 Good afternoon, everybody. It's a pleasure to be here even at the end of a long two days and before Bill Gates and Brian Monaghan speak. My name is Tom Heller. I've spent most of my life as a professor here, went into the private sector with an analytics group for 10 years or so. And now I'm lucky enough to be back in some important degree to work with the Precourt Institute in the Bank of America's new sustainable finance initiative. And I'm even luckier to have a good friend here with whom to talk, Joaquin Levy, who is the CFO and managing director of the World Bank and previously maybe known to a number of people here as the finance minister of Brazil. So lots of experience in all of these questions and a real opportunity to learn from him. Let me say that while we always think of technology as the driving force and certainly at Stanford, it has been an extremely important driving force in thinking about energy transition. Finance in some ways has always been at the very heart of the policy agenda all the way since the Rio Summit in 1992 because there are many ways we could understand all of the efforts that we have been making over the past 26 years as following the load star of re-pricing assets so that the asset values we see in the market actually reflect the various external costs, the non-monetized costs, whatever you want to use as terminology that reflect the total impact of the various values that the assets add to the economy. And yet, while we've had this single load star to follow and have approached it in different ways over time, in the background, this whole effort has gone on against massive shifts in technology, in economics, in finance itself following the recession, in institutions, in geopolitics. And I think one of the things that would be useful to explore in this conversation is to understand how the energy transition fits together or rubs up with friction against these various other changes that are going on in the world that contextualizes the energy changes. And because of the nature of these damages or these potential costs associated with the byproducts of energy, we know that these problems have to be handled in at least some coordinated way across the globe. They cannot be handled nation by nation. So at least in a core set of countries, we add the coordination problem to the general question of these multiple changes that are interacting with each other. So what I would like to do in this conversation and in these questions for Joachim is I'd like to focus on three specific aspects of this. First, there is a new landscape of finance that is evolving across the world and certainly in this country. I would like to think about the relationship between public finance and private risk in that new landscape. I would like us to think about other major changes in context. What is going on in political institutions more generally? What is happening in macroeconomics? What is happening in technology? How do those fit together? So that's a second area of work. And I think the last area, which we may get to principally through either questions or through a variety of illustrations in thinking about these principal changes is that as many people have spoken and alluded to, we have seen a real change in geographic concentration because to solve the issues of managing climate risk or other sustainability risk, so much of the world's capital, innovation, demography has moved into the major emerging markets, and we simply cannot solve this problem without an understanding of how these problems are situated and how they're going to be defined. So let me begin by focusing Joachim's attention on this new landscape of finance in the world that is both post-recession and post-Paris in a world in which some of the initial things we were trying to do, like have a homogeneous, serious carbon price across the world or have international negotiations that were productive rather than paralyzed. As we've moved from general questions of credibility to infrastructure, implementation has become the critical question, and that partially explains the focus on finance. So Joachim, through the world of development banking, where you are at the World Bank, there are other multilateral banks, national development banks that you know well, can you describe your sense of how this landscape is changing and what the implications are? Yes, well, good afternoon. I presume most of you know what the World Bank is and the different institutions that comprise the World Bank. We are focused mostly in developing countries. Some have advanced dramatically in the last 30 years, so the landscape of our membership is changing in terms of our clients. Some are what you call graduating, but continue to participate as stakeholders, shareholders in the institution. As Tom mentioned, of course, the participation of the emerging markets of developing countries will be increasingly important in the discussion of climate change, and I would say stability in general and in the global sphere. A large part of the global growth comes from emerging markets. But also we saw this morning, or this morning, the slide that showed that the impact of climate change is particularly dramatic in emerging market countries and developing countries. I would say this is the reality in many of these countries, given today, and 90% of the countries that are really fragile and vulnerable is because they either are vulnerable from the point of view of, say, climate or because of governance of conflicts, and very often both are linked because of famine or because of dislocations and continuous poverty. So this discussion is very much at the heart of what we do. I think the two existential things for development these days, and we just highlighted this in our recent annual meeting in Bali, are climate change and, of course, knowledge, human capital, how people can respond to all the differences in the workplace and the economy. One of the big changes we believe that has happened, of course, is that a lot of the new industries, let's call them the economic activities that are the most profitable, actually are less capital intensive. The cost of capital goods, the cost of capital required to unit of GDP growth has declined significantly in most advanced economies, which has created a problem in terms of what to do with the savings. Of course, part of the very low interest rates today are due to the action of central banks, but it also reflects this change between the supply and demand of savings. And we believe this is a great opportunity to find a meaningful, let's say, investment opportunities in developing countries where you can through infrastructure in particular and energy that is absolutely fundamental for economic development to have long-term income streams created in a very diversified, let's say, geographic distribution. Of course, for these, you require also what we call a soft infrastructure, conditions that make investments with a level of risk that they adequate. And this is the heart of our activities. And there is where we realize we have increased the share of a climate-related, climate-benefited projects in our balance sheet about a third since, let's say, 2015. It's relevant, but the multilateral banks, the development banks are tiny compared with the size of the overall challenge. While, like I mentioned, we do have a lot of savings that need to be redeployed and bring together these two aspects exactly what we're doing, trying to mobilize the resources of the private sector. And the mechanisms are many. You, of course, are familiar with green bonds, other initiatives where we work with the government and with the market to create means, vehicles for investment that are particularly targeted to, let's say, promote investment that have an impact generally in the environment, but more and more into the infrastructure and in climate change. And we work very closely with the G20, which is this group of countries. Next year, the G20 will be in Japan, where the focus will be on what's called the quality infrastructure. And there we want to, all the countries, want to inject exactly how you invest, particularly in energy, look forward and try to bring the new technologies so that you can change the price equation in these countries. I think it's a remarkable, and also I think this morning it was mentioned the case of India. Five years ago, we talked, we'll go to India and the government will talk only about coal and how coal was the way to go. And especially after President Modi, what you've seen is a Prime Minister Modi. What you've seen is a clear shift to solar. And price-wise, you discover that you don't even have to give subsidies for that. So the focus of our activities is to bring the private investors so that you can leverage our capacity. We can take some risk on our balance sheet so that you have what is called the blended finance where we take some of the risk that cannot be diversified by the private sector. And also work so that you get an enabling environment where you can have this investment. And we believe that this can have a transformation impact in many of these economies in a way that actually increase the productivity, the potential growth of these economies on a sustainable way. And bring, like I said, a meaningful income, long-term income and streams to investors. Do you see increasing cooperation from your standpoint as it'll lead multilateral bank with some of the institutions, national development banks, the China Development Bank, the National Development Bank of Brazil, the state banks in India, who have enormous capacity in terms of their lending ability? Is that being brought into this question of blended finance where the structuring of the risks reflects the different risk absorption capacity of the different public banks as well as between the public and private banks? Well, yes, no doubt. And often it's this blending that works. Taking the case of Brazil, for instance, people will not know, but in a few years we got, for instance, wind accounting to something as 15% of the installed capacity of energy in Brazil. And in many of these places, like here in the US, there is this combination where you get the new technology and also you get a lot of new jobs created because you're investing in things that, of course, you have to build, et cetera. So it's something that ultimately is very attractive. In China, it's quite remarkable what it's been doing. And in the area of green bonds and a number of incentives for banks also to steer or to favor investment when you have two choices, one that is greener than the other, how you get the price signals so that, say, companies will rather pick a type of investment so they know they can get cheaper financing. Usually through an indirect way, in the case of China, for instance, the central bank would require less. We reduce the cost of reserves for banks that have a portfolio that is greener. But this is not only in developing countries. Actually, if you look, we see in the Netherlands, ING, which is one of the biggest banks there, they also look into the strategy, the portfolio of some of their borrowers. And if they see that it is sustainable, even if today's portfolio of this client is not totally green but they see they have a credible strategy to become greener, they will be glad to land in more favorable terms. And the margin then to companies that think that this is not important. And I think that this approach, especially when you look at banks, is important because we don't want to have green washing. We don't want just the companies to focus on marginal little things but really to put in place a new way of thinking. And even if it's not immediate but to have a really good strategy to green their overall portfolio. And I think, and maybe you could discuss a little bit about this, I think a turning point about this was that the document put forward by the Financial Stability Board, which is an institution created after the great financial crisis, they bring together the G20 central banks and other institutions, the World Bank, I represent the World Bank there. About two years ago, they issued what's called the Bloomberg report about the disclosure of climate risks, the so-called stranded asset risks of companies. And these as well as some legislations in France that requires companies to disclose how they address this risk. I think it's a very important step forward because it brings the discussion to a much higher level of rigor and creates a language that can be really talked by all participants. So I think these, perhaps even more than government determined carbon tax, can be a tremendous effect in changing the direction of investment and really translating the kind of information that, for instance, the IPCC, the report of the UN, and so on, have made available. You have to create these levers and mechanisms that translate these in pricing to companies. So let me just go a little further with the example of China because it is so important in the position of dealing with the world's carbon risk management. And that has certainly been stressed in these discussions. But I think there are several points that Jiaqin made that deserve attention. First, nearly all the finance in China is from the state banking system. Let's be clear about that. The risk associated with these investments falls onto the state. That's a remarkable decision because it has raised two questions recently that are worth discussing. They entered the question of securities markets because previously all of this financing, green and brown, was done by bank lending. Now they have entered security markets and have issued a very substantial volume of green bonds issued by the same state banks as we're doing the lending. But the securities markets bring a different tone to this overall question. And perhaps the most interesting issue is they have just made decisions in the last two weeks that they cannot green the bond market without greening the loan market. And so the People's Bank of China is now issuing what I think will have to be a trend, which is trying to understand, as you suggest, the total picture of financing, which is being done, both through disclosure and through incentives of the type that they are now issuing. So I think it's very important to keep our eyes on this factor. And I guess my question is, are you optimistic about the rise of various thematic special purpose vehicles, green bonds, green funds? Or is it the larger portfolio and the wisdom, the productivity of its allocation, where we ought to be focused over the coming years? I think these instruments are our gateway for investors. There is a clear demand by investors. And so to organize a market, it's important to respond to that. In Europe, for instance, there is an effort even to regulate debt so that you have consumer protection. You're the investor that put the money in something that's green and knows that this is green. And I think that more broadly, the market can provide part of this assurance. I think we at the bank, we work at several levels. We have a partner, for instance, with one of the leading asset managers in Europe to get $2 billion fund that basically will help, we invest in different banks so that they can help clients to issue a green bond. So we are using the private sector, enabling, say, companies in emerging markets, sometimes smaller emerging markets, that by themselves do not have a way to access the market. But through this fund, they can get access to the market because the fund then issue in advanced economies to really develop green bonds markets in all developing countries, including small countries in Africa. This is very important. Also, the mechanisms of coordination we are considering, you see together with IMF, we do regular reviews of the financial sector of countries, what's called FSAAP. And we are now considering to include a component to see how well their financial system is equipped to deal with this new landscape and the new risks related to climate change. Let me make one observation here. Of course, for growing economies, transition costs, in a way, are easier because you have additional demand. This is the point Tom often mentioned. I think the advances in productivity even in markets that are not growing so much. Sometimes we have now alternatives that are much cheaper than existing sources of energy. And the question is how you create a regulatory environment that allows finance, for instance, to bring forward this gain of productivity. So, for instance, you can pay for the discommissioning or for compensate the incumbent that has a dirty, actually more expensive productivity. So I think part of our work in the finance side is really to work with regulators on how to really use the flexibility when there are gains to be shared so that we can make the transition but take care of, let's say, the dislocations. And this is very important because we have the very clear example today of trade. Trade is an example where you have a lot of gains when you have trade. But if you don't take care of those that suffer sometimes limited by very concentrated impact of this transition, then you have people who are left behind and you get a backlash. So I think more and more we in the finance side, we also have to look on how to use finance to smooth the transition between models. I think this is an extremely important point and just to prove at it a little further, many of the banks, the public banks have a history of deep criticism from the IMF, for example, on the productivity of their allocations. There can be lots of reasons, corruption, gaming, but no one knows that better than someone who has been the finance minister in Brazil. So there is this really interesting problem we have of trying to understand how to take these scarce public resources that are necessary to bear the risk with private actors in the system and allocate them efficiently. One of the things that I find most interesting in China, and this is for comment, is that I never hear and I spend a lot of time in China. I never hear people talking about a climate crisis. This is all framed in terms of growth and it's largely framed in terms of AI based growth in which energy is an application that will produce greater growth and efficiency, but it is not the energy position itself that Xi Jinping emphasizes or the banks push, it is the transformation of the economy more broadly to bring a new growth model to China. Do you see this as a rising tide or simply a part of how life goes on in China? Let me say two things first. Yes, I think like you mentioned, especially in expanding economies, the opportunities of if you're investing and you're investing for the next 30 years, you better invest in something that will be sustainable and you'll be working 30 years ahead. And this is clearly, for instance, what is said in India like I mentioned in slower win in Brazil in many other countries. Now talking about how to use and how to focus resources, I would come back to the question of how you put a lot of these things in the language of risk. And here, let me mention something that is quite important. It has been created by willing central banks the called network for greening financial system. And what is the idea? The idea is there really to use the, say brain power, the capacity of central banks to really start to analyze the climate change risks in economies in the real sector and how they future in the financial sector, the stability. It's true that often we think it's stability like three or five years and maybe climate change in five years is not so obvious. Well, first, there has been an acceleration. Second, we may not be talking only about banks but also talking about insurers, et cetera. Many of these central banks are actually the regulators of insurers. And the fact that you start to have a good model that can price this risk and can see what is the impact, prudential impact on the financial system, I think is one of the most clever way to really price the risk and to provide the right price signals to those who finance companies and through this mechanism, actually the companies themselves in their investment decisions. So I think that we are getting into a new phase where we are moving to a much more systematic approach to analyze these risks. There are enormous complexities. We go from the new scenarios, et cetera, all sorts of non-linearities, but you start to get away where in a systematic way you can get the right price signal. So certainly one of the main focal points of the new SFI is going to be working with these central banks in trying to come up with the metrics and the management strategies that would allow them to regulate in a variety of ways and offer modes for managing these risks as they do appear in the economy. I would raise a question with you. The People's Bank of China, central bank, the Reserve Bank of India, central bank, certainly in Brazil, the central bank, are critical actors which in some ways mark a potential institutional shift. That is to say, we started off with multilateral negotiations. They had their problems. We started to shift focus onto the fiscal authorities, the to impose taxes, carbon taxes at the local level. There has been slower than desired behavior in that area in pushing the price up to one that affects behavior. We then turned to the development banks. Now, you and I both are very interested in turning to the central banks. Is this the latest fad or do you think there's really something about the central banks that ought to give us more hope than we have or more prospect for success than we have had over the last 25 years? I think it's a process. I mean, and you know the difficulties of initiatives and the global coordination from a political side. I think, like I said, the advantage of having this in the discussion in central banks is that you start to have a clear language that can translate these risks on things that can measure and you start to see how this impacts the stability of financial system and then this requires some action that you've been the remit of these banks. These are not ways to get a backdoor subsidy or support. No, it has to be clearly focused on the real risk that you have to the financial system and then take the adequate prudential actions there. The fact that this may have a price impact is only plus because this will be the market-based way to get financiers and companies acting well, ultimate for our survival. We have five seconds left. I want to thank everyone and I want to particularly thank my friend Joachim for spending this time with us. Thank you very much. Thank you.