Ahead of the 2020 North American Gas Forum we had the pleasure of interviewing Mark Florian, Managing Director at BlackRock. Mark shared with us what BlackRock has focused on this year, the impact of the global pandemic on their work, the role of the investment community in driving ESG and more.
We invite you to read the full interview below.
ED: Beginning of this year Larry Fink’s letter to investors made some significant waves in the investor community. The new standard for investing would immediately have a stronger focus on ESG and sustainable investing would be the linchpin of BlackRock’s strategy. How has BlackRock’s strategy evolved since January and what is the COVID19 impact on your work?
MF: BlackRock has been focused on ensuring the full integration of ESG principles and analysis in our investment decision-making across all of our investing strategies. The Firm has also been creating more types of investment pools that have an ESG or sustainable focus, so investors have more specific choices to invest in sustainable strategies. For our Funds, we have actually been considering ESG in our investment analysis for many years, so this actually was not a big transition.
ED: What do you foresee the pace of the energy transition to be? What will be headwinds? Tailwinds?
MF: The energy transition will take several decades. Over the last 10 years, there has been $2.5 trillion of investment in wind and solar energy. The result of all of this investment has been the rapid growth of renewables, but still, in 2019, wind and solar constituted less than 5% of the energy produced and consumed in the world. So there will be huge amounts of additional capital investment to enable further transition, and that will take a very long time. The headwinds are the amount of capital formation and project formation that is needed to execute more renewable penetration, while the tailwinds can be more government policy to encourage renewable development.
ED: What is the role of the investment community in driving ESG and what collaborations are needed amongst all stakeholders in the natural gas sector?
Investors are more and more focused on ESG as both a risk factor, but also an opportunity to run businesses better. Public pension plans, sovereign wealth funds and others are focusing more and more of their capital and focus towards positive ESG investments.
For the natural gas sector, I believe that the industry needs to tell a much more compelling story about how natural gas is part of the solution for a cleaner energy future, rather than being part of the problem. Energy is a basic human need, which we want to be not only cleaner, but also available 24/7 and at a reasonable cost…there is not one energy source that provides all three of these parameters….so a mix of renewables, with clean, cheap and fully available natural gas power, can get us to the climate goals that the world is seeking…the natural gas industry needs to show how natural gas is part of the path to this cleaner future. I don’t think this has been articulated well to date.