Ep 56: The Rt Hon The Lord Mayor William Russell 'Greening the City of London'

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Michael Liebreich: Before we start, if you're enjoying these conversations, please make sure that you like or subscribe to Cleaning Up, it really helps other people to find us. Cleaning Up is brought to you by the Liebreich Foundation and the Gilardini Foundation. Hello, I'm Michael Liebreich and this is Cleaning Up. My guest today is the Right Honourable William Russell, the 692nd Lord, Mayor of London. Let's bring William Russell into the conversation. William, thank you very, very much for joining us here on Cleaning Up.

William Russell: Michael thank you for having me.

ML: It's a great pleasure to see you in your official finery as Lord Mayor of London.

WR: Well, occasionally I wear my badge and for this podcast, I'm keen that you know, I'm in the Mansion House wearing the Lord Mayor's finery.

ML: And you know, I'm such a stickler for formalities. And no doubt that was one of the reasons why you wanted to make the commute today to make sure you had all of the trappings of office.

WR: Absolutely. Well, I've been here since April the 12th. Michael, leading from the front.

ML: Very good, very good. I hope that City workers are trickling back to their desks now that the summer is over.

WR: They are indeed. My benchmark is Pret a Manger down the road. And two days ago, they'd sold out of everything by one o'clock. So that's all you need to know.

ML: Well, I think that's good news. I think that's good, as long as it wasn't a lorry driver that couldn't replenish the shelves or whatever. Absolutely. Can we do this to get started? So because we've got a very diverse audience around the world, and they won't all know what the Lord Mayor is, and they won't necessarily know and I know you've answered this question a million times the difference between the Lord Mayor and the Mayor of London. And, and then if you know, explain, you are the 692nd in a long line that goes back to Dick Whittington and beyond. So if you could explain all of that, as in the sort of short version, that would be very, very helpful. I think.

WR: I'm happy to do so. So yes, as you said, I'm the 692nd Lord Mayor of the City of London, the mayoralty dates back to 1189. And my role is very much an ambassador for financial professional services for the whole of the UK that employs 2.3 million people, is 8% of our GDP and 11% of our tax take. And in a normal year, I travel 100 days a year around the world, probably to 30 different countries promoting this very important sector. However, this is not a normal year. In fact, it's not a normal two years, Michael, I am Lord Mayor for two years. And the last time that happened was 1860-1861 there was a Lord Mayor called William Cubitt of Cubitt town he built Cubitt Town down in the Isle of Dogs and built Covent Garden and it was his brother Tom Cubitt who built Belgravia. So it isn't, it is a very different time. And he was given, by the way, a second year of being Lord Mayor, because his largesse to the city was so great. They said give him another year. And I jokingly say I'm probably the cheapest Lord Mayor that there's ever been. However, you're absolutely right. I think 28 Lord Mayors since 1189 have done back to back years. But there's one Lord Mayor who did four years in total who did that in 1397 and 1398. And yes, you're right, it was Dick Whittington so I never thought I would have that in common with Dick Whittington, but I do and I jokingly say to those you know the Dick Whittington story, I'm still looking for the cat to bring to the Mansion House. But to answer your other question about the difference between myself and Sadiq Khan, The Mayor of London. Firstly, my mayoralty dates back to 1189. His doesn't. Secondly, he's elected every four years and looks after the whole of London, which is 9 million people. My territory, even though it is part of his territory, really, but we work very close together is the Square Mile. And the closest comparison to the Square Mile, I think, is probably the Vatican. We aren't as powerful as what they have in the Vatican. But that's the way I see it. And we have our own police force. And we're probably one of the wealthiest local authorities in the world, let alone in the UK.

ML: Thank you for that. I could draw other differences between you and the Mayor of London. You are highly effective and competent. But let's move on. Now, you've been, you are the champion for the City of London. What does that actually involve? Because as for most of our audience, they're sort of aware that it exists, probably don't know that much about the role of financial services or the financial sector, in allocating resources, in managing risks in financing things, and then why do you need to promote them at all? And why do you need to promote London?

WR: A very good question. So, I mean, in partly in answering that question, when I do travel the world, and whether it's Shanghai or, or America, many cities say I wish we had the City of London Corporation, because what we do effectively, because we date back from such a long period, and the wealth we have is over hundreds of years, we for free, promote financial professional services, the ecosystem that we have here, whether it's the law firms, the rule of law, whether it's insurance, whether it's asset management, we're the largest, second largest asset management centre of the world, after America, and insurance, Lloyds, the Lloyds insurance market is 29% of the GDP of the financial sector. Whether it's maritime, which people forget about, whether it's fintech, whether it's now green finance, you know, we effectively promote that around the world. So for example, I have done calls today with the regulator in Jakarta. I was in Thailand today, talking about fintech. And I was in Sydney first thing this morning, virtually, of course, but what we're doing is that, you know, our services and providing professional service are such a huge asset. And it's such a huge export for us, that, that it's good that somebody's the titular head out there promoting this sector for the UK, and hence, part of the reason why we are where we are in the global financial world, I would say, number two to New York at the moment, but we're looking very hard at how we're going to get back number one slot back.

ML: Right, because we were number one for some six or eight years, we managed to get our nose out in front.

WR: Yeah, that's right. I mean, look, Brexit has changed things a bit. But I mean, I can give you a very optimistic view of London and what we have here, going forward, and you and I have got to know each other on the Board of Trade. But you know, a lot of it is around, you know, carbon voluntary markets, green finance, and the opportunities for London to really dominate that space with COP26 coming up.

ML: And indeed, our paths crossed because of the Board of Trade. But actually, they crossed from time to time before then just talking about green finance, because you have really lent into the whole green finance and sustainable finance trend. I would say in a way that your predecessors, maybe the times were different, but they didn't really do that. I wasn't that aware of it. But you have been a huge champion for green finance, do you want to talk through some of the things that you've done in that space?

WR: Absolutely. So I mean, in 2015, I made the decision that fintech was going to be a big thing. It is enormous for us. And in a way fintech goes hand in glove with green tech, and what's going to happen in green finance. And I think the City, as I look back in history, has always been able to innovate over the centuries. And just just just to give one more little sort of story, or what's critical to what the City is, and you may, you know, I suspect all about the livery companies, but the so everyone knows, the livery companies were the trading bodies of the city, and whether it's the fishmongers or the vintners, or the butchers, and and if you got your freedom of the city, it gave you a right to really trade in those sectors. And you were Freeman, probably of one of the livery companies. So we've always been a trading city. And we've always adapted to what's going on in the world. Whether it's after the Fire of London, whether it's, you know, after the Blitz, and here we are, again, we're adapting after Brexit and around Covid. And Covid has enhanced our status as the Fintech centre of the world, in my opinion. And I genuinely believe that the delay of COP as much as we didn't want any delays. And by the way, my sources tell me this one definitely isn't being delayed. So don't believe everything that you read in the papers. Because I think that would be the wrong thing to do. But the delay in COP has helped us get our sort of act together even further, so probably about when I became Lord Mayor in November, 2019 COP was coming up in November 2020. I'd already sort of figured that this was going to be a big event. But there was a key event in November 2020. That really focused my mind even more, and that was the Green Horizon Summit, which you and I spoke about, where we had over 90 countries represented. I co-hosted it here, at the Mansion House with Mark Carney, and also Mark being a long term friend who has been very influential to me. In fact, I would always argue that the real influence on Mark Carney and myself is his wife, Diana who was way ahead of all of us when it came to the green agenda. But obviously he made that famous speech about the horizon. And that was a game changing moment for financial services, because he was just pointing out, you know, there's a disaster waiting to happen. And we need to look at resilience, look at risk, because it affects all of us, as you know, too well. And one thing I will say to this audience is that what I've learned from Michael over the last year and a half having got to know him has been phenomenal. And still in awe of his knowledge of everything to do with the climate and climate change. So there's a platitude for you, Michael, but I tell you, I, it is, it is never a truer word. So I got into that, I just could see the effect. And then, you know, the last event we had here was March 2020, which was hosting the bushfires fundraiser. And we had the bushfires, and you could see what was going on in the world. But you could also see the opportunities that were there for the City. And you know, whether it's around carbon markets, whether it's around, you know, just green finance as a space, I mean, a lot of people focus on green bonds. Saying, you haven't listed as many green bonds here as Amsterdam, I said, it's not about green bonds, it's about the whole ecosystem. So my theory is very simple. We have this ecosystem, as I said, rule of law, asset management, insurance, maritime, everything's here. And what's going to happen is that the ecosystem is going to be naturally green, it's going to turn green, because this is the biggest opportunity of a generation. And they recognise it and they're smart people here, all these companies, and it's happening as I speak. And finally, after the professional services side, Deloittes, KPMGs, the PwCs. They are massively influential. It's because of course, all these big corporations have them as advisors. And they want to say, what do we do? The first question every corporation is asking now is, what do I do about sustainability, green finance, because this is going to be a much bigger event than anything we've seen around Covid-19. I know you and I have said that you ain't seen nothing yet, which is a bit depressing. But we've just got to stop what could go wrong in the future.

ML: Right. So I'm sort of, I'm basking this, I'm enjoying it. Because you said very nice things about me, there's me, I feel like I've been beavering away in this kind of clean, green finance, sustainability, net zero before it was called that, and so on. And so it's great to be able to kind of help in any way. But also because I found New Energy Finance, it's now Bloomberg NEF, and it is the world's premier information provider. And I founded it in London. And so I'm part of that or the thing that I created is very, very much part of that ecosystem. And right at the core, all the people you mentioned, when they work on clean energy, clean transportation, carbon finance, etc, etc. They're all using the services, you know, they're all relying on the team that I built. 

WR: My obvious observation to you Michael is that you sold out too early. 

ML: You know, because the business has grown 10 times since I sold it, I sold it very well, I spend some of my time in Switzerland, lovely house in London, and, and I've been able to spend time with my family with my father, who was not well when I sold it, and so do I have regrets? No, but there is part of me that thinks, damn, Michael, you'd make a fine billionaire. You know, I'm young, you're young. Maybe when you finish being Lord Mayor, we'll figure out some way to kind of correct this huge injustice that I'm not one. Because just to recap, just before we go back onto green finance, because you are a practitioner in finance, you are, you have a, you're a thoroughbred, you're not somebody who has come through the political system to represent effectively a borough of London, which happens to be the City you are a financier, are you not?

WR: Yes. So I started my career at First Boston, ageing myself, in 1987. I was at Durham University. And then I went to Merrill Lynch. I always worked for the Americans. I worked out quite early on the meritocracy of the American society and American corporate world. If you do a good job, we'll pay you whatever it takes. And you know, and that was great. And I left Merrill Lynch in 2006. I jokingly say because I could see I could see what was coming. I think it was more to do with wanting to see my children more, like yourself, and enjoy their schooling and go to the sports field and stand on the touchline and annoy them. They humoured their father very well, my boys and my daughter, but, I have and I do think this role has changed, where you do need to know a little bit or a lot about financial sector. However, the privilege of being Lord Mayor is that you learn a hell of a lot on the job. And that's fascinating because you meet so many interesting people, and you know, you being one of them, but of course, we joke about our new friend Tony Abbott, you know, and all that. So you know that if you like people and you you want to learn and more about so many different things in life, then then, you know, that is, that is great, but I think that probably the people often ask me, What as Lord Mayor is the one major thing that you feel is important. And it's that soft convening power. And that is, it's difficult to, to, to, to articulate or put up something, value on it, or tangible value, but it is that network, you are bringing people together, I always say I opened the door, I take people through the door into the room, and then I leave them to do the deals because you can't go too far to the weeds, so to speak. But I think it's huge. And the convening power is one of the big game changers as Lord Mayor as people want to come to the Mansion House. So if you write them a letter and say, you know, I'd like to meet you, more often than not, they find the time and say yes, so you can make a big difference that way and two years, in a way, has made that easier. And one year you're just running. Or I've been running 3000 zoom calls since May, sorry, March 2020. And you're just running and I'm zooming and it's fine, because now I've gone back to hybrid and and I find it very useful because I probably genuinely reached more people than any other Lord Mayor in the history of Mayoralty. And that's a lot of it's to do with what we're doing. Now. Here I am doing a podcast and it goes to 250 people.

ML: So just to…250, also on YouTube and a lot more via the podcast. Very good. It should be well into the thousands. We're getting, we're getting a growing audience. That's what that's well, well, well into the thousands. Just a bit of context there. You mentioned Tony Abbott, I forgot to mention to our audience that you and I sit on the Board of Trade. That behind me is a report we all worked on. And what was fabulous about it was that Tony Abbott, the former PM of Australia, who's also an advisor to the Board of Trade, just like you and me, was sort of, you know, that there was this kind of I don't want to say a fake conflict. But there was a sort of oppositionality set up by the whole system, I will, you know, we'll never get agreement. And actually, we worked very well. And I think that's a better report for the challenge that we brought pushing the green finance and services side of things. And that Tony brought with obviously, a more kind of purist, slightly libertarian trade based view, and it is a good report. So we're gonna put a link into the show notes. And Tony was on the show two weeks ago. I want to ask you something, though, I don't know if they've finished yet. But certainly a few days ago, we had an Extinction Rebellion, who decided that the number one target that they had to hit was the City of London. And I certainly when I look at the push for clean finance, green finance, whether it's green bonds, or whether it's whatever it is, and those services from the ecosystem, I can't conceive of how we're going to address climate change without that system being supported, redirected, maybe in the right direction, in fact not maybe redirected to finance the right things. But if we just think we can break that system and somehow deal with climate change, to me, that seems completely absurd. It's a very leading question, but I'm gonna say…

WR: I agree with you 100%. Literally, I’m here at <inaudible> outside the window, there were Extinction Rebellion all last week. And there was a side of me that wanted to sort of get on my microphone and go and talk to them and say, look, have you heard of this word transition? You can't get us to just dump all these oil stocks and all that, you know, all these assets, we need to help them transition to the right position. Because if we did that, you know, BP and I always use Royal Dutch Shell would be in dire straits, because no one owns their shares. And, and it's this transition and I've had a call with, and you probably met him, it’s worth getting him on your podcast, Bernard Looney, the CEO of BP and I had 40 minutes with him, and you know, is absolutely fascinating. He is genuinely making this transition. Not everyone's gonna agree with it. But you can already see that that EBITDA that he's generating from fossil fuel is being reinvested into renewables etc, because there is this transition. So I totally agree with you. And I know that Mark Carney agrees with you. And I know Mark Carney has had, you know, the meetings with Greta Thunberg. And that's where there’s differences even though I think, the Extinction Rebellion, what they have done is highlight and people are more aware of climate change, even if they don't necessarily agree with the way they go about it. But it's also quite interesting how, you know, with COP coming up, we have <inaudible>. And there are a couple of big financial institutions who haven't joined yet, and one of them was targeted by Extinction Rebellion, and there's this sort of, you know, then the pressure is on, and I don't obviously, in any way condone the way they've gone about it. However, they got a lot publicity. It's highlighted a lot of the issues that you and I talk about. And as I said, the transition is a critical path to getting where we're getting to. And you're absolutely right about finance. And the phrase I use, or have been using, since I gave a lecture back in February 2020 is greening finance, financing green, and we'll get to the day one day when the word green won't be there, every single aspect of finance is green. And it has to be because that's the only way we're going to get the trillions of dollars that we've got to spend to get to where we need to get to by 2050.

ML: Well, you've sort of done my segue for me. My next question was going to be how it was going to be about what you think about sustainable finance. Is it an asset class? Because you said, well, there's fintech and then that leads into green. But we've also got maritime, and we've got this and we've got that, you know, is it then a category of finance or a sector or set of products? Or? And you've already sort of answered it, you started your answer, at least, is it just everything has to take that into account and everything, just as you know, there are now very few internet companies, there was a time when internet was a category and a sector and a class. You know, all that, frankly, a lot of that went horribly wrong. Because in the end, the internet is everything, everything we do, this is the internet, we are on the internet right now. But it's not called that anymore. So will green finance just be called finance?

WR: Yes, definitely. And we are, I mean, it's already happening. So if I talk to, you know, some of the big private equity firms like KKR, when they invest in a business, and let’s they take a five-eight year view, they won't be able to sell that business, if it's not sustainable when they invest in the first place. So everyone is thinking about it, and they're thinking about it in every part of the world. Today, I did a fascinating call with the Indonesian Investment Authority. Now they've set up a sovereign wealth fund, it's literally 137 days old. But what's fascinating about that, is, you know, they're getting, you know, some money from obviously the Indonesian government, but other people, and my view is, the opportunity is, their first investment is going to be infrastructure in Indonesia, and they're trying to do it in a sustainable way. But think about the amount of money that we could put in the Indonesian Investment Authority, get a return on it, but all that money is going to make Indonesia a greener, more sustainable country. And this is how it's gonna happen. And I, as I said, I think we're moving very quickly, on a down that route, we can always move quicker, but but you're actually right, I don't know when the day will be when we can turn around and just say, you know, finance, it's all going to be sustainable. We're getting quite close, you know, it's not a separate asset class anymore. And every fund is going to have to look at themselves and say, you know, we just can no longer invest in companies that aren't doing what they should be doing around sustainability.

ML: Okay, we'll get back to how you tell whether companies are doing what they should be doing with respect to sustainability, and all the metrics and methodologies. Indonesia is a fantastic example, because going into COP, we've calculated, my team and I've calculated the net zero pledges, brackets, which aren't yet actions or laws, but they’re pledges, it's a start, they cover 80% of the global economy. Hugely impressive, way beyond Paris. However, they only cover 40% of the world's population. And it is places like Indonesia, Malaysia, India, and a lot of Africa that are not yet on track for net zero. 

WR: I think we're gonna get some before COP. So, I mean, on some of the calls, having the surprise of advice sent to you, Singapore hasn't made a net zero commitment. You probably know that, a lot of people on this call didn't. Of all the financial centres. I was really surprised to discover that.

ML: They've made a soft commitment, I believe they have declared an intention. 

WR: Yeah. Okay. Sorry, we could all declare our intention. I mean, we want at least we've gone to 2050 here in the UK. I mean, China has gone to 2060.

ML: The thing is, ours is in law. It is a very different kettle of fish to China's long term.

WR: I'm saying to my friends in Singapore, ‘Here you are, you're looking at the carbon voluntary markets, you're doing this, you're doing that, but you haven't made the net zero commitment. It just doesn't add up. How can you? You know, if people really want to take you seriously around the markets that you're trying to do, you should make those commitments.

ML: Funny. I had that same conversation with that very nice Tony Abbott two weeks ago.

WR: Australia. Well, we've just seen the news today in the free trade agreement where, you know, hiccup has been exactly what you and I, you know.

ML: To be honest, that for me is a non story. Why put a temperature into a trade deal? No sense at all, the attention to be in line with Paris was enshrined in the deal. That's enough. So I'm kind of absolutely with Tony on that one. To be quite honest, if it is what it seems it seems to me somebody is just troublemaking. But, what do we say? Okay, you're very optimistic, and that's good. But what do you say to the people who say, it's all great, fine, but it's not fast enough? You know, for 1.5 degree we have to halve the emissions by 2030. Halving the emissions by 2030 is not, you know, none of them not, not Bernard Looney, and by the way, had his boss or his former boss, Lord Brown on a month ago. And, you know, that's the person who started that process at BP. But you know, those things are happening. So we've got a lot of movement, even from European oil and gas companies. But as a global financial system, we are still financing a lot of things that are not consistent with, you know, net zero 2050 requires halving emissions by 2030. And we are, I'm guessing, we're going to be, I used to think 5%-7% down on the peak, we're basically at peak now. I now think we might get to, let's call it 15% or 20% down in terms of emissions by 2030. And I think that's reasonably optimistic.. So it's not fast enough.

WR: Problem is, I agree. I agree. <inaudible> we can keep pushing, keep doing what we're trying to do, lead by example, here in the UK, with COP 26. And some of the statements that are coming up, but we just have to keep at it. Now. You know more about this. So in our reverse, I shouldn't be asking you questions. But you know, I am. I think you and I have talked about how I am a fan of a carbon tax. I think what the EU is doing on this carbon border tax is going to force businesses to adapt, and the market will have to adapt. But I'm not sure whether that's going to be enough to get it  moving more quickly. But no, I mean, I agree. We mean, we're out doing our bit saying what we should be doing. But it has to come from governments to lead the way. We can still shout and scream from the rooftops. But I agree it's got to be got to be quick. I mean, today, I heard from Indonesia that, you know, if they do make a commitment, it's going to be 2065-2070. Well, I'm sorry. That's just I hope I'm wrong on that. But you know that, I hope it's going to be earlier than that. So our challenge is to get China to come forward. Our challenge is to get China to change their view on coal fired power stations, you know, their peak is 2030. How can we get them forward to 2026? So we're still in, you know, there's good momentum, as you and I know, but it's a tough one to begin to really get countries to come to move faster forward.

ML: Yes, my suspicion, and what I hope is that as soon as you sort of state a year, it ends up coming forwards because, you know, once the businesses and the financiers of the polluters, the fossil resources, once they kind of know that the gig’s up, then it comes forward. If you look at the UK, we were going for an 80% reduction by 2050. And then it was upped under Theresa May. And that's now been locked in by the current government. And it's 100% net zero by 2050. But the costs as calculated by the Climate Change Committee are no higher. Because once everybody puts their mind to it, and we start really pushing down the cost of capital through that ecosystem and so on, it doesn't end up being more difficult. Yeah. So now I promised to come back to a question of these methodologies. And how do we know because I've done a deep dive into this. First of all, there are 55 organisations that are working on the greening of finance globally, that doesn't even include national bodies, regional bodies, academics working on this, think tanks, they're hundreds and hundreds of others. And they all think they've got the sort of golden the, I don't know what you'd call it. They're the key to the golden or to the green, golden kingdom. They've all got their methodologies, they've all got their networks, they've all got their trillions that they claim to be following them. It's very confusing, is it not? Do you keep track of them all?

WR: I don't think we do. But what is fascinating, and this is just a, you know, a small snippet of what running into COP. We at the City of London, which I told you, Michael we've created the GHs at COP 26 brand. And we've got the rotunda, the south side of the Clyde overlooking the actual site. And you know, we went out to some of our partners in the different sectors which I've described. And I mean, talk about oversubscription. Everyone wants to be involved. So it comes back to. We know everyone wants to be involved. And what I'm hoping comes out of the COP, and for us, there's sort of four big questions which I'll share with you, which I may have done before. But firstly, how can we finance both transition and growth? You know, picking up issues like engagement versus divestment, coming back to the comments I made about Extinction, Rebellion. And then how can we build this global rulebook for sustainable Finance. I mean, that is critical, everyone, and I'm hearing that there's some positive things moving slowly with the IFRs in America. 

ML: That's the accountancy board.

WR: There's a positive thing going there. Because, you know, we need to talk about this global rulebook. And of course, I was on the other day, and then, you know, how can we price carbon and nature because they're, you know, finance and biodiversity, in my view, are very much work hand in hand. And then the fourth question is around meeting the 100 billion funding gap, which you and I know is not nearly enough, and it's gonna have to be trillions, not 100 billion. But coming back to, to the question of, of the various areas. So I'm just, I could read you some of our major sponsors. So, you know, E.ON is one of our major sponsors at COP that covers insurance, BlackRock, the biggest asset manager, London Stock Exchange group, which owns Refinitiv. And obviously, I know, you know, you sold your business to Bloomberg, but it's all about data. And that data is going to be critical for everybody. And the more we can do that, the better. And then Phoenix group, which is a big life insurance company, NatWest, one of our big banks, and then Standard Chartered, covers, you know, a lot of the emerging markets. So there's an example. But we've got lots of other partners, and they all want to be involved, particularly around asset management, etc. So, you know, ideally, we monitor what everyone's doing. Partly, but coming back to my original point, I think the markets are gonna force them to get to where we need them to get to. However, we need to help the market by coming up with these rules and standards, and that's what everyone is telling us. And, you know, I hope that out of COP some of that happens.

ML: Okay, but so those are, you've got everybody in the room. All the right people. Are they clamouring to be regulated? Or are they claiming to the contrary, you don't need to regulate us because it's going to happen anyway. Or can we self-regulate?

WR: If I was guessing, I think they're, they're clamouring to be regulated. Because if you don't have that, you're gonna have people going off in different directions. I think regulations, the regulators have a big part to play in this. Because if we can have that regulation, and that rulebook, then they've got to follow it. And that's leadership for me otherwise, they're all going to go off in different directions and just talk to the FCA if you don't regulate financial services, you know, you've got rogues and that's the problem. We're gonna have the rogue ones greenwashing which, you know, it has become you know, you saw of the news with DWS and all that and the market, you know, they're gonna be, you know, people are gonna pick every company's up and whether they're getting it wrong, right. And if regulators aren't there watching it, they'll take advantage of it, you know, you know what goes on in the financial world.

ML: There will tend to be a competitive race and it'll be a race to the bottom, not necessarily a race, there may be a sector that races to the top, but it won't be universal. I think one thing you said that was very interesting was IFRS. I actually did a deep dive into finance a few, a couple of months ago for Bloomberg NEF, one of the pieces I wrote. And I was really struck by the importance of the GAP accounting in the US, which is slightly behind IFRS, which are really starting to put climate risks demand that they put onto balance sheets. And it strikes me that there is nothing that will get action faster than a big write-off in the value of your hotel chain, your refinery, your shipping company, whatever it is, because you're being left behind, either you're being left behind by a trend, or you're actually at physical risk because of the changing climate. So the accountancy move strikes me as being hugely important, but not sufficient, particularly for things like the asset management sector or, or some of the other segments.

WR: Right, we've already started to see that with the fossil fuel companies, I mean, BP have already, as have Shell, written off some stranded assets, knowing that that's the way that things are headed. So they're starting the process. It's easy, I mean, fossil fuels because of what's going on. But I totally agree. I mean, I think that's going to happen more and more with companies, they've got to look at those assets and say, you know, and if that means doing things on the balance sheet to make that call I think that's great.

ML: And I think I think that's very much on track to drive the change, I think, in terms of the regulations around portfolios, and I think the disclosure having to disclose is kind of, you know, absolutely, we should push and that should be regulated, because otherwise people won't, but it's very difficult. I've looked at the methodologies for counting the carbon and climate impact of portfolios. And they all use scope three, and there's huge double counting, triple counting, quadruple counting, infinite counting, and then forget, you know, once you get into the area of derivatives, all the calls, puts, CDRs, and etc. To me, that's not on track. There's vast confusion.

WR: Even more reason for that global rule book.. And that's where it's at. But but but it is, it is, I mean, there is this momentum. So a big insurance company told me they've saved 200 million pounds, not flying around the world because of COVID. So COVID has helped us here. There's no doubt about it. And, you know, there's a reason why British Airways are looking at doing a low cost airline out of Gatwick because they're working out business travelling isn't coming back as fast as we all thought of because you, one of the big firms has got to justify their carbon footprint. And they can say, well, we aren't flying around the world anymore. And we've just saved it. Not only is it good for the bottom line, but it's good for the messages to their shareholders, what they're doing is one of the things they're doing around climate change. So it is very interesting. As you can tell, I'm always optimistic, but I'm also realistic. And I'm one of those people that out of tragedy there's always some good but you may not see it straight away. And actually, I think Covid-19 has totally focused our minds on the subject that we're talking about. And I remember Gillian Tett saying that and good for her, she admitted the mistake. She said, when COVID happened, I said, this is going to be like, the crash of the crash of the financial crisis 2008. Oh, and I think climate change is gonna go to the backburner, and they're just gonna focus on this. And she said, I was totally wrong. She said, Actually, it was the complete opposite.

ML: And Gillian Tett for our audience, that's the Financial Times, the fantastic, the doyenne of journalism, of diary journalism in Financial Times. And you know, it's absolutely provably true. What she says not she said at the time, but the fact that I was expecting renewable energy to go to the back burner, electric vehicles to go to the back burner. And what we've seen is in an enormous uptake, so what's very fascinating is that if you go back to the great financial crisis, in a crisis, people avoid risk. They stop doing risky stuff, and they go back to what they're comfortable with. And in the great financial crisis that was fossil, fossil cars, fossil energy. And in the COVID financial crisis, the risky thing was actually the fossil thing, fossil energy, fossil cars. And so actually, it's accelerated the transition and it's provided new electronic services, things like Zoom and digitalization, so it's actually has definitely accelerated a transition towards cleaner. Not fast enough. but cleaner.

WR: Yeah, I agree with all that. 

ML: We are two months away from COP, you are working frantically on your preparations. I'm working frantically on preparations for the Climate Action Solution Centre, which is what we're doing country house, at the Blair estate outside Glasgow, our paths are going to cross, I'm going to thank you for the time you've spent with us here today, I wish you luck in your preparations for November it is going to be in person and it is going to be a huge and vast success. And I look forward to being part of your agenda and also drawing you in so that you can be part of ours.

WR: And vice versa. And thank you for having me on Michael, and I'm sure we'll be able to find time to have a wee dram in Glasgow.

ML: You could say another wee dram. There was that tremendous Board of Trade meeting in Glasgow where we visited the shipyard and it was a tremendous day. So I think we've laid some good groundwork for an excellent COP 26 in Glasgow in November.

WR: Brilliant. Well, thank you very much for having me. And it's been great to talk to you as always, and look forward to catching up soon.

ML: Thank you very much.

WR: Thank you.

ML: Thank you very much. So that was William Russell 692nd Lord Mayor of London. My guest next week on Cleaning Up will be Julie Klinger. She's the Assistant Professor of Geography at the University of Delaware, and a global authority on the geopolitics of rare earth metals. Please join me this time next week for another episode of Cleaning Up.