Welcome to zero.

I am Akshadrati this week?

Did we get climate finance wrong?

It's been ten years since the Paris Agreement and the world has spent more than ten trillion dollars trying to cut emissions, and yet, as you all know, it's not been enough.

The world needs to spend a lot more.

The trouble is with government pursus tight and tightening, most of it will have to come from private sources, and so far the attempts, which have mostly involved nudging and cajoling financial institutions, haven't really worked.

So have we got our approach to climate finance wrong?

Lisa Sachs thinks so.

She's the director of Columbia University's Center on Sustainable Investment, and if she is right, we are in deeper trouble than we think.

The current climate finance regime was born just months before the Paris Agreement was signed.

It was created by a speech given in September twenty fifteen by then Bank of England Governor McCartney, the same McCartney who is now Prime Minister of Canada.

Climate change is a tragedy of the horizon.

We don't need an army of actuaries to tell us that the catastrophic impacts of climate change will be felt beyond the traditional horizons of most actors.

It will impose costs on future generations that the current one has little direct incentive to fix.

The speech title The Tragedy of the Horizons made the case that financial institutions must take climate action more seriously and act urgently, for if they wait till it's obvious that climate change is going to have disastrous consequences on financial stability, it will be too late to prevent deep damages to the global economy.

And Carnie's answer to that problem has led to the current regime of corporate climate plans and financial institutions setting net zero goals.

But emissions from these companies or banks have mostly not fallen in line with the targets they've set.

Neither has there been a drastic reduction in lending that these financial institutions make to fossil fuel companies, something that must occur if the world is to avoid catastrophic heating.

That's why Lisa's answer that climate finance has it all wrong is worrying, because finance underpins every discussion about how to implement climate solutions.

So this week on Zero, I ask Lisa why she thinks Carneie's approach to climate finance isn't working and what financial institutions should be doing instead.

By the way, if you have feedback for Zero or get suggestions, please write to Zero pod at Bloomberg dot net.

Lisa, welcome to the show.

Oh, thank you so much.

So we celebrated the tenth anniversary of the Paris Agreement and plenty was talked about, but I think there was a bigger anniversary, at least for you, that was celebrated a few months before that.

I'm talking about a speech that a former Bank of England governor gave here in London in September twenty fifteen.

Tell us about that speech and why it's such a big deal.

Yeah, thank you, and actually I'm coming to you right now from the Bank of England.

So what a way to commemorate that speech ten years ago?

That was Mark Carney's speech called the Tragedy of the Horizon, and Mark Harney was warning, especially the financial community, that climate risk, which we already knew of course ten years ago, well well before that, we knew it to be a major risk, was going to be a financial risk.

But in the future, that's the tragedy of the horizon.

So we better wake up to it today and address it today to TechEd the future financial system.

And that speech, at least how it was interpreted, has defined how the finance sector has approached and how the climate community has approached climate finance for the past decade.

And it is a powerful speech, especially making it at a time when the Paras Agreement hadn't been signed.

So he says, look, by the time you feel the impacts on your balance sheet, it will be too late to act, and you will suffer losses for much longer than if you start to act now.

That's the first part of the speech, really well made case.

Most people don't recall the second part of the speech, which was okay, so I'm telling you you've got this risk that you're not considering right now, and the way to address that risk, Carnie said, was to try and get companies to disclose information about their climate risk, about their emissions, allowing these investors to then take those risks on their balance sheets and thus as a result start to put money toward solutions that will tackle the problem.

Is that happening.

It is happening.

And it's not tackling the problem.

I think the fundamental misunderstanding of financial risk is that by getting better information and managing financial risk that the economy will reallocate capital towards solutions.

That was the mistake everything else about what he was saying that as climate risk and climate impacts intensify, the financial sector will feel it, but on a delayed trajectory.

That's correct.

But by the way, we're already seeing some effects in the economy and some effects in some financial assets, so we better be attentive to and manage those risks.

But if we want to reduce the underlying risks, it is a different set of mechanisms altogether.

But the translation of that problem became the structure of how, at least for the past decade, the world has been trying to tackle this problem.

And we don't even need to get to the political side of you know, right wing populism or policy changes.

It's really the basic logic of the operation came from the speech.

Came from the Paris Agreement.

Right we had a target under the Paris Agreement that wanted to keep temperatures below one point five degrees celsius.

That was translated by scientists as the world needs to reach net zero by twenty to fifty carbon dioxide emissions, and then corporations took that on heart, saying, well, that means all of us, at least the big ones, all need to get to net zero, and that would allow investors, who also have not just their own emissions from their little operations and offices and flying around, but like major emissions that are connected to them financing these corporations to go, Yes, we need to be net zero, and we didn't make very much progress.

What went wrong?

Because that feels like a clear logical pathway that the world should have followed exactly.

Well, I hope that ten years on we really can take stock about whether that theory of change held or what we got wrong about it.

What is needed to transition any system and our economy in this case, which, by the way, the transition that's needed is a compelling case economically and for energy resilience and affordability and security.

This is hardly even about climate now, but that's changing the real economy.

Instead, if we look at this as a financial risk, then the set of tools that we have to engage in that is financial regulation, which are disclosures and risk assessments.

That is not how you change the real economy.

So that was I think where the split was.

Then there are other underlying fallacies in what you just described.

I'll say one basic one, which is that the concept of net zero being an atmospheric concept cannot be achieved by individual entities setting their own net zero targets, which is the direction we went in, because individual entities are part of systems, energy systems, transport systems, built environment, and they can't shape those systems on their own.

They can influence them, but they can't shape them on their own.

So setting a net zero target for an entity is a fallacy.

It's impossible, and it has led to a lot of accounting maneuvers and disclosure oddities to try to project some reductions that are disconnected from what's happening in the real economy and the real atmospheric concentrations.

So what is the solution then, if companies should really not be aiming for net zero but they should be trying to shape the system, Well, we know they can because they have labbying powers, etc.

But they've never lobbied for green policies.

They've lobbied for their self interest.

Now you're asking them to change the system in the interest of the rest of the world, and you're asking them to lobby in the interest of the rest of the world.

That is not something they're set up to do anyway.

So what could be an alternative that would allow for corporations to be a part of the solution.

Believe it or not, I will tell you as someone I think I am probably more existentially concerned about climate change than anyone, and yet what I think is the solution set I do think is in the self interest of economic actors.

And when I talk to companies and the financial institutions, what I'm saying to them resonates more than this structure that we've created that misunderstands incentives and possibilities and levers the different institutions have.

So I just want to say that what you've described as being difficult, I don't think is so difficult.

So what I would say is, first of all, what Mark Carney described as financial risk, that's true.

So every entity and financial institution should understand real evolving climate risk, which there are.

That's prudent risk management.

That doesn't solve the climate crisis.

But it is true that we are facing extreme heat, floods, heat that affects labor productivity.

The insurance prices are going up.

So there are real effects in the economy of climate change that should be managed from a risk management perspective.

And by the way, companies better do that too, because companies that are in flood zones or that rely on supply chains from regions that are very vulnerable, so from good risk management that is important, but we should not conflate that with the solution set.

The reason why I think the solution set is in the interest of companies and of the financial sector is that now more than ever, the transitions that are necessary to create efficient, secure, resilient, affordable energy systems that can support new types of industry and industrial innovation, and built environments that are efficient and can have cost savings.

All of this actually is compelling for economic reasons.

These are financiable.

Sometimes they're so obviously financiable that finance is driving them.

The largest installed solar capacity in the US is in Texas, not because anybody's lobbying for climate policies in Texas, but because the economics makes solar capacity the most compelling, and we see that in all parts of the world that there are clean solutions now that are already the more affordable solutions where they're not yet financiable is because we need to create the market and connect users, the downstream consumers with the producers, and adjust the utilities and the way that the grids are managed to be able to optimize these benefits.

As one example, if different industries can save money by storing some of their own energy and having better demand response, that's saving for the industry, but the utility needs to be able to manage that flexibility on the grid.

When we can solve those market structures in these solutions become compelling for the companies and compelling from the finance perspective.

That has certainly played out in the renewable sector rit large, not just solar, but win also batteries and now increasingly electric cars.

You know, plenty of developing countries now have more electric car sales in their share of new vehicles sold than many of the most developed economies.

That's happened through a set of government coordinating mechanisms where there's been either a target set to try and reach a certain amount of renewables in the grid, initially to there being incentives in terms of subsidies, which is the sort of formula that the US uses mostly to try and fund these technologies that the governments think the world needs but are expensive and need to start to compete with the alternative.

But we are now also in that place where given the politics and given the policy changes, people are looking towards investors as the driver of change because these financial risks are real.

So last year, Norge's Bank Investment Management, which is the world's largest manager.

You know, all the oil money that Norway has earned has gone into this huge part that the government uses for all sorts of things, invests in pretty much every investable company in the world with like one or two percent of their stake, said last year that they believe the financial sector's conventional approach to estimating the physical risk of climate change is hugely understating the problem.

So they're kind of confirming what Conny said ten years ago and saying it in twenty twenty five with greater urgency.

So when they were asked, okay, then what should NBIm do as a result of understanding this US risk, shouldn't they be investing more aggressively in climate solutions?

They said, no, that's not their mandate.

The mandate comes from the Norwegian government and it currently is not the government's mandate.

So what is the solution here?

Is it to go back and try and essentially create a political movement that would put the right leaders in government.

I think the solution is easier, but that that's a perfect example of what the solution is not.

That was a perfect example that even though financial risk may be real, that that in and of itself is not the motivation to go finance new solutions.

And whether the mandate comes from the government of Norway or from beneficiaries that are expecting returns on their portfolio, anyone invested in the markets is expecting financial returns.

They don't want their companies to go out and be financing things that might be loss makers or that will be loss makers because there's no market for them.

They want to be maximizing the risk adjusted returns in the current economy.

And by the way, let me just note that as long as our consuming sectors consume fossil fuels, the demand for fossil fuels will remain.

The solution is not to say stop financing the fossil fuel sector.

The solution is phase out the demand by making the alternatives cheaper, more affordable, more accessible, which is happening.

As we do that, even more the demand for fossil fuels phases out and then the financing stops.

So we should understand the levers.

So what is the solution now more than ever, as I was saying, the investments that are needed to create a clean, efficient economy, are billions, if not trillions of dollars of investment opportunities that Norges Bank and other financial institutions will want to invest in when we make them financible.

That is the challenge, which I don't think is such a big challenge, but it is also the solution set.

So what can the finance sector do because they can't lead on making markets that don't exist financiable, but they have unique expertise in understanding what is financiable.

How do they perceive different types of risk market risk, off take risk, technology risk, political risk, regulatory risk, construction risk, so that we can in the real economy, using other types of tools, the export credit agencies and the development banks that have concessional finance and guarantee mechanisms and other risk sharing tools can address the risks so that they become financiable by the private sector with real returns.

That's why I think that this is in the financial sector's interest to help create these financiable investments.

After the break, I ask Lisa whether China's approach to climate finance can be reproduced in Western countries.

And if you're enjoying this episode, please take a moment to read and review the show on Apple Podcasts, Spotify, and YouTube.

Recently, Liney Chevri wrote simple but deep.

I love the analysis of this podcast.

Thanks Lina.

The biggest place where finance is not flowing a must flow is developing countries where we know the opportunity of having cleaner energy and the benefits are far greater as a result, and the risks of actually investing from an investor perspective are also greater.

So how do you solve that problem?

Yes, that is what I spend a lot of my time thinking about.

Not only are the clean energy opportunities in emerging markets huge, but frankly so much infrastructure development in emerging markets, in clean industry, in mobility solutions, in information and communication technologies, the digital hubs.

These are great investment opportunities.

But emerging markets are perceived as risky, and when they are risky, either by mandate, some institutional investors cannot invest in them, or even those who aren't driven by mandate, the private credit markets don't want to invest in places that are risky.

So we are trying to unpack that risk because some of the risk is a misperception of risk by not understanding because people are not familiar with emerging markets.

Some of the risk are real risks.

Risks like currency risk because the developing countries borrow in hard currency but they have their revenues in their own currency, or some types of political risk if the utilities may not be reliable off takers, or liquidity risks because when debt becomes due, developing countries don't have large reserves like the developed countries do.

So each of these risks has determinants factors that are leading to these risks.

If we can understand why these risks exist in emerging markets, we can solve them structurally, We can solve them with new risk sharing tools, and we can help investors understand that some of the perception is actually not correct.

Is there an example of a place where that's happening.

Yes, So one recent publication that starts that helps, but much more needs to be unpacked, is that after a lot of advocacy, the development finance community released their data on default rates across their portfolios and it's called the GEMS database.

And what the GEMS database showed is that the default rates in low income countries is much lower than what their risk ratings would imply.

That was already helpful, it needs to be much further unpacked because this is financing from development finance institutions, which of course has more protections than private investment does.

But private investment can co invest with development finance and benefit from those guarantees.

And in developed countries too, a lot of financing is benefits from public sector guarantees or supports, So we need to unpack that.

But that's at least one area.

But all of this request coordination and coordination often comes from governments.

When it cannot because of the politics or because of their physical capacity.

Who else can step in?

Yeah?

Absolutely, so many other actors can step in.

The appropriate financing stack or the financing solutions to d risk can involve a number of different financial entities that have an interest in coordinating with other financial entities.

So yesterday I was at a wonderful workshop up on export credit agencies and the role that export credit agencies can play in de risking critical investments.

But export credit agencies have an interest in collaborating with other development finance institutions, the multilateral development banks, with local commercial banks that can bring additional local currency finance.

So even different actors within the financial sector, not one financial entity that wants to make a market, but to work with the other types of financial actors to create a financing stack.

And development banks are big, there are many, but they are not as big as private financial institutions are.

There examples where private and financial institutions have stepped up.

There are, they're not enough because and I think this goes to the question of the perception, because the more data that we can have that shows what good investments there are, the more that we'll see.

But there are a few.

The way that the private sector usually comes in to emerging markets where there really are assessed risks, whether they are real or perceived, is together with an entity that can take on that first risk or that can help to de risk it.

So there are co investments with development finance institutions or blended finance vehicles where either a philanthropy or a other type of catalytic fund, a guarantee mechanism, or a development finance institution, or in the case of Singapore, the monetary authority puts in some initial capital and on that basis the traditional institutional large private investors feel more confident because there's a mechanism to take on the first loss.

One region in which I'm quite interested in what this could look like is in Southeast Asia, which from a climate perspective for the world, is a very important region.

It has the second largest growth in energy demand after India.

If that energy demand and is met with clean energy, that will save the planet, and if it's not, then that will lead to massive overshoot.

From the region's perspective, actually the driver of the clean energy transition is not climate.

It's that to meet their growing energy demand in the most resilient, secure, affordable, independent way and to support the growth of clean industries within their economy and by the way, to decrease congestion in their roads and to clean their air.

They have an interest in an integrated clean grid that requires connecting different sources of clean energy generation, which is located throughout Southeast Asia with all throughout the region, because in order to make the clean energy reliably available and affordable, you need to be able to move it from where it is to where it's needed.

And by the way, the country that this the most is Singapore, because Singapore can't generate its own clean energy, so its ability to truly decarbonize its economy will depend on its being able to reliably secure adequate clean energy from the region.

So the whole region knows that they will benefit from a clean integrated energy system.

Why hasn't that happened.

Yeah, well, I mean that seems like it's in their self interest.

It's in their self interest, and it's a great investment.

This is going to be a huge energy market.

One basic starting point is that until this year, there wasn't even a scenario in the region for what does this clean energy system look like.

So if you were an energy investor and you wanted to go invest in the fastest one of the fastest growing energy regions in the world, from an investment perspective, it's not even clear where you make that investment because there's no scenario.

Then the cost of capital, as we were discussing in emerging markets is very high for clean energy.

When the cost of capital is high, the levelized cost of energy is higher than fossil fuel production.

So on a competitive basis, clean energy is not competitive only because of the higher cost of capital in emerging markets.

And then the final point I would say is that for an integrated energy system, if you have cross border infrastructure, then the investors need some assurance that they're going to be able to trade power across borders.

How do you do that when you have different energy systems, different markets or so on.

So until this year, there wasn't a plan.

Now we're putting we're supporting the wonderful institutions in the region, especially the Ausion Center for Energy and the Member States, to say, oh, you know what, it would be good to have a plan for what this looks like.

And when we have a plan, we can identify where they're good investment opportunities.

And then the finance comes, which is how do we make this all financiable?

And so we have been speaking with both public and private financial institutions.

Of course, the Asian Development Bank is already involved, the IFC is involved, and most recently we've been speaking with JP Morgan as one of the many interested private sector entities who sees opportunities in financing, and we've been saying with JP Morgan, let's figure out how we can make this grid financibal.

Then it'll unlock a lot of financing opportunities in the region.

So together with JP Morgan, we are organizing a series of workshops that will bring together these public and private sector financial institutions, also together with some of the utilities and the regulators, to say what is needed to make this all financible, and when it's financible, it will unlock a lot of important investment opportunities.

So this is the case where a technology that now has been at least globally shown to be de risk but is facing this problem of cost or capital is being addressed by bringing in this coordination mechanism.

You're saying, it's not driven by climate, so it is driven by other factors.

And the way to think about it from a corporations perspective is, obviously they have to deal with the risks they face today, but they also have a risk in the future of just not knowing where their business is going, and so they have to keep an eye out for future business opportunities, And you're saying, the coordinating mechanism here is not climate, is actually the future business opportunities.

And JP Morgan, as a big financier, wants to make sure that they are tapping into this future business opportunity.

That's great, that works for renewables.

That is maybe fifty percent of the problem.

Fifty percent of the problem is technologies that are not yet financiable, that are not yet cheap, that require a bunch of rich governments to do something about it.

Typically, But if those governments are not going to step up, what do we do about the rest of the problem.

Yes, So, first of all, I think it's important to know that we probably have about seventy percent of the technologies that are needed for global decarbonization.

So the challenge, the real constraint is not that we don't have the technology, it's the deployment.

What's very interesting is that that deployment is happening faster in emerging markets than it is in developed countries.

Because we have the technologies.

They know that to deploy those technologies across their systems is compelling from an efficiency perspective, from a cost saving perspective, and that it can be done by bringing together those actors in the system that would benefit from the new technologies.

So we see more deployment in emerging markets than in developed countries.

But there are some places where we need new innovation.

Plenty of them, green steel, green cement, sustainable aviation fields, etc.

Etc.

What about them?

Yes, So, first of all, we do need public finance.

We need public finance.

This is not going to be so by the private sector alone.

What we should be thinking about in every financing solution, or what needs to be in what we need to be financing is what is suitable for public finance and how?

What is suitable for private finance and how?

And then where can we find blended mechanisms or how can we use some types of public or innovative risk sharing mechanisms to bring in the private sector.

Those are basically the three categories.

The public finance can come in many different mechanisms.

We fund R and D that is one of the best ways to fund new technological innovation.

We use subsidies to incentivize.

We also use mandates by the way and procurement, so government doesn't even necessarily have to be laying out financing to shift the markets if you mandate certain efficiency standards, the markets shift.

If you commit to procurement of some standard of some clean technology, then the markets shift.

If you can aggregate demand in that way, then the markets meet that aggregate demand.

So some of the additional investments needed can come in that way.

Some of them remain very difficult, and you've named a couple of them.

So let's take green steel, where right now the technology that would decarbonized steel is more costly in some parts of the world.

Actually, because we're already seeing that in Sweden's Stegra is able to produce clean steel at a rate that is marketable on the market, and you have companies that are willing to buy the green steel in Sweden.

But in Asia, where there's most of the world's steel production, the clean versions are not yet cost competitive.

This is an example where I believe it to be possible to bring together actors from within the system, which we are also doing in January together with the real estate company in Hong Kong that has an interest in procuring clean steel, and realize that it can't do it on its own, So we are bringing together Boo Steel, which has been very involved from the supply side, and producing clean steel, the real estate companies, the car companies that have an interest in buying, the private sector financial institutions that are happy to finance when there's going to be a commercial market, the public sector officials that can understand well what types of mandates would create this market.

And then maybe in this case we may need either development finance, concessional finance, or philanthropy to address the green premium until the point that the prices come down.

So the one place where we know coordination happens really well is China, and of course that is the place which is now as a result of that coordination among government actors, among companies and finance, the place where most green technologies are made, and they are made more cheaply than anywhere else.

But that kind of politics can be replicated.

Is there anything from the China model that can be replicated outside of China?

I think there are two really important points.

One is that China sees a huge competitive advantage in building the economy of the future.

This is actually part of the point is that they are it's benefiting their companies and the country to be investing in the component parts of the clean energy future.

They are we are not going to be able to compete for the price of solar panels, certainly not evs, and they're doing this from an economic basis.

So that's one point is that we should This is a perfect example of how economics and climate objectives have aligned.

The other thing is that, of course China sets vision and a plan and a strategy and can be coherent.

That, by the way, can be done by any form of government.

Just have a plan and how do you achieve that plan?

Within all of these sectors, there is immense competition.

That is what has led to the development of the most incredible technologies at the cheapest price.

Immense competition because everything in China is at an immense scale.

So this is not that it is so heavily subsidized by the government.

The government has set direction, created and enabling framework.

Any form of government can do that, and then there was immense competition and the winners prevail, and there are a lot of losers in that case, by the way, But China, I think exemplifies two things we can all learn from.

One is that plans are useful.

Planning is helpful.

You can align your incentives and your markets and your skill sector with your plan.

That is a good takeaway, And the second takeaway is that there is tremendous economic opportunity in the new clean energy future and if we don't lean into that globally, then China will and we're already seeing that.

So it should be a message to all of us that to be investing in the component parts of a clean, efficient, reliable economic future can be a real competitive and diplomatic advantage.

By the way, this is a good way to show leadership in the world is to be the financing and technology partner to all of the emerging markets that are huge markets for these new technologies.

So if you go back to McCartney's speech, then clearly he pointed to a problem that needed to be highlighted and given the platform to actually focus attentions and solve a problem.

But then his solution set isn't the right one.

Now McCartney is in government, he is the Prime Minister of Canada, and what we've seen is he is continuing to think of his solution set as the logical outcome.

So on this podcast, we had a minister from Karnie's cabinet who resigned as a result of a deal that he signed with Alberta, the state that produces most of the oil and gas in Canada, and as part of that logic of signing that deal, which you know, I hopelessness can go back and look at the details of but the logic was, look, governments are not in this case Alberta not ready to invest in green solutions, but Marconi things, because clean energy has become cheaper, markets will do so.

And so his logic here now is because the politics is not there, We're going to let the markets do the bidding.

But you're saying no, Actually, for a lot of this, we still need government solutions.

We still need government support, We still need public finance, even if it doesn't come from a national government.

Are we concluding in twenty twenty six then that really let's go back to the board and get the politics of supporting climate action right, because that is the only way we actually solve this problem and make it in a place where all of these technologies make our lives better regardless of climate anyway.

I think the takeaway for twenty twenty six is that markets follow the real economy, but there are many actors that shape what happens in the real economy rapidly declining technology costs that has an impact.

Commitments, procurement commitments have an impact.

Collaborations among private sector participants can create markets, but we should understand that what gets financed depends on the real economy and when demand changes or a company signals its commitment to procure clean energy or to procure storage, that makes those solutions financiable.

Governments absolutely should be at the table.

And by the way, governments themselves have many different actors cities, states, even within those there are different agencies that have different tools that they can use, green banks, utilities.

So I don't want to get too consumed by the idea that we need to convince our leadership that is not thinking very coherently that they, of course they could do more, but we're not hamstrung by their lack of sanity.

We can work with other real economy actors to make markets financible.

One thing that was odd in Canada, I have to say is that we of course understand that it's mandates and these procurements that make the markets.

At the same time as saying we're going to let the markets solve it.

Prime Minister Carney also rolled back, for instance, the EV mandate and the tools that were in place that would have shaped the demand.

That is incoherent.

Actually, because the way that you shape and said, then you know there's going to be a demand for fossil fuel for years to come, Well, yes, if you aren't using your real economy tools to shape that demand.

That is another fallacy in this climate debate is that the way that we decrease the demand for fossil fuels is by decarbonizing the sectors that use them.

Why he rolled back the mandates that would have had that effect while saying well, oil's here to stay.

That was the most incoherent part to me.

So in trying to give agency to trying to tackle problems of climate change, there are three big actors.

There's governments, there's private industry, and then there's individuals.

Individuals have the least agency in this fight.

But if you look at governments and finance, what you're saying is on accountability, you really need to look at net zero targets and climate goals and mandates and policies toward the government, and you should hold them to account and you should create the politics that enables that.

But when it comes to private sector, whether that's finance or business trying to hold them accountable to net zero?

Is there a wrong idea, But you should hold them to account for what kind of future that they as companies are trying to make money from.

Is that future a green future which will help the world, or is that a future that is making everybody's lives worse?

Is that the best summation of.

How to take I think it's a very good one.

But I'm going to give a summation that is even more a moral even though I am the try to be the most principled person, but I think that we can solve this even without expecting the private sector to have any morality to it.

My summation would be that there really are risks to be managed.

We should manage those risks, but not assume that managing those risks is going to necessarily it won't on its own lead to new solutions.

So let's first of all, stop talking about climate as a financial risk as a solution set.

It is a financial risk, and we should be aware of that, better accounting for it, and better managing it throughout the real economy and the financial sector.

On the real economy side, what you said, by the way, is right.

Our livable future also now is increasingly, if not already the most compelling affordable solution already.

That's going to create massive investment opportunities where it's not already financible or already the most competitive.

There are many tools in our toolkits, at different levels of government, in different parts of the private sector, through collaboration, through procurement commitments, we have many tools to address the risks, the perceived risks that make these not financible.

What I would say to the private sector and the financial sector is help be a part of these solution sets.

That's not even a cost, that's not a cost.

If you can come to the table and help us think how do we make these transitions financiable, you are the first in line to benefit from these new affordable, efficient, resilient investments.

And I would rather be a leader than a lagger.

But those who lead are going to change the systems, and those who lag are going to be part of these nu clean systems in any event, even if they're going to have higher costs in retrofitting and so on.

So I believe that if we lean into creating the markets that are ultimately in all of our collective interest.

We can do that without expecting any institution to be moral or to believe in some future that is not in their self interest.

We're just trying to come together to create a financible, new, efficient, resilient, clean system economy for all of us.

Thank you, Lisa, Thank you so much, and thank you for listening to zero.

Now for the sound of the week.

That is the sound of chickpeas being roasted.

As coffee prices rise globally mainly because of climate change, many companies are looking to one hundred year old recipes to make coffee alternatives, and roasted chickpea powder is one of the ingredients for those alternatives.

Read the full article linked in the show notes.

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This episode was produced by Oscar boyd Our.

Theme music is composed by Wonderly Special.

Thanks to Alistair marsh Samarsadi Mosses Andim Laura Milan and Sharon chen I am Akshadrati.

Back soon.