Bret Kugelmass
We're here today with Brian Lehman, who's the Managing Director and Head of the Green Economy at JPMorgan Chase. Brian, welcome to Energy Impact.

Brian Lehman
Thanks, Bret.

Bret Kugelmass
Well, we'd love to hear what green economy is and what green bonds are. But before we get there, we'd love to just learn a little bit about you. Tell us about yourself. Where do you grow up?

Brian Lehman
Well, first and foremost, I just wanted to thank you for the opportunity to be a part of this. Energy Impact is a very meaningful podcast for awareness. You've had so many luminaries that predate me, and so I would hope to play my part in that. And so thanks for letting me participate. And so, as it relates to me, I am a son of a bricklayer, actually, an addictions counselor. Grew up in Maryland, spent most of my formative years on a construction site of all places, surrounded by large family of about 20 aunts and uncles and 29 first cousins. I was fortunate enough to really set out a different course for my life through higher education. Some might say I overdid it a bit by having a couple of undergraduate degrees and a few Master's degrees, also a CFA designation. But that's just part and parcel of what I would consider myself as a lifelong learner.

Bret Kugelmass
Anyone specific who inspired you, or kind of pointed you in that direction?

Brian Lehman
I wouldn't be able to isolate any particular individual. But the guiding, really true north, I would say, was both my mother and my father, just specifically encouraging me to do things differently. There weren't really many people within my family, including themselves, who had been part of higher education. But they knew that education was incredibly important. and saw that, early on, I had some aptitude for that, and an interest in learning and so encouraged me to just take it as far as I could.

Bret Kugelmass
And when did finance become interesting to you?

Brian Lehman
Finance became interesting to me, really, in college undergraduate, where I took my first real courses, both in finance and political science. And from there, it was a question ultimately, a struggle between would I one day become a lawyer? Would I work for the government? I had an internship at the Department of State. Or would I consider the private sector in finance. And so I was really fortunate to have an opportunity to study abroad. I went to Cambridge University, really, during my fall semester my junior year, between that period and the fall of my senior year. It was an amazing experience. I learned a few things, ultimately, that I didn't want to spend as much time working at that for the next phase of my career in the government, but really focusing on the capital markets implications and the financial implications of the policy that governments ultimately made, not just in the United States, but globally. And so that really led me down the path of being interested in finance.

Bret Kugelmass
And was there anything early in your career that really kind of made that impact real for you, how the private capital markets could have greater leverage than some of the other directions?

Brian Lehman
It just became, I have to say, just an interest level. Just reading and reading more and more. And one particular book that particularly stands out was Michael Lewis's "Liar's Poker". And whether you love the cultural aspects of that day and age within the sales and trading environment, or if you just find that to be a really good story, to me, it resonated in terms of the human impact people can make and contributing to market structure. The flow of money, flow of funds, money transfer, and then ultimately the role that banks had to play within the formation of capital,

Bret Kugelmass
Yeah, pretty amazing. So where did you go early on your career? What were your early jobs?

Brian Lehman
Well, one of my earlier Jobs was at Paine Webber. So that was in institutional fixed income, sort of a generalist working on portfolio optimization for smaller institutions and net worth individuals. It was a great proving ground. That was before business school. I ultimately wanted to get more steeped in finance and so had applied to business school was very fortunate to get into the school that I wanted to attend, and really bolster my finance background.

Bret Kugelmass
And when you came out of business school, what kind of new opportunities were on the horizon for you?

Brian Lehman
There were so many. And it also just coincided with a very challenging hiring market. Thinking about when I went to business school, it was when I started in 2000 that was on the other side of the financial crisis at that time, the dot com bubble. Valuations had declined materially. There was just a challenge to bounce back from the changing markets. And so as a result, the hiring market wasn't nearly as attractive as it is, of course, today. But I was very fortunate to stay with the management team that had been part of the merger team between Paine Webber and UBS, which was a transaction that took place in between, or really right after, I started business school in 2000. Then I returned to UBS, really with an equity capital markets focus and serving as agent underwriter and principal in derivatives transactions. Things that were just left of center as it relates to what companies might do to optimize their balance sheets and their capital structure.

Bret Kugelmass
What was your first touch point with the energy sector or just like real assets in general?

Brian Lehman
Early on, that was really a focus on just strictly power utility companies and helping companies, at that moment in time, find efficient ways to help return capital to shareholders, through, in some cases, derivative transactions where they could accelerate the retirement of shares that were otherwise in circulation. Where they could put that money down and actually find ways to increase efficiencies for how they went about doing that.

Bret Kugelmass
Anything with kind of building new assets, at any point?

Brian Lehman
Most of the early part of my career was around optimizing existing capital structures. Largely they were investment grade. They were tweaking things along the edges. But then as I rounded up my career and started to focus on capital raising, yes, there was that much more of a focus on finding ways to raise both equity capital, convertible financing - which is kind of a hybrid between a debt instrument and an equity instrument - and finding ways for companies to raise capital for new projects that would have been involved in infrastructure.

Bret Kugelmass
Tell me more about that. Tell me on the capital raising side, what precipitated the shift in your career? Was it you wanted to flex a new skill set? Was there something that was more creative or interesting or personable about capital raising? What was it?

Brian Lehman
It just was a confluence of events where I had really good managers who were incented to really open up the aperture for what was available. At that moment in time I was at UBS and had very good support at that senior level to not just have me focused on something more myopic and niche with these off the run transactions that I mentioned, where in some cases I would act as counterparty in principle transactions with clients, but be more holistic around the delivery of products that banks could offer. That would include capital raising, both in traditional sort of initial public offerings, equity offerings, but then also these hybrid convertible instruments. And so it's really that where others just gave me that path that otherwise might not have been available to me. And for that, I'm very fortunate.

Bret Kugelmass
Tell me about these hybrid convertible instruments. How have these been used effectively to finance? What types of projects, what industry has really been enabled or grown out of these hybrid instruments?

Brian Lehman
Yeah, sure. So later in my career, I spent more and more of my time specifically at Morgan Stanley, co-running equity-linked capital markets. Convertible financing, at its core, is just another tool that companies can utilize to raise capital. And these convertible financings are sort of right in between debt financing, which typically would carry a lower cost of capital than issuing equity financing. That's why I say convertibles are a hybrid between the two. And so, if one were to think about the cost of equity as being most expensive, in terms of a company's cost of capital, and the cost of debt being the least expensive, convertible financing is somewhere in the middle. Then, for publicly traded entities, the convertible financing is a way for these companies to drive down their cost of debt by issuing warrants or embedded options that would help defuse the cost, the cost that they would pay each and every year in that hybrid debt instrument or hybrid convertible instrument. And so what this has ultimately enabled companies to do, even in circumstances where they may not be profitable at this moment in time, is to issue convertible financing to help fuel and fund growth. If historically, one takes a look at the convertible markets, the most heavy users of these instruments in the public capital markets are technology companies and healthcare companies. What you have seen, now that we will advance to the green economy and what the public markets look like today, if the technology companies that would be more focused on the green economy have this opportunity to issue convertible financing much earlier in their lifecycle, taking advantage of the inherent volatility in their share price that investors like hedge funds, for example, would be in a position to pay for and give them access to capital markets at a much sooner rate at a cheaper cost of capital than what would otherwise be equity.

Bret Kugelmass
Okay, so the warrant- by offering a warrant, and that's where the debt would get converted to equity in the case of what happening- and how often does that happen? I understand that, okay, so you're reducing risk in a certain way to the debt provider by offering them these warrants. Is that just to make them feel like it's okay? Or do these warrants actually get called and then they're able to kind of bolster their- re-bolster their position across the portfolio for where they do get converted into equity?

Brian Lehman
Well, I think ultimately, that's the benefit for the convertible financing, right? What happens if the share price threshold isn't ultimately met? Typically, let's say a company has $100 per share stock price. In a convertible financing, the conversion premium, where - think simplistically - that debt instrument becomes more of an equity instrument. The issuance price embedded in that convertible financing is not at $100, but let's say it's $150. There is some benefit in servicing the debt between the moment time they issue the convertible, and the moment that convertible instrument might actually be converted into equity. And that would be a dramatic savings against the alternative, which is straight debt. So that's the benefit for the moment in time the instrument is issued and the time prior to any sort of conversion into equity. Now, when, let's say fast forward, the share price has appreciated, the financing then becomes more equity-like, then there could be some conversion or more equity sensitivity embedded in that instrument where the debt converts to equity. And at that moment in time, yes, the proceeds could be something that would bolster a balance sheet, right, because those shares might be issued at a much higher price than what was originally contemplated years before. But there are also settlement mechanisms that could allow for flexible ways for companies to settle that equity obligation.

Bret Kugelmass
Existing equity holders chipping in a little bit more money or something so those warrants aren't called?

Brian Lehman
Well, so there's a notion - this is getting a little bit technical, Bret - but there's a notion of, call it, net-share settlement where companies have the ability to pay, let's say, the principal amount in cash and also have sort of the equity value in the money value of that option that was sold years ago. That would be settled ultimately in shares. So, taking a step back, what the convertible financing allows companies to do is to find a way to access the capital markets potentially sooner than they would otherwise in the debt markets, but then also drive down the cost of issuing that debt, adding on that incremental equity sensitivity, where if they were to find themselves in a better stock price position years down the line, that instrument would become more equity-like than debt.

Bret Kugelmass
And does this convertible mechanism really only work with institutions that are comfortable being both debt and equity providers? Or do they like you know, if it gets called, they might have a partner or something that is more comfortable being the equity holder?

Brian Lehman
Well, so that ultimately depends. There are strategic investors in convertible financing. There are also market participants. Oftentimes people have a certain interpretation of hedge funds, for example. But hedge funds might actually be viewed an asset in the context of a company publicly traded that would consider issuing a convertible, because it's those hedge funds that will pay for that option premium and help the company drive down the cost of that debt. And what they'll ultimately do is trade the underlying volatility, the movements in the stock price going up or down against what the company's obligation is, inherent in that convertible financing. So that would be one market participant. But then there are also strategics, Bret, that you just highlighted. That also could be critically important, not just in the public markets, but also in the private markets. Convertible financing instruments do take place within the private markets where there might not be an offsetting equity market that's tradable for that underlying company. But that might be a way to bridge the gap between what the company is looking to raise and the cost of what it will take to raise that capital. Convertible financing in a private context is equally powerful. Where, if those shares ultimately get converted, it really depends on the underlying security structure. There might be a strategic investor who would find it to be attractive to actually hold on to that equity, and ride that story for a much longer period of time, and maybe even take an active role in managing, whether it be at the board level or otherwise at that enterprise.

Bret Kugelmass
And what size transactions are common? Does this type of instrument makes sense in the 10 to $100 million range, 100 to a billion dollar range? Where do you see this the most?

Brian Lehman
So in the public markets, it typically is a transaction size that could be as little as call it 75 to $100 million, but it could be multiple billions of dollars. And so there are technical factors that would go into the calculus around, Bret, for example, if you were the CEO of your company. With certain trading characteristics and how many shares were outstanding, I would be able to tell you what would the market ultimately bear? What would investors deem attractive in some future issuance? If one were to think about the private markets, then really convertible financings get done in all sizes at various stages of those companies’ lifecycles.

Bret Kugelmass
Great. Okay, cool. Let's circle back to energy. Tell me about energy, the green economy, and when this became a real focus of yours.

Brian Lehman
Yeah, sure. Along the way in my career, I've had the benefit of building out businesses, both on the investment banking and commercial banking side of things. I had a thesis on the other side of the financial crisis that non-bank financial institutions would not only survive, but they would thrive in a post-crisis world. And that's precisely what's played out with then you see financial technology, market structure changes. Really, permanent capital vehicles that may not be regulated right by the Fed, that are taking capital and investing it in a broad range of things. Now, about five years ago, I ran into a particular company at the intersection of renewables and finance and an absolute love affair was born. For me, where these permanent capital vehicles - or this particular permanent capital vehicle - was investing across the energy transition in a very progressive way, investing in infrastructure projects, and things that really move the needle. And then the moment I found that company, I wanted to very quickly look to the left and to the right of that company to understand what were the competitive attributes, how many others were doing this, in what format. Because there are private fund structures in infrastructure that might make those investments. There are permanent capital vehicles, that might be private or public, making similar investments. And from there, really, that was the wedge that got me interested specifically on finding a way for JP Morgan to express its interest within the green economy differently.

Bret Kugelmass
What are the specific bottlenecks? What are the specific challenges that can be solved?

Brian Lehman
Sure, well, if I can, let's talk about what the green economy is and then also what it's trying to especially solve for. The overarching backdrop is just, for me personally, I've spent so much time in the capital markets and worked with companies up and down the capital stack, acting as principal, agent and underwriter. That's sort of my role in this and in appreciating now what JP Morgan ultimately can do, which is, if we do this right, walk through every stage of the company's lifecycle. And that's from the other side of A round, which- Bret, I know your background in technology. You're very familiar with some of the challenges around the bottlenecks in capital markets, crossing the valley of death I think is sometimes utilized. I prefer to say something different. But yeah, the goal is to try to find a way to bridge the gap and to pull through these progressive technologies. The overarching theme was specifically how we can promote the formation of capital, where the common thread is to help decarbonize the globe. The starting point for me was in sustainable finance. That's the first vertical of four that we call the green economy. Sustainable finance is basically anybody who is taking money and investing it into the green economy. That could be, right, early stage venture, late stage growth, could be infrastructure. It could be permanent capital vehicles, it could be residential, solar finance companies. Anybody who's putting money to work into this ecosystem. But then, of course, that's only one component that would be critical to making an impact in this world. Renewable energy. That is, by far and away, a critical piece of this puzzle, recognizing that the lion's share of the emissions that we're trying to combat against are at the core of how energy is produced and ultimately utilize. And so, renewable energy as we define it, it's specifically focused on all the technologies that would be part of renewable energies. So yes, of course, the more stable or established by now, technologies of solar and wind, but it's geothermal. At some point in the future, Bret, I know you're focused on nuclear. Modular nuclear could very well be a part of this future. But it's carbon capture. It's hydrogen. But it's also the producers of the equipment that would go into clean energy. And so we really are focused on the integration of this entire ecosystem, recognizing that there are so many macro themes that have an impact on all of renewable energy. So the closer we are to that industry, the better off we'll be in supporting the needs of our clients.

Bret Kugelmass
I was just gonna ask, what are some of the things - and maybe this comes back to some of the bottlenecks and challenges - but for some of the upcoming technologies, let's say like carbon capture or advanced or modular nuclear - what are some of the things that you need to see to make them more investable, essentially?

Brian Lehman
It's a very important question that I think will decide the success of many of the enterprises that we - at JP Morgan and I'm sure others - are having real time dialogue with. What do you need to see? There needs to be a credible path to growth where there's a business plan to support it. With the earlier stage most transformative technologies, it will present a very different, we'll call it, model. What bankers always talk about is what is the corporate model. And in that corporate model is the revenue projections. It's the expense projections and what falls out of that is profitability. The further out earnings are, the less clarity investors have and the bigger the discount rate those investors would need to make that technology investable. That is very much the struggle when we're moving away from, well again, the more established technologies of wind and solar and we're focusing on some of these, let's say, carbon capture technologies or even modular nuclear. A lot of that profitability is in the distant future. And the capital expenditure requirements in order to achieve those revenue features down the line are material. What needs to happen is that credible connection between where that company is today, where it needs to be tomorrow, and have that commercial glide path. And so I think it will be really important for companies to really find ways to institutionalize themselves. And to really appreciate it's not just what the bankers are looking for. But in the end, what the investors really need to find that platform investable.

Bret Kugelmass
Institutionalize themselves. What do you mean by that, exactly?

Brian Lehman
Technology is really, really at the core of - we'll just focus specifically right on the more progressive technologies within renewables. And by the way, before we get away from it, the third and the fourth verticals within the green economy are food tech and ag tech, and efficiency technology, so changing the way the industrial complex operates. We think about these progressive technologies that would be part of both tech and ag tech, that would be part of efficiency technology and the more progressive technologies, but then renewables, what does institutionalization ultimately mean? It's ultimately, I would deem it to be bankability, right? Do you have a patented technology? If we're focused on technology. Do you have a competitive moat around your technology and competitors technology? Is there some path to commercialization of that technology where there's a revenue model that can be supported? And if you think about just simply what does a revenue model really mean? Well, something that investors tend to like is a subscription model. You take a Netflix and you know, Bret, what are the odds that if you're paying, whatever the number is $12, this month that you'll continue paying it over time? It's even better if you have a five or 10 or even 20-year contract that would suggest, Bret, as long as you are financially solvent, you will continue to pay $12 to watch Netflix with price escalators up until whenever is agreed in the contract. Those sorts of revenue models tend to sell well, not just for banks who are looking to raise capital around these ideas, but naturally, ultimately, for investors who are looking to invest in these models. When you put all of those things together in a form that's presentable and well understood by investors who see hundreds of these business opportunities every single day, there needs to be a playbook that is understood, but also with meaningful differentiators around those points that I just highlighted. In the end, an addressable market, as attractive as it is, and this addressable market within the broader green economy for most of these entities, that addressable market is enormous. But there needs to be a credible path to accessing it. That's institutionalization.

Bret Kugelmass
Yeah, I mean, a lot of those things that you mentioned around the characteristics of bankability make total sense to me. And I kind of assume, I kind of go into this saying, Okay, let's assume those things. But the pushback that you often see from these more conservative financial players is not wanting to take any technology risk. It's not enough to have a patent on the technology. They want to see- if it's a $100 million facility, they want to see it running. Or let's say it's a $500 million facility. They want to have seen a $100 million version of it running for a few years first.

Brian Lehman
Bret, that just goes back to what I was mentioning. What we're trying to achieve is to walk through every stage of the company's lifecycle.

Bret Kugelmass
Okay, that's what I'm getting at. Are you going to break that mold essentially?

Brian Lehman
Well, what JP Morgan has, thankfully, is a broad suite of products. And so - let me if I can, if you can indulge me - I want to go through the three things that we're trying to do well within the green economy. The first is to deliver content, which is how could you institutionalize your business, Bret? What are your competitors doing? What are they thinking about? How do you organize your opportunity set to maximize success? That's what bankers traditionally do. And this is important around our broader firm commitments within our two and a half trillion dollar commitment towards sustainable development and climate impact as a firm. Within that two and a half trillion over the course of the next 10 years is a trillion dollar commitment towards green initiatives. How we at JP Morgan will track that is in two ways. It's the capital we commit to our clients, as well as the capital we raise on behalf of our clients. That is the backdrop for the creation of the green economy, and then towards the two other things that we're trying to achieve within it. The delivery of credit, and investment banking. And that dovetails well into committing capital to clients and raising capital on behalf of our clients. Within the delivery of credit, earlier stage lending opportunities is something that we have the ability to do and have done specifically within the green economy. And hopefully this is music to your ears, Bret, given some of the last prior conversations you've had. I think a meaningful differentiator for JP Morgan is to provide venture lending.

Bret Kugelmass
This is exactly I want to hear. Okay, great.

Brian Lehman
Good. Now, I don't want to give off the impression that JP Morgan is providing capital to anyone, under any circumstances. We have a fortress balance sheet method of analyzing credit investments and making sure that whatever money we put out the door, we do right by our shareholders and our regulators to get it back. And so we have a framework for that. But we are selectively providing venture lending opportunities to companies even on the other side of Series A, where they have a prototype, but they don't yet have commercialization of their product. Just specifically, we executed one of these transactions on Friday of last week. So that's one example. There are multiple other transactions that we're working on, in sort of mandate phase two execution around this whole notion of prior to a company being profitable. Still, in the earlier stages, what one would consider the venture phase, JP Morgan is providing venture lending to extend the runway between, let's say, Series B and Series C.

Bret Kugelmass
Great. Okay, so venture lending, you said that that was one mechanism. What are some other mechanisms? Do you guys do capital raising specifically for pre-revenue companies?

Brian Lehman
Let's go into maybe the credit product and then we can focus on capital raising. From the credit standpoint, venture lending, project finance, both in utility scale and middle markets, right. And that really speaks to distributed generation as being a very meaningful theme, particularly in North America. That is a capability that we have really focused on to match the needs of our clients. We do the traditional revolving credit facilities, asset-based lending facilities. And then of course, it migrates into this institutional capital markets where it could be Term Loan A financing, but it also could end up being Term Loan B financing or even high yield financing. That's the complete product suite that JP Morgan can deliver around credit. As it relates to raising capital, whether its debt, hybrid, right, these convertible financings, whether it's secured and debt like or preferred in nature, or just straight equity. These are the products that we have conversations with our investors about regularly, and yes, access our clients to those respective markets, in certain circumstances. Yes, many of these companies, the more technologically progressive they are, the more they have meaningful capital expenditure needs, the further distance they are in terms of where they are today, to where they will be when they turn profitable. That growth capital is certainly a requirement to keep the engines running into reach that commercialization.

Bret Kugelmass
Yeah, I'm loving the way that you're talking about this. Because one of the problems that I've seen just from meeting with God knows how many entrepreneurs in the sector, whether- you can use your examples. Ag tech was one of your pillars. It's like, Okay, so let's say you have to build a $50 million facility to do some sort of like, interesting new way, an urban park, whatever it is, recent technology, but you haven't done anything yet. Maybe you've got some lab scale stuff. And then you also mentioned that idea of bridging the valley of death. To me, I just see so many of these. It always seems to be around $50 million, where it's like, or you know, like 20 million, 100 million or something like that. That's what they need to get this first demonstration plant up and running to get to the point where you can get your more traditional capital players to kind of like, take over the flywheel from there. And so do you guys have a good thesis as to, if you were to kind of go out in capital raising mode, who do you go to to pull in that early equity, project equity investment at that scale, essentially?

Brian Lehman
And that's precisely why I love one of the four pillars being sustainable finance, right? The way we really need to get after this is not just saying, Hey, this is what JP Morgan can do. It's so much better and a more enriching client experience. And at least as I see it, if Bret you're a client of mine, and I say, Hey, listen, I love your business. I love what you're set out to do. But JP Morgan's capital, we're not ready for that exchange as of yet. But let me at least provide you with some insights as it relates to who might be. It's really important for us to have these significant relationships with those early stage VC, late-stage growth, these non-traditional investors who will play, for example, in project equity, where they will ask for differentiated returns, right? And that might be an investment that they regularly call upon JP Morgan, and whatever other bank that they have in mind, to make that connection. I want to deliver, JP Morgan wants to deliver a comprehensive experience to say, but I might not be able to give this to you now, but I know four people who might,

Bret Kugelmass
And it's the non-traditional investors I'm always so curious about. And obviously don't give away any secret sauce here. But how do you think about who to go after for that? Is it generally family offices that are looking to diversify? Is it strategics that just kind of don't know about how this technology might impact their long-term business growth? And you can help tell that story with the financial sense? Is it- or you tell me, fill in the blank. What are these different buckets of non-traditional capital that we can go after?

Brian Lehman
Well, it is as broad an ecosystem today as I think it's ever been, which is a plus. But it also indicates, let's say, a bank, like JP Morgan's role in that. And that just goes back to, if you are an entrepreneur and you have a story to tell, let's curate what that message looks like and put it in a language, a format that all of these various investors can understand. That's the role of the bank. We are experienced in doing that. And as a relates to-

Bret Kugelmass
And that, when you say that that's the role of an investment bank or an advisor- just because some of our audience might- not everyone's a super financial geek, they might be thinking, Okay, JP Morgan Chase, I deposit some money there, too. But you're talking from the investment bank perspective.

Brian Lehman
Correct. The way I think about it, commercial banking activities are separate, of course, from investment banking activities. But in thinking about the construct of what we're trying to achieve at JP Morgan, the commercial banking activities might involve providing or extending credit that would be necessary to fuel a company's growth. With those various products that I discussed, the investment bank will be focused on helping raise capital for that client, whether it's in the debt markets, the convertible markets, or in the equity markets, for example.

Bret Kugelmass
I was just gonna ask. Just to kind of paint the picture for people who might be coming to you for investment banking services- so you're going to help craft the story, because you know the language that those capital providers speak. And so you're going to listen, take- kind of understand the technology, understand the impact, kind of do some workshops, and then you're going to help write that story into financial speak. I guess, what is the venue that that happens, though? Are there monthly breakfasts where these people come together and they want to hear about these different stories? Is it targeted where it's like, I've been developing this relationship with these 50 family offices for the last 20 years, and they tell me, I know this guy likes this type of risk and this guy likes this type of risk. What's the venue that you make the pitch?

Brian Lehman
That is the role that equity capital markets ultimately plays. If we're- let's just focus on an example of private equity. Who is the audience? What does the outreach look like? Within JP Morgan's equity capital markets franchise, we have private capital markets. Their sole job is to know who the investors are and provide that level of expertise around what those investors want around every particular story. And there's a level of specialization that our private capital markets colleagues will have, specifically around the green economy eligible names. They will be the practitioners digesting the information, curating the message, and then making sure that there are one on one, in some cases, outreaches that would indicate we're not just going out en mass for these stories. It's a tailored discussion. That's why banks like JP Morgan will have a, we'll call it salesforce, institutional practitioners who would maintain these relationships with all sorts of institutional investors and family offices to have an appreciation for what it is they're looking for, the risk they're willing to take, and the returns that they're looking to get in exchange for the risk that they're taking, such that it is an informed conversation when that idea is broached.

Bret Kugelmass
And how long does the process usually take?

Brian Lehman
It varies. I mean, it could be weeks, it could be months. It really varies.

Bret Kugelmass
And are there any other elements to the process? Do you throw a flyer out to a couple early people first, just to kind of see how they respond to it? And then, Okay, they said this and this, so now let's regroup and reframe the story this way. Is that part of the process?

Brian Lehman
It's certainly, by and large capital raising is an iterative process. Yes. And so there are, even in the context- this goes back to, Bret, your question around knowing who's out there. It's not always the case where JP Morgan will have, this is my thesis. We as bankers shouldn't be in a position to specifically wait until there is a fee event where someone wants to raise capital and then we would like to take that mandate to the capital markets and raise that capital on behalf of the client. Sometimes it's simply, Hey, look, this may not be an appropriate project, or it may not be the right point in time for us to actually do business. But let me introduce you to three folks who might be interested in your story. Where there's no formal arrangement, it's just helping out-

Bret Kugelmass
I like that. General networking through some just like informal matchmaking services.

Brian Lehman
Much of that is really, really important in making the world a smaller place. And that just provides, in my assessment, just a real sense of transparency around the quality of a relationship. And there there may ultimately be some opportunities specifically for JP Morgan to play a role in that relationship. But, again, that's a meaningful differentiator, having been on large institutional platforms over the course of my career. At JP Morgan, we have the ability to think incredibly long term, where it's very much about relationships. It's not any at all about a single transaction. And so bringing the friends and family that way to a relationship is far more real and tangible. And I think helpful.

Bret Kugelmass
I love it. I love it. And I love the extra advantage that the scale and the size of your organization has in that respect. The ability to both think long term, but also to be able to kind of see projects through from their infancy to you when they're fully developed. Let me ask, as we wrap up here a little bit, what do you see looking forward to the future? Five years from now, where do you see things going? What are some things that, because of the unique relationships that you build, that you've developed some interesting insights that might help you predict where things are going in the future?

Brian Lehman
Well, a couple things. It's been mentioned before, but it's worth mentioning again. For as much as all of us might pat ourselves on the back that, last year, the estimate was somewhere around $500 billion that was invested in the energy transition, which is like twice what it was 10 years ago, we need three to $5 trillion a year for the next 30 years. The estimate is 100 to $150 trillion to get to one and a half degrees centigrade. And that's not even for certain. What needs to change is just mass adoption at a scale that we have yet to experience. What I'm encouraged by is the $2.5 trillion dollar commitment that JP Morgan has made, the number of company commitments around net-zero. The awareness is there. And I don't think that the climate practitioners or the folks who have been really in and around climate change for a long time, it's less "approve it" style story. I think folks are, the consumer and certainly the commercial arena, are aware that climate change is an existential issue we need to address. What I love about- and this is the role that I want to play, is what can the capital markets do to help achieve these ambitious climate goals around mitigating climate change? I think we've just begun. What needs to happen over the course of the next 5, 10, 20 years is further institutionalization. You think about the carbon offset market and it's only what, like 22% of the carbon offset regulation or framework. Whose have only covered 22% of the global emissions. We have $51 billion- sorry, 51 billion tons of emissions that we need to eradicate by 2050. And so we need a global framework. We need a market structure that brings together so many of these disparate policies and creates some exchange that will credibly enforce, track, support a carbon tax. I think those are some of the things that, yes, it's been talked about for a number of years. But those are the sorts of transformational things that I would expect to see in the next, certainly, I hope it's inside of 10 years. But those things have to happen in order for us to get to the ambitious goals we've set out for ourselves.

Bret Kugelmass
Very interesting. Any final words that you want to leave our audience with?

Brian Lehman
Bret, what I would just go back to is really the green economy and what JP Morgan is doing. It's really part of a broad sweeping number of things in the public domain. Aligning ourselves with the Paris agreement in October of last year. Establishing the Center for carbon transition. In the same time, being a good steward of our own capital. Providing a roadmap for investors to see through our carbon compass methodology that will track our progress and helping reduce carbon emissions with what JP Morgan specifically is doing and how we're supporting our clients. It's making these bold commitments around the green initiatives for a trillion dollars over the next 10 years. And the green economy is rolling and being a tactical practitioner in partnering with these companies that will ultimately make a difference. And so that's what I would love to leave you with and hoping to make the world a smaller place in the process and get to those carbon neutrality goals that we have.

Bret Kugelmass
Brian Lehman, amazing work that you're doing. Thank you so much.

Brian Lehman
Thanks, Bret.