245: Deceit, Small Thinking and Fiduciary Duty

Paul: [00:03:02] Well, I was very jealous of the studio in Seattle where you seemed to have limitless amounts of moss and water and the sort of extraordinary sounds of nature and sort of minuscule things going bzzz. And I just wanted to be there, really, so I missed it. But I'm with you now.

Tom: [00:03:16] There is a wonderful image in my mind of a studio made of moss, which is used as the sound deadening function. That's that is actually what it was like, isn't it.

Christiana: [00:03:24] I like this, let's keep it going, I like it. I'm beginning to feel very at home. 

Paul: [00:03:29] It's where we are going to record next, in some huge cave.

Tom: [00:03:29] I loved, I loved Kara's comment at the end of that episode. This, I listen to this podcast, but this is a very diverse episode, which I thought was a very.

Paul: [00:03:38] Millions of little things that you two were arguing about, whether they were lichen or moss or lichen are moss or something or something. Anyway, it was it was interesting. You should listen to it if you haven't heard it.

Tom: [00:03:48] Let me tell you, what you saw on that podcast was 1% of the week long argument Christiana and I about. 

Paul: [00:03:55] Okay, Clay and his magic scissors. I can imagine that, actually, I can imagine, so.

Tom: [00:03:58] So I'm still in Washington. The trip continues. I'm excited to go home at the end of this week, but we are going to dive into some of our topics. And I believe Christiana, this week we're going to kick off with you.

Paul: [00:04:07] Christiana.

Christiana: [00:04:08] Okay, and maybe just because you are in Washington, Tom, what I have chosen to bring for this week is a.

Tom: [00:04:18] Oh no, if it's Washington related. I'd just like to immediately say I've got nothing to do with it. Please carry on.

Christiana: [00:04:21] Well, once you hear this, you might want to say that this was thanks to you. How's that?

Tom: [00:04:27] All right.

Christiana: [00:04:27] Okay. Stand ready. So last Tuesday, we saw the release of a 65 page report, which is actually the result of a three year probe into internal documents of six oil and gas companies, which are Exxon, BP, Shell, Chevron, American Petroleum Institute and Chamber of Commerce, that poses as being a chamber of commerce, but is, an oil and gas lobbying group. And here's the amazing thing. It was the Senate Budget Committee, together with the House Oversight and Accountability Committee that commissioned and released this report, and it has been three years in the making. The sum result of this is that it is now painfully evident, if not pellucidly evident, that these companies have moved from denial to delaying climate change, that they had a very sophisticated strategy of quote unquote, deception, disinformation and double speak, and that they have been doing this since the 1960s okay. That is when they already knew the consequences of their emissions. And they started this very, very intricate and well planned campaign to confound public opinion, to deceive, to disinform, and to act publicly as though they were concerned, but internally actually quite to the opposite, and as though that were not enough. It is now very clear that they actually actively obstructed and delayed the committee's investigation. So this is nothing new. The information is not new. What is new is that this was now seen on Capitol Hill, and that it is the official report of a, a Senate Committee and a House Committee. Honestly, quite outrageous, absolutely outrageous that this has been happening for such a long time.

Tom: [00:06:51] I mean, well, Paul, you go first.

Paul: [00:06:54] Really, because I've got to.

Tom: [00:06:57] No, no, I want you to, I've missed you, yeah.

Paul: [00:06:59] The problem here, Christiana, thank you so much for bringing this because this is absolutely critical. And I think some of it probably to some degree, is, is, is another raising the profile of stuff that's in the lawsuit from the, the state of California. But it's very much the same points. What I'm most outraged about here is what I'm going to call the principle of limited liability. Now, we have limited liabilities for companies. And it's because, for example, I don't know, I'm going to give an example. We we we might want to use airplanes okay. And we might get on a flight with British Airways or something like that. And then that flight might blow up and crash right. Because of a mechanical error. And all the passengers might be killed. And you can't really expect all the directors of British Airways to go to prison unless they did something really badly wrong. So we limit the liability of directors of big companies for exactly this reason. There could be a mechanical failure on an airplane. You couldn't necessarily blame the directors of an airline for that. But if the directors are undermining the national and global security of our planet by undermining the political process designed to protect us, I don't personally understand why they should or would expect to be covered by limited liability. This is such a dangerous thing they did. I think it's worse worse than cutting the engineering staff at the airport, you know, so the plane isn't properly maintained. I think it's worse than that.

Tom: [00:08:27] Yeah, there's something about it, which is I mean, I have to say, just as you were reading that, Christiana, and of course, as you said, there's not new necessarily information there. That stuff is kind of known to us in many ways, but it's now been listened to in this other way. But just the sense of intentionality is the thing that really makes you feel, you know, a lot of times we kind of project badness onto the world of like, someone is doing something in a nefarious way, and often it's not that right. Often it's someone's doing their best, but they're not kind of making it work in quite the right way. Like greenwashing, I think, is often an example of that. Not always, but often of like companies are trying, but they're not quite getting it right. But here you have evidence of deliberate misleading of the world in a manner that will leave hundreds of millions of people without their homes. That will destroy enormous amounts of biodiversity unique in the universe as far as we know, in exchange for personal gain. I mean, there is a strong argument to say that these are some of the most irresponsible, heinous acts that anyone has ever undertaken in history to have deliberately misled humanity and to have slowed our collective capability to respond to it. I just watched 3 Body Problem on Netflix, which some of you may have seen. Spoiler alert clip for the next 30s if you haven't seen it, it's a it's a series about humanity getting in touch with aliens, it's very, very well done. Based on the the Chinese science fiction book. And one woman takes it on herself to reach out to the aliens in a manner that gives them the coordinates of Earth and thereby dooms the whole of humanity. And as the story unfolds, this sense of like, who gave you the right to do these things.

Paul: [00:10:05] She was even warned by a nice peace loving alien not to do it.

Tom: [00:10:10] Even warned. Well, these people were warned by very nice, peace loving people not to do it as well, but they kept doing it for personal gain and for whatever reason. I mean where this ends up when people realize what these people have done is actually quite frightening. I don't know where that turns out to, but it is outrageous.

Christiana: [00:10:25] Well, just to double click on that, Tom, what what I'm just still trying to chew and digest is the fact I'm thinking back to 1960s when this started okay, how many people truly understood climate change back then. They did.

Tom: [00:10:47] They did.

Christiana: [00:10:47] That's the most, they did, they understood the problem in a way that no one else, or very few other people, other than a handful of scientists really understood in the United States and abroad. And they did. They understood because they had scientists looking at this. And they deliberately they deliberately covered it up, abusing the fact that hardly anybody else knew. They covered it up and misled the public. I mean, it is that's the piece that I'm just trying to sit with. This is 1960s, okay, wow.

Paul: [00:11:29] But one important point.

Christiana: [00:11:30] 60 years ago.

Paul: [00:11:31] Very important point is I think the people who did this then inexcusable. They could see that it would be decades before this problem really became something everyone's talking about, like we are now. But let the message go out loud and clear to all executives of all companies now that this kind of behaviour is going to be unimpossible to avoid culpability for if it continues in 2024, it was outrageous then it's unthinkable now.

Christiana: [00:12:03] Well, and speaking of culpability, and you asked Tom, where is this going to go. Well, obviously it goes to the courts right. And Tom has already, reminded, oh sorry, Paul has already reminded us of this amazing California, filing a lawsuit against the the companies. And that is probably the most powerful of all of the lawsuits. But it's far from being, the only one. It is not no longer a fringe legal strategy right. Now, we are seeing more and more climate related cases as of December 22nd, the last report that was put out, there were over 2000 climate related cases filed in 65 jurisdictions, some by children and youth, women's groups, we talked about that recently, and in the Netherlands, local communities, indigenous people, etc., etc. what I think is, getting very concerning is that all of those legal cases are within a particular jurisdiction within a country or within a particular community. But on top of that, my friends, we now have some legal cases that are between nations. So the Inter-American Court of Human Rights has already been asked to address the issue of compensation of one nation to other nations because the most vulnerable nations, such as the Caribbean islands, are seeking legal and financial accountability for the climate crisis. Now they've brought it to the Inter-American Court of Human Rights, and they're bringing it against other members of that court, the Inter-American Court of Human Rights is considered one of the most progressive of all of the regional courts of human rights. We have to remember that its advisory opinion will not be directly legally binding, but it does open the doors and frankly, those doors have now been pushed open. I would actually say the dam is really filling and when it breaks, oil and gas industry will no longer be able to defend themselves. Case after case after case will be increasingly successful, with increasingly high consequences for the oil and gas industry, and they will be won in a domino effect. I don't know if they are ready for this.

Tom: [00:14:44] Yeah, well.

Paul: [00:14:45] But what will happen is they'll be pulled into what's called probably, I'm guessing, so like a kind of master settlement agreement, which is what happened to the tobacco industry. So they'll they'll be able to continue to kind of operate, but their profits will be sent to pay for climate change damages. But you've got to recognize countries outside of the US, for example, will be queuing up because the state of California wants that damages money to build its own seawalls first. So there's going to be a queue to get those oil company profits. Sorry, Tom.

Tom: [00:15:08] No, so I mean, that's very interesting. And I think we've talked a lot about legal processes and those sorts of things on this podcast, and it's one of the most interesting areas in the coming years. The other place that I would just point to, because I'm sure all of our listeners are feeling this is I actually had a conversation with a friend here in DC about what you just shared, a few days ago. And this person is not an activist, well connected, person with significant resources. And you know what he said to me, and I could feel it in myself. He said, you know my reaction to that, I want names. And actually, that's the dark response, that's the really dark response when you think about.

Christiana: [00:15:43] Ouch, ouch. Names of people rather than just the companies?

Tom: [00:15:45] Of the people who did it. Not just the not just the legal process, but the people who did it. And obviously, that's not something we're advocating, but there is a human instinct that is drawing us in a certain direction here that as the impacts and other things mount, is a really dark potential scenario.

Christiana: [00:16:03] Ouch.

Tom: [00:16:05] So.

Paul: [00:16:06] We had that conversation long ago Tom, let's not remind listeners what I said.

Tom: [00:16:08] I'm not I'm not going to bring that one up, exactly.

Paul: [00:16:11] Okay.

Tom: [00:16:12] All right, thank you Christiana.

Paul: [00:16:13] Thank you Christiana I think it's a brilliant thing to bring, appreciate it. Tom, are you next?

Tom: [00:16:17] So I think I'm next. All right, so, this is going to be not quite at the level of outrage that Christiana just brought, but I'm still outraged about it. Okay, you ready?

Christiana: [00:16:26] Ready.

Tom: [00:16:27] So I'm outraged that that Macron has used the first visit to Europe by Xi Jinping for five years to call for a lifting of tariff threats on cognac, okay. That's the top line, okay, so let's get into it. So president Xi in France this week for two days. First visit since 2019. First time he's been in Paris since the COP in Paris in 2015. I've read pretty much every piece of media about the trip that I could find, and there's pretty broad consensus. There were three topics. First, one, Chinese support for Russia, purchasing of oil and selling them what's called dual use goods like microchips and satellite imagery that's being sold by China to Russia that helps in the war effort. The second.

Christiana: [00:17:11] That's a justifiable topic Tom?

Tom: [00:17:13] Justifiable, absolutely justifiable. So all of these justifiable. 

Christiana: [00:17:15] Absolutely justifiable.

Tom: [00:17:15] The second one, really important, the second one, Macron pushed Xi for backing an Olympic truce. I mean, you've got to give him credit. He's a very poetic leader. That's a lovely idea, global truce during the Olympics. But the third one was on cognac. And this is part of a larger conversation. So I'm just going to unpack this for a couple of minutes, then we'll get into it. So we're now in a situation where as so often before, Chinese state planners, have over subsidized capacity in a promising sector in China. And this has happened before. And it's reshaped Europe's industrial landscape, because what China does is they use subsidies to open more firms and factories than the markets need. And that's traditionally been with basic commodities like steel. However, also famously with things like solar energy, a market which the EU once dominated. And the big one now.

Paul: [00:18:10] Let me just stop you for half a second, like more than the world needs, some little bit defending China here because the world needs. Okay, alright.

Tom: [00:18:14] We'll get we'll get back to that. It's a very good point, yeah, yeah. So the big one now is cars right. China has focused on battery electric vehicles and they have made huge strides. And a few brands are now world class like BYD. And all of them are cheaper than their Western rivals. Chinese firms are now on the cusp of becoming dominant, partly due to state subsidies, but also due to the hard work and investment by Chinese companies and they make far more cars than China's market demands. So as a result of this.

Christiana: [00:18:47] In, okay, go ahead.

Tom: [00:18:47] Some European governments, no no, it's fine.

Christiana: [00:18:49] You're on a roll, you're on a roll.

Paul: [00:18:50] Apple make more iPhones than the US.

Tom: [00:18:53] Okay okay okay okay. So some European governments are now ready to resort to protectionism. And last October, the European Commission had launched an investigation into Chinese electric vehicles and whether the subsidies break international laws. This could then see punitive tariffs imposed back, which would lead to a retaliation. And that's where cognac comes in. In a recent speech, Ursula von der Leyen said there is clear overcapacity in China and this will be exported. So Europe has a choice and it's not an easy one. They want to reduce emissions, and Chinese made electric vehicles are a pretty good way to do that. They are cheap and they're scale. It would be popular with European drivers. But Europe also wants to protect domestic jobs. And we're seeing a populist backlash in EU against climate policies. You can imagine now if there's a perception the EU has traded automaker jobs in Germany for climate goals, that will then be further fodder for political extremes. And the EU is also wanting to make sure that they're not overly reliant on Chinese supply chains. Xi recently said Western reliance on their supply chains is a powerful countermeasure to foreigners who seek to control us. 

Christiana: [00:20:04] Ouch.

Tom: [00:20:04] So Europe being in this, exactly, Europe being in this position of choosing between climate goals, jobs on the continent and independence from China is what they're trying to balance. And the reason I'm outraged and we should get into all of that in just one second, is, holy cow, we should be bigger than this. We are in 2024 and we are facing an emergency halfway through the decisive decade. We're potentially facing another Trump presidency in the US. The EU and China are going to be it to carry the can for actually getting us to our goals. And rather than doubling down on collective action and saying, yes, we've got these trade issues between our countries, but we can fix them and let's make it happen. They're getting drawn into these disputes around how subsidies work and other things. This is not humanity at its best, and we're actually missing the chance, exactly as you pointed out, saying, oh, we've got too many solar panels and we're going to dump them on different markets. This is needed, and it's not easy, but we need to find a way through it. That's my opening pitch. What do you think?

Paul: [00:21:02] I, I first of all, I kind of want I want the names of the European car makers who didn't go electric sooner. You said that people in Europe want to buy all these electric cars. I bet they do. And if they're being manufactured in China, it's time to put a very, very bright spotlight on, was it big German car companies, was it big French, big Italian car companies that said, oh no, no, no, no, we're going to do the internal combustion engine. So I'm actually going to, little play a little salute here to Chinese industrial policy, which I think is a great thing for the world, so I'm not buying that argument in Europe. However, I am just going to say one thing that did make me laugh a little bit in the Financial Times, Gideon Rachman, who's very funny, he said, who is Xi Jinping's travel agent, right. He's making this first trip.

Tom: [00:21:49] Oh yeah, Serbia, Hungary and France, was that it?

Paul: [00:21:51] So he's going to France, then he's going to Serbia, then he's going to Hungary. You could argue that that's pretty much textbook probing for weaknesses in the European Union's political alliance, but that's a slightly separate topic. Christiana, what did you make of it?

Christiana: [00:22:03] You know what what concerns me is the narrow vision that this reflects.

Tom: [00:22:12] Yeah.

Christiana: [00:22:13] Instead of focusing on the many different products and services that need to be go electrified, that need to be powered by clean energy, that need to have the best technologies that need to be accelerated with AI. Et cetera. Et cetera. Et cetera. Of which the list is frankly limitless, instead of that and seeing the bigger global transformation that is not just necessary, but urgent, they're focusing on this sector or that sector or that sector with very much of a focus on scarcity and competition, instead of abundance and limitless sectors that need to be transformed and urgency and collaboration. So that's honestly what makes me angry.

Tom: [00:23:05] Yeah, I agree, and I mean, you know, I mean, we don't want to deal too much in counterfactuals. But imagine if Xi had come back to Paris ten years after the signing of the agreement and said, we are doubling down and we're using our industrial policy to go faster, and we don't know what's going to happen in the US. But together with the EU, we're going to find a way to not stop this enormous decarbonization that has been unleashed by our policy, exactly, Paul's even applauding my pretend Xi Jinping's speech. I mean, that would have been an amazing moment of global unity. And we keep missing these moments, exactly as you say in this myopic focus, which is understandable. I mean, I'm not saying it's easy and we have political headwinds, etc., but we can't just give up on this stuff. We have to find a way through.

Christiana: [00:23:46] Yeah, but that speech would have to have been by Xi Jinping and by Macron also.

Tom: [00:23:51] Right, yeah.

Christiana: [00:23:52] Both of them would have to be on the same.

Paul: [00:23:54] And not, and not followed by by a cheeky trip to Hungary to try and just prise apart the European, the Union and the European Union.

Tom: [00:24:02] But you will be pleased to know, as a silver lining, that Xi Jinping did say that he wouldn't put tariffs on cognac. And happily, cognac stocks rose in France. So, you know, there was a silver lining to the trip.

Christiana: [00:24:13] Well, what, why are we talking about cognac, Tom, come on?

Tom: [00:24:15] I'm using I'm just using it as a device to underline your point about how short sighted this stuff is. I mean, of course, if you're a cognac maker, that's very important, but that's not the deal. That's not what this should be about.

Paul: [00:24:25] Yeah. I mean, cognac is, you know, one of many luxury stocks that have, you know, fantastic profitability and enormous political power. We've got to recognize that, you know, some of our enemies here are trivial industries with gigantic resources, sorry to say.

Christiana: [00:24:40] I mean, Tom, I think that's a really good point that you brought. And I would summarize it as very dangerous rearranging the chairs on the Titanic.

Tom: [00:24:51] Absolutely, absolutely. That's precisely the the metaphor. Okay, we're cracking through it. PD you want to hop in?

Paul: [00:24:58] Okay, I'm, I'm going to say that I'm completely optimistic about one of my favourite topics.

Christiana: [00:25:07] Thank god.

Paul: [00:25:08] It's fiduciary duty. And I can see both of your faces light up at the mention of my favourite thing.

Christiana: [00:25:14] Oh boy, I said thank God, and now I'm like, oh boy, here we go.

Tom: [00:25:18] Now can we please have for for listeners, just a quick working definition of fiduciary duty before we go any further, Paul, because I know you're likely to dive in.

Christiana: [00:25:25] And Paul, Paul, can you please differentiate between fiduciary duty writ with small letters and fiduciary duty written with capital letters.

Tom: [00:25:37] And some distinction between European and US fiduciary duty as well please.

Paul: [00:25:39] I think I've worked out what's going on here. It was the same with transition plans. I choose the topics you wish you'd chosen and then you attempt to deliver my specialist subject. That's what happened with transition plans. That's what's happening with fiduciary duty which is very exciting.

Christiana: [00:25:52] Okay, okay, okay, we will now go into mute and listen to you.

Tom: [00:25:54] Sorry, sorry.

Paul: [00:25:54] Oh no no no no I enjoy the banter.

Christiana: [00:25:56] Tom, you and I are now muted.

Paul: [00:25:57] The more problematic the better. 

Tom: [00:25:59] I'll press mute.

Paul: [00:26:00] Well if only I had a mute button. No no it's not true, and this is a sort of this is a kind of 15 day lecture. I'm going to try and give in five minutes. So what is fiduciary duty. Let's get it really, really simple here. I'm going to say it's a really big idea and it's really important. And I'm going to start off with people tripping over a cable. And if you were in a hotel or in a supermarket or in an airport and tripped over a cable and you smashed your head, you would be able to sue the supermarket or the airport. People have been tripping over cables for like hundreds of years and smashing their heads, and sometimes very seriously. And so we've got laws that kind of protect us from kind of negligent or kind of stupid behavior. So they say, you've got to be careful how you conduct yourself. And that basically is fiduciary duty. And the two main fiduciary duties, I guess, are company directors have fiduciary duties to the company and to the shareholders and then investors, and this is the one that's most important. They have fiduciary duties to to the beneficial owners. Now look, if you own a sweet shop or something, then your fiduciary duties to yourself is not that important. But if you're a director of Shell or Apple or HSBC, you have fiduciary duties that are very, very large in their significance. Now, the point I'm going to make, and this is the key point, is that destruction of the world through unmitigated climate change is against the regulations, right. You can't have a world where if you trip over a cable, you can sue them for $1 million, but you can just destroy the whole world with greenhouse gas emissions. No, it's against the regulations. But what you do have to do is you have to have a progressive interpretation of those regulations, okay. So what does fiduciary duty say. It says you've got to act in the best interests of the beneficial owner. In fact for investors, I'm going.

Tom: [00:27:45] Which normally would mean the investor right, I guess, the person who owns the who owns the stock in the company?

Paul: [00:27:49] Yeah, that's right, yeah. If you if you, you know, if you if you're in a pension plan, maybe the trustee of your pension plan, but actually even if you just have $1,000 and you went to the bank and just put it into, you know, a savings account, someone is your fiduciary. So the most famous bit of legislation, which I think is beautifully worded, and I'm just going to change it slightly to make it not sexist. So it doesn't presuppose one gender, but it was beautifully constructed bit of law, from a case called Harvard versus Armory in 1828. And this is what it said. All that can be required of a trustee or a fiduciary is that they shall conduct themselves faithfully and exercise a sound discretion. They are to observe how people of prudence, discretion and intelligence manage their own affairs, not with regard to speculation, but with regard to the permanent disposition of the funds, considering the safety of the capital invested. So fiduciary duty reflects the evolving ethical perspective of our society. And I remember reading the, the doctoral thesis of somebody called Claire Molinari. And I remember reminding her of this, and she said, oh, yeah. She pointed out that the House of Lords in the UK in 1920 were very, very clear in a case called Roberts versus Hopworth that equal pay for women was seen as squandering pension fund capital.

Paul: [00:29:08] So in 1920 equal pay at a company was seen as squandering, pension fund capital. Well guess what, that doesn't play like that in the 21st century. In fact, unequal pay is technically against the law. So the point is, our society changes. And this is where I'm going with this is is you, our listeners, you happen to own little stakes, although you don't realize it in all the world's biggest companies, Shell and Apple and HSBC, and you are capable of deciding how they should behave. Of course, Richard Curtis has been great coming on this show talking about Make My Money Matter, but my optimistic thesis is that we can all get busy not just voting every 4 or 5 years, but thinking every day about, for example, how our money is invested. And how the directors of big companies are behaving and asking, are they acting in our best interests. And if they're not, then it's up to us to communicate that with that, with clarity and force, and then we can take back control. To use a lovely phrase that was ruined by the Brexit campaign.

Tom: [00:30:16] Don't use that.

Paul: [00:30:16] I shouldn't say it. No one's ever allowed to say that ever again.

Tom: [00:30:19] Okay, so so so, Paul, I have a question for you, so thank you, and it's such an interesting topic. And I think the way that's interpreted is such a critical thing. But but so so my question is, is it legitimate to say fiduciary responsibility is to provide the investor with maximum financial return punto, that's it. That is the only responsibility of the management. You are looking after an investor's money and your responsibility is to make it grow and anything else like that, Milton Friedman the business of business is business. Nothing else matters. That is a conventional interpretation, why is that wrong?

Paul: [00:30:57] Well, I'll tell you why, maximum kind of implies that you maybe you're only investing in 1 or 2 stocks that your plan, let's just say your plan was to make a lot of money out of coal. So you just put all the all the money in 1 or 2 coal stocks. Well, straight away you've done a very dangerous thing on behalf of the beneficial owners. You've put all the money into just one little sector. And if the government of somewhere bans coal tomorrow, you've lost all your money. So the first thing you want to do is you want to diversify your investments quite widely right. But then the second question is maximum. Now do you mean maximum in terms of more than other people, or do you mean the maximum you could get now?

Tom: [00:31:36] The maximum you can get.

Paul: [00:31:37] This touches upon something called Universal Owner Theory, which I'm planning to do a 722 part mini series on at some point in the not too distant future. But essentially Universal Owner Theory says, well, if you're invested in pretty much all the stocks, then you're going to get the most money, not by putting them all into coal or tobacco or gambling or any particular sector. You're going to put them evenly in all the stocks, and you're going to get the most return when society is performing at its most effectively. So one of the biggest risks to financial returns at the moment is the fact that climate change is starting to have negative impacts on the earnings of companies. So have I answered your question, Tom?

Tom: [00:32:19] Well, you've answered it in a meta level, but say I'm a little investor and I have $10 million and I want to make as much money as I possibly can.

Paul: [00:32:26] That's little to Tom by the way, most of his friends like have hundreds of millions.

Tom: [00:32:29] No, no, no, it's not, I should possibly rephrase that, it would be a very large amount of money to me but.

Paul: [00:32:33] Leave that in Clay, it's important.

Tom: [00:32:33] As a global investor, that's not a very large amount of money. Then you're going to put it in a company and say to them, look, okay, it's all very well to do this like, you know, equal pay, CSR, climate stuff, but I want you to provide me with a 20% growth rate and that's going to require you to invest in things, invest in, you know, aggressively in expanding your market. And I want to get a return on my money. And yes, the world is going to a hell in a handbasket, but I want to be the one that that wins in that transition. So what I'm asking is, why is that, because many people will tell you that that's fiduciary duty. And that fiduciary duty is a reason why corporations can't make their transitions faster, because the investors tell them their responsibility is to make money. So I'm trying to get at why that's wrong, Christiana looks like she has a view.

Paul: [00:33:14] Well because.

Christiana: [00:33:15] So can I, so, Paul, before you, before you answer, can I, can I just say in a very simplistic fashion and this may be overly simplistic, please tell me. The the difference that I have in my head between fiduciary duty written with a small F and a small D, is the interpretation that Tom has just given, give me over the next six months, over the next 12 months, the highest rate of return. It's a very short term, view of, of of fiduciary duty and of benefit for the owners of the assets, the one that I write with a capital F and capital D is actually the long term. So even if right now I invest in oil and gas and make a killing, and I use that word quite deliberately, make a killing. The fact is that they are killing the planet. And so from a long term perspective, my investment, even if it has a very good rate of return over the next 6, 12, 18 months, the fact is that my investment there is contributing to destruction of the planet, and that is not fiduciary duty writ large. That is irresponsibility.

Paul: [00:34:37] Yeah, 100%.

Christiana: [00:34:38] Because it's not even in the in my interest if I'm investing there.

Paul: [00:34:42] 100%. You got it exactly right. And look, you know, you got to ask yourself why, you know, do you think you might make more money out of fossil fuels. Well, it might be that there might be a little bit of a shortage of fossil fuels because there's been an invasion of a major country in Europe, we've not done that since about.

Christiana: [00:34:57] Or that they have huge subsidies?

Paul: [00:34:58] 1940, or that they have huge subsidies or that they have, you know, an ability to politically control, or because we haven't gotten enough electric vehicles to go back to the previous topic. But, let us just look forward a little bit. You know, it's somewhere, you know, the IEA talk about like 2016, that basically investment in clean energy overtook fossil fuel energy investment and the gulf just increases. Although it's true fossil fuel investments been increasing last five years, clean energy investments increasing so much faster. All we've got to do is change the law slightly. Tax carbon, for example. And all of a sudden, you know, the profits evaporate from the fossil fuel industry. So you've got to ask yourself, where do you think you're going to get the better long term return. It could be that certain political industries, as also was described with ice running down our spines by Christiana. Some industries have have kind of tipped the scales to stop us dealing with the dangers of their products and to stop us paying for them. But over time, society does get to where it needs to go. So I would say you might think you're going to get more money out of these, you know, high carbon emitting stocks. But the evidence over the mid to long term is you definitely won't, you know, there are no bills sent to you by the winds, there are no bills sent to you by the sun. Once you've built that equipment, it delivers free energy for 20, 30 years.

Tom: [00:36:15] Yeah, I mean, it's I completely agree with you. And I think this continues to be one of our stumbling blocks right. Because there are people who don't want to come to the same conclusion as you deliberately interpret it in a different way to allow them to do whatever they want. And that's a big part of the problem we have in our lives, or a big part of the problem we have in this transition.

Paul: [00:36:32] Well, one last comment I'm going to make is that, you know, some very sort of sinister efforts have been made to pass anti ESG laws in the US, which is kind of US censorship, saying investors aren't allowed to think about things like climate change. That's so against what the United States is all about freedom of speech, freedom of discussion and making wise decisions based on information. I think it's going to go nowhere. So just I want everyone to like Google fiduciary duty, become a geek like me. You'll find it incredibly rewarding. Go to your pension fund, get active, that's fiduciary duty.

Tom: [00:37:02] That's an interesting action list I haven't heard before. Google fiduciary duty and become a geek like me. That's a great action list to end the podcast on. I like it, okay.

Christiana: [00:37:13] Can you please tweet that, can you please tweet that, Paul.

Tom: [00:37:14] Yes.

Paul: [00:37:14] My third tweet, huh.

Tom: [00:37:15] Whoever has access to Paul's Twitter account, please tweet that. Okay. I have to hop. So I'm very sorry about that, that this got squeezed in between a couple of different things. But it's been lovely to see you. And you know what, Christiana, you will be thrilled, we've done this in a more, compact amount of time than we normally do, like 35 minutes or something. So let's see. Listeners tell us this is the.

Christiana: [00:37:34] I'm having a little victory dance over here.

Tom: [00:37:35] This is a four year argument between Christiana and I, which is even longer than the moss lichen argument about the length of the podcast, yeah.

Paul: [00:37:41] Only suspended during the three part series on nature, yeah.

Tom: [00:37:45] Yes, exactly. Between Christiana's hour long multi hour long epic, which was beautiful. Okay. Lovely to see you both, and see you next week.

Paul: [00:37:54] See you next week.

Tom: [00:37:55] Thanks for listening everyone, bye. 

Christiana: [00:37:57] Bye.

Clay: [00:38:02] So there you go. Another episode of Outrage + Optimism. I'm Clay, producer of the Outrage + Optimism podcast. Almost didn't say that right. The Outrage + Optimism podcast. You would think that I would have this down by now. But, you know, every day is a new mystery. Short credits this week. I really just want to emphasize one thing before you go. At the beginning of the episode, you heard Paul and Christiana talk about our How to Live a Good Life series coming up that we're about to do, and I am here to say in my own voice that recording a voice note is the preferred way of letting us know the dilemmas, the questions that you are wrestling with that we will play on the show. So I've set up a voicemail inbox. As the host said earlier, it's literally a record button on a web page. You can use it on your phone, your iPad, your computer. Once you record, you can actually listen back to what you recorded before you send it, to make sure that it has everything that you wanted to say. And, you know, I get this often, Clay. I don't like the sound of my own voice. Believe me. You sound great. Your fellow Outrage + Optimism listeners are cheering you on. We really want to hear from you in your own voice. So send us your questions, your dilemmas, the things you're wrestling with, the big and the small, you know, it doesn't have to be just one. You can send several. The voicemail inbox is open. There's a link in the show notes speakpipe.com/outrageandoptimism. Looking forward to hearing from you. And thank you for sending those in. Okay, Christiana wins again. Short episode this week. Please hit subscribe. Share this podcast with a friend that you think would enjoy listening. It's how we grow. Thank you for listening again. We will see you next week.