The host of Wall Street Week David Westin joining us as he does every day
at this time. David, always great conversations coming
out of you here. And you actually had a chance to sit
down with and often look at a name I haven't heard in a while.
It was a big deal over at Bank of America.
Now she's moving on to something now known over the years.
Bank of America is vice chair and now she's going to TPP, as you know, at Bank
of America. A lot of her work actually had to do
with ESG investing. She's taken it with what was cool
before. It was cool.
Great. I know it's good for you.
But as you take that with her to TPP and she's really working on trying to get us
through this climate transformation, which she estimates will cost four
trillion dollars a year going out into sometime to come.
So we talked her today specifically about where that money's going to come
from. It's a big number.
It would seem impossible, right, to get there, but at least half of it is kind
of accounted for already. Meaning if you think about financing is
an 80, 20. Debt is 80.
Equity is 20. So I'll use on that side.
Just looking at the annual reports from banks around the world, you can easily
get to 2 trillion. I mean, I obviously I know Bank of
America. And their numbers on what they do in
terms of financing of the SDR. Cheese is about 8 percent of the overall
effort. I just talked to someone at HSBC.
They said their number is about 200 million.
And I think that JP is probably about that, too.
So you can get to 2 trillion by extrapolating out if if B of A is a
percent of the whole, then you get to about one point eight, maybe two
trillion and then equity is another four or five hundred billion on top of that.
So there you have two and a half trillion and that's this year.
And of course, that's without the IRS. And without just projected growth as it
is. So I think you could over time in the
next several years, see your way to three trillion dollars given what a
boost the IRA has been. That leaves at least a trillion dollars.
And so now you're really running into who who needs another trillion?
How do you get it? Who needs the other trillion is the
developing world. They don't have risk management
practices in place. So they don't have a government backing.
They don't have the capital system to support it.
And they are the most in need. So those are the ones that are kind of,
shall we say, downwind of the industrial nations and they are the most affected
and the least stable, able to deal with climate change.
And they also can't make money from the kinds of innovations that are in place
right now, again, because they don't have the capital structures in place.
Thus we have got to come up with a way to ameliorate that.
There's a lot of talk, a lot of discussion about developed nations
coming up with more money for the less fortunate nations to cover this.
Also, some multinational organizations at the same time can then come up with
enough or do we need to have the private sector help us out?
Well, I'd argue you need the private sector.
I think there is a large body of work and thousands of companies that believe
the following could work. Companies, thousands, tens of thousands,
but certainly thousands of companies have committed to being net zero.
Hundreds of financial firms have committed to be net zero.
That means there's a whole process they have to go through.
They have to do an audit. Take an inventory, figure out where they
are in terms into their carbon footprint, ameliorate what they can,
which is to
go to a renewable electric electricity to reduce their carbon footprint by
what they do in terms of power light, how they heat, how they cool their
buildings. Well, we probably have 10 years to
anyone get to carbon neutrality. Why not allow companies who are on this
to drag? You have done an audit.
Who can be evaluated? Use the delta between what they've got
and where they need to be paid. Pay a fee for that, if you will.
And by nature, based
concerns in the developing world or even put capital into the developing world,
you could get credits for that. And as you know, Gina McCarthy and I put
a an editorial together that ran on Bloomberg about a week ago.
And we really argued to give this like the compliance markets.
What does that mean in the compliance markets?
And I'll use California as an example, and I'm really going to simplify this.
But it's this is about right. And that is if you're a car manufacturer
and you you have a certain emissions level that they are allowed.
If you get over if you go over it, you pay.
And if you're under it, you can sell your
your extra credits to either another company or it's a cap and trade.
You either meet your goals, you don't. If you don't meet your goals, you pay.
This is the same I do carbon credits. It's just done on a voluntary basis to
make that work. And by work, I really mean the ultimate
goal is actually to help save the climate, to actually make sure we're
having fewer emissions than we have in the past to make it work.
Do you need some third party entity to audit and enforce or whether it's a
government or otherwise? Well, I don't think we're going to see a
government do it in the US. I do not think we will see a national or
federal compliance program. So, yes, you have to do it.
The company set it on a voluntary basis and they also have to be willing to be,
as you call it, audited, evaluated. And there are plenty of mechanisms for
that. And I think companies that are willing
to say they would go carbon neutral or net zero are also willing to be
evaluated in the same way.