WEBVTT - Mark Carney on the Energy Transition 0:00:00.480 --> 0:00:03.640 Hi, This is Dana Perkins and you're listening to Switched 0:00:03.680 --> 0:00:06.760 on the bienn F podcast. So this is the first 0:00:06.840 --> 0:00:09.879 of a series of special episodes that will be interspersing 0:00:09.920 --> 0:00:13.600 with our regular episodes. They'll be external guests that were 0:00:13.640 --> 0:00:16.920 actually interviewed at one of our recent bienny F summits. 0:00:17.560 --> 0:00:20.239 BENNF hosts a series of summits around the world each 0:00:20.320 --> 0:00:23.079 year and we bring together key decision makers in the 0:00:23.200 --> 0:00:25.840 energy transition and we talk through some of the key 0:00:25.880 --> 0:00:30.160 issues facing the transition and decarbonization. Our summit in New 0:00:30.200 --> 0:00:33.360 York City took place in April earlier this year, and 0:00:33.440 --> 0:00:37.479 this episode includes an interview conducted by my colleague Ethan Zindler, 0:00:37.640 --> 0:00:40.760 whose head of America's for bien EF. He was privileged 0:00:40.800 --> 0:00:43.120 to sit down with none other than Mark Karney, you 0:00:43.240 --> 0:00:46.560 un Special Envoy for Climate Action and Finance and chair 0:00:46.600 --> 0:00:49.400 of the Glasgow Financial Alliance for Net Zero or g 0:00:49.560 --> 0:00:52.279 FANS for short. He's the author of the book Values 0:00:52.479 --> 0:00:56.280 and previously Governor of the Bank of England from twenty 0:00:56.520 --> 0:00:58.760 as well as Governor of the Bank of Canada from 0:00:58.760 --> 0:01:02.080 two thousand eight to twenty ROUTEAM. Among the topics they 0:01:02.080 --> 0:01:05.720 discussed was the role and importance of corporate disclosure as 0:01:05.720 --> 0:01:08.679 it relates to climate. Please note that BNF does not 0:01:08.760 --> 0:01:11.520 provide investment or strategy advice, and we have a full 0:01:11.560 --> 0:01:14.080 disclaimer at the end of the show. If you get 0:01:14.120 --> 0:01:15.720 to the end of this episode and you like what 0:01:15.800 --> 0:01:18.200 you hear, don't forget to hit subscribe to switch it 0:01:18.280 --> 0:01:20.440 on on whatever your player you're listening to us on. 0:01:21.200 --> 0:01:31.600 Now let's hear Ethan's interview with Mark Karney. Mark, thank 0:01:31.640 --> 0:01:33.360 you for joining us, and it's nice to see you 0:01:33.440 --> 0:01:36.120 probably a few feet from my office in Washington, p C. 0:01:36.400 --> 0:01:38.720 Thanks for joining us from the bureau down there, so 0:01:38.959 --> 0:01:40.920 we're really pleased that you're able to join us and 0:01:40.959 --> 0:01:45.480 take part in our conversation. Where one year we'll give 0:01:45.560 --> 0:01:48.400 or take a few weeks since the announcement of g fans, 0:01:49.040 --> 0:01:51.160 maybe give us a status update on where it stands 0:01:51.200 --> 0:01:53.560 today and what its ambitions are for the balance of 0:01:53.600 --> 0:01:56.280 the year. First off, thank you for having me Ethan, 0:01:56.400 --> 0:01:58.920 and your office is in good shape. I'm checking it out. 0:01:58.960 --> 0:02:01.840 Look In terms of g fens, you know, over the 0:02:01.880 --> 0:02:04.600 course of the last year, we've obviously grown the tremendously 0:02:04.640 --> 0:02:07.120 in terms of the number of member firms, and the 0:02:07.160 --> 0:02:10.920 assets so that they control importantly, and it's not headline news, 0:02:10.919 --> 0:02:13.600 but it's necessary to ensure that it can be as 0:02:13.600 --> 0:02:16.640 effective as possible. We've really built out the core team 0:02:16.800 --> 0:02:19.640 in de fans, from the private sector, from the public sector, 0:02:19.720 --> 0:02:23.360 the stakeholder groups, built out the advisory panel under Billy 0:02:23.400 --> 0:02:27.000 Gilbert's that leadership, but huge additions to leadership with Mike 0:02:27.000 --> 0:02:30.320 Bloomberg is co chair and and Mary Shapiro's vice chair 0:02:30.320 --> 0:02:32.920 and all their expertise and energy that they brought. And 0:02:32.960 --> 0:02:35.880 we're in the process of expanding its global footprint and 0:02:36.000 --> 0:02:37.760 you know, watch this space over the course of the 0:02:37.800 --> 0:02:41.400 next few months for more announcements on that. But at 0:02:41.440 --> 0:02:44.880 the core of what we've been doing obviously securing members 0:02:44.919 --> 0:02:47.640 and having their core net zero commitments, what we've been 0:02:47.680 --> 0:02:51.320 doing is is having hundreds of people from those member 0:02:51.440 --> 0:02:55.080 firms working on a series of initiatives around what is 0:02:55.120 --> 0:03:00.160 best practice for implementing net zero commitments, So UH net 0:03:00.240 --> 0:03:04.960 zero implementation plans for financial institutions that consistent standard across 0:03:05.000 --> 0:03:08.960 financial institutions. A draft consultation on that will come out 0:03:09.120 --> 0:03:11.920 in the next six weeks. How do we bring consensus 0:03:12.000 --> 0:03:16.200 around sectoral pathways the pathways towards net zero in key 0:03:16.280 --> 0:03:19.800 high emitting sectors, whether it's steel, transportation, oil and gas, 0:03:19.800 --> 0:03:23.880 and others. What is best practice for company net zero plans? 0:03:23.880 --> 0:03:26.960 In other words, what is the financial institution financial industry 0:03:27.440 --> 0:03:32.160 expect from companies for decision useful information so that we 0:03:32.200 --> 0:03:34.400 can get capital to go to where the emissions are 0:03:34.400 --> 0:03:37.200 and get those emissions down again. A consultation will come 0:03:37.200 --> 0:03:39.200 out and that in the course of the next two months, 0:03:39.320 --> 0:03:41.560 and in very important to other elements of that, and 0:03:41.600 --> 0:03:46.160 I'll stop here after these. Even working on the approach 0:03:46.240 --> 0:03:50.120 to managing the phase out of stranded assets, we need 0:03:50.160 --> 0:03:54.040 a responsible and transparent framework to do that so that 0:03:54.160 --> 0:03:57.760 the so called industries that are high emitting energy sources 0:03:57.800 --> 0:04:01.560 that are causing climate change that can be responsibly managed 0:04:01.600 --> 0:04:05.280 down and truly be part of the transition. And then 0:04:05.320 --> 0:04:08.120 the last thing I really want to underscore, because it's critical, 0:04:08.360 --> 0:04:10.760 is a tremendous amount of work is being done to 0:04:11.040 --> 0:04:14.840 help mobilize capital at scale to the emerging and developing 0:04:14.880 --> 0:04:17.800 world where most of the emissions are today and where 0:04:17.800 --> 0:04:22.000 the challenges for just transition and secure sustainable energy transition 0:04:22.120 --> 0:04:24.760 are the greatest. So thanks for that over here. That's 0:04:24.839 --> 0:04:26.920 very helpful. You know, I was in treatuing when g 0:04:27.120 --> 0:04:29.479 FANS got. One of the major announcements around g FANS 0:04:29.520 --> 0:04:31.800 was at at Glasgow, of course, and you know, the 0:04:31.839 --> 0:04:34.440 discussion out of a hundred and thirty trillion dollars of 0:04:34.600 --> 0:04:38.320 total assets among all these four fifty institutions that are involved. 0:04:38.640 --> 0:04:41.400 And yet surprisingly to me somewhat, you know, the the 0:04:41.440 --> 0:04:45.320 initiative has generated some pushback and some complaints from environmental 0:04:45.360 --> 0:04:49.280 groups that not all the commitments are sort of ironclad, 0:04:49.640 --> 0:04:52.920 not all the organizations have made the same level of commitments. 0:04:53.120 --> 0:04:55.039 How would you respond to some of the criticism that 0:04:55.120 --> 0:04:58.599 the initiatives received you in that regard, Well, look, the 0:04:58.680 --> 0:05:02.080 first thing is that we wealth welcome scrutiny and and 0:05:02.120 --> 0:05:05.480 welcome the high expectations. The world has been on track 0:05:05.600 --> 0:05:08.680 for a climate catastrophe. The world has been you know, 0:05:08.800 --> 0:05:13.679 government policy, company investment, and financial institutions have been funding 0:05:13.680 --> 0:05:16.960 the world that was headed towards above three degrees. Now 0:05:17.279 --> 0:05:20.599 we started to turn with the ambitions at Glasgow by 0:05:20.720 --> 0:05:24.719 countries in the Glasgow Climate Pact of now covering of 0:05:24.720 --> 0:05:27.719 global emissions with net zero objectives were starting to turn 0:05:27.800 --> 0:05:31.400 with leaders in industry with their initiatives and the core 0:05:31.520 --> 0:05:35.920 of the financial system that number dred trillion ist of 0:05:35.960 --> 0:05:39.520 global financial assets as you know, and those assets turn over, 0:05:39.600 --> 0:05:42.160 and the key is as those assets turn over, as 0:05:42.240 --> 0:05:46.599 loans mature, as investment decisions are made, that all of 0:05:46.640 --> 0:05:50.200 those decisions take climate change and the net zero transition 0:05:50.240 --> 0:05:53.719 into account, that they do so transparent and so that 0:05:53.960 --> 0:05:57.760 all stakeholders can judge and see who is funding the 0:05:57.839 --> 0:06:00.760 solutions and who is still part of the now just 0:06:00.880 --> 0:06:05.200 by adjoining DEFENS, making the commitments committing to the transparency. Remember, 0:06:05.240 --> 0:06:09.280 there will be annual reporting of all DEFENS members of 0:06:09.320 --> 0:06:13.320 their emissions, of their portfolio companies Scope one, Scope too, 0:06:13.360 --> 0:06:16.520 and Scope three emissions where material and you know, one 0:06:16.520 --> 0:06:19.280 thing finance can do is count and we'll be able 0:06:19.320 --> 0:06:21.520 to see, as I say, who's part of that solution 0:06:21.560 --> 0:06:23.680 and all of that work I mentioned in the ends 0:06:23.760 --> 0:06:26.720 in response to your first question is is to bring 0:06:26.760 --> 0:06:32.440 in a discipline, rigorous, consistent approach to implementing those commitments. 0:06:32.720 --> 0:06:35.599 So thanks for that clarification, and certainly look forward to 0:06:35.640 --> 0:06:38.760 the counting the disclosure. I think Scope three strikes me 0:06:38.800 --> 0:06:40.880 as the real challenge and in many of these cases 0:06:41.440 --> 0:06:43.360 since I've got you, we're gonna shift topics a little 0:06:43.360 --> 0:06:46.200 bit and want to get your view on the macroeconomic 0:06:46.520 --> 0:06:49.719 picture within the context of energy of course as well. 0:06:50.240 --> 0:06:52.200 I mean, one of the things we've talked a lot 0:06:52.200 --> 0:06:55.799 about has been how much the entire macro economic situation 0:06:55.920 --> 0:07:00.040 has changed so dramatically in the last two months to 0:07:00.240 --> 0:07:02.560 the conflict in Ukraine. We just wanted to get your 0:07:02.600 --> 0:07:06.200 thoughts on on really, how does the energy transition fit 0:07:06.320 --> 0:07:09.920 within the current picture. You know, the reaction we've seen 0:07:09.960 --> 0:07:13.320 from Washington has been to release more oil from the 0:07:13.320 --> 0:07:18.680 strategic Petroleum Reserve, loosen standards around ethanol temporarily, and and 0:07:18.720 --> 0:07:21.400 now there's also going to be additional drilling. Do you 0:07:21.400 --> 0:07:23.480 think these are the appropriate responses? And how does it 0:07:23.800 --> 0:07:26.120 this fit within a grander challenge that we have now 0:07:26.360 --> 0:07:29.160 of addressing climate change? Well, let me let me go 0:07:29.240 --> 0:07:33.040 to the grander challenge, since we're talking macro and and 0:07:33.040 --> 0:07:36.080 and within that the energy transition. I think the first 0:07:36.080 --> 0:07:38.720 thing to say is that the horrible events and that 0:07:38.800 --> 0:07:42.680 Russia's uh in a horrific convasion of Ukraine has added 0:07:42.760 --> 0:07:46.920 an additional layer and additional challenge. But the macro environment 0:07:46.960 --> 0:07:49.680 was shifting. Before that, we're moving to a world of 0:07:50.000 --> 0:07:54.520 quite significant supply constraints, supply adjustments. These were much broader 0:07:55.040 --> 0:07:57.200 than short term. Part of that has to do with 0:07:57.280 --> 0:08:00.520 the nature of global integration and the reversal of many 0:08:00.560 --> 0:08:03.200 elements of that. Of course, that has been reinforced by 0:08:03.320 --> 0:08:05.440 recent events. It also has to do with the with 0:08:05.480 --> 0:08:08.160 the energy transition, and I think the way i'd look 0:08:08.200 --> 0:08:12.120 at the specifics of the energy transition, the consequence of 0:08:12.360 --> 0:08:15.800 Russia's invasion and the reaction to it, I divided into 0:08:15.960 --> 0:08:18.880 the near term, medium and longer term. In the near term, 0:08:19.080 --> 0:08:22.280 it's not good news for the energy transition. It's not 0:08:22.400 --> 0:08:25.200 good news for our climate objectives. There will be more 0:08:25.400 --> 0:08:28.320 emissions as a consequence of this war is a consequence 0:08:28.360 --> 0:08:32.120 of short term scramble for energy, energy sources that are 0:08:32.160 --> 0:08:35.200 available and readily available now, I think is a fact. 0:08:35.320 --> 0:08:38.520 And you know climate physics that doesn't ask why carbon 0:08:38.559 --> 0:08:40.840 has been put in the atmosphere. It just subtracts it 0:08:40.880 --> 0:08:43.640 from the carbon budget. So it makes our challenge more difficult. 0:08:43.720 --> 0:08:47.400 That's first point. In the second is that the response 0:08:47.440 --> 0:08:50.920 to it, the medium term response for material shifts in 0:08:51.000 --> 0:08:54.120 energy mixes in countries it takes three to five years 0:08:54.280 --> 0:08:57.280 to really move the needle. And with that horizon, the 0:08:57.360 --> 0:09:01.319 judgment about which energy sources to the elop which to accelerate, 0:09:01.640 --> 0:09:05.640 which to use as bridges. Clean energy performs exceptionally well 0:09:05.760 --> 0:09:10.000 with relative to conventional energy. There will be a need 0:09:10.080 --> 0:09:12.800 for additional fossil fuels, and I'll come back to that. 0:09:13.160 --> 0:09:16.359 But to be clear, clean energy it's not just sustainable 0:09:16.800 --> 0:09:19.880 or cost effective, it's also secure once it's built. No 0:09:19.920 --> 0:09:22.640 one owns the the sun and the wind, and hydrogen 0:09:22.720 --> 0:09:26.640 is literally everywhere if you're producing green hydrogen. So you 0:09:26.679 --> 0:09:29.680 see this tripling of ambition in Europe, in the UK, 0:09:29.880 --> 0:09:33.000 the up of ambition in Canada's emission reduction plan that 0:09:33.080 --> 0:09:34.960 was put out two weeks ago, and I think we'll 0:09:34.960 --> 0:09:38.360 see more of that because the raw economics the realities 0:09:38.400 --> 0:09:42.960 of energy security overlap exceptionally well with the needs of sustainability. Now, 0:09:44.200 --> 0:09:47.440 the medium and longer term point about bridging what is 0:09:47.480 --> 0:09:50.920 also required from this and and the dictates of energy 0:09:50.960 --> 0:09:54.319 security will mean that there will be in my judgment, 0:09:54.440 --> 0:09:57.120 more stranded assets. I mean, we all are familiar with 0:09:57.160 --> 0:10:01.480 the geological drivers of the stranded assets. Geology meets climate physics. 0:10:01.520 --> 0:10:04.600 But what I mean is that there will be more 0:10:04.760 --> 0:10:09.760 energy sources developed that are for purposes of energy security. 0:10:09.800 --> 0:10:12.720 They will make other energy sources redundant in the fullness 0:10:12.720 --> 0:10:15.480 of time if we are going to hold to our 0:10:15.520 --> 0:10:19.880 climate objectives. That changes the economics of those new developments again, 0:10:19.960 --> 0:10:23.280 and it reinforces the drive on on clean energy. So 0:10:23.400 --> 0:10:25.760 challenges in the short term, we need to be disciplined 0:10:25.760 --> 0:10:28.160 about what we do in the longer term, and to 0:10:28.320 --> 0:10:31.760 loop it back into gfans, we need a financial sector 0:10:32.200 --> 0:10:35.959 which is laser focused on the transition and that can 0:10:36.080 --> 0:10:40.800 responsibly finance those investments, particularly in the emerging and developing world, 0:10:41.040 --> 0:10:44.720 that are necessary to get us through this period well 0:10:44.760 --> 0:10:48.920 accelerating the investment in clean energy. Now for a very 0:10:48.920 --> 0:10:55.360 short break, stay with us. So I hear you right? 0:10:55.520 --> 0:10:58.400 Are we running some risk though? I mean you mentioned 0:10:58.440 --> 0:11:00.840 a three to five year time arising around the build 0:11:00.840 --> 0:11:04.080 out of large energy infrastructure, which totally makes sense. But 0:11:04.360 --> 0:11:06.840 you know, Europe is staring at a winter coming next 0:11:06.920 --> 0:11:10.319 year where they either of they'll attempt to completely wean 0:11:10.440 --> 0:11:14.160 themselves off of Russia or simply dramatically reduce that reliance. 0:11:14.400 --> 0:11:16.520 How do those timelines sync up? That seems like a 0:11:16.559 --> 0:11:20.600 real fundamental challenge. It is a fundamental challenge, and that 0:11:20.679 --> 0:11:23.640 Europe is doing its best to to bridge, partly through 0:11:23.880 --> 0:11:27.600 spot gasts wherever they can find it, partly through very 0:11:27.760 --> 0:11:31.680 high emitting sources I reference to coal, partly through a 0:11:31.679 --> 0:11:34.600 potentially demand management which is part of their plan some 0:11:34.720 --> 0:11:38.160 near term acceleration on the clean energy, but it's limited 0:11:38.200 --> 0:11:41.079 in that time horizon, so there are big challenges. And 0:11:41.200 --> 0:11:43.560 one element, as you know, that has not been put 0:11:43.559 --> 0:11:47.280 on the table has been the restarting of of nuclear facilities, 0:11:47.440 --> 0:11:50.360 which could play a role here. But it's yes, it 0:11:50.440 --> 0:11:52.000 is a challenge, and it's one of the reasons I 0:11:52.040 --> 0:11:54.760 said in the short term that you know, this is 0:11:54.800 --> 0:11:57.960 not positive new I mean clearly it's not in any 0:11:57.960 --> 0:12:01.000 such stretch of the imagination to start with the humanitarian 0:12:01.120 --> 0:12:03.840 but from a climate perspective, it will use up more 0:12:03.840 --> 0:12:06.640 as the carbon budget. It does strike me that it 0:12:06.720 --> 0:12:09.600 requires policymakers to take both a short term and long 0:12:09.679 --> 0:12:12.880 term view simultaneous, which isn't always the best thing. That yeah, 0:12:13.000 --> 0:12:15.040 can I just re emphasize this point though, you said, 0:12:15.080 --> 0:12:18.720 because whether you're building a new Elergy train, whether you're 0:12:18.760 --> 0:12:22.480 accelerating hydrogen, whether you're building major offshore, when whether you 0:12:22.520 --> 0:12:25.080 have nuclear as part of your consideration. These are the 0:12:25.080 --> 0:12:28.000 time horizons three five years, and look at the economics 0:12:28.040 --> 0:12:31.000 of that as a policy maker, look at the overlap 0:12:31.080 --> 0:12:35.040 between energy security and sustainability, which is virtually total once 0:12:35.080 --> 0:12:37.520 that these facilities are built. And you know, this is 0:12:37.520 --> 0:12:40.640 a horrible situation to be in, but it concentrates the 0:12:40.640 --> 0:12:44.680 mind and I'll just underscore it. Particularly for Europe the 0:12:44.720 --> 0:12:49.120 finances there. We've got huge balance sheets looking for these 0:12:49.120 --> 0:12:51.880 transition investments and we've seen and I want to I 0:12:51.920 --> 0:12:53.800 want to give credit to the European Union in the 0:12:54.000 --> 0:12:57.360 Member States. Thus far, the response has been ambitious and 0:12:57.440 --> 0:12:59.440 more needs to be done, but it's headed in the 0:12:59.520 --> 0:13:02.880 right direction. Thanks for that. Can we world shift gears 0:13:02.920 --> 0:13:05.719 for just for one last segment of questions here you're 0:13:05.720 --> 0:13:08.719 in Washington, of course, the Securities Exchange Commission the other 0:13:08.800 --> 0:13:13.720 day issued a fairly comprehensive bit of rulemaking around requiring 0:13:13.800 --> 0:13:17.439 companies to disclose their CEO two emission profiles and the 0:13:17.520 --> 0:13:20.600 risk their climate risks. Essentially. First, my understanding is to 0:13:20.600 --> 0:13:22.480 some degree this is based on the Task Force for 0:13:22.520 --> 0:13:25.800 Climate Disclosure Framework, which you worked on as well as 0:13:25.800 --> 0:13:28.760 Mary Shapiro and others. So congratulations on that. But second, 0:13:29.240 --> 0:13:32.520 we're in the comment period officially for that for that rule, 0:13:33.559 --> 0:13:35.360 would I would like your comment. What do you think 0:13:35.360 --> 0:13:39.760 of that? Well, I look, it's it's hugely welcome that 0:13:39.840 --> 0:13:43.640 the SEC has done this. It is a and they 0:13:43.720 --> 0:13:47.680 put out this proposed standard after a very comprehensive and 0:13:47.760 --> 0:13:50.959 detailed analysis, and they've had the benefit of learning from 0:13:51.040 --> 0:13:54.400 the experience of the TCFD, which you reference, learning from 0:13:54.480 --> 0:13:58.680 what's been done in other jurisdictions, responding to very very 0:13:58.679 --> 0:14:02.839 significant demand for investors in the United States. Financial institutions 0:14:02.840 --> 0:14:05.200 in the United States, many of whom disclosed on the 0:14:05.240 --> 0:14:08.120 basis of the TCFD. But what they really want is 0:14:08.160 --> 0:14:11.319 this disclosure from the companies in which they invest and 0:14:11.760 --> 0:14:14.120 to which they lend. You know, there's twenty eight trillion 0:14:14.160 --> 0:14:17.720 dollars of balance sheet that supports the TCFD. The SEC 0:14:18.080 --> 0:14:21.120 is has taken it to another level in terms of 0:14:21.160 --> 0:14:24.880 the quality and the rigor, and keyword that I think 0:14:24.920 --> 0:14:28.160 they really live by is decision useful. What they're putting 0:14:28.160 --> 0:14:31.520 in this standard is what investors want, and it's not 0:14:31.800 --> 0:14:34.640 just about what they want to manage the risks, although 0:14:34.680 --> 0:14:37.640 those risks are pretty significant, but it's to seize the 0:14:37.680 --> 0:14:41.760 opportunities that come with the transition, recognizing that this is 0:14:41.800 --> 0:14:45.680 a top strategic priority for most companies in America, most 0:14:45.720 --> 0:14:48.320 companies around the world, which is to get their emissions 0:14:48.320 --> 0:14:51.480 down and be carbon competitive, and events of the last 0:14:51.840 --> 0:14:54.960 two months have only reinforced that, so very much welcome it. 0:14:55.040 --> 0:14:57.720 The last point I'd make is that the SEC, while 0:14:57.760 --> 0:15:01.160 showing leadership, is being joined with a difference, you know, 0:15:01.400 --> 0:15:04.880 a different version of a similar objective through something called 0:15:04.920 --> 0:15:07.760 the I S S B, which will cover ultimately over 0:15:07.800 --> 0:15:10.440 a hundred and thirty countries other than the United States, 0:15:10.440 --> 0:15:12.840 including the rest of the G seven and G twenty. 0:15:13.080 --> 0:15:15.160 The push back, it seems that it's been on the 0:15:15.280 --> 0:15:18.360 SEC rule and and there's been different types, but one 0:15:18.400 --> 0:15:20.080 of them has been that, you know, we have something 0:15:20.080 --> 0:15:23.600 called the Environmental Protection Agency and that's their job is 0:15:23.640 --> 0:15:27.720 to worry about zotomissions and it's not not the SEC's job. 0:15:27.720 --> 0:15:30.440 So I wonder if your take on that, well, that's 0:15:30.480 --> 0:15:34.120 not I mean, that's nonsense, absolutely nonsense. This is this 0:15:34.200 --> 0:15:39.080 is disclosure for financial institutions. Financial institutions want this information, 0:15:39.560 --> 0:15:44.400 so that they can manage risks, sees, opportunities, differentiate between 0:15:44.440 --> 0:15:48.000 companies that have a strategy to address these issues and 0:15:48.080 --> 0:15:50.960 companies that don't. And if the company doesn't, then of 0:15:50.960 --> 0:15:53.320 course the lender, the investor in them, they want to 0:15:53.360 --> 0:15:56.160 make a judgment of whether management has made the right call, 0:15:56.400 --> 0:15:58.800 and that you need disclosure in order to make those judgments. 0:15:58.800 --> 0:16:01.240 You don't make it on an inference. And you know, 0:16:02.080 --> 0:16:06.880 corporate disclosure. That's like saying the the telecom regulator, the SEC, 0:16:07.200 --> 0:16:11.240 should regulate a corporate disclosure for all tech companies and 0:16:11.280 --> 0:16:15.479 telephone companies. No, the SECS job is material corporate disclosure. 0:16:15.520 --> 0:16:19.160 It's a job that constantly involves what is material evolves 0:16:19.160 --> 0:16:22.000 as the U S economy evolves, and as climate comes in, 0:16:22.000 --> 0:16:25.400 climate management and transition and the energy security issues come 0:16:25.480 --> 0:16:29.440 center stage. You know, the system has been lacking comprehensive 0:16:29.800 --> 0:16:32.280 comparable disclosure in the SEC is right and the moved 0:16:32.320 --> 0:16:34.480 to address this, and you rightly point out that a 0:16:34.520 --> 0:16:37.040 number of companies have embraced us, but certainly many others 0:16:37.040 --> 0:16:40.160 have not. Does this require essentially a cultural change and 0:16:40.200 --> 0:16:43.080 a number of corporations to assuming this rule does go 0:16:43.120 --> 0:16:45.560 into effect, which it looks like it's it's in line 0:16:45.600 --> 0:16:48.880 to do. First off, if a company doesn't see this 0:16:48.960 --> 0:16:51.560 as a major issue, their view is that both the 0:16:51.560 --> 0:16:54.720 physical risk from climate change, the regulatory risks around it, 0:16:54.800 --> 0:16:58.400 the competitiveness issues around having a high carbon footprint or 0:16:58.440 --> 0:17:02.760 a higher carbon footprint relative to other companies in their industry. 0:17:02.800 --> 0:17:05.760 If they don't think that that's important, that you know, 0:17:05.840 --> 0:17:07.840 they disclose that, and they disclose it in away, and 0:17:07.880 --> 0:17:11.399 then their investors and lenders make the judgment. That's the 0:17:11.440 --> 0:17:14.879 way the capital markets work. What I think you've flipped 0:17:14.880 --> 0:17:19.239 this around, though, which is what do the investors and 0:17:19.280 --> 0:17:23.280 the lenders want, and that's this information. I have the 0:17:23.359 --> 0:17:25.879 honor with Mike Bloomberg of Coachair in defense and so 0:17:25.880 --> 0:17:29.320 a hundred and thirty trillion of assets in that as 0:17:29.359 --> 0:17:32.359 you know, and included in that or all the major 0:17:32.840 --> 0:17:37.280 US banks, the two largest US investors, in fact global 0:17:37.320 --> 0:17:41.199 investors in black Rock and Vanguard, both of whom supporters 0:17:41.240 --> 0:17:43.480 of this type of disclosure from the start. And I 0:17:43.480 --> 0:17:45.760 could give you many, many examples. And they need that 0:17:45.840 --> 0:17:49.639 information in a consistent way across companies to make the 0:17:49.720 --> 0:17:53.399 judgments so how to discharge ultimately their fiduciary duties to 0:17:53.480 --> 0:17:56.840 two Americans. Who's whose money they're managing? Well, listen, thank 0:17:56.880 --> 0:17:58.560 you so much for taking the time of Chael in 0:17:58.600 --> 0:18:00.680 terms of busy week, I know with the meat taking 0:18:00.680 --> 0:18:03.400 place in Washington, and really welcome your perspective on all 0:18:03.440 --> 0:18:07.040 these issues. Recovered a lot of ground in exactly twenty minutes, 0:18:07.080 --> 0:18:09.359 So thank you so much for your time. Really appreciate it. 0:18:09.720 --> 0:18:17.320 Thanks very much. Today's episode of Switched On was edited 0:18:17.320 --> 0:18:19.920 by Rex Warner of gray Stoke Media. Bloomberg any F 0:18:20.040 --> 0:18:23.080 as a service provided by Bloomberg Finance LP and its affiliates. 0:18:23.359 --> 0:18:25.879 This recording does not constitute, nor should it be construed 0:18:25.920 --> 0:18:29.520 as investment advice, investment recommendations, or recommendation as to an 0:18:29.520 --> 0:18:32.040 investment or other strategy. Bloomberg an e F should not 0:18:32.040 --> 0:18:34.639 be considered as information sufficient upon which to base an 0:18:34.680 --> 0:18:37.719 investment decision. Neither Bloomberg Finance LP nor any of its 0:18:37.720 --> 0:18:40.920 affiliates makes any representation or warranty as to the accuracy 0:18:40.960 --> 0:18:43.600 or completeness of the information contained in this recording, and 0:18:43.640 --> 0:18:46.520 any liability of this recording is expressly disclaimed.