 Hello and welcome to the World Economic Forum in Davos. My name is Simon Kennedy of Bloomberg News. Joining me today for an insight and idea is the World Bank president, Jim Yong Kim. Thank you for joining us. Thank you, Simon. We've got half an hour to save the world. There's been a lot of commentary this week on finances and credit bubbles and currency wars. But let's zero in on something that has the potential to shape our future for centuries to come. And that's climate change. It's something you've brought a passion to the World Bank. And I'd like you to start maybe by telling us about the details of a report you brought out in November. Well, we did this along with the Potsdam Institute. And it was an effort to give a sense of what the world would look like at 4 degrees centigrade, Celsius warmer than the average, historical averages. And it was really striking to me. I'm trained in science. And I thought I was keeping up with the climate literature. But I found out that I had not been. And when I really saw what it was going to look like and some of the estimates of when this 4 degree Celsius world could happen, I was really shocked. I was personally shocked. And I started doing some of the math. And it turns out that if it's the absolute worst case scenario, my children in their adulthood will be living in a 4 degree Celsius world. And what did that mean? Just some of the top line headlines, the oceans will be 150% more acidic. The coral reefs would have been long dissolved. The fisheries will be fundamentally uprooted. Some people have said that carbon may be the currency of climate change. But water is the teeth of climate change. There'll be water fights everywhere. There'll be food fights. So in their adulthood, my children could be living in a world that doesn't even resemble the world we live in now, where the animosity of the fights over basic resources will be so severe that it will threaten human civilization. So I started going back and saying, so what about the work that we do? We build roads. We build bridges. We work on health care, education, social protection. All of these issues could and will very soon, if we don't take action, be affected by climate change. And what were the conclusions on what you can do about this? Or what we and what governments and other policymakers can be doing or should be doing? There's a lot of different solutions. And one of the things that I asked my team about was when these once in a lifetime, and there have been so many once in a lifetime events that have happened recently, when these once in a lifetime events happen, everyone turns their attention to climate change. And then the suggestions that are given are usually kind of small bore. Well, we can recycle. We can do all these sorts of small things. But what I was asking them is, let's make a list. What are the really big things that we need to do? What are the big things that we need to tackle right away? And all the other things, of course, recycling, these are all important things. But what I learned was, the one thing that we need, and everyone has said this for a long time, we need a stable price of carbon. And we need to find a way to make a market that works for carbon. And so we began talking to people. It's complicated. Finding equivalences, forest carbon, black carbon. These are complicated technical issues, so we have to work them out. But we believe it's doable. The other issue is we have these fossil fuel subsidies. I was just in Tunisia. And they're struggling to try to find a way to remove fossil fuel subsidies. But they were very explicit. They said the fossil fuel subsidies help the richer people who have cars. And they're fundamentally not progressive. We want to protect the poor. The fossil fuel subsidies don't do that. Moreover, we want that money back. We think there are better ways of spending that kind of money. But it's politically very difficult. But we should remove fossil fuel subsidies in every country in the world. The World Bank needs to help countries find a way forward. And the other thing is the mega cities. The top 100 cities are responsible for some 60%, 70% of the emissions. And so if we find a way to build green cities, that will have a huge impact. Now it strikes me that those three major things could actually have an impact and change the arc of climate change. You were, I don't know if people can notice, but you're wearing the World Bank tie, which carries the mottier. Our dream is a world free of poverty. Tell us a bit more about how the climate change fits into that. People might see that the World Bank is somewhere working with developing countries, a financial organization. How do you mesh those two? How do you unite the climate change ideal and ambition with actually your mandate? Well, so if you look at the various things we need to do to adapt to climate change, there's no question that poor people are the least able to adapt to climate change. Let me just give you a specific example. Droughts in the Midwest of the United States and other parts of the world led to increase in prices of wheat and maize. And so who does that affect immediately? It's the poor. And what happens, we know and from our studies, is that they simply eat less. And so we're seeing that the climate-based increases in the price of very basic grains in this case can actually have an impact, not only on just temporary increases in food prices, if there's malnutrition in children, they're stunting and they never gain that back. So if you increase the price of food and cause malnutrition in kids at a certain age, this is gonna have an impact not only on their lives but on their whole families and even on the potential for economic growth in those very communities. So the canaries and the coalmine of climate change are going to be the global poor. Those people are our primary concern at the World Bank. There's no way that we can do our work fighting poverty and not pay attention to the impact of climate change. What's been the reaction of your shareholders, the people who will fund the World Bank going forward? Well, I think that across the board there's been strong support. One of the questions as I was coming into the World Bank was what's gonna be the role of the World Bank in tackling these global public goods issues like climate change? And I think we answer that question very clearly. The World Bank is involved in so many issues that could have a direct impact. We fund energy projects. We fund roads. We're working on the building of cities. There's so many things that we do, agriculture. We wanna be sure that everything we do is aligned with this effort to slow down to mitigate climate change. Is there a risk that in a world that seems to be emerging from the financial crisis and the Euro crisis of last year that relapses or other problems take climate change off the agenda because it is viewed as a problem in the longer term. It's always tomorrow's problem. Is that a problem? How will you try to avoid that? Well, I think that the drought in the middle of the United States last year, for the first time climate scientists said that this drought was related to man-made climate change and then hurricane Sandy. But there's so many of them. The president of the Philippines, President Aquino, was here and he said, if you doubt the impact of climate change, just come to the Philippines. We used to have typhoons only into September. Now they're all the way through December. Places that were very wet before are now facing drought. Faces that never suffer from typhoons are having them. And his representative to the meetings in Doha said in a very emotional presentation, please world, wake up. We're facing it every single day and the poor people of the Philippines are feeling it the most. I think it will be on the agenda. And I think people are starting to connect the dots. These extreme weather events are related to climate change. We've got to act. And if we do forget it, I'm gonna be there to remind people because it's something very real to me. And it just take the water issue, right? I'm a physician and what we see is when there's problems with water, there's increase in diarrheal diseases and there are more people who die from bad water than die from AIDS, malaria and TB combined. So this is a very real problem in our faces. And I think it's my role to continue to remind people that we've got to find climate-friendly ways of encouraging economic growth. The good news is we think they exist without question. But how easy are they to implement? What would you like to see the governments do? Well, they're not gonna be easy to implement. I'd like to see the governments really get behind establishing a carbon market. I would really like to see everyone work together to do that. Again, the fuel subsidies are something that we need help with. The developing and middle-income countries, the low and middle-income countries are gonna need help to take that difficult but important political step. And I think the mega cities, everyone has to be involved in figuring out a way to build clean cities so that we reduce the carbon reductions. There's something that everyone can do. What we wanna be clear on is that it's everybody's responsibility to contribute. But we also wanna make clear that we've now gotta tackle the really big issues that can truly have an impact. The World Bank is already working on these things. Just this week or just this month, the IFC, which is the private lending arm, raised $280 million, the governments of Britain, Canada, and Azerbaijan for projects related to climate change. What more do you think the World Bank can be doing and will be doing? Well, I think that I'm having conversations with a lot of different people, including Christine Lagarde at the IMF, various ministers of finance about building a carbon mark. It'll take that kind of an effort. We're looking at everything we do from the perspective of climate change. We're looking at every single one of our projects, every single one of our energy projects. There are tough choices to make. You know, we cannot deprive developing countries of energy. They need energy to lift their people out of poverty. So in every case, we have to make very difficult decisions about balancing the climate change issues with a fundamental need for energy. But we are now using this lens to look at every single thing that we do, to try to be innovative, to try to come up with transformational solutions that will not only spur economic growth, but will do it in a way that's climate friendly. So then to your broader agenda at the World Bank, you've been there less than a year? Six months. Six months. And you told my colleague in an interview the other day that your first six months have been studying and learning and now you're ready to kind of roll out an agenda and a plan. Tell us what you've learned in that period and how you might be looking to change the bank. Well, the most important thing that I've learned is that we have an institution that's just full of people who are passionate about fighting poverty. You know, there are PhDs in economics from the best institutions in the world. And when I scratch a little bit, what I find is this great, deep vein of emotion and passion, they could have been working anywhere, but they're working at the World Bank because they want to fight poverty. So that's been great. We're clear that that's what we're doing. But then the other part of it that I found was that we also know that we have to do it through what the IFC is doing in this case, which is making investments and loans so that countries can grow their private sector. You know, we just put out a report saying that 90% of all jobs in developing countries come from the private sector. So we have to fight poverty, but at the same time we do it by creating dynamism in private sector so that businesses can grow and jobs can be created. What I found is that the World Bank is just full of people who are passionate about that. Now what we need to do is to set some clear targets, some clear goals for us, and organize ourselves in a way that every day we're moving toward those targets. And we're going through a major reform process right now where we're trying to do some things that everyone wants us to do. You know, we're awfully good technically. When we work on a project, you know you're going to get the best knowledge, the best expertise, but it takes too much time. And so one of the things we're working on is just to really reduce the amount of time it takes to get a loan through our process and then get stuff happening on the ground. Not easy. These are huge bureaucracies. This one's been around for 66 years, but we're committed to making that change. And we feel that if we can just get better, reduce the time it takes to get a project in, you know, by 60, 70, 80%. If we can do that, we think we can spur a lot of other activity that'll be important. It's a great institution. It needs to refocus on its fundamentals, which is ending poverty and boosting what we call shared prosperity. In other words, prosperity that's shared by young people, you know, in the Arab Spring, you know, we found that the rates of unemployment were incredibly high among young people. Interestingly, the highest rate of unemployment is among young people who are college educated. So they did not share in the prosperity of Tunisia, and that's what caused fundamental instability in their society. It has to be shared with women. You know, we were not always on the cutting edge of gender equality, but what we know now is that development has to put women at the center. And in our notion of shared prosperity, we think the most important element of that is to share prosperity with future generations. End poverty, build shared prosperity, focus on those goals, look at everything we do, and move forward quickly. There's a lot of talk in Davos these days about the state-of-the-world economy from an advanced economy point of view, something that probably wouldn't have been expected during the early part of this century. And yet, that takes away from the developing countries. So a lot of the talk this week has been about is the US in a sustainable recovery? What's gonna be on the euro crisis? And then the emerging market to the future of China and India and the like. Tell us about the state of play for the developing economies. You know, the development economies have shown remarkable resilience over the last five years. You know, the lion's share of the global growth of the last five years have come from the developing countries. So for example, in Africa next year, we're predicting a growth rate of 5.5%. Now, you know, some people might think, well, it's because commodity prices went up, that's the only reason. And what we found is that in Africa, in 2000, they invested about 16% of their, 16% of the GDP was an investments in infrastructure. This year was 22%. So they've actually increased their investment rate. They're increasing their investments in the foundational elements that will lead to future growth. And also, they've done a lot of things well. We feel very proud that we've worked with these countries. They've done a lot of things well, good fiscal policy. They've invested in health, education, social protection. And so there's a great story there. Latin America rebounded very, very quickly. What we're telling the developing countries now is, okay, you got through this period well. You may need to build back your buffers a bit, but focus on building those foundation for the next phase of growth. So it's a great story. You know, and in fact, the rich countries should thank the developed world for maintaining the growth that we've seen in the last five years. We're laser focused on making sure that they're prepared if there's another shock and also that they're building the foundations for the future. I'd like to stress test the commitment on climate change. Sure. And two is, as you're learning in Washington, you get hit from both sides. The environmental lobby has questioned whether there's a hypocrisy that the World Bank's performance on climate change in their mind has been questionable. Christine Aid, for example, says the bank's funding of coal has surged in the past five years. In 2002, the World Bank loaned nearly four billion for a coal-fired power plant in South Africa. Obviously, this is before your time. How do you avoid those projects in the future? Do you accept that in some places you're gonna have to do things that will work against climate change, but they will work for the good of those economies that need that infrastructure? So a couple of quick things. So if you add up all the emissions of all the developing countries and you remove China, all of the developing countries emit about a third of the CO2 that the US, EU, and China together emit. So it's actually a relatively small proportion of the overall emissions. And I live in Washington, DC. I get my electricity from a coal-powered plant. So we have to be really clear about where we are right now in the world. I said it before, our job is to focus on ending poverty. Now we do everything we can to avoid sponsoring coal projects, but you have to look at every single country and say, so is there any other option? So everything we do, we're looking at every single other option and only in the most severe cases where countries have no other option and where us coming in and helping them will ensure that any coal-powered plant will be clean. Now I have not yet signed a coal-fired project and I would like to not, but I also am very much aware that my first priority is helping countries have the energy that they need. And countries like Kosovo and Mozambique, we're looking at every other option. But Kosovo, they don't have heat. And Mozambique, they desperately need energy to take the next level, to get to the next level in development. We're very much aware that coal is problematic. On the other hand, our job is to help people have the energy they need to lift their own people out of poverty. So it's a tough, this is why I'm in this job, it's a tough negotiation. We wanna do everything we can to lower the use of coal. But we can't turn our backs when poor countries need energy in order just to light homes and provide heat. On the flip side, the World Bank is in Washington. It is the World Bank, but the US is its largest shareholder. You wrote a column in the Washington Post yesterday making some of the points that you've made here. Response today from a lobbyist and columnist for the Post, Ed Rogers, a Republican who says, Republicans unite, America's way of life is being threatened by global warming zealots who want to mindlessly raise American power bills. I hope Congress pay attention to how Kim is spending his time and performing at the World Bank. The accusation is that when you talk about carbon markets, when we talk about prices for fuel, that it's price hikes, that it's tax increases. How do you challenge that argument with the knowledge that the purse strings for the World Bank are somewhat controlled by Congress? Yeah, you know, I've been trained in science and I have young children and I've looked carefully at the science. There is some 97% agreement that man-made climate change is reality, that it's connected to these extreme weather events that we could really be living in a four degree Celsius world. So quite apart from any of those considerations, the political considerations, I feel like I have to tackle this issue just as a matter of conscience. And also, if you're a scientist and you see there's 97% convergence, it's surprising. I mean, we're almost worried when we see 97% convergence. I know very few things in medicine on which there's 97% convergence. This is real. And if this were just a doomsday story and all we were saying is price hikes and the future is bleak, that's not what we're saying. We're saying that a future that is fueled by renewable sources of energy, by cleaner sources of energy in the interim, that's an exciting future. It's a future that we can all look forward to. And what we need to do is to begin talking more about the exciting future that lies ahead of us if we take action together. I'm very encouraged by the fact that President Obama has been so clear on tackling climate change. And I'm sure that we're gonna have these discussions. And I would simply say that anyone who wants to talk with me challenged me on this issue. We're ready to go. And it's really about people having children and grandchildren. It's really about the world that we wanna leave behind. If we're serious about our care for our children and our grandchildren, then I think we have to take it seriously. What's your message for businesses? Obviously, Davos, a huge amount of business executives, can they play a part in what is that part? Well, the point that we try to make in the Washington Post, which a little bit, I think indirectly, is that the only way that we're gonna actually tackle this is to get market forces moving. Once people start making money off of climate change mitigation and adaptation, once they start seeing clearly what the price of carbon will be and adjust, I think that there's a lot of money to be made in building the kind of technologies and doing the kind of work that will help us bend the arc of climate change as you guys have thought of it. So, we actually want them to think in the most innovative and entrepreneurial ways about how they can help us move toward this climate-friendly future. Without the private sector getting involved, without the private sector taking advantage of the opportunities, we're not gonna be able to tackle this problem. This has got to be a market-driven approach. Will it take more superstorms and droughts to make this, to really push this forward? And it's obviously not the driving force we want, but do you feel that the superstorm, Sandy, for example, has given a change in focus on this debate, made it a more real world debate? Well, we have to keep up a steady drumbeat in between the extreme weather events. We have to keep talking about what's happening. We have to keep talking about basic things like when the oceans are getting a little bit warmer. What's that really gonna mean? I think our role at the bank is to continue to make clear the impact this is having on poor people. I mean, I think people in the wealthy countries over the last few years have shown that they're extraordinarily compassionate. In the worst economic times, the high-income countries were very generous to the World Bank and to other agencies. So we think there's a tremendous reservoir of compassion. We simply have to keep telling the story. But the extreme weather events are gonna have a very powerful impact on people's understanding of the role of climate change. What about your clients, the people who you're trying to help? Are they interested? Are they engaged in this, or do they feel that they're missing other things that will... Let me give you an example. The largest emitter we know is China. I was just there in meeting with the future premier, Li Qicheng. And he specifically talked to me about this issue. And what he asked me to do was to focus on urbanization. He says, you know, for us, urbanization is about food security, health, education, not just roads and buildings. And more than anything else, it's about climate. We wanna build a green future. We wrote a report with them about what a green Chinese economy would look like. And they've set some really aggressive targets. They wanna decrease the carbon intensity by 40 to 45% by 2020. So they have a plan. They're being very aggressive. Yes, they're building coal-fired plants, but they have a plan of how to move forward with their green economy. I mean, they're feeling it directly. The people are having more respiratory illnesses. There's a lot of complaints in China. So even in the highest emitter, there's a great interest. Also, in the developing countries, interestingly, the market and demand for renewable energy is going up very, very quickly. So there is a concern. I think they do get it. I think they would love to be able to move toward renewables. We just need to be ready to help them when that's the case. You're only six months into your term. What would you, given the challenge on this, what would you like at the end of your term to at least have achieved? What do you think is acceptable? You might have a, not ambitious, but what do you think is an acceptable result at the end of your term on climate change? Well, at the end of five years, I'd like to have all three of our projects either completed or really on the move. So carbon market, removal of fuel subsidies. A reasonable, evidence-based approach to mega cities. I'd like to see all of them in place in the next five years. And for what will require that political push or business push or a voter level push? You know, I think we have to work on it with all our parties. I mean, the good thing is that we're engaged with the private sector, we're engaged with, of course, our member countries. I think everyone will have to work together. And we're gonna have to have this discussion in the, you know, with our board, with our governors, with the ministers of finance. But I'm optimistic. I think it'll happen. I think there will be more extreme weather events. I mean, there are extreme weather events right now. The extreme cold, you know, here in Europe, you know, Australia is suffering a severe drought. You know, as these things happen more frequently, I think it'll drive the world toward asking fundamental questions about why this is happening. Then we can talk about the science and we can talk about really large bore projects that could take us toward solutions. And it also seems that this could be a driver for economic growth, something we'd love to do. It has to be. It has to be. We will not be able to tackle climate change unless it's a driver of economic growth. If it's simply a vision of doing less, I just don't think it's gonna work. Because doing less means that we can't lift more people out of poverty. So our dual goal of ending poverty through growing economies and creating a cleaner future, we think those are compatible. That's the great news. That's the optimism. That's the bright vision of a future that we've gotta talk about. You know, if climate change is just about doing less in a bleaker future, again, I don't think we'll be able to tackle it. We've gotta look at the growth opportunities, look at the transformational societies we can build. And what's next for you? What's your work for the next year? Well, it's really to talk with all our partners and the constituent bodies about how we can get these three major efforts going. In the meantime, we're doing other things. We're working on sustainable agriculture. You know, climate-smart agriculture is an area that we need to make some movement on. Just today, I was talking with former Secretary General Kofi Annan, who has a deep interest in this area. We can build climate-smart agriculture in Africa in ways that could be very, very helpful. So there are lots of other things to do, but we wanna get those large projects. We do have other things that we do. You know, we do work on many, many other areas. You know, we work on health and education. I'm involved in all of those areas. But this has gotta be one of our very top priorities. Well, it sounds like after six months, you've got a uniting force here. The climate change is perhaps the gender setting for the World Bank, and through it, you're able to pick off various bits that have all been together, but you've drawn a line between them. You know, Simon, let me just say that for us, it's never an issue that's the driving force. It's people. Our focus is on ending poverty. And our focus is on ending poverty, especially for children. And if you really care about the children, you've gotta care about climate change. So the reason I've spent the first six months saying what are our fundamental values? We're talking about our values at the bank. What are our values? And what does the evidence tell us about how we can move to those values? If our fundamental value is ending poverty, then lots of things flow from that. We care about people living in poverty. Then if you care about people living in poverty, for all the reasons that I mentioned, the fact that they're so vulnerable to climate change, you've gotta care about climate change. You've gotta care about energy. You've gotta care about access to healthcare, healthcare, education. That's what's so exciting about being at the World Bank, that it's not a bank thinking about the return on loans. It's a bank that has money, thank God. And what we think about is how do we end poverty? What a great opportunity. President Kim, thank you very much. Thank you, Simon.