The Texas attorney general and others want to punish companies that have ESG efforts. Will that affect how you offer services? Forbright is a relatively small bank in that we have $6.5 billion of assets. So it's very easy for us to say we have no carbon exposure: We can say not a nickel of our funds go to finance fossil fuel infrastructure. We are also committed that over time 50 percent of our assets will directly finance decarbonization or sustainability. So we're not only operating a negative screen, but we're allocating capital. Contrast this with Bank of America, which has a large business financing the fossil fuel industry. They can't get out of that right away and nor, quite frankly, should they: This is an energy transition, after all. Seeing what's happening with Europe in Ukraine, we clearly need fossil fuels. So I think some of the big banks are getting some unfair criticism, because they can't just get out of these businesses, nor does the world nor do we want them to get out. But that doesn't mean that they can't be applying more of their capital to financing decarbonization. The Texas attorney general can do whatever they want, but if someone's building new capabilities in Texas, the businesspeople making those decisions are going to build it in a low-carbon way. A lot of big VC players have tended not to fund the big scientific challenges of our time. Can your bank impact how other finance firms, like VCs, operate? This is an interconnected ecosystem, and everyone has a role to play. Everyone's got a position to play on the team. And everyone's got to play that position really well for the team to be successful. So a regulated bank like us operates with a safety-and-soundness mindset, as we're required to do by our regulators. But an increasing number of venture capital firms are just focused on decarbonization, and one of them is an investor in Forbright: a firm called Galvanized Climate Solutions founded by Tom Steyer. So we can be in the middle of all that stuff. Very predictable, relatively low-cost capital, is really important because so much of decarbonization is about infrastructure. While we need breakthrough technologies to change the world, we also need a few old-fashioned JP Morgans, to actually finance all the infrastructure that's needed. For example: We need low-cost, low-carbon cement. If the cement industry were a country it would be the third largest emitter of CO2 in the world. The important role for banks to play is financing the backbone of all this stuff. So how will it work — funding the American heartland to be part of this green transition? There’s a reshoring and re-industrialization going on in the West right now. And that's a good thing, given the East and the West aren't getting along so well. That’s causing Western countries to say we need to re-industrialize a lot of our heartlands so we're more resilient, and that’s all interwoven with doing that in a more sustainable manner whether you're in Texas or whether you're in California. Scientists say we may not keep warming to 1.5 degrees celsius. That the good work won’t scale in time. How do you react to that? I'm actually very optimistic about the United States right now. Although I'm feeling really bad about the climate data, because we're clearly lagging, and the geopolitical situation creates a big headwind for all this stuff, I think it’s amazing that we got the Inflation Reduction Act. I wanted more, but I thought we were gonna go through this president's first term and get nothing, which would have been so depressing. I think change can happen faster than people think when you get the innovation. So there will be opportunities to accelerate and catch up. Look at Tesla — putting aside Elon Musk for a second — Tesla did change the global auto industry. And they made every auto company adopt an EV strategy. Not because the Tesla cars were so great: They did it because Tesla became so valuable. And they wanted to copy that. Our own little humble spot of this continuum is we want to go to other banks and say, “Listen, you can do this, too. We need more partners. And by the way, it's really good business.” As they age, today’s young folks are going to drive more and more of these decisions. That's why I'm optimistic: They clearly want this.
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