Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 2: Tim Stenebek on Bloomberg Radio.
Speaker 3: Do you want AI involved in your brain surgery if
Speaker 3: it's really good?
Speaker 2: Okay.
Speaker 3: The reason I'm asking you is because China is actually
Speaker 3: testing an AI assistant for neurosurgeons seven hospitals in Beijing.
Speaker 3: The bot's going to answer questions with citations based on
Speaker 3: more than a million academic records, could help with CT
Speaker 3: scans images. Eventually, though, the researchers envision the AI taking
Speaker 3: a more active role, warning doctors from pursuing risky procedures
Speaker 3: for instance.
Speaker 1: Yeah, there's a lot of questions about this, right. We
Speaker 1: have a great guest to talk about this, because you know,
Speaker 1: the idea of having AI helping in the operating room
Speaker 1: could be an issue of trust. But you do wonder
Speaker 1: you could have a doctor who's had a little tired
Speaker 1: watching the oscars or doing something else, and you do
Speaker 1: wonder about that element. So there's a lot at stake
Speaker 1: here and we've got a great guest to get into it.
Speaker 3: Yeah. Michelle guide To, a CEO of the CROC Institute
Speaker 3: for Tech Diplomacy at pursue. She's Purdue. She's also a
Speaker 3: former Assistant Secretary of State for Global Public Affairs that
Speaker 3: was during the Trump administration from twenty eighteen to twenty twenty.
Speaker 3: Michelle joins us from Austin at Texas. Michelle, good to
Speaker 3: have you on with us.
Speaker 2: How are you good to be with you?
Speaker 3: Well, good to join us. I'm so glad you're joining
Speaker 3: us on this because we've been talking a lot about AIS.
Speaker 3: You can probably imagine, but you and the team over
Speaker 3: at the Institute for Tech Diplomacy at Purdue. I got
Speaker 3: a a poll on our radar from Edelman and we
Speaker 3: talked to the Edelman team a lot about their trust barometer.
Speaker 3: And this one specifically has to do with trust in
Speaker 3: AI companies declining. And it's not just here in the US,
Speaker 3: but it's around the world too. How can companies that
Speaker 3: are working on this technology earn the trust of us?
Speaker 2: So thanks for that question. I've seen that poll and
Speaker 2: it says that about thirty five percent of Americans now
Speaker 2: trust companies to do what's right when it comes to
Speaker 2: artificial intelligence. Let me give two other numbers for you.
Speaker 2: The first is twenty thirty, which is the year that
Speaker 2: China has stated that it wants to lead and dominate
Speaker 2: in artificial intelligence. The other number is fifty one billion dollars,
Speaker 2: and that's how much China is committing to science and technology,
Speaker 2: which is up ten percent from last year. They just
Speaker 2: announced this coming out of their National Party Congress. And
Speaker 2: I share those because there's important context in terms of
Speaker 2: the trust that we are putting in our government and
Speaker 2: in our tech companies to innovate properly when it comes
Speaker 2: to artificial intelligence. But it's not happening in a vacuum.
Speaker 2: That is happening in the context of a competition with
Speaker 2: adversaries across the world who want to use these technologies,
Speaker 2: dominate in these technologies, and compete with us in order
Speaker 2: to advance their value system and their systems of government
Speaker 2: which are authoritarian versus ours. So that's really important context.
Speaker 2: But this notion of trust is so central, and it's
Speaker 2: not about the tech, it's about the trust. And the
Speaker 2: good news is we don't just have to rely on
Speaker 2: government to get it right. We don't just have to
Speaker 2: rely on tech companies to get it right. And what
Speaker 2: the CROC Institute for Tective PLOYANCDE is doing is also
Speaker 2: making sure that citizens are involved in shaping this, that
Speaker 2: they have a right and they have a responsibility in
Speaker 2: order to help shape and dictate where AI goes. I'm
Speaker 2: here at south By Southwest in Austin. This is a
Speaker 2: gathering every year of creatives and leaders in media and
Speaker 2: an innovation and that's why we're here having conversations around, well,
Speaker 2: what is the role necessary role that you play in
Speaker 2: national security and in geopolitical competition. So it's getting everybody involved,
Speaker 2: and here's two practical ways to do this.
Speaker 3: Hold on, let me let's I just want to jump
Speaker 3: in real quick, because I you know, if there is
Speaker 3: one thing that unites democrats and Republicans, like, there's only
Speaker 3: one thing, I think it's it's kind of beating up
Speaker 3: on these tech CEOs when they do testify. And we
Speaker 3: did see in recent weeks examples of the way that
Speaker 3: Democrats and Republicans do not think that companies like meta
Speaker 3: platforms have guardrails on the way that they're serving content,
Speaker 3: the algorith rhythms that they're using two feed content to
Speaker 3: for lack of a better term, miners here in the US.
Speaker 3: So I'm wondering how you can rely solely on companies
Speaker 3: to actually get this right without involvement from government or
Speaker 3: without relying on government.
Speaker 2: Yeah, well, I would add and maybe challenge what you
Speaker 2: just said. There's actually another really bipartisan issue in DC,
Speaker 2: and that is winning the competition against China, and specifically
Speaker 2: on technology. And so with that context, it isn't just
Speaker 2: about relying on tech companies to get it right, whether
Speaker 2: it's in the US or in any of our like
Speaker 2: minded partners in allies countries, and it isn't just relying
Speaker 2: on government. One good example of talking about bipartisanship is
Speaker 2: there's a new House bipartisan Task Force on Artificial Intelligence.
Speaker 2: So you've got leaders in the House across both sides
Speaker 2: of the aisle coming together to think about how do
Speaker 2: we engage industry in the right way, engage the public
Speaker 2: in the right way in dictating what role artificial intelligence
Speaker 2: plays in our lives. That's a great place for those
Speaker 2: who responded to the poll and said they don't trust companies,
Speaker 2: so they don't trust government to get it right. Then
Speaker 2: working with and getting involved with the members. There's twelve
Speaker 2: members in that House caucus and that task force is
Speaker 2: a really good way to do it.
Speaker 1: How do we do that. I mean, companies are going
Speaker 1: to be very careful. They don't love regulatory oversight, they
Speaker 1: don't like what they might deem as extreme regulatory oversight.
Speaker 1: I'm playing a little bit Devil's advocates. So how do
Speaker 1: we create quickly the right private public partnership on this,
Speaker 1: And to be fair, it's got to be global. None
Speaker 1: of these companies are operating in a vacuum, right. We've
Speaker 1: seen this with financial regulatory oversight, and often Europe has led.
Speaker 1: We think about kind of climate Europe has led. So
Speaker 1: how do we do this in a smart way and quickly.
Speaker 2: It's interesting that you actually see companies Microsoft, for example,
Speaker 2: trying to lead the conversation on AI and essentially saying
Speaker 2: we're not going to wait for government regulations to figure
Speaker 2: this out, and we're actually going to put out a
Speaker 2: proactive point of view on what we think some of
Speaker 2: the guardrails might be and initiate that conversation with government
Speaker 2: not only here in the US, but to your point,
Speaker 2: in Europe and across other parts of the world. And
Speaker 2: that was a lesson learned I think from social media
Speaker 2: where we're flipping the script now and seeing private sector
Speaker 2: companies try to initiate that conversation. And that's a good
Speaker 2: thing because look, if do you feel.
Speaker 1: Like, can I ask you something of the Michelle, do
Speaker 1: you feel like the world has learned their message on
Speaker 1: not having enough oversight on social media? And I know,
Speaker 1: we get into a free speech. There's it's complicated, right,
Speaker 1: It's not so black and white. But have we learned
Speaker 1: the lesson that you know, not having enough oversight in
Speaker 1: social media and content and you know, the false content
Speaker 1: that gets out there, the content that can hurt in
Speaker 1: so many different ways. Have we really learned the lesson
Speaker 1: so that we get it right this time around when
Speaker 1: it comes to AI.
Speaker 2: I definitely think you see some changes. So for example,
Speaker 2: when Facebook came out, Twitter came out, there wasn't a
Speaker 2: House bipartisan Caucus on social media because we didn't know
Speaker 2: that we needed one, and that all came after the facts.
Speaker 2: So now in the early days, you have things like this,
Speaker 2: this task force in the House trying to get ahead
Speaker 2: of it. You have companies I mentioned Microsoft earlier, trying
Speaker 2: to get ahead of it. But here's the thing we
Speaker 2: don't want to rely too much on and point the
Speaker 2: finger at government to say, go figure it out, because
Speaker 2: if tech companies and innovators don't know where the technology
Speaker 2: is going, our government leaders, sure as heck, don't know
Speaker 2: where it's going. And so this has to be a
Speaker 2: collaborative conversation not only with the innovators and the high
Speaker 2: tech companies and with government leaders and policymakers, but also
Speaker 2: with customers of those tech companies and constituents of those
Speaker 2: politics we trust to different.
Speaker 1: How can we trust them to do it right? Come on,
Speaker 1: because they make money over you know, having more eyeballs,
Speaker 1: the velocity on social media platforms. How can we trust
Speaker 1: tech companies to do the right thing here?
Speaker 2: Well, that's where I don't think it just has to
Speaker 2: be a hey, we're going to trust you, and I'm
Speaker 2: going to sit here and watch them. Be a spectator,
Speaker 2: and I hope you get it right. Whether it's it's
Speaker 2: asking that of tech companies or it's asking that of governments,
Speaker 2: it's well, then, what is the role of a customer,
Speaker 2: what is the role of an end user, and what
Speaker 2: is the role of a citizen in getting involved? Now
Speaker 2: on the front end in driving that conversation.
Speaker 3: Hey, Michelle, we only have thirty seconds left. Should the
Speaker 3: US force TikTok's parent company to divest TikTok.
Speaker 2: Well, the US is giving them the option to divest
Speaker 2: or be banned. But yes, because Byte dances a Chinese company,
Speaker 2: they're required by law to provide information to the Chinese
Speaker 2: Communist Party, and it's a surveillance platform, and it's an
Speaker 2: influence operations platform, so it does a national security issue.
Speaker 1: I feel like we scratched the surface. We come back soon.
Speaker 1: Tim's angry. I will get like three questions in a
Speaker 1: row with you again.
Speaker 2: We have a ton to talk about.
Speaker 1: Come back, come back, come back. Michelle Gaida, CEO of
Speaker 1: Crock Institute Protect Diplomacy over at Purdue joining us from Austin, Texas.
Speaker 1: I'm sorry, it's excited because I want.
Speaker 3: To talk to her too.
Speaker 4: How do I trust them?
Speaker 3: We'll call her.
Speaker 1: After to do the right thing. All right, Now, he's
Speaker 1: not even going to listen to me. All right, you're
Speaker 1: listening and watching Pootburg Business Week.
Speaker 3: Well, another piece of the Biden administration sweeping policy response
Speaker 3: to climate change fell into place last week. That was
Speaker 3: when the SEC voted to approve highly anticipated climate disclosure
Speaker 3: requirements for public companies.
Speaker 1: That's right, Tim, The SEC's new rule is groundbreaking and
Speaker 1: that it requires public companies to make certain climate disclosures,
Speaker 1: mainly reporting of greenhouse gas emissions. For the first time,
Speaker 1: large public companies will be required to disclose their direct
Speaker 1: or scope on and Script two emissions. Notably, they must
Speaker 1: do so only if they deem them material significant to
Speaker 1: their bottom line.
Speaker 4: That's what that means.
Speaker 3: Okay, So all that said, some environmental advocates say it
Speaker 3: doesn't go far enough. Leslie Libruto is Managing director of
Speaker 3: Sustainable Finance at the Environmental Defense Fund. It's a nonprofit
Speaker 3: that works to address climate change, which it calls the
Speaker 3: greatest challenge of our time. She joins us from London today, Leslie,
Speaker 3: do you think the SEC climate disclosure requirement goes far enough?
Speaker 4: Hey, guys, great to be here. To be honest, this
Speaker 4: SEC rolling it's a positive development for businesses and investors.
Speaker 4: We needed this step, it was overdue, and finally it's
Speaker 4: a chance to bring the United States to a point
Speaker 4: of consistency and rigor in disclosures that we hadn't seen before.
Speaker 4: So we obviously the Commission will go further, but this
Speaker 4: is a foundational step that we need to take in
Speaker 4: order to start moving us.
Speaker 3: How much further, do you want the SEC to mandate
Speaker 3: that companies disclose emissions within their supply chain, because that's
Speaker 3: what a lot of critics are pushing back on right now.
Speaker 4: Yeah, I mean, look, we need to start somewhere. And
Speaker 4: at this point, when we see all of the considerations
Speaker 4: being taken into account, climate risk is financial risk, and
Speaker 4: this is where we need to start. And you know,
Speaker 4: the SEC is long required disclosures across a number of
Speaker 4: different metrics, and finally we're seeing a step forward and
Speaker 4: really getting public companies towards they need to be. And
Speaker 4: with the tunnel lined disclosures, it also gets smaller companies,
Speaker 4: gives them a chance to really get up to speed,
Speaker 4: and then finally we can evolve on this role over time.
Speaker 4: But for now, this is where we need to start
Speaker 4: to get the ball moving.
Speaker 1: I mean, this is what ESG was supposed to be.
Speaker 1: I think about right to really understand environmental social governance
Speaker 1: issues and what risks financially materially they are for companies.
Speaker 1: Having said that, what the SEC is doing and Chairgantler
Speaker 1: is doing, we're now getting a standardization right, so apples
Speaker 1: to apples from company to company, but it's.
Speaker 4: More than that it's apples to apples, but finally we
Speaker 4: have an ability to foster transparency. It means that investors
Speaker 4: and people like you and me can finally start seeing
Speaker 4: the data. As you said, apples to apples. But it
Speaker 4: also builds a more resilient market. Right if you're in
Speaker 4: Louisiana and you're a company and you're not thinking about flooding,
Speaker 4: you're not thinking about the material risks to your business
Speaker 4: that are going to affect ultimately your resilience and your growth.
Speaker 4: And you know, imagine if your a utility company and
Speaker 4: you're not thinking about wildfires. I mean, if you look
Speaker 4: at the data, the US alone has suffered six hundred
Speaker 4: billion dollars in damages from just about one hundred weather
Speaker 4: months in the last five years alone. These are things
Speaker 4: that we're trying to start taking to consideration where we're
Speaker 4: looking at businesses and evaluating, you know, should I invest
Speaker 4: in this one or that one. We now have data
Speaker 4: around just climate risk, which again is a financial risk
Speaker 4: that can help us make better decisions, help investors figure
Speaker 4: out where to allocate capital, and again help folks from
Speaker 4: Main Street to Wall Street figure out where to put
Speaker 4: their money.
Speaker 1: Leslie, we talk scope on Scope two emissions. But my
Speaker 1: understanding is the biggest change from the proposed rules initially
Speaker 1: that public companies are no longer required to report Scope
Speaker 1: three emissions are those from the supply chain and the
Speaker 1: downstream use of products, even though that these often represent
Speaker 1: the largest portion of a company's greenhouse gas emissions. So
Speaker 1: is that kind of a big bummer to be quite honest.
Speaker 4: I mean, look again, we got to start somewhere, right,
Speaker 4: and when we look where we got to start in
Speaker 4: the United States, we're asking public companies to now do
Speaker 4: something that. Mind you, ninety nine percent of the S
Speaker 4: and P five hundred already report on some metrics around
Speaker 4: sustainability and non financial metrics in general. So for us,
Speaker 4: it's a chance to really brand us up to speed
Speaker 4: and then we hope the SEC can keep evolving on
Speaker 4: this decision over time. Right, this isn't a one and
Speaker 4: done deal. We have time to keep evolving this and
Speaker 4: you know, bring the United States to you know, where
Speaker 4: it wants to be in terms of fully encompassing climate
Speaker 4: risk as one.
Speaker 3: When do we see this move the needle for investors, like,
Speaker 3: when do we start to see this type of data
Speaker 3: come out and actually move a company stock price.
Speaker 4: You know, a lot of this data already exists. We
Speaker 4: talked to one investor. They have to collect twenty five
Speaker 4: thousand data points right now just to get a view
Speaker 4: of climate risk, and it's oftentimes really inconsistent. Because this
Speaker 4: rule is taking effect, and we can start, you know,
Speaker 4: taking time in about a year, those twenty five thousand
Speaker 4: data points that might be inaccurate, we can start seeing
Speaker 4: them streamlined and be reliable. So again investors can start
Speaker 4: looking apples to apples and we can start seeing not
Speaker 4: only what are the risks, but how are these companies
Speaker 4: mitigating them as early as next year? Right?
Speaker 1: And to be fair, I mean this is a leslie.
Speaker 1: This is about how climate can impact financially or does
Speaker 1: it have a financial material financial impact on a company.
Speaker 1: That's what this is about. This isn't necessarily assuming that
Speaker 1: it's going to force companies to do something better for
Speaker 1: the climate.
Speaker 4: Is that fair? This is all about managing risk. It
Speaker 4: is asking companies to say, what material risks have you
Speaker 4: identified and what are you going to do about it?
Speaker 4: So when we're reading reports an less reports looking at
Speaker 4: a company, we can say, oh, they've considered these things
Speaker 4: that are straight up risks to the company, and we
Speaker 4: know that they're mitigating them. Again, I mentioned the stat
Speaker 4: about six hundred million dollars in damages from weather events.
Speaker 4: This is real stuff. These are real risks that we're
Speaker 4: talking about, and this gives us a chance to look
Speaker 4: at those and say, did this company consider them? Are
Speaker 4: they looking at the things that pose significant risks of
Speaker 4: their business that could affect me and you and investors
Speaker 4: in making decisions about allocating capital, where to put more money,
Speaker 4: and how to shift kind of you know, what we're
Speaker 4: seeing as the future for a resilient market in the
Speaker 4: United States.
Speaker 1: Well, having said that, I don't know what work you
Speaker 1: guys have done over at the EDF, but I do
Speaker 1: wonder in terms of, you know, the insurance industry, Tim
Speaker 1: and I in our Bloomberg News team, they have done
Speaker 1: a lot of reporting about was it home insurance in
Speaker 1: California or Florida where insurers are just kind of backing
Speaker 1: off because of the costs. Have you guys done works
Speaker 1: where you where you feel like certain industries, whether it's insurance,
Speaker 1: whether it's home builders, I don't know what where they are.
Speaker 1: You know, once we get a clearer picture, we might
Speaker 1: find that there's a lot more of climate related material
Speaker 1: effects on their businesses that maybe has been way under reported.
Speaker 4: Yeah, you know, our team we are constantly trying to
Speaker 4: equip the final community with independent analysis of what they
Speaker 4: need most to make decisions around climate risk. And this
Speaker 4: completely includes the insurance markets as well. I mean you
Speaker 4: said it so well right. We're seeing insurance shifts all
Speaker 4: over the place, people retracting from markets, premiums going up,
Speaker 4: and a lot of it us to do with. We
Speaker 4: have no idea how to price and assess the risk
Speaker 4: that climate faces poses on businesses. So when we look
Speaker 4: at the insurance market, for example, it's a great chance
Speaker 4: for us to say, how are insurers thinking about this,
Speaker 4: Where can alternative tools step in to build resiliency, and
Speaker 4: how do we stop kind of fueling the beasts, so
Speaker 4: to speak, by making decisions that put consumers at risks
Speaker 4: like building homes and flood zones. Right, And if we
Speaker 4: have a chance to start assessing data that's apples to apples,
Speaker 4: we can start making better decisions that again are working
Speaker 4: for just the general public and you and me.
Speaker 3: You know what's so interesting, Carol, I'm looking at shares
Speaker 3: at BIL resorts. They're right now down five percent. This
Speaker 3: is a company that owns many mountains throughout the United States,
Speaker 3: some outside of the US. The company came out with
Speaker 3: earnings and said that they had forty what is it,
Speaker 3: unfavorable conditions forty two percent lower snowfall across the entire
Speaker 3: western North American resorts through January compared to the same
Speaker 3: period a year prior.
Speaker 1: So this would play right into it exactly.
Speaker 3: I mean, this is we're talking about. I mean, this
Speaker 3: is a company that has sample yeah, and that it's
Speaker 3: like because of climate change, because of our shifting climate,
Speaker 3: they're seeing real, real detriment.
Speaker 1: No, and that's so Leslie, this is the kind of
Speaker 1: thing that we're talking about. You're nodding your head. Is
Speaker 1: California though, the holy grail? Because when it comes to rules,
Speaker 1: you know, in terms of you know, in regards I
Speaker 1: guess to some of the climate if you will, or
Speaker 1: sustainability reporting requirements, is California kind of the holy grail
Speaker 1: in terms of where we need to go with this.
Speaker 1: I know you say it's important, it's great, it's first step,
Speaker 1: but like, what's what's the endgame in your view?
Speaker 4: You know, we've seen different regulations come through in different states,
Speaker 4: and this ruling is a chance to really streamline what
Speaker 4: we're seeing. Obviously, different states have adopted different kind of
Speaker 4: rigor in terms of, you know, where they want to
Speaker 4: see on climate reporting. Finally, because the SEC is an
Speaker 4: independent body, we're seeing a streamlining of the data that's
Speaker 4: going to be coming through. So it's a real chance
Speaker 4: to take the US to a place that is consistent.
Speaker 4: Right and we've already seen sort of some of these
Speaker 4: multinational disclosure frameworks in other markets Canada, Australia, the EU, China.
Speaker 4: The US now has this as well to kind of
Speaker 4: bring us to a speed where it's international and global.
Speaker 3: We only have ten seconds left. But if the election,
Speaker 3: if President Trump wins the election in November, what happens
Speaker 3: to these rules or the way you think about things.
Speaker 4: I mean, fortunately, again the SEC is an independent agency
Speaker 4: acting on a mandate from Congress to protect investors at
Speaker 4: the end of the day, and meant you're not concerned, Hey,
Speaker 4: you know, you don't know. But again, because they're an
Speaker 4: independent agency, we're feeling that these disclosures hopefully figure Scots
Speaker 4: for hear.
Speaker 1: Today leave it on that note, Hele Leslie, thank you
Speaker 1: so much. Leslie Libruto, Managing director of sustainable Finance at
Speaker 1: the Environmental Defense Fund, joining us right here in New
Speaker 1: York City,