Speaker 1: Hello, and welcome to Stephanomics, the podcast that brings the
Speaker 1: global economy to you. This week, we're up a mountain
Speaker 1: in Davos for the World Economic Forum, that famous and
Speaker 1: infamous gathering of the global great and good now celebrating
Speaker 1: its fiftieth anniversary. That's fifty years of talking about the
Speaker 1: world's problems in the middle of the Swiss Alps. Who
Speaker 1: would have thought it. This year, climate change has dominated
Speaker 1: the agenda and ten teenage environment activists were invited to come,
Speaker 1: including Greta Tunberg. There were also a hundred nineteen billionaires
Speaker 1: and many many chief executives and bankers. But luckily, tackling
Speaker 1: global inequality has also been high on the agenda here,
Speaker 1: so you can stop worrying about that as well. I'll
Speaker 1: be talking about the potential physical and social impact of
Speaker 1: climate change with the director of the McKinsey Global Institute
Speaker 1: later on, and I'll be asking the leader of one
Speaker 1: of the world's biggest trade unions, Christie Hoffman, how she
Speaker 1: would make the world a fairer place. But first I
Speaker 1: wanted to catch up with the Davos veteran attempted to
Speaker 1: say the Davos Institution, so Dr Jacob Frankel is a
Speaker 1: very distinguished economist and former colleague of mine at JP Morgan.
Speaker 1: He served as chairman of JP Morgan Chase International since
Speaker 1: two thousand and nine, and before that, among other things,
Speaker 1: was Governor of the Central Bank of Israel for nearly
Speaker 1: a decade. Jacob, love you to have you on Stephanomics.
Speaker 1: It's been fifty years they've been holding the World Economic Forum.
Speaker 1: You just told me this is your thirty three say.
Speaker 1: I'm struck how the economic debate here has broadened in
Speaker 1: the past few years. Most of the people I've spoken
Speaker 1: to here, and indeed the speaking to it for the podcast,
Speaker 1: and not focusing on just the narrow macro economic issues.
Speaker 1: They're talking about the environment, about populism, about social inclusion.
Speaker 1: Do you think the discussions were having here up a
Speaker 1: mountain have become more or less useful over the past
Speaker 1: few years. I think that the definition of useful has
Speaker 1: evolved so in a way they are all relevant given
Speaker 1: the interests of the time. For example, thirty years ago,
Speaker 1: there was no question about what does it take to
Speaker 1: do good economics. There was the so called Washington consensus.
Speaker 1: You knew you have to have budget responsibility, monetary policies
Speaker 1: that focuses to achieve price stability and the things of
Speaker 1: that type. And at the same time the issue was
Speaker 1: will government have the political will to execute what we
Speaker 1: all know needs to be done? The compass was clear.
Speaker 1: The great financial crisis of a little bit more than
Speaker 1: a decade ago marks the most important change because that crisis,
Speaker 1: in which still has the consequences seen today, That crisis
Speaker 1: shuttled the compass. The question was not anymore how do
Speaker 1: I execute what we all agree needs to be done,
Speaker 1: but rather what should be done? The narrative world experts
Speaker 1: have failed. We need to have a new theory. We
Speaker 1: need to throw all the textbooks away, in my judgment,
Speaker 1: a big overshooting, with the danger that you will throw
Speaker 1: away also a lot of good wisdom. It all started
Speaker 1: with the notion that somehow all the conventional modeltor my
Speaker 1: macroeconomic policies up analyzed. Fiscal policy could not be used
Speaker 1: because that was already too big. Structural policies could not
Speaker 1: be used because it takes more time to show fruits
Speaker 1: and we are in a crisis. Therefore, the theory when
Speaker 1: we need to show quick results. Hence, all the lights
Speaker 1: were put on the central banks and monetary policy. Before long,
Speaker 1: central banks became the only game in town and they
Speaker 1: needed to do the only things that could be done,
Speaker 1: namely lowering interest rates. The file was extinguished and the
Speaker 1: question was how do you go back to the old
Speaker 1: power time of growth and prosperity. However, what was coined
Speaker 1: as unconventional policies to be understood as a temporary departure
Speaker 1: has become almost a conventional policy because the consequences are
Speaker 1: still with us. Your expertise is monetary policy, your former
Speaker 1: central banker, and I'm struck that the Bank of England,
Speaker 1: the Federal Reserve and the European Central Bank are all
Speaker 1: now under or now undergoing a review of their tools
Speaker 1: and their targets everything they did with monetary policy. Um,
Speaker 1: what do you think where do you think they should
Speaker 1: end up? We should not expect a new textbook to
Speaker 1: be written in this context. That's not the issue. The
Speaker 1: main focus will be on various procedures, on various mechanisms,
Speaker 1: on various regulations. It will not be the new perspective
Speaker 1: of macro economics because those things are not done through
Speaker 1: a review within the central bank. Those are things that
Speaker 1: are generational things That's what I'm saying, don't throw the
Speaker 1: old textbooks away, but also recognize that being the only
Speaker 1: game in town for monetary policy is a very dubious
Speaker 1: compliment because it means that you are granted or taking
Speaker 1: upon yourself tasks that you are not equipped to deliver.
Speaker 1: You do not have the tools to deliver. The name
Speaker 1: of the game today is innovation, growth, technology, creativity. Where
Speaker 1: does this come from? It comes from everywhere but monetary policy.
Speaker 1: It is fiscal policy, it is tax system, it is
Speaker 1: structured policy policies that remove these totions, policies that realize
Speaker 1: the flexibility of the economy is the key for further growth.
Speaker 1: But if we do all of these re examination within
Speaker 1: the monetary policy domain, it leaves the impression that also
Speaker 1: the answer to the current challenges will come from the
Speaker 1: central bank. I all welcome to see reviews of monetary policy,
Speaker 1: but I warn't against the illusion that here we will
Speaker 1: see a new framework that will allow the only game
Speaker 1: in town to continue. But on that precise point, and
Speaker 1: where does inflation fit into that? I mean, do we
Speaker 1: have to be have an understanding of why all those
Speaker 1: inflation targets are being missed and where we're going to
Speaker 1: get inflation from, if not from the any game in town. Well,
Speaker 1: I my answer when people ask me where is the inflation?
Speaker 1: After all, you we were told that if you print,
Speaker 1: that's what happens. Well, the inflation found itself in another
Speaker 1: place in asset markets. You have kept interest rates so
Speaker 1: low that you have provided artificial stimulus to investors and
Speaker 1: others to invest in the financial markets because that's well
Speaker 1: the incentives go. And as you do that, you inflate
Speaker 1: asset prices. You have stock markets all over the world
Speaker 1: reaching new heights every day, and as a result, you
Speaker 1: have a greater disconnect between the real economy and the
Speaker 1: financial economy. At the end of the day, the mirror
Speaker 1: and the reality needs to be aligned. Let make a
Speaker 1: long story short and say macroeconomic policies have been pushed
Speaker 1: to be out of balance, excessive reliance on monetary policy.
Speaker 1: And I think that therefore, as we do the review
Speaker 1: of monetary procedures all over the world, it's time also
Speaker 1: to wake up other one under policy instruments. Okay, final question.
Speaker 1: We've talked about this. That you are soon retiring from
Speaker 1: JP Borgan, you're gonna have a bit more time to
Speaker 1: take grand thoughts. Um, you already have PhD. But I
Speaker 1: wonder if you were going to go and get another one,
Speaker 1: go back to school, what would knowing everything and seeing
Speaker 1: the world as it is, what would you want to
Speaker 1: go and study? Well? To begin with, I would ask
Speaker 1: myself what is the name of the game today? And
Speaker 1: I will say those things were not even on the
Speaker 1: curriculum when I was stilled AI, Artificial intelligence, big data?
Speaker 1: Who knew all of the Internet, all of that kind
Speaker 1: of thing? So I think that, but in more general way,
Speaker 1: I think the future will not depend on how many
Speaker 1: degrees you have, but rather how many how much knowledge
Speaker 1: you have accumulated. And knowledge is not a set of information,
Speaker 1: but capability to operate in a changing environment, capability to
Speaker 1: know where to find the information that you need once
Speaker 1: you need it, but really capability to operate across section.
Speaker 1: Most of the curriculum of important universities has moved away
Speaker 1: from narrow discipline to interdisciplinary approach. And the reason why
Speaker 1: it is the case because there is greater understanding that
Speaker 1: to be a good physician you need also to be
Speaker 1: a good psychologist. To be a good psychologists, you must
Speaker 1: understand how other systems work. Etcetera. And on the job
Speaker 1: training will become a very important thing. We spend a
Speaker 1: lot of resources on training and too few resources on retraining.
Speaker 1: Why do we need to retrain? Because the things that
Speaker 1: we are training for have changed, and hopefully we will
Speaker 1: move into even a more rapid change and if there result,
Speaker 1: the whole concept of education and training will need to
Speaker 1: be modified. Well, we're being very interdisciplinary on steconomics, is
Speaker 1: we You're the only economist I'm talking to, But Dr
Speaker 1: Jacob Franko, thank you very much, thank you. We talk
Speaker 1: a lot about the future of work here at Davos,
Speaker 1: and these days I think there is also a lot
Speaker 1: of talk about capitalism needing to deliver a better deal
Speaker 1: for people. Trade unions you might have thought would be
Speaker 1: useful things to have around when you're trying to navigate
Speaker 1: both of those things. But by and large, I would
Speaker 1: say that the trade union movement is not very well
Speaker 1: represented here at Davos. One exception is the Union Network
Speaker 1: International UNI, which represents twenty million people around the world.
Speaker 1: And I'm delighted to say that the UNEDS UNEDS General
Speaker 1: Secretary Christie Hoffman is here with me. Christie, thank you
Speaker 1: and welcome to Stephanomics. Thank you for having me pleasure.
Speaker 1: I guess I should start by asking you, you know,
Speaker 1: what kind of reception you get here at the World
Speaker 1: Economic Forum? I mean, they do talk a lot in
Speaker 1: these sessions about giving workers a better deal, But do
Speaker 1: they want to do a deal with the likes of you? Yeah? Well,
Speaker 1: actually there are ten of us here, and I think
Speaker 1: more or less that's that's been the same for for
Speaker 1: several years, just to you know, spice it up when
Speaker 1: there we'reds, you know, three thousand. But in any event, um,
Speaker 1: where some of the top you know, international leaders are
Speaker 1: here and so we're a feisting group. Um, how do
Speaker 1: they react? I think that you know, the question of um,
Speaker 1: that the hard question that a lot of the companies
Speaker 1: here have to face with us is that our demand
Speaker 1: is we want to, in particular UNI's voicing this this
Speaker 1: year and other as well, that we have to really
Speaker 1: re strengthen and restore the role that collective bargaining plays
Speaker 1: in our economy because without that we will never solve
Speaker 1: the issue of inequality. And we talk about inequality breaking
Speaker 1: down social cohesion and diminishing economic growth and all the
Speaker 1: problems of inequality, immorality, the number of working poor, um,
Speaker 1: the gross you know pay that goes to the CEOs
Speaker 1: these days, and all these things. But at the core
Speaker 1: of it is we have broken down an attack to
Speaker 1: collective bargaining for so many decades, and that's at the
Speaker 1: point where we need a conscious campaign to restore collective bargaining.
Speaker 1: And yeah, I mean, is that the message that companies
Speaker 1: really want to hear. No, I think they'd rather hear
Speaker 1: you know, you should give everybody a little more time off,
Speaker 1: or you should think about rescheduling or some like benefits
Speaker 1: they could sprinkle down to make life better for workers.
Speaker 1: And that's all good, but we need a power shift
Speaker 1: and if we don't have that, we're not gonna we're
Speaker 1: not going to solve the issues of inequality and we're
Speaker 1: not going to be at the bargaining table to navigate,
Speaker 1: as you pointed out, the new world of work, where
Speaker 1: it's critical that unions are able to workers through their representatives,
Speaker 1: are able to sit down and navigate how we're going
Speaker 1: to implement new technology, What are the skills required, how
Speaker 1: are how old will this impact the workers? UM and
Speaker 1: climate change. We need to be able to negotiate just
Speaker 1: transitions so all the problems we've faced in every direction.
Speaker 1: We need to have a worker voice at the core.
Speaker 1: That's why there was a good line I heard earlier
Speaker 1: in a session from the chief executive PayPal who said
Speaker 1: that the multi stakeholder capitalism that people talk about couldn't
Speaker 1: just be about having two wolves and a sheep decide
Speaker 1: what to have for dinner, which I thought was But
Speaker 1: it is true that if you think about the nineteenth century,
Speaker 1: you know the real changes in working conditions and pay
Speaker 1: happen because they were forced on businesses by legislation and
Speaker 1: to some extent by by trade unions. I mean, do
Speaker 1: you think it will be any different this time. I
Speaker 1: think there's always room for voluntary movement in the right direction.
Speaker 1: We negotiate with companies all the time. We try to
Speaker 1: persuade good companies that they should negotiate agreements on the
Speaker 1: whole range of issues, and we're successful in that within limits.
Speaker 1: But we want governments also to step in. They're not
Speaker 1: Governments are not just there to protect the corporate elite.
Speaker 1: They need to step in and strengthen their collective bargaining institutions.
Speaker 1: But I guess one of the reasons why, I mean,
Speaker 1: there's been. The US famously has this legislation which does
Speaker 1: make it very difficult to organize a union. M But
Speaker 1: one of the reasons why employers not always very welcoming
Speaker 1: is they unions have not been associated with helping change
Speaker 1: to happen. So is that is that a fair criticism
Speaker 1: that unions also have to be a bit more flexible.
Speaker 1: I think what you find if you look at unions
Speaker 1: all over the world is that unions where there is
Speaker 1: a more equal balance of power tend to be way
Speaker 1: more flexible. Um. And so when you look at our
Speaker 1: Nordic unions, so from Sweden, North Norway, they are really welcoming,
Speaker 1: open arms with their employers towards how to make the
Speaker 1: employer more efficient, how can we use technology to advantage
Speaker 1: everyone because they know they're going to share in the
Speaker 1: gains um and they don't feel threatened by change. They
Speaker 1: feel that they want to embrace change and embark upon
Speaker 1: change in a way that makes their jobs more interesting,
Speaker 1: their companies more competitive, shared prosperity, etcetera. So, and then
Speaker 1: when you look at unions in the UK who are
Speaker 1: a little more embattled, maybe they're not as flexible. Same
Speaker 1: for the US, but a lot of that also depends
Speaker 1: on whether you have work site you know, enterprise bargaining
Speaker 1: or you know work site by work site relationships or
Speaker 1: a sectoral relationship where you have sectoral bargaining. So just
Speaker 1: in one industry, right and that I mean, there was
Speaker 1: a big study UM that came out this year from
Speaker 1: the O E c D, which is not known as
Speaker 1: being a radical institution, that said sectoral bargaining is really
Speaker 1: healthy for economies. It's better for employers and better for workers. Now,
Speaker 1: they didn't say every form of bargaining is is the greatest,
Speaker 1: but they did say that, but it's a real change
Speaker 1: and they've really said, Look, you want stronger economies, better
Speaker 1: ability to weather the ups and downs, better ability to
Speaker 1: implement new technology. I mean, I know, I started out
Speaker 1: my working career in a factory and a very big machine.
Speaker 1: And when they introduced numerically controlled machines that didn't require
Speaker 1: me to turn the wheel all day, I could not
Speaker 1: have been happier. I was so happy that my job
Speaker 1: was easier, safer, cleaner, UM and I had a union
Speaker 1: so that it wasn't gonna Uh. You know, nobody felt
Speaker 1: threatened by the implementation of new technology because we knew
Speaker 1: our company needed to be productive and high tech if
Speaker 1: they were going to succeed. And I think most workers
Speaker 1: weren't their companies to succeed for sure. It's really that
Speaker 1: they also have to think about, well, does this mean
Speaker 1: I'm growing out on the street with no protection? And
Speaker 1: I did hear it, actually hear it dens. I think
Speaker 1: I had a Scandinavian unionist saying that that we're not
Speaker 1: worried about new machines, were worried about old machines. They're
Speaker 1: the biggest threat workers. What about the gig economy, because
Speaker 1: it feels like, again when you look at the debate
Speaker 1: around you know, what's an employee? You know, lots of
Speaker 1: these gig companies, you know, Uber and others, famously they've
Speaker 1: kind of not had to worry about workers right so
Speaker 1: much because they say that all of these people working
Speaker 1: for them are not employees. Um and there's a sort
Speaker 1: of legal debate around that. Don't you haven't seen until recently,
Speaker 1: you may correct me traditional unions really active in that
Speaker 1: debate and or indeed kind of reaching out to the workers.
Speaker 1: Is that kind of the next runt? Is that going
Speaker 1: to be new unions that do that or the old ones. Uh,
Speaker 1: you know, I think it is maybe the next frontier.
Speaker 1: But I also know that a lot of members of
Speaker 1: UNI are or or the Transport Workers, two different federations.
Speaker 1: But I'm aware of a lot of unions reaching out
Speaker 1: to Uber workers. And now some of it is a
Speaker 1: question of making sure they're regulated in the same way
Speaker 1: as taxi drivers. For example, so um like in Stockholm,
Speaker 1: the uber drivers were not allowed to operate unless they
Speaker 1: registered as a taxi company. Brussels they're not allowed to operate.
Speaker 1: Geneva they're not allowed to operate. So many cities across
Speaker 1: Europe are saying either you act like an employer, or
Speaker 1: you act like a taxi company, or you're you're out,
Speaker 1: and so this we're seeing this increasingly. But we're also
Speaker 1: seeing unions talking to the drivers a lot. And then
Speaker 1: in the US you have a big fight in California
Speaker 1: about whether or not they're an employer, and I think
Speaker 1: that that's going to play itself out. But increasingly Uber
Speaker 1: is facing like all these different doors, none of which
Speaker 1: are especially attractive, because to be an employer doesn't meet
Speaker 1: with their business model to be a taxi company. That's
Speaker 1: also kind of burdensome and then to just be free
Speaker 1: to do what they want. More and more governments are
Speaker 1: saying no so, and unions are talking to the drivers
Speaker 1: and trying to especially in California. The unions are really
Speaker 1: really involved in California, and I think that will be
Speaker 1: a little bit of a test because that's by far
Speaker 1: their biggest market. Climate change has been around as an
Speaker 1: issue for years here at Devils, but it's all felt
Speaker 1: a bit well, superficial. The movers and shakers coming here
Speaker 1: have been urged to take a bust up the mountain,
Speaker 1: not a limo. Instead of the usual freebees, we got
Speaker 1: plastic free drinking bottles in a recycled bag. This year.
Speaker 1: The streets up still full of cars and chauffeurs, and
Speaker 1: a lot of those bottles still seems to have ended
Speaker 1: up in the trash. But it does feel a bit different,
Speaker 1: and not just because Greta Tunberg was here, not just
Speaker 1: because we've had weeks of coverage of the fires blazing
Speaker 1: in Australia. I think it's also because serious money is
Speaker 1: now going into making the world zero carbon and business
Speaker 1: leaders really are starting to think about what it means
Speaker 1: for them. The McKinsey Global Institute has brought a report
Speaker 1: here to Davos on what exactly climate change could mean,
Speaker 1: not just for the planet, but for people and the
Speaker 1: global economy. And I'm glad to say I have one
Speaker 1: of the directors of the Institute who co authored the report,
Speaker 1: Jonathan Wetzel, sitting down with me here. Jonathan, thanks very
Speaker 1: much for being on Stephanomics. We have had a lot
Speaker 1: of consciousness raising here over the years about the cost
Speaker 1: of climate change. What's different about your report, Well, we're
Speaker 1: looking at the physical climate risk. So what's different is
Speaker 1: that this is we think the deepest and most comprehensive
Speaker 1: assessment of both the hazard and it's social and economic impact.
Speaker 1: There are a lot of reports out there which take
Speaker 1: a look at a specific area, whether it's wildfire or
Speaker 1: a heat wave or flooding uh in a specific geography.
Speaker 1: What we have tried to do is step back and
Speaker 1: take the global view while going deeply into nine different
Speaker 1: cases of extreme climate today and then looking forward and
Speaker 1: say how wild all this play out across the world.
Speaker 1: So that's that's what we've tried to do here, and
Speaker 1: we think that is a step forward for the conversation contribution.
Speaker 1: We hope to decision makers. And when you talk about
Speaker 1: the socio economic impact, what's an example, what's the kind
Speaker 1: of thing we're talking about. I was very struck. For example,
Speaker 1: you had the figure about the percentage of the world
Speaker 1: population that could face a quite significant risk of a
Speaker 1: of a change of weather that could actually make it unlivable. Well, yes,
Speaker 1: so we're looking at impacts that are affecting our three
Speaker 1: basic sources of capital, human capital, economic capital, and natural capital.
Speaker 1: And we look at the hazards in terms of the droughts,
Speaker 1: the heat waves, of floods and so forth, and how
Speaker 1: those hazards effect those systems. So the intersection of that
Speaker 1: is physical climate risk. But there will also be places
Speaker 1: that maybe for some period of time, would benefit or
Speaker 1: even find it easier to grow food for example. I
Speaker 1: mean it's very differentially impact. Indeed, physical climate risk is spatial.
Speaker 1: It happens in a place, and as a result those
Speaker 1: those impacts in those places may differ. As you say,
Speaker 1: agricultural yields in northern latitudes are likely to increase uh
Speaker 1: and warmer weather for some parts of the world would
Speaker 1: be a benefit, and cold weather kills lots of people.
Speaker 1: But on the other hand, it's this is not a
Speaker 1: report that tries to make a trade off. It says
Speaker 1: we're trying again measure the full risk so that people
Speaker 1: can decide what is the appropriate action. Just to play
Speaker 1: devil's advocate, I mean, I wonder when you're very clear,
Speaker 1: and a lot of other reports are also very clear
Speaker 1: on the differential impact, and that it's often the poorest
Speaker 1: countries that are going to suffer most, which of course
Speaker 1: ought to be a call to arms. But if the
Speaker 1: richer countries that have also been most reluctant to change
Speaker 1: their behavior, if it's increasingly clear to them that they're
Speaker 1: not going to pay the full price of failing to
Speaker 1: do anything and may even benefit in the cases you
Speaker 1: say of some Northern European countries, I mean, do you
Speaker 1: just is there a little bit of you that worries
Speaker 1: that actually more information in this debate could make the
Speaker 1: political argument harder because you're saying to people you're probably
Speaker 1: not going to suffer from this. We know that now
Speaker 1: with a bit more certainty than we did a few
Speaker 1: years ago, but we still want you to help pay
Speaker 1: for it to avoid it. The reality is, I don't
Speaker 1: think we can in there's ever more interconnected global world
Speaker 1: somehow pretend that what happens somewhere doesn't affect us or
Speaker 1: wherever we are. Whether it's the supply chain that gets interrupted,
Speaker 1: it's migration, it's a financial wealth being dissipated because of
Speaker 1: the unexpected systemic knock on effect, and tax revenues for
Speaker 1: Florida being affected by the devaluation of coastal properties. Ultimately,
Speaker 1: physical climate risk affects every geography and uh and because
Speaker 1: it is so nonstationary, because it's changing all the time,
Speaker 1: it challenges our assumptions those thresholds that we have basically
Speaker 1: built our economies and our physical infrastructure, whether that is
Speaker 1: the grid transformers and how much heat they can bear,
Speaker 1: or is the sea walls and how high they are,
Speaker 1: or it's our ability to stay outdoors. I mean, these
Speaker 1: things are going to be changing and challenged globally, and
Speaker 1: that's that's that's the reality of where we are. And
Speaker 1: even in countries that the UK, where there's a commitment
Speaker 1: for zero colbum by, I think even there people criticize
Speaker 1: it for not being a near target. Um Even there,
Speaker 1: people haven't thought about getting rid of all that aspied
Speaker 1: boilers in the house and things like that, so people
Speaker 1: are definitely underestimated. I think that we are just at
Speaker 1: the beginning of incorporating this risk into our financial and
Speaker 1: economic calculations. That and with without a measure, of course,
Speaker 1: it can't be managed, and so we are attempting to
Speaker 1: help provide some of those measures. So we can now
Speaker 1: think that through. And as others in the financial community
Speaker 1: have said, that should then factor into portfolio allocation for capital,
Speaker 1: it should re be reflected in insurance premiums and reinsurance premiums,
Speaker 1: and those decisions ultimately are going to be I think
Speaker 1: the ones that affect decisions like what should my boiler
Speaker 1: be and how should I what I what will my
Speaker 1: city council invest in? Because it's simply put, will be
Speaker 1: more expensive to invest in UH assets which are either
Speaker 1: climate exposed are our climate risk inducing. I'm interested. I
Speaker 1: said at the stop that I thought that there had
Speaker 1: been a che a change is sort of maybe a
Speaker 1: tipping point has been reached in terms of people taking it,
Speaker 1: not just taking it seriously and talking about this, but
Speaker 1: it actually as you suggest people. Mark Carney, the Government
Speaker 1: of the Bank of England, for example, this week, was
Speaker 1: talking in a session about reminding people that every British
Speaker 1: financial institution was going to be stress tested now by
Speaker 1: the Bank of England, not just for a financial crisis,
Speaker 1: but for what it would look like in a zero
Speaker 1: carbon world. Um a lot of investors, they had a
Speaker 1: black rock talking about how environmental factors might have to
Speaker 1: start sort of factoring into how they think about companies.
Speaker 1: How has this report been received here? Do you sense
Speaker 1: a change of mood? Well, I think it's first of all,
Speaker 1: I mean, it is the topic. I think the entire
Speaker 1: Dabo's experience too, so far from me, has been all
Speaker 1: about climate and I think that so there's a recognition.
Speaker 1: I think there's also a bit of a I don't
Speaker 1: want to say that the good news is that people
Speaker 1: seem to know what to think. They know what the
Speaker 1: bad news is, and it's without again knowing what that
Speaker 1: risk is. It's very hard to justify putting incremental capital
Speaker 1: to work to do something about it. And so one
Speaker 1: might have the best will in the world, but there
Speaker 1: are all these priorities, and whether those are saving for
Speaker 1: pensions for the orphans, or climate or something else. This
Speaker 1: allows us to say, well, this is not a question
Speaker 1: of choice, this is an underlying change that affects everything,
Speaker 1: and so it gets factored in now across the financial community.
Speaker 1: So the protection, I think has been to say, well, great,
Speaker 1: now we have something that we could work with. We
Speaker 1: actually have some data that we have a methodology that says, well,
Speaker 1: this is how we think about physical climate risk, this
Speaker 1: is what we can do about it. Jonathan Weistle, thank
Speaker 1: you very much, my pleasure, Thanks for listening to Stephanomics.
Speaker 1: We'll be back next week with the final episode of
Speaker 1: our second season. Sad as Donald Trump would say, but
Speaker 1: you can always get news and analysis from Bloomberg Economics
Speaker 1: by following as Economics on Twitter. This episode was written
Speaker 1: by me and produced by Magnus Hendrickson. Special thanks to
Speaker 1: Dr Jacob Frankel, Christie Hoffman, Jonathan Witzel, Clive Tarling, and
Speaker 1: Victoria Cochrane. Our executive producer is Scott Laman and Francesco
Speaker 1: Levy is the head of Bloomberg Podcasts.