What did you learn from your survey. Oh David we learned so many things. I mean the first thing we
learned is that this really is a movement. I mean I was surprised you know when 20 19 about 16 percent of the world's
GDP you know by country had committed to some sort of net zero plan. And today just three years later that number is 90
percent. And you know this whole thing was really led initially by policymakers. Right. But now what's happened is all these
other groups have jumped in whether it's activist shareholders or you know whether it's consumers who want to buy you know
goods that they think or not don't have a huge carbon footprint. So it's all in its shareholders. They've all jumped in and
everybody wants to get on this wagon. So the first big takeaway was that you know it's a movement and it's going to happen. And
I think actually that the events between Russia and Ukraine are actually going to further accelerate this because Europe has to
get off its dependency on hydrocarbons. So the first big takeaway was that that it's really a movement and it's
happening. So so can they need to get off their dependence you say. Ukraine
drives that home powerfully. How difficult is going to be. Because one of the things I really focused on in reading your
survey was there are three different categories here of emissions and one of them is your own companies. Another is the
people supply you. But then there's a third category that actually dwarfs the other two.
Yeah basically the first one is what you use to make your goods and services and products and then the second one is the
purchased energy. You know electricity you buy and then the third one is the really difficult one to to measure. And that is
really the carbon footprint of all of your suppliers. And it's estimated that that third level David is three times as big as
level 1 and level 2. So that is. I kind of think of it as being an iceberg. So you're a corporation and you say I'm going to get
to net zero you control level 1 and level 2 but controlling level 3 all of your suppliers. That is really complicated. But
we have to do that if we're going to get to net zero as a society. You know how people get their David they're basically
three different strategies. You know there's mitigation and then there's a transformation and then there's financial engineering.
So those are sort of the three ways that you can get to net zero if you're a corporation in doing your survey. Did you get a
sense of timeline for these corporations. If they're committed to net zero how long is it gonna take.
Yes we did and it was fascinating. So what we found is that of the 34 hundred companies that 11 percent of them globally said
they're going to get there by 2030. That's just eight years away. That number quadruples by the time 2040. Forty one percent
of the companies said that they would be there. And there are also some real differences by region. So if you look at Europe
for example there 20 percent of companies say they're going to get there by 2030. So they're far ahead of the rest of the
world. In China fully a third of companies don't even have a timeline. So there are big differences by region. We'll talk
about that geographic dispersion. Call it that. You talked about Europe. You talked about China. Where is the United States.
You know the United States is just solidly right right in the middle there. I think it's about I can't remember the exact
number for 20 30 but we're solidly in the middle and we've been accelerating our timeline.
OK we have Wall Street week we appeal to investors try to inform them. What's this going to cost. What's it going to do to
revenue. The top line on the one hand was also going to do to the cost line.
Well that was the really fascinating part of the study. So what we found is that in general the thirty four hundred companies
analysts expected that revenues would decline about 5 percent. Now that averaged from 0 percent to as much as 14 percent
depending on the sector for example energy companies you would imagine would have one of the biggest hits. So we think that
they'll be a revenue hit. Interestingly we also think that there's going to be a real pickup in research costs. So about
one point two trillion of R and D will be spent we think over the next five years. And capital expenditures we think will be
about two point four trillion over the next five years. So put it together. You've got lower revenues you've got higher costs.
It means that you're going to have a hit to operating profits which we think will be down about 5 percent on average. So that
sounds like a pretty grim picture. And you know in the short term there definitely will be pain but there are going to be
companies that are going to be beneficiaries of this as well. OK. Name a couple.
I'm going to name a couple of areas David where I think you're going to see real beneficiaries. What is gonna be the enablers
right. Like the people who produce renewables or the industrials that produce you know products that contribute to better energy
efficiency. I think you'll see financials benefit because we're good. They're going to with this lower revenue and higher costs.
You're going to see companies need to to raise money so they would be beneficiaries as well. And then I think you'll see
going to see beneficiaries in terms of the first movers. You know the first movers who were able to do to get to net zero.
It's going to be helpful to their brand. They're going to lock in lower capital costs and they're going to you know avoid some
of the vagrants some of the variations in the pricing of hydrocarbons. So they're going to be companies that are going to
benefit here the enablers the first movers the financials. Ken as you as I said are in charge of research for Bank of
America. You like data like like numbers with the numbers. How are we going to know whether these companies are delivering on
their promises. We did had this week the S.E.C. came out and proposed a new rule about disclosure on greenhouse gases. Do we
need to get to a standardized world where we're all reporting and maybe record we're required to report so we know what these
companies are actually delivering on their promises. I think that is a great question and I think the answer is very
clearly yes. We need to have some sort of standards just like we have standards you know general accounting principles. We agree
that they're a little bit different country by country. But in general we have standards. We need the same kind of standards to
measure all of these ESG metrics. And I think that the move that the SCC made this last week is really a very good first step in
that regard. And it applies really to level 1 and level 2 emissions that we were talking about before. Where it's gonna
get really tricky is finding those metrics and that framework for how you measure the Level 3 emissions. But I was very
pleased to see that the FCC came out and did what they did this week. So finally Candice it give us a sense of why you did this
study to begin with. Bank of America does a lot of great work but you're doing it because it's part of your business. Why was
this important for Bank of America. You know it was important for Bank of America because one of the
things that we want to do is look at transformation and really provide original anticipatory ideas to invest for clients. And
this really was what I wanted to anticipate how net zero was going to be implemented. And I learned a lot and so did all of
the analysts learn a lot you know talking to all their companies and really understanding this transformation. This is huge. This
is potentially as big as the industrial revolution. It's going to take a long time to happen. But you know 2030 and 2040 aren't
that far away. If you're investing. So that's why we did it.