Bonus: Exploring opportunities in a circular economy–Morrison

Ever wonder about those plastic crates your fruit comes in?

Morrison CEO Paul Newfield reveals how these overlooked circular economy systems represent infrastructure potential his $25B firm hunts for.

Paul shares his candid admission about underestimating New Zealand's renewable energy, why Australia's coal plants breaking down makes the energy transition inevitable, and how Morrison's decades-long expertise—from 1990s NZ wind farms to billion-dollar US developments—turned early disadvantages into global competitive advantages.

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Episode Transcript

Speaker 1 (00:00):
You're listening to a share these podcast, any kind of
broader trends that you see out there that are informing
your portfolio.

Speaker 2 (00:08):
We think a lot about growth of data. We think
a lot about decarbonization. The next extension of decarbonization really
has been thinking more about a circular economy and what
opportunities come from that, which again is not just an
esg idea, it's actually also just an economic rationalist idea.

(00:29):
Why I use things once and put them in the trash.
So I give an example of a really interesting business
we've invested in for one of our funds. It's called
viscount Reuse. So when you go to the supermarket, we
love investing in all the things that you hopefully you
don't need to have heard of Morrison, You don't even

(00:50):
need to even realize you use the products you're invested in.
But when someone mentioned you go, oh that thing, I
use that every day. I never even thought about the decision.
So when you go to the supermarket, fruits sometimes comes
in those cardboard crates which get scrunched down, and then
when you're moving house you go to the supermarket and
pick them up from the back. Increasingly around the world

(01:11):
supermarkets are trying to get away from that and use
reusable plastic crates. And what's the best way for a
supermarket to do that. It's to have one pool provider
so that all of their suppliers are using the same
kind of crates. They come into the supermarket, then they
get broken down, sent back to you to clean, and
then you send them out to their suppliers, and so

(01:32):
you end up with this very infrastructure like business. You know,
something which is going to keep being used in the
next ten years. You're locked in as the sole supplier
to one of a duopoly or oligopoly the supermarket providers,
and you can add on some other customers. So that's
a business we've invested in that ultimately its growth will
come from the world wanting to be more circular, and

(01:54):
the supermarkets want to be more circular, partly for ESGM,
partly because it increases their margins. Up with this really
downside protected infrastructural like business, but something you never thought
of as infratructure.

Speaker 1 (02:04):
It's a place comes in where there's real value in
standardization exactly. It's otherwise where do you send them back
to exactly?

Speaker 2 (02:11):
And then think of all the ways you can start
improving that, like make those traceable, allow the supermarket to
know what temperature that product's been at all the time,
so they know that has this milk been tainted because
at some point in the supply chain there's a failure,
they can work out where it was. So the whole
lot of ways you can use technology to keep making
this dumb things smarter and add value to the customer.

Speaker 1 (02:31):
Well infrastructure everywhere. So we've talked a little bit about
renewables and especially New Zealand's history with renewable but how
do you see that transition going throughout infrastructure investment throughout
Australia and New Zealand.

Speaker 2 (02:49):
I'll admit something to my shame, having grown up in
New Zealand they moved to Australia, and having been on
the board of Tilt Renewables when we created it all
the way through to when we sold it, I didn't
think much new renewable energy development was going to happen
in New Zealand. Kind of thought, oh, well, we're kind
of done. Know we're at ninety percent. And what I
hadn't factored in was the rest of the electrification of

(03:13):
the economy. So how do you go from Fonterra burning
coal to turn milk into milk powder to using renewable electricity,
cars running on renewabal electricity. See realized there's actually all
of this demands. Even when you're at nine percent renewables,
Probably in New Zealand will still double its renewable energy
capacity over the next few decades. Australia has gone very

(03:37):
slowly and is now starting to make progress at getting
towards sixty seventy renewables, and that won't actually be driven
by policy. That'll be driven by old coal plants breaking right,
so that reaching end of life. So that's kind of inevitable.
So there's a lot of opportunity in Australia. Probably the

(03:58):
biggest constraints in the moment in Australia is just the
scale of the transition required means you're rewiring the whole country.
So in one of our other portfolios, Utilities Trusts of Australia,
we are a shareholder in Transcrid the poles and wires
of New South Wales and Electronet the poles and whis
of South Australia. Those businesses are literally investing billions of

(04:20):
dollars to rewire from a system that was based around
generating in a few small coal a few big coal
power plants, to one where actually there's renewable energy all
over the state and you need to connect up your
states to manage intermittency, so all of that stuff has
to get worked through. So that'll mean there's short term
difficulties friction points in Australia, but long run will look

(04:40):
really interesting. And then you look globally, whatever happens out
of the big beautiful bill that's going through at the moment.
One where another US is going to build a enormous
amount of renewable energy just because it needs the power
in it is brood economics. The lowest cost form of
power is solar or solar plus batteries in the US.

(05:01):
Europe's got an energy independence issue, so it's not just
about renewables there, it's actually how do we reduce our
dependence on Russian gas, so you need to all have
your own renewables. And then Asia you've got growth of
demand for energy as well as you know, as people
get wealth there in the economies industrialize along with decarbonization pledges,

(05:23):
so you think all around the world you see different
reasons for people to be doing a lot more. The
really unidealistic way to think about renewable energy, Like you
can think about it as an idealist, and I do,
but the unidealistic way to think about it just as
an investor is actually it's an option strategy. So you
know that you can have complete confidence in the trajectory

(05:44):
of the world. Over the next two three decades, a
lot more renewables will be built. It's really hard to
be certain in the next twelve months which specific solar
farm or wind farm will get built because there's a
change in energy prices or a change in regulation. You
can have renewable energy development options in as many places
as possible, with great teams working on them, and then

(06:06):
optimize at each point which one you should be putting
your two three hundred million dollars into. Actually taking from
being a plan to being reality, you'll find that you're
constantly surprised on the upside, rather than kind of having
like a single pinpoint bet on one company or one
project of that.

Speaker 1 (06:23):
Do you think that we can be leaders in the
field of how that develops.

Speaker 2 (06:27):
I think we already are. Like if you think about
New Zealand, had this ADVANTAGEHI built from its disadvantage artists
from not having a lot of coal and gas. It
got really good at wind generation. And then for Morrison,
we took that idea that we've been working on the

(06:48):
nineties in New Zealand and started getting options in Australia
in the late nineties that we created Tilt Renewables, which
we which an infertal investment that we sold twenty one
twenty two. Out of that experience, we set up Long
Road Energy for intilling the New Zealand super Fund in

(07:09):
the US. That's been a phenomenal investment now worth several
billion dollars. Took that to the Europe, took it to Asia.
So yeah, and that's just really kind of slowly over decades,
reinvesting in the fact that you've got to hit start
on the world and something they need more of.

Speaker 1 (07:28):
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