August 12, 2025 • 32 mins
In this enlightening episode of the Leaders podcast, host Joe Cass engages with industry stalwarts Malin Norberg, Chief Investment Officer at NBIM, and Dan Yergin, Vice Chairman at S&P Global. Together, they explore the evolving landscape of global energy, the implications of geopolitical shifts, and the critical role of innovation in driving sustainable development. Tune in to gain valuable insights on the challenges and opportunities that lie ahead, as well as the leadership strategies that can guide us through an ever-changing world.
Chapters:
0:00 Introduction and Overview
2:31 Current Trends in Global Energy
10:16 Geopolitical Influences on Energy Markets
20:46 Innovation and Sustainability
30:01 Leadership in Times of Change
40:31 Looking to the Future
50:01 Q&A Session
55:01 Closing Remarks
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:07):
Hello and welcome.
My name is Joe Cass, senior Directorat S&P Global Ratings, and a host and
the Creator of the Leaders Podcast.
So on this episode we have at MalinNorberg, Chief Investment Officer
of Market Strategies at Norges BankInvestment Management, or NBIM.
And Daniel Yergin, viceChairman of S&P Global.
Quick reminder that the viewsof the external guests are their
(00:29):
views alone and they do not reprepresent the views of S&P Global.
Okay, Malin and Dan, thank youso much for joining me today.
Thank you.
Thanks for having us,
Malin, let's kick off with you.
At a very high level, could youjust give us an overview of the
purpose of NBIM and what your roleas Chief Investment Officer involves?
(00:54):
Of course.
So NBIM managed Norway's SovereignWealth Funds, which is one of the
world's largest at about $1.8 trillion.
So our purpose is to transform our oilwealth into financial wealth for the
future generations and their visions.
So the fund was establishedback in 1990 after we discovered
(01:16):
massive offshore oil fields.
And the idea was very simple.
save money today so thatNorway can benefit tomorrow.
And what makes us unique is that weinvest exclusively outside of Norway.
We own about 1.5% of all listed companiesglobally, and we also follow a very
disciplined spending rule where onlyabout 3% can be withdrawn annually.
(01:41):
So as for my role as ChiefInvestment Officer of Market
Strategies, what I do is that.
Well, what we do in, in my departmentis that we oversee our market exposure,
so that involves everything from theinflows to the fund allocation into
different regions and asset classes.
It's the portfolio management of ourbroad equity portfolios and the fixed
(02:03):
income government bond portfolios.
So that's about 75% of the identityof the fund, and it also includes
the implementation in the market,so all securities lending, cash
management, as well as all the trading.
Fantastic.
Thanks Malin.
Dan, welcome back to the show.
Listen, Dan, you're a very well knownguy, Pulitzer Prize winner, and I'm
(02:25):
sure many people probably know whoyou are already, but just humor me.
would you be able to let everyoneknow your background, your role
at S&P Global and your realarea of expertise and interest?
Well, I founded a company with oneother person that eventually became
part of, S&P and, I'm vice chairmanand I think my roles in the company,
(02:48):
are thought leadership, interactingwith companies and governments
around the world and working with theresearchers on, on their own research.
But I guess I'm also, you know, asyou, what I'm known for, I think also
are the books that I've written ofwhich "The Prize" received the Pulitzer
Prize and was a number one bestseller.
And then the most recent book called,"The New Map: Energy, Climate, and
(03:11):
the Clash of Nations." And thesebooks have, been published in 20
countries around the world, different,lots of different languages.
And so there's kind of a stronginteraction between what I do at S&P
Global and and the work I do in termsof thought leadership and writing.
My general area of focus is, kindof energy and, and, and geopolitics.
(03:36):
Great.
Thanks Dan.
So Dan, given the rise in renewablesover the past decades, potentially
an upcoming rise in nuclear, what areyour thoughts on the accuracy of net
zero targets set by sovereign nations?
I think that it needs to be a rethink.
I think the energy transition asan recent article we had in foreign
(04:00):
affairs is troubled and that there'sa gap between the, the targets and
actually what's going to happen.
And there are about seven differentreasons, but we've had a couple of years
of experience now after, after COVID.
We've seen that wind and, and solarare growing, you know, very fast.
But, but as we've seen, oil,gas, and coal are also growing.
(04:25):
And so I think one needs to kind of stepaside and rethink how this whole process
is working, and what's realistic.
Malin, can you talk to us about thenet zero targets that you set for your
companies and if you have one for NBIM?
So, first just to clarify, so we haven'tpledged net zero by 2050, but we've set
(04:50):
an expectations for the companies thatwe're invested in to set net zero targets
in alignment with the Paris Agreement.
And we've also not set ambition forissuers to set climate target as I
think that would move us more intopolitical territory, which we is not
our role as a financial investor.
But, Secondly, if I turn yourquestion around the bit, I think the
(05:13):
important thing to ask is what are thechallenges if we don't pursue net zero?
So I think scientists have been prettyclear on this, and that's a dramatic
change to the physical climate and ourown analysis also shows that even in the
current policy scenario, physical climatechange can have a significant effect
on GDP and therefore our investments.
(05:35):
And that's as a long-term investor,of course, that's something
that we care deeply about.
and that's not to say thatthere aren't challenges for
companies in achieving this.
What we are seeing is that while climatechange was probably in the top 3 in
boardrooms a few years ago, now it's morelike top five or top seven, and there's
(05:55):
a lot of other stuff going on, and we getthat there's geopolitical, geopolitics,
inflation, supply chains, but we'restill encouraging companies to stay the
course on their climate commitments.
I mean, in the long run this needsto be sold and companies that
manage these risks well today willbe better positioned for the future.
So that's why we continue ourengagement because climate
(06:17):
risk, it remains financial risk.
And that's regardless of where,where ranks on today's priority list.
Yeah, I mean clearly thetransition is gonna happen.
The question is timing and you know,one of to look at is that 45% of
the emissions in the world come fromcountries that don't have 2050 goals.
So 2050 goals are primarilyin Northwestern Europe.
(06:40):
North American target, not an Indiatarget, which has 2070 as its goal.
And one of the challenges to the energytransition, the reality is the growth
is going to be in developing countries.
to give you one example, electricitydemand for, for two decades hasn't
grown in Europe in the same periodIn Southeast Asia, it's tripled.
(07:01):
And so I think that the issues ofthe developing nations is, needs
to be folded into the, into thethinking to achieve the kind of
goals that Malin is, is pointing to.
So the goals are there, it'sjust a question of timing,
the complexity and the cost.
Hmm.
Yeah, absolutely.
(07:21):
Dan, another big topic, which isvery much closely aligned with
energy now is the rise of ai.
So how do you think the rise of AI.
Has changed the strategicimportance of energy infrastructure
or data centers more broadly?
Well, that's one of the seven bigreasons that, you know, that just
(07:43):
being realistic, the rethink.
Two years ago, AI wasn't on theagenda when it came to energy.
And then in March of 2024, wehad our conference, our CERAWeek
conference in Houston and itwas like it exploded suddenly.
And and the now there's a real focus onhow you're going to have the electricity
(08:06):
supply to, to meet the needs of AI.
And, for instance, it's now about 4%of us electricity goes, for, data
centers that could be 10% in our numbers.
Within five decades.
Other people have higher numbersand suddenly natural gas is back in
the, in the game in a significantway in electric generation in
(08:28):
which it wasn't two years ago.
and these, so, and you, you seethat there's this real competition.
We think of energy securityin terms of oil and gas.
Now it becomes electricity.
So that's been a, a, a big,one of the factors there.
And it's also one of the factorsthat's encouraging, this kind of
(08:48):
rebirth of interest in nuclear power.
And Dan, you mentioned it in yourprevious answer about kind of different
regions and their energy needs.
What region do you believe is, Iguess, underappreciated by markets
on the new energy map and why?
(09:09):
By what regions?
well, I, I think I, I thinkit's basically the developing
world, the emerging markets.
There's 700 million peoplein Ozonia in Southeast Asia.
you see their per capita incomesin countries are much lower.
You, you take an African countrywhere the per capita income is one
(09:30):
20th or one 30th of Northwest Europeand their energy needs, they, they
need energy in order to develop.
And, and I think another issue that'sbecome clear on energy transition
is this north south split betweendeveloped and developing country.
Who, developing countriesclimate is an issue?
(09:50):
Well, the, the Prime Minister ofMalaysia at our Energy Asia conference
last time said, he said, we haveour climate goals, but we have goals
in terms of economic development,reducing poverty, improving health.
And he basically said, we're notgonna be told by other parts of
the world what, what we need to do.
So I think the needs of the developingworld where, you know, 7 billion
(10:12):
people live roughly, is, is reallygonna be the the big question for
big energy question for the future.
Thanks Dan.
Malin, what's your kind of high levelview of the US debt situation, and are
you changing your approach to your ownportfolio allocation to lean towards
(10:33):
other regions outside of North America?
So our task is to be prepared for allsignificant changes that may affect
the global financial markets, and weoperate with a delegated, mandates.
So all our, our different teams in theorganization are experts on different,
(10:56):
parts of the market and includingthe the US government bond market.
So the allocation to these differentregions and asset classes follow
our benchmark, which is set bythe Norwegian Ministry of Finance.
And that is not somethingthat we've changed recently
or are planning to change.
But the increase in governmentin indebtedness, it seems to be a
(11:19):
global phenomenon, and we see it inEurope and other countries as well
as the us and of course, we followedthat development very closely.
And the fact that almost 20% of alltax revenue in the US is being used
to pay for interest rate costs ongovernment bonds, that's very high and
it only seems to be trending higher.
(11:39):
So what we do in the fund is that werun annual stress test just to calculate
the portfolio impact and potentiallosses in different extreme scenarios.
This year, those three scenarioswere in AI correction, debt crisis,
and a fragmented world, referringto them to the, trade situation.
(12:02):
And out of those three, the debtcrisis was the most impactful
scenario, and that had a modeldrop of about 40% in the portfolio.
So it's clearly somethingto be taken very seriously.
Thanks, Malin And Malin, do you haveany thoughts on the competitiveness
of Europe at high level?
(12:25):
So it's something thatwe care a lot about.
So we're, we're a large global investor,but we are a European investor.
We're based in Europe.
And what we, we have seen over thelast, decade is that our share of,
the share that we hold in Europeanequities has gone from 26% of
(12:48):
the portfolio to about 15% in thepast decade, and the number of
companies, European companies in ourportfolio has, fallen by about 25%.
So.
Of course, it's in our interest tohave a big and diversified portfolio.
We own about two and a half percentof every European listed company.
(13:09):
So to have a well functioningand competitive market in Europe
is, really important for us.
And, I think there are some very goodinitiatives going on now, with the
European Savings and Investment Unionto channel, saving and investments into
the capital markets to make the capitalmarket a, an attractive alternative to
(13:33):
just keeping your money in the bank.
And it seems to be a sense of urgency,right now that we at least have some hopes
that this is gonna, this is gonna happen.
Great.
Dan, have you got any views,from maybe the US perspective?
(13:53):
I think two things.
First, I listened very carefully towhat Malin just said, and I think
they're, both of those answerswere actually, very profound in, in
the significance of our comments.
One, of course is the concern aboutthe US debt and, that number she
had Malin, that you had that 20%going to just pay for the debt.
The US is now spending more money ondebt service than it is on defense.
(14:18):
And then, on Europe.
Europe has been kind of single-mindedon where it's focused, but now
it has two new imperatives.
One is taking defense spending to 5%,and the other is the, is this focus
as Malin said, over the last yearor so, on the, on competitiveness.
(14:40):
And there is a real structuralproblem that europe has, it seems,
at least I hear from the privatesector all the time, is two things.
One is kind of what we might callpolitical targeting of what they
wanna achieve and secondly sortof regulation manufacture, that
is somewhat, is not really veryconnected with the marketplace.
(15:03):
And Malin's comment about howtheir share of European companies.
Has gone down, of course probably reflectspartly the tech companies in the US and
the stock market, but it's also Europe'sreal issue about de-industrialization.
And the Draghi report tried to addressthat about making Europe more competitive.
(15:23):
But that's a challenge for the way Europeoperates now and the sort of gap between.
The eu, the commission, and to a lesserdegree, governments from, from the
marketplace and, lack of connectivenessand realism and, a very heavy hand of
regulation, which is what, what, whatmanagers and companies talk about.
(15:49):
All the time, how much time theyhave to spend, how many people,
how many pages of regulations.
And so I think that challengeof competitiveness for Europe,
addressing what mountain's talkingabout is quite a big challenge.
And just, you can't solve theproblem just with rhetoric.
And, and in addition to theheavy regulation, it's also
very fragmented regulation.
(16:10):
It's of course, a single marketplaceconsists of multiple markets that have
different, regulation with the withholdingtaxes to, post trade transactions.
So it's, there are a lot of,different angles to, attack this.
(16:30):
Yeah.
And you just think going, Norway hasalways had a, you know, commitment
to, its, its defense structure, butfor Europe, going from one, one and
a half percent spending on GDP to 5%,that is a significant diversion shift
in, in where resources are going.
And also, you need a, an industrialbase that can respond to that.
(16:57):
Yeah.
Fantastic.
Great comments, Dan.
Unusual question for you now.
What is one truth the energyindustry tells itself today
that could age terribly?
Well, let me answer slightly differently.
What I've noticed in all these, you know,years of the, of observing the energy
(17:21):
industry is that a consensus developsabout where things are going, and that
consensus usually lasts about threeyears, and then something comes along.
It could be economic, it could betechnology like AI, it could be
geopolitical, like the invasion of,Ukraine by Russia, which suddenly
took energy security, which hadn'tbeen on the agenda before for
(17:42):
some years back on the agenda.
It, can be,
you know, a, a crisis.
It could be COVID, but anyone.
And so the challenge for the energyindustry, it's long-term investment.
It's one of the longest term investingindustries, but things change.
And we can look at some of theEuropean companies, how, just in the
(18:06):
last year or so, they've had to shiftthe balance of their investment.
So I think it's, the challenge is howdo you see beyond what the consensus is?
And I think part of the answer iswhat Mallon says that you do use
scenarios to try and create a framework.
So I think it's, I think, I think the, theone truth is that the truth doesn't last.
(18:27):
I remember once talking with thisfellow Armand Hammer, who created the
original, Occidental Petroleum andhe said, I've been in business for 56
years and the one thing I've learnedis that things don't stay the same.
And I think that's a challengefor a long term industry.
That's great.
Fantastic.
Thanks, Dan.
(18:47):
Malin, you oversee one ofthe largest pools of capital.
History.
It's an enormous role.
What's been a moment where you've reallyfelt the weight of that responsibility?
So this is of course, a hugeresponsibility all the time, and we don't
(19:11):
manage money for a few rich individuals.
The money that we managed, itbelongs to the people of Norway.
And, the fund accounts for almost aquarter of the annual government budget.
So that's massive.
And this, well, this was really,really tangible during the
(19:32):
early days of the COVID crisis.
So, Oil prices went to zero.
Just to, yeah, howunpredictable things are.
It even went negative fora short period of time.
And this being the source ofincome for the fund, that's a
dramatic development in itself.
But, on top of that, the governmentneeded money to fund all the COVID
measures and, with the whole world isupside down, suddenly we're sitting
(19:57):
in our bedrooms selling bonds.
I was working in fixedincome trading at a time.
To, to fund the country.
And that was a very special experience.
And, it also shows the enormousimportance of the fund to Norway.
Great.
Thanks Malin.
Dan, I want you to put yourselfin the shoes of a leader of a
(20:21):
sovereign wealth fund in 2025.
What are you really betting on?
Hydrogen, nuclear, LNG orsomething else entirely?
Well, I suspect that a, leader of asovereign wealth fund, perhaps such as the
person sitting here in this interview withus, is not going to make a single bet.
(20:44):
I think that that person isgoing to, diversify because you
don't know and you're gonna see,
You know, what is actuallygonna generate cash for you?
And then where you want to,have a diversified portfolio.
I mean, I would say two years ago,the hopes for hydrogen were very high.
(21:05):
I think they've somewhatreceded over the two years.
Nuclear has sort of moved moreto the fore, but nuclear is
not gonna turn on tomorrow.
So, I think the answer is, you know,and, and I think then it depends.
As the fund, I think, I thinkas I understand, the Norwegian
(21:26):
fund doesn't do venture capitaldoesn't do private investments.
But, if you do have the flexibility tomake a series of bets along those chains,
would be the, the prudent way to do it.
The rebirth of nuclearis very interesting.
The number of reasons for that.
I think, one is the concernabout the electricity security.
(21:50):
I think the other is that thehyperscalers, are, who do have the net
50 goals are looking for, non-carbon,carbon free electricity, and, you can
see the investments that they're makingin, in developing companies, nascent
(22:10):
companies in nuclear and also in theUnited States, the deals that they're,
that they're making with existing nuclearpower plants to take, to take their power.
So just, just to comment on that,so we are mainly an investor in the
public markets, but we also have someinvestments in unlisted real estate and,
(22:33):
infrastructure for renewable energy.
So we got the mandate for renewableinfrastructure in 2020 and, we have
the potential to allocate up to 2% ofthe fund, in this space and 2%, it
may not sound like that much, but we'retalking about approximately $40 billion
in potential investment capacity.
So when we got the mandate and we startedlooking for investments in 2020, it was
(22:57):
very high demand, elevated prices in,in that renewable infrastructure space.
But we've seen it come downsignificantly, over the last few
years, and we've deployed a lot.
More capital in that market.
We're still far from that 2%target, but, as of year end we
had roughly $2.2 billion invested.
And that's primarily in solar and wind.
(23:20):
And, and, and, and of course, I mean it'svery interesting what you said about the,
the cost of, how prices were very high.
But what has been striking is to seethe, how the costs have come down.
Not, not for offshore wind necessarily.
Oh, it's come down, but then inflation.
But for solar, it is interestingtoo that a lot of China's strong
(23:44):
position in renewables, particularlyits domination of solar, is very
interesting and that's another areawhere you see energy transition now,
colliding with, geopolitical rivalry.
Yeah.
Fantastic.
Thank you both, Malin.
Just switching gears, what's onechart or data point that haunts you?
(24:12):
So, I mentioned our, stress testbefore, and, one of the scenarios
that we looked at is an AI correction.
So that would mean a significantcorrection in the technology sector
that's triggered by investments inAI, failing to generate expected
earnings and value creation.
And that may be multiple reasons for that.
(24:33):
Strict regulation, technologicalchallenges, lack of necessary
resources, but such a correctionwould've a particular impact on the
US tech sector, but of course alsospread to other sectors and regions.
So, to answer your question, thechart that haunts me is a market
concentration in these big technames and the weight that these
companies have in the index now.
(24:54):
So that's around 30% of theS&P and of course, also in the
benchmark that we, that we have.
So since we follow our benchmarkfairly closely, that also means
we have an enormous amountinvested in very few names.
So in Apple we have about50 billion US dollars.
(25:15):
Same with Nvidia.
And it, that's prettymind blowing amounts.
So are we talking about akind of deep seek moment, but
on like a, a larger scale?
I think there could be multiplereasons for a, a correction like that.
So the, we, it's, it's named the AIcorrection, but, say we encounter
(25:40):
technological challenges, we haven't, wehaven't forseen it could be a, a deepseek
or just, the AI leadership broadening out.
The winner takes, doesn't takeit all, but takes a bit less.
And, and the whole, AIleadership is gonna broaden out.
It could be multiple, potentialreasons for such a scenario.
(26:06):
Great.
Thanks Malin.
Dan, what's the one energy risk intoday's world that markets are ignoring?
Well first, I think in a way partlyties back to what Malin just said
and, you know, thinking about,
(26:29):
there's no, the markets are notexpecting or, signaling an AI
correction, but we've always seencorrections even happen in other markets.
I suppose it may be underestimating thechallenge for electricity generation.
I, I think people are getting mobilized.
On that now, but I think until veryrecently, and the inability to get
(26:53):
things built, to get things permitted,to get things done, that you can
see what the need is or the goal is,but you can't actually get there.
I think that's a very good point.
Yeah.
Fantastic.
Malin, what's one book that shapedyour thinking about markets?
(27:16):
So, of course there are many greatbooks that it gives different
perspectives on the market.
But, one of the books that I read earlyon was, "Market Wizards" by Jack Schwager.
So that's just a collection of interviewswith some of the most, successful
traders and investors of the 1980s.
And he talks to them about their tradingstrategies, mindset carriers, and.
(27:39):
I think what's fascinating ishow each different person, have
a completely different approach.
So some are technical analysts, somefocus on fundamentals, some holds
position for years, others for daily,and what the book really shows is that
there's no magic formula on how tomake money or how to beat the market.
(28:01):
but you do have some certain, thingsin common like discipline, risk
management, and the ability to learnfrom, from losses and mistakes.
And just to mention a, a morerecent book that made an impression
was, "Quit" by Annie Duke.
So.
As a former poker player, it, thatreally changed my thinking, how to
(28:24):
think about, cutting losses and,I mean, she knows, like in poker,
walking away isn't a failure.
But, knowing when to do that, it'sreally crucial for long-term success,
both in poker and in the markets.
Yeah.
Every, every dollar you keepin a losing trade is a dollar.
You don't put into a better opportunity.
(28:46):
I was gonna ask Malin, when yousaid a former poker player, are you
talking about the author or yourself?
Oh, no.
Annie Duke, I can't, yeah, not
myself.
Okay.
Great.
Actually, Dan, beforewe go to the last one.
Obviously you're the author or a numberof, you know, very well received books.
(29:11):
What books really shapedyour thinking about markets?
What really made an impact on you?
Well, it would, I would be hard put to,to, point to one, but this may be an
odd answer, writing this book called"The Commanding Heights, the Battle
for the World Economy," the, the battlebetween state and market working on
(29:34):
that book changed my thinking a lot.
I learned a lot from writing.
For me, writing a book is like solvingan equation, solving a problem, and I
came out with a much deeper understandingof the power of markets and in a sense,
the morality of markets, which is.
Is not the language or the rhetoric, butwhat they deliver in terms of results.
(29:55):
And I, and so I, I don't mean thatin a funny way, but it was the
learning experience of writing thatbook was really quite profound.
Great.
And Dan, last question.
It goes to you, what's the bestpiece of advice you've been
given and who gave it to you?
Well, let me, let me give two examples.
(30:16):
One, when I was starting off atmy PhD at Trinity College, at
Cambridge University, there was avery eminent economist there who's
visiting named John Kenneth Galbraith.
And I went and told him, I went to justsee him not knowing him and told him
what topic I was gonna write my PhD.
And he said, well, you can do that, butif you wanna be irrelevant for the rest of
your life, you can go ahead and do that.
(30:37):
So I, he suggested a different topicand I did that different topic and six
years later I had a book that was afront page review in the New York Times.
So that was really good advice.
The other piece of advice is when Idid "The Prize," which is a Pulitzer
book, to the CEO and the COO of whatwas then a prominent investment firm
(30:59):
called Paine Weber invited me to NewYork, and at the end of the lunch,
they just wanna talk about the book.
This, the president said,well, what do you wanna do?
I, I, I said, I want to actually,I'd like to do a. BBC-PBS series,
on the book, a television series.
And I, they said, oh, okay.
They said We might be interested in that.
that's interesting.
(31:20):
And so then I went and talked tothis guy who's volunteering to be the
producer of it, and I told him aboutthe conversation and he said, dummy,
go back and ask them for the money.
So I went back and asked them for money,and they said, yeah, that's a good idea.
And I, and I ended up with a PBS seriesthat was watched by tens of millions
of people around the world and taughtthem a lot about the energy industry.
(31:42):
So those were two very practicalpieces of advice, that I had that
sort of turned corners in my life.
That's fantastic.
And anyone who's, who's watchingor listening, definitely go
out and, and look for that.
PBS documentary series is excellent.
I think some of it's actuallyon YouTube as well, and it has,
you know, tons and tons of bits.
Yeah, both of that, both thatand the commanding heights are
(32:03):
both, there now is is yeah.
On YouTube.
Fantastic.
Well, listen.
Malin and Dan, thank you somuch for joining me today.
Really interesting conversation foreveryone watching everyone listening.
See you next time on The Leaders Podcast.
Hello and welcome.
My name is Joe Cass, senior Directorat S&P Global Ratings, and a host and
the Creator of the Leaders Podcast.
So on this episode we have at MalinNorberg, Chief Investment Officer
of Market Strategies at Norges BankInvestment Management, or NBIM.
And Daniel Yergin, viceChairman of S&P Global.
Quick reminder that the viewsof the external guests are their
(00:29):
views alone and they do not reprepresent the views of S&P Global.
Okay, Malin and Dan, thank youso much for joining me today.
Thank you.
Thanks for having us,
Malin, let's kick off with you.
At a very high level, could youjust give us an overview of the
purpose of NBIM and what your roleas Chief Investment Officer involves?
(00:54):
Of course.
So NBIM managed Norway's SovereignWealth Funds, which is one of the
world's largest at about $1.8 trillion.
So our purpose is to transform our oilwealth into financial wealth for the
future generations and their visions.
So the fund was establishedback in 1990 after we discovered
(01:16):
massive offshore oil fields.
And the idea was very simple.
save money today so thatNorway can benefit tomorrow.
And what makes us unique is that weinvest exclusively outside of Norway.
We own about 1.5% of all listed companiesglobally, and we also follow a very
disciplined spending rule where onlyabout 3% can be withdrawn annually.
(01:41):
So as for my role as ChiefInvestment Officer of Market
Strategies, what I do is that.
Well, what we do in, in my departmentis that we oversee our market exposure,
so that involves everything from theinflows to the fund allocation into
different regions and asset classes.
It's the portfolio management of ourbroad equity portfolios and the fixed
(02:03):
income government bond portfolios.
So that's about 75% of the identityof the fund, and it also includes
the implementation in the market,so all securities lending, cash
management, as well as all the trading.
Fantastic.
Thanks Malin.
Dan, welcome back to the show.
Listen, Dan, you're a very well knownguy, Pulitzer Prize winner, and I'm
(02:25):
sure many people probably know whoyou are already, but just humor me.
would you be able to let everyoneknow your background, your role
at S&P Global and your realarea of expertise and interest?
Well, I founded a company with oneother person that eventually became
part of, S&P and, I'm vice chairmanand I think my roles in the company,
(02:48):
are thought leadership, interactingwith companies and governments
around the world and working with theresearchers on, on their own research.
But I guess I'm also, you know, asyou, what I'm known for, I think also
are the books that I've written ofwhich "The Prize" received the Pulitzer
Prize and was a number one bestseller.
And then the most recent book called,"The New Map: Energy, Climate, and
(03:11):
the Clash of Nations." And thesebooks have, been published in 20
countries around the world, different,lots of different languages.
And so there's kind of a stronginteraction between what I do at S&P
Global and and the work I do in termsof thought leadership and writing.
My general area of focus is, kindof energy and, and, and geopolitics.
(03:36):
Great.
Thanks Dan.
So Dan, given the rise in renewablesover the past decades, potentially
an upcoming rise in nuclear, what areyour thoughts on the accuracy of net
zero targets set by sovereign nations?
I think that it needs to be a rethink.
I think the energy transition asan recent article we had in foreign
(04:00):
affairs is troubled and that there'sa gap between the, the targets and
actually what's going to happen.
And there are about seven differentreasons, but we've had a couple of years
of experience now after, after COVID.
We've seen that wind and, and solarare growing, you know, very fast.
But, but as we've seen, oil,gas, and coal are also growing.
(04:25):
And so I think one needs to kind of stepaside and rethink how this whole process
is working, and what's realistic.
Malin, can you talk to us about thenet zero targets that you set for your
companies and if you have one for NBIM?
So, first just to clarify, so we haven'tpledged net zero by 2050, but we've set
(04:50):
an expectations for the companies thatwe're invested in to set net zero targets
in alignment with the Paris Agreement.
And we've also not set ambition forissuers to set climate target as I
think that would move us more intopolitical territory, which we is not
our role as a financial investor.
But, Secondly, if I turn yourquestion around the bit, I think the
(05:13):
important thing to ask is what are thechallenges if we don't pursue net zero?
So I think scientists have been prettyclear on this, and that's a dramatic
change to the physical climate and ourown analysis also shows that even in the
current policy scenario, physical climatechange can have a significant effect
on GDP and therefore our investments.
(05:35):
And that's as a long-term investor,of course, that's something
that we care deeply about.
and that's not to say thatthere aren't challenges for
companies in achieving this.
What we are seeing is that while climatechange was probably in the top 3 in
boardrooms a few years ago, now it's morelike top five or top seven, and there's
(05:55):
a lot of other stuff going on, and we getthat there's geopolitical, geopolitics,
inflation, supply chains, but we'restill encouraging companies to stay the
course on their climate commitments.
I mean, in the long run this needsto be sold and companies that
manage these risks well today willbe better positioned for the future.
So that's why we continue ourengagement because climate
(06:17):
risk, it remains financial risk.
And that's regardless of where,where ranks on today's priority list.
Yeah, I mean clearly thetransition is gonna happen.
The question is timing and you know,one of to look at is that 45% of
the emissions in the world come fromcountries that don't have 2050 goals.
So 2050 goals are primarilyin Northwestern Europe.
(06:40):
North American target, not an Indiatarget, which has 2070 as its goal.
And one of the challenges to the energytransition, the reality is the growth
is going to be in developing countries.
to give you one example, electricitydemand for, for two decades hasn't
grown in Europe in the same periodIn Southeast Asia, it's tripled.
(07:01):
And so I think that the issues ofthe developing nations is, needs
to be folded into the, into thethinking to achieve the kind of
goals that Malin is, is pointing to.
So the goals are there, it'sjust a question of timing,
the complexity and the cost.
Hmm.
Yeah, absolutely.
(07:21):
Dan, another big topic, which isvery much closely aligned with
energy now is the rise of ai.
So how do you think the rise of AI.
Has changed the strategicimportance of energy infrastructure
or data centers more broadly?
Well, that's one of the seven bigreasons that, you know, that just
(07:43):
being realistic, the rethink.
Two years ago, AI wasn't on theagenda when it came to energy.
And then in March of 2024, wehad our conference, our CERAWeek
conference in Houston and itwas like it exploded suddenly.
And and the now there's a real focus onhow you're going to have the electricity
(08:06):
supply to, to meet the needs of AI.
And, for instance, it's now about 4%of us electricity goes, for, data
centers that could be 10% in our numbers.
Within five decades.
Other people have higher numbersand suddenly natural gas is back in
the, in the game in a significantway in electric generation in
(08:28):
which it wasn't two years ago.
and these, so, and you, you seethat there's this real competition.
We think of energy securityin terms of oil and gas.
Now it becomes electricity.
So that's been a, a, a big,one of the factors there.
And it's also one of the factorsthat's encouraging, this kind of
(08:48):
rebirth of interest in nuclear power.
And Dan, you mentioned it in yourprevious answer about kind of different
regions and their energy needs.
What region do you believe is, Iguess, underappreciated by markets
on the new energy map and why?
(09:09):
By what regions?
well, I, I think I, I thinkit's basically the developing
world, the emerging markets.
There's 700 million peoplein Ozonia in Southeast Asia.
you see their per capita incomesin countries are much lower.
You, you take an African countrywhere the per capita income is one
(09:30):
20th or one 30th of Northwest Europeand their energy needs, they, they
need energy in order to develop.
And, and I think another issue that'sbecome clear on energy transition
is this north south split betweendeveloped and developing country.
Who, developing countriesclimate is an issue?
(09:50):
Well, the, the Prime Minister ofMalaysia at our Energy Asia conference
last time said, he said, we haveour climate goals, but we have goals
in terms of economic development,reducing poverty, improving health.
And he basically said, we're notgonna be told by other parts of
the world what, what we need to do.
So I think the needs of the developingworld where, you know, 7 billion
(10:12):
people live roughly, is, is reallygonna be the the big question for
big energy question for the future.
Thanks Dan.
Malin, what's your kind of high levelview of the US debt situation, and are
you changing your approach to your ownportfolio allocation to lean towards
(10:33):
other regions outside of North America?
So our task is to be prepared for allsignificant changes that may affect
the global financial markets, and weoperate with a delegated, mandates.
So all our, our different teams in theorganization are experts on different,
(10:56):
parts of the market and includingthe the US government bond market.
So the allocation to these differentregions and asset classes follow
our benchmark, which is set bythe Norwegian Ministry of Finance.
And that is not somethingthat we've changed recently
or are planning to change.
But the increase in governmentin indebtedness, it seems to be a
(11:19):
global phenomenon, and we see it inEurope and other countries as well
as the us and of course, we followedthat development very closely.
And the fact that almost 20% of alltax revenue in the US is being used
to pay for interest rate costs ongovernment bonds, that's very high and
it only seems to be trending higher.
(11:39):
So what we do in the fund is that werun annual stress test just to calculate
the portfolio impact and potentiallosses in different extreme scenarios.
This year, those three scenarioswere in AI correction, debt crisis,
and a fragmented world, referringto them to the, trade situation.
(12:02):
And out of those three, the debtcrisis was the most impactful
scenario, and that had a modeldrop of about 40% in the portfolio.
So it's clearly somethingto be taken very seriously.
Thanks, Malin And Malin, do you haveany thoughts on the competitiveness
of Europe at high level?
(12:25):
So it's something thatwe care a lot about.
So we're, we're a large global investor,but we are a European investor.
We're based in Europe.
And what we, we have seen over thelast, decade is that our share of,
the share that we hold in Europeanequities has gone from 26% of
(12:48):
the portfolio to about 15% in thepast decade, and the number of
companies, European companies in ourportfolio has, fallen by about 25%.
So.
Of course, it's in our interest tohave a big and diversified portfolio.
We own about two and a half percentof every European listed company.
(13:09):
So to have a well functioningand competitive market in Europe
is, really important for us.
And, I think there are some very goodinitiatives going on now, with the
European Savings and Investment Unionto channel, saving and investments into
the capital markets to make the capitalmarket a, an attractive alternative to
(13:33):
just keeping your money in the bank.
And it seems to be a sense of urgency,right now that we at least have some hopes
that this is gonna, this is gonna happen.
Great.
Dan, have you got any views,from maybe the US perspective?
(13:53):
I think two things.
First, I listened very carefully towhat Malin just said, and I think
they're, both of those answerswere actually, very profound in, in
the significance of our comments.
One, of course is the concern aboutthe US debt and, that number she
had Malin, that you had that 20%going to just pay for the debt.
The US is now spending more money ondebt service than it is on defense.
(14:18):
And then, on Europe.
Europe has been kind of single-mindedon where it's focused, but now
it has two new imperatives.
One is taking defense spending to 5%,and the other is the, is this focus
as Malin said, over the last yearor so, on the, on competitiveness.
(14:40):
And there is a real structuralproblem that europe has, it seems,
at least I hear from the privatesector all the time, is two things.
One is kind of what we might callpolitical targeting of what they
wanna achieve and secondly sortof regulation manufacture, that
is somewhat, is not really veryconnected with the marketplace.
(15:03):
And Malin's comment about howtheir share of European companies.
Has gone down, of course probably reflectspartly the tech companies in the US and
the stock market, but it's also Europe'sreal issue about de-industrialization.
And the Draghi report tried to addressthat about making Europe more competitive.
(15:23):
But that's a challenge for the way Europeoperates now and the sort of gap between.
The eu, the commission, and to a lesserdegree, governments from, from the
marketplace and, lack of connectivenessand realism and, a very heavy hand of
regulation, which is what, what, whatmanagers and companies talk about.
(15:49):
All the time, how much time theyhave to spend, how many people,
how many pages of regulations.
And so I think that challengeof competitiveness for Europe,
addressing what mountain's talkingabout is quite a big challenge.
And just, you can't solve theproblem just with rhetoric.
And, and in addition to theheavy regulation, it's also
very fragmented regulation.
(16:10):
It's of course, a single marketplaceconsists of multiple markets that have
different, regulation with the withholdingtaxes to, post trade transactions.
So it's, there are a lot of,different angles to, attack this.
(16:30):
Yeah.
And you just think going, Norway hasalways had a, you know, commitment
to, its, its defense structure, butfor Europe, going from one, one and
a half percent spending on GDP to 5%,that is a significant diversion shift
in, in where resources are going.
And also, you need a, an industrialbase that can respond to that.
(16:57):
Yeah.
Fantastic.
Great comments, Dan.
Unusual question for you now.
What is one truth the energyindustry tells itself today
that could age terribly?
Well, let me answer slightly differently.
What I've noticed in all these, you know,years of the, of observing the energy
(17:21):
industry is that a consensus developsabout where things are going, and that
consensus usually lasts about threeyears, and then something comes along.
It could be economic, it could betechnology like AI, it could be
geopolitical, like the invasion of,Ukraine by Russia, which suddenly
took energy security, which hadn'tbeen on the agenda before for
(17:42):
some years back on the agenda.
It, can be,
you know, a, a crisis.
It could be COVID, but anyone.
And so the challenge for the energyindustry, it's long-term investment.
It's one of the longest term investingindustries, but things change.
And we can look at some of theEuropean companies, how, just in the
(18:06):
last year or so, they've had to shiftthe balance of their investment.
So I think it's, the challenge is howdo you see beyond what the consensus is?
And I think part of the answer iswhat Mallon says that you do use
scenarios to try and create a framework.
So I think it's, I think, I think the, theone truth is that the truth doesn't last.
(18:27):
I remember once talking with thisfellow Armand Hammer, who created the
original, Occidental Petroleum andhe said, I've been in business for 56
years and the one thing I've learnedis that things don't stay the same.
And I think that's a challengefor a long term industry.
That's great.
Fantastic.
Thanks, Dan.
(18:47):
Malin, you oversee one ofthe largest pools of capital.
History.
It's an enormous role.
What's been a moment where you've reallyfelt the weight of that responsibility?
So this is of course, a hugeresponsibility all the time, and we don't
(19:11):
manage money for a few rich individuals.
The money that we managed, itbelongs to the people of Norway.
And, the fund accounts for almost aquarter of the annual government budget.
So that's massive.
And this, well, this was really,really tangible during the
(19:32):
early days of the COVID crisis.
So, Oil prices went to zero.
Just to, yeah, howunpredictable things are.
It even went negative fora short period of time.
And this being the source ofincome for the fund, that's a
dramatic development in itself.
But, on top of that, the governmentneeded money to fund all the COVID
measures and, with the whole world isupside down, suddenly we're sitting
(19:57):
in our bedrooms selling bonds.
I was working in fixedincome trading at a time.
To, to fund the country.
And that was a very special experience.
And, it also shows the enormousimportance of the fund to Norway.
Great.
Thanks Malin.
Dan, I want you to put yourselfin the shoes of a leader of a
(20:21):
sovereign wealth fund in 2025.
What are you really betting on?
Hydrogen, nuclear, LNG orsomething else entirely?
Well, I suspect that a, leader of asovereign wealth fund, perhaps such as the
person sitting here in this interview withus, is not going to make a single bet.
(20:44):
I think that that person isgoing to, diversify because you
don't know and you're gonna see,
You know, what is actuallygonna generate cash for you?
And then where you want to,have a diversified portfolio.
I mean, I would say two years ago,the hopes for hydrogen were very high.
(21:05):
I think they've somewhatreceded over the two years.
Nuclear has sort of moved moreto the fore, but nuclear is
not gonna turn on tomorrow.
So, I think the answer is, you know,and, and I think then it depends.
As the fund, I think, I thinkas I understand, the Norwegian
(21:26):
fund doesn't do venture capitaldoesn't do private investments.
But, if you do have the flexibility tomake a series of bets along those chains,
would be the, the prudent way to do it.
The rebirth of nuclearis very interesting.
The number of reasons for that.
I think, one is the concernabout the electricity security.
(21:50):
I think the other is that thehyperscalers, are, who do have the net
50 goals are looking for, non-carbon,carbon free electricity, and, you can
see the investments that they're makingin, in developing companies, nascent
(22:10):
companies in nuclear and also in theUnited States, the deals that they're,
that they're making with existing nuclearpower plants to take, to take their power.
So just, just to comment on that,so we are mainly an investor in the
public markets, but we also have someinvestments in unlisted real estate and,
(22:33):
infrastructure for renewable energy.
So we got the mandate for renewableinfrastructure in 2020 and, we have
the potential to allocate up to 2% ofthe fund, in this space and 2%, it
may not sound like that much, but we'retalking about approximately $40 billion
in potential investment capacity.
So when we got the mandate and we startedlooking for investments in 2020, it was
(22:57):
very high demand, elevated prices in,in that renewable infrastructure space.
But we've seen it come downsignificantly, over the last few
years, and we've deployed a lot.
More capital in that market.
We're still far from that 2%target, but, as of year end we
had roughly $2.2 billion invested.
And that's primarily in solar and wind.
(23:20):
And, and, and, and of course, I mean it'svery interesting what you said about the,
the cost of, how prices were very high.
But what has been striking is to seethe, how the costs have come down.
Not, not for offshore wind necessarily.
Oh, it's come down, but then inflation.
But for solar, it is interestingtoo that a lot of China's strong
(23:44):
position in renewables, particularlyits domination of solar, is very
interesting and that's another areawhere you see energy transition now,
colliding with, geopolitical rivalry.
Yeah.
Fantastic.
Thank you both, Malin.
Just switching gears, what's onechart or data point that haunts you?
(24:12):
So, I mentioned our, stress testbefore, and, one of the scenarios
that we looked at is an AI correction.
So that would mean a significantcorrection in the technology sector
that's triggered by investments inAI, failing to generate expected
earnings and value creation.
And that may be multiple reasons for that.
(24:33):
Strict regulation, technologicalchallenges, lack of necessary
resources, but such a correctionwould've a particular impact on the
US tech sector, but of course alsospread to other sectors and regions.
So, to answer your question, thechart that haunts me is a market
concentration in these big technames and the weight that these
companies have in the index now.
(24:54):
So that's around 30% of theS&P and of course, also in the
benchmark that we, that we have.
So since we follow our benchmarkfairly closely, that also means
we have an enormous amountinvested in very few names.
So in Apple we have about50 billion US dollars.
(25:15):
Same with Nvidia.
And it, that's prettymind blowing amounts.
So are we talking about akind of deep seek moment, but
on like a, a larger scale?
I think there could be multiplereasons for a, a correction like that.
So the, we, it's, it's named the AIcorrection, but, say we encounter
(25:40):
technological challenges, we haven't, wehaven't forseen it could be a, a deepseek
or just, the AI leadership broadening out.
The winner takes, doesn't takeit all, but takes a bit less.
And, and the whole, AIleadership is gonna broaden out.
It could be multiple, potentialreasons for such a scenario.
(26:06):
Great.
Thanks Malin.
Dan, what's the one energy risk intoday's world that markets are ignoring?
Well first, I think in a way partlyties back to what Malin just said
and, you know, thinking about,
(26:29):
there's no, the markets are notexpecting or, signaling an AI
correction, but we've always seencorrections even happen in other markets.
I suppose it may be underestimating thechallenge for electricity generation.
I, I think people are getting mobilized.
On that now, but I think until veryrecently, and the inability to get
(26:53):
things built, to get things permitted,to get things done, that you can
see what the need is or the goal is,but you can't actually get there.
I think that's a very good point.
Yeah.
Fantastic.
Malin, what's one book that shapedyour thinking about markets?
(27:16):
So, of course there are many greatbooks that it gives different
perspectives on the market.
But, one of the books that I read earlyon was, "Market Wizards" by Jack Schwager.
So that's just a collection of interviewswith some of the most, successful
traders and investors of the 1980s.
And he talks to them about their tradingstrategies, mindset carriers, and.
(27:39):
I think what's fascinating ishow each different person, have
a completely different approach.
So some are technical analysts, somefocus on fundamentals, some holds
position for years, others for daily,and what the book really shows is that
there's no magic formula on how tomake money or how to beat the market.
(28:01):
but you do have some certain, thingsin common like discipline, risk
management, and the ability to learnfrom, from losses and mistakes.
And just to mention a, a morerecent book that made an impression
was, "Quit" by Annie Duke.
So.
As a former poker player, it, thatreally changed my thinking, how to
(28:24):
think about, cutting losses and,I mean, she knows, like in poker,
walking away isn't a failure.
But, knowing when to do that, it'sreally crucial for long-term success,
both in poker and in the markets.
Yeah.
Every, every dollar you keepin a losing trade is a dollar.
You don't put into a better opportunity.
(28:46):
I was gonna ask Malin, when yousaid a former poker player, are you
talking about the author or yourself?
Oh, no.
Annie Duke, I can't, yeah, not
myself.
Okay.
Great.
Actually, Dan, beforewe go to the last one.
Obviously you're the author or a numberof, you know, very well received books.
(29:11):
What books really shapedyour thinking about markets?
What really made an impact on you?
Well, it would, I would be hard put to,to, point to one, but this may be an
odd answer, writing this book called"The Commanding Heights, the Battle
for the World Economy," the, the battlebetween state and market working on
(29:34):
that book changed my thinking a lot.
I learned a lot from writing.
For me, writing a book is like solvingan equation, solving a problem, and I
came out with a much deeper understandingof the power of markets and in a sense,
the morality of markets, which is.
Is not the language or the rhetoric, butwhat they deliver in terms of results.
(29:55):
And I, and so I, I don't mean thatin a funny way, but it was the
learning experience of writing thatbook was really quite profound.
Great.
And Dan, last question.
It goes to you, what's the bestpiece of advice you've been
given and who gave it to you?
Well, let me, let me give two examples.
(30:16):
One, when I was starting off atmy PhD at Trinity College, at
Cambridge University, there was avery eminent economist there who's
visiting named John Kenneth Galbraith.
And I went and told him, I went to justsee him not knowing him and told him
what topic I was gonna write my PhD.
And he said, well, you can do that, butif you wanna be irrelevant for the rest of
your life, you can go ahead and do that.
(30:37):
So I, he suggested a different topicand I did that different topic and six
years later I had a book that was afront page review in the New York Times.
So that was really good advice.
The other piece of advice is when Idid "The Prize," which is a Pulitzer
book, to the CEO and the COO of whatwas then a prominent investment firm
(30:59):
called Paine Weber invited me to NewYork, and at the end of the lunch,
they just wanna talk about the book.
This, the president said,well, what do you wanna do?
I, I, I said, I want to actually,I'd like to do a. BBC-PBS series,
on the book, a television series.
And I, they said, oh, okay.
They said We might be interested in that.
that's interesting.
(31:20):
And so then I went and talked tothis guy who's volunteering to be the
producer of it, and I told him aboutthe conversation and he said, dummy,
go back and ask them for the money.
So I went back and asked them for money,and they said, yeah, that's a good idea.
And I, and I ended up with a PBS seriesthat was watched by tens of millions
of people around the world and taughtthem a lot about the energy industry.
(31:42):
So those were two very practicalpieces of advice, that I had that
sort of turned corners in my life.
That's fantastic.
And anyone who's, who's watchingor listening, definitely go
out and, and look for that.
PBS documentary series is excellent.
I think some of it's actuallyon YouTube as well, and it has,
you know, tons and tons of bits.
Yeah, both of that, both thatand the commanding heights are
(32:03):
both, there now is is yeah.
On YouTube.
Fantastic.
Well, listen.
Malin and Dan, thank you somuch for joining me today.
Really interesting conversation foreveryone watching everyone listening.
See you next time on The Leaders Podcast.
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