← The Sustainability Story
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- [00:00]
Mark Campanali
Foreign.
- [00:05]
Paul Moody
Welcome to the latest of our sustainability podcasts. My name is Paul Moody and I'm the host today and I'm delighted to be joined by Mark Campanali. Mark and I have got a long history together. In fact, we used to work together just over 25 years ago when we were both working in sustainable finance within the same organizations and same team in the asset management community. But I'm meeting Mark today in his capacity as the founder and director of the Carbon Tracker Initiative. A little bit about Mark before I jump into the podcast. Mark, as say, is the founder of the Carbon Tracker Initiative. It's a nonprofit think tank with offices in the UK and us. He's enjoyed a long career in sustainable finance for over the last 20 years, where he became really a big pioneer in terms of looking at the way sustainable finance was emerging as a force for good. Carbon Tracker is best known for its work around stranded assets. And we're going to be exploring that today and the carbon bubble and providing transition analysis for the members of the Climate Action 100 Plus. These concepts are also used by the fossil fuel divestment movement and for investors and regulators in how to set decarbonization pathways for the fossil fuel sector. So I'm looking forward to an exciting conversation with Mark a little bit by background to Mark. Mark was also responsible for some of the first responsible investment funds launched here in the uk. Initially working at Jupiter Asset Management, then MPI AMP Capital and Henderson's Global Investors. He served on the World Business Council for Sustainable Development, working on capital markets leading up to the 1992 Earth Summit, was a member of the steering committee of the UNEP Financial Sector Initiative, founder of a UK Sustainable and responsible investment Forum, and is now an advisor on the board of gfans. So, Mark, want to start by just. Could you tell us a little bit more about Carbon Tracker and how that came to life? What was behind all that?
- [02:15]
Mark Campanali
Thanks, Paul. And just to sort of start off, I'm delighted to be joining with you today the CFA Institute and its members. And the work it does is really important, the bedrock of all good financial analysis. And I really want to sort of make that point that Carbon Tracker is. I set it up to support analysts in understanding the energy transition. What was the problem that we wanted them to think about? It's a very straightforward one, which is why we refer to it as a carbon bubble, is according to the climate science, we know that there's only a finite amount of carbon dioxide and other warming gases we can emit and put up into the atmosphere before we exceed levels of temperature rise that we've not seen for hundreds of thousands of years. And scientists can measure this with reasonable degrees of confidence in gigatons. How many gigatons of carbon dioxide? And what they tell us is, is if we want to keep the planet to no more than 1.5 degrees above pre industrial levels of temperature, which is around 16 degrees Celsius, then we can only emit somewhere like 150 to 200 gigatons of carbon dioxide. If you want to limit it to 2 degrees above pre industrial level, again something we've not seen for hundreds of thousands of years, then we want to limit it to below around 800 gigatons. So what's the carbon bubble? Well, when you analyze the reserves of the world's publicly traded coal, oil and gas companies, Chevron, Exxon, bp, Glencore and so on, we find that there's over a thousand gigatons of carbon dioxide already in their reserves. Which leads you to ask the question, well, how does a thousand gigatons fit into the remaining carbon budget of 200? Well, the answer is it doesn't. That's why we call it a carbon bubble. But when you look at governments, you know, the Saudis and the Americans, the Canadians, they all own fossil fuel reserves, which is not owned by publicly traded companies. They've got another 3,000 gigatons. So there's the problem. You've got 3 to 4,000 gigatons of carbon dioxide all chasing the remaining carbon budget. Is it like a game of musical chairs pool now? They can't fit in the remaining 200, 150, 200 gigatons, most of it will be unburnable. And there lies the dilemma for the analysts. There's the problem for you as a fund manager. How do you work out which company fits the remaining carbon budget? Who gets the last chair in this game of musical chairs? And if they can't all develop their reserves, what does this mean for valuations? What does this mean for what the market is assuming about what these companies are worth? And then if you are like Beefy's just announced a big increase in expansion of fossil fuel development. Well, if we can't burn what we already own, why are shareholders allowing companies to go out and spend shareholder funds on finding more? So there we go. That's where I set up Carbon Tracker. It's a bit long winded, but it's essentially to answer that dilemma. What do you do when you can't burn fossil fuels?
- [05:12]
Paul Moody
I wanted to ask you a little bit more. People have been talking about stranded assets and valuing stranded assets because I mean it's the ultimate sort of fear holding something that's worthless. Given the carbon bubble is imminent. Why do you think this hasn't been factored more into valuations at the moment? And do you think this is something that is coming as people recognize and start to understand this concept more?
- [05:39]
Mark Campanali
Yeah, let's separate physical stranding from financial stranding. So you could have, you could, a company could own assets which is on its balance sheet that it can't develop or in whatever form. And of course reserves aren't on, technically speaking on companies balance sheet, they're owned by the company, the rights to develop them but they're not balance sheet items per se. But there's an assumption about what the assets of the company are worth which could include things like oil rigs and pipelines and mines and equipment and so on. And then you've got financial stranding which is you say to your shareholders we're going to go and do this but you can't do it. You own a bunch of assets which will never generate the return that you thought they would or what the market thought that they would. So you've got two types of stranding. So to answer your question, why hasn't this happened so far? Well, there's another thing which we need to go back to Paul, which is we didn't say it was a financial bubble, we said it's a carbon bubble, which is there's too much carbon. Financial is different. So let's just step back a minute and do a simple exercise. Let's take all the barrels of oil owned by let's say Shell or cubic meters of gas or tons of coal owned by Glencore. Let's take all the world's listed companies, let's add up and say let's take today's price for gas, today's price for oil and so on. If you do that calculation, what do you end up with? Well what it tells you is that the company's own reserves which are worth around 114 trillion dol at today's prices. That does not mean these Companies are worth $114 trillion. Their market cap which is the multiplication of all the world's large listed or coal, oil and gas companies, what's their value today? It's around 7 trillion thereabouts. So 7 trillion of market cap versus 115, 114 trillion of reserves. It's not a financial bubble Paul, because could not develop $100 trillion worth of those reserves and you'd still be worth more than the market cap of these companies. So what the market really wants to know is how do you value a company? Well, typically speaking, you're valuing these companies on a relatively short pathway of their cash flows. So just a very narrow numbers of years. There's an expectation. So you've got other things that you need to think about which is what is the company worth if it can't develop its business plans, if it can't develop all its reserves? The market is certainly in Europe, less so in America got companies, oil companies in Europe on lower valuations than those in America, which is why companies like BP and Shell no doubt will be trying to think about listing in the US market. Companies have not been replacing their reserves like they were in previous years. So in the last five years we've seen a drop in capex for exploration. That's changed in the last year really since the war in Ukraine. So let's take a typical European company. They will have less than 10 years of oil and gas reserves to develop and not all of them are planning to replace them. So you can actually start to model that as an analyst. And then the key thing which we need to think about is what are the assets, the oil rigs and the pipelines worth if they don't have a 30 year life, but only have a 10, 15 year life? You're going to do early depreciation, you're going to do asset write downs and then financial model. Is there a positive terminal value once you discounted your cash flows to an npv? Is there a positive terminal value for a coal fired power station? Well, arguably no there's not. What about the decommissioning costs for the oil rigs? What about the cost of all those abandoned oil and gas wells? Someone's going to have to clean them up. Does the market value those? And the answer to that in Paul is no, they don't value those. And many companies have not made provisions for cleaning up hundreds of billions of dollars of cleaning up liabilities. So there's a lot that the market doesn't know. There's a lot the market does know. Our job I think as analysts, whether it's Carbon Tracker or anybody, is to try and find answers to those questions and be confident in those answers in.
- [09:41]
Paul Moody
Terms of your work to help identify the winners and the losers in the future, sort of interest in your concept around carbon supply cost curves. I wonder if you could talk a little bit more about that and how you trying to identify the winners and losers and whether you think that can be done at not only a company level but also more at a country.
- [10:03]
Mark Campanali
Level, you probably looking at our website because yes, we do try and find answers to those. So let's take the country level. We wrote a couple of reports called the Petra States of Decline where some countries, just because of the geology and the extractability of their reserves, some countries are very much the lowest cost producers in the world. The Middle east is a good example for that, Saudi Arabia is a good example for that. But if you've got oil assets in say the North Sea or ultra deep water or in the middle of the Amazon or whatever, it's expensive to develop those oil and gas reserves. So what we do at the country level is we've calculated which countries have the highest percentage of their GDP or their revenue dependent on selling oil and gas or coal. And we did the study for oil and gas companies and then we said which ones are the most vulnerable because they got the highest cost of production relative to their peers. And then we created this intersection of high cost producers intersected with countries which are the highest percentage dependence on oil and gas revenues. And that told you which countries are riskiest. Now I'd like to say there were lots of sovereign credit risk analysts that went out and studied that and started to reprice sovereign debt. Has that happened? No, it hasn't. It's an exercise we think is worth doing. And let's turn to companies. Now companies is slightly similar in that each company will own say 100, let's say they have 100 different projects, each project will have a different break even price, the cost of extracting it and developing it and getting a forecast rate of return on it. And what we've encouraged investors to do is say look, if a company has got mostly low cost, by which we mean say below 40, below $30 a barrel, break even and most of their portfolio of those projects, then they're probably in the money. If their projects require high break even 60, $70 a barrel, they're probably out of the money. And if you look at something like the Rystead energy database, you've got companies that won't actually generate a return to investors unless they get $100 a barrel. Now when the oil price is at 60 or 70, you're doing fine. But when the oil price like we saw just before the Ukraine or just at the time of the Ukraine war during COVID it got down to below $10 a barrel and went negative briefly then if you're producing at 50 and you're selling at 20, you've got a negative return. That's not a happy place to be. And of course, a lot of the oil companies were borrowing to fund their dividends because of that problem. They weren't generating positive cash flows because of the low oil price. Now, the International Energy Agency says that to be net zero or to be well below 2 degrees, all production above $30 a barrel essentially has to disappear. And so the questions that investors should be asking is if you own a company that's pushing ahead with projects that require $50, $60 a barrel to get a return on capital, when you've also set goals of net zero and well below 2 degrees, then you really want to be modeling and stress testing against 30. So that's the kind of expectation that's what we hope analysts are doing now. And when you go see a company, ask them which projects have these different breakevens. It's something we've asked for over a decade now. Unless you pay Rystad to get the data, project by project, investors are somewhat in the blind and can only go on what companies tell you. And companies more often than not will just give you an average break even price across the whole portfolio, not a breakdown project by project, which they think is confidential. So the market's somewhat flying blind in trying to work out which are the most risky companies. Now, Carbon tracker, through our Paris maligned test on our absolute impact tests, which you can download for free off carbontracker.org, we go into a lot of this analysis ourselves.
- [13:54]
Paul Moody
How's that, do you think going to be affected as well? Because on the other hand, you've obviously got a cost of extracting fossil fuels in the break even point, as you say, and the cost for that.
- [14:04]
Mark Campanali
But.
- [14:06]
Paul Moody
Presumably you believe that the cost really of petrochemicals is going to fall, particularly with the rise of renewables, as the cost of renewable energy keeps falling over time. How do you balance off that? And when does it become a point where simply the cost of renewables will kill off that fossil fuel demand and the price is really going to plummet? Do you see a tipping point around this?
- [14:31]
Mark Campanali
Yes, it's a good point, Paul, because what you're really asking is about demand destruction. As the more EVs come on the road and more wind turbines and solar panels get built, particularly by the Chinese, oil demand begins to fall and there's a very, very strong correlation or price sensitivity between demand and price in the case of oil and gas. So very, very small drops in demand could lead to very, very large drops in price and that's not good for anybody, least of all investors. So your central point. Yeah, look, the rise of renewables is killing, will kill fossil fuel demand is basically correct. And in Europe it's so much cheaper. And the rest, like most the rest of the world, to build new wind and new solar, unsubsidized, including with battery storage, than it costs to build new gas. And we see the price of power generated by gas in the UK is much more than the price of energy generated by wind and solar. That has to play out on a global level. Now. It only works, Paul, when renewables start to replace fossil fuel use. And what we've seen in the last year with the rise of artificial intelligence, machine learning, lots of cloud computer storage, lots of bitcoin mining, is demand for energy is going up. So the challenge we have to respond to is can we build out renewables faster than we can build out then we can then than we can from growing energy demand. It's only when renewables replace all growing energy demand and replace existing fossil fuel use that we'll be able to see falling demand for fossil fuels. And we're confident that that will happen in the next decade or next year. Next five years more certainly. And a good example of this is China. EV sales have exceeded 50% of all new car sales in China. And the International Energy Agency's forecast that we'll see 5 million barrels of oil disappear a day from around 100, 101 million barrels we use now because of electrification. A lot of this will be driven by China. Now why is that 5 million figure so important, Paul? It's a very sort of thing we often miss. During COVID oil demand fell from 100 million barrels a day to 95 million barrels a day. We lost 5 million barrels a day. Now what happened to the share, what happened to the, to the share price of the companies? Did they fall by 5% as oil prices fell by 5%? Wrong. They fell by 50%, 60%, 60%, 70%, that kind of figure. And the reason for that is small declines in oil price and demand leads to significant drops in oil prices and then led to significant drops in share prices. And so that's the thing we have to look at, just because the market does a very good job discounting the future. And as soon as, and we get asked this all the time, as soon as oil demand peaks and begins to fall and we can see falling oil demand like we've seen in China this year, which has dropped by about.02 0.3%, very small. But if that continues to grow, then it's softening in prices. And this is the thing that investors have to watch out for, is that as the market shifts, they're not owning companies that have gone ex growth with demand falling. And that's the real worry for investors. They have to price that now before everyone else figures it out, because otherwise you could get caught holding companies which you think are growing demand for the products when actually it's falling. And this is the kind of question we ask all the time, just to use as another illustration pool, is that there's about 70% of new car sales in Europe and the UK are from leasing. I don't know about you, I don't actually use a car. I can't remember the last time I drove, probably a couple of years ago. But you might have a car, you probably leased it, but when you come to the end of the lease after three years, you can hand it back and get yourself a new car. Now, what happens if, as we expect to happen and it's happening in the uk, is people hand back their internal combustion engine car and because it's cheaper to run and operate, they swap it for an ev. Now, if they do that, there's an awful lot of cars that are going to get taken off the road that use the internal combustion engine and get replaced with an ev. And so long as that the electricity is made in a clean way from wind, from solar, a battery storage and so on, then you could power your car using electricity that's clean and the road will be removing internal combustion engine cars. Now that's Europe. What happens if they happen around the world? People come off lease cars. I rang up an oil company a couple of years ago, me and a colleague, we spoke to them and said, well, what's the life of the car you're modeling? And they said, when a new car is sold, we assume 16 years on the road that they'll be using oil and gas. Now, that's fine if you own the car, but if you're leasing it, that's not true. And I don't think anybody's properly unpicked. What happens if everyone hands back their internal combustion engine car for an EV1? You would see massive demand destruction for liquid fuels and that would happen very quickly.
- [19:41]
Paul Moody
Other pleasure is actually visiting Beijing frequently. And when I go to Beijing, I think almost all cars is far more than 50% on the road are electric vehicles. And it feels like you're just visiting the future. They say it's cleaner for the environment. The cars you take are superior. So you, you just notice this and you can see this does look like the route we're going. It's a question of how fast that journey is. But I think all that you say when, when you look at the market like that, you can see how quickly this can take hold and really how, how much change you can see in a short time period. Which really brings me to my next question. Do you think market surprising in the risk at the moment, or is there a different model to consider? The timeframe and the risk that may be a not error.
- [20:37]
Mark Campanali
The global energy, clean energy revolution is happening at pace all over the world. And even when you've got a change of administration such we've seen in the US you're still at the state level, states like Texas building out large amounts of renewable energy, particularly wind. And that's a good sign that the transition continues, regardless of the politics. And it's all driven by the economics. If, if renewables are the cheapest form of energy in most, if not all parts of the world unsubsidized, why wouldn't consumers want to benefit from access to that cheap energy? So all of these are the signposts that we're looking for as analysts to try and understand big shifts in energy in demand and shifts in supply. So what we expect will happen is that renewables will continue to grow, electric vehicles will continue to grow, and this will then materialize in demand for fossil fuel products. And the signpost when it goes ex growth is when the market will respond. Now, you'll know from, I don't know if you've done this exercise and we've done it. We've looked at the chart of. Do you remember the video store Blockbuster, which was a publicly traded company, used to go in and collect your video. You'd watch your video and if you forgot to return it the following day, you'd pay a fine. And then on comes Netflix. You can watch through your TV or your laptop, you can watch anything you like and you just pay a subscription fee. Now, Blockbuster's sales continued to grow when Netflix appeared, and Netflix started to grow itself. But actually the market discounted the share price of Blockbuster many years before it discounted the share price, or rather appreciated the share price for Netflix. And so Netflix share price grew. But Blockbuster, even though their sales were growing, was being derated by the market. And what that was was the market was saying, look, we found a better technology, Netflix, than the existing one, Blockbuster. And the market actually derated Blockbuster before their sales began to decline. Now we expect the same phenomenon to play out in other sectors. We saw the same thing happen, Amazon versus Walmart. Amazon grew its share price and exceeded Walmart before their sales crossed over. And you've seen the same with other companies like a Tesla versus a GM or a Ford. So markets are good at discounting the future. That's what we do. That's what analysts try and model and try and understand. And the clear signs are there in the fossil fuel and energy and transport. It's just now a matter of time before we actually do the more technical calculations and are more confident about the signals. But I've no doubt that this will happen in the next decade and it will be driven by policy, but it'll be driven by consumer preferences. Driving an EV is just a much better experience than driving an internal combustion engine car. And they're cheaper to run.
- [23:36]
Paul Moody
Have you done your work in terms of obviously all bubbles burst and when do you think the carbon bubble is actually going to burst from the work from Carbon trackenmark?
- [23:45]
Mark Campanali
So Paul, is a carbon bubble, not a financial bubble? So long as these companies share prices don't run ahead themselves with some kind of irrational fossil fuel exuberance, I don't think that we're going to be seeing massive deflation. I think you could argue that these companies, particularly European oil and gas majors, are fairly valued, possibly even undervalued relative to their US peers. So I don't think you're going to see anything major happen there. What we actually want to happen, we don't want anybody's portfolios blowing up. What we actually want to happen is for governments to set a clear date for the phase out of the use of fossil fuels in line with the climate science and that they should put in place policies to encourage electrification and renewables, which that most countries are doing, many countries, but all many countries are doing, and that investors are not misled into, particularly the banks are not misled into funding activities which will have no place in the future. And just as a warning sign, it's been noticed that the oil companies have moved from issuing five year bonds to 30 year bonds. Some bonds were issued on the London stock market just a few months ago, dated 2060. What the companies are doing is taking the money from the bondholders now to fund dividends to shareholders today because they know in 2016 they're not going to be around. We don't think the market has quite got this right, particularly the bondholders. Why you should be buying a 30 year bond or 40 year bond when these companies will probably disappear as we know them today. There'll be some residual use for things like plastics and chemicals but most of the use of oil and gases is for power or for transportation, not for plastics there'll be some use, but by far and away the most important is the sale for transportation and for power. Why? Bondholders buying 30 year bonds, they're going to be buying it for the 5 year coupons but after 5, 10 years these are going to be looking very shaky. So it's a bit of a risk here which the market we don't think is quite properly understood.
- [26:07]
Paul Moody
What do you think about the transparency and disclosure rules, particularly the new ISSB rules which seem to be driving much greater transparency in the market and the effect they will have and generally awareness.
- [26:26]
Mark Campanali
Around that Positive now at this point, Paul, because we have a team of four or five analysts at Carbon Tracker who work on accounting and disclosure and we're just going to be be issuing a report shortly on regulations and disclosure on this issue. It's the accounting treatment for coal, oil and gas reserves. When is a reserve a reserve? And if you can't burn the reserves that you've told the market you have, what point do you actually discuss in the notes that we own rights to develop and permits that we'll never use? Do you just tell the market you're going to retire them or never use them, which is what we think should be happening. What we've actually encouraged, and this is in the UK is the prospectus regulation brings is coming back from Europe to the uk there's regulations going to be published in the next couple of months and this will be passing in the UK in the next six months. Now there's a new section, Paul, in the prospectus regulation that was out to consultation a couple of months ago and we responded that says that all new coal, oil and gas reserves are being financed through the London stock market will have to undergo a new test which is are they compatible with our obligations onto the Paris climate agreement? So I don't know if you're familiar with how you put together a prospectus for coal or an oil or gas companies. One of the things they typically do is you produce a competent persons report, which is an independent report from a mining engineer or a geologist or a petrochemical or a oil and gas specialist to do a geological study. Can you find the reserves and then do a financial study? Can you extract these reserves at current market prices? What we've proposed is the third test which is as well as them being geologically certain and available to remove from the ground or from wherever you found the oil in the coal, are they consistent with the parents agreements? So we hope that the financial conduct authority who's governing this process will issue some guidance in the next few months. That's the kind of transparency and disclosure that we, we want to see put in place. Now, we're not, it's not illegal to be an oil and gas or a coal company, let's be very clear about that. But if you're going to develop your reserves and take money from people, from shareholders or bondholders to do that, you've got to give them the information to say what the risks are as to whether you'll ever extract them. And that's the reason why this regulation is so important, is because it's quite clear now that most of these reserves will not be extracted. And there should be some discussion from the companies and their independent experts, like the independent geologists, to some assessment as to whether these reserves will be extracted. And that should appear in the prospectus. It should appear in other financial documentation, including the accounts.
- [29:22]
Paul Moody
Many of the people listening to this podcast will either be asset owners or asset managers and analysts. And what advice would you give to them when they're looking at a constantly evolving marketing industry? As the climate science evolves, the tools, groups like yourself constantly evolve in terms of one, the fiduciary duty. If you're an asset manager and then as an analyst, how do you stay up to speed and apply this new learning in a consistent way without any future regret?
- [30:00]
Mark Campanali
Yeah, gosh, it's very tricky. So what? It's not, it's not straightforward, Paul. I mean, what I think the rational person would do is you take all the planned production of colon and gas, which you can do. We do it on a website, fossilfuelregistry.org others do it like Rystad. You take all the future production, you calculate the carbon dioxide in the reserves, the thousand plus gigatons, and then you say, well, the science tells us we've got to be well below 2 degrees. Let's take 1.5, it'll be a couple hundred gigatons at most. We're already through 1.5, arguably already. Let's say you take 1.6 or 1.7, which even the scientists think is scary, but let's take that and you come up with a carbon budget, 400 gigatons. So you're immediately going to say, how do you squeeze all this planned production into that very, very small carbon budget? Let's apply a rational cost curve. Approach. So you put all of the production on a cost curve, high cost producers, low cost producers, and then you find the companies with the lowest cost of production and you interrogate them and you use data from carbon tracker or from ricetail, whoever you plan to use, who are the lowest cost producers, and you orientate your production around those companies. That's the rational thing to do, I think. And yeah, we could discuss it again a lot. Ultimately, every country wants to be the last producer of oil and gas, ultimately, but of course, not every country can. And we need some kind of global agreement. It's not in the Conference of the Parties, which is the yearly meeting we have of governments. It's not in there because of course, fossil fuels aren't mentioned in the climate treaty. So we need something parallel, parallel process. And I'm on the steering group of something called the Fossil Fuel non proliferation treaty, fossilfueltreaty.org, which about a dozen countries have already joined, where countries negotiate with each other to give up their fossil fuel rights. And what that will do is it will put in place a production cap and allow us to work out which countries and which companies will be the last producers. That's the, I think, intellectually rational way of doing it. But we're not in an intellectually rational world today, Paul, so it's unlikely that will happen anytime soon. But I'm a huge supporter of it.
- [32:28]
Paul Moody
So we've covered on a broad range of topics and some of the pioneering work you continue to lead on. Is there anything you think we should have covered which I haven't covered today?
- [32:38]
Mark Campanali
Paul, the fiduciary duty question is something that you and I used to talk about 25 years ago when we were out presenting our sustainability funds. There's no fiduciary duty to destroy the planet. And the corollary of that, there's no fiduciary duty to own a bad company. Now, if you think a company is engaging in something that would destroy the value of beneficiaries, you make the planet uninhabitable. You're breaching your fiduciary duties as a trustee. If you support that, and if you are investing in a company that makes that worse or is not pioneering a move to a low carbon future, and you're not factoring that into your valuations, you're probably breaching your duty as a fund manager to your clients, who are the asset owners. So we must think hard about what fiduciary duty really means. And there's some nonsense going out at the moment. That says if you go for 1.5 degrees, transition risk will remove 10% of the value of your portfolio. But if you wait for 3 degrees, physical destruction will only mean you'll lose less than 1% of the value of your fund. That's completely the wrong way round. At three degrees you've passed tipping points, you've got extreme weather events, London's a meter underwater, the economy goes into reverse. And when people show you these calculations, one of the things that's missing is that we're not just talking about falls in GDP or negative gdp, you're talking about real wealth destruction. The values of agricultural land, of buildings will halve, disappear, food production will change. And actually that's a world that is not good for anybody, least of all a pension fund trustee who's trying to match assets and liabilities. And you need to avoid that outcome. The unfortunate problem, Paul, is it's on our generation now, those of us in our 50s and 60s who have been thinking about this for 30 years, to give some guidance on how we can avoid these kinds of climate shocks on the system to allow an orderly transition that doesn't affect the value of people's assets. And that's a conundrum I hope we'll see resolved in our lifetime, Paul, but I'm not sure that we will. I'm sure that we can come back and I'll the same questions in a decade.
- [34:51]
Paul Moody
Thank you, Mark. You've been a pioneer in the sustainable finance space now for over 30 years and a thought leader and it's Greg, see that your enthusiasm remains and remains unabated. So please continue the great work with Carbon Tracker and keep your energy and enthusiasm there for the fight ahead.
- [35:11]
Mark Campanali
Thank you, Mark, that's appreciated, Paul, thank you very much.