Financial Climate

The Paris climate agreement was designed to keep Earth habitable through a framework of national emission reduction commitments. But actual binding laws enforcing those commitments are still lagging behind. In response, many corporations have promised to reach net zero emissions voluntarily. Many have released plans of how they intend to do that. And consumers and investors have sought to hold them accountable.

Despite some admirable progress, a lot of corporate commitments are based an incomplete patchwork of emission disclosures. And too often, companies’ climate plans are full of caveats, inconsistencies, and outright greenwashing. Federal governmental action to require rigorous climate disclosures is—at best—slow in coming. 

But California has found a brilliant workaround. If California were a country, it’s economy would be the fifth largest in the world. By passing a state law that affects companies doing business in California, the state can set a standard that companies are held to around the country and the world. 

On October 7, California Governor Gavin Newsom signed a bill called the Climate Corporate Data Accountability Act, championed by State Senator Scott Wiener. The law will soon require rigorous and standardized disclosures for a huge number of companies that do business in California. 

This episode’s guest, Catherine Atkin is an attorney, a climate entrepreneur, and the co-founder of a nonprofit organization called Carbon Accountable. She’s also a CodeX fellow at the Stanford Center for Legal Informatics. State Senator Wiener’s office has described Catherine as the legal mastermind behind the new law. 

• SB 353 Text
• Carbon Accountable
• Catherine Atkin Stanford CodeX Fellow bio

InnSure is a nonprofit organization that fosters insurance-related innovations to address climate problems. Usually, we think of insurance as a tool for climate change adaptation—and it is. But InnSure also looks at insurance as an indispensable tool to help implement and scale emission-reducing technologies. I wanted to understand better why and how that is. I also wanted to learn about the enormous climate-related business opportunities emerging in the insurance industry, and how these relate to the set of transformative insurance initiatives commonly known as insurtech.

This episode's guest, Christopher Lowell, is a Managing Director at InnSure. He has deep expertise and hands-on experience in the insurance industry. He worked as the Managing Director of Corporate Strategy and Research at Liberty Mutual. Among other insurance roles, he also set up and led an experimental insurance innovation lab inside The Hartford.

• https://innsure.org/
• https://www.linkedin.com/in/christopher-lowell

More than ever before, advocates are pressuring private-sector companies to take action related to climate impacts. One thing that’s increased the potential effectiveness of these tactics is the tremendous concentration of corporate voting power in the hands of a small number of enormous asset managers. And at the same time, huge, secretive, private equity firms are amassing control of privately held companies, or are taking publicly-traded corporations private.  

Harvard Law and Economics professor John C. Coates has just released an insightful and thought-provoking book about the dangers and challenges of these investing trends. During his distinguished career, he was a partner at the leading Wall Street law firm of Wachtell, Lipton, Rosen & Katz, and he served at the U.S. the Securities and Exchange Commission in several roles, including as General Counsel. His new book is called The Problem of 12: When a Few Financial Institutions Control Everything. 

I sat down with John Coates to learn about the many problems stemming from this extraordinary concentration of corporate power. I was especially interested to understand what his arguments mean for the efforts of the activists and consumers pushing corporations to meet climate goals and uphold other standards of environmental and social responsibility. 

Robin Millington is the CEO of the London-based nonprofit financial think tank Planet Tracker. She talks about how her organization uses sophisticated financial tools to make markets more environmentally sustainable.

https://planet-tracker.org/

Ben Keys, a professor of real estate and finance at the Wharton School of Business talks about the effects of climate risk on insurance, property values, and real estate markets. 

Relevant Links:

• Ben Keys New York Times guest opinion on climate risk and homeowners' insurance
• Ben Keys Congressional testimony
• https://firststreet.org/
• https://www.nber.org/papers/w27930 (Ben Keys and Philip Mulder economic research paper on the housing markets, mortgage lending, and sea level rise)

In 2012, Emilie Mazzacurati founded a company called Four Twenty Seven. It pioneered the practice of applying esoteric scientific climate models to help businesses manage climate risk. She sold the company to Moody's in 2019, and stayed on to manage it as Moody's Global Head of Climate Solutions. She's now working on a new venture related to climate mitigation. 
 
Emilie talks about the challenges of understanding and managing business climate risk. She discusses improvements in our ability to develop and apply climate data and the importance of doing so. She also shares insights on the lack of climate tech investment in adaptation and the breadth of entrepreneurial possibilities in the climate adaptation space. 

Relevant links:

• https://climate.moodys.com/
• https://www.caelistrategy.com/
• https://www.linkedin.com/in/emazzacurati

Ambassador Janine Felson is an expert on international climate finance frameworks and governance structures. She served as a senior diplomat from Belize to the United Nations. She contributed to crucial international negotiations, including the 2015 Paris climate agreement. She also held key roles as a negotiator and strategist on behalf of a coalition of countries facing extreme climate vulnerabilities—called the Alliance of Small Island States.

Programming note: Going forward, to better accommodate the workload of producing this podcast, Financial Climate will run every three weeks, rather than every two.

In 2020, Ulf Erlandsson founded a nonprofit activist think tank called the Anthropocene Fixed Income Institute, or AFII. Through sophisticated analysis of bond markets, the organization seeks to hold corporations and governments accountable to climate goals. 

Erlandsson worked for many years as a bond trader and fixed income portfolio manager, including on behalf of AP4, a Swedish public pension fund which currently manages the equivalent of more than $44 billion in assets. He also worked as a quantitative strategist at Barclays Capital. He holds a PhD in Economics from Lund University in Sweden. 

• Anthropocene Fixed Income Institute (AFII) web site
• AFII on LinkedIn
• Ulf Erlandsson on LinkedIn

Today's guest is Dimitry Gershenson, co-founder and CEO of Enduring Planet.

Enduring Planet is a startup financial technology firm that lends to climate-focused businesses. It provides financing without the need for an equity stake, collateral, or personal guarantee from funding recipients.

Today’s guest is Kingsmill Bond, a longtime equity analyst and strategist, who has provided insights on the energy industry on behalf of some of the largest banks and asset managers in the world. After recognizing the implications of the energy transition for financial markets, he went to work for the pioneering London-based nonprofit financial think tank Carbon Tracker Initiative. Still in London, he’s now a Senior Principal on the strategy team at the U.S.-based nonprofit RMI. 

Mentioned in/relevant to this episode: 

• The Innovator’s Dilemma, by Clayton M. Christensen
• How Big Things Get Done, by Bent Flyvbjerg and Dan Gardner
• Carbon Tracker Initiative 
• RMI
• Kingsmill Bond web site