Shari Friedman | Managing Director of Climate & Sustainability at Eurasia Group

Are you looking to become a leader in clean energy and an expert in cleantech? Do you hope to get noticed in the crowd as you pursue a career in this fastly growing industry? You are in the right place. Join Karan Takkar as he invites clean energy leaders to share industry developments highlight cleantech investment opportunities and shed light on how you can increase their chances of employment in this high-growth sector. We will also discuss the energy transition across key emerging markets like India and explore partnership opportunities for the US private and public sector. After all, this is the Zenergy podcast.

In this conversation, we will be speaking with Shari Friedman, who leads the Eurasia Groups' climate and sustainability coverage. Shari has been involved with climate and sustainability issues for over 25 years; she worked for the US government during the Kyoto negotiations and moved on to roles in venture capital, consulting, and banking. Immediately prior to joining the Eurasia Group, Shari worked at the IFC, where she bought climate strategy and also launched the Climate Biz Podcast which is served as a huge inspiration for this Zenergy podcast series. It was a real privilege and honor to interview Miss Shari Friedman ,and I hope you enjoy our conversation.

Thank you so much, Miss Friedman, for taking the time, I've been really excited to speak with you and as I was mentioning before we turned on the recorder, I'm a huge fan of the climate biz podcasts.

Oh! thank you,

01:03 Karan Takhar: 
Which actually served as an inspiration for me to start interviewing leaders like yourself in the energy space and look forward to learning about the story that led to that creation, but before getting there, I think it would be best to start at the beginning can you briefly talk about what sparked your interest in the climate field?

Sure, and thank you. I'm so glad to be talking to a listener; that's really great. When I started in climate It was back in the mid-1990s and nobody thought, hey, I'm going to go in a career at climate change, in fact, most people didn't know what it was most people when I said I work in climate change, they were like, oh yeah, the hole in the ozone, you know, I know about that nobody knew what it was and frankly, this side science was not as clear as it is now to climate scientists that were tracking it. I think many of them felt like it was very clear, but how it was communicated out there was still a lot of doubt, but to me, it felt like anything that you would do to mitigate greenhouse gases are things that environmentally and frankly economically, should have been done anyway.

So if you wanted to put it under the umbrella of climate, great If you wanted to put it under the umbrella of energy security, great but it was more working on, yeah, waste reduction and working on renewable energy and what's funny is when I first left grad school and I talked to one of my economics professors about, you know, career paths and I said, you know, I'm really thinking about renewable energy and she said, Oh yeah, there's no there's no future there. It's never going to price into the market in the same way that the fossil fuels do so you know, nice. Interesting idea, but mad don't worry about it which for very long time that I was in there it wasn't priced. It was suddenly at one moment it shifted and in a few years the prices came down enormously and suddenly this is the career trajectories of people thinking I'm going to go into renewable energy, It's a whole different market, you know suddenly it's not a bunch of hippies in a barn in Vermont, you know, now it's people sitting at a board table.

Much different around what year was that shift?

I think it's around 2012. I'd have to go back and check it, but that's about when solar and wind prices started to dive down and every estimate that anybody has made on them, it just keeps getting blown out of the water the prices just kept going further and further down and when I worked at the International Finance Corporation, the price projections that we used to look at were always Always overestimated and they always had to be adjusted the next year It's just been a really interesting story, and it's an interesting lesson in watching how a technology evolves. People roll their eyes at a technology for a very long time until suddenly, It takes off and so I think you have to not so much look at at the past as look at the potential of the future and there's different markers on different technologies that give you an indication of will they eventually take off a little a kind of stay dormant and those people who can definitely predict or make a lot of money so it's not as though it's, it's so clear cut.

Very interesting! I saw that you started working at the EPA as a climate policy analyst in 1995,

05:21 Shari Friedman: 
yes.

05:22 Karan Takhar: 
Can you talk a little bit about how this opportunity came about and whether you have any advice to current students who were attempting to land their first work opportunity in the climate space?

Well, I started I was still in grad school I was at Georgetown in grad school, and I was just pounding the pavement looking for a job that would both pay me and also be interesting and in the field that I was looking for and I got, I have, I got a fellowship work at EPA inside of their climate group, and like I said, climate change wasn't really the thing I was after It was more working on renewable energy, working on waste reduction. It was anything where you could use a policy where you could use financial incentives in a policy framework to be able to shift the behaviour that's where I was really looking, so you would do unit pricing and waste, or you would do, you know, carbon taxes in terms of renewable energy or other kinds of financial incentives, so that's that was what I was looking at and I came across this job and talked to them and they said, yeah, we could, we could use somebody the way that we look at it this is through the climate lens and we're in the climate group and so I thought, great and I jumped on that and it was really interesting 'cause I walked into this world that I didn't really even know existed there was people working on this is pre-Kyoto, so there was working on the lead-up to the Kyoto negotiations, so I got to when I was an intern I got to kind of get an idea of this and then they hired me full time and at that point, I started in a very granular part of understanding how to calculate greenhouse gas emissions I was working with States and localities on creating their greenhouse gas inventories and I would just say I know you had said earlier you're really interested in career trajectories I think starting off in the details really helps you, it helps you understand, as you start to develop policies, the details matter understanding where greenhouse gases coming from and how you account for them, and how you might create a policy that goes this way that way is a really good skill and from there I went on to being on the team that tried to feed the economics team and trying to figure out where we could place the target for Kyoto and then from there I joined the Kyoto negotiating team and that was super exciting.

You mentioned that the internship ultimately translated into a full-time opportunity. Were there any specific reasons for why you believe they hired you full-time?

It's a little bit of everything, but now being on the other side If it what I can say is when you see a resource who works really hard and who's really interested and who basically is a positive force in your organization that you want to hire them and we've had that I've had this experience now as the hiring manager where you get somebody in and you could like, look, I don't know if you can hire them and then they behave in a way that you're like, I want that person and so it was a little bit of everything sometimes opportunities are there and you're in the right place at the right time, and sometimes you've proven yourself and somebody creates an opportunity for you, so it could go either way but I think that you know when you when you take an internship or you take a fellowship, that's basically a job intereview even if you're not getting that job, you're talking to people who will help place you in other jobs, even if it doesn't meet and sometimes you can't find this bad for I've lost many people who I was like I really want to hire that person and I just could and then I take that person and I call my friends and I'm like, this is a resource that should not go to waste, hire this person so no matter what when you get a fellowship, that's a job interview it is a long-term job interview.

That's amazing. Are there any specific traits that you particularly look out for, and you mentioned it being a positive influence on the team, I mean good energy also maybe technically focused? Are there any other art-specific things that you looked out for just given that I'm going to be sharing this interview with a lot of other graduate students who might be entering the fields and feel like it could be helpful to hear your perspective, given that, you know, you're the one who's actually hiring students?

From the perspective of somebody who's hiring, you want somebody who is going to make your life easier. That's the bottom line; for me, where I am right now, our goal is to provide our clients with value, with an understanding of the market, so I hire people who can help me do that, who I will trust to give me information when I say I need this piece of research, who will be able to do that and I can say I believe that they've probably asked the right questions, done the due diligence research, and provided me with an answer and have been able to explain why that answer is, so you have to. It's really just thinking about what is needed and being able to provide that, and I can't overstate enough how important it is also to be amenable to doing whatever is needed. You know, I try to make everybody's life as interesting as possible, everybody work as interesting. as it can be, but sometimes there's just stuff that's not interesting, and you have to hand that off to somebody and if somebody does a bad job at it, 'cause it's not interesting, or they just have a bad attitude about taking it, it makes a really big difference. It makes a huge difference, so the people that I have valued the most will pitch in where you need to pitch in all of us do or in the group that I work in and also all reliable and take a look at every piece that I need I have good judgment, so I can trust them

Thank you so much for expanding on that. Now, getting back to your work at the EPA, I read that you and you briefly mentioned that you remember the US negotiating team to the Kyoto Protocol. Could you talk about what that negotiation process is like, as in how it's structured, and are there any specific negotiation tactics?

So it's structured fairly similar to the way that it is right now, and what do you end up having is the country's kind of band together in these blocks, and the United States was in something called the umbrella group, and this is before the EU was the EU. The EU was a kind of structure in the EU, but they didn't call it that, but that was now a negotiating block, and then the United States was structured in the umbrella group with Canada and Japan. I'm going to totally forget half the group now, and Australia, New Zealand, those are the ones I can remember off the top of my head and you basically, so when you negotiate you kind of get together, you form your opinion negotiation has many layers, so sometimes you're negotiating your internal block, and then you go, and you negotiate again with a bigger block now there's an informal divide between industrialized and developing countries, and in all different machinations then in within the Kyoto Protocol, it was an official divide there was an Annex one countries and non-annex one country, and the Annex one countries were industrialized countries that had binding climate and emerging markets did not have binding targets, so there were those so when you were negotiating, you'd negotiate inside of your block, and then you go she ate inside of annex one, and then you do a bunch of bilaterals with emerging market countries. So it was a lot of different touchpoints, getting trying to figure out how you're going to get physicians to move forward, and I think it's the same now. It's just different groups, different configurations.

Got it. Just curious as to how your team would approach difficult negotiation.

That's such a great question; just to be super clear, the way that the negotiations also work within the United States is that State Department takes what we used to call the first chair, right? So State Department is the head of the negotiations between the countries and then the EPA deal we; when I was there, AG was a lesser player, but I don't think they are now. I think they're a bigger player in these conversations now would be part of the internal conversations and part of the conversations with other countries in part of the negotiating team, but State Department handles the part that you're talking about, like this negotiation, so you sit with them while they're doing this, but it really states department that's like making that kind of back and forth negotiation. It's fascinating, but one of the things I think that is important in the negotiations is to just always understand where everybody else's perspective is. so I specifically worked on developing the rules for the Clean Development Mechanism, which was emissions trading between industrialized, capped countries, countries with an emissions cap, and developing countries, which were countries that did not have a CAP, so you had to figure out how we're going to create integrity inside of a system.

It's very similar to the idea of trading now between regulated trading systems like the EU, China, and some of the other regulated training systems in these voluntary offsets; it's the same conversation, how do you create integrity while you're still kind of developing a big market and making sure that you're getting the emissions reductions in the most efficient way that you can so in terms of the way that we would then negotiate when we were talking to emerging markets you had to know what their priority was, what did they care about? You don't want to start talking to them about emissions reductions in energy systems if they were really looking at emissions reductions inside of their forestry system. I always found that everybody knows when you're not telling the truth, so you might as well Just tell everybody the truth like, you're not going to convince somebody if you have an unstable argument, so you just find the people who drive with the same thing that you want to say, and that's where you go, but it's not really it feels like an uphill battle If you're really going to try to convince somebody to do something that's so clearly against their interest, that's just it doesn't feel like there's much of a point there.

That makes so much sense. As someone who was directly inspired by the climate biz podcast and can honestly say that had you not launched the client biz podcast, I don't know whether I would have had the opportunity to interview so many smart people like yourself and would love to just learn about what why do you to start the Climate based podcast?

This story behind it was this is pre-pandemic so for IFC, one of our goals was to help companies understand the opportunities that are out there to decarbonize because it's both good for the world, but it was also good for business because the more opportunities that are out there the more companies see those opportunities, the more that the easier it is to place investments in climate-smart opportunities as investors, you're very cognizant at the fact that you are not doing anything you're only financing other people to do something, so if other people are not seeing the opportunities, investing in low carbon and whatever in low carbon buildings and low carbon energy and low carbon agriculture, you have nothing to invest in, so we spend a lot of time running around the world, talking to people, going to conferences and he thought you was just after we opened this podcast studio in our building and they were just doing internal podcasts and I thought why don't we do an external podcast? We spend so much time in so much carbon running all over the world so I came up with the idea actually when I was coming back from a family vacation and I was just sitting on the plane, looking out the window when I was Like, why don't we do a podcast and so I whipped out my computer and I wrote the proposal and I got home and I talked to my colleague, Marcie Mitchell and she was like I love that idea let's do it and so then we had to, you know, in any big bureaucracy then of course you've got to negotiate your big bureaucracy to get something done that they've never done before they never did an external regular podcast and so we were the first one there, and now they've got a few and it's great, and now podcasting is much more common place so the space is crowded and I welcome everybody into this space because the more people are listening to this, the more people are hearing what the opportunities are and I think you, Karan have a very specific role also because you're going to be appealing to your peers.

Yeah, my age group or younger.

Right and so like what's your when you're thinking about like your goal for your podcast, what are you thinking that is?

This is definitely a long-term thing that I would like to focus on because I feel like podcasting is just a complete value add all around, you get to learn from some of the smartest people, and you get to share those learnings you get the dual where you're not just learning for yourself, but you're also able to share those earnings and additionally in terms of goals because I think I want to do this over the long term a gold mine is to help develop young people and showcase different work opportunities for them in the climate space and also showcase the career paths of current climate leaders so that young people can kind of understands the different trajectories.

And you know, what I find so interesting also just about the whole corporate movement towards sustainability, is that your generation and talent inside of your generation is one of the major drivers for a lot of companies wanting to be more sustainable and your generation is much more discerning, I think, than mine was, and understanding what that means and what they want on it cause companies are saying everyone we talked to companies on our podcasts, they're saying we can't attract young talent unless we are being perceived by that generation, by the younger generation as being sustainable and so that's part of, I would say investment and talent attraction are the two big things so to me or your podcast is really interesting also because you're speaking to that next generation of talent who's coming in either into a pureplay environmental roll or into even if you're working for Amazon, not on ESG, interested in making sure that that company is following ESG practices as you think that they should.

That's a really interesting way to look at it; I mean, for me personally, I want to work in an area that has impact potential where you can do meaningful work and also as a business opportunity, as in it's a growing space and there's an opportunity on the business front as well, and I feel like the climate space hits both of those pretty perfectly, where the work is really meaningful and important, and it's also growing.

Yeah, I think that that's right and I know you wanted to also talk a little bit about ESG investing and where it's growing and there's so much consternation, I guess, is the first word that comes to my mind around ESG investing, with people saying that it's it's greenwashing and then people saying that it's it's really important and that in other people saying no, it's not, it doesn't really make a difference and I think that as you divide, first of all you've got to divide ESG investing into the impact investing where people, companies are trying to make an impact and then there's the other part where they're just trying to reduce their risk and noting that environmental, social and governance are risks that they need to incorporate in a much more substantial way than they ever have before, and they need to be much more transparent about this and I'm getting to what you were just saying through a little bit of a roundabout way, because I think one of the ways that this area is growing is because as companies need to be much more transparent about how they are handling all of these risks, there's new opportunities that are popping up both in understanding how to track them, in understanding how to evaluate them in also being part of the solutions that you might imagine are going to follow from companies needing to disclose their climate risk, once you start to show something you're like, wow actually that was a risk we need to shift and then you can be part of that shift so, your generation is going to have a lot more opportunities, I think, to come up in this I do think that the space is expanding.

On that point, do you believe that ESG investing is here to stay over the long term? and Part B to that question is given that there is an expectation of a potential economic downturn and interest rates are increasing. How do you believe that will impact ESG investments?

A couple of things those are two very gooey questions, and they're great questions. I do think ESG is here to stay I think in both forms I think in the impact form you're just seeing a lot more money as you're starting to see you know these billionaires place huge swaths of cash into ESG this is the value based investing where they say we believe this is what should happen that's kind of the value based ESG and then there's also going to be a continued development in the ESG that's coming from evaluating climate risk and biodiversity risk and social risk and I think that people are seeing the impacts even you know on the social risk I think goes a little foggy are but what just happened you know, with the solar panels coming in, I don't know if you followed this, but there was a commerce investigation that stopped the solar panels coming in based upon social issues and then you have you flip out that is also semiconductors coming in on social issues and it's not only you flip it is not only semiconductors, it's just largely semiconductors is one of the areas that's largely affected so if you're seeing the financial impact and I think as we see this there's no returning Investors are going to be asking the questions and companies are going to need to be disclosing the answers and then on your other question about the economic downturn, I think in terms of like the ESG on the Impact Fund, I think that's a question that our macro economists look at a lot like water interest rate adjustments, how does that affect different asset classes and I feel like some of my colleagues are probably better placed to answer that question but one of the ways I think is interesting to also think about this is that on the risk assessment side is that as you assess risk trajectories, as you say, is investing, for example, in a fossil fuel investment in this country going to be risky economic constrictions are affecting those, as you look at the different trajectories the energy transition trajectories in different countries so for example in China, we know that their economic downturn, they have an energy transition pathway and they will continue to transition, but the pace of it maybe affected by their economic downturn, they've been very clear that but as they have economic issues, they are going to be focusing on resolving those first and particularly as part of their near-term transition was from coal to LNG and LNG prices are exorbitant right now, you might expect and we do expect that to be slowed down so. Then an investment inside of China, inside of a net carbon project, will have a different risk profile based upon the economic economics of China. Does that make sense?

That makes a lot of sense Thank you so much, Miss Friedman, for your time; I really appreciate it. Thank you.

Oh, it's been great to talk to you, and I hope we keep up the conversation. Thanks a lot for having me.

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