1 00:00:10,160 --> 00:00:11,360 Speaker 1: Hey, Drilled listeners. 2 00:00:11,520 --> 00:00:15,120 Speaker 2: We are still on a production hiatus working on our 3 00:00:15,200 --> 00:00:19,040 Speaker 2: next season, but there's a little sneak peek of that 4 00:00:19,239 --> 00:00:22,599 Speaker 2: season at the end of this episode, so make sure 5 00:00:22,640 --> 00:00:25,360 Speaker 2: you listen to the end for that. The reason we're 6 00:00:25,360 --> 00:00:27,680 Speaker 2: coming at you today is because I had the opportunity 7 00:00:27,960 --> 00:00:31,639 Speaker 2: to speak with David Serrata about a recent piece that 8 00:00:31,720 --> 00:00:35,440 Speaker 2: he did in his newsletter TMI too much Information. You 9 00:00:35,520 --> 00:00:38,879 Speaker 2: might recognize David's name from his previous gig at The 10 00:00:38,960 --> 00:00:43,520 Speaker 2: Guardian or as a speechwriter for Bernie Sanders. I wanted 11 00:00:43,520 --> 00:00:45,960 Speaker 2: to talk to him because I get his newsletter and 12 00:00:46,000 --> 00:00:49,240 Speaker 2: I saw an item in there that we had actually 13 00:00:49,280 --> 00:00:51,600 Speaker 2: missed on our policy trackers, so I added it. But 14 00:00:51,640 --> 00:00:53,760 Speaker 2: I also wanted to get the backstory on it. 15 00:00:53,360 --> 00:00:54,520 Speaker 1: It was a. 16 00:00:54,960 --> 00:00:59,360 Speaker 2: Sort of obscure, little proposed rule that basically makes it 17 00:00:59,400 --> 00:01:05,000 Speaker 2: harder to to invest retirement funds in environmentally sustainable funds. 18 00:01:05,319 --> 00:01:09,240 Speaker 2: It's been pushed mostly by the fossil fuel industry, no surprise, 19 00:01:09,640 --> 00:01:12,560 Speaker 2: and we're going to pick up this conversation with David 20 00:01:12,720 --> 00:01:16,160 Speaker 2: explaining more about it in a minute after this message 21 00:01:16,200 --> 00:01:20,920 Speaker 2: from today's sponsor. I'm a Westervelt and this is Drilled. 22 00:01:40,000 --> 00:01:42,280 Speaker 3: So I was I was hoping that you could start 23 00:01:42,319 --> 00:01:44,240 Speaker 3: by sort of saying, you know, what is this rule 24 00:01:44,360 --> 00:01:48,160 Speaker 3: change and what brought it to your attention initially? 25 00:01:49,320 --> 00:01:56,400 Speaker 4: Sure, So ESG investing is basically the technical term for environmental, 26 00:01:56,840 --> 00:02:01,160 Speaker 4: social and governance based investing, And what that's a lot 27 00:02:01,160 --> 00:02:05,640 Speaker 4: of jargon for is investing in a way that takes 28 00:02:05,720 --> 00:02:10,880 Speaker 4: into account what the companies you're investing in are actually 29 00:02:10,960 --> 00:02:16,120 Speaker 4: doing in the world and how their corporate behavior affects 30 00:02:16,360 --> 00:02:21,200 Speaker 4: the environment and the like. And to be clear, it's 31 00:02:21,240 --> 00:02:25,080 Speaker 4: not just to make you as an investor feel good, 32 00:02:25,440 --> 00:02:29,760 Speaker 4: but there's also a financial reason that proponents argue that 33 00:02:29,840 --> 00:02:33,560 Speaker 4: you want to engage in this kind of investing. For instance, 34 00:02:33,680 --> 00:02:37,480 Speaker 4: you don't necessarily want to be investing your retirement money 35 00:02:37,520 --> 00:02:42,560 Speaker 4: in investments that are at risk of being destroyed by 36 00:02:42,639 --> 00:02:45,680 Speaker 4: climate change. Or you don't want to be investing your 37 00:02:45,720 --> 00:02:53,320 Speaker 4: money in investments that are based on destroying the climate 38 00:02:54,240 --> 00:02:59,080 Speaker 4: and could be financially imperiled at the point, hopefully soon 39 00:03:00,240 --> 00:03:04,280 Speaker 4: that we actually take action to not use those products anymore. 40 00:03:04,320 --> 00:03:08,280 Speaker 4: So you don't necessarily want your retirement savings in oil 41 00:03:08,320 --> 00:03:12,400 Speaker 4: companies if you think that at some point we're going 42 00:03:12,440 --> 00:03:14,440 Speaker 4: to basically say, you know what, we have to use 43 00:03:14,760 --> 00:03:19,280 Speaker 4: less oil to not destroy the entire planet. So that's 44 00:03:19,280 --> 00:03:24,960 Speaker 4: what ESG investing is. And the Trump administration has put 45 00:03:25,000 --> 00:03:30,960 Speaker 4: forward a rule that aims to make it harder for 46 00:03:31,360 --> 00:03:38,240 Speaker 4: financial managers to help you move your money and help 47 00:03:38,920 --> 00:03:45,400 Speaker 4: worker retirement systems move that money into ESG investments. Now, 48 00:03:45,480 --> 00:03:50,800 Speaker 4: what the Trump administration says is that the current existing 49 00:03:51,160 --> 00:03:56,320 Speaker 4: Labor Department rules about how financial managers have to invest 50 00:03:56,640 --> 00:04:00,600 Speaker 4: other people's money, that those long standing rules say that 51 00:04:00,680 --> 00:04:05,880 Speaker 4: the financial manager must prioritize above everything else, they have 52 00:04:05,960 --> 00:04:13,040 Speaker 4: a fiduciary responsibility to maximize returns regardless of what kind 53 00:04:13,040 --> 00:04:16,719 Speaker 4: of investments the money is going into. Now, there's a 54 00:04:17,080 --> 00:04:23,120 Speaker 4: good reason for that basic idea of fiduciary responsibility that 55 00:04:23,640 --> 00:04:26,880 Speaker 4: you don't want financial managers to be able to self deal. 56 00:04:27,200 --> 00:04:30,560 Speaker 4: You don't want people who are managing your money to 57 00:04:30,640 --> 00:04:33,760 Speaker 4: be able to just throw their friends your money for 58 00:04:34,000 --> 00:04:36,960 Speaker 4: reasons that have nothing to do with whether they're generating 59 00:04:36,960 --> 00:04:39,719 Speaker 4: good returns. But what the Trump administration is doing, and 60 00:04:39,760 --> 00:04:43,440 Speaker 4: which is so insidious, is that they are taking that 61 00:04:44,520 --> 00:04:51,200 Speaker 4: understandably good concept of fiduciary responsibility and then saying, in effect, 62 00:04:51,720 --> 00:04:55,680 Speaker 4: that that means it should be harder to invest in 63 00:04:56,160 --> 00:05:03,080 Speaker 4: ESG investments, and the underlying insinuation is ESG investments environmental investments, 64 00:05:03,120 --> 00:05:06,799 Speaker 4: investments that take into account climate risk, that those must 65 00:05:06,839 --> 00:05:14,440 Speaker 4: be inherently worse performing as investments. That's actually not the 66 00:05:14,520 --> 00:05:18,560 Speaker 4: way the markets are working. But that concept has been 67 00:05:18,600 --> 00:05:20,760 Speaker 4: out there forever. Hey, you know, if you want to 68 00:05:20,800 --> 00:05:24,479 Speaker 4: go invest in some in some feel good investments, you know, 69 00:05:24,520 --> 00:05:27,160 Speaker 4: you want to feel like you're really socially responsible, fine, 70 00:05:27,200 --> 00:05:28,680 Speaker 4: do it on your own time. If you want to 71 00:05:28,720 --> 00:05:31,760 Speaker 4: do that individually with your own individual investments, fine, And 72 00:05:31,880 --> 00:05:37,520 Speaker 4: of course, not surprisingly, the fossil fuel industry is cheering 73 00:05:37,600 --> 00:05:41,200 Speaker 4: on this new rule, and the fossil fuel industry is 74 00:05:41,240 --> 00:05:46,080 Speaker 4: saying in one letter, they said, the push to divest 75 00:05:46,240 --> 00:05:51,320 Speaker 4: money from the fossil fuel industry has become a serious 76 00:05:51,360 --> 00:05:56,160 Speaker 4: problem for the industry because because large institutional investors are 77 00:05:56,160 --> 00:05:59,000 Speaker 4: increasingly moving their money out of fossil fuel investments, and 78 00:05:59,040 --> 00:06:02,039 Speaker 4: that's depriving us of capital, which of course is the 79 00:06:02,080 --> 00:06:03,640 Speaker 4: point of the devestment movement. 80 00:06:03,800 --> 00:06:04,080 Speaker 5: Right. 81 00:06:04,160 --> 00:06:06,599 Speaker 3: That's so interesting because I want to say, maybe four 82 00:06:06,680 --> 00:06:11,200 Speaker 3: or five years ago now, one of the early lawsuits 83 00:06:11,279 --> 00:06:14,960 Speaker 3: against Exon was about exactly this kind of thing, except 84 00:06:14,960 --> 00:06:17,760 Speaker 3: they were making the opposite argument, and it was like 85 00:06:17,800 --> 00:06:22,200 Speaker 3: a worker retirement fund that was suing Exon for an 86 00:06:22,279 --> 00:06:27,000 Speaker 3: abdication of fiduciary responsibility because they had, you know, put 87 00:06:27,040 --> 00:06:30,520 Speaker 3: off writing down assets forever, and they were doing various 88 00:06:30,560 --> 00:06:33,279 Speaker 3: things that they were you know, the workers were arguing 89 00:06:33,800 --> 00:06:39,080 Speaker 3: would sort of reduce their returns from their retirement fund. 90 00:06:39,520 --> 00:06:42,440 Speaker 4: If you're a worker, any of you work for Exon, 91 00:06:42,839 --> 00:06:45,040 Speaker 4: I mean, there's a good case to be made that, 92 00:06:45,440 --> 00:06:48,559 Speaker 4: especially in the era of climate change, you don't want 93 00:06:48,680 --> 00:06:52,200 Speaker 4: your money or lots of your money in your own 94 00:06:52,279 --> 00:06:55,720 Speaker 4: company just as a matter of future returns for your 95 00:06:55,760 --> 00:06:59,480 Speaker 4: retirement sattings, I mean putting money, and especially now at 96 00:06:59,480 --> 00:07:02,400 Speaker 4: a time when the the fossil fuel industry is reporting 97 00:07:02,520 --> 00:07:07,240 Speaker 4: I mean just big earnings losses, right, big losses, and 98 00:07:07,320 --> 00:07:09,840 Speaker 4: you see, you know, I think it was there was 99 00:07:09,840 --> 00:07:12,800 Speaker 4: a story in the Financial Times about how ESG investments 100 00:07:13,040 --> 00:07:17,560 Speaker 4: are actually performing or in some cases outperforming the market. 101 00:07:17,760 --> 00:07:21,120 Speaker 4: So the whole idea that ESG investments are you know, 102 00:07:21,240 --> 00:07:29,000 Speaker 4: automatically bad for your own portfolio is just increasingly proven wrong. 103 00:07:29,400 --> 00:07:32,920 Speaker 4: But again that's why the proverbial smoking gun here is 104 00:07:32,920 --> 00:07:35,520 Speaker 4: is that when the letter from the one of the 105 00:07:35,560 --> 00:07:38,400 Speaker 4: oil industry's lobby groups is saying, we really want this 106 00:07:38,480 --> 00:07:42,520 Speaker 4: rule because the devestment movement is draining us of capital, 107 00:07:42,840 --> 00:07:45,920 Speaker 4: then you see the real motive. At the same time 108 00:07:46,040 --> 00:07:51,440 Speaker 4: this has been going on, essentially, the SEC has stalled 109 00:07:51,560 --> 00:07:57,920 Speaker 4: the effort to require more disclosure by companies about their 110 00:07:57,920 --> 00:08:02,280 Speaker 4: own climate risks, and these two things are linked. Basically, 111 00:08:02,360 --> 00:08:06,840 Speaker 4: the upshot of the new Trump proposed ESG rule is 112 00:08:06,880 --> 00:08:09,320 Speaker 4: to just make it that much harder. There's all sorts 113 00:08:09,360 --> 00:08:14,400 Speaker 4: of new kind of due diligence requirements and kind of 114 00:08:14,440 --> 00:08:19,560 Speaker 4: paperwork requirements to justify when financial managers want to want 115 00:08:19,560 --> 00:08:22,960 Speaker 4: to shift money into ESG, just to kind of bog 116 00:08:23,040 --> 00:08:23,520 Speaker 4: it down. 117 00:08:23,760 --> 00:08:24,440 Speaker 5: Do you know if. 118 00:08:24,400 --> 00:08:25,240 Speaker 1: There's any. 119 00:08:26,600 --> 00:08:30,200 Speaker 3: Any way that this might impact the role out of 120 00:08:30,280 --> 00:08:33,520 Speaker 3: all of the ESG stuff that's happening in Europe? 121 00:08:33,880 --> 00:08:36,520 Speaker 4: You know, ultimately, the global pool of money is one 122 00:08:36,679 --> 00:08:41,520 Speaker 4: giant pool of money, and so certainly it and the 123 00:08:41,640 --> 00:08:43,679 Speaker 4: United States has an outsized role in that, and so 124 00:08:43,720 --> 00:08:48,800 Speaker 4: certainly it can deprive the move into those investments. And 125 00:08:48,880 --> 00:08:51,520 Speaker 4: here's what's really interesting is that if you read the 126 00:08:51,559 --> 00:08:54,960 Speaker 4: comment letters on the rule, the big opponents of the rule, 127 00:08:55,400 --> 00:08:59,600 Speaker 4: not exactly, not necessarily. You know, the most altruistic people 128 00:08:59,600 --> 00:09:01,440 Speaker 4: in the world. I mean, yes, you've got some great 129 00:09:01,640 --> 00:09:03,880 Speaker 4: environmental groups on there. But but there's a lot of 130 00:09:03,920 --> 00:09:06,600 Speaker 4: Wall Street firms, right, Like Wall Street firms that that 131 00:09:06,600 --> 00:09:09,600 Speaker 4: that don't they don't they don't really have an ideology, right, 132 00:09:09,720 --> 00:09:13,240 Speaker 4: They're just looking for customers, and they know that customers 133 00:09:13,880 --> 00:09:16,959 Speaker 4: and you know, the people who's money they're managing. They 134 00:09:17,000 --> 00:09:18,760 Speaker 4: know that there's a demand for I don't want to 135 00:09:18,760 --> 00:09:22,360 Speaker 4: invest in oil companies. I'm more interested investing in green investments, right, 136 00:09:22,559 --> 00:09:25,440 Speaker 4: And so a lot of these sort of you know, 137 00:09:25,800 --> 00:09:29,640 Speaker 4: Wall Street firms that aren't do gooders have put in 138 00:09:29,720 --> 00:09:31,480 Speaker 4: letters saying, you know, we don't like this rule. This 139 00:09:31,640 --> 00:09:33,840 Speaker 4: rule is not good because we want to have as 140 00:09:33,920 --> 00:09:39,319 Speaker 4: much freedom as possible to meet the consumer demand for 141 00:09:39,400 --> 00:09:40,679 Speaker 4: more sustainable investments. 142 00:09:41,160 --> 00:09:44,200 Speaker 3: Yeah, that's super interesting and also kind of flies in 143 00:09:44,240 --> 00:09:46,839 Speaker 3: the face of the whole we're just worried about returns 144 00:09:46,880 --> 00:09:50,360 Speaker 3: thing exactly exactly. 145 00:09:50,440 --> 00:09:53,440 Speaker 4: I mean, I mean those firms want returns also. So 146 00:09:53,520 --> 00:09:57,400 Speaker 4: it's a weird situation where in some senses, it's like 147 00:09:57,720 --> 00:10:00,520 Speaker 4: the Trump administration is so devoted to going to bat 148 00:10:00,600 --> 00:10:05,360 Speaker 4: for the fossil fuel industry that it's willing to piss 149 00:10:05,440 --> 00:10:07,679 Speaker 4: off the financials. 150 00:10:09,440 --> 00:10:26,360 Speaker 1: Yeah, that's it for this time. 151 00:10:26,480 --> 00:10:28,960 Speaker 2: Thanks for listening. I also want to thank all of 152 00:10:29,000 --> 00:10:32,600 Speaker 2: our Patreon members. You guys are really helping us to 153 00:10:32,679 --> 00:10:35,200 Speaker 2: get more work done. We appreciate it. And I want 154 00:10:35,200 --> 00:10:38,280 Speaker 2: to share a little preview of what's coming up in 155 00:10:38,320 --> 00:10:41,880 Speaker 2: the next season of Drilled. If you're curious and you 156 00:10:42,040 --> 00:10:45,560 Speaker 2: want to get the scoop on these episodes, please consider 157 00:10:45,640 --> 00:10:49,920 Speaker 2: becoming a Patreon subscriber. We have all different levels of 158 00:10:50,000 --> 00:10:54,400 Speaker 2: membership and you will get early access to episodes for 159 00:10:54,520 --> 00:10:58,040 Speaker 2: the next season. You can also get ad free episodes, 160 00:10:58,559 --> 00:11:01,320 Speaker 2: and I've gotten some questions from folks about how to 161 00:11:01,400 --> 00:11:05,280 Speaker 2: access AD free episodes. Those actually come into a special 162 00:11:05,400 --> 00:11:09,319 Speaker 2: Patreon feed, but then you're able to kind of connect 163 00:11:09,360 --> 00:11:13,200 Speaker 2: that to whatever podcast app you use. If you're having 164 00:11:13,240 --> 00:11:15,520 Speaker 2: trouble doing that, let me know and we can try 165 00:11:15,559 --> 00:11:18,400 Speaker 2: to help sort that out for you. Thanks again, and 166 00:11:18,520 --> 00:11:33,679 Speaker 2: here's the season five preview. This season on Drilled, then. 167 00:11:33,640 --> 00:11:37,360 Speaker 4: They went after Kandi asked they come truly to believe 168 00:11:37,440 --> 00:11:39,520 Speaker 4: that Donager is a criminal. 169 00:11:39,600 --> 00:11:42,000 Speaker 6: There's a lot in the film that they could have 170 00:11:42,160 --> 00:11:47,360 Speaker 6: used to go on a more narrow request, but they've 171 00:11:47,400 --> 00:11:50,600 Speaker 6: not done that. They've simply asked for the entire footage 172 00:11:50,640 --> 00:11:52,839 Speaker 6: to be turned over to go on a fishing expedition. 173 00:11:53,280 --> 00:11:54,720 Speaker 5: I think if I had it to do over, I 174 00:11:54,720 --> 00:11:59,000 Speaker 5: would advise my client to completely protest the trial. And 175 00:11:59,120 --> 00:12:02,840 Speaker 5: unfortunately Stephen didn't have that option because Stephen lives in 176 00:12:02,840 --> 00:12:05,400 Speaker 5: New York and he's subject to the jurisdiction of the 177 00:12:05,440 --> 00:12:08,320 Speaker 5: court and he has to defend the case. But my 178 00:12:08,440 --> 00:12:11,440 Speaker 5: clients did have that option, and that was not a 179 00:12:11,440 --> 00:12:14,280 Speaker 5: card we chose to play. In retrospect, that may not 180 00:12:14,320 --> 00:12:16,679 Speaker 5: have been the best decision. Hindsight is twenty twenty. 181 00:12:16,760 --> 00:12:19,400 Speaker 7: It was cold, so we would be all bundled up. 182 00:12:19,480 --> 00:12:21,800 Speaker 7: We would be in this long line to get through 183 00:12:21,840 --> 00:12:25,240 Speaker 7: security to get into the courthouse, and then you would 184 00:12:25,240 --> 00:12:32,120 Speaker 7: see a row of five black suburbans arrive with tinted windows, 185 00:12:32,640 --> 00:12:36,400 Speaker 7: and out of it would come senior management of Chevron, 186 00:12:36,679 --> 00:12:40,640 Speaker 7: their head of litigation, their entire legal team, and they 187 00:12:40,640 --> 00:12:44,840 Speaker 7: were ushered in through a separate entrance as VIPs, so 188 00:12:44,880 --> 00:12:46,480 Speaker 7: they didn't have to stand in the line with all 189 00:12:46,520 --> 00:12:49,400 Speaker 7: the rest of us. I am now tired of rating 190 00:12:49,520 --> 00:12:51,400 Speaker 7: about Stephen and the ankle. 191 00:12:52,360 --> 00:12:54,240 Speaker 1: Enough with Stephen and the. 192 00:12:54,200 --> 00:12:57,640 Speaker 7: Ankle I want the attention to go back on the 193 00:12:57,640 --> 00:13:00,000 Speaker 7: Ecuadorians and what they had said. 194 00:13:00,600 --> 00:13:04,560 Speaker 5: A state cannot contract human rights away. 195 00:13:05,080 --> 00:13:09,760 Speaker 1: Human rights are inalienable. They belong to humans, They belong 196 00:13:09,880 --> 00:13:10,640 Speaker 1: to the people.