Speaker 1: Welcome to In the City, Bloomberg's podcast, connecting you to
Speaker 1: the conversations and the stories shaping the world of finance
Speaker 1: and Francin.
Speaker 2: Laqua and I'm David Merritt and this.
Speaker 1: Week conversation with Paul Pullman.
Speaker 3: Yeah, Paul was chief executive officer of course, of Unilever
Speaker 3: for ten years from two thousand and nine to twenty nineteen.
Speaker 3: Before that, he worked for Procter and Gamble and Nessla
Speaker 3: and he's the author of net Positive, How courageous companies
Speaker 3: thrive by giving more than they take.
Speaker 1: And I have to say, throughout his years in charge
Speaker 1: of company, he's always cared about sustainability. So, Paul, we've
Speaker 1: been trying to get you on the podcast for a
Speaker 1: while and this might be the perfect time, with COP
Speaker 1: twenty eight in Dubai kicking off. Do you have high
Speaker 1: expectations or any expectations about what can be achieved at COP?
Speaker 4: Yeah, there will certainly be things that can be achieved,
Speaker 4: but I think we have to manage our expectations. In fact,
Speaker 4: I've been at about fifteen cops or more, and anytime
Speaker 4: we have this COP, I issue a little bit of
Speaker 4: a warning before that we do have to manage our
Speaker 4: expectations because we think that this will be this magic
Speaker 4: want that all of a sudden solve solid climate change problems,
Speaker 4: our financing problems. That's not going to happen, especially at
Speaker 4: this COP, which is a very difficult COP in a
Speaker 4: country that is still heavily dependent on fossil fuel itself,
Speaker 4: and many people are rightfully so worried about that. But
Speaker 4: having said that, we made good progress in Paris when
Speaker 4: we bent the curve from four and a half degrees
Speaker 4: to below four degrees was the COP twenty one and
Speaker 4: the Paris Agreement clearly stating that we want to get
Speaker 4: to about one and a half degrees that we can
Speaker 4: afford for a livable planet if you want to. Then
Speaker 4: Glasgow came it bent the curve a little bit further
Speaker 4: and now we're still projecting to about two point seven,
Speaker 4: but coming from about four and a half is a
Speaker 4: good progress. So what we now need to do is
Speaker 4: this is the first time since Paris that what you
Speaker 4: have is what we call a global stock take, which
Speaker 4: is where all of the countries since Glasgow until now
Speaker 4: put in their submissions of if they've made progress towards
Speaker 4: these targets or not. Then the reality is we're still
Speaker 4: far off track. Although there is some progress, we're clearly
Speaker 4: not moving fast enough. And as I've pointed out many times,
Speaker 4: we are creating the problems at the fastest speed than
Speaker 4: we're applying the solutions. So where can we expect progress
Speaker 4: at the cop The first thing is getting into a
Speaker 4: greener world will require investments, So that's three to four
Speaker 4: trillion dollars that will be needed to stay around to
Speaker 4: one and a half degrees by all means possible still
Speaker 4: if we decide to do so. So there will be
Speaker 4: a lot of talk about financing. Can we come up
Speaker 4: with a fund of loss and damage for especially the
Speaker 4: emerging markets. Can we finally agree on the Green Fund,
Speaker 4: which is this hundred billion that was agreed already fifteen
Speaker 4: years ago but still not pulled together. Can we get
Speaker 4: a reform or a further progress on the reforms of
Speaker 4: the financial institutions, so it's called the Bridgetown Initiative IMF
Speaker 4: World Bank. Can we free up funds to really accelerate
Speaker 4: the conversion in emerging markets where now all the new
Speaker 4: emissions are So that's the financing piece, and then there
Speaker 4: are two other pieces. One obviously is the greening of society,
Speaker 4: which basically means that we need to triple the investments
Speaker 4: in green energy and solar and winter will on track
Speaker 4: to do that, but we need to get tripled by
Speaker 4: twenty thirty, and we need to double the energy efficiency.
Speaker 2: So that's a really long list.
Speaker 3: For Ryan, you just said it's going to be a
Speaker 3: difficult cop So that long list of goals is it
Speaker 3: in any way achievable in Dubai.
Speaker 4: I think the most important thing that we need to
Speaker 4: get out is that the more and a half degrees
Speaker 4: is still alive, that we're not stan it's I think
Speaker 4: many well. The International Energy Agency, the UNFCCC, which is
Speaker 4: responsible for the climate negotiations, have issued various reports. Our
Speaker 4: own studies would point at by all means it's still possible.
Speaker 4: If we already see, for example, on electric vehicles, that
Speaker 4: two thirds of the sales of by twenty thirty could
Speaker 4: be electric vehicles. We see wind and solar capacity being
Speaker 4: online with the trajectory of one and a half degrees,
Speaker 4: So if we really are serious and unlock those investments
Speaker 4: at a little bit higher pace, but the technologies are there,
Speaker 4: the funds are there, and frankly it would cost us
Speaker 4: less than not doing so, so that is by all
Speaker 4: means possible. And then methane. If we attack the methane issue,
Speaker 4: it's obviously a short term far more burning, is one
Speaker 4: hundred percent more potent in the timeframe that we have,
Speaker 4: and that's also possible. We have one hundred countries that
Speaker 4: have signed up to the methane pledge. So this is
Speaker 4: one feature I think of the COP twenty eight and
Speaker 4: many COPS that it's difficult to get all the countries
Speaker 4: to agree on something nowadays, especially with the geopolitical tension,
Speaker 4: but you can get these side agreements that are quite
Speaker 4: significant in moving things forward.
Speaker 1: So when you read a lot of the press, they
Speaker 1: say this is really also the last chance to cut
Speaker 1: emission significantly for this decade. Right. Does the fact that
Speaker 1: the US and China, the world's two biggest plut started
Speaker 1: talking to each other, does that make a big difference
Speaker 1: in terms of environmental pledges?
Speaker 4: You cannot get there without the US and China cooperating,
Speaker 4: There's no question about it. Eighty percent of the emissions
Speaker 4: are in the G twenty countries and the biggest ones
Speaker 4: are China. In the US, so the fact that we
Speaker 4: had the meeting in California between them that lasted four hours,
Speaker 4: where they were.
Speaker 5: Clear agreements to move forward.
Speaker 4: We had yesterday a meeting with negotiate a WTO and
Speaker 4: talked about that again. It is encouraging is that the
Speaker 4: only solution no China actually is moving very fast in
Speaker 4: many areas in the US. The IRA Inflation Reduction Act
Speaker 4: has really changed the environment there. But you know, we
Speaker 4: have to be very mindful. But you do have these
Speaker 4: two on board is absolutely key.
Speaker 3: I'm interested by by saying nothing will really shift, I mean,
Speaker 3: everyone still feels the need to convene this time in Dubai.
Speaker 3: You've been to many, many of these conferences. What's it
Speaker 3: like on the.
Speaker 2: Ground, you know, And what will you be doing?
Speaker 3: Will you be personally lobbying representatives for these countries, for
Speaker 3: these companies to try try to change people's mind, to
Speaker 3: try to reach some agreement and maybe get some rabbits
Speaker 3: out of hats that the world isn't quite expecting.
Speaker 4: Yeah, So these meetings are difficult, and the mechanism that
Speaker 4: has been put in place is difficult, but we haven't
Speaker 4: found a better one. But having agreements nowadays unanimously between
Speaker 4: all the countries in the world when you have this
Speaker 4: enormous geopolitical tension, it's just not going to happen. We
Speaker 4: see countries like countries like Saudi or Russia outright boycotting
Speaker 4: these processes and trying to slow you down. And we
Speaker 4: might see other countries, like especially the seventy Island states
Speaker 4: which are drowning literally being far more aggressive. So this
Speaker 4: has always been a process of finding compromise. But this
Speaker 4: is just one meeting that people work to. Most of
Speaker 4: the activity happens during the year. But it's important on
Speaker 4: anything to have a deadline so that some of these
Speaker 4: agreements are being worked.
Speaker 5: And come together.
Speaker 4: What you will see in the COP and coming to
Speaker 4: the areas that I'm focused on, you will see in
Speaker 4: the COP quite a big representation of the private sector.
Speaker 4: Obviously you'll have the fossil fuel sector and we'll take that.
Speaker 4: Hopefully they'll get an agreement on.
Speaker 2: I mean, they have to be part of the seduction.
Speaker 4: Well, they now have to show their cards, and I
Speaker 4: think they will be saying ultimately, they will be saying,
Speaker 4: if we're sitting here in two weeks time, that we
Speaker 4: will be net zero in the fossil industry. But they
Speaker 4: will only be talking Scope one and two, which is
Speaker 4: what is under their own control, whilst we all know
Speaker 4: that all their emissions are in Scope three. But where
Speaker 4: we will see progresses in companies showing governments that they
Speaker 4: have set higher ambitions than the governments themselves. So we
Speaker 4: have fifty percent of the major companies in the world
Speaker 4: now have set net zero commitments. But they're also which
Speaker 4: is not bad. Actually it's about thirty seven tillion in value.
Speaker 4: But they also have said very clearly we're at the
Speaker 4: point now that we cannot get there unless the governments
Speaker 4: start moving in different directions. We still have seven tillion
Speaker 4: dollars of perfers, policies and government subsidies that push us
Speaker 4: in the wrong direction.
Speaker 5: So we do need governments.
Speaker 1: Ultimately, But how do governments change? And this is something
Speaker 1: that Dave and I speak about quite often, is that
Speaker 1: you need to I guess, galvin, I yes, And I
Speaker 1: don't know whether it's galvanizing, you know, you talk about
Speaker 1: the climate change horrors and so galvanized public opinion, or
Speaker 1: you galvanize you know, by protesting something I think probably
Speaker 1: needs to happen to put climate change talks about it
Speaker 1: at the forefront. Given all the other crises.
Speaker 4: Absolutely and you see now Jeremy Hunt put the report
Speaker 4: to the Bank of England for example, on what there
Speaker 4: is four risks and all of a sudden climate change
Speaker 4: has disappeared when it was last year on the list
Speaker 4: as one of the four biggest priorities. So we do
Speaker 4: have some countries and you know we have to watch
Speaker 4: what happens in the US was the next election.
Speaker 3: But that's the thing, I know, it's the backsliding, right.
Speaker 3: We have these risks, but on the government side.
Speaker 5: But then you cannot stop. You see where we are.
Speaker 4: You cannot get discouraged because then you know the alternative
Speaker 4: is just not there. The costs that we are now incurring,
Speaker 4: the human suffering that we are encouraging. So whilst we
Speaker 4: at times might be discouraged by some short term political action,
Speaker 4: we actually need to go in overdrive. And what you
Speaker 4: now see is civil society is speak louder. Employees and
Speaker 4: companies are willing to walk away from companies not making
Speaker 4: commitments that all commitments that they are not living up to.
Speaker 4: You see companies themselves getting together at the increased pace
Speaker 4: to form these alliances to put pressure on governments.
Speaker 1: Does climate change have a pr problem. If you speak
Speaker 1: about air quality control, then maybe galvanizes people more than
Speaker 1: climate change because it also feels very far away when
Speaker 1: you have two wars, when you have inflation, cost of
Speaker 1: thin crisis.
Speaker 4: Yeah, I couldn't agree with you more that the way
Speaker 4: the narrative has been constructed clearly hasn't gotten through to
Speaker 4: the extent that we need.
Speaker 5: So we do need to look at a different narrative.
Speaker 5: What I like is, and I.
Speaker 4: Am especially focused on the food system transformation. We've pulled
Speaker 4: a lot of big companies in the food system together
Speaker 4: at thirty percent of the problem, as I said, but
Speaker 4: also thirty percent of the solution. And by all means,
Speaker 4: it's possible to go to fifty percent regenerative agriculture by
Speaker 4: twenty thirty, which basically means capturing carbon in the soil
Speaker 4: and creating soil health. It's by all means possible to
Speaker 4: protect biodiversity or restore biodiversity by twenty thirty, and that
Speaker 4: alone is probably the biggest opportunity that we have right
Speaker 4: now to thirty percent. So governments are frankly not well equipped,
Speaker 4: not well organized, not well aware of these possibilities, and
Speaker 4: incur quite often significantly different costs somewhere else. Take the UK,
Speaker 4: for example, a broken food and land use system, it's
Speaker 4: the lower stone biodiversity of all OECD countries. A broken
Speaker 4: food and lent us system which results in people not
Speaker 4: eating the healthy food they could be eating and actually
Speaker 4: paying more for food than they should be paying ultimately
Speaker 4: results in fifty five to seventy billion extra costs for
Speaker 4: the NHS. So increasingly we're able to explain those things
Speaker 4: to governments.
Speaker 2: But are they listening? I mean the UK.
Speaker 3: Let's talk about the UK government. We've just had the
Speaker 3: autumn statement from the Chancellor. Are you in any way
Speaker 3: optimistic that this current government and we're going into a
Speaker 3: big election year here, obviously politically they're going to make
Speaker 3: this a priority.
Speaker 4: Well, clearly they've decided not to, although they put different
Speaker 4: voices behind that and try to position it differently. But
Speaker 4: what we've clearly seen is, you know, one year ago,
Speaker 4: it's let's get to the electric vehicles by twenty thirty
Speaker 4: because it stimulates innovation and it makes economic sense, and
Speaker 4: that's indeed true. Now all of a sudden it's no,
Speaker 4: we don't want.
Speaker 5: To do it.
Speaker 1: But why because it's not popular it's not popular voter voters.
Speaker 4: I mean, they're desperately trying to see if they can
Speaker 4: get re elected in next year, earlier next year.
Speaker 5: That's not mince words around that.
Speaker 4: So that's why you see the Butchhet cuts now, which
Speaker 4: our disguised increases actually for consumers. The men of England
Speaker 4: again and the Butterchet Office clearly stating that it's not
Speaker 4: making a big difference. But these are all attempts and
Speaker 4: that you see in every country where you have short
Speaker 4: term attempts too over the electorate to either limit the
Speaker 4: damages or you know, get elected again. And you know,
Speaker 4: we have to speak out when these things happen to
Speaker 4: make clear that there was never a meat text plan
Speaker 4: in the UK. There was never a plan to pull
Speaker 4: out the gas boilers in people's arms and have them
Speaker 4: incur extra expenses. There was never a plan to force
Speaker 4: them into not flying and all these things. But these
Speaker 4: governments are now become so populist in some extent that
Speaker 4: I think they're increasingly losing the elector. This is not
Speaker 4: a good move for the government. It is unwise, it
Speaker 4: is ignorant, it's actually more expensive. And if you see
Speaker 4: the UK, the majority of people like in the US,
Speaker 4: by the way, the majority of people expect governments and
Speaker 4: business increasingly to attack these.
Speaker 1: Issues, but not the majority of people. Still, if you
Speaker 1: have to change your stance on climate change or greening
Speaker 1: the economy to get voters, then there's again there's a
Speaker 1: problem of communication.
Speaker 4: It is very easy to take a populist view and
Speaker 4: say we want to protect you from becoming an any
Speaker 4: state to tell.
Speaker 2: You what to do, or it's rising prices. You know,
Speaker 2: it's cost to avoid.
Speaker 4: You paying more because it is a higher cost, and increasingly,
Speaker 4: study after study points out because also of the advances
Speaker 4: in technology, because of the cost that you would incur
Speaker 4: if you don't move that it's actually economically more attractive.
Speaker 4: But you know, you have to explain that to your electorate,
Speaker 4: and there are very few politicians that clearly are first
Speaker 4: to do that properly. But that's the reality. I'm not
Speaker 4: denying that. But it means that we have to organize
Speaker 4: ourselves better around that. When Suona came as its proposals
Speaker 4: the other day, I think it was not well received.
Speaker 4: It was not well received by the left to right,
Speaker 4: it was not well received by the majority of business people,
Speaker 4: and that message hopefully resonates mister Photers as well when
Speaker 4: it comes to making a choice.
Speaker 3: I mean, the world does feel very different from the
Speaker 3: cop that was held in Britain, right in Glasgow. Since then,
Speaker 3: we've had the rampant inflation, We've got two wars raging
Speaker 3: now in the European time zone, and so with that
Speaker 3: has come this. I suppose you could call it a
Speaker 3: backlash right against ESG because it's gone down the priority
Speaker 3: list of companies of people of households and people are
Speaker 3: worried about the cost of things and adding to their bills.
Speaker 3: Do you think that that sort of back quard step
Speaker 3: in terms of a backlash if you want to call
Speaker 3: it like that against ESG. Is that just a blip
Speaker 3: in terms of the progress of greening the economy heading
Speaker 3: to net zero? Or is it something more fundamental?
Speaker 4: Well, I think we need to separate two things that
Speaker 4: you put in one sentence. There is obviously other short
Speaker 4: term priorities that have come to the foreground. TREATCHIC as
Speaker 4: they may be, But I wouldn't immediately because that is
Speaker 4: being prioritized, that there is a backlash against the ESG.
Speaker 4: In fact, the world is moving quite fast. It's just
Speaker 4: not moving fast enough. But what we see this year,
Speaker 4: for example, is the doubling of the capacity of green energy.
Speaker 4: We're spending one point eight trillion to two trillion dollars
Speaker 4: this year on green energy. That's twice as much as
Speaker 4: what we're spending on fossil fuel. So it is moving,
Speaker 4: and it is actually moving quite fast, but we continue.
Speaker 4: You know, the things like the wars themselves don't help either.
Speaker 4: They're carbon emitting. The fact that we're getting close to
Speaker 4: negative tipping points. The forest fires in Canada alone had
Speaker 4: emissions that were, you know, quite a significant part of
Speaker 4: annual emissions. We're getting into a deeper understanding of climate
Speaker 4: science where the world's capacity to absorb our shortcomings if
Speaker 4: you want to, is far less now than what we thought.
Speaker 4: So that sense of urgency has come up. And at
Speaker 4: the same time you have distractions. Many people are moving,
Speaker 4: actually many countries are moving, but we're just not.
Speaker 5: Moving at the speed.
Speaker 4: And I always say, going back to the old vehicles,
Speaker 4: if you want to, it's easier if you're in second
Speaker 4: gear to move to third or fourth gear.
Speaker 5: Then if you would be in reverse. We're not in reverse.
Speaker 5: But we just need to accelerate.
Speaker 1: People don't like talking about it. So I remember doing
Speaker 1: an interview with Larry Think in Dubos at the year
Speaker 1: head launch. He was quite emotional for the first time.
Speaker 1: He said some of the attacks he got in the
Speaker 1: US were very personal. And he also said, recently than
Speaker 1: actually stopping to use the word ESG because it's become
Speaker 1: too politicized. Is that the right thing to do, to
Speaker 1: continue maybe with an ESG agenda without talking about it.
Speaker 4: No, I don't think it is. I think the Wolke
Speaker 4: attacks that you see in the US are real. We
Speaker 4: should not underestimate that. But they're not making ground. There's
Speaker 4: very few legislation that has been passed, the very food
Speaker 4: proposals in the proxy seasons in companies that have been accepted,
Speaker 4: and frankly, it has been presented in a way that
Speaker 4: hasn't caught the interest of American people. Even seventy percent
Speaker 4: of the Republicans think that whatever investment decisions you make,
Speaker 4: you should have the freedom to make the choices and
Speaker 4: the factors you want to take into consideration. So, which
Speaker 4: are often ESG factors. We know that companies that are
Speaker 4: more diverse have a higher likelihood of performing better. Companies
Speaker 4: that are more aggressively attacking issues of climate chains are
Speaker 4: better presented, better prepared for the future, and the market
Speaker 4: actually felues on better right now.
Speaker 1: And explain to people why we target companies to come
Speaker 1: on this program and others to talk about ESG and
Speaker 1: they're at the forefront of the leader board of people
Speaker 1: that are doing good and we'll talk about everything except that.
Speaker 4: Yeah, because well, ESG first and foremost. The ESD term
Speaker 4: is only ten years old. And certainly the attacks by
Speaker 4: certain parts of the political parties mainly in the US
Speaker 4: but also coming increasingly to Europe and heavily sponsored by
Speaker 4: the fossil industry have an agenda, and that agenda we
Speaker 4: should not be naive about that. The agenda will become
Speaker 4: more offerred and more vicious as the conversion is happening.
Speaker 4: That's because then the veested order will push back harder.
Speaker 4: We shouldn't be naive about that. What is said about
Speaker 4: it is that you mentioned Larry Fink that he has
Speaker 4: to put personal guards by his house, that he gets
Speaker 4: people to you know, threats that are you know, to
Speaker 4: his family and to his life. And that's all sponsored
Speaker 4: by you know, think tanks that are on the extreme
Speaker 4: right by some politicians like our FEEFAC guy from Cincinnati
Speaker 4: who wants to be elected, and the money traces back
Speaker 4: to the fossil industry. But what we are saying is,
Speaker 4: you know, fine, that is the reality of it, but
Speaker 4: it is so economically more attractive to move forward. That's
Speaker 4: why you see states like Wyoming or Texas, which a
Speaker 4: red states, actually moving very fast. Those are leading states
Speaker 4: in solar and in wind for example, the investments are going.
Speaker 4: The three hundred and eighty nine billion that has been
Speaker 4: made available with the Inflation Reduction Act in the US
Speaker 4: is matched by the private sector up to about one
Speaker 4: trillion right now.
Speaker 5: So fundamental shift is it enough?
Speaker 4: No, the US definitely is in a catch up mode.
Speaker 4: Did they have to make some compromises given the political
Speaker 4: situation and also leave some subsidies on the plate for
Speaker 4: the fossil sector. Yes, but you see a fundamental shift
Speaker 4: happening there. And that shift is not you cannot stop
Speaker 4: where we are losing out is and Frantiinore totally right.
Speaker 4: Terra Is because business is silent, or many of them
Speaker 4: have decided to become silent. We don't see the partnerships,
Speaker 4: the new partnerships emerging. We don't see the ambitions going
Speaker 4: up versus where they are moving. We do, so it's
Speaker 4: in that gap of ambition, and of course there are shortcomings.
Speaker 4: ESD has grown so fast that we don't have all
Speaker 4: the standards yet, but they're coming in the Sustainable Standard Board,
Speaker 4: the European legislation, the SEC in the US. Of course
Speaker 4: there are companies that make noise that they do things
Speaker 4: and not deliver on that, but these are increasingly being
Speaker 4: called out.
Speaker 5: So the shortcomings of ESG. If you want to need
Speaker 5: to be attacked.
Speaker 4: We shouldn't. We shouldn't be too simple about that. But
Speaker 4: I would not say that the woke capitalist attacks are
Speaker 4: having the effect that the fast that order was thinking.
Speaker 4: So this is not an issue of voke capitalism, to
Speaker 4: be honest, this is an issue of broke capitalism.
Speaker 1: Paul, thank you so much.
Speaker 2: Thanks for listening to this week's in the City. We
Speaker 2: will be back.
Speaker 1: Next week, but in the meantime, if you like our show,
Speaker 1: please head on over to Apple Podcasts or wherever you
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Speaker 2: Episode was hosted by me David.
Speaker 3: Merritt and Me franc and Blackquad was produced by Somasadi.
Speaker 1: Additional editing by Blake Maples,