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- [00:00]
A
Pinpointing the genetic changes that predispose us to disease Identifying the roots of mental illness Treating congenital anomalies even before birth. At Boston Children's Hospital, we're investing in children's health today to ensure the well being of adults tomorrow. As home to the world's largest pediatric research enterprise and more than 260 specialty programs, Boston Children's is where the world comes for answers. The learn more@bostonchildrens.org how can you grow your business from idea to industry leader? Bring your vision to life with smart business buying tools and technology from Amazon Business. From fast free shipping to in depth buying insights and automated purchase approvals, they deliver everything you need to achieve your goals. It's not easy to stand out from the crowd. Simplify how you stock up to get ahead. Go to amazonbusiness.com for support. Hiscock Small Business Insurance Knows there is no business like your business. Across America, over 600,000 small businesses, from accountants and architects to photographers and yoga instructors, look to Hiscox Insurance for protection. Find flexible coverage that adapts to the needs of your small business with a fast, easy online', @hiscox.com that's his cox.com there's no business like small business. Hiscox Small Business Insurance Bloomberg Audio Studios Podcasts Radio News this is Bloomberg Business.
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Week Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies and trends shaping today's complex economy. Plus global business, finance and tech news as it happens. The Bloomberg Business businessweek Daily Podcast with Carol Massar and Tim Stanweck on Bloomberg.
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A
Radio Hi everyone, welcome to the Bloomberg BusinessWeken podcast. Well, a backdrop this week, gridlock in New York City. Yes, that was definitely going on this as the 80th annual UN General assembly was in session, coinciding with New York City's annual Climate Week summit. President Trump gave his first UN speech of his second term as president, assailing the world body in other countries of offering nothing but empty words and labeling climate change a con job. With that, global leaders in town, Bloomberg and Bloomberg Philanthropies, both founded by Michael R. Bloomberg, hosted the Bloomberg Philanthropies Global Forum where we did a live broadcast.
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B
Over the next two hours we will bring you some of our conversations and highlights from the event. These are discussions focused on innovation and opportunity in the climate space as well as where funding for global climate change initiatives is coming from and how it all fits into the state of the global economy. On that, a lineup of European leaders from government to banking. We also Talk AI data centers and the growing partnerships in the space with the former head of strategic partnerships at OpenAI.
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A
And then a little later on, Bloomberg News editor in chief John Micklethwait sits down with the Prime Minister of Spain. First up this hour, a look into the global consumer, the US Consumer and what big multinational companies are prioritizing in this new age of tariffs. We do that by checking in with the world's largest retailer. We are of course talking about Walmart. A member of the company C suite joined us at the Bloomberg Philanthropies Global forum. Chris Nicholas is president and CEO of Sam's Club, Walmart's membership only retail warehouse club, mostly with clubs in the US but also overseas in Mexico, China and Brazil.
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C
What we're seeing at Sam's Club is consumers that are consistent and rational. You know, I've been in retail for more than 30 years now and I've never known a time when people don't love great items at great prices. And as long as you're giving people that, we're finding consumers really, you know, rational and consistent.
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B
What is their behavior though right now? Because that's something Carol and I were talking a lot about. You know, the whole idea of are they buying what they typically buy? Are they buying what they buy at a certain point in economic cycle? Are they trading up, are they trading down? What are they doing in your stores?
- [04:10]
C
Yeah, it's interesting with, I mean, consistent would be the word I'd use. People are still buying general merchandise from us. I mean we talked in our last quarter the results about general merchandise sales having another quarter of positive comp. But what's really interesting within that is that the units are moving faster than the items, which means that, you know, we're still giving them great value. And I think people are really moving to appreciate when they're getting good value. You know, the club warehouse model is, is made for times like these. I would say it's a good time to be in the club model. We've got in our clubs we've only got 4,000 items. And the way that the club model works just to level set us is our job is to make almost nothing on what we sell. We're just about break even and we make all our money from membership. So the lower you can operate in terms of costs, the lower you can keep prices. And when that happens, people are more loyal, they renew more often and you get more members. So we're in this like really special moment right now where people love the great value that we've Got. And they love the great items that we've got too.
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A
You know, I want to cross that with what we just heard from Fed Chairman Jay Powell in terms of the decision and kind of basically saying the Fed's not in a great place. Like, either way, there are some risks to the employment picture. There are concerns still about inflation.
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D
So this is.
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A
There's kind of risks to both sides of the equation and concerned about monetary policy that it's hard to do right now in this environment. So that to me sounds uncertain, unsure, but it doesn't sound like you're saying any of that.
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C
Look, the club, we have this, this position where there's only, I mean, between us and our main competitors in the club model in particular.
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A
Right.
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C
We're only like six and a half percent of the. The total retail market. And we would definitely, from a club point of view, our consumers definitely skew sort of more wealthy, you know, bigger basket sizes. But, but we do serve everybody. And we don't see a great delta between different income cohorts.
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A
You don't?
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C
No.
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A
All right.
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D
That's.
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C
Nor generations.
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A
When you think about kind of the environment, especially when it comes into tariffs in terms of pricing, how do you kind of figure out where you can maybe raise prices where you can't?
- [06:19]
C
It's such a great, it's such a great question. We. And again, not to sort of pivot, but one of the powers of the club model is because you've only got 4,000 items in the club, those items are curated.
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A
Yeah.
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C
And our merchants, they are true professionals, like many of them have been in their jobs decades. And they understand the value chain from end to end better than anybody. And so they get the ability to choose what's in the club, but they also get the ability to work through where the inefficiencies are in the supply chain. They've got deep relationships to suppliers. So you work through where the opportunities are between the suppliers, too. So I'll give you an example. Our roses that we buy from Ecuador, the costs went up because the tariff environment changed. And so our merchants worked through with the supplier, like, what could we do? So we moved them in different ways so we have less packaging. We wrap them in the US now instead of where we used to wrap them. And so you do things like that that help you to manage the input costs. That means you don't have to pass it on to the consumer. And our job is to work through how little you pass through and you work through how late you do it. So we'd always like to be last up. But we have the ultimate opportunity in the club channel and that is that we have choice because we don't have to sell everything. So the curation actually is a superpower for us.
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A
Does that mean you haven't raised prices on anything?
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C
No, no. We see there are certain things that, where prices move all of the time anyway. So produce would be a good example of that.
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D
But.
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A
And there are some things strictly tariff related.
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C
Yeah. What I would say to you is that if I think about general merchandise would be the. Which is like all of the electronics and apparel and all of those things.
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A
The stuff that I have way too much in my home.
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C
There's never enough.
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A
Yes, there is.
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B
You're talking to guys who sell stuff, Carol. Never.
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A
I know, I know.
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C
But anyway, please buy more.
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A
But in terms of tariffs, particularly putting pressure on pricing.
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C
Yeah. So what we see is in terms of what people are buying, I think I mentioned this, but the growth in the units that we've had is outpacing our comps in general merchandise. So if you think about like over the last few years you had like packaged goods through Covid became more expensive and they never really came down. Whereas general merchandise, they. We had the supply chain disruption, you remember that. And they. The general merchandise inflated and then it deflated rapidly as it was after all of the supply chain disruptions disappeared. And at the end of last quarter we were still in a period of slight deflation in general merchandise. So prices move all of the time. Our job and our merchants job is to make sure that we give people access to the price points they want and the value that they want. Maybe it's worth mentioning, but in Sam's club we're 25% cheaper than retail in general. So as we resist putting prices up because that's in our DNA, we're always going to be more price competitive than everybody else.
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A
So then you haven't raised any prices related to tariffs.
- [09:16]
C
We will, we will. We will be the last people to put prices up. And some prices have gone up and, but in the mix, I'm telling you so for sure, I mean we, we, we have input price changes in some items and some's come through already and some is still to come through. But, but I would tell you that like our job is not to lead with putting prices up and, and all of our sales growth in Sam's Club is through unit growth, not inflation.
- [09:42]
A
Okay, cool.
- [09:43]
B
I'm wondering what you're hearing from, from your team who's out there talking to the producers, the American Producers of things we grow produce, beef as well. We had a Bloomberg News story last week about farmers and the toll that the Trump administration policies are taking on farmers right now. And immigration, just one of them. Tariffs on soybeans are another one as a result of fewer interest, less interest from China and Chinese buyers. What are you hearing though on the immigration front? Because in some cases 40% of migrant workers are from outside. 40% of farm workers rather are migrant workers. So they're coming from outside the US and that's a challenge for farmers to actually find those employees right now. What are you hearing from them?
- [10:24]
C
Yeah, I'm not hearing, I don't have anything to add or to offer on that topic. I would tell you that we have brilliant pharma partners. We understand the value change really well and we have no in stock issues or cost price issues.
- [10:39]
B
So have they raised prices at all on American produce?
- [10:42]
C
You'd have to ask somebody else about the through line on like employment and price increases. I think you probably speak to lots of people that are better informed.
- [10:50]
B
What about from produce that comes outside of the United States? I mean we can't do everything here. We can't grow bananas, we can't grow avocados.
- [10:55]
C
Avocados?
- [10:56]
B
Yeah. Tomatoes when they're out of season, come from outside of the U.S. what does that look like?
- [11:01]
C
We definitely over index on US Beef. The vast majority of what we buy is us. The vast majority. And, and so, you know, but we have choices about where we buy from. This is the benefit of being this curated limited assortment retailer is that we get the choices to buy from the places that, which give the consumers great value and, and great quality which we're never going to relent on. But you know, yeah, we buy items, you know, we buy avocados, as you said, from abroad and many other items. Tomatoes when it's out of season. And you know, the quality and the value will never relent on the quality but if the input costs increase and the inputs costs will increase. But there's in produce, there are so many variables. Produce and beef, I mean that there are so many variables that pushes the costs down as well as up. So I think it's a super complex situation and I, and I think that our farmers are some of the best in the world and I think that our merchants know how to work with the farmers. The thing, the best thing you can do for those farmers is to give them great forecasts, allow them to grow to those forecasts and give them good prices that allow them to run sustainable business. Models and we do a really good job of that.
- [12:15]
A
Chris, you guys in retail, I'm sure we're, you know, even late to talk about the holiday season and the upcoming holiday season. When you think about assortment.
- [12:23]
C
Yeah.
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A
And what you want to have in inventory for consumers, how's it looking for this year? Is it going to be a lot different from last year? Are the supply chains all there to get what you need and what you want for your consumers?
- [12:32]
C
Yeah, that's not an issue. We don't see any issues with, with supply chain management in that way. A Sam's Club in particular, we get really early. So you go to a Sam's Club now, which hopefully you know, please do. You'll see it's full of Christmas.
- [12:45]
A
I know, it drives me a little crazy.
- [12:47]
C
Yeah.
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A
I mean if I understand, I mean Halloween hasn't even happened.
- [12:51]
C
Yeah. Well in, in the club channel people like to be prepared.
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A
I know.
- [12:55]
C
So we get in to a season early and then we exit early and, and that's kind of scarcity is part of the value that we, that we create. And so we, so we're not worried about it from a Sam's Club point of view. But the thing I would say is that like people just love to celebrate, they love to buy, they love the seasons. And, and so I think you'll find that certainly at Sam's Club people, whether it's the general merchandise they buy pre Thanksgiving and Christmas or the food that they buy for the season, as long as you're giving them great value, they're going to come to you and people will find a way to celebrate.
- [13:31]
A
One of the things we love about the Global Business Forum is we tackle everything. Climate change, you know, workforce, employment, economics, politics. As a leader who's been at a company for a long time and I'm sure looking at everything that's going on, what's top of mind for you and an environment where there's pushback against certain initiatives, there's a lot of political things going on. Geopolitics. I'm just curious in running what you guys do and I know you're kind of a well oiled machine in many ways, but I'm just curious.
- [14:01]
C
Yeah, I think, you know, in an environment of change and by the way, I like change is a constant and you've got to love it then. I've always found that the best thing to do is to focus on what you can control. And what you can control is the culture you create as a business, how you work with and treat your customers. And your members, the experiences that you create. You know, a great example is, is the E commerce business. We've just launched express delivery from our clubs and people love it and they're opting in.
- [14:37]
B
Does the price change with delivery?
- [14:39]
C
No, we have price parity. We have price so others don't. We do so we have price parity between clubs and online with. That's really important from a trust point of view. And people are thanking us for our delivery from club food. And non food is growing at triple digits right now. So I think like, focus on what you can control. Start with being great people. Start with being a great business. Look after your associates so they can look after our members. And then, you know, that generally will lead to the right outcomes.
- [15:10]
B
So on that, we'll hear from one of your big competitors tomorrow. Costco reports earnings tomorrow. How do you make sure that people join Sam's Club and not Costco?
- [15:19]
C
Yeah, look, Costco is a great competitor. We think that we're great too and we're doing a lot of good things. What I would tell you is this.
- [15:28]
A
Because you have an aggressive plan in terms of expansion.
- [15:31]
C
Yeah, we're excited about it.
- [15:32]
A
I know.
- [15:33]
C
Yeah, we're really excited about that plan.
- [15:35]
A
Actually.
- [15:35]
C
The club channel in general is a relatively small channel. There's a huge, there's huge upside for the whole of the club channel. And I would tell you this, good competition makes you better. And, and I've never been afraid of, of good competition.
- [15:48]
A
What about AI and how you guys are working?
- [15:51]
B
Are you afraid of AI?
- [15:54]
C
AI? AI is a big topic everywhere now, isn't it? We, you know, here's the thing. We are, we're excited about AI as a company. And I am personally too. I think this idea of.
- [16:06]
A
Are you guys using it a lot?
- [16:08]
E
A lot.
- [16:08]
C
We've been using it for a long time, honestly. But the generative AI and then the agentic AI, that's coming through too. Yeah, is, is really exciting. It's exciting for our members and for our associates. What we do, we pivot to growth. How does this help us move faster, do more for our associates and our members? How do we find different routes to market? So that's exciting. Of course, we also look at like, how do you find opportunities to take time out of product launches and all of those kind of things so that you're a better business. The one thing that you may have seen is we also believe that the opportunity to give people, to empower people with the use of AI, but with an enterprise, but with enterprise data is really exciting. So whether it's in the office or recently we made an announcement a couple of weeks ago, a holiday meeting where we gave our frontline management access to OpenAI to ChatGPT, which they can use to just go faster and do more. And that's really exciting.
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B
Our thanks to Chris Nicholas, President and CEO of Sam's Club.
- [17:09]
A
Coming up, we go all in on AI with the former head of Strategic Partnerships and Global affairs at OpenAI.
- [17:15]
B
You're listening to Bloomberg Businessweek. This is Bloomberg.
- [17:23]
A
Pinpointing the genetic changes that predispose us to disease Identifying the roots of mental illness, treating congenital anomalies even before birth At Boston Children's Hospital, we're investing in children's health today to ensure the well being of adults tomorrow. As home to the world's largest pediatric research enterprise and more than 260 specialty programs, Boston Children's is where the world comes for answers. Learn more@bostonchildrens.org.
- [17:54]
F
This is the Small Business Minute brought to you by Amazon Ads. I'm Lisa Mateo. Credit card perks offered to small business customers include cash back and travel rewards, but the feature many business owners find the most attractive is a high credit limit. Nearly half of all the small and medium sized businesses surveyed by payments.com and payments processor i2b said so, but the smaller and younger the business, the more likely higher credit limits were at the top of the priority list. The survey also found small business owners using business and personal credit cards to finance their operations, and nearly half of the smaller and younger businesses were carrying card balances over each month. Payments.com and i2b say the survey speak to the need for alternative credit solutions tailored to the needs of small businesses. That was the Small Business Minute brought to you by Amazon Ads, helping you reach relevant audiences through streaming TV ad solutions.
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G
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F
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- [19:36]
B
You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5pm Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg business app or watch us live on YouTube.
- [19:50]
A
Leaders and one of the big topics this week that we've seen as world leaders are in town and also as it's climate NYC is everything and anything to do with artificial intelligence.
- [20:01]
B
I mean we can kind of stay away from headlines here every single day. Microsoft partnering with Open Air rival Anthropic to help power its workplace AI assistant. Anthropic founded by former OpenAI employees. Carol. It's one of the largest competitors to OpenAI, a key player in the industry.
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A
Yeah. Just coming on the heels of one of the big stories that we covered this week. Nvidia announcing it will invest as much as $100 billion in open AI to help with that build out of data centers. So there's a lot going on when it comes to AI. It's all about partnerships and we have a great guest to talk about that. Lane Dilg is for former head of strategic partnerships Global affairs at OpenAI. She's had a career in law, politics and she's also worked at the Department of Justice. I'm rushing but you have like this incredible public private background. So when you think about AI, I don't know, how do you make sense of just, it just feels frenetic, the amount of money, the amount of activity, the amount of headlines that come every day.
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D
Yes, there obviously is so much happening, so many big deals in the news and those big deals in the news do have real life implications for all of us. So incredible as you mentioned, to see, see the Nvidia and OpenAI deal showing that Nvidia will provide chips to OpenAI up to 10 gigawatts and also make an investment $100 billion, obviously shoring up OpenAI's credit and providing a real Runway for OpenAI. Those kinds of deals we are seeing almost weekly right now. You mentioned Microsoft and Anthropic as well. So a very, very competitive landscape and a landscape that is moving extremely quickly.
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B
It's kind of funny to hear about Microsoft partnering with Anthropic given that Microsoft is a huge investor in AI. What do you make of that? Like what's the world that we're living in when you have these strange bedfellows?
- [21:40]
D
Yes. I think, you know, I think everyone is watching sort of all of these different pieces from an adoption perspective. People are looking at how, how many different companies will individual companies work with? So do you want to work with one AI model? Do you want to or one AI model provider, do you want to work with many. Microsoft also has in house AI. They have the partnership with OpenAI. And now you see them within.
- [22:03]
B
Well, can you. We've had some folks come on our program and say, okay, there's been so much funding, there's been so much money chasing these companies. There are also those people who say we're kind of just going to wait until the dust settles because we think there could be this commodity issue when it comes to LLMs. What separates one LLM from another? What separates Claude from Chat GPT? And I fully were asking somebody who was at chat GPT. Yes, at OpenAI. So yes, that's, that's where this question is coming from.
- [22:32]
D
A great question though, because obviously now I use all of them to try to stay up to date on where everyone is. And I also speak with the different companies about sort of what their trajectory will be going forward. I do think the models are somewhat different just for users. They, they provide responses a little bit differently, they're friendly in different ways, they're useful in different ways. And so there's some personal preference. I do think that we will start to see differentiation in areas like material science, chemistry, biology as people really move into these more specific domains where different model providers lean in. Who they work with and how will become important in terms of what you can do to solve problems with the technology. And I think the other piece, as you see with the Nvidia OpenAI deal, we often say infrastructure is destiny. It is true that there is also this massive race for compute and that is because to continue the research and development, to continue to make the progress you need compute. And compute requires a lot of energy. So we don't know yet whether there will be differentiation there or not. But everyone racing to make sure they have the compute they need to continue development.
- [23:43]
A
You run your own advisory firm and you're dealing with, with kind of innovation and partnerships. Right. And working with other companies. But I want to go back to what Tim said. I mean, I think there was when the Nvidia deal came out that there was concerns that it was a sign of a bubble, that it's Nvidia partnering with OpenAI. Obviously it's the company Chachi beat so identified when it comes to AI at this point. But this idea that Nvidia needs a marketplace to keep buying its chips. So I'm just curious, I mean, at some point, I don't know, what are you hearing from companies as you talk to them? Are they a little cautious at all? Is there any nervousness about this incredible spend and this incredible build out?
- [24:23]
D
Yes, a great question. Obviously financial experts around the world asking many of these questions. I think, you know, we previously thought that Nvidia may not be able to supply enough. So interesting to now hear people say, well, they are, you know, trying to find a consumer a home for their gypsy.
- [24:40]
G
Yes, right.
- [24:40]
C
Yeah.
- [24:41]
D
So I think, you know, I think that conversation, but happening on both sides. You know, my own personal view is that we are not yet anywhere close to maxing out the demand for compute and chips. And when we are, then you may actually see that model development is stalling or something else. But I just don't think we're there right now.
- [25:01]
A
I am curious. When you are at OpenAI and we know you left a couple a few months ago, but now you have your own advisory firm, is the phone ringing off the hook of people saying, help me, I need to find this and what are they looking for?
- [25:13]
D
Yes. So it is true that people are looking for lots of answers. They're looking for answers to the macroeconomic questions. They're looking for answers to help them guide investments. But then teachers and health care providers are looking at, you know, what is the potential? How do I take care of my workforce and also take care of those I serve at the same time, what is the pace of adoption? I'm excited to be here with Bloomberg Philanthropies working on the Mayor's Challenge, which is a competition they run around the world for mayoral innovation for city services. And so many people in that space saying, where are the opportunities for innovation? And we're seeing such interesting proposals there as well.
- [25:54]
A
I just want to say I actually had a meeting with a giant company. I'm not going to say who it was.
- [25:59]
B
We've heard of them.
- [26:00]
A
Yeah, everybody's heard of them. But it was like we were talking about, they were asking me about what I'm, how I'm using AI. I was asking them and it's like we're all kind of fumbling our way through and we have courses that have come up at Bloomberg to kind of help us figure our way through this company, they're just kind of like somebody figures something out and they do a kind of a show and tell. But it's, it's interesting how we're trying to find our way through this.
- [26:21]
D
Yes. I've heard two CEOs at the Frontier Labs really say the pace of scientific progress on the AI side is much faster than the pace of implementation and adoption. It's hard. The are large institutions with lots of people. You have to actually figure out what is the right way for your company for Your school for your business. And that takes some time.
- [26:39]
B
You know, I use ChatGPT all the time, personally. I use it at work too. We have the paid version at work, but I have the free version on my phone. And when it tells me I can't use it anymore, I just go over and use Claude. How do you, how do you prevent that? Like, how do you get me to pay for it? Like, how do you monetize all the free users when so much computer is being used?
- [26:56]
D
Yeah, I think, you know, same with any product in a certain way, you know, you want yours to be the go to, you want yours to be the most useful, the one that you turn to to solve the problems that are most important to you. And I think that companies are competing in that and we'll see fits and starts. But you, do you get accustomed to one product or another?
- [27:15]
A
Will we be paying for it?
- [27:16]
B
Well, I mean, or is there going to be advertising?
- [27:19]
D
Yeah, so I think, you know, right now you can pay for different, different levels of access. I think that is meaningful both for individuals and for businesses. I use the paid accounts across all of the different companies, which may seem crazy, but I want to see where the capability really is. So I do think that is the monetization that you're seeing primarily, and I'm.
- [27:39]
B
Not a tax professional, but that's a business expense, I would imagine. So talk to your accountant.
- [27:43]
A
Yes. Taking notes. I do think though about the intersection of technology and politics. And I feel like every decision is made with a careful glance at the White House. So talk to me about that and how that might, I don't know, kind of impact the deals that are done and how they're done.
- [28:03]
D
Yes, absolutely. I think you see a lot of that in the infrastructure space. So if you look at the models, they, as we talked about, require compute, but compute also requires energy. And as we look at competition between the United States and China, I think people feel really good about our talent, they feel really good about our workforce, they feel really good about our innovation. But we do need to get more energy on the grid and we need to do that fast. And so I think you see this all of the above approach, but also disagreement over what is that all of the above approach. How does it work? Do things need to be grid connected or not? And most importantly, how do we make sure that consumers have the electricity they need at the prices they need while we power all of this AI?
- [28:43]
A
Well, is it ultimately going to be everybody, especially the hyperspace scalers, probably doing their own, like, energy Development on site, that kind of thing, or I think.
- [28:51]
D
You'Ll see a mix. Just like you see the mix in the financial deals. I think you'll see a mix both to hedge risk, but also because it'll be opportunistic. We need the energy as fast as we can get it.
- [28:59]
B
Hey, just want to end with what this does to the American workforce, the global workforce. Dario Amade over at Anthropic has been really outspoken about how this could just decimate white collar jobs. You agree?
- [29:11]
D
So I think there was a conference in San Francisco that people are watching just last week about what the different scenarios are. I think we don't know the answers yet. And so from a policy perspective, we need to be planning for multiple scenarios. It's critically important that we understand both the data of how are jobs moving, where the transition's happening, and also look at the social safety nets and other things to make sure that if there is dislocation, we're doing the reskilling, we're doing the training to get people, people into a place that is productive.
- [29:39]
B
You've seen the tech up close. You know what it can do. What keeps you up at night?
- [29:43]
D
What keeps me up at night is, you know, as always, it's the humans. It's our human potential, it's our ability to step into this technology and it's also what we can do with it for good or for ill. And I think that that's the space where I'd like to see the policy focused.
- [29:56]
A
Are you worried about the bad side of AI?
- [29:58]
D
I'm worried about humans using AI for bad purposes is what I worry about more. More than the doomers who are more concerned about what we would call alignment issues. I think the science on alignment is pretty strong and will continue to be strong and people will be alarmed if it's not. But the question of what can you do with the technology is a hard one. We are about to all get more powerful.
- [30:20]
B
That was Lane Dilg, former Head of Strategic Partnerships Global affairs at OpenAI. Again, we were broadcasting live this past week from the Bloomberg Philanthropies Global Forum at the Plaza Hotel. The event took place alongside the United Nations General assembly in New York, and it brought together heads of state, business leaders and more to address the world's most urgent challenges and opportunities. There were a lot of leaders there. We heard from Bill Gates, Ruth Porat of Alphabet, Jane Goodall was there, NBA Commissioner Adam Silver, Brookfield's Bruce Flatt and many more. Check out all of the interviews from the Bloomberg Philanthropies Global forum on the Bloomberg terminal or@bloomberg.com still ahead on Bloomberg.
- [30:58]
A
Businessweek, the European Build out that investors are eyeing when it comes to sustainable economic development and how to get those.
- [31:05]
B
Countries to come together to make it all happen. We do that with the lending arm of the European Union as well as the European Commissioner for International Partnerships. This is Bloomberg. This is the Bloomberg Business Week daily podcast. Listen live each weekday starting at 2pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg 11:30 this.
- [31:36]
A
Past week, Bloomberg Philanthropy's Global Forum took place alongside the UN General assembly in New York and alongside Climate Week NYC. Now the event brings together heads of state and business leaders to address the world's most urgent challenges and opportunities.
- [31:50]
B
Among those challenges and opportunities is global sustainable economic development. And that's where Yosef Sekela comes in. He's European Commissioner for International Partnerships. It's kind of exactly what it sounds like. He's charged with working with countries all over the world to partner on everything from infrastructure, finance, decarbonization, sustainable development and more. Welcome, thanks for joining us today.
- [32:10]
H
Thank you very much for the invitation.
- [32:11]
B
So your remit is big, it's global. How do you see this in the context of America first and the world in some cases turning more inward?
- [32:21]
H
Well, my experience is slightly different. I don't believe in zero sum games. I'm a former banker and my experience is that all the business which is not to a benefit of all involved parties does not have a usually long life. And basically I think Europe is the best proof because being built from scratch after the second World War for the cooperation the solidarity was basically one of the foundation of the success on the way to lifestyle superpower in average high salaries, highest living standards. This is not a coincidence that from 30 most developed countries based on the Human Development Index 20 are European ones. And this is basically also the narrative we want to promote partnership of equals, mutual benefit, strategic alliances which should help to create jobs, to create supply chains, to open the access to the world markets to less developed countries. Because this is about the value creation but this is also about the fair access to critical raw materials to more global security, to resilience.
- [33:47]
A
Commissioner Sekela, I am curious who is it easier to partner with China today or the United States?
- [33:53]
H
Well, I don't see for example Russia as economic competitor or rival because what they can offer is just bribes, weapons, propaganda and lies in that they are Good. China is basically plundering the partner countries. They are not investing in the future of the countries. They are interested to control the supply chain of the raw materials and to weaponize it. And this is not the way we want to go. And I had a very productive meetings here with you as representatives and also with the senior advisor, with the advisor to President Trump on Africa. And this is not about us against Europe. This is about collaboration of guardians of democracy in order to ensure fair supply chains and about basically access to the critical raw materials in order to not allow the authoritarian regimes to weaponize it.
- [35:12]
B
Your view on China really got my attention how you described it. Do countries that China has partnered with in the past and I'm thinking of the historic Belt and Road Initiative from the last decade and a half or so. Do they share your view that they do. They feel like China plundered them subsequently?
- [35:31]
H
I think the attention to the difference between promises and deliveries is increasing in the countries. And since I took over the responsibility for Global Gateway, the European Investment Sustainable Investment Initiative, I am traveling, I am traveling a lot and to New York. I arrived from Pacific and from Africa, from Namibia. And yeah, sometimes I'm calling it Belt and Ring Trap because our attitude is to empower, not to impose, not to entrap. And there are simply examples and Namibia is the best example where Europe is investing in education, in supply chains, in the economy of the future, in hydrogen production, in decarbonized direct reduced iron which can be then used for a clean production of high quality steel, for example, in Europe, when you take into account the structure of the trade between Europe and Namibia is very much diverse and that there is a balance positive in favor of Namibia. What is China doing? China is investing the road to the mines and buying purely unprocessed raw materials and shipping them and sending them to China. Meanwhile, is China controlling 70% of the raw materials. And we have in Europe very negative experience with dependencies. And the bill for basically get rid of the dependence on Russian fossil fuels was extremely high and extremely painful. But we learned what does it mean if your rival is weaponizing the supplies of the fossil fuel or critical raw materials against you.
- [37:37]
B
Our thanks to Yosef Sekela, European Commissioner for International Partnerships.
- [37:41]
A
Now, along with the UN General assembly this past week, as we said, it was also Climate Week NYC and Mother Earth was a big topic for President Trump during his UN speech calling climate change, quote, the greatest con job ever perpetrated on the world. While also criticizing renewable energy and praising coal.
- [37:59]
B
The President also warning UN Member Countries saying, quote, unquote, if you don't get away from this green scam, your country is going to fail. That could spell a major blow to global climate change initiatives. Our next guest is still hoping to deliver over 1 trillion euros in green investment by 2030. In his role, Amboise Fiot is vice president of the European Investment Bank. It's the lending arm of the European Union.
- [38:24]
I
One of the big projects of the European Union is climate neutrality by 2050.
- [38:30]
D
Right.
- [38:30]
I
And we have put in place to support this objective a policy that is our climate strategy that has a few targets, including having more than 50% of what we do in climate and environment. This is a target that we have reached. We are actually closer to 60%. We are lending around 100 billion euros per year. So it's a big, big thing for us in terms of financing for renewable energy projects, energy efficiency, clean transportation, innovation in climate. And our goal is to continue and stay the course because we think this is also something that is good for maintaining competitiveness in Europe. And we are going to present to our board our climate strategy for the next five years that will basically continue the pace that we have chosen since five years and link that to the competitiveness of the European Union.
- [39:33]
A
So even with a narrative in some parts of the world that are maybe pushing back against climate change and green initiatives, sustainable initiatives, nothing's changed for you guys?
- [39:46]
I
No, for us, I think nothing changes in terms of the path and the objective. What we try also to do is to listen to what our stakeholders tell us. And for example, some of the SMEs tell us that the reporting obligations are very, very complicated. So these kind of things that we are going to try also to address in our strategy, but the key objectives, we are going to keep them.
- [40:09]
B
Can you expand on the idea of competitive advantage a little more? Because. Because here in the United States, as the president, he said, if you don't get away from this green scam, your country is going to fail. He essentially thinks that it's a waste of money to actually invest in green initiatives or do sustainable development. That's my takeaway. What's the competitive advantage that you believe the European Union Union has if it invests in this way?
- [40:32]
I
I would say there are two things. And when you look at energy, we have invested 31 billion billion euros in 24 in energy projects. 31 billion euros is a lot of money in offshore wind farms, in grids, in a lot of also solar and nuclear, and then the number of projects that are related to energy, the things that we see is one that actually the competitiveness of the cost of energy is going down for many of these renewable energy, and it's becoming competitive. And the second thing is when you look at energy, you also need to look at your independence. And what we have learned since 22, and that's why we have sped up actually the implementation of our energy projects is that if you want to be independent from Russia, you need to have more and more energy independence. Energy independence for a continent that has little energy itself means renewable energy and other kind of energies.
- [41:36]
A
How are you thinking about. And I know the war, of course, between Russia and Ukraine is not over still, but thinking about what might need to be done in terms of helping Ukraine going forward, the financing demands and needs that will be to build back all that's been destroyed.
- [41:52]
I
Yeah, well, actually, it is absolutely clear that the needs are huge in Ukraine. And from the beginning of the war, we have been supporting Ukraine. Actually, even the week after the war, we have redone some of our loans to be able to send some financing to the Ukrainian government. Since the beginning of the war, we have financed 4 billion euros of projects in Ukraine. And that is mostly in projects that have, you know, reconstruction of hospital, working with municipalities, train capabilities. And actually we have just opened a new line in Ukraine that where the, you know, the tracks of the. Of the trains will be the same as in Europe. It wasn't the case before you had between Ukraine and Slovakia. In this case, you had to change trains at the border. Now you don't.
- [42:58]
A
So as you rebuild, you do it.
- [42:59]
I
Yeah, exactly.
- [43:00]
G
More smartly.
- [43:01]
I
And this is also on the way for accession of Ukraine to the European Union. And we have done something that is not necessarily consistent with our climate strategy, but that we have done for Ukraine. We have just approved a loan that is going to allow Ukraine to finance its gas storage for the winter because, you know, that's an emergency.
- [43:23]
B
You're here meeting with leaders from all over the world. If there's a message that you have for American leaders and what you want from American leaders right now, what is it?
- [43:30]
I
The thing that I like here is to be able to meet with a lot of people from very various backgrounds and, and original cultures. And that's what makes this meeting so interesting. I mean, the transatlantic relationship is so important that we need to do everything to make us as good partners as possible.
- [43:54]
B
That was Amboise Fayo, vice president of the European Investment Bank.
- [43:58]
A
And that wraps up our first hour of the weekend edition of Bloomberg Business Week from Bloomberg Radio. Coming up in the next 60 minutes, more voices among the European leadership, including the Prime Minister of Spain, in conversation with Bloomberg News Editor in Chief John Micklethwait.
- [44:12]
B
Plus a former climate high level champion on how COP will work in the face of American climate hostility.
- [44:18]
A
As our coverage of the Bloomberg Philanthropy's Global Forum continues. This is Bloomberg Businessweek. I'm Carol Massar.
- [44:24]
B
And I'm Tim Stanwick. Stay with us. More from Bloomberg Business Week Daily coming up after this.
- [44:33]
F
This is the Small Business Minute brought to you by Amazon Ads. I'm Lisa Mateo. Credit card perks offered to small business customers include cash back and travel rewards, but the feature many business owners find the most attractive is a high credit limit. Nearly half of all the small and medium sized businesses surveyed by payments.com and payments processor i2b said so, but the smaller and younger the business, the more likely higher credit limits were at the top of the priority list. The survey also found small business owners using business and personal credit cards to finance their operations, and nearly half of the smaller and younger businesses were carrying card balances over each month. Payments.com and i2b say the survey speaks to the need for alternative credit solutions tailored to the needs of small businesses. That was the Small Business Minute brought to you by Amazon Ads helping you reach relevant audiences through streaming TV ads Solutions.
- [45:32]
G
These days, AI can help you write emails, summarize long meetings, and even create presentations that impress your most demanding customer.
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But how about industrial AI that uses data and simulation to boost productivity on the shop floor?
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AI tools that help you understand machine language? AI that helps you grow your business? With Siemens Accelerator, you can use AI.
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Plus, you can find the right AI partner without having to search through hundreds of providers.
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G
That's AI for real from the global market leader in industrial AI, Siemens Xcelerator. Learn more at Siemens US Accelerator so.
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B
Have you heard the story about the prescription plan? With savings automatically built in, it's where a family of any size can feel confident the cost of their medication won't hold them back. Go to CMK Co Stories to learn how CBS Caremark helps members save just by being members. That's CMK Co Stories. You're listening to the Bloomberg Business Week daily Podcast. Catch us live weekday afternoons from 2 to 5pm Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube to plenty ahead.
- [46:55]
A
In our second hour of the weekend edition of Bloomberg Businessweek. We are highlighting conversations from this past week at the Bloomberg Philanthropies Global Forum held in New York City. Those conversations include a former UN climate high level champion on mobilizing stronger and more ambitious climate actions amid a U.S. pullback.
- [47:13]
B
Plus how Canada is tackling the challenges and opportunities in sustainable economic development.
- [47:19]
A
First up this hour, as you know, more than one hundred and forty world leaders and senior officials and delegations were in town this past week for the United Nations General Assembly.
- [47:28]
B
Among them was Pedro Sanchez, the Prime Minister of Spain. He sat down for a conversation with Bloomberg News editor in chief John Micklethwait. And their conversation touched on everything from Donald Trump, Spain's housing crisis and yes, his reelection efforts.
- [47:43]
H
Prime Minister, Spain, thank you for talking to Bloomberg. It's a pleasure to have you.
- [47:47]
E
It's a pleasure.
- [47:48]
H
I just looked out of all Europe's leaders, you are the one who seems most prepared to disagree with President Trump. You champion the cause of recognizing Palestine. You push, you pushed against the 5% limit on defence spending. You've also been very close to China. I mean when you heard his speech yesterday which seemed to depict Europe as kind of hellhole, did you think that was, do you think that was aimed at you?
- [48:16]
E
Well, I think I'm respectfully disagree with President Trump statement because you know, he took migration and climate change as I would say the major challenges that we have to fight against for. And I said, well look, if you took the experience of Spain is the contrary. So thanks to claim to these green policies we have dropped the electricity, the prices since 2017 till now by 50%. So that enables us to gain competitiveness. And thanks to that we are witnessing this extraordinary outcome of, of the economic growth in Spain. We represent 30% of the total economic growth of the European Union. And when it comes to migration, in the last seven years we have received 2 million migration migrants while at the same time we have dropped by 40% the unemployment rate. So all in all, what I'm trying to say is that green transition and migration when it comes on regular basis are positive for the economic development of a country.
- [49:30]
H
Do you think your fellow leaders in Europe could be braver about making those comments?
- [49:35]
E
I think that we need to keep transatlantic bond and to strengthen that transatlantic bond, it is indeed true that we need to combine it with other policies such as for instance trade diversification. That is why we are, we've been very vocal in reaching this agreement between the European Union and mercosur, which it will be definitely a game changer in, in our economic ties with other regions of the world. And second, what we do, what we need to do within the European Union is to do our homework, as the former central banker Mario Draghi always remind us. And that means that we need to deepen single market, that we need to review our competition policy in order to scale up big companies in Europe and try to be, you know, as good, as competitive as global corporations are in the US and other and other parts of the world.
- [50:34]
H
It's very interesting though. You look at what's happened, your economy has grown very well, 2.7%. You look at what's happening in other countries on the periphery, like Greece, there is a very interesting thing. A few years ago we were used to saying the periphery is the problem and the core is great. Now it's the other way around. France, Germany, Britain, barely growing at all. Do you think it is now the center of Europe that is the problem in the economy?
- [50:59]
E
No, not at all. I mean, Germany is a big country, big economy, also France, and we always expect a positive, let's say dynamic in their economies. But it is indeed true that from the south we can contribute to the economic growth of the European Union. So for instance, when you see that 60% of the electricity generation in Spain comes from renewable sources, that means that we have a potentiality that we can contribute to the strategic autonomy exporting that, don't you?
- [51:37]
H
To France where they.
- [51:38]
E
Yeah, well, we need to, to interconnect better our grids. But we are, we're trying to convince our friends in France to, to do so. So. So all in all, what I'm trying to say is that if you see the economic figures of the south and Europe, especially Spain, that represent, and I said before, 30% of the total economic outcome of economic outcome of the European Union. That means that we have achieved many reforms that were demanded by the European Commission over the last years. So we have achieved to reform our labour market, our pension system, our educational system and also our energy policy and digitalization along with the contribution of migration. So it is true that these pillars also show that the economic background or pillars of space are quite solid if you compare it to previous periods, such as the one before the financial crisis.
- [52:41]
H
Selfish question from the point of view of all the foreign investors. Looking at this, many people want to invest in Spain for all the reasons you said, but you want to introduce 100% tax on them if they want to buy a house there, a second home?
- [52:54]
E
No, not at all, not at all. What we, what we need to face is a real challenge that I think that according to across Europe and also in England, in the uk you're suffering especially with youth. But not only youth, which is the lack of or the impossibility to access to a house or to emancipate. In the case of our youth, what we did is for all British people or European people that want to buy a house for living. They won't pay taxes. Yeah, but this is the point. We need also to understand that we need to solve the problem of housing that we have in Spain. But all in all, if you see now the figures of real estate sector and how we are speeding the process of construction in Spain is quite amazing. Nowadays we have increased by 63% construction of how, let's say public housing, whilst the private sector has increased like 13% during the last year.
- [54:05]
H
Now see a bit about the relationship between the economy and politics. The economy seems to be going very well for you in politics. It's harder. Your party is behind the party to popular. You also got vox coming up, this much more right wing outfit and in the current polls you would, you would lose the election. What do you think the problem is? You've got a good economy unlike most other European prime ministers and yet you're still behind.
- [54:30]
E
Polls are polls. I mean of course you have to, to. To look into it, you have to see. But what I am defending is that unfortunately we are seeing not only in Spain, but across Europe, Europe, a political collapse of the center right traditional parties, which by the way, it started after the financial crisis with the failure of governments, with all this rhetoric of austerity banking and the financial rescue that we had to pay with taxes all around Europe. And, and what you see now from the center right is that they are copying not only the way of doing politics of far right, but also the contents. So you see now that they are like identifying migration with insecurity, which is a fake. It is not true. And by the way, as I said before, when you see the figures in Spain you can see that we had have the contribution of migration. But at the same time we're reducing unemployment rates in Spain and there are sectors such as construction, agro industry or social services or tourism, which in Spain are quite important, where up to 20, 30% of the total workers comes from different countries and not Spain. So what we, what we need to do is to face that we need migration. But for that migration what we need to open is a path of regular migration. And this is what we are doing with many countries in Latin America. Also with the US administration, with the previous administration, we reached a very interesting program in order to have this circular Migration coming from the US and of course some countries in North Africa. But all in all, the contribution of migration to the economic growth in Spain is quite, quite positive.
- [56:33]
H
Sounds as if you're kind of, you're bridling for that fight. So you will, you will definitely lead the Socialists in 2027 into the election.
- [56:40]
E
Yeah, I will do it for sure. This is something that I have already spoken with my family and with my party and if they allow me, I'm confident that we can repeat a majority and, and to keep the work ahead. But let me add coming back to migration, that the dilemma that all Western societies we're facing is whether we open up and grow or we close off and shrink. This is the real dilemma that we need to face. So the challenges that we have with within the European societies is how do we integrate this migration?
- [57:19]
H
Do you think it's easier in Spain because you've got a lot of people from Latin America where everyone speaks the same language? That's at least part of the argument why you might have been better.
- [57:28]
E
So when you listen to some centre right parties and the far right, they are saying we need to expel all these migrants coming to our. Okay, so what we do with demographics, because either you have, how do you say, family policies, yes, plus migration. But they don't propose anything in these two policies. No migrants and less welfare state and therefore less family policies. And that means social services, health care, Social Security, and so on and so forth. So what I'm trying to say is that if we don't have this contribution of migration, what we will face in the coming years in Europe is that we have stagnation, we won't have the capacity to grow and therefore there will be more cuts in our welfare state. So, so this is something that we need to explain to our citizens that if we articulate a positive migration policy, that will be for the good of the Europeans and the Western societies. So just to give you a figure, 94% of the total migrants that are living nowadays in Spain came from regular SAY systems and they are, they came on legal basis. So we're talking about only 6%. And this is, this is the reality. So I think that we need to fight and to give positive, let's say, message about the contribution of migration to our societies and to our prosperity.
- [59:20]
B
That was Pedro Sanchez, Prime Minister of Spain, with Bloomberg News editor in chief John Micklethwait.
- [59:25]
A
You're listening to Bloomberg Business Week. Coming up, more on global efforts to stem climate change with someone who has been a key player when it comes to United nations climate efforts.
- [59:34]
B
This is Bloomberg. This is the Bloomberg Business Week daily podcast. Listen live each weekday starting at 2pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa, play the Bloomberg 11:30. Another UN official stated in 1989 that within a decade entire nations could be.
- [60:00]
J
Wiped off the map by global warming.
- [60:04]
H
Not happening.
- [60:05]
B
You know it used to be global cooling.
- [60:07]
J
Now they could just call it climate change because that way they can't miss.
- [60:10]
B
It's the greatest con job ever perpetrated on the world.
- [60:14]
J
In my opinion.
- [60:15]
A
If you don't get away from this.
- [60:16]
H
Green scam, your country is going to.
- [60:19]
A
That was President Trump in his address to the United nations this past week. As we mentioned earlier, the President was very critical of climate change. Now keep in mind, not all global leaders in town felt that way. We talked to a lot of them as many attended more than a thousand events about actions and investments in renewable sources of energy and ways to tackle the climate crisis.
- [60:39]
B
One of those was Mahmoud Mohildeen. He's UN Climate Change High Level Champion for COP27 that was held back in 2022. He's also former World Bank Senior Vice President and former Minister of Investment of Egypt. Mahmoud joined us from the Bloomberg Philanthropies Global Forum.
- [60:57]
J
Well, I see it around the world, especially in many of the emerging markets, countries of the global south, in Europe, in Latin America. It's moving, progressing despite the political statements and political hurdles because people becoming today more affordable, comparing what you can produce of electricity from renewables compared to fossil fuel. So it makes sense just to compare the cost. So people are progressing towards decarbonisation and investing in renewables because it's much more affordable and cost effective.
- [61:32]
B
So the market is, the market is making this decision for countries.
- [61:35]
J
Absolutely. And a few weeks back, what gives us hope? Based on some interesting big read article from the Financial Times that what gives us hope is technology, technology, innovation, what we were producing at multiple of costs 10 years ago. Each time we try to cite a figure we get corrected because of the lowering of cost when it comes to electricity. I wouldn't dare saying that about the cost of adaptation. So as you know, climate change had those two wings, the mitigation part or investing in decarbonisation, renewables, that's becoming more affordable. But when it comes to adapting countries, societies and economies to the climate change and its risk here we need to mobilize more public finance because the cost Return is not really as straightforward when it comes to commercial market basis compared to decarbonisation.
- [62:31]
A
Well, one thing I want to ask you. So there was President Trump an hour addressed to the UN General assembly out there. I was there, you were there. And some very strong words when it came to climate change. I am curious, when you have conversations with members of the administration, are they as opposed in terms of US Strategy? What they talk about US strategy being opposed or not supportive of policies to stem climate change?
- [62:59]
J
Members of the US administration follow their.
- [63:02]
A
Leader and their I was curious if backdoor conversations.
- [63:06]
J
But we see as well some practical pragmatic statements, like a recent statement that came out comparing investing in renewables in the form of solar versus wind farms. So there was a kind of a statement that tells us, well, you can invest better in solar. And then there is a great deal of investments as well in innovation when it comes to batteries, storage and all of that. So we see some opportunistic approaches and more pragmatic approaches, but not really to oppose the strong statements coming from their boss.
- [63:37]
A
Can I ask you in terms of COP this year, I'm just curious how COP will work this year in such an active kind of climate hostility that we see from the United States. States. Well, is that a problem not having?
- [63:52]
J
Of course. Of course it is. For the biggest economy in the world with the great deal of dynamism, inventions, innovation that could really help not just the United States, but the rest of the world. We are missing a lot. But having said that, two things. Finance for development conference in Seville that took place few weeks ago. It was fantastic, it was successful, it delivered, it was all the world minus one. So that gives hope. The second thing, the preparation for COP 30 when I was in Rio and their Climate Action Week, great deal of dynamics, participation, not just at the leaders level, but community, private sector, civil society. So it is happening. So again, the world minus one, you've.
- [64:34]
B
Spent a lot of time thinking about emerging and developing economies. And here in the us, with the dismantling of usaid, with the pullback in foreign aid, this narrative has seemed to emerge which is basically like why should we be sending money to countries outside of the United States when there are people here in the US that need that money. What would you say to that?
- [64:56]
J
Well, there is an evolution of thinking at the beginning of start of the aid, there was the issue of consideration of others and there is some sort of altruistic behavior that we need to, to help the rest of the world, the countries, the rich economies. And there are some Elements as well of compensation, especially from the colonial powers that well, we exploited the resources of these poor countries. So let's help them. And then it came as well, issues related. Let's do the help because we will benefit more even if a kind of self interest will like stability. We like bigger markets, we like people to follow the same kind of standards and we need to eliminate forced migration. So there was a kind of mix of ideas between positive and negative. But. But then we are in a new world now and I think it's very much the end of official development assistance as we know it.
- [65:50]
B
You do?
- [65:51]
J
Yes, of course. Not just from USAID and it's disappearance suddenly, but actually from other sources as well.
- [65:59]
B
So what does the world look like, particularly the developing world in this new era?
- [66:03]
J
It depends really where you are addressing the issue. There are many countries, including my brothers, I'm an African, I'm an Egyptian, my brother's from South Sudan for instance, or Burundi. They are more dependent on external help and support when it comes to their budgets. Other countries would use aid as a kind of catalytic help to help in bringing the private sector elements of innovation, blended finance. So they will survive without, without aid. But other countries that are more dependent, especially in humanitarian work, human development, they need really to get new sources, including from philanthropies.
- [66:40]
B
Would you argue that there is a soft power element still to this as well, that there is a benefit for. And look, I think this was an example used in a New York Times article months ago.
- [66:51]
J
Yeah, I've seen that one.
- [66:53]
B
Like, you know, a bag of rice shows up, it has an American flag on it.
- [66:56]
H
Yeah.
- [66:57]
B
Somebody in some far flung place sees that and says, I have a different view of an America, of America and an American as a result, it helped.
- [67:04]
J
Promoting American values, American culture. So that was positive to, to the United States in this case. But you can really see aid in different ways as well from the recipient countries. If aid is basically prioritizing what the nationals and the communities are pushing for and hoping for, this is a good thing. If it is a catalyst for transformation, it's a great thing. But if it is crowding out public finance, if it is crowding out private sector, then you have other considerations. So there could be some sort of blessings in disguise when we are addressing these kind of changes.
- [67:40]
A
China has been in the past certainly very aggressive when it comes to providing funding, especially for the developing world. I just do wonder, in an absence of other developed nations helping out the developing world, does China step up its efforts and is that a problem?
- [67:55]
J
Yes, like the old rules of nature and physics, when there is a gap, there will be our vacuum. Find somebody trying to help you. We see the role of China's rising, the role of many of the middle powers rising, the role of regional powers is rising as well. So and role of foundations, philanthropies, not just the big names that we are familiar with, but some of the smaller ones coming from, from the regions. And this comes associated with, with benefits, including soft power. The issue that you mentioned, or you cannot really draw a line now between what's aid and what's promotion for investment or promotion for exports. So there will be some serious spillovers given this kind of sudden cut.
- [68:41]
A
Is the money getting to the emerging world that needs it in terms of certainly when it comes to climate initiatives where they are so vulnerable?
- [68:48]
J
No, no, no. The development finance system and the climate finance system. I described it before we were preparing for COP27 and after that has been insufficient because there is a widening gap, inefficient because it takes forever until you mobilize funds and unfair because of cost. And we still suffer from the same problems now where perhaps better public private partnerships with the support of philanthropies, we can mobilize funds in a better way.
- [69:17]
B
That was Mahmoud Mohildeen, UN climate change high level champion for COP27. That was back in 2022.
- [69:24]
A
You know, I think what was interesting, Tim, as we did these conversations with global leaders and you know, we talk about climate so much on Bloomberg Business Week daily. But I think what was fascinating is that global leaders, they're moving ahead with their initiatives. I felt like we heard that very much from the European contingencies. But I also know in having some offline conversations with companies that they too are not thinking necessarily in presidential terms when it comes to strategy and policies and about their impact on the climate. And so they, they're thinking much more longer term. So interesting to hear that the spend and the activity is still moving on. And a lot of it has to do with, I feel like another message this past week was the idea that renewables, they make sense now, right? In terms of financially what they cost or how, how to go about them.
- [70:11]
B
So we heard that over and over again. And that was pretty surprising to me because what, as I understand it, the investment in these renewables in the beginning can be pretty high. But some of the European leaders, Carol, told us that, hey, this is actually the market taking care of itself here. These energy sources for us at least are on par or cheaper than what we used to get. So this is the way we are moving forward. The question that I have for the United States is are we going to be left behind if the vision at the top changes? Let's say the next administration wants to invest in net zero or wants to invest in renewables, Are we going to be left behind? Certainly the idea of nuclear is something that President Trump has talked about a lot. But up till now, Carol, we know that these projects take a very, very long time. They're very expensive up front and the US has not built very many new reactors in the last few years.
- [71:06]
A
Right. And we're going to find out how important it is to have the government support with its regulatory business initiatives so that the private sector can go about and developing all of this. It brings to mind there was an incredible story on the Bloomberg this past week, an exclusive, and it talked about venture capitalists from Western firms are starting to say out loud what they've suspected for a while and that is China's dominance has left key sectors in the west uninvestable. And they visited factories, they spoke with startup investors in China. And what's interesting is the VC's plan to avoid allocating funds to Western startups that cannot compete with Chinese peers, with some already halting investments in Western battery cell manufacturers and looking to collaborate with Chinese firms. But I about things like solar panels and renewables where China has been spending EVs right. Big time and many would say are definitely ahead of the U.S. here.
- [72:05]
J
Yeah.
- [72:05]
B
Don't forget the reality is China is the world's largest source of carbon emissions, but at the same time it's also the strongest motor guiding the planet to a low carbon future. So the relationship that the United States has with China right now, the fact that we need certain materials or certain things things in order to have renewables in the world come from China. So yeah, this is a great story on the Bloomberg Terminal written by Alastair Marsh. Do check it out if you have the time.
- [72:30]
A
Dillahead on Bloomberg businessweek, the CEO of Canada's bilateral development financial institution as our coverage from this week's Bloomberg Philanthropies Global Forum continues.
- [72:40]
B
This is Bloomberg.
- [72:48]
F
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- [75:09]
A
Carol Massar along with Tim Stanwick, we are here at Bloomberg Philanthropy's Global Forum. We're going to continue with some great conversations from this event.
- [75:16]
B
Yeah. The event brings together heads of state, business leaders to address the world's most urgent challenges and opportunities. Among those challenges and opportunities is sustainable economic development. And that's where Laurie Kerr comes in. She's the chief Executive officer of Fintev Canada. It's Canada's bilateral development finance institution. She joins us on set here at the Plaza Hotel. How are you?
- [75:35]
G
I'm great. It's really great to be here. Thanks so much for having me.
- [75:37]
B
Nice, Gabby, good to have you here. I feel like our conversation this year would be a lot different than our conversation last year if we were to have that. We're going to get to that in a minute. You invest in Africa, Latin America, the Caribbean, in a world that many would argue is turning inward. How do you convince Canadians that what you're doing is in their best interest?
- [75:55]
G
Well, I mean, if I quote some of the recent speakings of our own Prime Minister, he certainly recognizes that when developing countries prosper, Canada prospers as well. It's a time to really lean into global partnerships to build resilience and global economic growth.
- [76:15]
A
How do you prioritize how to do that? Because I'm sure there's a lot of folks saying we need help.
- [76:20]
G
Absolutely. And quite honestly, like the demand is limitless for, for what Fintev Canada offers and other bilateral development finance institutions. So how we approach our financing and investment decisions is of course we have to have commercial sustainability. That's what we're going to. We want to have vibrant markets and we also look through three impact lenses. We have three impact lenses through which we work that informs all of our financing and investment decisions. Climate and nature action, gender equality and local market development has to check on.
- [76:48]
A
All of those in order for it to happen or not all of them.
- [76:50]
G
Because different types of investments in financing opportunities will address one or more of them. We obviously look to try and have positive contribution across each of those. But not everything ticks every box, so to speak.
- [77:04]
B
I feel like in this administration, in the environment that we're in in the United States, those, those boxes would not exist under this current administration. Does that, how do you think about that?
- [77:15]
G
Well, it's again, it's a real wonderful opportunity for Canada to, to show global leadership. And again, when developing countries prosper, Canada prospers and the world prospers. So it's an opportunity for us to continue with, looking at having impact in the markets that we serve.
- [77:28]
B
So with the US pulling back on foreign aid, with the US dismantling usaid, which certainly is controversial here in this country, as I'm sure you're aware. Does it, does it mean more of an opportunity for Canada or net net, does it hurt Canada and does it hurt the world in the long run?
- [77:44]
G
Well, I think certainly there's a lot of hugely, hugely negative impacts from a huge amount of the age aid bathtub sort of a plug being pulled, so to speak. But we have to look at that as an opportunity. Right. As I mentioned when we just started that, you know, demand for development finance, you know, is steep, but now it's really infinite because the US has traditionally played such a very big role in development aid and in development finance. So in a way it's a tremendous opportunity for countries like Canada and like minded countries to lean in.
- [78:17]
A
Laurie, I'm always interested in the specifics of things so Talk to us about some things that where there have been investments made and what's the outcome?
- [78:24]
G
Yeah, absolutely. So let me give you one example. So we were established in 2018, so we're the youngest bilateral development finance institution. And one of our very first investments is in a company called Climate Investor 1, and they're supporting energy transition across Africa, across Asia and across Latin America. So in 2018, we made a $20 million equity investment and now they've been able to raise $800 million. 80% of that is dispersed across 16 renewable energy projects. Six of them are already in operation. So that's renewable energy on grids, that's diversification of energy matrices, that's supporting local economic and local economic growth, so really having a positive impact. So they've been a really great example of how using public resources through development finance can really mobilize private capital and show that commercial viability and positive impact on climate can go hand in hand.
- [79:16]
B
We have been speaking about the potential economic effects of a pullback in aid by the United States and other countries filling that gap. But as we, we just heard just moments ago, we were speaking with Mahmoud Mohilden who basically said the. The era of developing countries being helped by other countries is over, in his view. Do you agree with him?
- [79:41]
G
Interesting. So what I would say it's definitely a repositioning.
- [79:46]
D
Right.
- [79:46]
G
I think we've, for the last 15, 20 years, it's been an era and the era is changing for sure. So there's disruption in this system again. I do think that there are many countries that are still looking to play their part, believe that there is a role, that Canada believes there is a role for Canada to play in development. So it's a reordering, it's a reawakening and it's much more about partnership, I think, going forward.
- [80:09]
B
Do you think about it from an immigration perspective at all? The idea that if you are able to improve conditions in other countries, the people who live in those countries will not feel forced migration?
- [80:22]
G
Absolutely. I think, you know, Canada is differently situated than many of our European friends and partners in terms of the immigration issue. But certainly, you know, one of the value added of supporting local market growth and local market development through the private sector is providing jobs. When you provide jobs, you provide incomes. When you provide incomes, you have a growing middle class. When you have a growing middle class, you actually provide export opportunities for countries like Canada. When you provide good jobs, people are happy to stay at home and work and thrive in those local economies. So there's. It's a reinforcing benefit, let's say, of supporting emerging markets.
- [80:57]
A
What's been the biggest impact on your world as a result of what I would say is a conflicted relationship between the US and Canada now, which is kind of amazing to kind of get your head around to anybody who's, you know, studied trade or history, who'd have thought? But this is where we are a little bit today. But what has been the impact on your world because of it?
- [81:16]
G
Yeah. So in the development finance world it's again, it's been a huge disruption. I mean the US has been such an enormous player in development finance, as I said earlier. So we're all having to reposition ourselves. It's providing a lot more opportunity and an impetus really for collaboration amongst the DFI community. So the bilateral DFI sides, we're a humble, but we're really a mighty bunch and we really need to be supercharged. We co finance and we co invest sort of as a matter of course. We're again a very collegial party.
- [81:44]
A
Well, who else is stepping up with you and you feel like really kind of. All right, so if the US isn't going to be so active in it, what other, you know, country or so on and so forth that are working more closely with you?
- [81:55]
G
Yeah, so we work a lot with so the bilateral. So for example with Proparco in France, with British International Invest in the uk, with FMO in the Netherlands, with DEG in Germany. So I mean there's a number of the European development finance institutions that we work with. We also do co finance with the ifc. And in fact just this week we're really happy to be closing on $125 million worth of transactions to two banks in Central America, Banco Industrial in Guatemala. So we're providing a $75 million loan. Guatemala is one of the most climate vulnerable countries in Central America. Use of proceeds entirely for climate finance. So climate smart agriculture and green buildings. And then the other transaction is $50 million to Bangladesh in Honduras and that's one of the poorest countries in Central America there. We're also supporting climate finance, renewable energy, water and sanitation as well as small and medium sized enterprises. Micro and small and medium sized enterprises and women owned and women led. Micro and small.
- [82:57]
A
I mean I always think about all the micro lending and so on stuff you do for women. Right. And the impact that it has on a family in particular.
- [83:06]
B
How do you make sure that the money is used efficiently? And you know, there were so many stories at least with U.S. money that went out where you'd find that, okay, well, grants that went to certain organizations were necessarily, necessarily used in the most efficient way or even used for what they were supposed to be used for. How do you make sure that there's not sort of a.
- [83:26]
D
Fraud?
- [83:27]
B
Yeah, I didn't want to say fraud. I just want to say there's somebody who sort of takes more than they're supposed to.
- [83:33]
G
Sure. So I mean we're, we're in the commercial financing business. Right. We provide financing and investment. We have a higher risk appetite than commercial capital. But you know, again, we want to provide, we want to support commercially viable solutions. Part of the impact framework that we as development finance institutions bring to the fore is sort of the rigor and vigor around the impact and the reporting. So, you know, we do go in and we have the measures and the metrics to actually be on the ground and make sure that we're getting the information back, the data back. We go out and verify that. So again, it's the, it's the depth around measurement in impact evaluation and reporting that makes us thrive and allows us to actually have impacts in the markets that we serve.
- [84:14]
B
Our thanks to Lori Kerr, CEO of FinDev Canada. It's Canada's bilateral development finance institution.
- [84:21]
A
Hey, before we wrap up and I highly recommend you check out a bunch of stories at the Bloomberg and@Bloomberg.com because our whole team, our global team was in town and reporting out everything that was coming from the UN General assembly and Climate Week and one other stories we wanted to bring to your attention because when we talk about climate change and the environment, you got to think about China. It's the world's largest polluter and it did set a target to cut economy wide net greenhouse gas emissions by 7 to 10% over the next decade. It's a strategy that's seen as too modest to put the nation on a path to net zero and galvanize global climate action. When you look at the big countries, the big polluters, like what they do, it matters.
- [85:03]
B
The promised reduction from China's peak levels follows President Xi Jinping's pledge that was back in April to pursue more stringent curbs and to set policies that cover the entire economy. Addressing pollutants beyond carbon dioxide. Now, Carol, it follows a tradition of Chinese leaders who've set relatively modest climate targets only to surpass them later.
- [85:24]
A
Yeah, and you know, so it's interesting, right? And we've gotta just think about the world and the connections here. I will say the European Union's climate commissioner did say that China's latest goals were met with criticism, calling the level of ambition clearly disappointing and saying it makes reaching the world's climate goals significantly more challenging.
- [85:43]
B
Well, I mean, it's a big deal that China's talking about this.
- [85:45]
A
Well, that's my other big tech takeaway with everything going on in the world. And I kind of compared to last year where we were head of a big US Election and conversations were different that climate change was talked about a lot. And that wraps up our weekend edition of Bloomberg Business Week from Bloomberg Radio. Of course, our highlights from this past week's Bloomberg Philanthropies Global Forum. You can catch all the conversations from the event on the Bloomberg and@Bloomberg.com Thank you so much for joining us.
- [86:12]
B
Be sure to tune in to Bloomberg Businessweek Daily Monday through Friday. It starts at 2pm Wall Street Time on Bloomberg TV, Bloomberg Radio and on Sirius XM Channel 121. You can also listen to us on Apple CarPlay and Android Auto Free in the Apple App Store or on Google Play.
- [86:25]
A
You can also watch our daily broadcast on YouTube. Just search Bloomberg Podcasts we're simulcast on Bloomberg Originals, available at bloomberg.com originals and streaming platforms including Roku, Amazon, Fire TV, Samsung TV and more.
- [86:38]
B
Find our Bloomberg Businessweek Daily podcast at bloomberg.com, apple or wherever you get your podcasts and the latest edition of the magazine. It's available on YouTube newsstands now at bloomberg.com and always on the Bloomberg Terminal. I'm Tim Stanovec.
- [86:50]
A
And I'm Carol Massar. Have a good and safe weekend. Take care of Mother Earth.
- [86:55]
B
This is the Bloomberg Business Week Daily Podcast, available on Apple, Spotify and anywhere else you get. Your podcasts listen live weekday afternoons from 2 to 5pm Eastern on Bloomberg.com, the iHeartRadio app, TuneIn and the Bloomberg Business. You can also watch us live Every weekday on YouTube and always on the Bloomberg Terminal.
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