Ep23: James Cameron 'Trade and Sustainability

Transcript

Cleaning Up is brought to you by the Liebreich Foundation, and the Gilardini Foundation. Hello, my name is Michael Liebreich, and this is Cleaning Up. My guest this week is James Cameron, not the director of Titanic. But James Cameron, the barrister, the expert in trade, the former chair of Climate Change Capital, the bank. He's a Friend of COP26, and one of the leading figures in the global climate action community. Please welcome James Cameron. So James, thank you very much for joining us here on Cleaning Up. Cheers.

My pleasure. Cheers.

What are you drinking in there? It looks fantastic.

I am drinking a porter, nice dark beer made by a mate of mine. He has a pub in Hampshire, which has a little brewery attached to it, it's called The Flower Pots. And it's a very fine pint of porter.

Wonderful! And, you know, we're going to come back to sort of you as a member of the establishment, I think, later in this conversation. Okay, James, now I want to dive straight in. Because you are something called a Friend of COP26 whatever that is. What is COP26. And what is a friend of COP26: give us the short version.

Well, COP26 is the Conference of the Parties. It's the 26th Conference of the Parties, which is the parties to the UN Framework Convention on Climate Change. 1992 it was signed at the Earth Summit in Rio. Negotiations began just before that, and it's been going on ever since. And it's a kind of rolling international negotiation with all of the countries of the world around a notional negotiating table to try and come up with a global agreement on how we're going to deal with climate change.

And this is... We have the famous Copenhagen COP, which was regarded generally as a failure. And then we have the Paris COP, which is what resulted in the Paris Agreement. Copenhagen was 15. Paris was 21. And this is now you are the Friend of 26.

Yes, five years gap to Paris. And each year there is a president of the process. So it was a French in Paris. It's now us, the UK. It's been weird because it's COVID year and so everything's been postponed, suspended to next year in Glasgow in Scotland. And the UK is president. It has a... all presidents have a kind of triumvirate: they work with a past president and a future president to try to have some sort of continuity and seamlessness between the roles. The role of the president is to shepherd the negotiations towards agreement. That agreement is prepared well in advance by the international civil servants in the Secretariat, which is in Bonn, in Germany. And that process is just vast. Not only is it 190 odd countries, but each event every year attracts thousands and thousands of observers and other delegates it's kind of trade fair, attached to a formal lawmaking process attached to a kind of gravitational pull for people who work on climate change who have careers associated with climate change. It's a pretty remarkable experiment, like living experiment in how you might do something like global governance, not global government, but a kind of a UN process that is open enough to draw in ideas and resources from outside the sovereign states themselves. And one of the things that the Presidency always does is it separates out its national delegation to focus that delegation on its national interests. And builds a presidency team focused on the global interests and they generally taking advice from outside their civil servants...

You are a friend of the national lot or the presidential lot?

I'm a friend and the friend, the first phrase, friends is a way of I think, communicating that we're not salaried. We're not staff. We're not civil servants. We have distance, but we are friendly to the presidency, not the UK delegation, but the UK presidency. of the whole...

And the President is?

The individual? The current individual is the Secretary of State for Business, Energy and Industrial Strategy who's called Alok Sharma.

Right. Right. Right. Okay. Very good. And we're going to come back to your role in, I guess, in previous COPs, because when you said that the whole process started in 1992, with the Earth Summit, but your own involvement in climate diplomacy goes back beyond that. But we'll get back to that, because I want to start off another sort of thread running here. And that is trade. Because you've been deeply involved in trade and sustainability, really the development of the

whole kind of theoretical basis of that. And this is an extraordinary time, is it not? Because, you know, we've got the Brexit negotiations going on in parallel, and I guess, in some ways, perhaps, in conflict, or in support of COP26, we've got the Brexit negotiations, and the UK's first trade deals as an independent nation after 46 or 47 years. So I guess I'll turn that into a question. Is it in conflict with COP26? Or is trade going to support COP26?

As a matter of law, there is a way of arguing convincingly for trade to support the multilateral agreement called the Paris Agreement on Climate Change, and indeed another set of commitments that we call the SDGs, the Sustainable Development Goals. But actually, the source of that authority is within the trade regime. It's not something externally imposed upon it. The members of the WTO have developed a practice over the years that recognises that their members will be members of other international agreements. And they need to be taken into account when the disciplines of trade law are applied. And there's also always been scope for the members of the WTO to set standards, which may differ from other members of the WTO and therefore cause some trade frictions, provided they don't do that in a discriminatory way, basically, provided they don't abuse that right.

Okay, sorry go ahead, I just want to gloss and make sure that I've understood because I'm not a trade and law expert, I've worked on a lot of these issues, and I'm a member of the Board of Trade. So I want to make sure that I'm understanding this correct. So what you're saying is, you know, the countries enter into something like the Paris Agreement, and the WTO, then doesn't say, wait a minute, that goes against trade law, what they will actually try to do is adjust the body of law or the practice of it, to support the other.

They have their own rules and their own own practices, which allow them to align trade law with the commitments that their members make in other fora, like climate change. Now, it's not to say that just declaring that takes away all conflict, right. In fact, there are dispute settlement mechanisms inside the WTO, that have been grappling with these conflicts between trade and environment regimes for years. And sometimes with real difficulty, because the trade-offs are hard to do. And you would appreciate that sometimes, the departments of state, even the individuals that do one set of negotiations, don't do the other and they have turf battles. And so you have a kind of conflict between perfectly legitimate arguments in two separate branches of international law, and they need to be resolved. All I'm saying is that they can be resolved, they should be resolved. And that trade regime is perfectly capable of supporting the commitments made under the Paris Agreement and consistent with the SDGs. And that there are dispute settlement mechanisms to deal with those circumstances when that conflict is too hard to resolve

without the appellate body of the WTO, which is the supreme adjudicative body in the WTO. Deciding on which side to fall on your particular case.

James, let's start with the easy stuff, right, which is around trade liberalisation. Because there the goals of the Paris Agreement and the goals of the WTO are very much aligned, right? Whether you take wind turbines, electric vehicles, solar panels, they all benefit from these global supply chains, the free flow of technology, talent, finance, they push down the costs. It helps the Paris Agreement and the WTO love it because it's all about trade. Right? So that's the easy bit. Do you see lots of... Is that is that a position that's well understood and, you know, are there initiatives around the world that are sort of trying to harness the power of trade to help achieve the sustainable and climate goals.

There's no doubt that trade liberalisation, a properly regulated global regime to facilitate trade to enable the supply chains to work effectively. And they do that in many different ways, some very technical or very dull and very precise rules that have to be implemented. That makes it much easier, easier in the sense of quicker, and we are in a race with climate change. And better in the sense of cheaper and available to more people around the world to use the technologies that we know can reduce greenhouse gas emissions, and in all sorts of ways. Whether it's power systems or more efficient products that are traded every day. So it's really clear that there is that alignment of interest between the two regimes. And it's also true that the WTO can do more, to continue to reduce ludicrous barriers to trade where they exist. And some really are quite mad, and can also use other devices, trade facilitation, managing supply chains more effectively, etc, etc. all can be done. And indeed, there have been some real advances on the way trade can, if you like, clear away the barriers to the deployment of the technologies that we need to deal with, with the climate change issue.

It doesn't always work though. Because I was very involved a few years back, trying to shepherd through from the World Economic Forum Agenda Council, right the way through this Environmental Goods Agreement, and the WTO actually stepped in, put it shoulder to the wheel but failed to produce an agreement. And now I believe there's something called ACCTS, which is the Agreement on Climate Change, Trade and Sustainability being pushed by a very small group of nations, isn't that right?

Yes, that's true. And it's true, there have been some real failures to deliver on good ideas. That was one of them. I remember very clearly, I remember being with you at the World Economic

Forum, when those ideas were advanced, and they're good ideas. And it's true that even in Seattle, some people might remember the riots in Seattle, the tear gas, I got tear gassed in Seattle, tried to get into the building, when I was doing work as a kind of independent advisor running between the delegations of the EU and the US. Actually, partly because of my my role at Yale. And, you know, we very nearly got an agreement on environmental goods and services then. And it was actually agriculture that prevented the the overall agreement in Seattle. And there isn't a good enough appreciation, I don't think, amongst those who are advocates for action, on climate. How much is delivered by an effective trade regime, a highly positive contribution to the delivery of that public good. However, it isn't straightforward. The WTO is a weakened institution today. It's not functioning as well as it could do. It's not agreed any major, new agreement for years. And we actually need it to be made stronger and more effective. And one of the ways I'd like to see it made stronger and more effective is to take some of these ideas on what the trade system can do for sustainability. And really go for it and really drive it I mean, take away fossil fuel subsidies, for example. That should be happening. The WTO should do that. In principle it can, in practice, it has not.

And it does strike me that there's a bit of a sort of PR war to be won, because there is this sense that trade is bad for poor countries and for the poorer people within countries. And, you know, a couple of days ago, I pulled the Sustainable Development Goals, the actual text down in the details. And you know, where trade is mentioned, there's a bit of sort of generic waffle about you know, trade is good trade brings, you know, trade's a good thing, we need a framework for it, but a lot of the mentions, the specific mentions of trade are all about how developing countries need to be sort of almost like protected from the ravages of trade. It's not kind of, okay, let's plant our, our tent on this piece of land that says 'trade is one of the ways we're going to make people wealthy and deal with climate and sustainability'. The Sustainable Development Goals are very lukewarm, not even lukewarm. They're cold on that To be honest.

Cold, but the language is often compromised. You know, there's a subordinate clause that weakens the effect of the first part of the sentence. That I'm afraid, is the consequence of trying to negotiate those rules around 190 countries at very different stages of development, with very different points of view. Actually, I don't think you can come to a categoric, you know trade is favourable to development in all circumstances. I mean, we've got loads of examples from our own economic history of when actually protectionism was quite useful for fledgling industries. And I don't think there is a fundamentalist position worth holding on to here. But I do agree that there's a lack of coherence in some of the critique. When you have a look at, particularly when you see where power is shifting in the world right now. The geopolitics of trade has shifted dramatically, not least since China's joining the WTO. And that the power of those large so called

developing countries are actually have many stages of development within them. All of those countries are now major players in the trading system, and have an effect on how the system is run. And yet, sometimes they're treated us as they're poor, poor, poor, developing countries, and they need somehow to be looked after by somebody else, which I think is pretty patronising. There is a straightforward dilemma, though. There is a constituency that fears trade, because it fears the competition in trade. And there's another constituency that fears trade, because they feel like it undermines other social values or environmental values that require protection in law, and communities need to be protected from competition, because their welfare will not be advanced. And you know, this is often split in a kind of ideological separation, which I would really like to break down. And there's long history in this, let's face it. Look at the 19th century battles over trade liberalisation. And the conflicts between. I don't know whether you're ready for this. I've threatened to bring out Tom Paine at this stage.

Oh, bring out Tom Paine. Bring out Tom Paine. Absolutely.

No. So you Tom Paine is scourge of monarchists. And you know, a genuine revolutionary not just in the UK, but in France and in the US, where he was highly influential on the US Constitution. But if I just read a passage to you from Tom Paine, 1782, right, which I think is directly relevant to how we should conceive of the value of trade or commerce with a capital C, as it's called in his pamphlets, right? So, you know, he's there, sitting right in the heart of the American Revolution, and explaining that commerce, trade, was among the most powerful forces shrinking the world and binding together its nations as never before. The peaceful unifying effects of commerce within nations had been noted by others, but few had seen the parallel civilising effects of commerce among nations of the world. Commerce on a global scale, for instance, between countries like France and United States specializing in the production and export of certain commodities, and made it clear that the sea was the world's highway, and the war among states was senselessly destructive. World trade was also beginning to multiply citizens' wants. Taste buds and fashions are slowly becoming cosmopolitan. This necessitated their satisfaction through tighter integration of national economies, international business, quote, in itself a moral nullity, close quote, was having the paradoxical effect of laying the foundation for a new cosmopolitan morality of freedom and equality of citizens in all lands. Once again, you know, Tom Paine bloody marvellous language. The point of entry for me, because I see trade as a force for unifying people, for bringing people together in commerce, for creating a greater distribution of wealth, prosperity, and the advancement of the human condition. I think it's a hugely positive force. And it is not often expressed that way, in the context of environment and climate change issues.

And I agree entirely, I'm totally on board with that perspective. I guess, when I sort of critique the SDGs all I'm looking at and saying, well, you know, it'd be nice if that was the sort of overarching vision. And then because trade does have some, you know, it's not all good. I'm not talking about just sort of unregulated at all times and all places, But it'd be nice if it was kind of trade is good and then let's deal with the, you know, the minority of situations where it doesn't work, rather than trade is to be feared, trade is bad. I suppose we have to put up with a bit of trade. Let's not make it too painful.

Yeah. No, I'm with you on that. But if you interrogate the language of trade law, which, believe me, having done it and been in those tribunals is quite a stretch for most people. But if you go to the general principles, which actually is what decides the main cases, people should know that. The limitless schedules and econometric analysis of who's done what, where and what market that's tough to access. But non discrimination? You know, abusive positions in marketplace, rank unfairness. And you know, really shoddy arguments for protecting an interest against another who should have the capacity... They're not difficult to understand. And most of the big cases are about that.

Now, let's come to one of those situations, which might not be quite so straightforward, where you might have one country that's really pushing ahead, dealing with climate, has priced carbon, and is of on a net zero trajectory. And there's another one that hasn't. And so now, there's a lot of discussion about carbon border adjustments. And the EU has said that they're going to propose some early next year and implement them by 2023. President Elect Biden, I can now say that, because it's now pretty certain, has previously said that he's likely to do the same. Does that worry you? Or how do we make sure that that is not something that kind of leads to a spiral unwinding of trade and all the good things that you've just listed and, and quoted the great Thomas Paine about?

Yeah, that's a very real, very live, political and legal problem that's going to have to be resolved. It's not new, it's been talked about for many, many years. In principle, the idea works.

So let's start with do we really need carbon border adjustments? Is there a way around it? Or are we going to have to go there sooner or later?

Let's deal with stages, the situation you suggest is a real one where there are differences between countries on how they implement their international obligations under the Paris Agreement, what methods they choose. And there are consequences on trade. Certainly, if you price carbon, and you put sometimes... You put your industry at risk of a competitive disadvantage with another country and you trade with that country across your border. You might want to equalise the difference between your regulated industry and theirs by putting a tax on that product when it crosses your border. And you can do that, it is a legitimate defence if you like. And I know it is going to be reached for by those countries, including the EU, probably the UK too who want to do that. Who've got you know, we've got a Climate Change Act, we've got a net zero strategy. And we want industry here to feel like it can compete fairly with industry in other parts of the world. Okay. The practical application of a principle like that is really quite hard, because you've got to be very accurate about what it is that you're targeting. And much of what you're concerned about is generally taking place in that other jurisdiction, i.e. how they make the product, as opposed to the product itself crossing your border. And that's always been difficult for the trade system to accommodate.

Because this isn't just... It's steel, it just looks like steel, but they've made it in a different way. And somehow you therefore need to extend your information all the way back into another country.

Correct. And actually information is a nice thing to pick up on there. Because in one sense, the country that is not regulating the pollution associated with making the steel is effectively subsidising the steel. And we, the rest of the world, are picking up the price for them not regulating the emissions because we have one atmosphere, and we all experienced the consequences of climate change wherever we are in the world. So it's clearly wrong in principle for there to be a trade between the country that's not dealing with a problem and trade with a country that is. But doing it in practice is not straightforward. Because you're effectively, you are requiring that country to do something when it's really difficult for you to enforce it. And actually also, many of the things that are, if you like the methods of producing those products, you know, are just beyond your control. They're in that other country and you've got to get them to regulate it. And you're not going to send in some enforcement mechanism to force them to do it. And so you have to track the flow in those goods, and not all the things you would be worried about are actually crossing your border anyway. Steel might be one of them, aluminium might be one of them, other forms of chemical production...

What about agriculture produce, because that's going to be... You know, in a sense, steel, aluminium, that's quite relatively simple, because there's only a few, you know, there's only a few commodities like that maybe. But then when you get to agriculture, I mean, that goes across the borders all the time, in terms of, in the form of food and agricultural commodities. And of course, that's, you know, farmers don't have... there's not a lot of fat in that system. You know, if somebody's being undercut by relatively small amounts, that's it, they can no longer produce.

Their margins are horrendously small. And they're feeling very vulnerable right now. And you will know, here in the UK, that is a live, everyday editorial at The Times yesterday, problem that we are experiencing, because we are regulating our agricultural sector. We are re-incentivizing the stewardship and management of land in this country. after Brexit, we're establishing our own rules after we've come out of the Common Agricultural Policy. And we are trying very hard to make that set of incentives advantage nature based solution to climate change, carbon sequestration in soils, using public money to pay for public goods. And that is a whole new regime with new costs. And the agricultural sector is very nervous about taking on that change, whilst we're negotiating trade agreements with the rest of the world, and we are doing that. Do you want to ask me a question?

Yeah, I want to come back to carbon border adjustments and agriculture. Because in a sense, if we're paying farmers to sequester carbon, and we're paying them to do whatever, you know, biodiversity, things that help biodiversity and so on. Do we still need carbon border adjustments to protect them? Shouldn't they be being remunerated through that system, so they can then still produce their commodities at an affordable price and shouldn't need then a protectionist, you know, mechanism or a mechanism like carbon border adjustment? Or am I missing something?

No, no, you're not. I mean, of course, it's a complex story, it depends what it is, and the percentage of the value of the sector, which is associated with trade, and its vulnerability to the importation of goods that they can't compete with on price. So this is a very complex space. And so yes, we are going to provide public money to help them do various things that we want them to do for public goods purposes, like major conservation. But equally, they're about to exposed to, to the kind of competition with the US, for example, where in some parts of the agricultural sector, the standards are very different. And we will struggle to compete on cost, certainly. So, the fact is that you can use border tax adjustments, you could even use border tax adjustment with a carbon element, because a lot of inputs into agriculture that are carbon based, everything from you know diesel to fertilisers and alike. And you can do that in a non discriminatory way. You can also negotiate a treaty, trade treaty with the US that ensures that there isn't a race to the bottom on

standards. Right? And NAFTA, the North American Free Trade Agreement has such a provision that says you can't just drive standards down and try and compete with the lowest possible standards. And we don't want that. So you can negotiate a clause that prevents a race to the bottom.

And that's got to be the kind of where the real clever resides is turning the trade system into something that engenders a race to the top. That doesn't kill trade because then we lose all those benefits that Tom Paine and you have been so eloquent about. But you know, if we do have it just as a race to the bottom, the cheapest this, the cheapest that and damn the standards, we can sort of kiss many of the good things about this planet, goodbye. So there's a lot of clever hacking to be done, right?

And the way you put that is ideal, because that explains the elevation of the planetary boundaries, natural systems on which life depends. Climate change, if not dramatically, the risk dramatically reduced puts all of us at risk. That's why you can elevate that up and say your trade disciplines need to support a well-regulated regime.

But let me push you. In practice and I don't want to run out of time, in practice, can you name a few of the things that you therefore do? And I'm thinking about, okay, what do you do when you're negotiating with the US? What do you do also, when you're negotiating with a developing country, you know, who might see a carbon border adjustment or something else as a kind of rich man's protectionist mechanism, you know,a way of keeping out our, you know, sugar, our wheat, our, you know, whatever the commodity might be. So give us a few things that you can build into these deals

You make sure that the entire agreement is oriented around delivering these commitments that have been made at a global level on climate change and sustainable development goals. That's just general principle, won't get you the solution. Then you reaffirm the well-established principle that you can adopt non-discriminatory measures at your border, to ensure that the trade that you have between states operates fairly and in the full sense of that word and helps deliver those objectives. You can include a avoidance of pollution haven or race to the bottom clauses, so that you don't drive standards down. You could establish, you mentioned before, information flows, you can have information requirements for products that cross border that disclose, if you like that have components of your product, either labelling or ESG standards, or things that help inform the consumers.

Are you building those things into your FTAs, your free trade agreements or trade agreements? Or are you doing stuff at the WTO on a different platform?

Okay, old dilemma. I happen to be a very committed multilateralist. But as we're about to find out, I'm also interested in getting stuff done. And sometimes you do that in smaller groups. So this is an old and difficult dance between the truly global, and the WTO has principles called most favoured nation principle, for example, that encourages any bilateral agreement to be multilateralized. However, because in the last few years, WTO has not been a very effective institution, we now have dozens of these damn agreements everywhere, bilateral agreements, regional agreements, and it's a bit of a mess. So I would love it if the WTO was reinvigorated, and its dispute settlement system reinvigorated which is the best protection for the weak against the strong. If that rather less powerful country in the trading system is outraged at an abuse of an environmental protection measure. And they know it's nothing to do the environment is to protect an industry and they're being unfairly capped out. I want them to go to the WTO I used to represent developing countries in the WTO. That system works. But it needs investing in it.

But it's it's a difficult time for that system. Because there have been voices, some very powerful voices. In fact, one, the most powerful voice in the world who's now no longer the most powerful voice in the world. He's actually busy filling cardboard boxes, but who has been trying to undermine that system, on the on the premise that it is an infringement of sovereignty. Is the WTO, and there are voices in this country who think that the WTO is an infringement of sovereignty. And you know, we're out of the EU, and we need to be out of the WTO. Or we need to pith it and turn it into something useless. What do you say to those people?

You can't eat sovereignty. Sovereignty is a concept. The rule of law is a better concept to think about, if you want to have good, effective trading relations, you have to make and keep a contract. That has to happen at a private level, but also at a governmental level, you have to honour those contracts, they have to be enforced. There's no point making promises you don't intend to keep. So you have to build robust institutions to do that. If you want a global trading system that functions effectively, you have to invest in theinstitutions, including the lawmaking and law enforcement part of those institutions. Your sovereignty can be pooled, shared, distributed, you don't have a hundred of sovereignty, and you lose five if you do a trade agreement. And then sovereignty is not the same as power. If you want power in the world, and you don't have all of it yourself, you combine with others. And if you are really serious about Tom

Paine type delivery of wellbeing and prosperity to your citizens, you want to increase your power by participating in a system or trading system that delivers you real world, everyday, food on the table benefits.

Now, and it strikes me that you know, as we leave the EU in the UK, you know, we don't want to be in the US block. We're not in the EU block. We don't want to be in the US block, I would suspect we very much don't want to be in the China block. And then it seems a bit fanciful to think we can be in our own block on any sort of equal... So therefore the more there's a rule- based system, the more we can sort of use it. We're quite good at kind of manipulate... We got good lawyers, don't we? We got people, we got your former colleagues at Baker McKenzie and all over the place that are pretty good at this stuff, right?

Right. But you know, yes, with a capital Y and emphasis, exactly as you described it. But that regime that we helped to build, we put a lot of effort, a lot of time, and lawyers and economists and much diplomacy and much, much care for the whole of the system. Yes, we were good at it. And we had a several hundred year history of successful trading. Sometimes, sometimes with a barrel of a gun. But we did understand that you need to build effective institutions, that you do need the rule of law. The WTO has a permanent civil service, which actually offers a really good service to those countries that may not have much in the way of trade resource themselves. I, for a while, represented Sierra Leone, in the WTO, they had no mission, the poor guy I worked with had to take the night train from Brussels to go to the event. I did it pro bono. But he could rely upon the Secretariat to give him really valuable material to help him represent his country. So I want that institution strengthened. I'd love the UK to be a part of that strengthening, I'd like us to really commit to it. And then you can build coalitions of interest within it. Including on this subject try and get fossil fuel subsidies removed by working with New Zealand and Switzerland and other countries that want that to happen.

James, you bring up a really good point about, you used the example of Sierra Leone. And you know as we build this very sophisticated system that has trade at its heart, but taking into account climate, taking into account biodiversity, the other planetary boundaries. Is there a risk that that effectively act as a barrier to countries like Sierra Leone, or countries in the developing world. And what is our responsibility to them within the global trade system to make sure that doesn't happen? I'm thinking things like Aid for Trade, but I don't yet know exactly what that means.

Yeah, I'm a bit wary of that phrase, because it's freighted. And it comes with a long history of disagreement. I'd say...two answers, one we've touched on before, if you build a good, robust, the cliche I'm afraid is mocked use rules based system. If you build a WTO, built strength in WTO, to settle disputes on behalf of the weak against the strong, to run efficient processes, to have a civil service there to help countries better look after their interest. That's all very good. I also think those countries who have very little representation there do need to be supported, they need to build up their capacity to look after their trade interests. The more they do that, the more effective they will be, the more they'll be able to join in that system and not be at a disadvantage. The other thing is, the WTO comes with all sorts of other methods and means to facilitate trade at the global level. And that needs investing in you know, we have, we have some great institutions in this country, that can really help there. Then we have the Crown Agents, and not many people know about the Crown Agents, but they do amazing work, you know, connecting procurement and supply chains. For countries like Sierra Leone, for example. They do a brilliant job, and they'll be doing a brilliant job in the next period of time delivering vaccines to people who are in need. So there's that there's a whole... once you properly understand that the moral virtue and day to day value in an effective trading regime, which will have rules attached to it, which is not a free market in any sense of the word. It's a regulated space for commerce, and allows countries to give full expression to their hopes of a more prosperous and, you know, a life extending beyond their current circumstances through the ability to trade with others.

So I wanted to get onto... for those nations also, you know, we talked about border carbon adjustments, carbon border adjustments. And of course, in an ideal world, those countries would be helped to invest in their own production so that their production will be as low carbon as ours, and we wouldn't have to apply the border adjustment. But rather than dive into that, in the interest of time, I suspect you would, you would agree that that's a good thing to do. But in the interest of time, I want to actually take a step back because you've done more than just trade in your career. And I want to take this opportunity. And if we go back to when you and I first met, you were a banker. You were actually chair... Well, I don't know you were the chair. I

I was an entrepreneur who created an investment business with a mission and purpose focused on climate change, called Climate Change Capital. I was very careful, actually. Well, the people, other people called me a banker, and I don't mind it just isn't really real. I just wanted an institution to exist, that would channel capital and provide good advice to those who are interested in dealing directly and effectively with the climate change issue.

And Climate Change Capital for those who you know that for those who are sort of relatively new to the space, because it's not around in its own anymore. But it was a pioneering was the first bank totally focused on, on getting assets to work that would accelerate climate action. And you did a whole bunch of really pioneering deals, did you not?

Yeah, yeah, we did. We did. We were formed in 2002. We had an amazing growth. It's a great story, actually, you know, Yale, Yale School of Management, we have a case study on Climate Change Capital, lots to learn from it, including, you know, ups and downs, and you know, how not to do the end game. But there's a lot of very good stories of very talented people brought into it, who still stay connected, you know, there's a Climate Change Capital Alumni, that's amazing. And they talk to each other and do business together and some have done amazing things since. Everything we did was the first of its kind. We had the first private sector investment fund focused on the price for carbon, global fund, a lot of the month a lot of that money went went to China, we've probably invested over a billion dollars in emission reduction projects of all different types across China. We had the first climate change themed property fund, we had a climate change team private equity fund focused on technology. And we had a thriving advisory business that did a lot of the early renewable energy deals, oddly enough, usually selling bits out of big energy companies like Shell and BP. But also building portfolios of renewable energy assets for investors. It was great.

And here's a little a little known biographical detail of my own, which is that when I launched New Energy Finance, we didn't have an office, I was actually working out of my garage and a friend's not living room, but conference room. And I needed a place to launch and one of your cofounders, Garet Hughes, who was also an investor in New Energy Finance, he offered your conference room. And I remember sitting there, looking at your artwork, which had cost more than the entire database behind New Energy Finance. So I do feel that we've been really closely linked in this journey...

I wish I invested! But the thing is that was part of the community that we had, we really wanted to help anybody who had a good idea that could be advanced, that we thought would make a difference in the world. And yours was one of those ideas. And we were very canny about our properties, we were very good at finding properties at the right time at the right price. And so, and we...

You mean rental... You mean office property to be let?

You know, because there's a thing there isn't there? You know, what we didn't want, when we started, we did not want to look worthy, and deeply, deeply green and nice. Right? We thought 'why the hell should we do that?' This is about investing in the future and as if it mattered. And so we'll play that game, we'll make sure we're situated even though we haven't got a bean, we've just started. We're going to present ourselves as being in the world of... Do you remember? You know, we had this we had a lot of fun also, and it was a great fun organisation to be in, it was a really good atmosphere that we built there. And we had this byline or, you know, theme for our... philosophy, called 'creating wealth worth having'. And it started as a joke amongst ourselves. But actually, it kind of worked and it worked in other languages in China, for example.

That's so funny, because we had on this show Jigar Shah, I think it was Episode 15 or sometime around then. And he had this saying, which was 'creating climate wealth', and he was very focused on the financial wealth that he and his business models were to create. But there was you in Mayfair pretending to be a very mainstream member of the establishment, I told you we would get back to that. And meanwhile, I was on the Kensal Road with about 15 interns crammed into a former chocolate factory, entering all this data into computers. and hoping nobody would notice that we didn't you know, own a suit between us. That my old suits from McKinsey had got holes in them. Very different way to build a business.

Yeah, but you could do very radical things in a suit if you want to. And, you know, frankly, it was part of how we wanted to present ourselves. And we wanted to stop this trading off of environment versus economy. We were proud of creating wealth worth having. Wealth is a good word. It's a word, you know, think Adam Smith. Adam Smith properly read, not Adam Smith, you know, filleted, for what? Anyway, you know wealth is a strong word. It's a word of generosity. And appeals across borders. You know, it's understood in other languages, it's not a mean thing at all.

But that phrase, you've just used doing radical things in a suit. I mean, that's almost that's almost your strapline, is it not? Because if we go back to your legal days, you were with one of the great firms. But you were doing radical things in a suit, weren't you? Because you were writing, you were writing opinions for Greenpeace on all sorts of things, you know, Law Review articles on stuff that nobody ever thought about. I mean..

Yeah, now it's important to point out that I did all of that as an independent barrister, I would not have been able to do all that radical stuff if I'd been a partner in a law firm. I was of counsel to Baker McKenzie and I kept my independent status. But I did something very unusual, which is that I helped build a business within a business. I sold a Baker McKenzie venture as just that an entrepreneurial venture within a law firm. And I couldn't have done it without Martijn Wilder and Rick Saines and others. But I did help build that sense that we, our group, our practice group on clean energy and climate change, was doing something more worthwhile than merely collecting billable hours. And I'm convinced that worked. I couldn't have done... I couldn't have been... it wouldn't have been successful if the others didn't know how to play the game inside the economy of a law firm. I had the luxury of independence, I could go and do something else. I always taught law. And I always practiced law as an independent barrister. And I could... I had immense intellectual freedom, which meant.. I also created my own organisation. So the Centre for International Environmental Law, Foundation for International Environmental Law and Development, even the ones that were not about law, Carbon Disclosure Project, there was some sense in which my professional background was helpful to those enterprises. And yes, I did... I wrote the first Law Review article on state responsibility for climate change. I built up the coalition with my colleagues at the Alliance of Small Island States and negotiated the international treaties, all of them, all from the very beginning. And yeah, I did that in a suit. But everything I did, was effectively a form of advocacy. And I would argue that even today, the things that I do, even with the businesses, the startups that I work with, they're all a form of advocacy.

When you say advocacy and advocate has got... a it's a fabulous word, right. But I tend to avoid it, because I want to be seen as an analyst and somebody, you know, if I were using 'advocate', everybody would say, oh, you know, he's just promoting, this promoting that. But you're sort of promoting this, promoting that, but advocate, you know, an advocate is also a legal person is an advocate, right?

That's right. And there's a certain amount of expectation that you will be accurate and disciplined and authoritative when you speak. So I felt that that was an important attribute to promote. I wanted to be independent, I wanted to be capable of being listened to by someone across the divide. I think of myself as an empathetic person, probably very idealistic at root, about the capacity for human beings to be fundamentally good and I and I am trusting. And sometimes that's difficult in commercial negotiations or diplomatic negotiations. But I believe it has allowed me to access a wide range of differing points of view, and to avoid being captured in a particular box or to be overly comforted by a tribal view of the answer to things. And one of the things I like very much about working with you, or associating with you, is you are hyper rational and analytical. And you ask hard questions, and you don't like softness of thinking. I work really well

with people who have complementary skills to me, I have an optimism bias. I work quite well with people who are sceptical, who want to ask that extra detailed question when I've already felt good about the answer. And building enterprises beyond myself has allowed me to experience that. And that's why I'm still very fond of enterprise building. Otherwise, I just, I would have stayed a barrister and academic and being on my own, which is less satisfying.

So you say very kind things about me. And it reminds me that we must find ways of doing more stuff together. Before we finish though, I want you talk about building new enterprises or and there's just one more that I want to mention. Because in 'your doing radical things in a suit', you've gone through law, you've gone through finance and banking, you've gone through the negotiations, the diplomacy, the trade expertise and so. But there's one other that we cannot finish without mentioning. And that is, you were also involved in what is essentially the invention of sustainability and climate disclosure, as well. And that's the Carbon Disclosure Project. You know, now, everybody talks about disclosure, the question is not whether we should do it. It's just you know, there's some details still to be tied up. But you were in there right at the beginning. How did that work?

Oh, I know, I've got a lovely little little plaque up there, which the boys, the two Pauls.

Paul Simpson and Paul Dickinson.

Paul Simpson and Paul Dickinson. And also the much missed and much loved Tessa Tennant. They're the real founders. But they rather sweetly include me as a co-founder, because they came to me right at the beginning with their idea. And I persuaded them that they had to think of this as a global enterprise from the start. That it wasn't of interest to me if they just went around a few UK pension funds and said you really ought to ask questions about climate. I said, you know, build something that's actually fit for a global capital market, where you could actually track investment in companies all over the world, and ask the questions that provide the information that the marketplace should have in order to make good, sensible decision about where to allocate their capital. And they went away and they did that I'm not I know, their origins are a bit like you and in Kensal Rise, there are origins and Farringdon were not glamorous. But they've done phenomenally well. Now it's a serious institution, I was very proud to chair it for many years after Tessa. And, you know, it's done great work. Of course, it needs to... everything needs to push on now, these metrics need to be applied, they need to be relevant, the data needs to be actionable every day in the financial system, whether you care about climate change, or not. Just

because that's what you should do to make a decent judgement. And we haven't quite got there. But we are way, way better off than we were when we started 20 years ago.

And of course, the Carbon Disclosure Project is part of the foundational architecture that's in place, it's not perfect, but it's but it's there and can be perfected over time. Another little biographical note, which is when they decided to put all of this data into a proper database actually came to me and said 'we don't know how to do that'. And it was my programmer, who helped the New Energy Finance, Jacek, who actually helped them to create the first web accessible datasets that they then distributed.

Yeah and always, you know, a relationship with Bloomberg is very important as well. And you know, and we now have Mark Carney and others around the Bank of England, still in the Bank of England today and other central banks, saying we simply have to have disclosure as a mandatory requirement for belonging in our marketplace. And, and we always thought that would be the point where CDP could retire. But actually, CDP has gone on, done other things with forest and water. And it is essentially about getting better quality data, analytics, the raw information you need to understand how to make investments in the real world, where these are factors that affect all of our lives and capacity to live within a system that needs capital to flow effectively.

James, we're reaching the end of the time that we can expect anybody to watch or listen in to a conversation between the two of us. I could continue for hours, no question. You've done so many radical things in those snappy suits of yours. So, I'd like to thank you though for joining us here on Cleaning Up, and I look forward to the next time our paths can cross in person after this damn pandemic is over.

Wouldn't that be great? Well, that yes. Cheers. Cheers to that. Cheers.

Bye bye, James. So that was James Cameron, barister, trade expert, advisor, social entrepreneur, talking about doing radical things in a suit. We're nearing the end of this first series of Cleaning Up. I started it over the summer at the height of the COVID lockdown in order to connect with some of the great friends I've made over the years and share their stories with a broader audience. We'll be back next year. We've already got some amazing guests lined up, so make sure you rejoin us for great conversations via YouTube or your favourite podcast platform. But before then, we've got one more episode, we'll be looking back at some of the great conversations that we've

had over the past four months. Please join me for a festive episode next week of Cleaning Up. If you've enjoyed this conversation, please leave a review on your podcast platform. Give us a five star review if it's Apple Podcasts, or give us a thumbs up on YouTube it helps to get the word out so you don't miss any future episodes, you can sign up to get alerts in a number of different ways. Go to cleaningup.live. You can sign up for an email, or of course you can follow Cleaning Up on Twitter. The handle is @MLCleaningUp.

Ep23: James Cameron 'Trade and Sustainability - the Radical in a Suit'

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