Bret Kugelmass
We are here today with Kara Mangone who is the Global Head of Climate Strategy at Goldman Sachs. Kara, welcome to Energy Impact.

Kara Mangone
Thank you, Bret. It's great to be here.

Bret Kugelmass
Yeah, absolutely. I mean, listen, Goldman Sachs needs no introduction. Climate, everyone in this podcast, the audience of this podcast is going to love it. But before we get into modern topics, let's talk about you, your past, where you grew up, and how you got into the sector.

Kara Mangone
Awesome. Sounds great. I'm so excited to be here. Look, what got me into finance and then eventually into sustainable finance was a pretty, actually pretty similar mix of things, which I think is being very fortunate, right place, right time, a level of just being very fascinated and interested in the space, and then I think, thirdly, really hungry to learn. I should start by saying I don't have a traditional energy or climate background, actually and there are times when it's quite a steep learning curve and has been a steep learning curve. But actually, that's what has, I think, kept me so excited and engaged and really humbled to be working in this space. Maybe to walk it back a little bit, in undergrad I studied English, business- English, finance, and Italian of all things. I was an Italian minor.

Bret Kugelmass
Because you have an Italian background.

Kara Mangone
I do. Yeah, exactly. Italian American.

Bret Kugelmass
Did you ever spend any time there growing up?

Kara Mangone
A little bit, yeah. I spent, actually, during college I spent a couple of months there, which, despite many years of studying it, it actually was not until I ended up living there that I was actually able to really master it. And I grew up around Italian dialect, my family's from Southern Italy, but textbook Italian is quite different. And so it was really, it was an incredible experience to be able to be there and learn it. I think what that probably shows a little bit is I just have a very sort of multi-disciplinary sort of nature to me and to my interests. I think that was a little bit of what ultimately brought me into finance and sustainable finance. The second thing is, I've always sort of liked to push myself sort of on the edge of my comfort zone a little bit more. I played competitive soccer growing up and had a couple of different options of what to do for undergrad and ultimately decided to walk on at a very strong D1 program, which was a very difficult, hard couple of years, but was ultimately a tremendous amount of growth for me personally, in my game, but also just really as an individual. I think that sort of grounding for me too, both of those things in combo, I think originally I had thought maybe I'll do corporate law with that kind of mix of finance and English or journalism. Potentially also, we'll get there at one point, who knows, but I think I just sort of wasn't quite ready to catapult into this when I was graduating and I decided to try for a banking analyst job at Goldman Sachs again, tried to- thought it was out of my reach, thought it would push me on sort of at the edge of my comfort zone, and I somehow got it. So that's really where I started my career. It could not have been a more dynamic place to start. I joined into a group that at the time was called the Mergers Leadership Group, which is still a really important part of our banking franchise, and that is where we advise clients who are facing hostile M&A or shareholder activism.

Bret Kugelmass
Can you double click on that a little bit, because - and this is just my ignorance, okay - shareholder activism. Whenever I hear that, Okay, the shareholder group is causing a ruckus. You look at their ownership, it's like 5% or something. How do they - I don't understand - how do they have enough ownership to actually move the needle?

Kara Mangone
It's a very good question, and a lot of it comes from the influence that you can gain with other shareholders. I think this- to be honest, this is actually the two big impressions that I had after working in this. Obviously, I was junior my career, I had just started, but I was doing - and I should also note, I was doing it right, sort of pre- and post-financial crisis, so an incredible amount of volatility for a lot of these companies, valuations just dipping significantly. The two things that it really taught me were, one, the importance of your relationship as a public company with your stakeholders. I could say the same right for any sort of private companies as well, but in that world where I was dealing with these publicly traded companies, that was one, and we'll talk a lot about this, I'm sure, during the course the conversation. The second was how important it is to have a really clear, articulated strategy to the market that resonates and that's supported by KPIs and a track record of performance.

Bret Kugelmass
KPI for our non-business group is key performance indicators?

Kara Mangone
Yeah, key performance indicators. And so, I think ultimately, to your question, what can happen is, as a hedge fund accumulates a stake, it may seem small, but they are effectively presenting an alternative narrative or thesis, investment thesis on a company or on a stock. And if you can get other shareholders on your side, then ultimately, these can play out in pretty - sometimes they settle - but ultimately, they can play out in pretty public ways. Often, we'll go to a public shareholder vote, and if you have a majority support, then those things will pass. And I should note, when I started, I really wasn't focused on- it was on environmental issues that were really playing out on the public stage in this way. But interestingly, that team now at the firm, there are a lot of corporate clients that we advise who are facing really significant levels of, I'd say, sometimes big A activism or hedge fund activism, which is where I started, but also just kind of smaller A, which is just shareholder proposals and environmental issues and things like that. That's really where- that's really how I got into finance and into the firm and where I started my career. After that, again, sort of, I think combo of being really fortunate, but also just being really fascinated and wanting to learn more, I had the opportunity to move to our Investor Relations team and spent about 10 years there managing relationships with the firm's investors, debt investors, equity investors, who are focused on ESG and sustainability

Bret Kugelmass
What types of institutions are these investors? Can you describe them to us, these investors, these equity investors?

Kara Mangone
Yes, it's both. These are large passives, like BlackRock and Vanguard and State Street, and can be large, active investors like Fidelity, Dodge and Cox, and then it could be, PIMCO, bondholders, but then it also can be smaller investors. Actually, when I first started in Investor Relations, a lot of the real pioneers in this space were a lot of the smaller socially responsible investors or faith-based investors, I spent a ton of time with a group called the Interfaith Center for Corporate Responsibility, which is a group of faith-based investors, and just had very thoughtful and had done a lot of research on different issues around human rights and business standards, and climate and food impacts and so it really was super wide ranging. And then over time, I would say to the point when I really left IR and moved to this seat, I also was spending time with what I would call sort of influencers, which are proxy advisory firms, or firms that actually rate companies on ESG, a really, really wide-ranging set of constituents.

Bret Kugelmass
And just help us understand, because from the outside - it might be obvious to you from the outside looking in - just the word investors, because, as far as I understand, so Goldman will hold on to other people's money and invest it, right? But then also people own Goldman itself. Is that right?

Kara Mangone
Yes, good question. Yeah. Where I was sitting is in the- think of it sort of the corporate, Goldman Sachs corporate, sort of, if you were to go up on Yahoo Finance and look at who owns- or the SEC, this is what I used to do in my old seat when I first started, looking the SEC filings and look into this shareholder registry, you will see a lot of the big institutional investors who own Goldman Sachs and their portfolio. And those are, again, those are really, really wide ranging and there are some that, you have kind of your largest public holders, but then you have some who are quite active in sustainability and ESG, who may not show up as top 20 investor, but are very sort of influential and thoughtful, and we engage with as well. But then the flip side of it - and this is actually starting to get into our sustainable finance model, which is really unique - we are also spending time with many of those institutional investors as clients of the firm.

Bret Kugelmass
I see, wait, so it goes both ways. It could be a big company that owns shares in the entity that is Goldman, but then Goldman independently manages a bucket of money of theirs that doesn't own them, but they invest it to make the Goldman brand more valuable. So sorry, not Goldman, their money more valuable, it's their money, but then also collect a fee, which then makes Goldman more valuable as well.

Kara Mangone
Yes, exactly. It's not- I wouldn't say it's investing in the brand of Goldman Sachs.

Kara Mangone
The entity, that is. I mean, look, there are investors that hold us as part of their portfolio and then there are a lot of institutional investors and corporate asset owners, pension funds, right, like a CalPERS and CalSTRS they hold Goldman Sachs on behalf of their constituents, pensioners, but then we advise them as clients of the firm, as well, and how to think about integrating climate and other considerations into their portfolio. It's a really symbiotic relationship, and actually, it's really interesting, because a lot of the corporate clients that I spend time with - even though my role is very sort of corporate strategy from the climate perspective, right, I'm very strategy-focused for the firm - a lot of the corporate clients that I spend time with, they really want to know, what is it like to build an engagement program with shareholders and investors over 10 years? And what is it like to the other part of my portfolio as our sustainability reporting? What is it like to put together a sustainability report? How do you know which disclosure frameworks? We don't have required sustainability reporting, mandatory sustainability reporting here in the US, so how do you figure out what those pieces of knowledge and insights are?

Bret Kugelmass
I see. And just to clarify, because now, I think, if I'm getting this, right, there's actually this third way that an organization can interact with Goldman, and that's, I think, you mentioned advising. Goldman will not necessarily directly manage money for, let's say, a pension fund, but will act as a consultant to teach them how to manage their own money. Is that right?

Kara Mangone
You can do it in a lot of different ways. Our business cuts across- and by the way, our sustainable finance business actually replicates our core business, kind of same strategy we have in our core business, which is we have our asset management business, where we're advising clients, where we're managing their assets, right investing on their behalf. We have our investment banking business, where we're advising corporate clients who are helping to finance if they want to go to the public markets, if they have an acquisition that they need to finance. If they want to IPO and become a public company, we have that part of our business. We have our global markets business, where we're working with institutional investors and providing liquidity and trading and advice for those solutions. And then also now, a growing consumer and wealth management business as well, which includes focusing very much on individual. Our sustainable finance footprint actually cuts across all of those areas, which is really, really cool and really interesting. I know one of the topics we're going to get to - so I'm probably front running it here - is kind of what has changed in financial institutions' approach to sustainable finance over time. I can say, obviously, I can speak closest to the Goldman Sachs approach, but really, it's been kind of this broadening and deepening of the pockets of expertise and insight and activity and capabilities that we can bring on sustainable finance that really mirrors how we've grown our business strategy broadly. And so that's both in terms of sort of thematic depth. Our commitment cuts across that we have a $750 billion commitment to finance investment advice and sustainable finance by 2030. That cuts across all of those businesses I mentioned. It also cuts dramatically across climate transition and inclusive growth. And so climate transition including clean energy and ecosystem services, sustainable transport, sustainable food and agriculture, but then inclusive growth, which includes investing in communities. It includes healthcare. It includes financial inclusion, areas and investments where we're working with companies who have an impact thesis around increasing affordability or increasing access or value of service.

Bret Kugelmass
How did you guys come up with that number, 750 billion? At that point, why not a trillion?

Kara Mangone
It's a great question. That was, by and large, the most significant sustainable finance target commitment on the street, by multiples, when we came out with it in the end of 2019. And I think the- look, the number is important. We did 156 billion in our first year, actually, of the target. And so that for us was just-

Bret Kugelmass
156 billion in the first year, and what year was that?

Kara Mangone
The first year, that was this past 2020.

Bret Kugelmass
Multiply that by 10, you'll hit a trillion by by 2030.

Kara Mangone
I think to me, the number got a lot of attention because it was so vague. But I think the second thing that got a lot of attention was actually we announced it in an op-ed, it was an op-ed from David Solomon, our CEO. I think what got a lot of attention was the rationale, which was sustainable finance, in particular, these two secular themes focused on climate and inclusive growth, are today, and are only going to accelerate in terms of being drivers for markets and economies. This is really about risk and this is about where there's values and about opportunity. It was very values light, if you will. Values are important in this space, of course, to a lot of constituents, individuals. We think about that a lot here at Goldman Sachs. If you think about where we've chosen to have partnerships and allocate capital and philanthropic capital, but like this is a commercial commitment. That $750 billion commitment does not include any philanthropic capital, that's a commercial commitment. What that tells you was really this view that our clients, we as an organization, our clients, this is coming up in boardrooms, this was coming up for David in meetings with investors. And this is really something that is about value now for a lot of our clients.

Bret Kugelmass
Since you guys are so wide-ranging, you've got very different- you've got a different set of tools and instruments to be able to help promote sustainability. And you have a lot of experience and you guys have touched all sorts of different types of assets, you've got huge teams. From your perspective, having seen all that, and having all of this access that other institutions might not, what do you guys think moves the needle the most?

Kara Mangone
There are a couple of things that we found to be really important in advancing sort of climate goals and inclusive growth goals. One is how you ground your approach as an organization. And so that means- and by the way, this is not an easy thing to do. I can say this wearing this sort of corporate hat for Goldman Sachs on climate. I can say this spending time with corporates and investors. You know this Bret from spending time, and I've listened to a bunch of interviews you've had, this space is filled with acronyms.

Bret Kugelmass
I had to make you spell one out earlier. I'm on a war against acronyms,

Kara Mangone
PPAs, ESG, GHG. I mean, it is just filled with acronyms. It can be one, super disorienting. Two, we're largely operating in sort of a voluntary framework, if you will, place in terms of disclosure. Ultimately, there are a lot of questions we get around, I have a commitment, but where should I put it? And how should I describe it? What should my KPI be? And is this a good enough KPI? I think that grounding is often where we advise our clients to start. It's how we started, which is, our purpose as a company is to advance sustainable economic growth and financial opportunity. Having that clear sense of what your purpose is, as a company, and you can be- this isn't just a statement for the greenness of green companies. This is, wherever your organization is, figuring out starting with your purpose, and then really peeling back the onion and saying, okay, where are the pockets of my business where ESG and sustainability shows up, where it's actually a material, relevant risk for me to be managing? That may be in terms of your operations. That may be ways that you can heat your buildings more efficiently. It could come up in the way that you think about the potential for transition risk on your business. This is a term that we talk about a lot in sort of the climate risk space.

Bret Kugelmass
What drives transition risks specifically? Is it that the laws will change underneath your feet and if you're not ready for it, you're gonna incur some costs?

Kara Mangone
That could be a component. The concept of transition risk - and there's usually these two buckets we talk about, transition risk and physical risk - the concept of transition risk is very much that there could be changes to policy, there could be economic factors that change, right. As those things go into place, how then is your business and your assets - it could be your real estate portfolio, etc. - how are those assets going to be impacted? If there is a price on carbon that's put into place, for example, what happens to the credit profile of certain companies that you invest in or that you lend in? And then what happens based on their credit profile? What happens to how they trade in the public markets, etc.? And then, is there a potential financial impact to your business from that activity? That's an important piece. I think that is the frame that we often advise clients is, think about this in the same way you would a financial risk, right? It's almost like take the ESG acronym out of it, and just think about it through the lens of your sort of traditional is this cost? Can I increase returns? And then the third bucket is really opportunity. Can I actually drive alpha from this activity? That's the first one we start with is really how you ground it. The second is how you operationalize it within the organization. And we just- I mean, we've had a long-standing approach to climate, our first sort of environmental policy framework that we put out that underscores our approach and describes our philosophy on these issues was all the way in 2005. We've been at this for a long time, but the $750 billion commitment was 2019 and that was really our opportunity to operationalize this across the firm, within our businesses, and we learned a lot from that process. That's a big question we get is, how do you actually do that within the organization? And then how does that interact with all of the sort of external facing pieces you have? You're reporting, you're engaging with stakeholders, all of that. That's the third piece, then. How do you ground it? How do you set it up? But then how do you tell your story? That's usually the conversation that we have with clients, and it's getting more and more sophisticated. That's the one thing I'll say is, asset managers, asset owners, corporate clients are getting very, very good at this and very sophisticated in the way and many of them you've interviewed, but just there is a lot of deep expertise now within the walls of a lot of private sector institutions. And I think that's really helped to advance this space as well, which be fair has gotten its fair share of criticisms of just being like a lot of talk or jargon or acronyms.

Bret Kugelmass
Or greenwashing. I see a lot of greenwashing, like people saying they make these grandiose commitments and then saying they satisfy them, but then if it's not really held to like a high ESG metric, it's hard to- if you take an objective look at it, maybe they didn't really achieve those goals. That's why I'm afraid, I'm afraid that we're going to do just a ton of greenwashing. And I'd like to maybe even pick your brain strategically, how do we avoid that?

Kara Mangone
Yeah, it's an important, it's definitely an important issue. The one thing I'll say is most of our corporate clients and investors are very attuned to it. They don't want to be accused of greenwashing. There are certain things that that we can learn from in this space. If you think about the green bond or social bond, sustainability bond, financing markets, which by the way, we've seen record levels of volumes. This year, we already are on- we've exceeded what we did all of last year in terms of sustainable debt issuance.

Bret Kugelmass
And just to clarify, when you say financing, you mean debt only or do you mean any part of the capital stack?

Kara Mangone
No, I mean, for sustainable debt financing, I mean, either green bonds, social bonds or sustainability bonds, which are green plus social. These are corporates who are issuing a bond who are ring fencing the proceeds towards either a green project, it could be operational efficiency, or it could be social project investing in communities, increasing the diversity of your supply chain, things like that. We actually went through this process this year, we issued our first sustainability bond issuance as a firm. In that space, there is a pretty clear established framework for what sort of counts, if you will, for green bond principles and their social bonds stand, I believe, on principles as well. And that framework is really useful, because it has guidance of what you would need to adhere to be compliant with those. The market really likes that. That's been a helpful- you can't just pick any KPI you want. You have to actually go through this process and done it with a second party opinion. Institutional investors have really responded well to that and corporates have responded well, to that, and I think that's why you've seen this rapid acceleration. We've also seen these bonds price, on average, five to 10 basis points higher than traditional bond issuance. So back to this values point, that part, what we're seeing from clients is not that we're saying to them, Oh, you need to go- you should go and issue a green bond. We're actually getting a lot of vice versa. Should I be issuing? Can I get diversification? I think I'm a good story to tell, etc.

Bret Kugelmass
When you say five to 10 basis points tighter, do you mean that's because there's more demand out there for them?

Kara Mangone
Exactly. Yeah, exactly. But look, there are parts of the market- I think there are things like that where we can learn from, to your question, which is, anytime you can have a set of clear standards, comparability, all of those things will help. But the climate challenge is really big and the role, the opportunity that the private sector has, therefore, is quite substantial. There's an area that we're spending a lot of time on in terms of transition, climate transition. I know this is one of the questions that you want to get to, around what kind of role financial institutions and Goldman Sachs in particular can play around net-zero. One of the- just to just to give you a little bit of a frame, we were part of a report, along with a group of financial institutions at the end of last year, that looked at the financing needs, or the investment needs required to actually achieve the goals of the Paris Agreement and the capital investment that was estimated as part of that process - we worked with the global financial markets Association and BCG on this - is 100 to 150 trillion.

Bret Kugelmass
Yeah, insane. Right.

Kara Mangone
It's astronomical, right?

Bret Kugelmass
And that's not overestimated either. That is like a legit analysis. It's not just people pulling a number that is like- that just speaks to the literal magnitude of the problem.

Kara Mangone
Absolutely. And I think what, interestingly, when you look into part of what that report does, is we look into what's the composition of that investment need? And there's a couple of interesting things. One is, there are about 10 sectors that account for roughly 75% of GHG emissions globally.

Bret Kugelmass
Okay. And that's what I was hoping to get to, when asked my question earlier, what do you see actually moving the needle? Can you talk about those sectors? And is there something that you do with your clients to kind of gear them towards a sector saying, Listen, if you really want to make a difference, it's cement, figure out a way to invest in green cement companies? Is that part of the strategy?

Kara Mangone
Well, that's the big question is, for us, the way we think about this, the starting point is, where are we best positioned as an institution to address global climate goals? We don't produce batteries, like we don't produce- so where are we really best positioned?

Bret Kugelmass
But you kind of do if you invest in a company that produces betters.

Kara Mangone
Exactly. Which we have. We've invested in Northvolt, which is a Swedish producer of lithium ion batteries.

Bret Kugelmass
What kind of investment is that? And what bucket of your capital does it come from?

Kara Mangone
It's within asset management, so equity investments within asset management. And that's a really cool one, because it was about a $1.6 billion investment that we made. We've worked with the company for many years. Part of that collaboration- it's something we haven't gotten to talk to a lot, but I think it's so big in this space, which is actually partnership and collaboration, the ability within the private sector to bring multiple parties together. Not only was that an investment - it's an incredible company - but not only was it that, that investment, but there was also a lot of work done with partners, including Volkswagen and BMW to actually figure out how the can structure order commitments to be able to then scale so that, if you actually know-

Bret Kugelmass
Sorry, just to break down for our audience. When you get those commitments, those commitments then are something that a financial institution can use to mitigate their risk when they put capital into a project. Right?

Kara Mangone
That's a great point. That's a great point. You know that you have a guaranteed buyer. In this case it was Volkswagen, actually, that set up the JV. They're building a Northvolt factory specifically for VW cars.

Bret Kugelmass
Let's come back to these sectors that make- actually, I don't know if you read- did you read Bill Gates, his latest book? He's a big innovation guy when it comes to climate. One of the things that I've been intensely focused on is trying to figure out where the greatest points of leverage are. And to me, it seems that - say I'm like a techno optimist - we've got all of these emerging technologies that- I don't care what any of these companies do in terms of commitments, if any of these new battery technologies or materials, technologies, if any of these come to fruition and hit the goals that they promised, it's going to dwarf all other efforts in comparison, in terms of our goals towards sustainability. The way I think about it is, if you can help finance that first new chemistry for like electric battery, or something. That's better than financing a factory that just produces the existing chemistry of lithium ion batteries. Do you see what I'm saying, how you can have a greater leverage point if you inch closer towards the role of venture capitalists, than of bank? And I'm wondering if you guys have an internal analysis or view on that.

Kara Mangone
It's a great point. I think the reality is, though, that there's just so much capital that's ultimately required, there's so much progress that still needs to be made in the space. And there's some great research that … has done around carbonomics, which is sort of one of our research products that specifically looks at the economics, if you will, of the transition. And a lot of that research is very much on this concept of how can the cost curves ultimately come down across these technologies, which are going to be, to your point, that's going to be the crucial piece. Because, out of the 100 to 150 trillion of capital that we talked about that's required to meet the goals of the Paris Agreement, there is a substantial subset of that investment need which is not really a market rate of return today. That either requires public private collaboration or it requires concessionary rates of return. Look, some of this-

Bret Kugelmass
Or creating a fund where it's not concessionary, but it's a higher risk, higher return.

Kara Mangone
Exactly.

Bret Kugelmass
Do you guys talk about that at all? Do you talk about partnering up with your other big institutions and saying, Hey, we're just going to create a billion dollar venture capital fund for climate technologies?

Kara Mangone
Yeah, I mean, look, there's a lot that we do in this space at different points in the lifecycle, one of the areas that we have been really focused on is actually how to do this in emerging markets, because about 55% of the investment need is expected to actually need to flow directly into economies in Asia, markets in Asia. That's an area where we're actually, we've announced we're going to work very closely with Bloomberg and the Asian Development Bank to actually figure out how we can potentially pilot some of these innovative approaches to actually scaling investment in the region. That's going to be a huge part of what's required. We won't be the only ones involved, with the idea of then we bring a lot of clients and others to the table. We have a lot of clients across our business who are trying to figure this out and see real opportunity. I think there's a lot of- I think there's a tremendous amount of opportunity here, but also a high level of complexity. To the points you were making, before, one of the things that we just feel so strongly about and all of this question around the role at Goldman Sachs and financial institutions can play in net-zero, the one thing that's so important is that this doesn't just become a carbon counting exercise, which, if you spend time in the space like we do, that is a big question that you get. You have a net-zero commitment. What are your interim goals? How do you get there? What's the pathway? Which sectors? What's the emissions reduction. That is important. But what's arguably the biggest question to be asking is, what is the real economy impact of the work that each and every one of us is doing, and I think, arguably - and we spent a lot of time talking about it today - arguably, given our business strategy, given our footprint globally, and given our client base, where we actually can have the largest real economy impact is working with these clients across these different sectors and figuring out the right ways to get capital to flow, to provide the right advisory expertise, and think about potential innovative ways that we could do this, whether that's a blended facility or whether that is KPI link financing, or some of the other ideas that you're throwing around. We should take them to the firm and make sure we hear Bret's ideas, because you have a lot of really good ones.

Bret Kugelmass
Well, I just think that, I understand why it's not the case, structurally, but I always just- because now in the last 10 years, I've gotten more experience with every type of capital and investment, let's say, graded by risk, all the way from early state. I was on the ARPA-E judging panel awarding government grants. In my former life, I've raised venture capital money for a technology startup. Now, I'm working directly with corporate banks, development banks, EXIM, trying to understand how to finance giant nuclear plants, or just new nuclear plants, they can be small ones, too. I've gotten to see this whole thing. And to me, it just seems that if there were single institutions that could help bridge the gap between these segments who had the vision to see how we can bring something from its research stage all the way through to- I just think there's so much opportunity there and I don't see too many institutions who- I see them dabble. I've even seen private equity companies make venture capital investments, but that's because the managing partner knows the founding team or something like that. But to me, I just wish that there were more institutions that had huge balance sheets to sit on, that were willing to go from zero all the way through to like the world changes, and see it through, see the investment through every step of the way. Or pull the pieces and pull partners in every step of the life.

Kara Mangone
Yeah, no, totally. And look, I think in our asset management business, we talked about Northvolt as one of those. We get involved in very early stages in some of those situations, they're not always public right away. But that's just such a great one, because it actually shows the growth and trajectory, to the point where then you're bringing in other partners. And I think, to your point, that's where you really start to get the scale. That's ultimately what is needed. It's not just an acknowledgement or sort of an investment, it's actually doing it at scale.

Bret Kugelmass
Tell me more. You mentioned something about emerging markets, which also just fascinates me. How did you guys- so you said- was it Asia, Southeast Asia or Asia? Where was it?

Kara Mangone
Yeah. We're looking very closely at South and Southeast Asia. If you think about this sort of capital requirement that I mentioned, 100 to 150 trillion, estimates are that about 55% will need to be directly invested in Asia, but obviously a lot in South and Southeast Asia.

Bret Kugelmass
Well, you jumped my next question which is, how do you decide which emerging market, but it seems that your analysis has shown that's where it's going to happen anyway.

Kara Mangone
It's a tremendously important market.

Bret Kugelmass
Can you just outline like the geographical boundaries? Does that go Vietnam through Indonesia? Where is the-

Kara Mangone
We're not- the work that was done on estimation was Asia overall. For us, we have a global business, we have a global footprint, and so what we're trying to do with Bloomberg and Asian Development Bank, and talking to a lot of our clients about this, as well is, in a lot of the- there's a tremendous amount of capital that is focused on this region. But the projects and the investments are not always at a market rate of return, exactly what we were saying tonight. And then you have other considerations or geopolitical and other considerations as well. I think that's part of the opportunity, if you will.

Bret Kugelmass
And on the on the deal that you're talking about that's manifesting itself, you said it was you guys, Bloomberg, and the Asian Development Bank, is that right?

Kara Mangone
Yeah, we've announced a partnership.

Bret Kugelmass
How does that come together? Why those institutions and in can you maybe tell me the origin story? Does this start over a coffee or at a conference?

Kara Mangone
It's such a good question. This is how, actually, a lot of the work gets done in the space. We had- I guess, a couple of things. We've done a lot with Bloomberg over many years as part of our economic empowerment programs. He was very closely involved in our 10,000 small businesses program.

Bret Kugelmass
Oh, this is- wait, are you talking about Bloomberg a person or the entity?

Kara Mangone
Bloomberg- well, this is where it started was Mike Bloomberg was very involved in that program and so he knows the firm very well and his institution, of course, then knows the firm very well. We also, just given our business, a big part of ESG and sustainable finance is knowledge and insights. Bloomberg has an incredible platform around data. Then we also are part of a coalition or initiative that Bloomberg had launched called the Climate Finance Leadership Initiative, which I'm sure you're familiar with, but we were one of the founding banks as part of that. That is very much is a dedicated focus on how you scale, looking at how you scale climate finance in that region. There's a lot of sort of research that was put into that process and now, actually, the next phase of that is operationalizing, so picking countries and then figuring out how you can pilot some of the sort of recommended approaches. Some of that is actually converging of a lot of natural work that we had under hand. Look, the Asian Development Bank, there's no one that understands the investment conditions required, some of the upstream work that needs to happen and understands these conditions better than an institution that works side by side with governments all the time. We are incredibly fortunate to have the Asian Development Bank committed and rolling up their sleeves with us. I'm excited to come back on the podcast and tell you about our first investment that we're able to announce with them. But it's exciting and it's an important, to all the points you're making, it's an important, really important region for all this work.

Bret Kugelmass
What amount of capital are you guys looking to deploy there? What do you think?

Kara Mangone
We're still exploring, because I think a lot of it will depend on the project and it'll depend on- this is not something, this is the starting point, but the idea is - we get questions all the time and a lot of interest from our clients - how they can actually. So the idea would be to pool capital together to really scale investment.

Bret Kugelmass
Great, great. I want to just come back to you as an individual for a second, just to kind of hear- we started off with how you got into the organization. That was your first job, was at your first job out of school?

Kara Mangone
My first job.

Bret Kugelmass
And it's the only company?

Kara Mangone
That's the only place I've been.

Bret Kugelmass
Okay, so you're a lifer for Goldman, okay. Just kind of tell me about how you've personally risen to this position and maybe - I know it's hard to brag about yourself, so I'm just gonna force you to do it, you're gonna have to grit your teeth and do it - just tell me which characteristics it is about you that you think has allowed for continued success.

Kara Mangone
Alright, cool. It is hard for me to talk about myself, so I am gritting my teeth. I talked about- we talked about the beginning how I came into the firm. I then spent about 10 years in Investor Relations. For me, that was really formative, because I talked about how stakeholder engagement is so much my frame on ESG and sustainability, and it really is how I ground a lot of my perspective on this work. And that's, I think, because I spent the first phase of my career advising corporates in the context within which their stakeholders are extremely important, the investor community, and then spending time with our own institutional investors, really listening and learning. That is a huge component of how progress has been made in this space over the course of many years. I know it's accelerated very recently and investment flows into ESG funds is up like 10 times relative to a few years ago. But there's a lot that has happened which is really an sort of an exchange of information and corporate's understanding - I'm now speaking with a Goldman Sachs corporate hat, not an advisor - the corporate's understanding as an institution, how does the NGO community think about transition and adequate pathways? And how do institutional investors think about which ESG metrics for financial institutions aren't material or not material. Those are all- that's a really important sort of component, I would say, of what-

Bret Kugelmass
And is there a specific forum that you do this active listening in? Is it on primarily on phone calls? Do you meet people in person? I know it's hard to meet people in person.

Kara Mangone
In this space, it's engagement. It's this dedicated engagement programs that we built within Investor Relations. Now, I still- there's an incredible team of folks who now does this with me within Investor Relations where I used to sit. I work closely with them, I have the opportunity to do some of this. If someone wants to go really deep on our approach to something, I'll have the opportunity to partake in those. But it's really broad, right? I mean, it's the investor community, it's the NGO community. We spend a lot of time with our people who, it won't surprise you, a couple days goes by when I don't get an email from someone saying, how can I get involved? Or what can we- so we have these operational impact goals, what can I do? Have you heard of this organization? I want to work in sustainable finance and I say, Well, lucky for you, sustainable finance is all over your business, so you can stay right where you are. I think that was really an important part and education for me over the course of many years, and then taking on our sustainability reporting was sort of the complimentary piece of that, because a lot of the learnings and insights that we would gain, we would then think about in the context of how we would either evolve our policies or business practices or our reporting. Those were all really important, and what that also did was to be able to effectively communicate, because it's in part listening, but we're also communicating to the market and to our shareholders, our approach and our strategy. I had to then become deeper and deeper into the firm's strategy and sustainability and that was a really natural sort of transition for me, once we announced the $750 billion commitment, to come over and really lead the strategy component of this formally. In terms of the sort of skill sets or kind of pieces that I think have helped me, I definitely think the mix that I had sort of mentioned the beginning, being really fascinated by this, definitely fortunate because I had the opportunity to take on the reporting. I will tell you, when I was first asked to do it, I sort of said, Really, reporting? Are you sure? Is that really something that you want someone with kind of a finance focus spending time with investors? But actually, it couldn't have been a cooler opportunity for me, and it put me right into the forefront of working with incredible teams around the globe, who are working on our operational program, carbon neutrality program, or are working on our approach to climate risk. It got me deeply connected with all of those folks who are doing amazing work. And then I think it also was just this commitment to staying up bit on the edge of my comfort zone and staying hungry and being really humble about what I knew and I didn't know. Here in this seat, you can't do this without an incredible, amazing team.

Bret Kugelmass
Talk about some of your colleagues a little bit. Do you have any mentors or sponsors who kind of helped pull you up from early career?

Kara Mangone
Yeah, I've had incredible sponsors at the firm. I mean, this place - obviously, I'm biased, because this is the only place that I've worked - but I think the sponsorship and mentoring is just incredible. I like to think that some of it was- a lot of is probably me putting my head down and showing up and improving myself, but I think, when you do that, you have an incredible ecosystem of people who are either throwing you opportunities. The sustainability report, I actually was given when I got back from my first maternity leave - I have three kids under six - and so that also has been resilient, there's been a heavy resilience component to all of this. Going through all of that transition has been awesome, but also hard. I love my kiddies and having work that keeps me really engaged, and it's hard, and it's collaborative, and gives me the opportunity to work with lots of people, is what has kept me coming back, because it's not an easy thing to do. I think I've had those, the mentors, which have been hugely helpful, but I've also had an incredible team of peers, both within Investor Relations, you know, in here within the sustainable finance group. A big part of our focus on climate strategy and our climate strategy portfolio is how we think about risk. I work very closely with colleagues within our risk division who focus on climate risk. We have an incredible expert on our team, Tim Whitehead, who leads our environmental risk management globally, and just an awesome squad of folks around me who work on some of the partnership work. It's really been, I think that ecosystem, to be honest, that's helped so much. This is a big task at hand. It's exciting, but you can't, you cannot do this alone. You need to be in a place that's collaborative to really have impact. And I think that's a big part of what has helped me and why I've stayed as well.

Bret Kugelmass
Strategy. How often does it get revisited, revised? And in what setting is it? Is there like a quarterly meeting or annual retreat? Where is it that you meet with your boss and a few other people to really say, Okay, all ideas are on the table. If we want to switch something, now's the time to bring it up. What format does that take place in?

Kara Mangone
Oh, my gosh, it's such a good question. It's super iterative. It's not a one point in time, it's not a one meeting. Look, I will tell you, we spend a lot of time with our management team on climate and sustainable finance. We spend a lot of time with our board on these issues. I think you do- it is important to have that top of the house focus and interest in oversight and asking hard questions. There are those natural forums where a lot of stuff will ultimately get discussed and then approved, but I would say, so much of our philosophy and strategy on this is not sitting still. It is meeting- and part of the heavy focus for us on stakeholder engagement is because that is actually your opportunity to continue to learn. If I have a conversation six months ago with someone, they're gonna have a different perspective. There's information that's more readily available six months later and markets are evolving quickly in this space. I think all of those, those are all the really important pieces. The way that we- I would say the way that it's really done is we have our policies, we have our practices, but then we have all these different opportunities to meet and engage, and then that's how we inform it. And then we have a couple of really public vehicles where we can then communicate to the market. We have an annual sustainability report. We have a climate focused report called our TCFD report - another acronym I'll throw out just to add one more, I think we've hit like 10 acronyms now at this point, Bret - but there's kind of no shortage of ways that you can communicate this publicly, but I think sometimes it gives the impression that you only do that two times a year, when actually, it's a much more dynamic feedback loop, if you will.

Bret Kugelmass
Got it. Okay, I've pretty much exhausted your time, but I do want to leave you with the final note. Anything that you'd love to share with your audience that we didn't cover so far?

Kara Mangone
This was great. It was awesome. I mean, I think the last thing I would really say is - I mentioned I have three little kids under six - and one of the big impressions that we didn't cover, but I think it's something I think about a lot. I don't have an answer, by the way, I'm raising this because I know you're gonna have an answer. I think the climate challenge can be a little bit inaccessible to the individual, especially at kind of younger ages. And I just think about some of the things that we- you read and I read our articles on my way in and it's like, emissions and two degrees, and all these things. I think there's an opportunity, there's so much good work that is happening, but I actually think there's this other complimentary opportunity, which is how do you really make this accessible to the individual? It's not lost on me that I'm doing this at a financial institution, working with a lot of people in the markets, and that's not always really translatable. We're talking about some pretty sophisticated topics, you're really deep on this, but what are the ways that we can translate a lot of this work and a lot of this conversation to really tangible, bite-sized pieces, particularly for, as a mom with young kids, I'm really focused in that piece. I don't know, maybe it's a podcast for the young ones. I don't know. But I'll leave that with you, and thank you. I mean, this has been a great opportunity and really appreciate all your insights and ideas as well. I have some good things to take back to the folks at Goldman Sachs.

Bret Kugelmass
Awesome. Kara Mangone, everyone.