of sources, and I think that’s what’s going to define this transition over multiple decades to come.
Jeff: So I know I said at the beginning that I might be the one who sounds sort of anti-ESG, but now I’m going to maybe turn that hat around a little bit here and say that’s an interesting sentiment you just expressed, but it is distinctly one that is not widely shared. I could probably name a dozen sources where they would make the opposite claim. I’ll pick one, the International Energy Agency, or IEA. They have a well publicized scenario that says that we don’t need any new oil and gas projects.
Lydia: Well the IEA is a hugely respected organization, but they published this scenario in May 2021 outlining changes in world energy demand that would be compatible with a 1.5 degree scenario with no overshoot. The assumptions used prompted the assertion that the world had no need for new oil and gas. The challenge is that this was based on assumptions for energy demand that have proved to be far too low. The real world data is showing a sharp deviation, even in two years from that pathway already. So realistically what we’re seeing is a very optimistic view about the way in which demand could develop. And to avoid a repeat of the situation we had in summer 2022 when Europe outbid other countries for natural gas leaving them without power in some cases, we need to make sure there’s an orderly transition and meet the energy demands of today whilst ensuring we can deliver the energy supply of tomorrow.
Jeff: Regardless of the rhetoric, I don’t see evidence that public companies have started to reverse this underinvestment.
Lydia: We are seeing big increases in investment from the Middle East and National Oil Companies that are privately held run by governments. This includes tax systems designed to actually encourage investment. For example, I was in Uganda a couple of weeks ago looking at what is the largest project in Africa right now. The government are working very hard to make it credible for companies, to make it attractive for them on the fiscal terms and also making sure that they can take steps to navigate some serious ESG concerns, but that demand for capital is very much there, we’re just not meeting it at the moment.
Jeff: So what’s interesting is your example there wasn’t a publicly listed, western energy company. I actually wrote something with our credit E&P analysts where we looked at new wells in the US, and there’s a strange pattern where public companies operate the vast majority of wells that are operational, but a huge proportion of the new wells are drilled by private companies, so there’s something strange there about the way that public companies are reacting.
Lydia: True. Some of that is on the government: for example, windfall taxes in Europe are likely reducing investment. Some is because companies are unsure about the long run demand looks like. We simply don’t know at this point. And companies are asking for payback on projects for oil and gas that is much shorter than a decade ago and thus fewer projects meet this threshold. And this is where I think an evolution in thinking about the transition would be helpful, to encourage the right oil and gas projects to co-exist with sufficient longer-term investment in renewables and low carbon activities.
Jeff: One problem with leaving it to individual companies to address an issue as complex as this is that we end up with a bottom’s up approach whereby a set of individual companies sort of uncoordinated seems to me to be ill equipped versus a top down approach led by policy changes to try to achieve the same outcome. I use net zero as an example – possibly the cost to achieve is very different across different industries and even different companies within the same industry. There’s no guarantee that achieving net zero everywhere for all companies is the right way to spend money to make this sort of a transition, that leaving it to companies to see a trend and spend some money to achieve it, presumably. That money might be better spent in another sector or industry where you could make even greater progress.
Lydia: That is more of a critique of the lack of coordinated policy response than it is of ESG investing though – there is nothing about the ESG framework that forces all companies to respond the same way.
Jeff: It’s true, I’m not saying it’s really forcing companies to respond but what I’m thinking more about is that when you’re putting pressure through individual companies, particularly public companies that’s sort of bottoms up there’s a sort of risk that happens is we change how activity gets financed rather than what activity gets financed. And I think that’s another issue that is worth ESG investors thinking more deeply about is that pressures from ESG are limited to specific financing channels and we want to think about what the implications are having those pressures but having them only exist in certain parts of financing .
Lydia: One of the goals of ESG investing is to raise the cost of capital for carbon-intense projects to better reflect their net impact on the environment. And I certainly see a lower willingness to finance fossil fuels than there was say 10 years ago. That includes banks which are facing regulatory and investor questions about scope 3 emissions linked to the lending book. Isn’t that a good thing?
Jeff: Lets use the example of private credit and the leverage lending guidelines. It’s an example of the limitations on the pressure on banks and public finance. They were subsequently rescinded but still enforced more informally even today, and it prohibited banks from underwriting loans with greater than 6x leverage. , and I believe although it’s never formally stated that there was an underlying suspicion that of leverage and too much leverage ends up exposing the economy to shocks and job losses and that we’d all be better off if the most levered companies in the economy were six times of less than 8 or 9 times leveraged. So what happened? Banks couldn’t underwrite these loans, but interest rates were pegged at 0 for a decade and investors were desperate for yields. Whilst economic conditions were benign interest rates were low some companies wanted to take on really high levels of leverage, so what did they do? Companies went directly to the lenders and so it’s also known as direct lending (the private credit market). So they connected directly, cutting the banks out of the system. So you saw the private credit market from c. $400bn in 2015 to $1.5tn today and so what changed was how the activity got financed, not what. Now there’s a parallel with ESG that if the pressures are too acute, then the funding just migrates and there’s a bunch of ways it could migrate. The private markets are way more robust today than they were 10 years ago, and private equity. It could be financed through cashflows, companies are already deleveraging. You could see assets spun off to become ESG immune if you will.
Lydia: Well, there is evidence that cos are deleveraging and financing out of their cash flows – of course this is only possible because profits have been high. For large projects in the developing world, they still need financing and we are seeing finance now coming increasingly from China as Western banks and companies choose not to finance and insure projects. This may actually come with fewer sustainability linked ambitions and I’m not convinced it’s a net positive for the planet.
Jeff: I agree ant the challenge is to toggle the pressures on investments so that they affect enough pressure to affect change but not enough to push it off and lose the grip of it entirely and that is a very difficult balance to strike.
Lydia: On that front I am somewhat less concerned. There was talk about companies selling specific problematic assets to private holders, but increasingly I see investors and companies accept that these assets are best kept in house, and managed with an acceptance that there are ESG concerns that need to be addressed. We’ve already seen significant evolution.
Jeff: Interesting you cite that: as we recently upgraded a coal company that we got quite a bit of grief from the ESG community, so I’m not sure that sentiment has fully sunk in yet.
Lydia: I can understand where that reaction comes from, and we can all want progress on reducing carbon emissions to happen faster, yet we also have to try as financial markets participants to incentivise companies to evolve in the right way, recognise that this transition is a multi decade journey and to work towards what is the best possible outcome. For me this comes back to the idea that there are a large number of stakeholders with diverse views.
Jeff: Ok well thanks Lydia for joining me. Hopefully we’ve touched on some of the emerging challenges to ESG investing. These are topics that are certainly addressed regularly in Lydia’s own Research as well as more broadly in the ESG Research on written by Barclays which spans sectors and asset classes. Both Lydia’s work and our generic ESG work are available to clients of course on Barclays Live, and thanks again Lydia for joining me.
Lydia: Thanks Jeff.
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The Flip Side podcast
This podcast series features lively debates between Barclays’ Research analysts on important topics facing economies and businesses around the globe.
Jeff Meli is Global Head of Research at Barclays, based in New York. Jeff joined Barclays in 2005 as the Head of US Structured Credit Strategy and has held a number of other senior positions in the research department, including Head of Credit Research and co-Head of FICC Research. Jeff spearheaded the firm’s response to regulatory changes in Research, including MiFID II, and has revamped the department’s approach to content monetisation. Jeff leads the development of the Research Data Science Platform, tasked with integrating new data sets and modern data techniques into investment research. He writes regularly about special topics in credit markets, liquidity, and financial market regulation and hosts The Flip Side, a podcast covering current events in finance and macroeconomics. Previously, he worked at Deutsche Bank and J.P. Morgan, with a focus on structured credit. Jeff has a PhD in Finance from the University of Chicago and an AB in Mathematics from Princeton.
Lydia Rainforth is a senior research analyst at Barclays, responsible for coverage of European Integrated Energy companies. Key areas of focus include energy transition and how the oil and gas industry adapts to providing clean, reliable and affordable energy in an increasingly capital constrained world. The team has delivered industry-leading work across the opportunities in decarbonisation and is working to develop the modelling of low carbon finance further. Lydia holds the CFA certificate in ESG investing, is a CFA charterholder and graduated with an MA from the University of Cambridge.