Welcome to Work and the Future, a podcast about tomorrow with your host, Linda Nazareth. Well, hello, and thank you for joining us today. The issue of climate and climate change is a huge one. We know that something's going on with our planet. It's getting warmer. We're having more weather events.
And just in itself, the fact that that's happening, that we have a warming planet and it's causing things to happen, is going to mean huge things for the economy, and it's definitely gonna mean things for work. We're gonna need different skills. We're gonna have to work differently. We are gonna have to deal with different realities. And over time, these impacts are only gonna get more protracted and larger. There's so much to talk about on this subject, so I'm really happy to be joined
on this episode by Steven Rothstein. Now Steven is the managing director of the Saris Accelerator for Sustainable Capital Markets. He sees the risks of what is going on, but he also sees the opportunities, and he's been doing this for a long time, and he flagged this really decades ago now. He has strong views about what organizations and specifically boards need to do to get ready for what's coming, and he also has views on what kind of skills they should be adding to their workforces.
So all things that are really relevant right now are relevant when we talk about the future of work. I was so glad to be able to sit down and talk to Steven. We had a really eye opening discussion. Please stay with us to hear it. Well, what skills will organizations need to deal with climate change? To talk about that, I'm joined by Steven Rotstein. He's the founding managing director of the Saris Accelerator for Sustainable Capital Markets. Steve, thank you so much for joining me.
Thank you for the kind invitation, Linda. Well, it's such an interesting topic. It's one I've become much more involved in the last few years from a workplace perspective. But I'd like to hear how you got to be the expert in this field. Tell me about your own career and how Cerus came to to happen. Well, so Cerus is, is our 35th year service, and we have a few 100
employees. And we work with folks all over the country and all over the world, where our investors, for example, represent $44,000,000,000,000 of assets under management, works with some of the largest companies, policymakers. And our basic belief is that climate is a significant factor for all businesses. There's multiple significant risks with fires, floods, tornadoes, and other things, transition risk, and significant opportunities.
And so the companies that understand their climate risks and opportunities are gonna do better financially. And, we also work on water and a variety of other topics. You know, I think these days, you probably have a lot of buy into that. I'm thinking back to 35 years ago. What was it like then? Not at all. Yeah. It's very, very different. I mean, you know, we talked about for 20 years, we've been talking about this concept that climate risk is financial risk.
And up until the last several years, people didn't really accept that. Like, climate was seen. Oh, well, we'll have our philanthropy department deal with something there. It's kind of an issue for, like, I used to say, you used to think about it for your grandkids. Now you're thinking about it for yourself because it's affecting, where people live. You know, in the United States last year, twice as many people died because of heat
than any other exposure. 3 and a half over 3,000,000 people were forced to move in the United States alone, because of climate issues, because of fires, floods, tornadoes, that, we're having more and more significant events. And there's also enormous big opportunities with the growth of renewable energy technology. So, yeah, it's it's been building momentum, but now there is broad awareness even in a polarized political environment. I wanna get you the work aspects of
this, but it is interesting. Do you think these risks are fully reflected in valuations? Absolutely not. No. No. That that I'll give you an example that, you know, in o eight with the banking crisis, and that took, you know, a decade to work itself through. We've done analysis, and other people have. There is more climate risk in the balance sheet of banks today than there was at subprime in o eight. More.
And it's not fully reflected. So people are addressing it more, but it's still underreported. And that's really frightening to me because I'm an economist by training. And the idea that there is the potential for this to take down the US economy, the world economy, because people aren't paying a lot of attention, it's pretty frightening. It is frightening. Again, if you think about it just as context, so the so the US federal government in the eighties said we had $1,000,000,000
storm every 3 every every 4 months. Excuse me. Last year, we had it every 12 days. And so places all over and again, all over the world, people are whether it be losing their livelihoods or their lives, because of floods, fires, heat, transition. If you're a company, for example, that makes spark plugs, well, if if for the EV market grows, they don't have spark plugs. So think about all of the changes in the transition in the economy.
If you got your if if your company gets its parts through the Panama Canal well, the Panama Canal, because of the drought now, has 40% less ships going through. So it it is affecting businesses all over, whether because of a physical risk, a transition risk, or a supply risk. So if you're an organization, whether the public or private sector or whoever, you really should have a plan to deal with this. But from my reading on this, companies don't even
have the right skills in house. What would you like to see them do, and what kind of people do you think they need? So first is we started at the board level. Board needs to be educated. We actually have a core, an online course. If we go to University of Michigan or Ceres, and, we have a course on Climate and ESG. So boards need to be educated, just like they do on other strategic issues. Second is that when you get to the senior management, they also need to be educated.
But we also think it should be incorporated into compensation. Not the only risk, obviously, lots of others, but to build there. And then there needs to be a clear accountability line. And there is not just a department because it affects finance, and it affects supply chain, and it affects procurement, and many other things as part of that. And then we think every major company needs to both, first, today, have climate disclosure, publicly say, here's where our
disclosure is, and then have a plan. By 2030, 2040, 2050, here's where we wanna get to. Any big problem, whether it be pandemic, cyber, inflation, need to both know where you are today and have a plan where you wanna go in the future. Climate is a big risk and a big opportunity. Every company needs to know where they are today and have a plan to go forward. Okay. Let's take that a bit at a time. You mentioned inflation. Okay. So you have an economics team in
house. You have finance experts. They're gonna brief the board on inflation. Who's briefing the board on climate? Well, most companies most large companies now have a chief sustainability officer, and some have a big department. Some may have one person. But, again, climate, it it's not it's not a stand alone issue like the economy isn't. It affects everything you're doing. It affects
your public relations. It affects your suppliers. I know a company that, for example, when they look at their big suppliers, if if their supply chain is in the line of a fire or flood, they ask for a backup location. And it it it affects the finance. It affects everything else. Some people would argue that if the if the real price of the oil company, for example, of closing the wells, that it would depress their valuation. So it affects your investment portfolio.
It affects every element of that. So companies are different levels of preparedness, a lot more than they were, but we're not we have so much more to go. Do you have an example of one that you'd say is doing it right? Well, I I I wouldn't say I mean, there's more than every company can do, but there's some of the large technology companies, Apple and Microsoft and Salesforce, that have really taken a step forward. And there are some large industrial companies. There are steel companies. There
are agricultural companies. There are car companies that are all moving forward. We have dozens that are in what we call our company network that are all on our website, sirys.org. And so there's a lot of exciting things companies are doing, but we have to go from having a corporate leader, an early adopter, to tens of thousands of companies doing some of these things. So if you're hiring people sorry. If you're hiring people, you know, there's different skills you
look for. There's different capabilities. Given that we have this crisis ahead of us, is there something special you'd like to see in hires and potential leaders? Yeah. That that there are many companies I know that view this as part of everyone's job because whatever you're doing is part of it. So depending on first, it depends on the industry, whether you need some people need a scientist or an engineer to really understand climate science.
Others just need a management, you know, who can who can manage the process and work with their, again, their suppliers, their employers. There is a growing legal issue. The number of lawsuits have tripled in the last several years. There is a growing regulatory set of issues of depending on some people think it's too fast. Some people think it's too slow, depending on where you are in the world,
but there's more regulatory. So it it's really you need to have people involved, but you really, what you need is to have a cross cutting team, somebody from your finance and from your legal and from your procurement and from your HR on a cross come cross cutting climate management team. Okay. So let's assume you have some of that in place. You mentioned disclosure. I know what you're talking about disclosure, how much energy is used, and the things that,
that we're most familiar with. I'm curious when you think about remote work, if you have a company that tells everyone to come to work 5 days a week, that company is one way or another creating a larger carbon footprint than others. Do you think there's gonna be pressure on those companies not to disclose, but also to change policies to be more climate friendly? Yeah. You know, climate, like any business issue, is complicated. There's no one answer fits everyone.
So, yes, I mean, if if you're if you have to come to the office 5 days a week, it does create more emissions. There may be offsetting factors depending on how big the company is, where people are, what kind of synergies there are. So, again, I I there's not one answer, one size fits all. But climate should be that's that was a that's a great example. That climate should be consideration in everything you're doing. So your HR decisions, that is a perfect example to think about it. And, you
have to look at that. You know, as companies are using more AI, Microsoft has said publicly that their carbon footprint is growing by about 30% because of AI. So they have to look for other initiatives to get to net 0. So it is important whether you're looking at technology, human resources, pandemic planning, or other factors. Do you think we're gonna have to see large scale infrastructure changes? Changes to office buildings, changes to where they're
situated? Is this gonna be, you know, a workplace transition that's part of this? I think there'll be a variety of factors. So first is this is a, the the it's been suggested by the UN and IEA and others that we're now spending around $2,000,000,000,000 a year on energy, renewable energy, and new emerging technologies. That 2 trillion has to go to 4 trillion. That is massive amount of opportunities.
And so whether you're in the EV business or other kinds of transportation or communication, it will affect you in a big way. Will it lead to more remote work? It is, again, one of those factors. You know, the the many countries, US is one of them, was built based on using your car. Everyone having a private car taking you from the suburbs. So I think, you know, those kinds of changes are long term, and it took decades to build it up, and it takes it'll take decades to change
them. But I do think it'll have some impact, you know, that there are US is guilty for using a lot more energy per person than other places, and we have to look seriously at that and on again, from where you work to what you eat. Okay. Let's talk about the generational side of this. Gen the generation z, generation alpha care a lot about these issues. Correct? Do you think that will spur how organizations do things? Right now, I know a lot of them talk about this, but the greenwashing
effect is real. I think there's so much skepticism about what companies are really doing. Do you think we're gonna see a lot of changes in the years ahead? Yes. I think that what we're what we're seeing is, first, the pace of crisis is growing, floods, fires, tornadoes, and that's creating awareness. Used to be that most people didn't know someone who was impacted by fires, floods, tornadoes, etcetera. Now that that is not happening. More and more
people are. You know, whether it be the smoke from Canada or the floods in Florida or the fires in California or, you know, a third of the country in in Pakistan was forced to move because of the rain. So, yes, I think the problems are growing, and younger generation is demanding more action. And there are lots of studies that show that, that given 2 jobs, they they wanna they overwhelmingly wanna work for a company that, that reflects their values. But it's also investors.
Investors representing tens of 1,000,000,000,000 of dollars have set net zero plans. So they then go to their companies and through shareholder resolutions or dialogues. So, yeah, we are seeing a pace of change. The challenge is we're also seeing a pace of change in the in the in what mother nature is doing, so we have to move faster. Okay. So if there's a leader listening and they're are they're somewhat overwhelmed because so much is happening, and they probably don't have the
resources, don't know where to start. What's your advice here? What are the first things you need to do, and what are the things you need to do over the next 5 years? Yeah. So, I guess three things. First is understand what your current admission profile is like and disclose that publicly. So here's what we're doing now, and second is to put a plan together. It's not gonna be perfect. No plan is initially perfect, but put it together and then update it,
every few years. And then 3rd is hire really smart people, staff, consultants, so that you can get updates on it. Just like, you know, you think about if I said, what would you do if you're overwhelmed by the issues of cyber or crypto or of inflation? You do the same thing. You figure out where you are now. You figure out what your plan is, and you hire people to work on them. And and that climate is
one of those issues. It also can be an enormous upside because of customer interest, employee, press, community, if it's done in a responsible way. If someone is thinking of becoming an expert in climate, some younger people going through, what are the skills they should be developing? Well, there's two directions. 1 is a technical direction where you become a climate scientist or an engineer, and and we need a lot of people
in those areas. But then there's also more general business, management, MBA. And again, if if you're in HR or, you're gonna be on the procurement front or a lawyer, understand climate issues. So I'd say whatever your career is, understand how climate affects it. Whether you're gonna be a climate expert or not, in your career, you'll be asked to work on it more and more and more.
It's not just again, I have an adorable granddaughter that's 18 months old, and I think about what life's gonna be like when she goes to college, you know, in 2040, but it's literally what's affecting us this year, next year, and the year after. And final question, Steve. Are you an optimist in all this? Do you think we'll get it right? I'm an incurable optimist. Okay. I'm an incurable optimist. And, I have lots of reasons to be that way. And, you know, we'll get it right
after getting it wrong. Meaning, in other words, we'll make mistakes along the way, but there are a lot of I can give you a long list of things that are happening today that are good things that weren't happening 5 years ago on the business front, corporations and things like that. So, yes, I am an optimist, but I'm only optimistic if all of us work on it together. And and conversations like this, Linda, are very important to share, and so I really appreciate that.
Well, thank you so much for talking to me today. Thank you. Steven Rothstein is the founding managing director of the Saris Accelerator for Sustainable Capital Markets. Well, that's it for today. If you'd like to know more about Steven and his work, please take a look at our show notes. You can see more there. If you'd like to be in touch with me, you can find me on Twitter or x at at relentlesseco. You can also find me on Instagram at lindonasworth keynote speaker.
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The Work in the Future podcast with Linda Nazareth is a relentless economics production.