Follow the Money, Eat the Rich | Crooked Media
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September 16, 2022
Follow the Money, Eat the Rich

In This Episode

We hear all the time that acting on climate can upset the delicate balance of the economy, worsen inflation, kills jobs. So on and so forth. But is it true? Today on Hot Take, Mary and Amy are joined by Akshat Rathi, Senior Climate Reporter at Bloomberg, to break down the barriers and dispels the myths between the world of finance and the world we live on.


Make sure to listen and subscribe to Akshat’s new climate podcast – Zero. Check out his groundbreaking investigation into ESG, too!


If you want to contribute to the relief efforts in Jackson, Mississippi and Pakistan, here are a few places to give to:


Cooperation Jackson – Mississippi


Mississippi Rapid Response Coalition


Alkihidmat Foundation – Pakistan


Flood Relief – Akhuwat -Pakistan


Follow us on twitter @RealHotTake and sign up for our newsletter at







Amy Westervelt Hey, hotcakes. Welcome to Hot Take. I’m Amy Westervelt.


Mary Annaise Heglar And I’m Mary Annaïse Heglar. Last week, Amy, I logged into Twitter and it was like somebody had died.


Amy Westervelt Apparently, some very old woman.


Mary Annaise Heglar Yeah.


Amy Westervelt Very old. Very, very old. Surprised everyone by dying.


Mary Annaise Heglar Of natural causes.


Amy Westervelt Lots of old women do.


Mary Annaise Heglar Yeah. Yeah, I. Yeah, I know there’s some some people are speculating on exactly what was the cause of her death. But like, I’m going to. I’m betting on time. I think it was just another time.


Amy Westervelt Father time baby. Ninety-six is old. That’s a long life.


Mary Annaise Heglar Yeah.


Amy Westervelt Yeah.


Mary Annaise Heglar Yeah.


Amy Westervelt Yeah.


Mary Annaise Heglar And so now we have well, we don’t have shit because I don’t live in a British Commonwealth. But some folks have a new king. There’s a king now.


Amy Westervelt A king. Yeah. King. King Charles.


Mary Annaise Heglar It’s going to take me a long time to get used to saying that. I don’t know if I ever will. I don’t really know what the king does, what the monarchy does. I’m like, I legit don’t get it. But the only thing I could think of when I heard that she passed away and I know this might be horrible is when she had people come and look for oil underneath Windsor Castle.


Amy Westervelt Oh, that’s right. That’s right. She did. Well, I mean, the monarchy is is pretty much a figurehead. But, you know, the British public pays for that shit.


Mary Annaise Heglar Yeah.


Amy Westervelt British people pay taxes that go towards supporting the monarchy. And right now people are really feeling the pinch because of exactly what we’re going to talk to our guest about today, which is like inflation and rising energy prices and all sorts of of economic impacts of of fossil fuel dependance.


Mary Annaise Heglar Exactly.


Amy Westervelt So, you know, they could use a break on those royalties. Womp womp.


Mary Annaise Heglar Right. And our guest is based in the UK, so he’ll, very excited to get his perspective. But before we go there, the new king, King Charles, is supposedly an environmentalist, but he’s partnered with BP. He’s a big fan of population control and alternative medicines, which we’ve seen how that can quickly turn the wrong way. It can go from like maybe drink some camomile tea to all of a sudden you don’t need vaccines, just eat a squash. So I don’t know what’s what’s your opinion on this theory that our new environmentalist King is just on the rise?


Amy Westervelt Well, two things. One, can you be a colonizer and a climate king? I don’t.


Mary Annaise Heglar Think so. I don’t think so.


Amy Westervelt There is no. No. And number two, I would like to know what sort of alternative dentistry he’s embraced because. Who.


Mary Annaise Heglar Amy?


Amy Westervelt No, thanks.


Mary Annaise Heglar Amy! Mean.


Amy Westervelt I’m sorry.


Mary Annaise Heglar This is the part where we have to remind you that Amy’s husband is Scottish and not crazy about the monarchy now.


Amy Westervelt No. I mean, I think, like, to be fair, I think quite a lot of people in the UK think that the monarchy is outdated. It’s this very costly, you know, kind of, I don’t know, weird decorative thing. It doesn’t really do anything, you know. And there’s a lot of things that that money could be spent on that would actually make people’s lives better. You know, like everyone’s wondering how their new Prime Minister Liz Truss, is going to possibly cut taxes while also dealing with the energy crisis and inflation. And this would be an ED sir, I don’t think she’ll do it, but yeah. Yeah.


Mary Annaise Heglar And if anything, the British monarchy as a symbol of the British Empire and of colonialism, I would argue the biggest climate, criminal history is the British empire. You know, we all I think we’ve said this on previous episodes before, but we always break down carbon footprints by country and never by empire, which really allows European countries, especially the UK or especially England rather, to just get off scot free. And if they had to account for that colonial carbon footprint, wouldn’t be no jewels in Buckingham Palace, let’s just put it that way.


Amy Westervelt That’s right. Honestly, I feel like if King Charles wants to be a climate hero, he could pay reparations to former British colonies. Yeah, yes, sure. That First Nations people get their land back from colonizers. Two great steps. Go for it, Charles.


Mary Annaise Heglar Right. And just. And then just see where it goes from there, you know, right away. But, yeah. So today’s guest is based in the U.K. We’re going to be talking to Akshat Rathi from Bloomberg News, who knows all things climate and finance and yeah, really excited for this conversation.


Amy Westervelt Super excited. We asked Akshat to walk us through all kinds of confusing acronyms and weird climate finance ideas that we have been, you know, confused about for a long time. And he helped us out. So, yeah, we’re excited.


Mary Annaise Heglar There should be a good primer for the Ask a Scientists episode that we’re planning coming up soon. So if you have not sent in your science related questions, please go ahead and do that. Send them to hot take at cricket dot com. Also some of the, you know, subjects we talk about in this episode, it might be a little bit, you know, inflammatory. And if you have anything to say in response to that please send your email to B-K-A-H-N at protocol dot com.


Amy Westervelt That’s right. Our friend Brian ready and waiting to open your hate mail.


Mary Annaise Heglar Exactly.


Amy Westervelt All right. With that, I think it’s time, Mary.


Mary Annaise Heglar Time to talk about climate. Okay. Welcome, Akshat. Thank you so much for doing this.


Akshat Rathi Great to be here. Thanks for having me.


Mary Annaise Heglar We’re very excited to talk to you because we have a lot of questions about climate finance. What is it? How does it work? I don’t know.


Amy Westervelt What are numbers even? Yeah.


Mary Annaise Heglar But first, I want to ask you how you got into climate journalism, because I don’t think you had the most traditional path.


Akshat Rathi I did not. I mean, I also think the the real answer for why I got into climate journalism is Donald Trump.


Mary Annaise Heglar Really? So that recent?


Amy Westervelt Huh. Interesting.


Akshat Rathi That was recent. You know, it’s only really from 2016 onwards that I’ve been full time focused on climate. But just take a few steps back. So I grew up in India. I did an undergraduate degree in India in chemical engineering, and then I was fortunate to get a place to do a Ph.D. in chemistry at the University of Oxford. I was on track to become a professor, and then halfway through I said, No, I cannot stay in the lab for all that time. I used to write as a hobby and I was having too much fun writing and staying in the world of ideas. And so what do you do with, you know, an education that is very science focused and a desire to want to write? And so I thought, okay, maybe science journalism would take me. And they did. And they let me write about science for a while. And that’s when I was at Quartz, when I was writing about science, all kinds of topics from astronomy to microbiology. When my science editor asked me, Hey, there’s Donald Trump guys talking about this thing called clean coal. What is it? And so I said, that’s a marketing phrase, but there is actually a real technology behind it. And he was like, That’s fascinating. Does it work? And like, it works if you really what does it work? And so that became his excuse to say, okay, you should write about it. And then I ended up spending a year learning about carbon capture and wrote a series that was very well-received. And I’ve never looked back. I’ve stayed in climate since.


Amy Westervelt Well, I’m a we’re like a big fan of everything you’ve been doing at Bloomberg.


Akshat Rathi Oh, thanks. And, you know, same things. Back to you, Amy. You know, big, big fan of Drilled and all you’ve built. It’s very hot to be doing what you do as an independent journalist. And, you know, now you’ve built all these different podcasts alongside. But, you know, it’s yeah, you’ve really shown a lot of people, you know, late in the day needed to see on this topic.


Amy Westervelt Thanks.


Mary Annaise Heglar Thank you.


Amy Westervelt Just a love fest here. Well, okay. We one of the things that we wanted to talk to you about well, we wanted to talk to you about lots and lots of things, like we said, because there’s a lot around this umbrella term of climate finance that is hard to understand and can be confusing for folks. But the word that we’ve been hearing a lot around here lately is inflation. So we wanted to kind of start there. First of all, I know this is a controversial question, but can you define inflation for us?


Akshat Rathi I mean, there is a very basic boring definition of inflation, which is that you take a basket of goods and it’s decided, you know, to take a range of goods from different sectors. And you calculate their price value. You sum up what you pay for them today, and then in a month’s time and then in a year’s time. And the difference in the amount you would pay for the same basket of goods over time is inflation. They’ll be, you know, if you’re paying $100 today and then next month you pay $101. Well, that was 1% inflation in one month. And if you pay $110 next year, then it was 10% inflation in one year.


Amy Westervelt Mm hmm. Mm hmm. And we’re talking on September 12th, 2022, the energy prices in the UK have increased with 54%. Now, is it 80%? What’s. What’s happening where you are? Yeah.


Akshat Rathi Yeah. You’ll hear all sorts of numbers because that is also not quite a true number, because the way energy prices work in the UK is tied to price caps. So every quarter now previously they used to be six months. Every quarter they raise the cap, which is to say what is a household going to pay? Max in that period for any amount of energy they use. So it’s not a true price in the sense that, you know, there would be some households which can go crazy and and keep using energy, but their energy bills would still be capped. So it’s not a good reflection of the true inflation that is happening. But yes, people are paying a lot more for energy than they used to. I mean, the best comparison, I would say is you can you know, maybe my house energy bills are really good comparison because I live in a very energy efficient home. It was built in 2016, which in the UK is rare because UK has a lot of old homes and new homes are rarer. And so when new homes are built, they were built with higher energy efficiency standard. And so, you know, my electricity bill used to be £30, give or take, 40, $45 every month, and now it’s £60. It’s twice. It’s already twice. And we’ve not even gone into the winter.


Amy Westervelt How quickly did that happened?


Akshat Rathi So £30 was last year and £60 it really rose to £60 over the last couple of months. So, yeah. And it’s set to rise again.


Mary Annaise Heglar Well, what’s crazy is that that sounds hella cheap from here because like, my power bill is like getting up to $500 a month. No joke.


Amy Westervelt Oh, my God, Mary. Wow.


Mary Annaise Heglar Yeah.


Amy Westervelt Wow.


Mary Annaise Heglar Not every single month, but I have seen $500 in a month. I’ve actually seen higher than that.


Amy Westervelt That’s crazy.


Mary Annaise Heglar And I’m not doing anything crazy over here.


Akshat Rathi Well, if you talk about bills, I think you probably Americans pay a lot more for your broadband for the same amount of, you know, gigabyte per gigabyte per second or GDP as you would get per per month. You probably pay a lot more for your mobile phone, but then you pay a lot less on your gasoline bills.


Mary Annaise Heglar Yeah, well, this isn’t just America. This is like New Orleans, which is crazy because of it being such an oil and gas and fossil fuel hub. Like, can a bitch get a break? We’re already breathing this shitty air and the shitty water and, like, bearing the brunt of the fossil fuel industry can a bitch get like a, you know, a lil price cut. A lil discount.


Amy Westervelt *laughing* That’s true. That is very true. Very true. Yeah. So actually, let’s talk about the role that energy prices in general are playing in in the inflation that we’re seeing right now, because. Right. That’s not just the cost of energy in people’s homes. It’s also causing the cost of goods to increase across the board. And that’s mostly being driven by the the like what’s happening with Russia, right? I mean, but like, actually, it’s I, I feel like I’m constantly debunking this and now I’m going to ask you to do it. How, how much are these gas prices and energy prices we’re seeing actually being driven by real supply and demand? And how much is is like market magic.


Akshat Rathi I mean, the prices of the prices. This is to say you are paying a certain amount for the natural gas you’re buying either through pipes or through LNG tankers, big ships that come to the shore and you can get gas from. But the market magic here is basically that. There is trading that happens around a limited amount of natural gas that’s available. And traders are making essentially bets based on whether they think that kind of supply will be available in the future or not. If they think it’s not going to be available in the future, they’ll pay a lot more for it. Right now, if they think it’s going to be available in the future, then they’re going to pay a lot less. And so what you do get is huge swings, right? The prices went up a lot because people are thinking, oh, my God, it’s going to be a really bad winter. Russia has just turned off the gas pipeline forever. And and the gas prices went up. And then suddenly the government said, no, we’re going to subsidize energy bills, that we’re going to bring in reform to the energy market. And we are going to make sure that this is not the kind of prices we pay and suddenly they fall. So that is the sort of like market magic we are thinking here, where prices go up and down and up and down, but that’s day to day. What is not in doubt is that the broad trend is that gas prices have been going up. So if you move the spikes around and you normalize that over the last six months or the last nine months, they have gone up. And they’ve gone up a lot.


Amy Westervelt Mm hmm. Mm hmm. I know that that the response in the U.S. and in some other countries as well has been to, you know, try to rapidly increase the production. And in the case of the US, more so the infrastructure around moving more LNG to Europe, which of course takes a considerable amount of time. It’s not a it’s not a rapid solution. So I’m curious just what what you think about that the way that this crisis has kind of spurred a huge embrace of LNG again, and kind of a build out of of infrastructure that’s going to be around for a while.


Akshat Rathi Yeah, it’s certainly not a crisis that can be met very easily with short term solutions. So if you want to build an LNG terminal, you’re talking 3 to 5 years at least. If you want to build a pipeline, it’s about the same time depending on the length of your pipeline. If you want to find a new field, you know it’s going to take even longer to find where that gas is and then tapping it and making sure you’re able to extract the gas in the right way. None of this solves what is the problem today, which is supply isn’t available. So there is a rush from politicians in Europe, but also here in the UK, which now has a new government, while yet another new government that is saying we’re going to tap in every last drop of oil and every last amount of gas that we can draw from the North Sea, which is the field that the UK has direct access to within its own shores. But that stuff is not helping today. The stuff that will help right now immediately is doing some of the subsidies work that the government is doing, which is capping the prices outright, but really insulating homes. If you cut people’s need for energy, you’re going to cut their bills. Do and you know, short term also like renewable buildout is fostered. You know, you could build a solar plant in 18 months along with all the electricity infrastructure you need for it. So that’s faster. But it’s still not next month. It still takes time. And of course, all of this is happening at a time when because of COVID and how the economy is rebalancing, there’s a shortage of both goods and the people who can move in place and install these goods. So it’s multiple layers that have really added up and there is no real good short term fix that solves the problem as we want it. And that means we have to cut our energy use, which is the last lever that we can pull. So that’s why you’re seeing Germans talk to industry and say, Do you really need all that gas? Can you make do with less of it, please? And these conversations are then had with industry after industry after industry to make a plan that, okay, save we run out of gas. Who are the people who we can shut first and who are the people we cannot shut because we can’t let people die? Freezing.


Mary Annaise Heglar It’s just so crazy to hear all this because like we had well, our governments had so much notice about both climate change and the finite nature of fossil fuels. Like, we didn’t have to get to this point had we invested in renewables sooner. And I feel like one of the arguments I’ve often heard is that we can’t act on climate because it’ll upset the delicate balance of the economy. And it’s kind of like used as the traditional excuse not to transition to renewables. What what do you make of that argument or say to it and honestly, are you even hearing it as much as you used to?


Akshat Rathi Yeah, that’s a good point. Now another I’ll take a UK example just because the numbers are large and these are coming through. So the UK just has capped its energy prices. There are some estimates out there which would say because of that the UK government is going to have to pay £150 billion over the next year. That’s like 5% of GDP. Wow. Talking to under $200 billion here. If the government knew five years ago that this is the kind of crisis they was going to face, it would have. And, you know, we knew with certainty this is the crisis that’s coming. Then it would have spent more than £150 billion, maybe over the five years, £30 billion each year, done all the things that we say it needs to do, which is insulate, build renewables, and you would not have had this crisis. But of course, the only time governments really act is when there is one. And so as much as we think this is a climate problem in the sense that governments should know better, they should act. FOSTER They have been doing that, not just in. The climate sphere. But pretty much everything else. And so should we expect anything else from them anyway? Like, it’s it’s a, you know, there are there are some governments that are more effective and they do a little more. Maybe the Germans, maybe the Swedes, maybe the Nordic countries have more planning and more buffer room to deal with extremes. But the UK has not had that.


Amy Westervelt It’s so weird to me because I feel like even just from purely like an energy and national security standpoint, like there was plenty of notice that Russia was going to ultimately be a problem in exactly this way too. You know, this is not it’s not a huge surprise. Even just this invasion of Ukraine, like it was foreshadowed by what happened with Crimea, what, five, six years ago, there was, you know, saber rattling around Ukraine for at least a year before Putin invaded. So, like, I just feel like there’s been any number of very clear signs that this is exactly what would happen. And yet here we are. You know?


Akshat Rathi Yeah. I mean, and imagine that that’s happening when the U.S. government has a $700 billion spend on the Defense Department, whose I hope the entire job is to insure national security not just of U.S. but of its allies. And so if they can mess up to this extent of, you know, well, we kind of knew in November they were like warning this is going to happen. But obviously, Crimea was 2014. Right. And so if they’re making these mistakes, should we also then blame all the climate policy wonks who don’t get $700 billion a year?


Amy Westervelt Right. Right. It’s really funny, too, because it reminds me, like, what’s happening right now reminds me a lot of what happened in the like the mid-seventies opiate crisis. And the response then was massively ratchet back oil and gas consumption. And then the industry’s response to that, like once one supply kind of normalized was, was to do everything they could to get people consuming again. So I don’t know, it’s just weird, like how much we repeat these cycles.


Akshat Rathi It’s true. But it’s also one of those things where to me, this is why climate finance of finance in general, you know, climate finance is just a phrase to say, money that might go to climate causes. But finance in general is so important to understand because a lot of what is driving not everything, but a lot of what is being driven is being driven by money. And so what happened in the 1970s was there was an oil crisis. Suddenly there was no energy. So government stepped in, did some short term fixes. All companies had a. Identity crisis. They started investing in nuclear and solar and batteries. This is all Exxon, by the way. And they actually made some progress. But as soon as they could make money the way they used to make money. They were like, Huh? Why bother?


Amy Westervelt It just went back to it. Yeah, exactly. Yeah. Mm hmm.


Mary Annaise Heglar So what you’re saying is we should eat the rich.


Akshat Rathi What I’m saying is we should make sure we understand where money goes and why it goes there. Because without understanding, money flows and the hole it has on everything around us, we wouldn’t really tackle this problem.


Mary Annaise Heglar Right. So you’re saying follow the money? I’m saying eat the rich. We’re going to say more things after the ad break.




Amy Westervelt That’s a good lead into ESG too actually is like because I feel like a lot of what companies say they are investing in is different from what they’re actually saying.


Mary Annaise Heglar But let’s spell out the acronym, though, Environmental Social Governance.


Amy Westervelt Yes.


Mary Annaise Heglar Which is a big technical term for what?


Akshat Rathi Well, it’s all adjectives as well. It’s not even the acronym makes sense on its own. *laughs*  I think it is probably the only acronym that is all adjectives. That is so widely used.


Amy Westervelt Weird its so weird. Yes, so what is it?


Mary Annaise Heglar So, yeah, one of ya’ll. What is it?


Akshat Rathi I mean, as Mary said, it is environmental social governance factors and the factors there, which again is like a very weird term. But the factors there is to say, I mean, this movement sort of began in the sixties and seventies post the Vietnam War, which was to say people with money move the world. So people with money who think they have morals and want to do the right thing should use that money to do the right thing. I mean, really very broadly sort of highfalutin purist idea. Right. But when then it comes to making the case for it on a technical level, the case that we make now in the 21st century is that their financial metrics that companies have, which is revenues and profits and debt and all these other numbers that are reported on a quarter to quarter basis and are used by all these analysts to make decisions whether to invest in a stock or to divest from a stock. Those metrics are only one side of the equation of whether a company is a good company doing what it needs to be doing for the long term financial health of that company. There are all these non-financial metrics, which is what ESG stands for environmental, social and governance metrics that also should, in theory, factor into whether this company has a future. I mean, to make it very concrete. Taken all company and all companies, entire business model is to supply fossil fuels to a world that currently demands fossil fuels. In a future where climate change is taken very seriously. There will be no demand for fossil fuels. So what then is the role of an oil company? And so the because we can’t capture that in a financial measure today, these ESG folks say we’re going to create those ESG metrics for you, which is going to track whether the company has a future in a world that’s going to be affected by climate change and other impacts. And we’ll tell you whether those non-financial metrics can help you invest or divest from a company.


Amy Westervelt You wrote this awesome story with Cam Simpson and Sejal Kishan for Bloomberg called the ESG mirage. And in it, you talk about MSCI, this ESG rating company. So I want to have you talk a little bit about, you know, what is this rating company and why is ESG so kind of dependent on these ratings?


Akshat Rathi Right. So I just built the Lego block of ESG for you and I’m going to kick it. Take it apart.


Amy Westervelt I’m just kidding. *Laughs*


Akshat Rathi So, yes, so there’s this theory which sounds appealing, right? It’s cool. It would be nice for companies to be caring about not just their finance, but also about the world. And maybe caring about the world will help them make more money. Great. All stock holders would go. Of course, that makes complete sense. The trouble is, how do you really measure it? And so companies have. Be created to try and understand what exactly are non-financial metrics, how to measure them, and how when you once have measured them, how to combine all that information and give an investment broker. A sign of whether this company is worth investing in or not. And that is what ESG rating companies do. So they take, I don’t know, 50, 8000 metrics. And these are how many women do you have on your board? So that would count for your S metric. How many emissions do you have on your carbon balance sheet that would count on your E metrics? Is your chairman and the CEO the same person? That would count as your governance metric because a chairman and CEO should be split typically so that they can govern the company better. And so you do all these numbers and you produce all these reports around now that we have these 80 metrics. Not every stockholder is going to be able to look at that. So they come up with a single measure. In the case of MSCI, which is an ESG ratings company, the most popular one. They come up with ratings that are double double B. This is speaking very much to the language that stockholders know of because there’s an entire industry, a financial credit rating, where they see whether a company is going to be able to pay back the money that it has taken from banks. And that credit rating system is also like this triple-A and triple B. And so they replicate that system and they give you that number. And then you, as a stockbroker, probably feels confident, okay, this company is not a good ESG company because it’s C and this is your company is good because it’s Double-A. And so I’m going to pick area where C and you go home and you feel good about yourself. The trouble is they are not. Telling you what those metrics actually mean. So ESG, as it’s marketed by MSCI, is to do good in the world that the companies that are higher ESG rating are doing good in the world. But really what they’re measuring is whether these ESG metrics would affect the bottom line of these companies, whether having higher emissions would lead to lower profits because you are in Europe and carbon prices are rising, or whether having fewer women on the board will mean that you will come under an FCC investigation because now there is a quota for how many women should be on the board. It’s really counting the risk that you you as a company is facing on these metrics rather than counting whether you are doing any good. It does not reward, for example, companies that are cutting their emissions. You know, we have an example at McDonald’s and there was emissions continue to rise and its ESG rating continues to improve. And that’s exactly not what the marketing is saying should be happening, but it’s what’s happening.


Amy Westervelt Right? Right. Wow. I want to just read the subhead for this story because it really jumps out at you. It says, MSCI, the largest ESG rating company, doesn’t even try to measure the impact of a corporation on the world. It’s all about whether the World Bank messed with the bottom line, which is essentially what you just explained. But but, yeah, it’s really like stark how how much those things are decoupled here. So I’m curious, like whether you think that this the SEC’s proposed climate risk guidance will help with that or not.


Akshat Rathi So the SEC has proposed rules to try and rein in some of the wild west of what ESG has become, because there are very few standards on how certain things are measured, how once you’ve measured them, you should interpret them honestly. Any standard right now coming from a real regulator would go the distance because it’s such a mess, you know, if you are.


Amy Westervelt Yeah. Are these all like self measured and self-reported too? The like the companies just do it themselves.


Akshat Rathi Correct. Like in. But that’s true of finance too, right? Like if you’re a company and you are reporting on your revenue and your profits and your losses, you have to do that on a self-reported basis, except if you lie on them, you get in trouble. The FCC will come after you and you have huge hefty fines and there is a real stick for not doing it poorly. Whereas there is none of that here in the ESG world. So, yes, it’s all self-reported. All these metrics are self-reported. Some of them are just algorithms calculating it based on I don’t know what, but that in itself is not the biggest problem. The biggest problem is there is no real stick for getting it wrong. The stick is that the investors might have a lower return. But if you are using your ESG metrics alongside ten other factors to make a decision, you won’t be able to tell whether it was the ESG metric that was the reason you got a lower return and all those analysis anyway take months or years after the returns are in the bank. So there is no self-correcting mechanism. That’s why having a regulator is so important.


Amy Westervelt Yeah, regulation, not just incentive. Right. Okay. This is really interesting because I’ve been looking into there’s a sort of recent thing that’s been bubbling up in the U.S. I don’t know if you’re seeing it in the U.K., too. That is a sort of a pushback against ESG, which is being branded by some folks on the right as, quote unquote, woke capital. It’s hard for me to say that without laughing because like. I mean, okay. But but.


Akshat Rathi I mean, there’s there’s double anthropomorphism happening there.


Amy Westervelt Yes. Right. It’s just ridiculous. But it’s really interesting because for a really long time, oil companies were very into ESG because it was such an easy greenwashing tool. Right. Like they could say, oh, we’re like, I mean, the same way they do. And a lot of their ads like were part of the transition where investing and all these renewables this thought the other and it really you see this backlash emerge right alongside the SEC putting out this proposed rule well starting to talk about it last like early last year and now that they actually have something on paper that they’re getting public comment for and all of that, like it’s really ramped up. And I have a feeling that it’s directly related to, you know, this actually becoming real so that like it becomes something that might mean less money for them instead of access to easy capital.


Akshat Rathi Yeah. I mean, this kind of thing is taking off because there’s always some grain of truth that is then twisted into making something sound much bigger than it really is. So the ESG mirage investigation that you brought up that was published in December last year, that was in the introduction of the most recent Tesla sustainability report, which then Elon Musk used as a way of saying, look.


Amy Westervelt Right.


Akshat Rathi We Tesla don’t get an ESG rating that is high. And that is for some would argue, very good reason because Tesla does not report its emissions properly, does not report on its employee management techniques properly. It has the same CEO and chairman and there are all sorts of ESG issues that are quite real, which is why Tesla doesn’t get a high ESG rating. But Musk is mad because, of course, I’m making electric cars and you know, am I not saving the planet? Is that not what ESG is supposed to do? Well, it turns out ESG is counting the risk to the company, not really whether you’re doing good or not. So I don’t know what you’re getting angry about, but he will use that rhetoric to make this case that, oh, surely all of ESG is broken.


Amy Westervelt Right?


Akshat Rathi Well, maybe it is, but not for the reasons you think it is. So everybody is getting this like and they are taking the stance that helps them. But beating on ESG because it’s easy to beat up on because there are no regulators around.


Mary Annaise Heglar Hmm. Well, just quick note, every time that you mention Elon Musk, there’s bound to be some muskrats who want to argue with you. So please send your comments about that to B-K-A-H-N at protocol dot com care of Brian Kahn.


Amy Westervelt Mm hmm. He’s our hate mail curator.


Akshat Rathi Fantastic.


Mary Annaise Heglar He actually loves it.


Amy Westervelt Yeah *laughs*


Mary Annaise Heglar Yeah, we will, get it. Trust me. I’ll get a text message. But yeah, send it there.


Amy Westervelt Oh, yeah, yeah, yeah. Um. Okay, so the other. Oh.


Akshat Rathi Well. As if Brian doesn’t get enough ideas to write climate stories.


Amy Westervelt The other part of this, this whole backlash has been it’s been really, really interesting because you’re seeing so what’s happening here is that a lot of the same foundations and think tanks and whatnot that invested in climate denial in the early days are investing in in this sort of like anti ESG thing. So you have Heritage Foundation. There’s a group called Consumers Research that has been kind of active in climate denial spaces for a long time. Lots of kind of the the usual suspects. And they’re particularly investing in a group called the State Financial Officers Federation, which is a group of state treasurers in the U.S. They’re mostly Republican and libertarian, and they never, ever talked about climate until like 2021. But all of a sudden, it’s like their raison d’etre is to fight against ESG. It’s just it’s like an attack on the free market. It’s really interesting because they have quite a bit of power, it turns out, in their states. And what they are doing is pushing policy that bars their state from doing business with any company that has an anti fossil fuels stance. So this is how BlackRock has now been kicked out of West Virginia and Texas. The West Virginia state treasurer had a great dad joke about this, Mary, that you’ll appreciate, he said. The only BlackRock we like in West Virginia is coal.


Mary Annaise Heglar That’s not funny.


Amy Westervelt *laughs* Yes. So it’s it’s really it’s interesting. And then you also then you also have this whole wave of venture capitalists like Peter Thiel, Vivek Ramaswamy and Strive Capital that are out there saying, you know, this ESG. It’s really interesting the argument that they’re making, because I feel like it it really doesn’t it really doesn’t address the actual problem with ESG at all. In fact, like the problem that it addresses is the only thing that ESG kind of does already. So their argument is like that ESG is putting, quote unquote, woke concerns over capital interests when actually the biggest flaw with ESG is it definitely does not do that. You know. So anyway, there’s there’s just a lot kind of like.


Akshat Rathi Yeah, I mean, that’s it’s like muddling it. It’s muddling things a lot, right? The point they’re trying to make is the person with money from us. So a lot of what BlackRock does is manages other people’s money, right? They’ll take pension funds money and then manage it for them. You, BlackRock, have a duty and this fiduciary duty to make as much money with the money that you’ve been given as possible. That is your job. Right. And BlackRock say, yes, that’s our job. So now BlackRock says, look, to make as much money as we would like to make, we recognize that fossil fuel industry does not have as bright a future as you think because we are in this crisis called climate change. And so we have to figure out a way in which we can invest in the right places and continue to make the fiduciary duty that we have been given to make money. And now they’re turning around like, no, no, no, no. Oh, wait, yes. If investing in fossil fuels means making less money, do that. Do that, BlackRock, that would be the right thing. So BlackRock is stuck in this like hard place.


Amy Westervelt It’s really funny because BlackRock is now taking it from all sides like the left doesn’t like BlackRock because they’re still invested in plenty of coal and other types of fossil fuels. And now the right is getting like all up in arms and being like those liberal elites at BlackRock are trying to force energy transition off. So yeah.


Akshat Rathi Well, I just did not expect to have BlackRock on my sympathy bingo for 2022.


Amy Westervelt Yeah.


Mary Annaise Heglar And this also it makes me remember the the conversation we had a couple of weeks ago with Abrahm Lustgarten about. You know, global debt markets and these financial institutions are not woke at all. Like, honestly, they’re damn near comatose.


Amy Westervelt Oh, yeah. Yeah. Well, I mean.


Mary Annaise Heglar I don’t I don’t feel sympathy. I just don’t.


Amy Westervelt The kind of interesting thing, too, is that and this will kind of lead into the other thing we wanted to talk to you about, which is the way that the media covers this stuff, is that the media has kind of been running with this criticism a bit, too. Like I’ve been seeing the head of the FCC kind of get grilled on different news shows about whether, you know, these this climate risk guidance is like running a field of what the FCC is actually tasked to do. And now just of course, I think it was last week or maybe two weeks ago, the the attorney general of West Virginia has filed his formal public comment about the SEC’s risk guidance, invoking this thing called the major questions doctrine, which is what the West Virginia versus EPA Supreme Court case hinged on, which is basically this idea that any government agency that tries to do anything that’s not explicitly kind of detailed out in its powers from Congress is is actually doing more than it should be doing. The FCC, of course, has said our whole role is to, like, provide consistency and help, you know, stockholders figure out where to invest their money. And this falls well within that purview. But but I think, again, I just feel like I don’t know that I don’t know whether it’s that, like not enough journalists in the finance space know enough about ESG and then nuanced, like reasons why it’s messy to to ask good questions here or what. But we’re going to talk to you all about that stuff right after another ad break.




Amy Westervelt I don’t know if you have seen this, Akshat, but like I keep seeing TV news presenters in particular kind of say to officials, well, isn’t this outside of your jurisdiction to address climate risk guidance? And I wonder what you think of that as a question.


Akshat Rathi Yeah, it’s a interesting question. I mean, as far as I understand in the U.S. system to me is more foreign sitting here in London. But, you know, financial regulators, one of the jobs that they have is to ensure financial stability and climate change is a problem of such a scale that it will have an impact on financial stability if if it’s not already. Look at what’s happening in Pakistan, right? A third of the country was underwater. It’s going to have tens of billions of dollars worth of damages, maybe even more on its books. It’s already debt ridden. It’s already taken a ton of loans from development banks that it has to repay if climate change is not affecting financial stability in the country. I don’t know what else is affecting financial stability there. And so the financial regulators here are and this is not just. The SEC, but also the Bank of England. And there’s a, you know, central banks are the Federal Reserve in the U.S.. They are they are got together. And they have also agreed that it is such a big problem that we need to understand it and then do what we need to to ensure financial stability. And so if you can’t let government regulators do the job that they’ve been assigned, then it’s only going to be trouble, if not now, in the future.


Amy Westervelt Mm hmm. I’m curious what you think about sort of the state of financial reporting as it intersects with climate in general. For my part, I pretty much only see you guys and FP doing anything in this realm. So I don’t know. I don’t know what you think of it. And like where, where things need to improve, what you would like to see more of in this space.


Akshat Rathi Yeah. I don’t know what it is that may have ended up happening for me to stay with business journalism all through my career in journalism. So after finishing my Ph.D. the first place I got an internship at, I feel like I got a master’s in journalism. Was The Economist a business publication? And then I worked at Quartz, another business publication, and then I came to Bloomberg. And so I’ve you know, it may not I may not have the the clearest idea, having not worked at a non-financial non business journalism publication, to know why it is so dire that other publications don’t get it. I mean, I can make a few guesses. One is that the human story, which is politics, is just so much more interesting and easier to write and make interesting because you’re talking about people and you’re talking about fights and you’re talking about backstabbing each other and finance is not that because you’re talking about numbers and you’re talking about terms like P e ratio and you’re talking about ESG acronyms that people are still trying to understand. And in some way, it may be that finance has shrouded itself in these acronyms to try and avoid scrutiny from all of public. And that might be one reason why not every publication does as much financial journalism as is possible. But I think so. You know, like and sure, there there are journalism professors who probably have much better understanding of why this is the case that finance does and finance and business and not just finance, but finance and business does not make it to the big papers, the big media houses, as much as it should for where I stand and where I have been doing my journalism. It’s absolutely crucial, I feel like, to understand where money goes because without understanding that you really don’t know where power lies, you really don’t know where things are going, what things need to change, and how will you change them? Because it is just the sad truth that money does play a fundamental role in everything around us.


Amy Westervelt Yeah


Mary Annaise Heglar I do kind of feel like the separation of business, journalism and climate change allows you know, you see all these articles about Shell and all these oil companies, but with no connection to climate change whatsoever. It’s like business. Election is the only time where you see them report on fossil fuel companies, but without any usually obviously actually you do a much better job of this. But in a lot of places, there’s no context of climate change whatsoever.


Amy Westervelt I think you might be right that like I think you might be on to something, but like there’s there’s maybe I don’t think that the finance sector is in a big rush to have a bunch of journalists all up and it’s grill. You know. Like I don’t I don’t think of it like. Yeah. I don’t think it’s an accident that a lot of it has been made kind of inscrutable.


Akshat Rathi And I say that I mean, maybe this is where some of my expertize might help. So I did science journalism before I did climate journalism, and now I do climate and business and finance. But in science journalism, there was the same problem because there was a ton of science that was happening in the world. And the science is getting more and more complicated because as our understanding of the world grew, it became more sophisticated. And so science journalists had a problem of not being able to explain it to that wider audience. And here in the U.K., there was a crisis that precipitated into really good science journalism. There was a researcher who claimed that vaccines caused autism and got somehow in his paper.


Amy Westervelt Oh, I remember this story. Yes. Yes.


Akshat Rathi Andrew Wakefield was his name, got that study published. And then journalists wrote up the study because it was published in a reputable journal, despite almost entire community against it, saying, this is not good science. There are lots of problems here. And for the science journalists who covered that, it was a moment of crisis, which is we cannot, because obviously what resulted from that is vaccine hesitancy, which has lingered on and has led to probably hundreds of thousands of deaths. You know, I haven’t seen a recent analysis.


Amy Westervelt And we should note that he walked that paper back like fairly quickly after it was published. No, that it was.


Akshat Rathi Well, the journal retracted it after some time. Not not very quickly. But but you know, that crisis precipitated into what then became a training ground for good science journalism. And so I was a graduate student here studying in chemistry while, you know, the the sort of downstream impacts of this crisis were being felt and there was a a desire for more science minded people to do journalism. And so I was able to write for publications and for student journalism and get myself into The Economist. And I found many other people who are here with PhDs in sciences who are writing for news outlets, and they are doing the hard work of actually translating the complexity for the audience. And that, you know, has had a real benefit in the COVID crisis here in the UK. There is no vaccine hesitancy of that kind anymore, and so it must have saved lives, but that kind of crisis helped make that happen. Maybe we need one of those for finance. Maybe people need to realize, Oh my God, this is the thing that is, you know, partially running the world. Even if politicians on the top are fighting and squabbling all the time, it is the money that and where it goes, really determining how the future is being shaped right now. And we need to. Look beyond all the acronyms. We need to understand the theory. We need to talk to the right experts. We need to report the hell out of it. And that, I think, would be a really good thing for both our understanding of the world as it exists, but also for climate.


Mary Annaise Heglar So you soon will be coming out with your own podcasts, right?


Akshat Rathi Yes, it’s this week, actually. I mean, we we just recorded our first episode that’s going to come out on Thursday. So yeah, it’s it’s a very exciting time.


Mary Annaise Heglar Yeah. By the time this episode comes out, your first episode will be ready to to listen to. So what can you tell us about it?


Akshat Rathi So the podcast is called Zero and it talks about the tactics and technologies needed to get to a world of zero emissions. And it’s going to try, at least in the first season, first few weeks of the podcast, get one person that I interview I think are of some stature, of some experience in this field about a topic that affects how we think about getting to zero emissions. And my goal is to try and both understand, you know, how that person came to be doing that, but really give people a flavor for topics like venture capital or climate laws or all this buzz around innovation or what the hell just happened in Australia. By the way, now that they have a Climate Prime Minister like I’m trying to make sure that people get not just the top headline or this thing happen, but really grapple with how do we think about this thing that just happened and how do we fit it in a mental model that will allow us to think about all the Lego blocks that are going to be needed to get to a world of zero emissions because without getting to zero emissions, we won’t have a stable climate. And then we all know what happens. Very, very bad things.


Amy Westervelt Very, very bad. Yeah. Awesome. Well, we look forward to listening to more of it.


Akshat Rathi Yeah, it’s going to come every Thursday. It’ll be weekly forever, I hope. I mean, at least for a year that I know of. And yeah, I mean, this is the first time I’m hosting a podcast. I’m learning from you guys here and would appreciate any feedback you may have on on talking all this climate.


Amy Westervelt Welcome to the Thunderdome. No, I’m just kidding. That’s awesome.


Akshat Rathi Climate and finance and technology and business and solutions. My goal is to try and really figure out, understand the problems, but then figure out, okay, then what do we do next?


Mary Annaise Heglar Mm hmm. Yeah, well, I’m excited to listen. I hope our listeners will will go head over and subscribe to your feed, too. And thank you so much for coming on the show. This was really great.


Amy Westervelt Yeah.Thank you.


Akshat Rathi This was fun. So, thank you so much for having me on.


Amy Westervelt Thank you.


Mary Annaise Heglar Hot take is a Crooked Media production.


Amy Westervelt It’s produced by Ray Peng and mixed and edited by Juels Bradley. Our music is by Vasilis Fotopoulos. Thimali Kodakara is our consulting producer and our executive producers are Mary Annaïse Heglar, Michael Martinez and me Amy Westervelt.


Mary Annaise Heglar Special thanks to Sandy Girard, Ari Schwartz, Kyle Seglin and Charlotte Landes for production support and to Amelia Montooth for digital support.


Amy Westervelt You can follow the show on Twitter at Real Hot Take. Sign up for our newsletter at Hot Take Pod dot com and subscribe to Crooked Media video channel at slash Crooked Media.