Season 2 Episode 5: Eduardo Famini Silva Transcript

Conversations on Climate – Season 2 Episode 5: Eduardo Famini Silva – Edited transcript


Section one: Eduardo’s global journey

Chris: Eduardo, thank you so much for inviting me here into your wonderful offices in the City of London. I’m really looking forward to our conversation. 

Eduardo: My pleasure to be invited to speak with you, Chris. 

Chris: You are Brazilian by background. Would you like to give us the story of your journey from an being an engineer in Brazil to investment banking in the City of London?

Eduardo: How much time do we have! It’s a quite unconventional path I would say. When I started choosing what to do in life, I had people guiding me, and my background was such that you need to become a doctor, lawyer, or an engineer to succeed in life. I was good at maths, so I went into engineering and actually I liked engineering school very much.

That was a good choice, and I would have been happy to be an engineer for life. You make decisions based on the information you have in the last year of your university, and I had a number of consulting firms coming to recruit on campus. I was fascinated by that type of career. You travel, you get to be in front of clients, discussing their major strategic issues…so I said: I’ll have a go at that. Prior to that point, I had no idea that that business even existed. 

So I joined consulting. It was an enjoyable career, and in consulting it’s part of a career path to do your MBA. I was also very excited to go abroad – it would be my first time – and so I pursued an MBA and ended up in London at LBS. There, again, enlightenment comes and I start to discover a range of other careers that by that point I had heard about, but was not much into. I would say banking felt like a good balance at that point between the client access I liked, but also the analytical strength that came from my engineering background. I said: okay, I’ll have a go at that. And luckily I got a very good offer to start in investment banking and I took it, and the rest is history. 10 years later, here I am.

Chris: That’s actually a similar enough path to my own. I started off as a lawyer and realized that there was more to life than that, and went into investment banking for 10 years. But at the end of those 10 years I decided that was enough. But investment banking, as we both know, covers an awful lot of ground. You can really be involved in any part of society, or any part of industry or business. But you’ve ended up in the energy sector, particularly as Director of Renewables. Can you tell us about your journey towards that particular specialism? 

Eduardo: That is also not a straightforward answer. I actually started with an offer in investment banking that was to cover the oil and gas industry, which didn’t take a lot of reflection because in Brazil, in consulting, I did a work in energy, but mainly utilities with some exposure to green energy. So oil and gas would be a change from that. But I took advice from people and I was told oil and gas is going to be a great job. You have an industry with great geopolitical exposure, commodities, and everything you do is global and large scale. I thought it was very interesting, because coming from Brazil, I thought working in oil and gas would be a way to further expand my horizons, if that makes sense. Which was true. 

I had a good run advising oil and gas clients; and in the end, what brought me from there to where I am now, I think possibly to surprise you, was that some of my clients started asking questions hydrogen, about carbon capture and storage. And the answer initially was: no, I have no idea what you’re talking about. But if you’re working with clients, you always need to pre-empt what’s happening. When you see the first signs of a wave – or a tsunami as it was for the energy transition – you need to be ahead. 

So I start to respond to those questions by educating myself, which resulted in me being much more proactive in bringing some of these topics to the oil and gas clients, and covering areas that would be relevant to them like electric vehicle charging points, for example. That credentialed me to do more and more. It got to a point where I was so excited by doing energy transition work, and of course it is in the part of the economy that has the greatest tailwinds, so you want to do more of that, right?

I got to a point where I said, I don’t want to be the renewable energy specialist disguised as an oil and gas banker, or vice versa. I want to go full in. That’s how I end up here. I was quite keen to move on to a platform that would allow me to work one hundred percent on the energy transition, and a good platform with a good track record with clients, and that was RBC (Royal Bank of Canada). That’s how I ended up here. 

Chris: Brilliant. So rather than a coming to Damascus moment, where a light went off and you decided, oh, I must do renewables; it was a slow but sure build-up of knowledge and information, where you then hit a point and said, this fits with me philosophically and it fits with me economically. It can be the best of both worlds. Is that, that a fair summary? 

Eduardo: It is. It is incredible how we can only act upon what we have in front of us, and it’s hard for you to have the whole set of information to make a proper, informed decision based on all the facts. And the decisions I’ve made over the course of my life were based on the facts I had front of me at the time, but I’m confident the end result was exactly what I would have targeted. So I feel lucky in that way. I think all those decisions nudged me towards the end result.


Section two: ESG, utilitarianism and the end of capitalism

Chris: Expanding a little for one more moment on your philosophy – you put out a really interesting quote on LinkedIn, in the run up to COP26. Let me just pull it out here fully…You asked, are we living in the end of capitalism as we know it? The models that we have right now are no longer working; are we finally getting to the age of utilitarianism? 

Would you care to tell us what you meant by that, and what your vision of a utilitarian future might be?

Eduardo: I would say, What do we take account of in our decision making? I would say in a pure capitalist mindset, let’s run a NPV calculation. Let’s see what is the utility I get, and make that decision. I worry about what I get, and much less so about what others get, unless that impact on others has a side effect on me.

Right now, we’re moving to a point where in our decision making as individuals, as society, as corporations, we look at impacts that are not measurable, and sometimes impacts that are completely non-financial. So if I take decisions today that will only impact generations two, three, four decades in future, this will not be captured by any of our models.

But people are making decisions that take into account these factors; on a qualitative basis, sometimes, but they are taking them into account. So when you look into capitalism, our models are limited because we run based on the ways we’ve always run. I think it’s about time for us potentially – and it’s very much easier to talk about, and very hard to implement – but look into ways of incorporating some of these factors which people already take into account, in the decision making of our models.

If I run, for example, a comparison across a number of companies, some good citizens and some less good…If all of them have the same bottom line, surely our clients or investors will choose the good citizens versus the bad ones, despite the fact that the models would give the same result. Isn’t it the case that we should change our models, So that they can be better at reflecting the ways we make decisions? And that’s more or less what I’ve trying to cover. 

Chris: I understand, I fully agree. Where do you see the role of ESG in utilitarianism? 

Eduardo: Very good question. It’s core to it, right? The reason the whole debate on whether we should care only about ourselves, or also care about others, started more or less at the same time when society started to worry about what happens if we destroy the earth. It possibly wont impact us, but definitely our children, and most certainly our grandchildren. Again, it’s very philosophical, but my belief is it’s interlinked. The need you have to decarbonize if, when I decide what I eat, I actually need to be thinking about Earth even though I’m paying A premium for organic food; or if I make an investment, actually I may need to sacrifice some cash flows to actually support a company that in future will enable a future for my grandchildren… I think it’s all very much interlinked. 

ESG is core. I see it as a framework, and I see ESG as a result of a trend that was already happening, which is people seeing catastrophic climate events, seeing a need to act, and then industry and society acting or reacting by creating frameworks. And ESG is a framework. 


Section three: the macro outlook for renewables

Chris: Moving on to your real area of expertise, which is capital markets and M&A. I think it’s fair to say that 2022 and the early parts of 2023 have been crazy times for the markets, to put mildly! In very broad terms, what’s your view on the macro outlook for the renewable energy sector? 

Eduardo: I’m very positive about renewables and I think if anything, I would say the hiccups in 2022 will be supportive of the long-term trend of transformation to renewables.

If you step back and think about policy making or energy policy making, people usually talk about the triangle of energy security, energy competitiveness, and sustainability. And sometimes the three points of this triangle conflict with each other. So if I think very long term about the alternative solution that policy makers will need to aim at, to actually solve all these problems, the answer is only renewable energy. I don’t see any alternative.

With renewable energy you leverage resources that are everywhere. If you think about, for example, geothermal, it’s so widespread. So you deliver on energy security. Then you have energy that’s generated at very low marginal price, So you deliver to the point of affordability. And of course, clearly it’s sustainable. So in terms of long term policy, the urge now to focus on energy security means actually it makes sense to invest in long term renewables. That’s going to be what’s going to solve the bigger problem. All the near term fixes you’re doing here is just medicine to address the symptoms of the problems.

So I think in the longer term, and taking this policy perspective into account, there is no change right now. A lot of the work I do is with the broader green ecosystem. And that covers of course renewable energies, but also new technologies such as hydrogen (which is not even that new anymore), carbon capture and storage, or infrastructure for EV charging or sustainable aviation fuels. The time horizon of people investing in these businesses is just so long term. They wouldn’t make investment decisions based necessarily on what happened in 2022, or for that matter, what will happen the next three or four years. It’s a long term perspective. 

I would say day-to-day what they see is an improvement in sentiment; and between us, I don’t remember ever being so busy with clients. 

Chris: That’s good to hear. On the M&A side, are you noticing a lot of activity? Do you see the future of renewables as being with larger companies – is scale going to be increasingly important? And is that driving the M&A markets, or is M&A slightly quiet?

Eduardo: That’s an interesting question. I think 2022 created a lot of volatility, and the basic concept here is that volatility isn’t good for M&A because it widens the bridge between the price buyers are willing to pay and the price sellers are willing to accept. 

That’s the basics behind it. But if we then insulate that macro trend, and look at my universe here, then firstly we have a large scale global rollout of renewables capacity, so most players, including the large ones, already have in-house a very large pipeline of projects they’re developing. I think the question then for them is, does it really make sense to go and consolidate now when I have myself such a large pipeline of projects? Because they’re in such a high growth environment for renewable energy, the case for M&A is a different case. It’s not the case of consolidation yet; it’s a case of increasing the ability to develop that pipeline. That may mean acquiring a smaller company that brings a critical capability, or it may mean acquiring a company that gives access to different geographies. 

What actually has happened is a deconsolidation in a sense. We worked, for example, on a transaction in which we saw BSF, for example, acquiring a very large wind farm – a chemicals company acquiring a wind farm from a utility. And that totally made sense. Industrial players and bigger emitters want to have access to green energy, which would be the source of the future.

So what M&A is doing now, in a sense, is perhaps even increasing the universe of investors in the wider renewables framework. Seeing, through M&A, industrial players getting into the renewables game, but also oil and gas companies and private equity –in a sense, we’re in that process of high growth deconsolidation. Maybe in the future when we have plenty of renewable capacity, then there’ll be a case for efficiency and that is why you will see consolidation happening. But I think that’s very far from now. 

Chris: You said the three major players then are industrials who are trying to clean up their own energy for their own uses; oil and gas companies who are in the energy business, so it makes sense; and private equity who are there to try and make money.

Eduardo: Three unconventional players. Of course the utilities are leading the space as well, nut when I mentioned deconsolidation, what I mean is there are players that you would not think at first would be investing heavily in this space, but loads of activity is coming from these buckets of money.

Chris: Sure. From my point of view, as someone who is more involved in the development side of it, I don’t see it as a consolidated market. I see it as a very fragmented market. I see it as hundreds and thousands of smaller players running around, each of them developing their own projects, their own little pockets, with very few really big players out there. So we might develop some projects and they might be bought by Microsoft. 

Eduardo: There is space for everyone, which is great! 

Chris: Yes, because we need everyone for sure. It’s a major issue. But going back a little bit to what you were saying about the uncertainties in the market and the gap between valuations for buyers and sellers: with high inflation, with high interest rates, with higher uncertainty, that does hamper the M&A market; but on the other hand, you’ve got a big drive towards green energy and decarbonization. There’s inherent conflict between them. How do you see that conflict is playing out? Is decarbonization winning? Or is it the concerns about, how am I supposed to build a large infrastructure project if I’m paying interest rates which are three times the amount that would’ve been there there 18 months ago?

Eduardo: One hundred percent, decarbonization is winning. I think there are a number of factors behind this. I would say the compression of multiples in listed equities is a result of short term cycles, and we are now at the bottom of the cycle. But also, if you think about developed markets, it’s linked to the growth of the economy. So when you look at multiple compression, that’s a result of investors expecting lower growth on the average stock market or the average set of investible assets. Now in the universe of renewable energy and the energy transition, what you see actually is a very high growth universe of companies, and that’s actually driving very high multiples. And talking about the multiple is actually even funny in a sense, because how do we even define multiples for companies that are actually pre breakeven, sometimes pre-revenue? You have these super large projects in the order of billions, these super valuable capabilities inside certain companies that never generate any revenue. And of course these are companies that will succeed, that will have very high multiples, but honestly should we even be talking about multiples? 

To the core of your question, I would say decarbonization will certainly win. The long term trend is high growth for this universe; it’s an industry that will require trillions of dollars of investment. This investment will come and honestly, when I talk with my clients and investors, the appetite for investment is very high. And when we look at some of the deals we’ve been running, I would say valuations remain robust. 


Section four: Ukraine, Europe and the US – energy policy in conflict

Chris: Moving on to another area, which is the macro environment and changes in the world and how that’s impacted your sector. Clearly one of the major events that has transformed thinking around energy was Russia’s invasion of Ukraine. A lot of the conversation that came out of that was centred around: should we reopen coal? Should we be building new pipelines? How do we compensate for the lack of gas we were getting from Russia. How do you see that conversation has evolved – do you think that it’s ultimately been a positive or a negative for renewables, and how has it framed the renewable sector? 

Eduardo: We have a problem that we need to fix, and this problem has caused some symptoms, and I think the symptom in the near term is energy security. There is a big focus on that. But the long-term solution is healing the problem, which is bringing home some of the production of energy and generation capacity, and doing so by enhancing renewables.

What I would say is the war has had terrible short term effects around energy security and the price of energy. But that opened eyes, and European policy makers realize that actually there were mistakes made over the course of decades in how they set up the infrastructure to deliver energy to this continent. I think this is good news because this now is enabling them to actually act. Particualrly in Europe, there’s often a lot of inertia and a lot of resistance to big quick moves. But perhaps the war was a trigger we needed, and I feel a bigger acceleration now.

We talk to clients and we talk to policymakers, and sentiment has changed in a very good way towards accelerating investment, enabling investment, and reducing a bit of the red tape. All of this is very positive in the long run. Now we have a problem in the next six months as well, and one could say, okay, we are abandoning all the long term plans because now we need to focus fully on actually get our homes heated and let’s go for coal. But fortunately, my impression is that we are doing both. We’re actually focusing on actually getting our homes heated by burning coal. It’s bad, but that makes us remember that actually, I’m reducing my carbon stock. And I need then to accelerate on the other side then to guarantee my future.

So I don’t think this lower resource base caused by the high energy price has impacted investment in energy. Governments have been moving money from elsewhere. The private sector has remained focussed, and I think possibly even looking at investing more. So I think if there is anything that can come out of this war that’s positive, it’s perhaps is an acceleration, particularly in Europe, towards the energy transition.

Chris: There’s an awful lot of support being given to the US renewable energy industry. Instead of us sitting back and complaining about it, we should try and do something similar ourselves and try and support that industry in Europe. What impact do you see from the Inflation Reduction Act overseas? 

Eduardo: Super interesting question. I think first of all the IRA should be lauded, because it’s a bold initiative in the right direction. It’s not only about providing monetary support, but it’s about simplicity as well. It’s beautiful how simple the provisions are. Even a banker could understand from five minutes reading what benefits investors would have, and actually target certain areas of the energy transition. 

That was a wake up call in Europe. The first reaction is panic, and several of my European clients started asking questions about investing in the US, which makes total sense, right? You have a regulatory environment that is simple, clear, and welcoming; versus an environment that is way more difficult and complex, with policy makers with the right intentions but struggling to find an agreeable framework. So it does have a side effect on Europe. Now, I think it’s a positive one, because Europe and the EU is a work in progress system, and they’re trying to find, from battling crisis to crisis, the way they can best function.

I’m a big believer in that model in the EU, but maybe the next crisis that will nudge them to actually operate in a better way. They’ve just announced a green deal industrial plan, which is a reaction to the IRA and shows a very quick reaction in sense for EU standards. They say, we are going to reduce bureaucracy; we are going to create a European fund to be announced by the summer to help investing, in renewable energy in the continent. Ursula [von der Leyen] made specific reference to the IRA when making that announcement. So it was a clear reaction to that plan, but it was a good reaction.

Of course, there was the initial panic and complaints, but now what you provide is a similar set of incentives for people actually to stay in the continent. I think that’s great. That’s the good race, and I think will incentivize investment. I’m positive that other countries will follow suit, and that actually will be a big enabler for the decarbonisation. 

In Europe in particular, if that results in a reduction of barriers, for example, that’s a rather big win. And I’m a believer that Europe will remain competitive, and if anything the IRA will accelerate that process. 


Section five: The big hydrogen debate

Chris: You seem really positive on hydrogen. 

Eduardo: I am. 

Chris: There’s an awful lot of skepticism around it, a huge amount. It was seen as the next big thing for many years; and then over the last 12-18 months, I’ve seen the tide really quite quickly turn. We can’t possibly put it through all of our pipelines; streets would blow up and houses would melt, and all this type of thing!

But you still seem to be a believer. And you’re an engineer by background. So how are you so positive?

Eduardo: Maybe I’ll start philosophically again, right? If I think through where the invisible hand will take us, very far down into the future: what’s going to be the energy system? We’re going to have a range of renewable generation capacity, which include possibly all source of renewables. So wind and solar at the front, but geothermal and then hydroelectricity and potentially tidal energy too. So thinking about all natural phenomena and what you can harness from that to be sources of electricity that will create the green electrons that actually will power society.

Right now, you said hydrogen is difficult to store and transport as electricity as well. And of course you can transport electricity on cables, but you cannot cable everywhere. And there’s a cost as well linked to that. So if, think about what happened with the LNG market, which was a way to create efficiency by moving cheaper sources of gas to places where gas simple does exist, is not accessible or too expensive – that created a global market, right?

So it’s a long answer, but there is a scenario in the future where we’re going to have a fully integrated global market where we’ll have renewable energy generation across the globe. And there will be a way to link different markets when our cables or interconnectors were not possible by other means.

And hydrogen is my bet for that medium of transport energy, when you have excess energy to produce hydrogen. Because the main problem of hydrogen today is that we don’t have enough renewable energy, period. Converting renewable energy into hydrogen is a process that actually has efficiency losses that are huge, And I get that. But there are applications for which hydrogen is anyway already needed. So industrial applications, for example, fertilizers and refineries. So that’s an immediate gain because actually it’s needed, and it’s very carbon intensive, so we need to fix that. So there is a big potential for green hydrogen there, but I think in the very far future there will be an even bigger potential.

Now how far is this future? That’s a big question and people are making their bets. I would say I thinks that future is much closer than people believe, because as happened for solar and wind I believe costs will go down for electrolyzers. And when you think about the future where we have plenty of renewable capacity, The marginal cost of renewables is basically zero.

Chris: Renewables won’t be built in that case…


Eduardo: That’s a whole different dialogue! 

Chris: If you’re saying that for hydrogen to work, you need the power to be free – well that power needs to be paid for and so therefore those generators won’t be built. And you’ve got the transmission losses and you’ve got the compression issues and you’ve got the storage issues, you’ve got the transportation issues. There’s a lot of things that need to go right for hydrogen.

I fully agree with you that replacing the current industrial dirty grey hydrogen has to happen. That will happen. But there’s a serious cost to that, and you can therefore afford to pay for your energy to go and do that. That’s fine. But the idea that it’ll be used for heating our houses…

Eduardo: Super interesting debate, Chris. Good question, and good point. I would say there is a whole range of applications or potential theoretical applications for hydrogen, some of which are perhaps obvious, which is replacing gray hydrogen used for industrial processes. Some others are less obvious, and I agree it’ll be hard to see a future where we are using hydrogen to burn in places when we can just electrify cities.

But let’s think about an extreme example. There are many people that are still off grid. There are islands and there are occasions where hydrogen can be an efficient way to get energy to certain places that are more remote.

Chris: Not more efficient than solar panels or wind turbines, or unless you’re talking about an island that’s actually subterranean! Then okay, fair enough. But in most other cases, islands tend to have seas as well. They tend to have water. They tend to have lots of other resources, such that hydrogen isn’t necessarily going to be the best solution. It is technically possible, but it’s always going to be relatively more expensive, 

Eduardo:  The future will tell. But you are right in the sense that there is a clear efficiency loss in converting electricity into hydrogen, period. That can be reduced over time. But there are places where producing hydrogen is cheaper than other places where you produce hydrogen. And even the cost of producing wind or solar vary from region to region. So there are applications where it’s easier. For example, in a mine or construction site, depending on where you’re constructing what you have as of today is diesel generators, which need to be replaced, right? So it’s hard to be building solar panels and wind farms on a mine that’s actually going have a finite life, when you have a transient period where you need some energy.

I see hydrogen as having great potential for a range of applications. I would agree with you for several other applications. Some people are making bets. I’ll give one final example, which is that hydrogen is a fundamental feed stock for synthesizing longer chain molecules for sustainable aviation fuels. There is, as of today, no other way to produce sustainable aviation fuels from building blocks that doesn’t use hydrogen. So, given the demand of the aviation industry, that would have huge potential for hydrogen. Again, there are applications that I agree are hard to see – perhaps in a very far future – but I guess some others I would be more positive about.

Chris: Fair enough.

Eduardo: Great debate!


Section six: renewables as social impact investing

Chris: You are a big believer in social impact and how that renewables can also create, positive impacts on society. Could you explain your thinking behind that and how renewables can assist on the ground? 

Eduardo: People in Europe and in developed countries sometimes forget that we still have a major issue as society globally of energy poverty. We have communities, in particular very large communities in Africa or India for example, which still don’t have access to the grid.

That is terrible and it’s a problem that is very hard to fix by creating infrastructure as we know it. Expanding the grid is expensive. It’s not necessarily economically viable. And then one could say government should just pay for it, but of course, government resources are finite. Paying for some of this perhaps means we’re not paying for hospitals or schools. I think for places such as these renewables can be a brilliant way to create energy justice, because you can provide decentralized energy generation solutions that then will not rely on the grid.

There are a number of companies, investors, government entities and multinational cross-government organizations looking to projects that can enable these outcomes. These are projects that typically are not targeting immense returns, but these are projects that actually can cause a major social impact and bring people out of energy poverty.

So yes, there is a big potential for renewables, solar in particular. when you look into these poorer areas there is great solar potential, but honestly it’s about all sorts of energy. Biogas has been one that’s been looked at, especially because these poorest communities have a lot of agricultural produce, and then you have some organic feedstock for biogas that ends up carbon neutral. 

Long story short, there is great potential, and it’s a great way to do things right first time, in a sense. Because when you create the grid as we know it, it’s a perfect solution for Europe. Now think about how communities in Brazil and the Amazon Rainforest are going to get an electricity cable there. Not easy!

Chris: Very true. And this is something that isn’t really part of the discussion in a European context. I imagine it’s far more so in Brazil and seemingly more so in Canada as well, that there’s a lot more conversations around the societal impact of renewables outside of Europe.

Do you see investors also looking at societal impact or trying to monitor it and understand what the impact will be? I don’t see that happening in Europe, but it would be interesting to know whether, say in Canada or Brazil, that’s a metric that’s that investors do look at. 

Eduardo: People look at this. Clearly if these are European or North American investors looking into investing in emerging markets, then that’s a consideration and there are some cases amongst my clients in which people ask the right questions

Obviously these elements get into the whole set of variables that investors take into account to make decisions. It may sometimes not be the most determining factor, but they certainly take into account. When you look into local investors, I would say its there to a lesser extent, but it’s getting stronger as well. The Social [in ESG] is also very broad universe of things you need to be doing. But when we talk, for example, about inclusion or gender equality, these topics are becoming mainstream in emerging markets as well. In Brazil for sure, I can say. So yes, that’s been taken into account.

Is this driving massive waves of change in the way people make investments? Not yet, but again I would say change needs to start somewhere. That may be a long process, but from my interactions and feedback I got from the ground, its a process that has started. 


Section seven: The future of energy and banking 

Chris: Which leads us neatly along to the concluding questions. First off, what is your hope for the future of the industry and the sectors that you’re in? Where would you like to see your industry and your sectors in 10 years? 

Eduardo: People talk a lot about the speed of change being too low. But actually being in the industry, I’ve been positively surprised sometimes by how quickly mindsets have changed, even if that didn’t result yet in the type of action people would expect. But again I think the foundation is laid for an acceleration of these good actions.

So I would hope that in 10 years, firstly developed markets would have renewables and other energy transition technologies established as mainstream; as an investible class that not only the highest risk-takers can bet on, but that everyone can bet on, including the most conservative investors such as banks. They have to create that positive virtuous cycle that will enable renewables to accelerate even further.

So in Europe, the United States, Canada, I would hope and expect to have renewables as completely mainstream, completely understood, with a low cost base, as well as other energy transition technology and infrastructure like EV charging points established. Overall, battery manufacturers cooperate in these countries and actually provide essential service to the grid. I would expect biogas, biofuel should be used for cleaning up marine and aviation and all of these mainstream applications rather than some highly speculative technology that we’re going to implement in the future for emerging markets. 

I think my hope is that the mindset that’s already existing in Europe has created a foundation for that expectation, and that by 2030-2035 that, that mindset gets more ingrained in emerging markets. I would say people focus on the most immediate problems, and sometimes that’s just to get a plate of food. Therefore it’s hard to actually think about climate as your first preoccupation. Hopefully that will change by 2030-2035, enabling then a second wave to come and repeat that first wave that will have happened by then in Europe, in North America, to happen in emerging markets.

If that all actually stacks up, maybe we could be on track for two degrees. Hopefully. It’s difficult, but I like to be positive. 

Chris: Last question: In that really quite optimistic future you’ve been you’ve been painting, what’s the role of investment banking to to help us get there?

Eduardo: As I say, there are number of bottlenecks. There is the regulatory bottleneck. We talked a lot about the technology bottleneck, which needs to improve, so that processes can become more economical. But there is also the capital availability bottleneck. I think banks and investment banking in particular will play a very essential role in bringing the capital that’s badly needed for some of these projects.

Bringing capital can be as a facilitator, as an agent, as a lender or as a structure that can create instruments and ways to attract blocks of capital that otherwise would not be have been available to that given project. Without the banking industry, I’m afraid to say, it’ll be very hard if not impossible for us to achieve the goals that societies actually have set for themselves. 

Chris: All right. The bankers are the good guys. It’s a new narrative, but I like it, I’ll run with it! 

Eduardo: Getting better. But I would say, good or bad – they are essential.

Chris: And I say that as a former banker myself. Eduardo, thank you so much. That was pleasure. It was really good conversation. 

Eduardo: Pleasure to be here. Thank you.


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