Former central banker Mark Carney is taking his crusade for sustainable investing to one of the world’s largest money managers, joining Brookfield Asset Management Inc. with a mandate to create funds focused on both generating profit and saving the planet.
Brookfield appointed the high-profile former Bank of England and Bank of Canada governor as its vice-chair and head of ESG (environmental, social and governance) and impact fund investing. The Toronto-based company oversees more than US$500-billion of assets, including a global collection of renewable power plants.
While at Brookfield, Mr. Carney will continue to serve as the United Nations special envoy for climate action and finance, a volunteer position he accepted last year.
In an interview, the 55-year-old financier said he would also remain an informal adviser to political leaders, including Prime Minister Justin Trudeau and British Prime Minister Boris Johnson, but played down any personal political ambitions. While he never ruled out one day running for office, Mr. Carney said there are many ways to do public good in the private sector. Last month, there was speculation Mr. Carney would run for the federal Liberals and become finance minister, echoing a similar scenario that made the rounds in Ottawa nine years ago, when Stephen Harper’s Conservatives were in power.
As a central banker, Mr. Carney repeatedly made the economic case for dealing with what he termed the “climate emergency” and the need for impact investing, which measures the social and environmental consequences of running a business alongside its financial returns. While at the Bank of England, Mr. Carney pressed businesses to develop strategies aimed at getting to “net zero” – where their carbon emissions are either offset or eliminated – and warned that companies that don’t adapt to climate change “will go bankrupt.”
His new job gives Mr. Carney an opportunity to transform businesses by tapping Brookfield’s operational skills and its clients’ wallets – the fund manager invests on behalf of clients such as sovereign wealth funds and pension plans.
“With an accelerated transition to a net zero economy imperative for climate sustainability and one of the greatest commercial opportunities of our time, I’m looking forward to building on Brookfield’s leading positions in renewable energy and sustainability,” Mr. Carney said.
“Mark has been a vocal proponent of the positive role that private capital can play in climate action,” said Bruce Flatt, chief executive of Brookfield. “Building on our track record in renewable investing, Mark will help accelerate our efforts to combine better long-term outcomes for society with strong risk-adjusted returns.”
In an interview, Mr. Flatt said Brookfield’s institutional backers have been asking for more exposure to sustainable investments for several years. “Over time, we see ESG and impact funds matching the size of our existing platforms,” he said.
Through its clients’ funds and its own capital, Brookfield owns US$200-billion of real estate, US$130-billion of infrastructure and green power assets and US$65-billion of private equity businesses, including one of Brazil’s largest water distribution and treatment companies. Over the past five years, the company’s assets under management grew at a 24-per-cent annual clip. ESG criteria are now woven into most mundane assets – corporate clients will pay more rent for space in a Brookfield building with a small environmental footprint.
Large investors, such as the $434-billion CPP Investment Board, now incorporate factors such as climate change and human rights into all their investments and expect their external managers to also consider these issues when putting capital to work. In a recent report, CPP chief executive Mark Machin said: “ESG factors have the potential to be significant drivers – or barriers – to profitability and shareholder value.” In a 2018 report, the Washington-based Forum for Sustainable and Responsible Investment estimated $1 in every $4 in institutional portfolios is now invested using ESG criteria.
Born in Fort Smith, NWT, Mr. Carney made his reputation steering Canada’s central bank through the global financial crisis and the Bank of England through Brexit.
He said he decided to join Brookfield after getting to know its executives early in his career – he spent 13 years at investment bank Goldman Sachs – and watching the company acquire and build businesses around the world. He said Brookfield’s ties to the world’s largest investors and experience in areas such as hydro, wind and solar power position the company as a leader in a rapidly growing ESG investment space.
“We are not going to solve climate change without the private sector,” Mr. Carney said in an interview. “We are in the early innings of a very long game.”
A veteran of the speaking and conference circuit, Mr. Carney is currently writing a book focused on creating a more equitable and sustainable postpandemic society, titled Value(s): Building a Better World For All, that is scheduled for publication next spring. Mr. Carney will be based in Ottawa – he moved back from London this summer – as Brookfield runs part of its renewable power businesses from offices in neighbouring Gatineau, Que. He officially starts at Brookfield in October.
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