200: Lifelines VS Deadlines

Paul Dickinson: [00:16:25] So what, if anything, might force a change.

Naomi Oreskes: [00:16:30] In terms of the positive message? Well, I believe that mold grows in dark places. And I believe that when we expose these things to the light of day and many people do become legitimately angry, they they don't like this and they want it to change. And I think that's how social change begins to happen. I mean, there are many different theories of social change, but I think a big part of it has to do with changing the narrative and changing what we think of as acceptable. I mean, if you think about the history of slavery, an awful lot of people thought slavery was fine until they didn't. And that's a really important change. And I was thinking, you know, Britain plays an important part in the role in the story about the abolition of slavery. It's a story that's hardly known in the United States, but consumer boycotts of sugar played a significant role in raising people's consciousness about how ordinary people were benefiting from slavery just by putting sugar in their tea, sugar that had been harvested by slaves in the Caribbean. And I think that there's something similar to that that we can do to begin to make people aware of the damage that is being done and the ways in which we are complicit. It's not our fault, but we are complicit until we start to do something about it. And maybe it might involve consumer boycotts, but still, we do have power as consumers. We have power as citizens. And I think that part of what we need to do is to use the outrage to channel people. I like to talk about channelling anger into action, and I think that's what you guys are doing. And that's why I'm so happy to be talking to you today.

Senator Whitehouse: [00:18:16] It is textbook economics that the price of a product should reflect its true cost. The fossil fuel industry violates this rule of market economies. It does so by spending billions of dollars on disinformation, false doubt, climate obstruction and political dark money. And why not, to protect one of the most lucrative subsidies in human history.

Paul Dickinson: [00:18:44] That's US Senator Sheldon Whitehouse representing Rhode Island, and he is Chair of the United States Federal Budget Committee. And he was speaking just a few days ago at a hearing on the real cost of fossil fuels. For decades, Senator Whitehouse has been sounding the alarm on how the corrosive impact of corporate money in US politics is blocking climate policy. So we began by asking him how this became so embedded in America's political system.

Senator Whitehouse: [00:19:19] The general overview is that when the Founding Fathers set up the United States of America, there was zero role for corporate influence in our politics, not in the Constitution, not in the Bill of Rights, not in the Federalist Papers, not in the Philadelphia Debates, nothing. But then along came huge corporations, and they began to interfere in our politics. And then along came Teddy Roosevelt and the muckrakers. And they put them back in their cage and they put an end to the abusive influence of corporations. And then came Lewis Powell and a bunch of Republicans on the Supreme Court who have studiously built a fake constitutional pathway for corporate influence in politics, culminating in the godawful Citizens United decision. This enormous power of corporate influence has been created in my lifetime, created by Republican appointees to the Supreme Court and created with exactly zero historic constitutional support. And that's the world we live in now. It's an artifact in which the corporations have created the road that gives them the power to dominate our politics.

Paul Dickinson: [00:20:30] Can I just hop in here for one second and just say, Senator, could you just explain what is a little bit about the god awful Citizens United decision for our listeners?

Senator Whitehouse: [00:20:39] Sure. And let me throw that into the context of a before and after, because when I got to the Senate, we were doing bipartisan legislation on climate all the time. There were at least three really good bills kicking around in the Senate. John McCain ran for President as a Republican with a good climate platform. Things looked perfectly normal. And then came Citizens United in January of 2010. And what Citizens United said is, hey it's cool for big special interests to spend unlimited, unlimited, totally unlimited amounts of money in politics. And it took about a nanosecond for the big special interests to figure out not only how to precipitate those millions of dollars into politics, but to do so through intermediaries that hid their hands, that hid who they were, and that created this new era we're in of massive political, dark money that is very hard to attribute to the special interests behind it. And with that January 2010 decision, all of the bipartisan work on climate came to an instant like heart attack stop. We have not been able to get a Republican on a decent climate bill since, and it is the malign power of the fossil fuel industry expressed through probably billions of dollars, but hidden through a whole flotilla of phony front groups that exerts this pressure on our Republican friends so that they ignore data and science that are taught in their own home state universities and walk the path of climate denial obediently.

Dylan Tanner: [00:22:17] I mean, that that's that's really a really grim state of affairs. But, you know, we detect a lot of influencing and negativity on climate directly coming from the oil and gas companies and their direct agents. So talk me through any other, aside from the money flows that impact elections. What else are they doing in terms of advertising and meeting with politicians and regulators?

Senator Whitehouse: [00:22:41] Well, if you look at the US Chamber of Commerce Dylan, who you have repeatedly outed as one of the worst climate obstructers in America, and you've outed them recently as having not changed their climate position one whit, but only having changed their PR strategy a bit to try to look a little bit less idiotic on the subject of climate. So they make a very good example. They play in politics by lobbying directly on behalf of the fossil fuel industry. They play in politics directly by writing campaign contribution cheques, PAC cheques to candidates who will oppose climate legislation. They play in politics by funding dark money enterprises. The so-called outside spending. And there have been cases in which in which they have been the biggest dark money spender in the race. And they play very aggressively in the administrative space with comments about regulations and litigation to stall regulations. And then they turn up in court as amici curiae to fight for the fossil fuel industry. So there's this whole array of five different arenas in which they obstruct climate progress for the fossil fuel industry. And they're the big one, but they're one of maybe 50 of such groups. So it's a real armada.

Dylan Tanner: [00:24:06] I want to that's that's really interesting. I want to drill down on this because we see it as a huge problem globally. You know, there's the equivalents around the world doing the same thing. But let's just take the US Chamber of Commerce. It has a it has it has a respectable sounding name. And, you know, from what I know that it has it has its main headquarters directly opposite The White House with big banners.

Paul Dickinson: [00:24:29] Looms over The White House.

Dylan Tanner: [00:24:31] Big banners saying jobs and growth. So, I mean, it is corporate America. So what's going on here?

Senator Whitehouse: [00:24:38] Well, not so much, actually. I think there are two tiers to this. One is that it is corporate America. It has a regular board, it has regular members, and they lobby on behalf of, um, you know, general corporate, deregulatory, anti-tax measures. They also are getting enormous amounts of money, I believe, from the fossil fuel industry, because I don't think they can spend the kind of dark money in elections that they spend without having revenue that comes outside of the traditional dues that their members and board members pay. So I strongly believe that there is a very significant slush fund for from the fossil fuel industry that they refuse to disclose for them. That puts them at odds with a great number of their members on climate stuff. And as you know, what they've done right now is they've set up, I think they call it their climate conversation with recalcitrant members who are upset about being painted as anti climate. And they've got them in this little climate conversation, like in a little corral and anything good that they're asked to do on climate goes into that corral and becomes part of that climate conversation, out of which nothing has ever emerged. Nothing. It's the black hole of climate activity.

Dylan Tanner: [00:26:11] It's PR.

Senator Whitehouse: [00:26:12] Meanwhile, all the horrible stuff that they've always been doing to stop climate action goes right past the climate conversation, straight into operations without the least hesitation. And for the moment, the corporations, big smart corporations who are in the corral seem comfortable to be treated this way, not treated seriously and producing no result. So it's a bit of a mystery why they're not more agitated. It's hard to believe that corporations this big and this powerful are being played by the US Chamber of Commerce unwillingly or unwittingly. I think there's a very good chance that they know this is a fake climate conversation. They couldn't care less that their organization is obstructing climate progress. So yeah, there's a very significant chance that this is a phony operation in which these big corporations are acting a role rather than sincerely trying to move climate anything. The chamber is so powerful that the next most prolific spender on lobbying in the entire world in the United States Congress behind the chamber, spends less than a third of what the Chamber does. So not only is it the leading lobbyist, it's the leading lobbyist by a factor of three. And that doesn't even count the dark money, the campaign contributions, the litigation and the regulatory effort.

Paul Dickinson: [00:27:39] So so let me just get this straight for our listeners, because I think some of them may be quite shocked. I mean, we had a series a few weeks ago on momentum versus perfection about how people in the climate movement, you know, are torn between trying to keep forward motion. But but, you know, some people have these high ideals or whatever, and, you know, the movement's in conflict with itself. You're saying to us that actually the sheer weight of lobbying from the fossil fuel industry is essentially kind of deranging the democratic institutions of the United States. And that's the problem. Is it that simple?

Senator Whitehouse: [00:28:12] Yes. And I think the word actually is corrupting.

Paul Dickinson: [00:28:15] Corrupting. Wow, okay.

Senator Whitehouse: [00:28:17] Yep. And what you you basically see a couple of groups. You see the full on fossil fuel funded front groups that are created and funded by them just to go out there and accomplish their mischief. Then you see the existing groups like the US Chamber of Commerce, which have been more or less taken over and inhabited by fossil fuel. I now hashtag them as #chamberofcarbon.

Paul Dickinson: [00:28:48] Yikes.

Senator Whitehouse: [00:28:48] And so they do the bidding of the fossil fuel industry, even though they pre-existed the climate denial effort. And then the third group is the huge trade associations for other interests like the American Banking Association, the American Insurance Association, the realtors, the retailers, the tech folks. They all play in Congress through trade associations that are the vector for their political power. And there is not one trade association that is any damn use on climate at all. They are silently complicit in what the rest of corporate America is doing.

Paul Dickinson: [00:29:28] But you're also saying that companies that we, you know, big companies that you wouldn't think were in the fight, you know, like good companies, I don't know Microsoft's or Coca-Cola's or something. You're saying that they're not taking action to stop this corruption. You're saying that they're complicit by inaction.

Senator Whitehouse: [00:29:44] Their trade associations are completely useless. Some don't even mention climate. And you have groups like banks. You know, big banks are out there publicly worried and concerned and writing reports about climate change, about coastal property value crashes and what that means for mortgages along the coasts, and what happens when wildfire adjacent properties are uninsurable and there's a wildfire area property values crash. I mean, they are looking the what happens when the carbon bubble bursts and there's a massive economic dislocation worldwide. They report on all of this stuff and then they send into Congress the American Bankers Association, which couldn't give a red hot damn, doesn't mention the issue and is, I think, what's the word? Their silence is deafening.

Dylan Tanner: [00:30:41] Yeah. So the IPCC says we need binding government policy, voluntary corporate actions and and kind of consumer behavior is not enough. In your opinion, how important is binding, meaningful government policy to deal with climate change in the United States and globally.

Senator Whitehouse: [00:30:58] Essential to the survival of our species on the terms that we now live in nature and on earth under. It is absolutely essential and Congress is absolutely essential to that. And that is why the fossil fuel industry focuses so much effort on Congress. And to put Paul's point that this is hard to believe into perspective, actually, not so much. If you look at what the International Monetary Fund has said about how big the subsidy for fossil fuel is in the United States of America, they've tagged it at $660 billion a year, mostly from the fossil fuel industry dodging its responsibility for its own pollution, which is a violation of ECON 101, which says that negative externalities belong in the price of the product to have a real market. So they have enabled Congress to defeat the real market principle that they should pay for the cost of their pollution, and that runs up to $660 billion of subsidy. So how much if you're the fossil fuel industry, would you be willing to spend in dark money on politics to defend a $660 billion subsidy every single year?

Paul Dickinson: [00:32:13] Well, a Harvard professor told me the answer actually is about 3.5 trillion at net present value and that buys you that buys you a lot of a lot of presidency.

Dylan Tanner: [00:32:21] You can't you can't spend that much money on lobbying.

Paul Dickinson: [00:32:24] Oh, I think I think people are having a good old go.

Senator Whitehouse: [00:32:26] It's a 200 to 1 annual payback if that's the right number. And, you know, you not only have the direct dark money, but you also have to run the machinery through which the dark money comes. So you have to prop up donors trust. You have to prop up competitive Enterprise Institute. You have to prop up the Heritage Foundation and the Heartland Institute and this whole array of, you know, dozens of phony front groups that they play like piano keys.

Dylan Tanner: [00:32:51] I mean, it's extraordinary that that this is not more of a bigger story. And we're not debating this more in society around the world.

Senator Whitehouse: [00:33:00] Well, that's one of the reasons that I have argued that you shouldn't allow corporations to show up at the COPs, the climate conference of the parties, at oceans conferences, at any climate or environment related gatherings, unless they bring with them, a certified statement of their climate political footprint, which would be easy to do. You run how you're lobbying. You run the the climate records of the members of Congress you're contributing to. But then it gets a little bit dicey because you run how your trade associations are behaving on climate. Which means there has to be some reporting back that the American Insurance Association isn't doing squat on climate despite the huge insurance risks. And then you get into the real danger zone, which is the dark money that they're desperate to protect. But if they had to report it in order to show up, we would get a much truer picture of what's really going on. And the two facedness of corporate America on climate would be flagrantly apparent.

Paul Dickinson: [00:34:10] What can people do to try and engage with this ghastly political nightmare? I mean, we were kind of joking about it earlier because it's so bad. It's kind of funny. But I mean, you know, human survival kind of depends on us fixing this problem. What can people do?

Senator Whitehouse: [00:34:26] Well, I think the first thing to do is to be outraged. The more that the civic world is putting pressure on the corporate world to stop the two facedness, and that can go right down to individuals. You know, send a letter to Coca Cola if you're a shareholder or even if you're just a customer, hey I'm trying to decide whether I should have Coke or Pepsi products in my refrigerator. Sure looks like your American Beverage Association is totally useless on climate stuff. What should I think about that? And just put pressure on them. They they care about consumers and they particularly care about young consumers. So if you're a young consumer listening to this and you say, hey I'm 18 years old, I'm going to be buying drinks for another, you know, 50 to 70 years, most likely. And I'm wondering why it is that the American Beverage Association, which you support, doesn't do a damn thing on climate, then they will pay, they'll start paying attention.

Paul Dickinson: [00:35:27] We're going to run out of time. But can I just ask you to say a little bit about the so to say, Limit, Save and Grow Act because it looks like there's something very unpleasant coming to try and attack the Inflation Reduction Act, is that correct?

Senator Whitehouse: [00:35:40] So if you really wanted to limit, save and grow, what you would do is limit carbon pollution, save the enormous costs that climate change is going to cause us and grow the clean energy economy. That's the real limit, save and grow. But the so called Limit, Save, Grow bill that McCarthy has come up with, which is his prescription for how to default on the credit of the United States, we've run through it and nearly 280 of its 320 pages are devoted to giveaways to fossil fuel.

Paul Dickinson: [00:36:12] Oh no.

Senator Whitehouse: [00:36:13] This is not a bill about the debt limit. This is a bill about taking care of the big fossil fuel donors who support the Republican Party like a hand supports a glove. And if you if you can't see the machinations and mischief of the fossil fuel industry in this awful default bill, you're really not looking.

Dylan Tanner: [00:36:44] Wow.

Paul Dickinson: [00:36:45] And you have given 288 speeches in the US Senate on this topic. Is that correct Senator Whitehouse?

Senator Whitehouse: [00:36:52] Yes. I've been a persistent annoyance. This is an infuriating danger and it is an infuriating dereliction. America actually matters in the world and we matter as President Clinton famously said, more because of the power of our example, than because of any example of our power and the example that we are presenting to the rest of the world right now is of a our vaunted democracy corrupted on an issue that is going to dramatically influence the lives of the next generations by the fossil fuel industry, which we all know has a massive conflict of interest. It's just an awful, awful message for the United States to send to the world about democracy. And don't think that the Chinese and the Russians and, you know, other totalitarian countries which have their own view of how the earth should be run and how politics should be run. Don't think they won't take advantage of this.

Senator Whitehouse: [00:37:56] But the idea that people fought and bled and died in World War II in order to create the American century, in order to create freedom in Europe and freedom in Asia and do the MacArthur Plan in out of Japan and do the Marshall Plan across Europe, all of those good works, we are at risk of spoiling and soiling because we've allowed one greedy industry to corrupt the very institution that we hold most high.

Paul Dickinson: [00:38:36] Dylan, that was quite the sobering moment I would say. Naomi is super smart and clearly knows exactly what she's talking about. And then to hear Senator Sheldon Whitehouse talk about the corruption of the US political system, it's a strong word, but you cannot deny what he says. What did you make of that Dylan?

Dylan Tanner: [00:39:01] You know, hugely powerful. And I've known those two individuals for some time, respect them immensely, and I think they are amongst the most influential and necessary, I'll use the word warriors in our fight for climate. One thing that struck me, I mean, we both work for civil society groups or run civil society groups dealing with the climate crisis. One thing that he said struck me was why aren't more civil society groups addressing what he thinks is the core problem around climate, which is the corruption or influencing of climate politics?

Paul Dickinson: [00:39:37] I think it's exactly the right question, Dylan. And the reason why I've been so supportive of your work for such a long time is I think you really do embrace this. I think I think the main reason is it's hidden. No one goes out there and says, hi you know, I'm going to subvert the political process, you know. So you don't see that on any website. It happens through trade associations, think tanks. It happens through kind of dark money paying for political outcomes. But I think, you know, the simple, awful, nightmarish truth of that somehow is too complicated or it's too invisible. I don't know.

Dylan Tanner: [00:40:18] I guess one thing I've noticed, or studying the fossil fuel industry, one of the reasons they're winning is that they are so razor focused on what the core issue is, which is blocking any binding legislation. The other side is focused on a whole range of things. You know, climate is now climate justice, reimagining finance, getting consumer behavior to change all of these things. And it's it's it gets dispersed. And meanwhile, the lobbying machine just says alls we need to do is block this next little piece of legislation, delay this next policy move, and that's it.

Paul Dickinson: [00:40:57] Okay. So let's try and find out about some investors who are trying to do something about this. So we're going to have two interviews now, one with Amita Chaudhury, Group Head of Sustainability at AIA, which is an enormous insurance company with hundreds of billions of dollars based out of Hong Kong, and also with Steve Waygood, the Chief Responsible Investment Officer of Aviva Insurance, again, a huge group with hundreds of billions of dollars based in Europe. So let's start off with Amita who has a fascinating perspective from the most important region of the world. You've talked before about your commitment as a company to deliver on a net zero strategy by 2050. Can you tell me how you think government policy fits into achieving your goal?

Amita Chaudhury: [00:41:55] So in 2022, we've done extensive amounts of work to look at the levers we will need to decarbonize our operations and our investments, and government policy and actions feature significantly that will affect the delivery of our goals, but also the goals of the companies that have made these commitments around net zero. As you know, the private sector cannot do it alone. Government policy must be in place for an effective transition. So, for example, Singapore currently has a carbon tax of $5 per tonne, expected to go up to $25 per tonne in 2024 and 2025 and to between $50 to $80 per tonne by 2030. Enormously helpful for decarbonization and set a, you know, progress towards the goal for many companies, including ours. And finally, disclosure, we need that in a big way. We need a greater regulatory push around environmental disclosures that will allow asset owners like us to set verifiable targets for a greater proportion of our portfolio and monitor progress in a meaningful way.

Paul Dickinson: [00:43:05] Hmm. I mean, thank you for calling out the legislation by the government of Singapore to have a carbon tax to say the price and to and to give clear indications of the direction of the price. It really can help business with planning. But also fascinating your comments that the the kind of Asia Pacific region or whatever is so enormous and diverse that it's much more complex to come to these you know, the the US Federal Government may be a little bit confusing and difficult or the, you know, the European Commission may have its problems with its member states. But fundamentally there's a there's potential for an overarching infrastructure or an overarching legislative reach that you just, you know, doesn't doesn't apply to to to to two thirds of the world or 60% of the world's population. And that's that's very logical, right?

Amita Chaudhury: [00:43:48] Yes, indeed.

Paul Dickinson: [00:43:50] So, um, you know, it's I know it's probably difficult to go into details, but in principle, how can a big company and I mean, I'm not specifically talking about AIA, I mean any large company, how can how can a company or a big investor help government action? How can it support government? How can you be, you know, a shoulder to shoulder, we would say, with the government to to to to to push forward for for more progressive policy to help us decarbonize.

Amita Chaudhury: [00:44:19] Yeah, I think one of the things that we do it obviously is the action that we take on climate, right? So let me put the support for government action in the context of Asia Pacific, which, as I said, is representing the biggest opportunity for global climate action. So we are present in 18 markets and of these 15 have met net zero commitments. But the policy response is currently not proportional to the delivery that of these commitments. And so business action becomes very critical to address both mitigation and adaptation and the actions that we're taking for a low carbon future and and for our net zero commitment will greatly augment the support that we have provided and all the governments over a long period of time already. So what are some of the actions that we are taking on climate. One is aligning with the governments to make sure that we make this net zero commitment a strategic priority for the business.

Paul Dickinson: [00:45:18] You know, how do you see the future of ESG, which is, I've come to realize recently very different in different parts of the world.

Amita Chaudhury: [00:45:27] So there has been a momentum building. But of course, 2022, we saw a turbulence in ESG. We saw one step back, two steps forward. We saw the invasion of Ukraine accelerating the short term investment in some replacement fossil fuels, LNG, but also call for energy security. But it also seems to be spurring on a faster transition to clean energy in the EU for energy independence. We've seen the ESG backlash, anti-war movement we have from the right wing in the US, but we've also seen the biggest policy win with the passing of the Inflation Reduction Act to accelerate decarbonization, companies are being called out for greenwashing greenhushing. But but we've seen an increasing emphasis on standardization of disclosures through ISSB launched by the IFRS Foundation to address the aggregate confusion caused by this alphabet soup of ESG standards, frameworks and ratings. So going forward, I see that there will be some divergence that will continue in the future. But ESG is very much here to stay.

Paul Dickinson: [00:46:33] So it's good to hear that despite the challenges, Amita believes that ESG is here to stay. And I think ESG is a funny term. But I think what she means is the sense of responsibility of that enormous company is here to stay. Now, having gained Amita's perspective, working in a giant insurance company in Asia to complement this, let's now hear from Steve Waygood. And we thought the view of another who has played an instrumental role would be fascinating. And Steve has been a leader in sustainability for a long time.

Steve Waygood: [00:47:06] I mean, you and I go back to I think COP6 actually was the first time we actually had a conversation at a COP. And I remember the environment ministers forever have been coming to the COPs and they've been going back to their capitals and talking about how deeply profound the problems are and how they need to be stopped and how governments need to work together. And, you know, the environment ministers are obviously understanding the issues now, the science is really clear and that's wonderful. The science is clear, but the progress is being impeded by the economics. And the way the way that's happening, I think, is it's important to understand because there are some real, real politic issues are stopping us. There are some really important handbrakes. For example, you start talking about climate risks and people in central banks start thinking of transition risk. How much value would be eroded from pension savings and investments if we move away from the fossil fuel sector at least too fast. I mean, some would argue there's no such thing as moving away too fast. But the transition risk, they worry about.

Paul Dickinson: [00:48:12] What will happen to the tobacco sector if we give up smoking too quickly.

Steve Waygood: [00:48:17] Exactly. This is this is a this is a thing. And I mean, that said, there are people who will own tobacco investments without knowing it. And that's just the way financial services are sold at the moment. And equally, people will own oil and gas without knowing it. So if they're uncomfortable about that, they need to look into that. But the transition risks are real. They do present financial stability issues. Then they talk about GDP needing low cost energy, then they talk about employment, full employment and what happens to the those that work in the various sectors that need to transition. And then then the chancellors, the finance ministers start worrying about inflation and what happens if we move away from low cost energy in the form of oil and gas and bit by bit, the political reality of what happens at the next electoral cycle starts hitting the the Prime Minister, the Presidents, and it means the environment ministers who, let's face it, aren't the most powerful in most countries anyway. They get overwhelmed by this sort of wall of economic handbrakes, if you like, these systemic handbrakes. But, what the environment ministers are now beginning to realise is that actually climate risk, climate change will harm GDP inexorably if it's allowed to run away from us, will harm employment. There are no jobs on a dead planet, as I've heard others say, will harm inflation. There's no question that insurance, for example, will go up and up in price as the risks are going up and up in the system.

Steve Waygood: [00:49:48] And there'll be certain things that we just can't insure. Which brings us back to financial instability. There is no question that at a certain point the physical risk in the system is just too much for the system to cope with. We don't know where that is, but we do think it is probably where we're currently heading business as usual, which by some measures is around three and a half degrees, not the one and a half or the two that is clearly the ambition of the Paris Agreement, but three and a half, at which point some of the physical risks are so profound. Not only do we have to worry about flood and fire and famine, but the geopolitical risks from the enormous levels of migration that are implied would also be an inflationary moment and a civilisation issue too. Let's be really blunt. So I think the problem is one of timeframe. The issues today should be eclipsed by the future issues that are being shored up if the world worked properly, if you like, if the intergenerational ethical issues drove political behaviour. But as it as we know, that's not how political cycles work. So that's some of what I'm beginning to realise we're up against, but we're still right to promote change because of course we need it.

Paul Dickinson: [00:51:10] So, you know, you are the Chief Responsible Investment Officer of a gigantic investor with hundreds of billions of pounds. That also happens to be an insurance company. And general insurance companies understand climate change very well. What, in your view, is the role of financial institutions to help governments bring in policy to support business and investors to reach the net zero commitments?

Steve Waygood: [00:51:32] So what's our role? Inform the conversation. That's obviously how policy is shaped through debate. So we have a role there. Two levels, I think of that debate. One, at the level of the real economy, what are we seeing as market failures in the companies that we're analyzing? Where is it paying them to do the wrong thing? We can be very open and honest and blunt to policymakers about where those market failures are and the kinds of corrections that they might wish to explore. After all, it's them that should do that. So real economy debate informing that and then more particularly, financial services is often said they're incredibly complicated. It's true in banking, insurance, investment, the massive scale of all three of those sectors, the various different asset classes, the different products, the way it works, I don't believe anywhere in the world, anyone in the world understands the whole system. I'm not professing to, even though I have been a banking analyst in an insurance company working for fund managers for now nearly two decades. So it is really complicated. And in my experience, policymakers and politicians tend not to understand finance and markets. So those of us that work in the system have, I think, a duty to shine a light on where it isn't working and how it can be changed.

Steve Waygood: [00:52:48] So that's the information side of things. And within that encouragement, supporting policy makers, supporting politicians publicly when necessary, who who are brave enough to to step up to this plate and talk about the scale of change that's needed. They need the backing of sensible financial institutions who understand the scale of this challenge. There's no question that there's a there's a policy debate and the people on the right side of it need our support. And then there's this question around how do we hold them to account? And that's harder. But we do lend as an industry, approaching $90 trillion to global governments around the world. And it is true, of course, that when we lend and invest in companies, lend to and invest in companies, we all now in financial services accept that we've got a stewardship obligation, a responsibility to check that those company directors who we elect to represent our interests are doing good things with the money and adhering to generally accepted standards of good practice. That that stewardship discussion is now absolutely accepted, certainly in Europe. But the question about what we do on the sovereign asset class is nowhere near so well explored, and.

Paul Dickinson: [00:54:04] And by sovereign, you're talking about basically lending money to nations, right?

Steve Waygood: [00:54:09] Yes, exactly. Governments and government lending. And I think one of the things that all the listeners will be now interested in is, of course, many of them will have thought about their corporate investments, but what about their country investments. It will be part of pretty much everyone's pension scheme in all likelihood. And you know, of course, governments vote at COP. Everyone signed the Paris Agreement. They have an NDC now, some of them are up to date, some of them aren't. Some of the NDC's nationally determined contributions have a capital raising plan. Many of them don't. What do we as lenders to those countries say to them about the status of their commitments to the UN Framework Convention on Climate Change and to their own citizens, particularly where their commitments, we know, need to be delivered to shore up financial stability over the coming decades. And what do we say? How do we express concern? And increasingly, we're finding there are there are lots of opportunities in that asset class that our industry hasn't even properly begun to explore in in all blunt honesty Paul. Extreme physical risk associated with climate change will jeopardize the integrity of the market. I was saying earlier how insurance as a business model might collapse, and if that happens, what then happens to banks and their mortgage books where, of course mortgages need home insurance in most markets. So we all recall what happened with the subprime mortgage situation leading to a financial crisis and a global recession. The Great Recession in 08/09, that was just 8% of the US mortgage market that did that. Imagine what happens where it's all mortgages everywhere, particularly those where banks require home insurance. So we have a legal duty, an economic interest and I think an opportunity to hold governments to account, to help and support them, to inform the process, to encourage the transition to be at the right pace.

Paul Dickinson: [00:56:15] I mean, you've been a leader in sustainable finance for a long time, Steve. You know this better than anybody. What what's what's in your tool kit before we come on to how maybe our listeners can can help participate in that game.

Steve Waygood: [00:56:30] The levers that governments can use to correct the market failure. They're the ones that have the hands on tax subsidy, on creation of standards, on creating market mechanisms like emissions trading schemes, on building new regulations, on consumer awareness tools. So those those are the ways in which you correct the market failure. That's how you internalize the externality as a government. So our levers are how do we help them understand that and how do we participate in consultations, for example, or even kick off a global consultation on a particular issue? For example, in the European Commission. I'm very proud to to have helped get the European Commission produce a high level expert group back in 2015, which I then served on that then created the Sustainable Finance Action Plan, which now underpins so many policies in Europe which have now gone global. The taxonomy, for example, another one which asks for the financial advisers to then in turn ask individuals what their interests are in this area before giving them a product that's suitable. So the levers that we have in mind are the ones that governments have to correct the mechanisms.

Paul Dickinson: [00:57:43] Sorry, I've got to stop you there. But this is worth repeating. You've you've helped create the regulations that require financial intermediaries to actually ask the public when they're kind of buying products, what they're looking for. Because if I understand correctly, that's going right to the top of the like it's rather than end of pipe problem, you're going to the very source, the kind of the the king or queen in the whole system, the actual investor.

Steve Waygood: [00:58:08] We don't have a global governance system that's fit for purpose, for governing the transition, the G7, the G20, the UNFCCC, the way that there are vested interests within the kind of unanimity voting clauses on the UNFCCC, there are we're holding ourselves back and crucially, nobody anywhere in the world, no multilateral body, has the job of building the plan or even a process for how others build the plan towards mobilizing 4 to $6 trillion of new money invested into solutions to the climate transition.

Paul Dickinson: [00:58:56] Dylan, I thought those were great interviews with people I actually really admire working in finance. And I mean, do you think finance has got the potential to solve these problems or what role do you think it plays? How do you see it?

Dylan Tanner: [00:59:09] The holy grail of many parts of the climate community is how to unleash the trillions in pension funds and in finance towards green and away from brown. And, you know, it's a massive theory of change that's that's ongoing.

Paul Dickinson: [00:59:27] I mean, look, I don't know if you've had this experience, Dylan, but mine is often in conversations with brilliant people in the movement who we love and admire. But there's this sense that we've got to kind of reorganize the financial system. And it can seem very complicated. And sometimes I'm kind of getting a little bit lost. But then there's another part of me that thinks, wait a minute, you know, money just flows like water, right? If we tax carbon, everyone's going to get out of carbon because they don't want to pay the tax. I mean, I wish I wish I could make that sentence more complicated, but I think it's that simple.

Dylan Tanner: [00:59:56] It it it really it really is that simple. And that's what they were saying. Look, I went to the original COP in Kyoto in 1997, and they said, look, it's easy. Let's just put a tax on carbon. And all the governments got together and thought, wow, this is great. We're going to solve this. And then what happened? The corporate lobbyists went and scuppered that whole idea. They scuppered the ETS in Europe, the the Emission Trading System. And and now we're at where we are and we have no regulations and we're relying on the financial system to to act altruistically, I guess, while the real economy regulations are not in place.

Paul Dickinson: [01:00:37] Okay. So this is about politics. Dylan, you and I are completely agreed. Let's go and hear from someone I think is an absolutely brilliant politician.

Chris Skidmore: [01:00:46] That we need to now slay this myth that somehow net zero is going to make us colder and poorer. Net zero will make us warmer and richer. And it is the economic opportunity of the decade, if not this century, to be able to create a new economy. Net zero is not just about 2050. We can't keep on kicking the can down the road. We don't have 28 years. We've got seven years to deliver on what is the most ambitious nationally determined contribution of 68% emissions reduction. If the UK achieves that, that is an economic prize that every single country across the world will look to us on how to achieve and it will deliver further growth. Ultimately, net zero is the future for the UK.

Paul Dickinson: [01:01:27] That's Conservative MP and former UK Energy Minister Chris Skidmore, speaking in the House of Commons in March this year. Following the publication of his must read publication, the cross-party Review of Net zero. Almost three years ago, you signed net zero into law, making the UK the first major economy to do so. And you've written a compelling cross-party review of net zero. And I wanted to begin by asking you to form a kind of climate party and become Prime Minister. But there is a new climate party that's formed, and I asked the leader, Ed Gemmell, what is his policy? And he said the Skidmore Review. So it seems that you're sort of already there. Is that right?

Chris Skidmore: [01:02:22] Well, I mean, the review I mean, Ed took part in the review. I think he was on one of the roundtables. And I will say, even though I'm a conservative member of parliament and obviously I was a conservative minister who signed net zero into law, I was really keen to make sure that the review was cross-party. Yeah, that's the only way we're going to deliver on climate action, and trying to get that buy in is absolutely critical. So I'm delighted that Ed sort of welcomes its recommendations.

Paul Dickinson: [01:02:49] Well, I mean, it is a new kind of politics. I think I call it politics with a small p, the politics of system conditions, which is not something that we need to argue about, something we can all agree on. Chris, we've we're really trying to dig into how the climate movement, which is growing every year, as you know, in its response to extreme weather and everybody understanding how much trouble we're in, how we as a movement can best interact with government. Now, you've said everybody is thinking, how do we implement and how do we deliver on our commitments? And you've said that 50% of all decisions that deliver net zero will not be taken by government. Now, I'm sure this is true, but I put it to you that only government can, to use that analogy from fireworks, only government can kind of light the blue touch paper and then stand well back. Do you agree with that?

Chris Skidmore: [01:03:36] Well, I mean, trying to think of a sort of an equivalent analogy around the blue touch paper. I mean, I think we've sort of moved further than that now. There's a sort of ring of fire that's sort of burning and the government's standing in the middle. And actually there are those on the outside who are sort of trying to douse it and put it out. And those are the, you know, local government, regional government, sort of business industry. Everyone wants to get on with it. And actually it's government that's behind the curve now, you know, in contrast to where I was as a minister several years ago, taking forward net zero, that had that was the moment when the blue touch paper was lit and we've moved beyond that now. We created that catalytic moment. If you'd asked me several years ago that now 90% of the world's GDP would be under a net zero target of some sorts, I simply wouldn't have believed you. We are moving so fast at this moment that actually Whitehall and Westminster, I don't think realise the scale of pace that actually business and industry need. And part of the net zero review was to identify, what is needed in order to unlock potentially how to go further, faster. And yes, government must create the enabling conditions, the regulations, legislation, policy certainty in order to make sure we can get the investment that is needed in to net zero. But half of this is around about getting out of the way at the moment when it comes to planning, when it comes to some of those regulations I spoke about, actually, they're holding back a big bang moment. I talked about in the review, a big bang moment that would allow actors on the stage to own their own net zero journey, and that could be local government, it could be regional mayoralties, it could be community energy groups. But they are not being given the powers they need to be able to get on with the job. And that, I think, is the key dynamic that's changed in the past couple of years.

Paul Dickinson: [01:05:28] So that's that's fascinating. You're saying that government does need to kind of kick this off, and I'd like to talk about that some more. But you also think government's got to remove a whole bunch of blockers? It's quite it's quite peculiar, isn't it? It's kind of more government and less government at the same time. How should our listeners kind of frame that that work?

Chris Skidmore: [01:05:47] I think the key thing is around how you take a mission based approach. And obviously the report net zero review was called Mission Zero. And one of the things the government didn't respond to directly was the call for ten year, at least ten year programmatic certainty around ten missions. Because if you can create a sense of a mission, you get a sense of a different sense of ownership. More actors can then see what the paradigm has been set out, the parameters that we need to meet, the data that's needed. Actually, it begins to generate its own sense of momentum where you don't need, you know, cap in hand going to government all the time. And we've seen that in the past where actually, you know, you took like the moon mission is obviously the classic example. But, you know, government hasn't got a role to play in that. It's got to provide the incentives and the investment needed for those who know what to do to get on with it. And it's I think it's the same with net zero across a range of areas, whether that's energy efficiency, whether that's looking at sort of onshore wind, solar, actually those blockers, those moratoriums that are in place, those sort of questions around sort of land use regulation, all are stopping the future deployment of net zero.

Chris Skidmore: [01:07:05] So the Government's got a really sort of set out I think that long term consistency, clarity, continuity of positioning that will allow sort of private investment to de-risk their sort of investment strategies for the future. The challenge is this is happening in other countries. So whether that's in Germany, whether that's in the United States, whether that's in the EU, they're all setting out these long term programmatic visions, a strategic sense of what we need to achieve rather than the sort of project by project approach that has in a way caused so many of the problems within our own net zero transition by maintaining high costs around labour, around materials, the supply chains that are unable to have that certainty, to actually look at how they can deploy at scale and therefore reduce costs. And that was very much the sort of positioning of the net zero review was if we want this opportunity to be realizable, government needs to get out of the way. Government also needs to provide certainty. So it is a tightrope. You're absolutely right, Paul. But at the same time, thinking about this in a different way requires government to think in the long term rather than just in the short term. 

Paul Dickinson: [01:08:20] Now, you've said that net zero is, in a sense, a kind of narrative. Classically, you would be described as as, you know, an MP and and a former minister as a policy maker. But then again, I wonder if you're a storyteller or should good policymakers be good storytellers?

Chris Skidmore: [01:08:38] So I look both to the past and the present for creating these new narratives. And actually, one of the reasons why I've tried to step forward on net zero to demonstrate that it is this opportunity. It is not just an environmental policy tool to deliver on climate emissions reductions, but it is the principal economic opportunity of this decade, if not the century, is because I wanted to counter from a center right perspective this narrative that net zero is going to be a cost. It's going to make us poorer, colder that we're not ready for it, that somehow it's being forced and imposed upon a population by a bunch of eco zealots. Net zero is the very least that we can do at the same time as continue to grow our economy and create new jobs.

Paul Dickinson: [01:09:23] You know, many of our listeners are in corporations, they're in NGOs. How can we as a climate change movement be most productive in terms of accelerating the the kind of the technical detail of policy so it's sort of parliamentary ready, for want of a better word.

Chris Skidmore: [01:09:40] I'm running something now called the Mission Zero Coalition. It has a buildings mission zero network, it's got a local mission zero network, and it's got an industry mission zero network, all of which are going to make recommendations to political parties about where we could be innovating on new policy frameworks to raise the level of ambition. Because I passionately believe in that opportunity to co-create to co-author policies. You know, net zero didn't come on high from the government. It was recommended to the government by NGOs, by the Committee on Climate Change, which also has a critical role to play in what it can recommend for the future. We've just seen that with energy performance certificates. You know, they've made future recommendations on that, as did the net zero review. The Government is now going to take forward potential measures to reform energy performance certificates to make them fit for a net zero purpose. But we can do much more.

Paul Dickinson: [01:10:30] You've written many actual real books, but metaphorically you've written the book on cross-party collaboration, consensus building across the political spectrum. Do you have any sense of of how best to do that, what principles you've deployed to, to build that that ability to to convene coalitions where the separation in politics, which has been so much emphasized in the last 5 or 10 years, is put aside and people roll their sleeves up and collaborate.

Chris Skidmore: [01:11:00] I think the the really important point around working collaboratively is to make sure you genuinely mean it and and you genuinely mean it, that means bringing parties in earlier rather than later. So when I had the Net Zero Review, I reached out to Ed Miliband, Kerry McCarthy, Alan Whitehead on the Labour side, I met with Caroline Lucas on the Green side. We met with the Welsh government. We met with, went up to Scotland to meet Michael Matheson from the SNP, and I sat down with him early and said, look, I want to ensure that the review takes every party's reflections on board. You may not necessarily agree with all the final conclusions. Obviously building consensus means that not everyone is going to be happy with potentially some of the compromise solutions that may need to be sought, but where could we find agreement for the future. So making sure that you actually genuinely mean it when you talk about cross-party consensus is key. I think also, you know, recognizing that the current consensus around sort of traditional party politics is shifting. So I think, you know, the local elections we've just had in the UK, for me, if you looked at some of those results, the Green Party went from 200 to 400 seats, you know, far in advance of what UKIP ever achieved.

Chris Skidmore: [01:12:17] And I just get the feeling that actually when it comes to certainly the next generation, even our current generation, they are looking for issues based policies of which climate change is now number three on the agenda behind the economy and the NHS. And so sort of recognizing that this can't be achieved without cross-party consensus. That's the other thing is that and this is where we are valued internationally is that if we have one party coming in and saying they're going to rip up something, another party's done, why would any private sector invest in that? It's having that understanding that we work together will actually the prize will be greater because we will have actually created a stable ecosystem. So making sure I think from a cross party perspective, you are building on what has gone before, not seeking to remove what has taken place is also sort of really key as well.

Paul Dickinson: [01:13:09] We've interviewed Steve Waygood, who's Chief Responsible Investment Officer at Aviva. Steve said that there is a potentially a bit of a problem in politics and I quote him. He said the chances the finance ministers start worrying about inflation and what happens if we move away from low cost energy in the form of oil and gas and bit by bit, the political reality of what happens at the next electoral cycle starts hitting the prime ministers, the presidents, they get knocked back. How can we avoid that regressive cycle cutting into this vital work.

Chris Skidmore: [01:13:39] Compared to where we were a year ago, nine months ago. We have now seen potentially a moratorium on onshore wind being lifted. We have seen fracking and a ban on fracking being reinstated. I nearly sort of ceased to be a Conservative MP when I voted on a confidence vote saying that I, you know, wanted to maintain my climate commitments rather than vote with my own government at the time. And that brought the Liz Truss administration down. But so, so I think we have seen everything moving in the right direction. I think the challenge is going to be how do we ensure like in 2019, net zero is on the front page of every political manifesto? It's not obviously in Rishi Sunak's five priorities at the moment, but I would be, hazard a guess that, you know, if we looked at when it comes to what is that sense of ambition, that sense of vision for the country that we need, you know, embedding net zero in that vision will ensure that its survival continues across the decades as is required.

Paul Dickinson: [01:15:10] I was brought up in a in a in a household somewhat of the left. And it was not my natural inclination to want to vote for people of the blue party. We were more of the red party. There wasn't even a green party because I'm not so young. But my point being that I think this pretty brilliant politician has found a sort of secret of building cross-party consensus. He seems very serious, very competent. His review is fantastic. So, you know, I think with people like Chris Skidmore in different countries all around the world, you know, we could get there. But going back to the discussion earlier in this podcast, that's only going to work if politicians like Chris Skidmore have got the mechanism and the freedom to do their jobs. Anyway, that's just that's where I was. I don't know. What do you think of Chris Skidmore?

Dylan Tanner: [01:16:07] In my opinion, I don't think any politicians anywhere genuinely have anything against climate change solutions. I think it's all originating from the money and the corporate influencing. And actually I've had discussions with folks in Washington like which came first, the negative Republican politicians or the climate lobbyists. And it's become almost a circular argument now. And they've almost created these politicians who are like androids in the system and they believe in climate denial, almost like as a second or third generation politician going forth. But it's all all coming back to the money and the fossil fuel industry corrupting the system.

Paul Dickinson: [01:16:50] I mean, we were talking a little bit before recording this about Senator Whitehouse, and you had a particular comment that he'd made that you felt kind of struck home. What was that?

Dylan Tanner: [01:17:00] Well, so I asked him, rather rhetorically, is binding policy needed? And you alluded to the carbon tax earlier, and he said it's essential to the survival of our species on the terms that we live now.

Paul Dickinson: [01:17:17] But then just thinking about these pretty progressive voices, I think Steve Waygood and Amita Chaudhury from AIA and Aviva, you know, I think that it feels to me like big insurance companies, for example, and there are other enlightened financial institutions are just kind of they're just kind of turning up at the at the party in a way. And they're just, I think, starting to take on some of the realities of this. I mean, you and I work for NGOs, right? So this is kind of like our job, but we're not managing hundreds of billions of dollars, whereas their organizations are. But I'm hopeful they're starting to factor the same logic into what could be described as their fiduciary duty or even just their self-interest, right?

Dylan Tanner: [01:17:55] No, they are. And I'm a big fan of Steve Waygood and people like him in that system. I think one of the issues with finance and advocacy around climate is finance has a huge set of regulations and policy that it's lobbying on. And it's not climate change, it's financial regulations.

Paul Dickinson: [01:18:15] You know, a long time ago, a friend of mine said that most financial services legislation is kind of written by corporations actually, who then sort of foist that on civil servants. But I think that what we're drawing a distinction between is the cut and thrust of commercial life and the survival of the species. I think we don't want to confuse, you know, the fact that there's a little bit of to and fro-ing between governments and corporations on this and that with these critical national security issues.

Dylan Tanner: [01:18:42] When we first launched InfluenceMap, we were invited to the Paris Agreement to present to all of these big businesses, you know, and we said essentially you're all part of these trade associations that are holding back progress. And there was a representative, a chief sustainability officer of a consumer goods company on stage on the panel with me. And he said, look, climate change is not just another political football that we can leave to the trade groups and lobbyists. This is different. This is the existential issue of our time. It's like civil rights in the 60s for the United States. It's something that needs to radically change the way we structure our society. And that kind of stuck that stuck with me. And I use that anecdote to to kind of shock people who are stuck in this mindset of, look, stay in your lane and lobby only if it's affecting your business.

Paul Dickinson: [01:19:35] Yeah. And I mean, in no way can decry the heroes of and heroines of the civil rights movement in the United States. One of the best examples of civil society changing a corrupt and evil system. We have to fix this. Dylan, such a pleasure and an honour to spend some time with you on this podcast. You are a fascinating intellect and enormous fun to be with and have done amazing work. Thank you, Dylan, for being with me today. On the first part of this journey and for doing what you have done so far with so much more for us all to do.

Dylan Tanner: [01:20:16] Thank you, Paul. My pleasure.