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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: You're listening to Bloomberg Business Week with Carol Messer and

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Speaker 2: Tim Stenebek on Bloomberg Radio.

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Speaker 3: Do you want AI involved in your brain surgery if

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Speaker 3: it's really good?

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Speaker 2: Okay.

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Speaker 3: The reason I'm asking you is because China is actually

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Speaker 3: testing an AI assistant for neurosurgeons seven hospitals in Beijing.

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Speaker 3: The bot's going to answer questions with citations based on

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Speaker 3: more than a million academic records, could help with CT

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Speaker 3: scans images. Eventually, though, the researchers envision the AI taking

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Speaker 3: a more active role, warning doctors from pursuing risky procedures

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Speaker 3: for instance.

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Speaker 1: Yeah, there's a lot of questions about this, right. We

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Speaker 1: have a great guest to talk about this, because you know,

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Speaker 1: the idea of having AI helping in the operating room

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Speaker 1: could be an issue of trust. But you do wonder

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Speaker 1: you could have a doctor who's had a little tired

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Speaker 1: watching the oscars or doing something else, and you do

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Speaker 1: wonder about that element. So there's a lot at stake

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Speaker 1: here and we've got a great guest to get into it.

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Speaker 3: Yeah. Michelle guide To, a CEO of the CROC Institute

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Speaker 3: for Tech Diplomacy at pursue. She's Purdue. She's also a

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Speaker 3: former Assistant Secretary of State for Global Public Affairs that

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Speaker 3: was during the Trump administration from twenty eighteen to twenty twenty.

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Speaker 3: Michelle joins us from Austin at Texas. Michelle, good to

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Speaker 3: have you on with us.

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Speaker 2: How are you good to be with you?

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Speaker 3: Well, good to join us. I'm so glad you're joining

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Speaker 3: us on this because we've been talking a lot about AIS.

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Speaker 3: You can probably imagine, but you and the team over

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Speaker 3: at the Institute for Tech Diplomacy at Purdue. I got

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Speaker 3: a a poll on our radar from Edelman and we

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Speaker 3: talked to the Edelman team a lot about their trust barometer.

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Speaker 3: And this one specifically has to do with trust in

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Speaker 3: AI companies declining. And it's not just here in the US,

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Speaker 3: but it's around the world too. How can companies that

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Speaker 3: are working on this technology earn the trust of us?

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Speaker 2: So thanks for that question. I've seen that poll and

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Speaker 2: it says that about thirty five percent of Americans now

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Speaker 2: trust companies to do what's right when it comes to

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Speaker 2: artificial intelligence. Let me give two other numbers for you.

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Speaker 2: The first is twenty thirty, which is the year that

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Speaker 2: China has stated that it wants to lead and dominate

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Speaker 2: in artificial intelligence. The other number is fifty one billion dollars,

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Speaker 2: and that's how much China is committing to science and technology,

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Speaker 2: which is up ten percent from last year. They just

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Speaker 2: announced this coming out of their National Party Congress. And

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Speaker 2: I share those because there's important context in terms of

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Speaker 2: the trust that we are putting in our government and

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Speaker 2: in our tech companies to innovate properly when it comes

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Speaker 2: to artificial intelligence. But it's not happening in a vacuum.

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Speaker 2: That is happening in the context of a competition with

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Speaker 2: adversaries across the world who want to use these technologies,

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Speaker 2: dominate in these technologies, and compete with us in order

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Speaker 2: to advance their value system and their systems of government

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Speaker 2: which are authoritarian versus ours. So that's really important context.

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Speaker 2: But this notion of trust is so central, and it's

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Speaker 2: not about the tech, it's about the trust. And the

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Speaker 2: good news is we don't just have to rely on

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Speaker 2: government to get it right. We don't just have to

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Speaker 2: rely on tech companies to get it right. And what

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Speaker 2: the CROC Institute for Tective PLOYANCDE is doing is also

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Speaker 2: making sure that citizens are involved in shaping this, that

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Speaker 2: they have a right and they have a responsibility in

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Speaker 2: order to help shape and dictate where AI goes. I'm

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Speaker 2: here at south By Southwest in Austin. This is a

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Speaker 2: gathering every year of creatives and leaders in media and

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Speaker 2: an innovation and that's why we're here having conversations around, well,

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Speaker 2: what is the role necessary role that you play in

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Speaker 2: national security and in geopolitical competition. So it's getting everybody involved,

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Speaker 2: and here's two practical ways to do this.

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Speaker 3: Hold on, let me let's I just want to jump

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Speaker 3: in real quick, because I you know, if there is

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Speaker 3: one thing that unites democrats and Republicans, like, there's only

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Speaker 3: one thing, I think it's it's kind of beating up

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Speaker 3: on these tech CEOs when they do testify. And we

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Speaker 3: did see in recent weeks examples of the way that

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Speaker 3: Democrats and Republicans do not think that companies like meta

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Speaker 3: platforms have guardrails on the way that they're serving content,

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Speaker 3: the algorith rhythms that they're using two feed content to

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Speaker 3: for lack of a better term, miners here in the US.

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Speaker 3: So I'm wondering how you can rely solely on companies

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Speaker 3: to actually get this right without involvement from government or

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Speaker 3: without relying on government.

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Speaker 2: Yeah, well, I would add and maybe challenge what you

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Speaker 2: just said. There's actually another really bipartisan issue in DC,

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Speaker 2: and that is winning the competition against China, and specifically

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Speaker 2: on technology. And so with that context, it isn't just

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Speaker 2: about relying on tech companies to get it right, whether

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Speaker 2: it's in the US or in any of our like

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Speaker 2: minded partners in allies countries, and it isn't just relying

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Speaker 2: on government. One good example of talking about bipartisanship is

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Speaker 2: there's a new House bipartisan Task Force on Artificial Intelligence.

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Speaker 2: So you've got leaders in the House across both sides

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Speaker 2: of the aisle coming together to think about how do

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Speaker 2: we engage industry in the right way, engage the public

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Speaker 2: in the right way in dictating what role artificial intelligence

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Speaker 2: plays in our lives. That's a great place for those

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Speaker 2: who responded to the poll and said they don't trust companies,

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Speaker 2: so they don't trust government to get it right. Then

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Speaker 2: working with and getting involved with the members. There's twelve

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Speaker 2: members in that House caucus and that task force is

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Speaker 2: a really good way to do it.

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Speaker 1: How do we do that. I mean, companies are going

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Speaker 1: to be very careful. They don't love regulatory oversight, they

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Speaker 1: don't like what they might deem as extreme regulatory oversight.

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Speaker 1: I'm playing a little bit Devil's advocates. So how do

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Speaker 1: we create quickly the right private public partnership on this,

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Speaker 1: And to be fair, it's got to be global. None

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Speaker 1: of these companies are operating in a vacuum, right. We've

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Speaker 1: seen this with financial regulatory oversight, and often Europe has led.

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Speaker 1: We think about kind of climate Europe has led. So

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Speaker 1: how do we do this in a smart way and quickly.

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Speaker 2: It's interesting that you actually see companies Microsoft, for example,

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Speaker 2: trying to lead the conversation on AI and essentially saying

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Speaker 2: we're not going to wait for government regulations to figure

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Speaker 2: this out, and we're actually going to put out a

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Speaker 2: proactive point of view on what we think some of

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Speaker 2: the guardrails might be and initiate that conversation with government

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Speaker 2: not only here in the US, but to your point,

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Speaker 2: in Europe and across other parts of the world. And

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Speaker 2: that was a lesson learned I think from social media

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Speaker 2: where we're flipping the script now and seeing private sector

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Speaker 2: companies try to initiate that conversation. And that's a good

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Speaker 2: thing because look, if do you feel.

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Speaker 1: Like, can I ask you something of the Michelle, do

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Speaker 1: you feel like the world has learned their message on

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Speaker 1: not having enough oversight on social media? And I know,

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Speaker 1: we get into a free speech. There's it's complicated, right,

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Speaker 1: It's not so black and white. But have we learned

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Speaker 1: the lesson that you know, not having enough oversight in

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Speaker 1: social media and content and you know, the false content

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Speaker 1: that gets out there, the content that can hurt in

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Speaker 1: so many different ways. Have we really learned the lesson

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Speaker 1: so that we get it right this time around when

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Speaker 1: it comes to AI.

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Speaker 2: I definitely think you see some changes. So for example,

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Speaker 2: when Facebook came out, Twitter came out, there wasn't a

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Speaker 2: House bipartisan Caucus on social media because we didn't know

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Speaker 2: that we needed one, and that all came after the facts.

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Speaker 2: So now in the early days, you have things like this,

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Speaker 2: this task force in the House trying to get ahead

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Speaker 2: of it. You have companies I mentioned Microsoft earlier, trying

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Speaker 2: to get ahead of it. But here's the thing we

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Speaker 2: don't want to rely too much on and point the

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Speaker 2: finger at government to say, go figure it out, because

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Speaker 2: if tech companies and innovators don't know where the technology

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Speaker 2: is going, our government leaders, sure as heck, don't know

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Speaker 2: where it's going. And so this has to be a

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Speaker 2: collaborative conversation not only with the innovators and the high

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Speaker 2: tech companies and with government leaders and policymakers, but also

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Speaker 2: with customers of those tech companies and constituents of those

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Speaker 2: politics we trust to different.

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Speaker 1: How can we trust them to do it right? Come on,

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Speaker 1: because they make money over you know, having more eyeballs,

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Speaker 1: the velocity on social media platforms. How can we trust

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Speaker 1: tech companies to do the right thing here?

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Speaker 2: Well, that's where I don't think it just has to

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Speaker 2: be a hey, we're going to trust you, and I'm

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Speaker 2: going to sit here and watch them. Be a spectator,

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Speaker 2: and I hope you get it right. Whether it's it's

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Speaker 2: asking that of tech companies or it's asking that of governments,

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Speaker 2: it's well, then, what is the role of a customer,

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Speaker 2: what is the role of an end user, and what

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Speaker 2: is the role of a citizen in getting involved? Now

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Speaker 2: on the front end in driving that conversation.

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Speaker 3: Hey, Michelle, we only have thirty seconds left. Should the

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Speaker 3: US force TikTok's parent company to divest TikTok.

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Speaker 2: Well, the US is giving them the option to divest

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Speaker 2: or be banned. But yes, because Byte dances a Chinese company,

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Speaker 2: they're required by law to provide information to the Chinese

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Speaker 2: Communist Party, and it's a surveillance platform, and it's an

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Speaker 2: influence operations platform, so it does a national security issue.

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Speaker 1: I feel like we scratched the surface. We come back soon.

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Speaker 1: Tim's angry. I will get like three questions in a

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Speaker 1: row with you again.

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Speaker 2: We have a ton to talk about.

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Speaker 1: Come back, come back, come back. Michelle Gaida, CEO of

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Speaker 1: Crock Institute Protect Diplomacy over at Purdue joining us from Austin, Texas.

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Speaker 1: I'm sorry, it's excited because I want.

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Speaker 3: To talk to her too.

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Speaker 4: How do I trust them?

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Speaker 3: We'll call her.

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Speaker 1: After to do the right thing. All right, Now, he's

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Speaker 1: not even going to listen to me. All right, you're

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Speaker 1: listening and watching Pootburg Business Week.

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Speaker 3: Well, another piece of the Biden administration sweeping policy response

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Speaker 3: to climate change fell into place last week. That was

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Speaker 3: when the SEC voted to approve highly anticipated climate disclosure

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Speaker 3: requirements for public companies.

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Speaker 1: That's right, Tim, The SEC's new rule is groundbreaking and

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Speaker 1: that it requires public companies to make certain climate disclosures,

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Speaker 1: mainly reporting of greenhouse gas emissions. For the first time,

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Speaker 1: large public companies will be required to disclose their direct

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Speaker 1: or scope on and Script two emissions. Notably, they must

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Speaker 1: do so only if they deem them material significant to

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Speaker 1: their bottom line.

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Speaker 4: That's what that means.

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Speaker 3: Okay, So all that said, some environmental advocates say it

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Speaker 3: doesn't go far enough. Leslie Libruto is Managing director of

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Speaker 3: Sustainable Finance at the Environmental Defense Fund. It's a nonprofit

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Speaker 3: that works to address climate change, which it calls the

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Speaker 3: greatest challenge of our time. She joins us from London today, Leslie,

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Speaker 3: do you think the SEC climate disclosure requirement goes far enough?

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Speaker 4: Hey, guys, great to be here. To be honest, this

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Speaker 4: SEC rolling it's a positive development for businesses and investors.

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Speaker 4: We needed this step, it was overdue, and finally it's

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Speaker 4: a chance to bring the United States to a point

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Speaker 4: of consistency and rigor in disclosures that we hadn't seen before.

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Speaker 4: So we obviously the Commission will go further, but this

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Speaker 4: is a foundational step that we need to take in

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Speaker 4: order to start moving us.

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Speaker 3: How much further, do you want the SEC to mandate

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Speaker 3: that companies disclose emissions within their supply chain, because that's

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Speaker 3: what a lot of critics are pushing back on right now.

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Speaker 4: Yeah, I mean, look, we need to start somewhere. And

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Speaker 4: at this point, when we see all of the considerations

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Speaker 4: being taken into account, climate risk is financial risk, and

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Speaker 4: this is where we need to start. And you know,

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Speaker 4: the SEC is long required disclosures across a number of

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Speaker 4: different metrics, and finally we're seeing a step forward and

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Speaker 4: really getting public companies towards they need to be. And

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Speaker 4: with the tunnel lined disclosures, it also gets smaller companies,

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Speaker 4: gives them a chance to really get up to speed,

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Speaker 4: and then finally we can evolve on this role over time.

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Speaker 4: But for now, this is where we need to start

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Speaker 4: to get the ball moving.

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Speaker 1: I mean, this is what ESG was supposed to be.

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Speaker 1: I think about right to really understand environmental social governance

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Speaker 1: issues and what risks financially materially they are for companies.

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Speaker 1: Having said that, what the SEC is doing and Chairgantler

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Speaker 1: is doing, we're now getting a standardization right, so apples

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Speaker 1: to apples from company to company, but it's.

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Speaker 4: More than that it's apples to apples, but finally we

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Speaker 4: have an ability to foster transparency. It means that investors

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Speaker 4: and people like you and me can finally start seeing

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Speaker 4: the data. As you said, apples to apples. But it

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Speaker 4: also builds a more resilient market. Right if you're in

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Speaker 4: Louisiana and you're a company and you're not thinking about flooding,

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Speaker 4: you're not thinking about the material risks to your business

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Speaker 4: that are going to affect ultimately your resilience and your growth.

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Speaker 4: And you know, imagine if your a utility company and

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Speaker 4: you're not thinking about wildfires. I mean, if you look

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Speaker 4: at the data, the US alone has suffered six hundred

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Speaker 4: billion dollars in damages from just about one hundred weather

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Speaker 4: months in the last five years alone. These are things

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Speaker 4: that we're trying to start taking to consideration where we're

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Speaker 4: looking at businesses and evaluating, you know, should I invest

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Speaker 4: in this one or that one. We now have data

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Speaker 4: around just climate risk, which again is a financial risk

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Speaker 4: that can help us make better decisions, help investors figure

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Speaker 4: out where to allocate capital, and again help folks from

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Speaker 4: Main Street to Wall Street figure out where to put

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Speaker 4: their money.

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Speaker 1: Leslie, we talk scope on Scope two emissions. But my

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Speaker 1: understanding is the biggest change from the proposed rules initially

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Speaker 1: that public companies are no longer required to report Scope

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Speaker 1: three emissions are those from the supply chain and the

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Speaker 1: downstream use of products, even though that these often represent

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Speaker 1: the largest portion of a company's greenhouse gas emissions. So

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Speaker 1: is that kind of a big bummer to be quite honest.

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Speaker 4: I mean, look again, we got to start somewhere, right,

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Speaker 4: and when we look where we got to start in

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Speaker 4: the United States, we're asking public companies to now do

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Speaker 4: something that. Mind you, ninety nine percent of the S

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Speaker 4: and P five hundred already report on some metrics around

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Speaker 4: sustainability and non financial metrics in general. So for us,

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Speaker 4: it's a chance to really brand us up to speed

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Speaker 4: and then we hope the SEC can keep evolving on

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Speaker 4: this decision over time. Right, this isn't a one and

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Speaker 4: done deal. We have time to keep evolving this and

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Speaker 4: you know, bring the United States to you know, where

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Speaker 4: it wants to be in terms of fully encompassing climate

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Speaker 4: risk as one.

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Speaker 3: When do we see this move the needle for investors, like,

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Speaker 3: when do we start to see this type of data

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Speaker 3: come out and actually move a company stock price.

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Speaker 4: You know, a lot of this data already exists. We

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Speaker 4: talked to one investor. They have to collect twenty five

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Speaker 4: thousand data points right now just to get a view

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Speaker 4: of climate risk, and it's oftentimes really inconsistent. Because this

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Speaker 4: rule is taking effect, and we can start, you know,

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Speaker 4: taking time in about a year, those twenty five thousand

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Speaker 4: data points that might be inaccurate, we can start seeing

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Speaker 4: them streamlined and be reliable. So again investors can start

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Speaker 4: looking apples to apples and we can start seeing not

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Speaker 4: only what are the risks, but how are these companies

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Speaker 4: mitigating them as early as next year? Right?

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Speaker 1: And to be fair, I mean this is a leslie.

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Speaker 1: This is about how climate can impact financially or does

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Speaker 1: it have a financial material financial impact on a company.

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Speaker 1: That's what this is about. This isn't necessarily assuming that

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Speaker 1: it's going to force companies to do something better for

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Speaker 1: the climate.

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Speaker 4: Is that fair? This is all about managing risk. It

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Speaker 4: is asking companies to say, what material risks have you

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Speaker 4: identified and what are you going to do about it?

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Speaker 4: So when we're reading reports an less reports looking at

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Speaker 4: a company, we can say, oh, they've considered these things

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Speaker 4: that are straight up risks to the company, and we

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Speaker 4: know that they're mitigating them. Again, I mentioned the stat

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Speaker 4: about six hundred million dollars in damages from weather events.

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Speaker 4: This is real stuff. These are real risks that we're

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Speaker 4: talking about, and this gives us a chance to look

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Speaker 4: at those and say, did this company consider them? Are

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Speaker 4: they looking at the things that pose significant risks of

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Speaker 4: their business that could affect me and you and investors

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Speaker 4: in making decisions about allocating capital, where to put more money,

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Speaker 4: and how to shift kind of you know, what we're

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Speaker 4: seeing as the future for a resilient market in the

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Speaker 4: United States.

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Speaker 1: Well, having said that, I don't know what work you

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Speaker 1: guys have done over at the EDF, but I do

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Speaker 1: wonder in terms of, you know, the insurance industry, Tim

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Speaker 1: and I in our Bloomberg News team, they have done

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Speaker 1: a lot of reporting about was it home insurance in

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Speaker 1: California or Florida where insurers are just kind of backing

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Speaker 1: off because of the costs. Have you guys done works

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Speaker 1: where you where you feel like certain industries, whether it's insurance,

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Speaker 1: whether it's home builders, I don't know what where they are.

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Speaker 1: You know, once we get a clearer picture, we might

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Speaker 1: find that there's a lot more of climate related material

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Speaker 1: effects on their businesses that maybe has been way under reported.

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Speaker 4: Yeah, you know, our team we are constantly trying to

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Speaker 4: equip the final community with independent analysis of what they

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Speaker 4: need most to make decisions around climate risk. And this

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Speaker 4: completely includes the insurance markets as well. I mean you

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Speaker 4: said it so well right. We're seeing insurance shifts all

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Speaker 4: over the place, people retracting from markets, premiums going up,

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Speaker 4: and a lot of it us to do with. We

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Speaker 4: have no idea how to price and assess the risk

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Speaker 4: that climate faces poses on businesses. So when we look

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Speaker 4: at the insurance market, for example, it's a great chance

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Speaker 4: for us to say, how are insurers thinking about this,

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Speaker 4: Where can alternative tools step in to build resiliency, and

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Speaker 4: how do we stop kind of fueling the beasts, so

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Speaker 4: to speak, by making decisions that put consumers at risks

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Speaker 4: like building homes and flood zones. Right, And if we

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Speaker 4: have a chance to start assessing data that's apples to apples,

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Speaker 4: we can start making better decisions that again are working

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Speaker 4: for just the general public and you and me.

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Speaker 3: You know what's so interesting, Carol, I'm looking at shares

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Speaker 3: at BIL resorts. They're right now down five percent. This

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Speaker 3: is a company that owns many mountains throughout the United States,

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Speaker 3: some outside of the US. The company came out with

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Speaker 3: earnings and said that they had forty what is it,

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Speaker 3: unfavorable conditions forty two percent lower snowfall across the entire

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Speaker 3: western North American resorts through January compared to the same

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Speaker 3: period a year prior.

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Speaker 1: So this would play right into it exactly.

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Speaker 3: I mean, this is we're talking about. I mean, this

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Speaker 3: is a company that has sample yeah, and that it's

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Speaker 3: like because of climate change, because of our shifting climate,

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Speaker 3: they're seeing real, real detriment.

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Speaker 1: No, and that's so Leslie, this is the kind of

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Speaker 1: thing that we're talking about. You're nodding your head. Is

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Speaker 1: California though, the holy grail? Because when it comes to rules,

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Speaker 1: you know, in terms of you know, in regards I

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Speaker 1: guess to some of the climate if you will, or

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Speaker 1: sustainability reporting requirements, is California kind of the holy grail

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Speaker 1: in terms of where we need to go with this.

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Speaker 1: I know you say it's important, it's great, it's first step,

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Speaker 1: but like, what's what's the endgame in your view?

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Speaker 4: You know, we've seen different regulations come through in different states,

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Speaker 4: and this ruling is a chance to really streamline what

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Speaker 4: we're seeing. Obviously, different states have adopted different kind of

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Speaker 4: rigor in terms of, you know, where they want to

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Speaker 4: see on climate reporting. Finally, because the SEC is an

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Speaker 4: independent body, we're seeing a streamlining of the data that's

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Speaker 4: going to be coming through. So it's a real chance

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Speaker 4: to take the US to a place that is consistent.

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Speaker 4: Right and we've already seen sort of some of these

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Speaker 4: multinational disclosure frameworks in other markets Canada, Australia, the EU, China.

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Speaker 4: The US now has this as well to kind of

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Speaker 4: bring us to a speed where it's international and global.

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Speaker 3: We only have ten seconds left. But if the election,

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Speaker 3: if President Trump wins the election in November, what happens

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Speaker 3: to these rules or the way you think about things.

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Speaker 4: I mean, fortunately, again the SEC is an independent agency

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Speaker 4: acting on a mandate from Congress to protect investors at

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Speaker 4: the end of the day, and meant you're not concerned, Hey,

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Speaker 4: you know, you don't know. But again, because they're an

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Speaker 4: independent agency, we're feeling that these disclosures hopefully figure Scots

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Speaker 4: for hear.

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Speaker 1: Today leave it on that note, Hele Leslie, thank you

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Speaker 1: so much. Leslie Libruto, Managing director of sustainable Finance at

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Speaker 1: the Environmental Defense Fund, joining us right here in New

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Speaker 1: York City,