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Lindsey Hall: I am Lindsey Hall.

Esther Whieldon: And I am Esther Whieldon.

Lindsey Hall: Welcome to All Things Sustainable. A podcast from S&P Global. As your hosts we will dive in to all the sustainability topics that reshaping the business world.

Esther Whieldon: Join us every Friday for in depth analysis and interviews from leaders from around the globe. Together we’ll break down big sustainability headlines and cut through the jargons. On this podcast, we talked a lot about the energy transition. And specifically asking, what needs to happen to facilitate the transition to a low carbon economy? Part of the answer is financing. It takes money that fund the project that will transform energy systems.

Lindsey Hall: Another big part of the answer is infrastructure. As you will hear from today’s guest. Making decarbonization a reality requires significant infrastructure investment. Everything from building wind, solar and nuclear facilities to electricity grids to charging stations for electric vehicles. Last week, S&P Global Sustainable1 hosted its annual Spring Summit in London, and I sat down on the sidelines of the event with our keynote speaker, Sir Danny Alexander.

Danny is the Chief Executive of HSBC's Infrastructure Finance and Sustainability Unit, which launched in 2024 to focus on the transition to a low-carbon economy. London-based HSBC is one of the world's largest banks with more than USD 3 trillion of assets and offices in 58 countries and territories. Before joining HSBC, Danny was a Vice President at AIIB or the Asian Infrastructure Investment Bank.

That's a Beijing-headquartered multilateral development bank dedicated to financing infrastructure for tomorrow with sustainability at its core. As you'll hear Danny mention, before that, he was a politician who held various roles in the U.K. government.

So given this breadth of experience, I was eager to ask him, at a time when so much of our world has become highly politicized, is infrastructure one of those rare topics that can bridge bipartisan divides. I started off our conversation by asking Danny where he sees the most opportunity in financing energy infrastructure.

Danny Alexander: So we see the commercial opportunities that come from net zero transition, and the infrastructure that's needed to deliver that, but also that's coming from digital transformation, from data centers, from the energies required to drive data centers as key trends. And I think by setting up HSBC Infrastructure Finance, we are going to substantially increase our business in that space and particularly in our kind of core markets in Asia, in the Middle East, where we see big opportunities in Europe, here in the U.K. and also in North America. So as a global bank, which is present and strong across all these corridors, I think it's the right time for us to be seeking to scale up that business.

Lindsey Hall: I ask Danny to explain more the links between decarbonization efforts and infrastructure.

Danny Alexander: Most of what's needed to make that decarbonization a reality is infrastructure of one kind or another. So energy infrastructure, how do you generate the power that is keeping the lights on that is core to all aspects of our lives. Is that from fossil fuels like coal? Or is it from renewable power from the wind, from the sun and so forth.

That's a kind of core choice about the kind of infrastructure you build, which is critical to decarbonization. Likewise, transport infrastructure. We hear a lot of talk about electric vehicles as opposed to petrol-driven vehicles, but the infrastructure needs to support them in terms of charging, for example. That's a critical infrastructure investment without which you can't make that transition.

And you can look across many different sectors of infrastructure and see similar choices. But before moving to HSBC, I worked with a multilateral development bank, AIIB in Asia. And a lot of the investments we were making in the developing world was public transportation. Many Asian cities do not have subways or strong bus systems, for example. So that's a critical part of the infrastructure that's needed to help people live their daily lives and to do so in a way that is more in keeping with the net zero transition.

Lindsey Hall: So with that critical role of infrastructure financing in decarbonization, tell me what sectors do you see as the most promising for investment in the near future?

Danny Alexander: Our focus is in a number of different areas. One is energy transition. So it's low carbon energy. It's the electricity grids and transmission systems that are needed to get that power to the right places in the right way. It's battery storage and electric vehicles. It's other energy technologies like nuclear, for example, data centers that are the driving force behind the AI revolution and the power that they need.

And that's another critical aspect. We also see opportunities in some other kinds of infrastructure like transport infrastructure, for example, which we also very much can support. So we see opportunities in all of those areas. It varies by region, by country and so forth, but opportunities in all those areas.

Lindsey Hall: You made some remarks when you were on stage just a little bit ago, giving the keynote address. And you discussed the challenges that first-of-a-kind technologies present and how HSBC is working with climate tech companies. Can you share some of that thinking with our listeners who weren't in the room for that?

Danny Alexander: There's a lot of new technology being developed. People with good ideas, small companies can access venture capital fund to develop those ideas. But then going from a good idea that's demonstrated at a small scale or in a lab or whatever to deploying that at the scale of infrastructure. is a big leap. It's a big leap in terms of the scale of finance that's needed, but also the skills and expertise that companies need.

And some people call it kind of valley of death, where you've got companies seeking to go from that start-up phase to really deployment at an infrastructure scale where they're seeking project finance, there's a big gap.

And so for us, we have a climate tech business, and we have an innovation bank, and that's designed to identify those companies to get to know them, to work with them and to see how we can support them, those that have the most potential, how we can support them through that journey.

I think it's a core part of how we understand the trends and get to know the companies that are going to be powering the next phase of these changes. So I think also being in a position to understand and to finance these first-of-a-kind projects is going to be very important to then helping them scale around the world.

Lindsey Hall: And of course, we can't talk about technology without talking about AI, which poses tremendous investment opportunities in clean tech. What opportunities do you see in the space?

Danny Alexander: So fundamentally, there are plans for hundreds of billions of dollars of investment in data centers. How do the companies who are driving those investments decide where to put their data centers? One of the major factors is where is the power to drive them? Or how quickly can you stand up the power that's necessary to drive them?

In most parts of the world today, renewable energy, solar, wind, with storage is highly competitive, often the cheapest or the quickest to stand up. But also, you're seeing across the world, including in the developed world in North America and elsewhere, for the first time for many years, the demand for electricity increasing and forecast to increase substantially off the back of these power-hungry data centers.

And so there is going to be big demand across the power system and thinking about the data center trends and the energy trends together makes a lot of sense. It makes a lot of sense for developers, for governments, but also for financiers like us.

Lindsey Hall: Banks like HSBC work with a variety of sectors with a range of different expectations about how to decarbonize and at what pace. And as we've heard a lot on this podcast, there's no one-size-fits-all approach to the energy transition. I asked Danny, how HSBC is engaging with different stakeholders to align sustainability goals.

Danny Alexander: So I think maybe a couple of things I'd say. I mean, firstly, I was a politician earlier in my life. This agenda has to go from being a kind of talking point among politicians to be something that's driven commercially. And first and foremost is the kind of commercial dimension. How do we deliver this? In many places now, renewable energy is the cheapest form of energy is a kind of critical factor here. Different stakeholders have different views.

Our job as a bank is to work with our clients to help them deliver their goals. We have our own goal. We support net zero by 2050, but we want to work with all of our clients to help them achieve their goals. And frankly, to make this work, you've got to work with those companies who have the toughest job, who have the most difficult transitions and not just those that have the easiest ones. And that means being pragmatic about how you work together to support our clients delivering their goals.

Lindsey Hall: I think in that answer, you've picked up on 2 of the key themes I heard throughout today's event. One is this idea of pragmatism and taking a really realistic hard look at your business models. And then the other is this idea of it needs to make economic sense, right? It can't just be a talking point among politicians. So when we talk about infrastructure, this is a long-term investment. What policies or government incentives do you believe would most effectively accelerate investment in low-carbon infrastructure?

Danny Alexander: So that varies very much according to which part of the world you're in. So when I was in the British government, one of the things we did was we designed the it's called contracts for difference. It's the policy system that incentivize these renewable energy in the U.K., especially offshore wind. By having a good quality and stable framework, it led the U.K. to be one of the largest markets for offshore wind in the world.

So that shows that it's not necessarily about money. It's much more about policy, regulation, getting that right. For example, the framework for the relationship between people who generate energy and people who purchase it to be organized in the right way that means that projects can be bankable. In some parts of the developing world, you see that, that's something that still needs quite a lot of work.

And so getting the policy frameworks right, I think, is absolutely critical. I think another aspect was about blended finance, about how you can put kind of public development finance together with commercial resources to broaden the pool of projects that are investable that are bankable.

And I think we're seeing among development banks and development agencies more interest in that space and the wish to really engage with the private sector to support the private sector to make those investments through blended finance. And as we're seeking to build our infrastructure business, those kind of partnerships will be one part of how we do so.

Lindsey Hall: Danny talked about his prior experience in Asia. And I asked him to describe the opportunities he sees in that region and in other parts of the world. Any key geographic trends?

Danny Alexander: I mean the short answer is there are opportunities all over the world because the need for investment is huge. We're talking about some people estimate perhaps up to $6 trillion per year by 2030 of investment that's needed around the world. This is energy infrastructure. There are many other kinds of infrastructure. If you look at all infrastructure, the numbers would be even larger.

And so maybe slightly different kinds of opportunities in emerging markets where you're looking at rapidly growing economies, in some cases, growing populations, where driving up energy consumption is going to be a critical part of how they fuel their growth. And so where there are enormous needs for energy infrastructure, for clean energy generation. We're talking about data centers earlier. You see that as a key trend around the world.

So far dominated by North America, but increasingly seeing more and more developed of data center around the world. Many countries now have data localization laws, for example, which require that infrastructure to be built locally. And obviously, the companies want to be closer to their customers. That's again linked to where you can have cheap, reliable, available electricity to make that work for HSBC.

Obviously, we're very strong all over the world. In Asia, in Greater China, in India, in Southeast Asia. We see opportunities across all those regions. Middle East is playing a critical role in a lot of these developments that we're discussing, whether it's in Saudi Arabia, UAE or other parts of the Middle East. We're here in the U.K. where there's a lot of talk about the plans and needs for additional infrastructure investment. Same is true in Europe. So I think there are different opportunities, but there are opportunities everywhere.

Lindsey Hall: When I hear the word infrastructure, it's somehow less loaded than a lot of other terms have become politically charged than things like climate, for example. Is that accurate based on your own work that you do? Is infrastructure just something that everyone can kind of in a bipartisan way, get behind?

Danny Alexander: We need infrastructure to live our daily lives, to grow our economies, to achieve all kinds of both public and private goals that countries and companies and individuals have. So yes, I don't think you could go to any country in the world that doesn't have a plan or isn't thinking about how to develop its infrastructure from whatever starting point that they have.

And I think it links to the point we were discussing earlier about for all the sustainable investment, the core is the commercial opportunity. And so driving infrastructure investment that is commercially viable, that will lead us to many of the sustainable solutions that we're discussing today.

Lindsey Hall: So today, we heard about the commercial opportunities one of the world's largest banks sees in infrastructure for the net zero transition. Danny said that HSBC is scaling up its business to take advantage of those opportunities, which exist across markets from Asia, the Middle East to Europe, U.K. and North America. We also heard about the role of technology and how HSBC is helping start-ups scale first-of-a-kind technologies to support the infrastructure for the low-carbon transition.

Esther Whieldon: And this is a topic we'll continue to cover on this podcast because energy infrastructure is needed to make decarbonization a reality. And this is true around the world and across the political spectrum. As Danny said, we need infrastructure to live our daily lives, to grow our economies and to achieve the goals that countries, companies and individuals have set.

Lindsey Hall: And tune in next week for more coverage from the annual S&P Global Sustainable1 Summit that took place in London April 30. We'll also include a link in our show notes if you'd like to learn more or register for our upcoming summit in Singapore on June 26. Thanks for tuning this episode of Sustainable. If you like what you heard, please subscribe, share and leave us a review where

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