Hiro Mizuno & Investor Responsibility During the Energy Transition

Last month, Hiro Mizuno was on the Capital Allocator’s podcast with Ted Seides. Ted runs and is the host of the Capital Allocators podcast, and I am a regular listener. I encourage you to add his podcast to your library.

Hiro Mizuno is the recently departed Executive Managing Director and Chief Investment Officer of GPIF, Japan’s $1.5 trillion Government Pension Investment Fund. During the conversation with Ted, Hiro spent time covering how to align ESG metrics to investment performance. Near the end of the conversation Hiro goes on a great monologue about investor responsibility and how active investors can take on the responsibility of addressing ESG metrics through governance influence- and he specifically covers carbon-generating industries..

“I refuse to actually compete for less carbon footprint of the global portfolio. We could do that by divesting a carbon-heavy industry. But given our universal ownership approach, it doesn’t make any difference. Maybe we divest coal, tobacco…. But from our universal ownership perspective, it sounds like we are passing ownership of those problematic businesses to the people that don’t care about it. We don’t want to divest the carbon footprint of our portfolio by divesting the carbon-heavy industry as that doesn’t reduce the carbon footprint of the world.”

I really appreciate how Hiro talks about the responsibility to address problematic businesses. He wants to own the problem so that he can improve the outcome. What a powerful statement.

At Energize, most of our digital investments address the renewable and/or digital side of the energy and industrial transition. However, as shown yesterday in our petrochemical review, our goal is to be a student of the entire energy ecosystem and understand how digital technologies can provide value across different energy types. The fact is that transition fuels like natural gas and their byproducts will be around for a long time and digital technologies that advance renewables (like drones, or cybersecurity) can also be leveraged into providing a more secure and environmentally friendly transition for these carbon-based fuels.

We embrace this responsibility, are tracking our ESG metrics, and seek to advance the entire transition. Here is to a responsible, digital, energy transition. And thank you, Ted & Hiro, for a great discussion.