The Role of Business in Creating a Sustainable Future
(upbeat music) - Good afternoon, welcome everyone. My name is Amit Khandewal. I'm the Jerome Chazen Professor Of Global Business and the Chair of the Economics Division at Columbia Business School. And I'm pleased to introduce today's program which is being presented as part of Columbia Business Schools thought leadership series, Leading Through Change.
Today's discussion will focus on the role of business in creating a sustainable future. As you know, the next generation of business leaders is about to graduate very soon. This is an event that's coming during a global pandemic that is strained our economy, highlighted a range of inequities and is occurring admit of additional events that have called for greater justice in society.
And so it's very important to emphasize the large role that business has and what it can can do in creating a more sustainable inclusive world. And we're fortunate to have an expert on this topic with us here today to help highlight some of the systemic and structural changes that are necessary to create socially inclusive growth. So Jeffrey Sachs is very simply there's many things that one could say about Jeffrey Sachs.
I'll say it very tersely. I think that he is the world's most influential economist. We are very fortunate to have him at Columbia University.
He's currently the director of Center currently the director of the Center of Sustainable Development and the President of the United Nations Sustainable Development Solutions. So why do I say that Jeffrey is one of the world's most influential economists? I think, you know, in looking at his work it's both the combination of breadth and depth. So in terms of breadth, if you look over his career he's written extensively on really important topics ranging from hyperinflation, economic structural change, the control of AIDS, the escape from poverty and more recently all of his work on climate change. And in each of these domains, it's very broad. It's very broad he's done something that's very unique, at least within the economics profession, academic economics profession which is he's date engaged very deeply with policymakers in each of these domains to drive meaningful and serious change in society. So in a moment I'm going to turn it over to Professor Sachs but I wanna mention two quick housekeeping items.
So for the Business School students who are in attendance today, today's event is eligible for the PPIL credit, so please check in using the link provided in the chat below. And then what we'll do is Professor Sachs will offer some remarks and then I'll engage and react to those remarks with some questions. And we'll take questions from the audience towards the end of the hour. So if you do have a question, please feel free to use the Q&A feature at the bottom of the screen in order to submit questions throughout and Jeffrey I will turn it over to you and thank you very much for joining us. - Amit thank you, thanks for the webinar and the podcast and Columbia Business School's Leadership for Sustainable Development. Oh, what a complicated world we have that did not get any simpler with the COVID-19 of course all our troubles and tribulations have been exacerbated by a worldwide pandemic of amazing disruptive force.
And we're still in the middle of that battle at the same time we're trying to think about what we can learn from this battle to do better in the future. And as you said Amit for me a framework for this is sustainable development. And that is a term of jargon at the UN where I've been honored to work for many years in conjunction, of course with all of the fun of being professor at Columbia. And it's one of Columbia's great advantages by the way to be next door to the United Nations and the part of a global diplomacy.
So what that jargon means in practice is that we want a world that is prosperous of course but also socially just and inclusive not disastrously divided between the rich and the poor the haves and the have nots. Those who are online, those who are not online those with jobs, those who don't have jobs and a world that is environmentally sustainable. And we believe as best we know with the uncertainties that COVID-19 is yet another reflection of the massive environmental upheaval. We don't know exactly the origins but the most likely origin of COVID-19 is that it passed from a horseshoe bat to a probably an intermediate mammalian species. And from that animal to humans and created a global pandemic. And it's not the first time this century that that's happened, it's happening repeatedly now with these zoonotic events, SARS and Ebola, (indistinct) in Africa, that mers from camels to humans and bedspread to Asia and many other diseases.
But of course these emerging diseases devastating as they are not the only environmental devastation we've got climate change and all of the attendant, hazards and disasters that are occurring and getting worse. We have the massive loss of biodiversity. We have the massive pollution. So sustainable development tries to put all of this together and say, "We want to aim for three big objectives." We want material wellbeing and poverty ensure access to economic needs like healthcare and education and infrastructure, safe water and sanitation. We want social justice and inclusion, It's striking that in a year where we went online because of the pandemic half the world is not on the internet.
So one can imagine one knows that when this pandemic hit the part of the world not online has suffered vastly more vastly more risk vastly more infection, vastly more impoverishment than the 1/2 the world that is in a digitally connected parts of the economy and society. So we face this mega challenge that even before COVID-19 was not being achieved the world was becoming more unequal. At least American society and economy was that was happening in many parts of the world.
The forces of technology in my view were the main drivers of that inequality. Whereas government was the main tool that we had to lean against the inequality if we chose to use it but we weren't choosing to use it in the United States. We were giving tax cuts to the rich and the corporations even as the inequality was widening. And the environmental crisis, though the target of many treaties was not actually getting under control. So this is why, from my way of thinking sustainable development becomes even more urgent. The message of COVID-19 is, "My God are we gonna take these challenges seriously?" And the analytical question is how can we actually achieve sustainable development? The way I like to think about it is to pick a forward date and understand what we should achieve by that date and then figure out how to get there.
And so one of the tools for that is the sustainable development goal agenda. 17 goals adopted by all 193 UN member States. Then of course, promptly forgotten and ignored by the Trump Administration for four years. But I hope we're back to thinking about them in the U.S I know that governments around the world
are and businesses around the world are so those are goals to the year 2030, and they're big goals. Every child should be in school all the way through upper secondary school. How do we get there when there were even before COVID 260 million school aged kids not in a classroom that should have been in a classroom but they were in conflict zones or in poverty areas. And didn't have a way to go to school. How do we get universal health coverage by 2030 which is SDG three a as a target.
Again, we weren't getting there beforehand but when you think about it as a problem to be solved if we give it to our students to say work out a roadmap, they can do that actually. Then the question is how to get the world to take seriously such roadmaps. And I was just on a discussion with the senior UN officials talking about the Paris Climate Agreement. How are we going to get the world to net zero emissions of greenhouse gases, CO2, nitrous oxide, methane and the others by 2050, so that we have a realistic chance of staying below 1.5 degrees Celsius warming of the planet.
It's a huge lift. It requires massive political and financial effort in every part of the world and it's not happening adequately. But if we give our students the assignment what would be a pathway to net zero technologically it can be achieved.
So this is why I put the sustainable development agenda at the core of my own thinking because it gives us targets. It gives us timelines, it gives us a sense of where we need to go. It forces us to do homework, to ask what could be done, what kind of policies do we have? And then that brings up the topic today, what about business? How does business fit into this whole agenda and business since a business hire most of the people in the world provides most of the jobs and livelihoods produces most of the goods and services is absolutely central of course to the agenda but it's not a matter of saying the business just do something businesses are oriented towards what they do by markets to a very significant extent by profits, by shareholder value and so on. And so how do we make the policy environment and the business environment and the business strategy compatible with these goals? So it's a big challenge.
I would summarize it the following way very briefly. And then looking forward to discussing it in detail with you, we need a society-wide understanding. Why do we wanna have sustainable development? We wanna have it because even our survivals, is a threat as COVID has demonstrated, this is no idle chit chat.
This is really making sure that the planet is safe and hospitable making sure that our societies are stable and working adequately together rather than in a kind of a culture or hot war. So first we need to do this, second we need this to be understood across all the major parts of society. Business leaders need to get it. Why is this important? Of course, politicians need to get it. That often is quite tricky. All of us as citizens need to get it so that we understand how to be good citizens how to support the right kinds of actions by government how to vote for the right kinds of politicians.
We have to understand that as consumers how to buy products that are helpful and good for us. And also to say to companies that are not responsible, "You better be responsible "'cause you don't have a social license to operate "unless you are responsible." So first comes understanding.
Second comes a policy framework that says "We really are going to decarbonize the energy system. "So don't think otherwise, "we really are going to have a healthy food supply "rather than one that is unfortunately killing "a lot of people with the metabolic disorders and so forth." And in other words, a regulatory and fiscal framework that is geared towards the kind of world that we want to live in then comes the business community. And I think for the business community, it's very important for the business community to ask, "How do we fit into that kind of world?" And I always recommend to businesses four questions that I think are fundamental to enabling a CEO or a manager, line manager branch manager to ask, are we compatible with the sustainable development objectives? So one question is our products are our products good for society. It's amazing to me how many products are produced that are lousy for society. They may make money, but they're terrible.
And this has been the fact of coal oil and gas, you know where it's dangerous at this point. And so if you are a CEO of an oil company you should understand, we need to decarbonize not from one day to the next but over time. And that has to be part of your strategy as a company. If you're producing fast food that people like but it's leading to obesity and metabolic disease and cardiovascular disease. That's not good. If you're producing semi-automatic weapons that are the source of these mass shootings every day or every week in this country, that's not good.
So to my mind, the first question is is your product adding value or simply adding money to your accounts? It's not the same thing. And of course, a lot of economics is about the extra analogies or the social costs that may not be captured at all by the market pricing. So that's issue number one second issue is, is the production process of your company, sustainable socially and environmentally are you exploiting your workers? Are you driving them in a way to ill health to a social disaster, to inability to live a basic decent life? A lot of businesses are by the way they say, "Well that's the market," but that is not business responsibility.
And you know, we've heard about workers in recent days not able to take bathroom breaks. This is absolutely not acceptable in the 21st Century in a U.S economy that has an average output per person, of $60,000.
Plus to have people not be able to go to the bathroom or not to be able to take sick leave with pay or a family leave. So there are basic decencies that are part of the social sustainability, and then there's the environmental sustainability. Businesses really need to understand what is their carbon footprint? What is their pollution footprint? What is their effect on land use on biodiversity and so on. Third question, what about the supply chains? Because all businesses are part of a supply chains where they're procuring inputs upstream.
They are selling products that are used downstream perhaps by other businesses or by final consumers. What about your full supply chain? Not just your operations if you're buying say a tropical hardwoods, is that coming out of deforestation of the Indonesian archipelago or the Congo basin, or if you're buying soy beans from Brazil is part of Amazonian deforestation. A lot of businesses would say, "I don't know, I buy it and you know mass marketplace "is a commodity," but it is it's absolutely core that we now track from the beginning to the end that supply chains are sustainable. And we have the technologies, whether it's blockchain or a barcoding along the way, satellite monitoring and many things enable us to determine the environmental sustainability along the whole supply chain.
And I think that this is a new kind of governance that's essential. And then the fourth area of this, the fourth question is are you a good corporate citizen? What do I mean by that? Well first of all, are you following the law? Because some businesses of course think that breaking the law is you know, is a crap shoot. And if we get away with it great, and we have to analyze it in a probabilistic way that I'm going to put aside because I want to talk about areas where it is so shady decision, but not an appropriate business action and not good citizenship. And a lot of tax management is like that. You know, we gutted the IRS so there are very few corporate audits.
And then some corporations are incredibly aggressive in how they're managing their taxes. That's why Secretary Yellen has recently called for a global corporate minimum tax. Why is it that American pharmaceutical companies low and behold have their intellectual property where in Bermuda in the British Virgin Islands in the Cayman islands, how did it get there? Well, obviously tax scam as far as I'm concerned. But you know, the tax lawyers say, "Well, yes we think that this will work, "but it may be contested and it's not contested" its bad behavior and good citizenship is decent behavior. The spirit of the law, not only will I get caught. So for me, a business asks these four questions.
What is my product line? How is it produced? What is my supply chain? What is my citizenship? And businesses on their own are not going to settle the decarbonization or the inequalities in society, because those require a lot of government action, regulation, leadership, market pricing, externality correction, and so on but businesses can be good citizens and can say, "You know we really a better direction. "And we're going to be helpful in that." I noticed today by the way that it's reported in the wall street journal that Jeffrey Bezos said, "Yes the corporations should face a higher corporate tax." Good statement by a crucial business leader in this country.
And I think that that's what we need is honesty right now of corporate leaders to say, "Yeah we're gonna make money, "but we're going to make money "compatible with sustainable development." So that's the basic idea Amit And thanks for letting me join today and back over to you. - Thanks Jeffrey that was fascinating. I'm wanna pick up on a couple of things that you mentioned, which I think are really interesting.
So one is about how you view kind of the metrics that we that policies geared towards, or even businesses are geared towards. So in a business case, it's pretty much frequently profit and you're, I think you're making a strong case that we need to expand that. And as you know, macro economists write down models that are going to generate GDP or generate consumer consumer welfare, which is largely about how much we consume. Right and so I'm curious how you think about pushing society, policy makers towards broadening the metrics that we typically use. Like, is that something that should, you know, if let me give you a stark point, if the BEA published instead of a GDP published an adjusted GDP, based on the metrics that we wanna think about, which is not just the mean, but also the inequality that's around it. How important do you think that would be in terms of driving change? Or do you think that, this is really gonna be coming from individual citizens kind of reacting - You Know I think there are two philosophically important questions in this and practically important questions.
One is that economists as you know well generally say, "Look if a consumer pays something." - Yeah. - For a product, that's a reasonable valuation of what the consumer values, the product or the at.
And we use that to calculate consumer surplus and measures of the valuation of these outputs. So that's one question is that really if a consumer buys something, is that really a good measure? Even for the consumer. - Yeah.
- Of the value. And then there's a second basic point which is that when we make a market transaction we may be imposing costs on others that are not incorporated in the market signals so called extranalities. So economists, typically say, you know I can't peer into the brain of the consumer. So I'm going to take pretty much if the consumer says it's okay for the consumer at least from the consumer's point of view I'm gonna go with that.
And then I'm gonna say, yeah there are a lot of extranalities. And they mean that the market signals are not so good. I would contest both areas actually. One thing that is amazing if you start adding it up which I've been looking at in recent years the amount of addiction in American society and the amount of about happiness created by that of course we have the opioid addiction. Now, would you say that the price that people pay for an opioid prescription is a measure of their wellbeing? I would say it's a measure of their human disaster and suffering even though they're paying a market price for it.
We see that when it's an explicit addiction in that way but lots of things are addictive in American society. Even our screen time even of course, the social media that is leading by many accounts to rising adolescent depression especially in of girls, young women. And there's a lot of evidence that there's a lot of suffering taking place on this. I think our food system is just wildly disastrous in this country. We have 40% adult obesity in the United States.
My God, that is an extraordinary morbidity. It leads to a lot of unhappiness of course it leads to a tens of billions of industry to help people try not to be obese but it also leads to major disorders of health. It's been one of the most pertinent comorbidities of COVID-19 in fact completely implicated in the high death rates in the United States is the obesity in the United States. And my view is that the food industry bears a huge responsibility for this.
And because the nutritionists that I know tell me yes, it's Coca-Cola come on. It's a sugar beverages, it is McDonald's and fast foods and highly processed foods that are literally addictive according to many endocrinologists and many neuroscientists the sugar addictions, the sugar additives and so forth. So on this first point, I don't think we can even say that what we buy is really an adequate measure of somehow even the personal valuations because when you add it up there's just a lot of unhappiness. And since I look a lot at surveys about happiness, an unhappiness the income has gone up and the happiness has gone down. So it's telling me something really is at stake here.
Then you turn to the second side of the externalities or the other market failures. And this society is really sending a lot of terrible signals right now because of the divergence of private costs and social costs. The economy is becoming more monopolized over time and not really, even for mysterious reasons or just lack of antitrust, it's becoming more monopolized because intellectual property is given monopolies for understandable reasons in the form of patents and more and more of our economy is under patent protection. And so we've given temporary monopolies 20 years from data filing all over the economy but it leads to terrible abuses. We know that the patents are not an ideal kind of policy when drug prices are raised a thousand times production costs.
When you have epidemics in this country not to mention COVID, but say Hepatitis C where there's a cure that could end the epidemic but the company that owns the cure Gilead has been charging hundreds of times the production costs for the medicine. So it's been doled out in small amounts rather than ending the epidemic. We've got a really twisted economy now, whether it BEA at the Census Bureau would be up to it to make the revised account or not. I'm not absolutely convinced, but I am I would hope so. And I think as economist, actually I pitched the idea.
In fact recently the GNP accounts are 100 years old, right, they started just after World War I. - Correct. - Because during World War I, it was realized we needed a plan to economy for the massive buildup of the military sector but we didn't have the capacity to make the plans. And so a lot of planning came out of World War I including the concept of national accounts.
And then the great depression was the second big spur to creating the national accounts and standardizing them and so forth. We need a new set of national accounts. Partly for the reasons we're talking about and partly because in the digital world we're measuring so many things wrong because a lot of digital services to put it on the other side are free and not counted of immense value.
And so we sometimes are understating the good things that are happening and over and as well as understating the bad things that are happening. In short, I think our sense of our economic life is a bit of a mess right now. Actually it does not cohere well with what we are actually downloading each day and in from Bureau of Labor Statistics or Census Bureau and so forth. - Yeah, that's an interesting point. I mean, I hadn't thought about the kind of innovations that we need in the national accounting statistics, as you suggested which are 100 years old there's of course been you know, been 50 years since Friedman wrote his you know, influential article on the social responsibility of businesses, its profits. And there's now a rediscussion as you've been saying about whether that's the right metric.
And I think we should be considering the same ideas in the economic space as well. - You know he got that completely. He got it completely wrong and I don't know whether it was mischief or misguided but when you read that article which was unbelievably influential, it actually posed exactly the wrong question and then had a huge effect. And it worked like this Friedman asked in 1970 what if a manager wants to do good? So he has a favorite charity for example.
- Yeah right. - And he gives money to the charity and He says we're doing good in this corporation, doing well. And he says, and Friedman says, "That's obnoxious." You know, he's using shareholder money for his personal tastes it's not his business to pose the tastes.
What he should be doing is maximizing shareholder value. And then let the shareholders decide what their values are. Well, Friedman was a very convincing guy by the way, I knew him when I was a student, I watched you know watched him debate and Cox, and he. - He's probably one of the first real economic public intellectuals of the modern day. - Yeah he was a very persuasive guy, but it was, this was baloney by the way, because it was not the real issue at hand. The real issue is two related things one, should a company impose costs on society knowingly in order to make more money, if it's legal to do so but harmful to do so.
So if you can pollute and get away with it, is that A okay, B your responsibility to your shareholders or C not okay? So I think if he had asked that question we would have had a very good discussion in the country but he didn't ask that question. The real issue is not whether the manager is giving toward charity. The real issue is whether the manager is doing harm that is not stopped by law or regulation. That's one point, my argument is you should not make profit from harm. So even if it's legal because the government hasn't gotten around to regulating it, or they don't know about it or they're not gonna catch you or it's a new product that you know is harmful but it's not regulated. No, don't do that and that's what Friedman should have talked about.
That's not a matter of, you know was imposing your tastes versus your shareholders, that's a matter of a basic principle of morality which is not to impose costs on others. It's the golden rule applied to the corporation. And in medicine, it's not even a question because the doctor's taken oath, Primum non nocere don't do harm, first no harm. But businesses don't take that oath. So that's one thing that Friedman completely diverted the discussion. Second, he said, "Of course, businesses "should follow the law."
But in the kind of plutocracy we have in America businesses make the laws, they finance the campaigns they pay the politicians, they draft the legislation have no doubt about it ladies the gentleman, that because I know, they hand over the paragraph to put into the code. And it's an inscrutable paragraph because it takes a long time for someone to decipher. That means this company in this district that's what that code means without naming it. So what Friedman didn't talk about was corporate lobbying. He didn't talk about campaign financing.
He didn't talk about the misdirection that ExxonMobil made for decades telling Americans, "Don't worry about climate change." And so that's another part of this corporate responsibility. And I think that, I agree with Friedman it's not the job of the CEO or the management team to give away the shareholders money for the charity of their particular choice. It is not the job of the CEO but it is the job of the CEO not to harm society. It is the job of the CEO, not to use lobbying influence to write the laws in a destructive manner for society and that's where I think things are beginning to be somewhat understood why the business round table has said, "Okay we're not only on a shareholder maximization route." Because it's become understood how much harm one can do even within the law, much less the fact that we've had so many corporate scandals breaking the law and so much market power.
What about when Martin Shkreli said he bought, of course he bought a drug that was a generic drug very important for a large group of people, but he knew that because of FDA processes, he could treat it like a monopoly. And then he jacked up the price hundreds of times, outrageously in my view creating a tremendous amount of harm through market power. And then he said, not only, "No, I'm right," but he said, "It's my obligation to the shareholders." How could I do otherwise then create that amount of harm through monopoly power. So that's where I think Friedman might have helped us to have a real debate in this country but he misled us by posing the issue in a wrong way.
And it's after decades of sifting through this that America is finally getting back to the right discussion. - Yeah so following up on that, we've seen in the past even in the past week or so with companies moving major league baseball for instance moving the all-star game out of Georgia in response to the to the rotor bill that they passed. This is becoming an increasing phenomenon that business leaders need to be weighing in. Or they seem to be weighing it on political legislation.
And my question, I guess for you is, are you optimistic that this is a force of change. Like if businesses are in fact kind of a seeding that profits not the only thing that matters and there are other other metrics that they're worried about, is this a meaningful force of change? Or do you think that the more systemic issues that you're mentioning which are Coca-Cola did the same thing by the way but you also mentioned Coca-Cola as a, you know the purveyor of sugary drinks or businesses kind of lobbying for particular legislations. Like that's more systemic, I would say. So I guess, how optimistic are you that certain actions of companies can drive change or do we think it needs to be more led from the laws that we write down in order to drive those? - Yeah, I really appreciate Coca-Cola and Delta and others coming out about voting rights right now, because it's in a particular national context and it is about values and it's not in this case lobbying for a particular bill and paying campaign contributions for it. It's actually standing up for something that is very important right now in an America which is very divided, confused and fraught with risk. So this particular issue is about voting rights and American history is unfortunately shockingly filled with the most basic denial of voting rights.
This country was built first on slavery and then on apartheid, and then after four score and more than seven years after the founding of the Republic, 'cause that was 1863 that Lincoln gave the Gettysburg address slavery was finally ended. And then we went to a Jim Crow Apartheid Society. African did not have voting rights especially in the South for 100 years more. And then when the civil rights legislation in the 1960s came, then came absolutely disastrous mass incarceration movement which was another disenfranchisement movement actually locking them up, just a shockingly large number of young people of color. As part of this white supremacist tradition in the United States. So what we're observing right now in Georgia and by the way, it's across 47 States according to the Brennan Center, which is keeping tabs on all of this, is an assault that is deeply familiar in American history and the Republican Party by the way it was the party of Lincoln.
And it was the party of emancipation and by the twists and turns of history, it became the party of white supremacy after the Civil Rights Movement. And Trump doubled down on that. And so what's happening now is something quite basic.
And we have to stand up and say, it's enough of this, enough of this deep culture in the United States of really White Supremacy and voter suppression. And it's nothing less than that Amit, that's why this is not a casual moment. It's really an and of course, January 6th it was not a casual event.
We're kind of in a showdown right now in the United States whether we're going to finally have a society for everybody or whether we're gonna continue to have a quasi-apartheid society and that's what this is about and the struggle is important. And the fact that businesses are being are coming in the right way to this issue is extremely important and I hope more and more businesses do so. I think that there are other very big issues in our society where I would also like to see businesses speak out in this way. And that is for basic social justice for a tax code that is honest and reasonable.
And that's why I appreciate what Jeffrey Bezos said and others also in the corporate sector, very important. And then on environmental sustainability that this is also no joke, no game. This is real and you know, America we invented modern public relations. Bernays in the 1920s were really good at PR at advertising, at misdirection and truths telling is not so easy in the United States because it's very noisy environment.
And because people are used to pitching their messages but right now we actually need some serious truth telling because the U.S came very close to disaster with Trump and we're not out of disaster yet. And so we really need to get our heads on straight at this moment. - I'm wanna pick up on one of the big issues that you've brought up repeatedly on climate change.
Since we have a lot of business students in the in the audience, what do you think is the one statistic on climate change that business students should know right now? - Maybe 1.2 degrees C. And that is how much warming we've had on the planet relative to the pre-industrial level. And the reason it matters is that once we reached one degree C warming, we were outside of the climate zone of the entire holocene period from 10,000 years ago when civilization and agriculture started till now. In other words we have already broken out of the entire climate span, temperature span of the period of civilization. We're in dangerous territory right now. And what I would like the students to know is the I felt as director of the Earth Institute for 14 years because we have at Columbia climate giants and we had two iconic figures.
Last one, Willey Broker who was the scientist at Lamont Doherty who invented the term global warming in 1974 science article, he was a giant of a climatology. And he kept telling me how dangerous this is and our other giant thank God with us and speaking so clearly and brilliantly is James Hansen. Who's I think the world's greatest climate scientist.
And I can tell you when I tell the students that Jim Hansen who was a soft-spoken fellow from Iowa, terrifies me because every time I see him, he says, "Jeff it's worse than we thought it was. "Things are going haywire faster than we thought." And Jim is a genius and has really figured out so much of the earth system dynamics, but he's been tracking for the last 15 years, all the tipping points on the planet including the disintegration of the ice sheets.
And we're already at a temperature a high enough where the disintegration of the ice sheets may well be underway right now which would mean several meters of sea level rise from West Antarctic Ice Sheet. And Jim has been saying, "Are you kidding? "You cannot do what we're doing. "We're going to wreck the planet." And the message is that this is so real and so dangerous and so hard for us to get our heads around because it happens imperceptibly to us year by year because it is outside of our normal experience.
Because before knowing Jim Hansen I never thought about the ice shelf that was buttressing the West Antarctic Ice Sheet, I just didn't know. And because of the noise and how many things we have to pay attention to it's easy to miss absolutely massive things in this world. You know, how many of us missed and almost all the governments of the world except those in East Asia miss the constant warning that we were gonna have another SARS like epidemic of a beta virus coming from horseshoe bats in Western China.
Okay, because it's hard for us to hear these real things. So I can tell you 14 years as heading the Earth Institute hearing from the scientists every day, 1.2 degrees we're already there in the danger zone. What Jim Hansen says is that the warming right now per decade is averaging between 0.2 and 0.3 of one degree C. So we could be at 1.4 degrees Celsius in the early 2030s we could be even 1.5 degrees
which is the limit that we've supposedly set for the world. In fact, even in the 2020s if we have a bad El Nino and things go faster than we think we could even be in that range this decade. So the messages we've got to decarbonize we've gotta do it no later than 2050 and probably beforehand.
So if you're thinking about any new investment in fossil fuels, don't no new exploration no new discoveries, no new pipelines, we've got more than we can possibly use. And where all the new investments have to come is in the clean green safe space, that's the basic message for climate change and we have to hurry and so this is, I think I've been, you know I track this by the hour, basically. I haven't seen a contrary fact or contrary message to this in the last 20 years, only the continuing accumulation of the evidence in this direction.
- There's two questions that speak to potential solutions that, that you're talking about. So one is about the role of carbon prices this is a question from Gregory Hummer, who and then to what extent do you think that that's a feasible solution since that's been discussed now for 20 years and it hasn't hasn't really happened. And the other one comes from Jerry Jureselski about the role of nuclear, because you mentioned that the very last thing you said it felt safe, renewed safe energy. And this is the question in nuclear in that case.
And so these two students are curious about those two points. - Yeah so we're basically now in the situation where quantity regulation is going to be central, basically to say in the U.S context for example, to every state, you've got to clean up your power sector.
President Biden's gonna argue no later than 2035. That is a real stretch, but admirable stretch. We're going to have to say to the auto producers. And in fact GM has basically said it. - Yeah, said it yeah. - No new internal combustion engines after 2030.
The most successful environmental global action of the last two generations was stopping the chlorofluorocarbon use that was destroying the ozone. And I just want to remind everyone that that under the Montreal protocol that was not pricing that was stop. It was a ten-year period, it was easy because it was replacing CFCs with the HFCs. There was a substitute, not a perfect one but one that stopped the ozone depletion. And the point is that it was a kind of command and control, get it done.
Now pricing can help on this in a number of ways but economists put it front and center. And it actually just can't play the role front and center for a lot of reasons. It's inadequate to all the challenges we face which require tremendous land use planning tremendous public infrastructure investment, public support for the kinds of technologies and so on.
And so we really need more plans and more pathways and pricing can play, it can play some role in that but it won't be the decisive role, but it will help you know, across technologies and across transport modes and so forth to get things done better but we can't rely on it. We really need a decisive by certain dates. Certain things have to be phased out approach in addition to the pricing. On nuclear I think the main two there are three things to say on nuclear.
One is that right now Fishing nuclear, the standard nuclear power plants provide a meaningful amount of energy in the economy. And it's zero carbon energy we should make sure those plants are safe but we should not scrap them right now to add enormously to our burdens. So when Germany scrapped its nuclear plants it boosted the coal and lignite plants which was environmentally exactly the wrong direction. It took Germany, basically almost a decade to get out of that particular morass by setting a date to phase out the coal as well.
Second is there really are from everything I hear. And, you know, I'm a consumer of the information, not a producer of it a lot of important fourth generation Fishing based nuclear possibilities that could really play a role, more modular passive safety systems new fuel cycles and so forth. So I would not rule out nuclear and certainly a lot of Asian countries are gonna be using nuclear.
Third and to my surprise and I've recently had some discussions with leaders in the field. There really is something to Fishing, big progress of fusion sorry to fusion power. It's on a timeline for the second half of this century but we ought to be investing more R and D in fusion because there've been some important breakthroughs and it could be, you know a massively important thing, 2070 but the idea that it's a cliche that it's always 30 years ahead is not right in this context because there's been some important scientific and engineering advanced. At least that's what I've been told and it sounded right to me.
- You know, one thing that's, this is also something related to climate that has come up in the past week as discussions of the Paris Climate Accord have resurfaced. You know, there's always been a pushback amongst the poorest countries maybe not the poorest countries but some large developing countries like India. And even now their minister had come out and said it's possible that we won't adopt to not zero carbon emissions by 2050 other countries should take the lead.
You know, you've been in the room with these ministers what is it that you tell them that they're missing? Because in the back of their mind, they have a, they believe in a negative correlation between growth and carbon, right? - Yeah. - That has to be what's going on. And how do you make them? I mean, this is a question about whether there accept it or not, but what is the argument you give to them that that says that, no this is.
I mean there's the argument of the externality which you can make, but think about it from the, like from their own perspective, what do you think and people make the same argument in the U.S by the way so as you know, so. - So I think one good thing we learn in economics is what equilibrium or outcome do you want? And then how do you allocate. - Yeah. - We should pay for it. And I start by saying to any leader in Africa or in India we don't want a world above 1.5 degrees and neither do you because it's hard to imagine places more vulnerable than India or much of Africa. India already is getting 50 degree sea days in almost every year and now some part of the peak and in the spring.
Unbelievable, this people are dying from these heat waves in large numbers and this is not a viable environment especially for poor people. They don't duck into their houses for air conditioning. So this is extremely dangerous for India and what I would like the Indian ministers and Prime Minister Modi to do is say, "You're darn right we have to get to zero "and you absolutely have created this mess, "you've imposed it on us. "You have to help finance this disproportionately." I'd love that message, so we could have a real message, not about whether to get to zero or not, but who's gonna pay for it. And then on the payment, I think that if I like to analogize this to a tort lawsuit basically this is a public nuisance.
Although nuisances sounds a little mild in this context if this were a proper class action lawsuit, three quarters of the world would be taking the United States, Russia, China and others to court, and saying, you owe us damages we have a right to a safe world and you have created 90% of the emissions that are creating the damage and here is our damages. And of course, such lawsuits are being filed. There are hard to win because they don't fit comfortably within the law but they do fit absolutely within tort theory. And this is how I would envision the issue which is I would love for India, which has its solar emission to have a massive expansion of solar, because it's got a lot of good desert for that. Really could scale up massively, really could get off coal, which is very unhealthy for India and any of us who have been in Delhi in a January day, you don't want what happens.
And, you know the estimates are even two years of life expectancy reduced from a lot of the air pollution linked to fossil fuels or air pollution a lot of which is linked to the fossil fuels. But let's get a fairer world global tax reform financing for development. I'm arguing for a mega expansion of the low cost financing coming from or into the multilateral development banks and so forth. But that's where I'd like to put the discussion that of course we're going to get it done, but of course it's going to be paid for in a fair way. - We're just about out of time Jeffrey. I wanna thank you for all your work and leadership and trying to create the sense of urgency amongst particularly the students because they will be the driving force for this change world that you envision.
And I think one of the things that it's hard to appreciate it's also easy to sort of receive the information but be able to digest it in such a way that makes it clear but what the framework is, what the goals are and this is what the action needs to be done. I think is something that I think is really valuable and an important message for the students to hear. So I wanna thank you for taking the hour today. And we look forward to having this conversation maybe in 20 years and it's a different discussion entirely.
- Well also, let's not wait to have a lot of more fun discussions in the very near. (indistinct) Amit thank you so much and thanks to everybody really appreciate the chance to be with you. - Thanks, Jeffrey. - Take care.