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Speaker 1: Hello, and welcome to Stephanomics, the podcast that brings the

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Speaker 1: global economy to you. This week, we're up a mountain

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Speaker 1: in Davos for the World Economic Forum, that famous and

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Speaker 1: infamous gathering of the global great and good now celebrating

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Speaker 1: its fiftieth anniversary. That's fifty years of talking about the

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Speaker 1: world's problems in the middle of the Swiss Alps. Who

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Speaker 1: would have thought it. This year, climate change has dominated

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Speaker 1: the agenda and ten teenage environment activists were invited to come,

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Speaker 1: including Greta Tunberg. There were also a hundred nineteen billionaires

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Speaker 1: and many many chief executives and bankers. But luckily, tackling

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Speaker 1: global inequality has also been high on the agenda here,

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Speaker 1: so you can stop worrying about that as well. I'll

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Speaker 1: be talking about the potential physical and social impact of

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Speaker 1: climate change with the director of the McKinsey Global Institute

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Speaker 1: later on, and I'll be asking the leader of one

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Speaker 1: of the world's biggest trade unions, Christie Hoffman, how she

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Speaker 1: would make the world a fairer place. But first I

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Speaker 1: wanted to catch up with the Davos veteran attempted to

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Speaker 1: say the Davos Institution, so Dr Jacob Frankel is a

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Speaker 1: very distinguished economist and former colleague of mine at JP Morgan.

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Speaker 1: He served as chairman of JP Morgan Chase International since

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Speaker 1: two thousand and nine, and before that, among other things,

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Speaker 1: was Governor of the Central Bank of Israel for nearly

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Speaker 1: a decade. Jacob, love you to have you on Stephanomics.

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Speaker 1: It's been fifty years they've been holding the World Economic Forum.

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Speaker 1: You just told me this is your thirty three say.

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Speaker 1: I'm struck how the economic debate here has broadened in

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Speaker 1: the past few years. Most of the people I've spoken

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Speaker 1: to here, and indeed the speaking to it for the podcast,

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Speaker 1: and not focusing on just the narrow macro economic issues.

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Speaker 1: They're talking about the environment, about populism, about social inclusion.

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Speaker 1: Do you think the discussions were having here up a

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Speaker 1: mountain have become more or less useful over the past

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Speaker 1: few years. I think that the definition of useful has

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Speaker 1: evolved so in a way they are all relevant given

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Speaker 1: the interests of the time. For example, thirty years ago,

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Speaker 1: there was no question about what does it take to

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Speaker 1: do good economics. There was the so called Washington consensus.

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Speaker 1: You knew you have to have budget responsibility, monetary policies

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Speaker 1: that focuses to achieve price stability and the things of

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Speaker 1: that type. And at the same time the issue was

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Speaker 1: will government have the political will to execute what we

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Speaker 1: all know needs to be done? The compass was clear.

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Speaker 1: The great financial crisis of a little bit more than

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Speaker 1: a decade ago marks the most important change because that crisis,

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Speaker 1: in which still has the consequences seen today, That crisis

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Speaker 1: shuttled the compass. The question was not anymore how do

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Speaker 1: I execute what we all agree needs to be done,

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Speaker 1: but rather what should be done? The narrative world experts

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Speaker 1: have failed. We need to have a new theory. We

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Speaker 1: need to throw all the textbooks away, in my judgment,

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Speaker 1: a big overshooting, with the danger that you will throw

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Speaker 1: away also a lot of good wisdom. It all started

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Speaker 1: with the notion that somehow all the conventional modeltor my

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Speaker 1: macroeconomic policies up analyzed. Fiscal policy could not be used

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Speaker 1: because that was already too big. Structural policies could not

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Speaker 1: be used because it takes more time to show fruits

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Speaker 1: and we are in a crisis. Therefore, the theory when

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Speaker 1: we need to show quick results. Hence, all the lights

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Speaker 1: were put on the central banks and monetary policy. Before long,

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Speaker 1: central banks became the only game in town and they

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Speaker 1: needed to do the only things that could be done,

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Speaker 1: namely lowering interest rates. The file was extinguished and the

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Speaker 1: question was how do you go back to the old

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Speaker 1: power time of growth and prosperity. However, what was coined

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Speaker 1: as unconventional policies to be understood as a temporary departure

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Speaker 1: has become almost a conventional policy because the consequences are

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Speaker 1: still with us. Your expertise is monetary policy, your former

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Speaker 1: central banker, and I'm struck that the Bank of England,

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Speaker 1: the Federal Reserve and the European Central Bank are all

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Speaker 1: now under or now undergoing a review of their tools

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Speaker 1: and their targets everything they did with monetary policy. Um,

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Speaker 1: what do you think where do you think they should

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Speaker 1: end up? We should not expect a new textbook to

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Speaker 1: be written in this context. That's not the issue. The

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Speaker 1: main focus will be on various procedures, on various mechanisms,

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Speaker 1: on various regulations. It will not be the new perspective

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Speaker 1: of macro economics because those things are not done through

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Speaker 1: a review within the central bank. Those are things that

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Speaker 1: are generational things That's what I'm saying, don't throw the

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Speaker 1: old textbooks away, but also recognize that being the only

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Speaker 1: game in town for monetary policy is a very dubious

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Speaker 1: compliment because it means that you are granted or taking

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Speaker 1: upon yourself tasks that you are not equipped to deliver.

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Speaker 1: You do not have the tools to deliver. The name

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Speaker 1: of the game today is innovation, growth, technology, creativity. Where

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Speaker 1: does this come from? It comes from everywhere but monetary policy.

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Speaker 1: It is fiscal policy, it is tax system, it is

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Speaker 1: structured policy policies that remove these totions, policies that realize

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Speaker 1: the flexibility of the economy is the key for further growth.

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Speaker 1: But if we do all of these re examination within

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Speaker 1: the monetary policy domain, it leaves the impression that also

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Speaker 1: the answer to the current challenges will come from the

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Speaker 1: central bank. I all welcome to see reviews of monetary policy,

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Speaker 1: but I warn't against the illusion that here we will

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Speaker 1: see a new framework that will allow the only game

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Speaker 1: in town to continue. But on that precise point, and

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Speaker 1: where does inflation fit into that? I mean, do we

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Speaker 1: have to be have an understanding of why all those

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Speaker 1: inflation targets are being missed and where we're going to

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Speaker 1: get inflation from, if not from the any game in town. Well,

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Speaker 1: I my answer when people ask me where is the inflation?

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Speaker 1: After all, you we were told that if you print,

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Speaker 1: that's what happens. Well, the inflation found itself in another

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Speaker 1: place in asset markets. You have kept interest rates so

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Speaker 1: low that you have provided artificial stimulus to investors and

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Speaker 1: others to invest in the financial markets because that's well

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Speaker 1: the incentives go. And as you do that, you inflate

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Speaker 1: asset prices. You have stock markets all over the world

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Speaker 1: reaching new heights every day, and as a result, you

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Speaker 1: have a greater disconnect between the real economy and the

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Speaker 1: financial economy. At the end of the day, the mirror

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Speaker 1: and the reality needs to be aligned. Let make a

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Speaker 1: long story short and say macroeconomic policies have been pushed

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Speaker 1: to be out of balance, excessive reliance on monetary policy.

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Speaker 1: And I think that therefore, as we do the review

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Speaker 1: of monetary procedures all over the world, it's time also

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Speaker 1: to wake up other one under policy instruments. Okay, final question.

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Speaker 1: We've talked about this. That you are soon retiring from

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Speaker 1: JP Borgan, you're gonna have a bit more time to

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Speaker 1: take grand thoughts. Um, you already have PhD. But I

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Speaker 1: wonder if you were going to go and get another one,

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Speaker 1: go back to school, what would knowing everything and seeing

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Speaker 1: the world as it is, what would you want to

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Speaker 1: go and study? Well? To begin with, I would ask

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Speaker 1: myself what is the name of the game today? And

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Speaker 1: I will say those things were not even on the

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Speaker 1: curriculum when I was stilled AI, Artificial intelligence, big data?

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Speaker 1: Who knew all of the Internet, all of that kind

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Speaker 1: of thing? So I think that, but in more general way,

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Speaker 1: I think the future will not depend on how many

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Speaker 1: degrees you have, but rather how many how much knowledge

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Speaker 1: you have accumulated. And knowledge is not a set of information,

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Speaker 1: but capability to operate in a changing environment, capability to

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Speaker 1: know where to find the information that you need once

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Speaker 1: you need it, but really capability to operate across section.

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Speaker 1: Most of the curriculum of important universities has moved away

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Speaker 1: from narrow discipline to interdisciplinary approach. And the reason why

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Speaker 1: it is the case because there is greater understanding that

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Speaker 1: to be a good physician you need also to be

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Speaker 1: a good psychologist. To be a good psychologists, you must

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Speaker 1: understand how other systems work. Etcetera. And on the job

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Speaker 1: training will become a very important thing. We spend a

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Speaker 1: lot of resources on training and too few resources on retraining.

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Speaker 1: Why do we need to retrain? Because the things that

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Speaker 1: we are training for have changed, and hopefully we will

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Speaker 1: move into even a more rapid change and if there result,

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Speaker 1: the whole concept of education and training will need to

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Speaker 1: be modified. Well, we're being very interdisciplinary on steconomics, is

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Speaker 1: we You're the only economist I'm talking to, But Dr

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Speaker 1: Jacob Franko, thank you very much, thank you. We talk

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Speaker 1: a lot about the future of work here at Davos,

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Speaker 1: and these days I think there is also a lot

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Speaker 1: of talk about capitalism needing to deliver a better deal

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Speaker 1: for people. Trade unions you might have thought would be

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Speaker 1: useful things to have around when you're trying to navigate

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Speaker 1: both of those things. But by and large, I would

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Speaker 1: say that the trade union movement is not very well

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Speaker 1: represented here at Davos. One exception is the Union Network

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Speaker 1: International UNI, which represents twenty million people around the world.

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Speaker 1: And I'm delighted to say that the UNEDS UNEDS General

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Speaker 1: Secretary Christie Hoffman is here with me. Christie, thank you

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Speaker 1: and welcome to Stephanomics. Thank you for having me pleasure.

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Speaker 1: I guess I should start by asking you, you know,

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Speaker 1: what kind of reception you get here at the World

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Speaker 1: Economic Forum? I mean, they do talk a lot in

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Speaker 1: these sessions about giving workers a better deal, But do

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Speaker 1: they want to do a deal with the likes of you? Yeah? Well,

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Speaker 1: actually there are ten of us here, and I think

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Speaker 1: more or less that's that's been the same for for

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Speaker 1: several years, just to you know, spice it up when

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Speaker 1: there we'reds, you know, three thousand. But in any event, um,

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Speaker 1: where some of the top you know, international leaders are

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Speaker 1: here and so we're a feisting group. Um, how do

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Speaker 1: they react? I think that you know, the question of um,

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Speaker 1: that the hard question that a lot of the companies

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Speaker 1: here have to face with us is that our demand

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Speaker 1: is we want to, in particular UNI's voicing this this

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Speaker 1: year and other as well, that we have to really

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Speaker 1: re strengthen and restore the role that collective bargaining plays

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Speaker 1: in our economy because without that we will never solve

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Speaker 1: the issue of inequality. And we talk about inequality breaking

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Speaker 1: down social cohesion and diminishing economic growth and all the

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Speaker 1: problems of inequality, immorality, the number of working poor, um,

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Speaker 1: the gross you know pay that goes to the CEOs

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Speaker 1: these days, and all these things. But at the core

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Speaker 1: of it is we have broken down an attack to

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Speaker 1: collective bargaining for so many decades, and that's at the

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Speaker 1: point where we need a conscious campaign to restore collective bargaining.

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Speaker 1: And yeah, I mean, is that the message that companies

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Speaker 1: really want to hear. No, I think they'd rather hear

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Speaker 1: you know, you should give everybody a little more time off,

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Speaker 1: or you should think about rescheduling or some like benefits

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Speaker 1: they could sprinkle down to make life better for workers.

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Speaker 1: And that's all good, but we need a power shift

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Speaker 1: and if we don't have that, we're not gonna we're

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Speaker 1: not going to solve the issues of inequality and we're

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Speaker 1: not going to be at the bargaining table to navigate,

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Speaker 1: as you pointed out, the new world of work, where

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Speaker 1: it's critical that unions are able to workers through their representatives,

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Speaker 1: are able to sit down and navigate how we're going

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Speaker 1: to implement new technology, What are the skills required, how

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Speaker 1: are how old will this impact the workers? UM and

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Speaker 1: climate change. We need to be able to negotiate just

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Speaker 1: transitions so all the problems we've faced in every direction.

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Speaker 1: We need to have a worker voice at the core.

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Speaker 1: That's why there was a good line I heard earlier

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Speaker 1: in a session from the chief executive PayPal who said

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Speaker 1: that the multi stakeholder capitalism that people talk about couldn't

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Speaker 1: just be about having two wolves and a sheep decide

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Speaker 1: what to have for dinner, which I thought was But

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Speaker 1: it is true that if you think about the nineteenth century,

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Speaker 1: you know the real changes in working conditions and pay

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Speaker 1: happen because they were forced on businesses by legislation and

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Speaker 1: to some extent by by trade unions. I mean, do

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Speaker 1: you think it will be any different this time. I

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Speaker 1: think there's always room for voluntary movement in the right direction.

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Speaker 1: We negotiate with companies all the time. We try to

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Speaker 1: persuade good companies that they should negotiate agreements on the

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Speaker 1: whole range of issues, and we're successful in that within limits.

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Speaker 1: But we want governments also to step in. They're not

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Speaker 1: Governments are not just there to protect the corporate elite.

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Speaker 1: They need to step in and strengthen their collective bargaining institutions.

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Speaker 1: But I guess one of the reasons why, I mean,

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Speaker 1: there's been. The US famously has this legislation which does

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Speaker 1: make it very difficult to organize a union. M But

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Speaker 1: one of the reasons why employers not always very welcoming

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Speaker 1: is they unions have not been associated with helping change

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Speaker 1: to happen. So is that is that a fair criticism

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Speaker 1: that unions also have to be a bit more flexible.

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Speaker 1: I think what you find if you look at unions

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Speaker 1: all over the world is that unions where there is

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Speaker 1: a more equal balance of power tend to be way

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Speaker 1: more flexible. Um. And so when you look at our

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Speaker 1: Nordic unions, so from Sweden, North Norway, they are really welcoming,

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Speaker 1: open arms with their employers towards how to make the

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Speaker 1: employer more efficient, how can we use technology to advantage

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Speaker 1: everyone because they know they're going to share in the

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Speaker 1: gains um and they don't feel threatened by change. They

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Speaker 1: feel that they want to embrace change and embark upon

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Speaker 1: change in a way that makes their jobs more interesting,

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Speaker 1: their companies more competitive, shared prosperity, etcetera. So, and then

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Speaker 1: when you look at unions in the UK who are

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Speaker 1: a little more embattled, maybe they're not as flexible. Same

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Speaker 1: for the US, but a lot of that also depends

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Speaker 1: on whether you have work site you know, enterprise bargaining

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Speaker 1: or you know work site by work site relationships or

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Speaker 1: a sectoral relationship where you have sectoral bargaining. So just

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Speaker 1: in one industry, right and that I mean, there was

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Speaker 1: a big study UM that came out this year from

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Speaker 1: the O E c D, which is not known as

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Speaker 1: being a radical institution, that said sectoral bargaining is really

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Speaker 1: healthy for economies. It's better for employers and better for workers. Now,

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Speaker 1: they didn't say every form of bargaining is is the greatest,

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Speaker 1: but they did say that, but it's a real change

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Speaker 1: and they've really said, Look, you want stronger economies, better

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Speaker 1: ability to weather the ups and downs, better ability to

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Speaker 1: implement new technology. I mean, I know, I started out

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Speaker 1: my working career in a factory and a very big machine.

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Speaker 1: And when they introduced numerically controlled machines that didn't require

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Speaker 1: me to turn the wheel all day, I could not

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Speaker 1: have been happier. I was so happy that my job

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Speaker 1: was easier, safer, cleaner, UM and I had a union

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Speaker 1: so that it wasn't gonna Uh. You know, nobody felt

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Speaker 1: threatened by the implementation of new technology because we knew

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Speaker 1: our company needed to be productive and high tech if

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Speaker 1: they were going to succeed. And I think most workers

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Speaker 1: weren't their companies to succeed for sure. It's really that

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Speaker 1: they also have to think about, well, does this mean

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Speaker 1: I'm growing out on the street with no protection? And

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Speaker 1: I did hear it, actually hear it dens. I think

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Speaker 1: I had a Scandinavian unionist saying that that we're not

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Speaker 1: worried about new machines, were worried about old machines. They're

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Speaker 1: the biggest threat workers. What about the gig economy, because

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Speaker 1: it feels like, again when you look at the debate

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Speaker 1: around you know, what's an employee? You know, lots of

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Speaker 1: these gig companies, you know, Uber and others, famously they've

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Speaker 1: kind of not had to worry about workers right so

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Speaker 1: much because they say that all of these people working

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Speaker 1: for them are not employees. Um and there's a sort

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Speaker 1: of legal debate around that. Don't you haven't seen until recently,

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Speaker 1: you may correct me traditional unions really active in that

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Speaker 1: debate and or indeed kind of reaching out to the workers.

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Speaker 1: Is that kind of the next runt? Is that going

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Speaker 1: to be new unions that do that or the old ones. Uh,

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Speaker 1: you know, I think it is maybe the next frontier.

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Speaker 1: But I also know that a lot of members of

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Speaker 1: UNI are or or the Transport Workers, two different federations.

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Speaker 1: But I'm aware of a lot of unions reaching out

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Speaker 1: to Uber workers. And now some of it is a

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Speaker 1: question of making sure they're regulated in the same way

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Speaker 1: as taxi drivers. For example, so um like in Stockholm,

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Speaker 1: the uber drivers were not allowed to operate unless they

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Speaker 1: registered as a taxi company. Brussels they're not allowed to operate.

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Speaker 1: Geneva they're not allowed to operate. So many cities across

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Speaker 1: Europe are saying either you act like an employer, or

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Speaker 1: you act like a taxi company, or you're you're out,

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Speaker 1: and so this we're seeing this increasingly. But we're also

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Speaker 1: seeing unions talking to the drivers a lot. And then

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Speaker 1: in the US you have a big fight in California

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Speaker 1: about whether or not they're an employer, and I think

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Speaker 1: that that's going to play itself out. But increasingly Uber

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Speaker 1: is facing like all these different doors, none of which

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Speaker 1: are especially attractive, because to be an employer doesn't meet

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Speaker 1: with their business model to be a taxi company. That's

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Speaker 1: also kind of burdensome and then to just be free

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Speaker 1: to do what they want. More and more governments are

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Speaker 1: saying no so, and unions are talking to the drivers

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Speaker 1: and trying to especially in California. The unions are really

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Speaker 1: really involved in California, and I think that will be

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Speaker 1: a little bit of a test because that's by far

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Speaker 1: their biggest market. Climate change has been around as an

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Speaker 1: issue for years here at Devils, but it's all felt

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Speaker 1: a bit well, superficial. The movers and shakers coming here

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Speaker 1: have been urged to take a bust up the mountain,

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Speaker 1: not a limo. Instead of the usual freebees, we got

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Speaker 1: plastic free drinking bottles in a recycled bag. This year.

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Speaker 1: The streets up still full of cars and chauffeurs, and

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Speaker 1: a lot of those bottles still seems to have ended

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Speaker 1: up in the trash. But it does feel a bit different,

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Speaker 1: and not just because Greta Tunberg was here, not just

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Speaker 1: because we've had weeks of coverage of the fires blazing

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Speaker 1: in Australia. I think it's also because serious money is

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Speaker 1: now going into making the world zero carbon and business

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Speaker 1: leaders really are starting to think about what it means

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Speaker 1: for them. The McKinsey Global Institute has brought a report

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Speaker 1: here to Davos on what exactly climate change could mean,

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Speaker 1: not just for the planet, but for people and the

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Speaker 1: global economy. And I'm glad to say I have one

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Speaker 1: of the directors of the Institute who co authored the report,

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Speaker 1: Jonathan Wetzel, sitting down with me here. Jonathan, thanks very

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Speaker 1: much for being on Stephanomics. We have had a lot

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Speaker 1: of consciousness raising here over the years about the cost

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Speaker 1: of climate change. What's different about your report, Well, we're

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Speaker 1: looking at the physical climate risk. So what's different is

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Speaker 1: that this is we think the deepest and most comprehensive

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Speaker 1: assessment of both the hazard and it's social and economic impact.

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Speaker 1: There are a lot of reports out there which take

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Speaker 1: a look at a specific area, whether it's wildfire or

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Speaker 1: a heat wave or flooding uh in a specific geography.

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Speaker 1: What we have tried to do is step back and

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Speaker 1: take the global view while going deeply into nine different

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Speaker 1: cases of extreme climate today and then looking forward and

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Speaker 1: say how wild all this play out across the world.

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Speaker 1: So that's that's what we've tried to do here, and

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Speaker 1: we think that is a step forward for the conversation contribution.

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Speaker 1: We hope to decision makers. And when you talk about

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Speaker 1: the socio economic impact, what's an example, what's the kind

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Speaker 1: of thing we're talking about. I was very struck. For example,

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Speaker 1: you had the figure about the percentage of the world

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Speaker 1: population that could face a quite significant risk of a

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Speaker 1: of a change of weather that could actually make it unlivable. Well, yes,

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Speaker 1: so we're looking at impacts that are affecting our three

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Speaker 1: basic sources of capital, human capital, economic capital, and natural capital.

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Speaker 1: And we look at the hazards in terms of the droughts,

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Speaker 1: the heat waves, of floods and so forth, and how

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Speaker 1: those hazards effect those systems. So the intersection of that

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Speaker 1: is physical climate risk. But there will also be places

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Speaker 1: that maybe for some period of time, would benefit or

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Speaker 1: even find it easier to grow food for example. I

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Speaker 1: mean it's very differentially impact. Indeed, physical climate risk is spatial.

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Speaker 1: It happens in a place, and as a result those

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Speaker 1: those impacts in those places may differ. As you say,

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Speaker 1: agricultural yields in northern latitudes are likely to increase uh

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Speaker 1: and warmer weather for some parts of the world would

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Speaker 1: be a benefit, and cold weather kills lots of people.

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Speaker 1: But on the other hand, it's this is not a

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Speaker 1: report that tries to make a trade off. It says

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Speaker 1: we're trying again measure the full risk so that people

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Speaker 1: can decide what is the appropriate action. Just to play

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Speaker 1: devil's advocate, I mean, I wonder when you're very clear,

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Speaker 1: and a lot of other reports are also very clear

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Speaker 1: on the differential impact, and that it's often the poorest

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Speaker 1: countries that are going to suffer most, which of course

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Speaker 1: ought to be a call to arms. But if the

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Speaker 1: richer countries that have also been most reluctant to change

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Speaker 1: their behavior, if it's increasingly clear to them that they're

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Speaker 1: not going to pay the full price of failing to

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Speaker 1: do anything and may even benefit in the cases you

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Speaker 1: say of some Northern European countries, I mean, do you

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Speaker 1: just is there a little bit of you that worries

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Speaker 1: that actually more information in this debate could make the

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Speaker 1: political argument harder because you're saying to people you're probably

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Speaker 1: not going to suffer from this. We know that now

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Speaker 1: with a bit more certainty than we did a few

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Speaker 1: years ago, but we still want you to help pay

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Speaker 1: for it to avoid it. The reality is, I don't

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Speaker 1: think we can in there's ever more interconnected global world

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Speaker 1: somehow pretend that what happens somewhere doesn't affect us or

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Speaker 1: wherever we are. Whether it's the supply chain that gets interrupted,

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Speaker 1: it's migration, it's a financial wealth being dissipated because of

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Speaker 1: the unexpected systemic knock on effect, and tax revenues for

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Speaker 1: Florida being affected by the devaluation of coastal properties. Ultimately,

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Speaker 1: physical climate risk affects every geography and uh and because

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Speaker 1: it is so nonstationary, because it's changing all the time,

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Speaker 1: it challenges our assumptions those thresholds that we have basically

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Speaker 1: built our economies and our physical infrastructure, whether that is

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Speaker 1: the grid transformers and how much heat they can bear,

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Speaker 1: or is the sea walls and how high they are,

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Speaker 1: or it's our ability to stay outdoors. I mean, these

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Speaker 1: things are going to be changing and challenged globally, and

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Speaker 1: that's that's that's the reality of where we are. And

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Speaker 1: even in countries that the UK, where there's a commitment

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Speaker 1: for zero colbum by, I think even there people criticize

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Speaker 1: it for not being a near target. Um Even there,

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Speaker 1: people haven't thought about getting rid of all that aspied

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Speaker 1: boilers in the house and things like that, so people

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Speaker 1: are definitely underestimated. I think that we are just at

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Speaker 1: the beginning of incorporating this risk into our financial and

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Speaker 1: economic calculations. That and with without a measure, of course,

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Speaker 1: it can't be managed, and so we are attempting to

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Speaker 1: help provide some of those measures. So we can now

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Speaker 1: think that through. And as others in the financial community

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Speaker 1: have said, that should then factor into portfolio allocation for capital,

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Speaker 1: it should re be reflected in insurance premiums and reinsurance premiums,

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Speaker 1: and those decisions ultimately are going to be I think

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Speaker 1: the ones that affect decisions like what should my boiler

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Speaker 1: be and how should I what I what will my

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Speaker 1: city council invest in? Because it's simply put, will be

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Speaker 1: more expensive to invest in UH assets which are either

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Speaker 1: climate exposed are our climate risk inducing. I'm interested. I

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Speaker 1: said at the stop that I thought that there had

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Speaker 1: been a che a change is sort of maybe a

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Speaker 1: tipping point has been reached in terms of people taking it,

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Speaker 1: not just taking it seriously and talking about this, but

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Speaker 1: it actually as you suggest people. Mark Carney, the Government

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Speaker 1: of the Bank of England, for example, this week, was

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Speaker 1: talking in a session about reminding people that every British

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Speaker 1: financial institution was going to be stress tested now by

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Speaker 1: the Bank of England, not just for a financial crisis,

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Speaker 1: but for what it would look like in a zero

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Speaker 1: carbon world. Um a lot of investors, they had a

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Speaker 1: black rock talking about how environmental factors might have to

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Speaker 1: start sort of factoring into how they think about companies.

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Speaker 1: How has this report been received here? Do you sense

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Speaker 1: a change of mood? Well, I think it's first of all,

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Speaker 1: I mean, it is the topic. I think the entire

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Speaker 1: Dabo's experience too, so far from me, has been all

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Speaker 1: about climate and I think that so there's a recognition.

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Speaker 1: I think there's also a bit of a I don't

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Speaker 1: want to say that the good news is that people

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Speaker 1: seem to know what to think. They know what the

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Speaker 1: bad news is, and it's without again knowing what that

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Speaker 1: risk is. It's very hard to justify putting incremental capital

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Speaker 1: to work to do something about it. And so one

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Speaker 1: might have the best will in the world, but there

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Speaker 1: are all these priorities, and whether those are saving for

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Speaker 1: pensions for the orphans, or climate or something else. This

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Speaker 1: allows us to say, well, this is not a question

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Speaker 1: of choice, this is an underlying change that affects everything,

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Speaker 1: and so it gets factored in now across the financial community.

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Speaker 1: So the protection, I think has been to say, well, great,

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Speaker 1: now we have something that we could work with. We

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Speaker 1: actually have some data that we have a methodology that says, well,

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Speaker 1: this is how we think about physical climate risk, this

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Speaker 1: is what we can do about it. Jonathan Weistle, thank

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Speaker 1: you very much, my pleasure, Thanks for listening to Stephanomics.

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Speaker 1: We'll be back next week with the final episode of

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Speaker 1: our second season. Sad as Donald Trump would say, but

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Speaker 1: you can always get news and analysis from Bloomberg Economics

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00:28:03,920 --> 00:28:08,200
Speaker 1: by following as Economics on Twitter. This episode was written

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Speaker 1: by me and produced by Magnus Hendrickson. Special thanks to

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Speaker 1: Dr Jacob Frankel, Christie Hoffman, Jonathan Witzel, Clive Tarling, and

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Speaker 1: Victoria Cochrane. Our executive producer is Scott Laman and Francesco

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Speaker 1: Levy is the head of Bloomberg Podcasts.