Green Strategies president and former White House Climate Change Task Force chairman Roger Ballentine makes the case for a new version of capitalism that aligns innovation, stewardship, social equity, and profit, treating decarbonization as an unprecedented economic opportunity rather than a cost.
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Sara Gutterman: The IPCC. Most conservative estimates say that humanity will need to capture more than 1 billion tonnes of carbon dioxide each year to keep the planet's average temperature from rising more than 1.5°C above pre-industrial levels. The median estimate is even a more onerous 6 billion tonnes a year. Clearly, this is going to take major systems change. Here with us today to explain how we can accomplish that.
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Sara Gutterman: Systems change is climate capitalist Roger Ballantyne. Roger believes that a new version of capitalism, one that encourages climate solutions and environmental performance by aligning innovation, stewardship, social equity and profit, offers an opportunity not just to solve for climate change, but to harvest incredible financial abundance. Roger is uniquely suited to talk about this topic. As president of Green Strategies, Inc., he provides management consulting services to corporate and financial sector clients on sustainability strategy, decarbonization, investment and transaction evaluation, clean energy procurement strategies, and the integration of energy and environmental policy considerations into business strategy.
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Sara Gutterman: He is also a venture partner with Arbor View Capital, a private equity firm that invests in the clean energy and energy efficiency sectors, and previously, Roger was a senior member of white House staff, serving president Bill Clinton as chairman of the white House Climate Change Task Force and Deputy Assistant to the president for Environmental Initiatives. So with that, Roger, please take it away.
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Sara Gutterman: Looking forward to hearing what you have to say.
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Roger Ballentine: Great. Thank you so much, Sarah. I'm even more inspired now after hearing your introduction. Thank you. And it sounds like this is a tremendous event and I'm really happy to be here. And by here, I don't mean my dining room necessarily, but to be with you is in this virtual way. It's unfortunate we can't be together. When I want to give these talks, I tend to kind of wander back and forth across the stage.
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Roger Ballentine: I'll try not to do that while I'm sitting at my at my desk. I want to thank you, Sarah, very much for the opportunity. I want to thank Scott and Train Technologies, my, my dear friends as well for for helping get me here and for just sponsoring this really important event. So let me. Sarah, you did a wonderful job on my on my bio, but let me just let me just elaborate for, for a moment here.
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Roger Ballentine: We'll go back in time here in with my old boss in a series that I was in charge of climate change in the white House. Now, that was a very, very different time. And not just because of all that hair I got had back then. From the perspective of what we're talking about today and what I do for for living and frankly, what kind of led me in this direction, you know, back then, the private sector, to the extent the private sector was thinking about climate change, it was probably mostly in loading up on lawyers and lobbyists to prevent us at the time from actually doing anything about it.
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Roger Ballentine: The issue was extraordinarily unpopular from a political perspective, and we faced strong pushback towards addressing this issue from Republicans and Democrats, frankly, in the business community very solidly thought that taking action on climate change was a threat to them. It was actually President Clinton before virtually anyone that I was aware of who had a very, very different view.
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Roger Ballentine: What it's what he called the big idea, which was that we're getting this exactly wrong. In fact, transitioning to low carbon economy certainly a moral imperative, but really an unprecedented economic opportunity. He was he was very much ahead of his time. Now, in 1999, the president sent me to an Arctic air. I don't think that's because he was mad at me, but it was to it was to go down and meet with some of the scientists who were doing some of the real important research that was demonstrating the reality of climate change.
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Roger Ballentine: And I got a chance to spend time with those scientists and and learn about their work. But Antarctica was not just where climate research was being done. It is also where we have been seeing some of the most dramatic and threatening aspects of climate change. In 2002, after a series of of warm summers which are now the norm, the Larsen B ice shelf, 3250km², swept off the mainland into the Southern Ocean.
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Roger Ballentine: Ten years after my first trip, and six years after the Larsen B collapsed, I went back to Antarctica and I found the Larsen B I shall floating hundreds of miles from where it carved off in the Southern Ocean. And after I was there in 2017, the Larsen Sea Ice Shelf, more than 13 times the size of Larsen B at 44,000km², also collapsed and slipped into the ocean, joining other enormous chunks of ice that were innocently minding their own business on land now in the ocean and contributing to sea level rise.
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Roger Ballentine: So this is look, this is not a crowd here today that needs to be lectured on the reality of climate change. But, you know, on the other hand, I do this myself. I don't think there's any of us who couldn't benefit from kind of constantly reminding ourselves of what's happening and the consequences of it happening. Our world is over, already warm more than one degree.
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Roger Ballentine: And that was since the dawn of the Industrial Revolution. Revolution. So that's over a century ago. We wanted a degree that one degree has already been causing extreme rainfall, extreme drought. We know all the things that are happening here. The fact that even though I live in this stuff, I was very much struck by the fact that temperatures reached 115 degrees last summer in Siberia.
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Roger Ballentine: We got some problems. And one of the problems we have, besides climate change itself, is kind of communicating this urgency to people. Certainly more and more people are feeling it because they see what's happening. But when you talk to them about, you know, the Paris climate Agreement and 1.5 degrees and we really want to keep it to 1.5.
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Roger Ballentine: And what about two degrees? It doesn't sound like that much necessarily to people. But the difference is enormous because this is a non-linear process. Two degrees of warming would double natural disasters and particularly heat waves, the percentage of the population that be subject to very dangerous heat waves versus 1.5 degrees. So you get a a doubling impact from a point five degree increase.
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Roger Ballentine: It's hard, but we need to communicate the urgency of sticking to 1.5 and the sheer disaster we would face at two degrees. And as we'll discuss, unfortunately, we're kind of on a pathway to bust through potentially both of those in the not too distant future. Human aspects and economic aspects are already manifesting themselves. 400% increase in natural disasters since 1980.
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Roger Ballentine: And if you look at this chart, only that yellow band, which is things like volcanoes, is unassociated with climate change and it has not changed. It's been roughly constant. Everything else is this is what's changing. And they're again, very much human and economic aspects to that. So as you know, how are we doing to address all this? Not so great.
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Roger Ballentine: I think in 2022 said, we have a certain amount of carbon that we can emit into the atmosphere in the next 20, in the next 30 years and still meet our targets. The bad news is we're on a pace to use up that in ten years. So it's kind of like emptying out your refrigerator at breakfast and having nothing to eat the rest of the day.
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Roger Ballentine: So really, what I want to kind of get to, you all know everything that I just said. But kind of my take on what we do about it. So you know, what's going to rescue us. And I'm going to start with, I don't think it's the government. I hope it is. And I want to be very, very clear.
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Roger Ballentine: We need more policy. We need a price on carbon. We need clean energy standards. We need stronger vehicle emission and efficiency standard. We need lots of things from the government. And there are folks and not enough, but everyone should be pushing for that to happen. I'm choosing a slightly different focus in in my career, in part because having banged my head against that policy will offer for the better part of 30 years.
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Roger Ballentine: It's clear to me that climate change is not waiting for political change. So while I hope it happens and do everything I can, we need to look to other options as well. Sir, you outlined very, very well the there is a lot of exciting new technology that's being developed. There's a lot that we haven't even come up with yet, but that we're going to need.
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Roger Ballentine: And the good news is, there's a heck of a lot of capital right now going in to develop new technologies. However, there are some who have resisted climate action in the political sphere in the past who their argument has been, we can't do anything yet because we don't have the right technology, so let's just invest in some research and development.
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Roger Ballentine: In the meantime, leave me alone. Well, that's very, very dangerous. And and it's also a fact that we're not remotely deploying the technologies that we already have that can really make a difference. So yes, we need policy. Yes, we need technology. None of that is a reason to stand still in every other aspect we can engage in, in trying to address the climate crisis.
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Roger Ballentine: So the one that I'm particularly focused on is, you know, how do we harness while we're waiting for policy, waiting for new technology, how do we align the private sector and market forces in a way that can better contribute to solving the climate crisis? So this is what I spend my time doing. And when I do that, I very often get kind of this reaction.
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Roger Ballentine: It's like, seriously, isn't it kind of the market that got us into this in the first place? And the answer to that is absolutely true. It is right. Climate change is the greatest failure of markets in history. Polluting the atmosphere didn't cost anybody anything and it yielded greater profits. But instead of being misaligned with environmental stewardship, as it has historically been.
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Roger Ballentine: Yes. What if markets were aligned with addressing the climate crisis? What if there was more value in being part of the solution than in being part of the problem? And Pollyanna, to an extent, probably fair. But this is not just about what's happening in the future. Five years ago, I gave a TEDx talk on what I call climate capitalism.
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Roger Ballentine: And, you know, the the idea I posited was just a fundamentally climate is in fact a business issue. And because it's a business issue, like any other business issue, it should be proactively incorporated into into business strategy. And third, if it's done right, it actually presents an opportunity for value creation and competitive advantage. So climate capitalism means mitigating risk and adding new value.
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Roger Ballentine: And the fact is that market forces that that drive corporate decision making are in fact changing today. This is not just about how do we start today where we have none of this and get this. It's happening today. We are seeing it. We are seeing things in the marketplace that are aligning climate mitigation and business strategy more than we've ever seen in the past.
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Roger Ballentine: So here's a good example. Here's our first aligner. Capital markets are increasingly interested and caring about and asking questions about climate change. And perhaps there's been no more impactful voice than the world's largest asset manager. Blackrock tends to be top single digit shareholder in most public companies, and Blackrock is certainly. And Larry Fink has been very strong on arguing and making the case that as an investor, as an asset manager, as an optimizer of returns, he cares about climate change and he cares about what companies are doing about climate change.
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Roger Ballentine: So the role of shareholders. Absolutely. There has been great benefit from activist shareholders who are seeking to disrupt strategies or lack of climate strategies among companies. And the most well-known of which, of course, recently engine law and relatively small investor in Exxon succeeded in changing the Exxon board. That's fantastic. So shareholder activism has an important role to play.
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Roger Ballentine: But when your largest institutional shareholder demands answers to questions and seeks better performance, that moves the needle and the the forward looking view of black courses that.
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Roger Ballentine: This is central to creating and maintaining value. So we're seeing the really unprecedented, as far as I know, shift in assets in the capital markets, as more and more investments are made through some form of sustainability or ESG consideration or screening or mechanism. So this is broader than climate change, for sure. But I would argue that climate change is the long haul in the ESG tent.
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Roger Ballentine: And while the I would say the ESG industry is still somewhat in its infancy, it's a little clumsy and a little imperfect and not necessarily asking the right questions or getting the right data. But directionally, it's it's absolutely critical and phenomenal, really, about the amount of capital that's being kind of moved and looked at and applied in a way that is taking ESG and climate in particular into consideration.
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Roger Ballentine: And that is good news. The this came out of Glasgow, the Net Zero banking alliance, more than 450 financial firms, $130 trillion in assets, all committed to align towards net zero. Do we know exactly what that means? Do we know exactly how they're going to do it, what the metrics are? Not really we don't. But it's unequivocally a good thing.
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Roger Ballentine: So so Wall Street is is paying attention. And and now I think I've actually figured out why why Wall Street's paying attention. Because it's looking a little wet down there. And as we move towards 2100 Wall Street, you can't see my cursor, I don't think. But it's right in there becomes a good looking fishing hole. So maybe this is why the real reason why Wall Street's paying attention is.
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Roger Ballentine: So here's another aligner its people. The World Economic Forum recently surveyed more than 30,000 millennials around the world, asking them, what do you care about? What's your top issue by a significant margin? And it really wasn't even close to the answer was climate change. You know, why is this on a liner? Because these are or will be the customers, employees, shareholders of virtually every company in the world.
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Roger Ballentine: People are driving change in the marketplaces, whether employees, customers influence or shareholders, media members, people shape markets. And we're seeing that, okay, there's another aligner and and that is risk. So even and this is any investor I don't care if you're an investor or not. You care about risk. Every company understands that they need to identify and manage risk.
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Roger Ballentine: And when it comes to climate change, the two types of climate risk, there's the physical actual risk from climate change itself, which can disrupt assets and real estate holdings and supply chains, and clearly a risk. And then there's transition risk. Right. And this is this is risk posed by human reaction to and maybe primarily in the minds of many companies.
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Roger Ballentine: Or what's the government going to do to address climate change. And frankly, any company that is not examining and managing climate risk, they're going to lose to companies that are this actually now has, has, is about to take on a very significant.
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Roger Ballentine: Level of importance to companies because the Securities and Exchange Commission proposed rule around financial disclosures. Yes, this is policy. This is policy. But it's not about mandating or prohibiting any particular action. It's just, you know, in quotes requiring companies to tell the market what they are or are not doing, how they've been thinking or not been thinking about climate change.
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Roger Ballentine: In my view, this is going to put climate capitalism on steroids. The risk aspect of this is the hook. That's the SEC's legal hook in this, because under statutory authority, you know, they have the authority to to mitigate investor risk. And that's what they're hanging their hat on. There's more to it. There is as they're actually also really trying to get information to the marketplace to identify which companies are actually taking this seriously.
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Roger Ballentine: And the information they're seeking is very broad. I'm gonna go through this really quickly, but they want to know, do you have a government structure in place that's that's looking at climate change. They want to know whether you've assessed the risks and whether you see risks that have a material impact on your business. They want to know how climate change is or might affect your business strategy, your business model and your prospects going forward.
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Roger Ballentine: Fundamental information the market wants to know about. They want to know the processes you've put in place for this. They want to know your emissions. They want you to disclose your greenhouse gas footprint. And they want to know if you, as a company, have set a climate goal or set a climate target. And if you have, how did you arrive at it and how are you doing?
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Roger Ballentine: How's your progress? If you use an internal carbon price, they want to know how you did that. And.
00:21:03:12 - 00:21:26:26
Roger Ballentine: Aspects of this will go on the financial statements as well. So I think it's pretty clear why this is important. It's actually it's actually going to be more impactful to the companies when they're asked, well, tell us about your climate goals. And kind of looking at their shoes. We don't have one of those, you know, what's your governance structure?
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Roger Ballentine: You know, she wouldn't really have one of those. It's going to put a lot of pressure on companies because this is full open kimono. And before you go to the beach and open your kimono, you know, you might want to go to the gym and tighten up those abs. And I think that's really what's going to happen in the marketplace with this.
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Roger Ballentine: So this is a really, really big deal. Last aligner I'll mention of climate action and business strategy. There's opportunity here. You know, back to back to Bill Clinton. And you know, the big idea. There's tremendous opportunity here. I think it was McKinsey study, $23 trillion in investable opportunity in the next decade. Here. There's a lot of opportunities for companies to be part of the solution and make money doing so.
00:22:13:09 - 00:22:42:25
Roger Ballentine: So the you know, what's what's my this is my takeaway. This is a slide that, you know, I used probably 20 years ago. And it wasn't even true. I was just kind of hoping, you know, someday maybe. But I think I'm I feel absolutely, firmly convinced that at this intersection is how you build a successful and sustainable from an economic perspective, business strategy, because you're not in that intersection.
00:22:42:25 - 00:23:16:14
Roger Ballentine: You're either working against people, you're working against planet, or you're working against profit. And none of those things are, you know, you run a business. So again, is this actually happening? Are we seeing climate capitalism take root? Certainly to the extent that you look at numbers again, five fold increase in the last five or so years, and companies that are setting some degree of of meaningful climate goal, that's a big change.
00:23:16:14 - 00:23:43:19
Roger Ballentine: And that trajectory is maintained in underway. And we've even seen more in the US and fortune 500 companies. If you're a major company, you don't have a meaningful climate goal. You're you're quickly becoming an outlier. And there is a lot of, you know, herd mentality in the marketplace. And that can be good. And in this case, it is it is good.
00:23:43:22 - 00:24:14:24
Roger Ballentine: So what are we you guys know about most of these? I'm sure. So I won't spend too much, too much time on it so we can get the question sooner rather than later. But the number of companies that are joining these are just a few that are joining these different coalitions or committing to things like reporting their emissions, under which again, soon may actually be the law, something similar to it.
00:24:14:27 - 00:24:50:16
Roger Ballentine: The difference between where we are today in terms of the number of companies that have taken this issue seriously to some extent, is remarkable and are some kind of going, kicking and screaming maybe or some going because they've, you know, drank my Kool-Aid, that no, this is actually the way to be a more profitable business if X and I don't necessarily even care if it's happening and if it's real.
00:24:50:18 - 00:25:02:23
Roger Ballentine: So before I kind of wind up and and see if I can learn something from you all.
00:25:02:25 - 00:25:27:11
Roger Ballentine: I got, I just got I got to pick a couple of minutes. And so the story, you know, the story I've portrayed here obviously is very much a glass half full optimistic. Let's look at the good things that are happening and, you know, maybe not pay as much attention to the companies that aren't moving in a climate capitalism direction.
00:25:27:11 - 00:26:16:06
Roger Ballentine: That's intentional. But I you know, as I said, those that aren't are gonna or they're going to fail. So I don't spend too much time worrying about them, actually, where I'm spending my time worrying a little bit more. Maybe this is misplaced energy, but I don't think so in that the, ecosystem driven in part by significant part by stakeholders and environmental stakeholders, climate concern stakeholders of which I consider myself one, have crafted expectations and rules and programs and that that companies are asked to follow, by and large, overwhelmingly really, really good.
00:26:16:09 - 00:27:02:18
Roger Ballentine: But they may not be good enough and they may need some. We may need to tweak a little bit what we're asking companies to do and how we can steer climate beneficial market force in a way that better optimizes climate outcome while still delivering opportunity and interest from the companies themselves. I'm just going to talk about two in particular, and I have to warn you, this gets a little bit nerdy, so I'm happy to have a follow up conversation with with any fellow nerds out there on on either this.
00:27:02:20 - 00:27:36:12
Roger Ballentine: But I want to talk a little bit about corporate clean energy procurement, because it is one of the biggest tools that that companies have in driving decarbonization. Corporate procurement has led to the deployment of almost 50GW of utility scale wind and solar in United States since 2008. That's kind of an incremental, enormous increment of wind and solar capacity above what was happening because of other policies like tax credits and renewable portfolio standards and all that's pure ad from the marketplace.
00:27:36:13 - 00:28:12:02
Roger Ballentine: And that is a good thing. But if you dig a little deeper, it may not be as good as it needs to be. And it has to do with how we, how we ask companies to do this. So everything I just said about all that renewable energy, it's great. But if you actually look at where we are in decarbonizing electricity sector, which is job number one, because it's the sector that is really hard to decarbonize, and it's actually the easiest.
00:28:12:08 - 00:28:38:21
Roger Ballentine: So, and not only that, it's the sector that we need to decarbonize faster than a mid-century target, because we're then going to need that zero carbon grid to help us, you know, decarbonize other sectors. And as people in this room know far better than me, that includes the built environment. There's there's tremendous urgency in decarbonizing the electricity sector.
00:28:38:21 - 00:29:17:13
Roger Ballentine: And my question is, are we optimizing the market to help us achieve that? So back to wind and solar. The problem is we will not decarbonize the grid with a pure grid focus of wind and solar and batteries. Batteries can help solve the problem. You see on the upper left, which is there's just a mismatch. We don't we don't decide when the sun shines or when the wind blows in.
00:29:17:13 - 00:29:41:16
Roger Ballentine: Load tends to follow a different pattern. So inevitably we have gaps, we have deficits, we have surpluses. And those become more exasperated, exacerbated as we get beyond the day, the week, the month to a season. And we have no storage technology that can fill a seasonal gap. The other problem is more of a political economy problem as well as as well as a scientific problem.
00:29:41:16 - 00:30:19:05
Roger Ballentine: What you see on the right, which is a pure renewables pathway to decarbonize the grid, which is the green you see here, is the most expensive. It's also doesn't get yet all the way, which you can see is kind of the asymptotic nature of a wind solar approach alone. And what this tells us is we need all forms of decarbonized electricity, particularly including forms of decarbonized electricity that are in fact firm and dispatchable, can fill those gaps.
00:30:19:07 - 00:30:49:10
Roger Ballentine: And why is this a nitpick? Because back to our our ecosystem, back to our science based target initiative. Already 100 the types of programs that we, the environmental stakeholder community, encourage companies to follow are leading them on a path that is not optimized to actually decarbonize the sector. So we need to make some changes. We need to make some changes there in terms of what we're asking companies to do.
00:30:49:10 - 00:31:15:27
Roger Ballentine: And super, super nerdy, the the other challenges, the way that we ask companies to calculate and report their missions. This is under the Greenhouse Gas Protocol, which is the baseline and kind of underlying set of rules which virtually all of these recognition and leadership programs use, in which potentially the SEC will incorporate somewhat wholesale into its mandatory disclosures.
00:31:15:27 - 00:31:37:21
Roger Ballentine: And there's a couple problems with that when it comes to electricity. The first is that if you look at this company on the left in this picture, you can see it. This is a company that is slowed. Its consumption is across the middle. They bought a whole bunch of more wind and solar, which is kind of that dome looking peak.
00:31:37:23 - 00:32:00:20
Roger Ballentine: And that equals all that green and black you see over there. So in terms of a total annual amount of energy, they bought enough renewables to cover all of their consumption. But the fact is even at 100% and they now can say they are 100% renewable using 100% renewable. They are not. You still see that black over there?
00:32:00:20 - 00:32:27:05
Roger Ballentine: Even your 100% renewable company is still consuming fossil energy from the grid. But under the greenhouse gas protocols, you move over to the right. Almost magically, a company is allowed to erase all those actual emissions associated with its continued electricity production and save the marketplace. We are 100% renewable, when in fact they are not. What's the problem with that?
00:32:27:05 - 00:32:52:18
Roger Ballentine: Was a couple of problems. And companies are not doing anything wrong here. They're following the rules we have set for them. But we're now letting that company say, I just checked the energy box when they haven't because they're still consuming fossil. And we got to get that fossil off the grid. And we need the market focused on getting that fossil off the grid, not just focused on investing in enough wind and solar to offset their own emissions.
00:32:52:20 - 00:33:24:25
Roger Ballentine: So that's the that's the sub optimization of market force that is a result of this kind of accounting approach. That and the recognition programs that are just leading to a suboptimal outcome from a climate perspective. So sorry, that was tremendously nerdy. And just talk about one more thing. And this has to do with offsets and voluntary carbon markets.
00:33:24:27 - 00:33:52:00
Roger Ballentine: Certainly there's immense potential here. If you look at the size of voluntary carbon markets today and the projected increase in the amount of capital that's going to be out there looking to invest in climate mitigation, it is enormous. And that amount of climate capital means there's going to be a lot more people in the marketplace, companies in the marketplace looking to buy offsets.
00:33:52:01 - 00:34:20:15
Roger Ballentine: Sarah mentioned Microsoft in particular, which has been fabulous here. And in my view, we should encourage this type of activity. But the fact is, there's still a lot of rhetoric and narrative in the marketplace that's very broad brush anti offset. We've got to get past that. We absolutely need this capital to be deployed. There are some who will say two two reasons people don't like offsets.
00:34:20:16 - 00:34:41:25
Roger Ballentine: One, they say well that's cheating because you should be doing the hard work of reducing your own footprint emissions and not going by an emission somewhere else. Okay, fair. If you could have gotten another tonne out of your own value chain, wouldn't it be better if you got that than getting it outside your value chain? Well, from a climate perspective, there's no difference.
00:34:41:25 - 00:35:05:22
Roger Ballentine: The climate doesn't care. But if you can get an additional there's a certain responsibility we expect from companies in reducing their own footprint. That's where they should go first. There's no question about it. But what if the next marginal footprint tonne from their value chain just is too expensive and there's another tonne somewhere else that's less expensive that might get invested in?
00:35:05:23 - 00:35:31:21
Roger Ballentine: We want them to do that. That's a it's a it's a it's an overall it's an overall benefit to the climate. And then of course there's criticisms that are very fair of offsets that some of them just aren't even real. And they don't represent real emission reductions. And no, we should not encourage those. But we have ways of distinguishing broad brush against offsets doesn't help holds back the potential of the market to contribute in an optimal way.
00:35:31:23 - 00:36:05:10
Roger Ballentine: Last point this was also mentioned by by Sarah. And that's the concept of removal. And this does drive me a little bit nuts. Sometimes when I hear people use the term net zero, when what they really mean is zero, not net zero, net zero is actually the scientific goal, which is a balance of dramatically reduced emissions and removal of carbon dioxide to to hit that net zero target by mid-century to keep us at a 1.5 degree increase.
00:36:05:11 - 00:36:44:01
Roger Ballentine: So at the very least, we should be encouraging investment in carbon removal based offsets. But again, our ecosystems are not necessarily aligned to optimize that amount of capital that could go into carbon removals. The science based targeted initiative, for example, does not allow you to apply removals to your own company targets. So I think we need to rethink some of these things and keep a focus, in my view, on how we maximize the climate return on every dollar of climate spend.
00:36:44:03 - 00:37:15:13
Roger Ballentine: I'm going to stop. And despite those quibbles, I am extraordinarily optimistic about how the market has already shifted, how I think it's going to continue to shift, and how increasingly the private sector is going to be more of an ally than a foe in in addressing climate change. And given the stubbornness of our political economy, we need this more than ever.
00:37:15:13 - 00:37:33:19
Roger Ballentine: So, yes, we're doing great things. We need to go faster. We need to do more. So with that, I'm going to stop and say thank you so much. And if we have time, which I think we do, I'd love to hear from Ellen. Thank you.
00:37:33:22 - 00:37:56:07
Mike Collignon: All right. Thank you Roger. Appreciate it much. And yes, please send in your questions. We do have some time for questions and we already have questions. You know, I had a question for you, Roger. I know it's it's somewhat faded from the forefront of the public discourse, but what is your opinion of the Green New Deal. Is it the big idea that we need.
00:37:56:08 - 00:38:02:28
Mike Collignon: Is it a Band-Aid? Is it somewhere in between?
00:38:03:01 - 00:38:43:10
Roger Ballentine: Well, I guess I just kind of push back on the premise. I don't know what the Green New Deal is, and I'm not sure anyone does. And you could ask ten different people and get ten different answers. Okay. So, and, you know, I haven't heard the term in a little bit. At its core, it was entirely, in my view, appropriate, which is it is about making that fundamental shift in through mostly the power and reach of government to dramatically increase our efforts or political efforts to address climate change.
00:38:43:13 - 00:38:50:06
Roger Ballentine: So I applaud that. But the.
00:38:50:09 - 00:39:30:20
Roger Ballentine: No policy that cannot be enacted is effective. And I it's a difficult it's a difficult, you know, compromises is a dirty word. And, you know, I'm, I sympathize with and and feel this way myself that, you know, we can't compromise on the planet. So if, if anything less than everything is not deemed adequate, I get that, but we're not necessarily doing the climate any favors if the alternative is nothing.
00:39:30:20 - 00:39:59:12
Roger Ballentine: So I think it's really hard. It's a as a political proposition. It's a dead letter as it was originally conceived. But I would say, forget the Green New Deal. If you look at what's in a what the president has already signed into law on the infrastructure bill, what the president has for climate change in to address climate change in his what used to be called the Build Back better legislation we're now referring to is something else.
00:39:59:12 - 00:40:16:22
Roger Ballentine: It's enormous. It's huge would be the biggest climate policy ever enacted. And the infrastructure bill now holds that distinction. So we need more. We need to get it done. But getting nothing done is is not an option.
00:40:16:24 - 00:40:38:12
Mike Collignon: Gotcha. Wanted to get to a question from Pete. He asks that it seems like many of the next big ideas are only open to big players right now. So how do small investors or potential investors get involved now in order to contribute to market pressures? And hey, maybe make a little money as well.
00:40:38:14 - 00:41:03:01
Roger Ballentine: Yeah. Well, look, I think from the from the investor side, I think both sides from both the investor side in the in the company side, you don't have to be big. You know, I mentioned I'm with a little private equity firm and we're little and we invent we invest in relatively small companies. But the value we see in them is how their climate capitalism aligned.
00:41:03:02 - 00:41:28:04
Roger Ballentine: You know, how they are actually rowing with the tides of this larger ecosystem of of that's driving the market related to climate change. You don't have to be a big investor or a big company to extract that value. It is true that in terms of, you know, the aggregate impact that, you know, a company can have, yes, that that scales with scale.
00:41:28:09 - 00:42:02:11
Roger Ballentine: But in terms of of how you would evaluate the, you know, in impact investor in this space, I would argue is also a return maximizing investor because even those smaller impact investments, if you're doing it right, you're you're investing in companies whose whose success financial success means environmental progress. You know, that's that intersection where, you know, where I live and work.
00:42:02:11 - 00:42:11:23
Roger Ballentine: If my clients do better, the world's a better place. And, you know, I get up happy to go to work every day. But that doesn't necessarily depend on scalar.
00:42:11:26 - 00:42:25:19
Mike Collignon: Keeping it on that smaller scale viewpoint. For just a minute, Monica wanted to know if you can give us some examples of carbon removal as it relates to individual companies.
00:42:25:22 - 00:42:28:19
Roger Ballentine: So.
00:42:28:21 - 00:42:40:22
Roger Ballentine: Immediately drawn to Microsoft here, of course, which is an outlier. It's just the size, ambition, talent, everything else.
00:42:40:25 - 00:42:58:13
Roger Ballentine: But the. Let me go back to the concept of net zero. Right. So companies are adopting net zero targets and you are adopting a net zero target with removal specifically in mind.
00:42:58:16 - 00:43:19:21
Roger Ballentine: In those who are encouraging them to do so. Kind of think of a company's net zero target as a zero target when, okay, if a company can get to zero, that's great, because the global scientific net zero is a term that is used globally by the scientific community to to describe the end state, we need to get to, to save the planet.
00:43:19:22 - 00:43:40:17
Roger Ballentine: Right. And but we've now taken that term and we're using it at the country scale and we're using it at the company scale, and we're using it the building scale. Right. As you all as you all know, along that kind of narrowing the focus of the use of that term, I think removals start to kind of fall by the wayside.
00:43:40:19 - 00:44:07:23
Roger Ballentine: And, you know, is that okay? Maybe it's okay. But as a contribution to the global problem, which is ultimately what this is, anybody investing in removals is making a contribution. So planting trees is a removal. What we're what we're seeing growth in the talk about the talk about climate tech. Right. Well the amount of money is being raised by direct air capture companies.
00:44:07:24 - 00:44:35:28
Roger Ballentine: You know just building these elaborate machines, the enormous there's a bit of a challenge there related to what I talked about in terms of offsets, because actually what those machines are is they're offset production lines. That's what they're kicking out or offsets. And they need somebody to buy those offsets, those negative emissions, those removals, those are removal based offsets.
00:44:36:00 - 00:44:58:12
Roger Ballentine: But nevertheless the commodity that will be transacted is an offset. So again, all the more reason to pump the brakes a little bit when when you hear an overly negative narrative about, about offsets. But, you know, could a company by a stream invest in a direct air capture or by some of the the the negative emissions coming off of direct capture?
00:44:58:13 - 00:45:27:24
Roger Ballentine: Sure. You do that. And again, we'd be better off if if we had systems and expectations and rules in place that allowed that company to really get the direct benefit in terms of the calculation of their carbon footprint or reputational or otherwise, we're not quite there yet. But what we are seeing in the marketplace, around around offsets is, you know, a beginning to see removal based offsets being a little more acceptable and prioritize.
00:45:27:24 - 00:45:40:28
Roger Ballentine: And maybe they should be. But I think there's there's any number of ways that that companies can stick their toe in the, in, in the removal part of the net zero equation.
00:45:41:00 - 00:45:58:24
Mike Collignon: Okay. We have a question from Sarah. Which oversight organizations are coalitions or policy advocates. Do you see being the most impactful with respect to driving climate capitalism?
00:45:58:26 - 00:46:21:16
Roger Ballentine: Oh boy. You know, let me answer by saying who I hope it will be someday. It's going to be like the Chamber of Commerce, the Business Roundtable, all all of the, you know, the business organizations that historically have been the obstacles to progress. I'd love to see them just do a complete 180 and realized like lowly crap, we were totally wrong about this.
00:46:21:18 - 00:46:45:25
Roger Ballentine: You know, we got to, you know, we got to kind of jump on the bandwagon. So that's my fantasy. We're not there yet. You know, in the meantime, it's still a little lonely. Sarah, frankly, you know, recognition is growing. You're seeing more, you know, you saw before some of the different coalitions that companies are, are joining related to climate commitments and so forth.
00:46:45:27 - 00:47:13:12
Roger Ballentine: I mean, maybe companies are doing that because they think it's bad for their business. I don't think so. I think they're actually demonstrating, you know, that the this, this intersection of, of addressing climate change and increasing value is, is where they want to be. And it's examples of that. So certainly more and more companies without using the term which is fine I don't have it patent it are moving in that direction.
00:47:13:12 - 00:47:42:08
Roger Ballentine: So I think it's I think it's a good thing there's still and I would say in the kind of 30 years I've been in this business, I think the attitudes of the environmental community writ large have also kind of shifted from from kind of overwhelming skepticism to of the role of markets and the private sector to really working productively to help, to help harness providing expertise, providing encouragement of that.
00:47:42:11 - 00:48:04:10
Roger Ballentine: Again, in my nitpick, you know, we kind of need to switch a little bit the way we're, you know, kind of asking companies to move. But I'm seeing, you know, significant shift in mainstream environmental community in support of making markets work for climate change. So it's happening. Things are kind of coming in the middle. I think the business community is kind of move in a way from this is nothing but a disaster.
00:48:04:10 - 00:48:23:12
Roger Ballentine: And the environmental community saying, you know, a government swung hammer is the only way we can solve this problem. And, you know, we're kind of coming together in the middle a little bit, which is where I live, which is traditionally a pretty lonely place. But, yeah, I think it's I think we stay in progress.
00:48:23:14 - 00:48:39:22
Mike Collignon: And I want to hit on that with this next question. I got three, three more questions for you, Roger, if you don't mind, but I want to hit on that sentiment of that kind of coming together towards the middle, because I noticed one of your slides cited Munich Re as a source.
00:48:39:25 - 00:48:40:29
Roger Ballentine: Yeah.
00:48:41:02 - 00:48:53:10
Mike Collignon: Those of you who aren't familiar, it stands for Munich Reinsurance Company. How much of this progress or momentum could be quasi mandated by insurance carriers?
00:48:53:16 - 00:49:10:13
Roger Ballentine: Yeah, it's a great, great, great point. Insurance industries. And for whatever reason, it's really been the European based reinsurers Munich Re, Swiss Re.
00:49:10:15 - 00:49:43:11
Roger Ballentine: Who have been at the forefront of this, 20 years of climate in general and in incorporating climate considerations into their business models for obvious reasons. Right. That risk, you know, we're we're talking about your point about, again, another reason I do what I do, which is the rules of the marketplace are not just written by regulators.
00:49:43:13 - 00:50:03:14
Roger Ballentine: Now there's regulators, there's regulation, and then there's kind of quasi regulatory and just just powerful market force. They all drive behavior. So absolutely the you know.
00:50:03:16 - 00:50:13:02
Roger Ballentine: It doesn't work overnight. I mean, if you want to go buy, you know, build a home in certain places in the United States, you can't get flood insurance.
00:50:13:04 - 00:50:42:10
Roger Ballentine: Does that have an effect on where you build your home and or how much you care about climate? Maybe. So the insurance industry is already very influential, can be tremendously more influential. I'd like to see some of the more consumer facing insurance brands kind of pick up on this. A little bit more of it has been the reinsurance industry.
00:50:42:11 - 00:50:57:03
Roger Ballentine: Their actions, their pricing, their decisions will drive behavior. And you're right, that really does have kind of a quasi regulatory effect. And it's only going to get stronger.
00:50:57:05 - 00:51:08:17
Mike Collignon: Sara wanted to know as we shift to a more regulated business environment. What do you think's going to happen to companies that merely check boxes and aren't authentic or transparent?
00:51:08:19 - 00:51:35:05
Roger Ballentine: Well, I think the SEC is a game changer on this. Again, the rule is not final. You know, we have to finalize the rule and then we got to fight about it in court. You know, we're long way from there. But what I, I've done a couple of talks just on, on that particular issue that the companies that look at this as a legal compliance matter are going to miss the boat.
00:51:35:07 - 00:52:14:16
Roger Ballentine: It is a sec. It will be a sec regulation. Obviously, your lawyers need to make sure you comply. But if you stop at that, are missing the boat. And like I said, you know, once the kimono opens up, you kind of are going to care more about what's there and what's not there. And I think that sunshine is going to drive companies in further in, in adopting policies and practices.
00:52:14:16 - 00:52:44:29
Roger Ballentine: And, and if nothing else, force some companies. And I think this is relatively few who who aren't who haven't thought about climate in some sort of proactive how do we improve as opposed to how do we stop and avoid? I think that's a really small number, but I think it will push more companies towards the leadership spectrum as it's currently established.
00:52:45:02 - 00:53:11:07
Roger Ballentine: And, you know, keep in mind that sustainability and climate leadership and and expectations and what constitutes a leader in the private sector on climate is a constantly changing concept. And it's not one. It's one that only goes in one direction. It is a ratchet. So you know, what was best practice two years ago probably is not today.
00:53:11:09 - 00:53:44:01
Roger Ballentine: And so the goalposts are moving, but that's the way leadership works. Yesterday's leaders are today's kind of mainstream. And that's that's that's the way it works. So I think it's going to have a tremendous, tremendous impact. I'm really, really excited about it and just hope that it gets over the finish line. I have pics about it. I have quibbles, of course, but you know, by and large this could be just one of the most impactful climate policies ever.
00:53:44:04 - 00:53:45:29
Mike Collignon: Change is the only constant. Right? Roger.
00:53:46:05 - 00:53:47:24
Roger Ballentine: That's right.
00:53:47:26 - 00:54:03:29
Mike Collignon: All right. I got one last question. I think it's a good one to end on. It's from Kimberly. She wants to know, are there any key stakeholders critical to this transition who are currently under utilized or under engaged?
00:54:04:02 - 00:54:07:12
Roger Ballentine: Good question.
00:54:07:15 - 00:54:45:08
Roger Ballentine: I would I couple of years ago I would have said young people that's changing. And their voices matter. They matter in the marketplace and they matter in the political marketplace. So, you know, are they underutilized? We're all underutilized, but that's gotten a lot better. I think the you're getting more specific. You mentioned one. The insurance, the insurance sector, you know, should that be a sector that's more impactful engaged in it is today.
00:54:45:08 - 00:55:09:02
Roger Ballentine: Absolutely. The financial sector at large. Now you're seeing investors move in this direction. But it's more and you're now seeing the SEC you know, at the microeconomic level, the Federal Reserve needs to do more. Certainly they're doing a lot more than they were a few years ago. But you know, you compare the US Federal Reserve to central banks and other parts of the world.
00:55:09:03 - 00:55:25:09
Roger Ballentine: They're actually well behind in kind of articulating systemic the systemic nature of climate change, financial system perspective. So I think.
00:55:25:11 - 00:56:07:17
Roger Ballentine: Monetary policy makers and financial sector regulators need to do more. And certainly on the Biden administration, there they are. To the extent it's not the Federal Reserve which is independent. So I find promising that as well, I think the agricultural sector is a big underperformers, by and large, at least in the policy front from a, you know, kind of organized, traditional sector lobbying perspective as well as some major companies, they are really in the crosshairs as much as any other sector, the real estate sector, not hearing enough from them.
00:56:07:17 - 00:56:10:14
Roger Ballentine: So.
00:56:10:16 - 00:56:32:00
Roger Ballentine: This could be a long answer because I could keep going because just I can go back to my graph of showing how we're doing on emissions and say, nobody's doing enough. And that's true. There's no question about that. But again, I retain enough optimism to get out of bed in the morning and come down to my dining room and go to work.
00:56:32:02 - 00:56:45:21
Mike Collignon: Well, we're glad that you did today, Roger, because this was a fantastic talk of got a couple of compliments from our audience sent in thanking you for your time. And I certainly thank you for this was great.
00:56:45:22 - 00:56:50:27
Roger Ballentine: Thank you. Thank you Mike. Thank you Sarah. Thank you everybody. Really enjoy the rest of the conference and thanks for the opportunity.