♪ viviana: coming up on bloomberg best, conversations from the 2020 world economic forum in davos. the biggest names in banking and finance discuss the biggest issues facing their industry and the global economy. >> the context of this year. >> rates, negative or not, to stay low. >> we have probably seen the end of the boom bust cycle. >> i think we have to recognize this is the new normal. viviana: world leaders weigh in on challenges and opportunities, in politics and policy. >> we do not manipulate currency. >> we are united in the european union on trade.

>> we are committed to policies that are environmentally effective and economically responsible. >> to those who think this is autopilot, i think that is ridiculous. viviana: plus, climate change crisis is front and center at davos. bloomberg drives the conversation on the most important transformation of our time. >> climate change is now becoming an investment risk. >> you have the core of the financial system, all the investors wanting information about what, about the transition. >> they just need to get on with it. >> investors will look at us and say, what did you do for me? viviana: it is all ahead on this special edition of "bloomberg best." ♪ viviana: hello. i'm viviana hurtado. welcome to a special edition of featuring conversations from the -- welcome to a special edition of "bloomberg best."

we are featuring conversations from the world economic forum in davos. all week bloomberg television spoke with influential and insightful leaders in global business, finance and government on today's most important topics facing the world. this gathering is always an opportunity for power players in banking and finance to discuss the state of the economy, the momentum of markets and the decisions they are making to grow their firms. this year was no different. let's start with goldman sachs chief executive david solomon. ♪ david: the monetary policy that has been allowed and has been in place for a long time has been an enormous stimulus. when we sit here today, i think about the path forward, i think we are now at a time this year, after three missed cycle cuts, for lack of a better term, that we don't expect a lot from the fed this year. the balance sheet has come down a lot over the course of the last couple of years and all of this supports markets paired the

fed has done a reasonable job. even with the speedbump. selina: i will ask you again, is that qe as they buy t-bills on the balance sheets expands again? david: anytime the fed uses its resources to affect liquidity, in some way, shape or form, it has an impact on markets. jonathan: we want to see the action we have seen the last couple of months. david: i have been talking to clients the past couple of days, one of the principal things i do while i am here, and i see and hear what i call a confident, middle-of-the-road view of the current economic environment. the u.s. economy is in good shape. manufacturing sector is a little bit soft. capital spending is lower than people would like to see, but i think the consumer has been overcompensating for that. europe is looking better, headwinds from the face-one deal -- phase one deal helps a little, but the overwhelming likely scenario is that the economy is humming. jonathan: well said. >> the balance sheet expansion. is it qe or not qe?

that debate is raging on wall street at the moment. what is james corbin's call on that? what is it? >> the fed only has two real tools it is working with at the moment, and they have pretty much exhausted the rates. so they only have the balance sheet they are working with, and it is a form of qe. it has been subsidizing price, it has been helping the markets along, and they have done it for good reason. when they raised rates, what was it, 12, 14 months ago, the markets took a scare. i think the fed is just bringing things back in line. tom: i want to bring it back to the triumph of morgan stanley. the statement of improving margins as well. if everybody wants to get into wealth management, is there a risk that you compete away the margins and the morgan stanley margins come down? >> there is a difference between wanting to do it and being able to do it cost effectively.

we made that call 10 years ago. there are monster players in wealth management, whether it is on the direct side with what schwab and ameritrade has done, fidelity has done in -- and full-service firms like ours has done. it is very hard to replicate those. ♪ >> will negative rates go further negative? or is there now really -- policymakers, they just need to rein it in? >> it is a difficult one, because as you know, there are two types of factors driving that. some are cyclical, linked to the aftermath of a crisis, dealing with a crisis and others are demography, with the aging population, growth of savings and interest rates are just kind of the price of money.

those long-term trends weigh on the level of rates, and one should expect for rates, negative or not, to stay low for a sustained time. >> what does it mean for asset bubbles? are we mispricing risk? what does it mean for the asset model for banks? >> we need to be very efficient. you have seen pressures on the cost. you know the work we have done at credit suisse to reduce our cost base significantly the past for years. that is a starting point. we need to -- the risk, you have done that. we need to be able to navigate the environment because there is also a layer of political risk that has added to a difficulty, but i am still very positive on the world economy. >> worldwide or in europe? >> more in europe. worldwide i am still very positive. we see growth everywhere, still

see good growth in asia, still positive on china, positive on southeast asia, latin america we will be bullish and brazil we are doing quite well. middle east is doing ok. africa is doing well, so that is a lot of the world. and the u.s. of course. francine: 2020, i hear from certain quarters, could be when europe does better than expected. what are you concerned about in europe? tidjane: for the eurozone, i agree with the assessment that things are getting better. it is going to be a long journey for you. ♪ jonathan: we did the interview with him. he said the following, a market share for consumers, 13%, depending on who counts. the reality is that you could double that. you want to double that? and when? >> we want to drive it forward. the context of that was, are you too big and do you have to go

outside the united states to do something? the answer is no, we don't. there is an opportunity in the united states. even though our market share is high, and the top 30 are considered the u.s., we are in the top 12. the next to us is six. the reality is up until a few years ago we were only in seven of them. if we look at the other seven as being like the other markets, that is a lot of growth. jonathan: double this organically. >> we have gone from 10% to 50% over the past few years. you can think it is a challenge for my can seem, the consumer. let's get with it. but the reality is it of response to opportunity in the united states for the bank of america. jonathan: for years you have talked about responsible growth. let's talk about a leveraged

loan business. almost every week there is a new shock with concerns about leverage loans. you have got great insights, this area of the market. walk us through what you are seeing at the moment? >> the real question for the economy and what different groups are talking about is, a lot of it is in funds and other types of support, and what will happen when those companies don't fare well? will those funds work the way the banks to work with them in terms of working them out as opposed to closing them out? the other question is in and added value context, our liability structure moves down with the asset, that feels good -- our actual leveraged lending is a small part of our on sheet balance risk. ♪ >> every year in davos i ask you about consolidation and the banking sector. is 2020 the year? >> one day it is going to come. actually as it goes by, we are getting very close to that moment. i do believe that the second half of the year is going to be very important moment because you are going to see the finalization of the basil three, basil four groups. how they are going to get implemented in europe. before that or after that you may start to see people really realizing the need for offsetting a shortage of capital with, you know, combinations. and i think it is a necessity for europe. it is not a matter of if, when, now, or who, this should happen or not. francine: would that really be a catalyst for banking consolidation? >> you know, today we don't need any further developments, there is an issue of critical mass.

so i am not saying that that per se is the solution, but when you are keep abilities and you are good at, you still need scale. no matter how good you are positioned in a competitive landscape, scale matters. scale allows you to create the resources not only to offset market compression but also to deliver savings that are attractive capital return and to invest in the future. ♪ viviana: still ahead as we review the week in davos on "bloomberg best," conversations with leaders. their decisions shape politics and policy, from central bankers to heads of government. >> traditional center-right parties in europe, provided they have the right agenda, can actually beat projections. they can beat the populists. viviana: plus, how businesses are grappling with the implications of the climate crisis. >> we set ourselves a goal affecting the package to everyone we sell by 2030. >> i think this is part of future proofing organization. viviana: up next, more insights from the most influential voices in finance and investing, today

markets and the local economy look strong, but what should keep us up at night? >> usually perfection doesn't last. >> maybe five years we will be talking not about the subprime bubble but the equity bubble. viviana: this is bloomberg. ♪

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viviana: this is "bloomberg best." i'm viviana hurtado. we are revisiting conversations from the 2020 world economic forum in davos. let's stay on the topic of markets and the global economy. some of the world's most respected investors, bankers and economists share their outlook for the year ahead. here is blackstone chairman and ceo david schwartzman. ♪ francine: what is the biggest unknown for the markets? is it the u.s. election, global growth, or is it geopolitics? david: it is not global growth. global growth will continue. the biggest risk for markets are two types of thing. one is u.s. domestic politics. and the second is the black swan effects that can happen. we just had an incident, for example, in iraq.

i was watching television. almost everyone was declaring world war iii starting. they'll happened to be wrong, but if they were right and the strait of hormuz were closed, and we ended up, you know, with a huge dislocation, you could get thrown accidentally into a slow growth from recession. francine: but it is amazing how the markets quickly discounted. once there was no immediate threat of war, they moved on. we had asset prices really priced to perfection. how do those two match up? stephen: usually perfection doesn't last. and you know, this has been an amazing run. usually you expect some type of adjustment. but if we don't have a really [indiscernible] event with u.s. politics, and we

avoid the kinds of major international type of risks, geopolitical risks, i think we will go on with variability up and down over today's levels. ♪ >> i do believe that there is a sense that for the next 12 months at least and maybe 24 months, we are going to have economic growth. it may be slow, or slower in places like china and germany, but there is economic growth out there, and so there is a reason to invest and there is reason to be more optimistic than businesses were last year. the only issue is, if we are wrong. francine: all right, i was going to say, are the analysts right? are the chief executives optimistic enough that they are ready to actually put money in capex? jes: i think if the labor market begins to put ever greater pressure on wages, and supply chains get broken, and productivity slips, and you

start to see inflation, we are, you know, we have a long way to go for the central banks to correct the monetary policy in case that happens. it looks like good news. we should all be happy, but if you start to see inflation, we have a lot of correction that needs to be done to get monetary policy in the right place. ♪ francine: where do you see the biggest risk coming from? >> in 2020, i think there is sort of two things which i would call out. the first is that there is a risk markets have moved ahead of the underlying economy and company earnings. typically the market has been pretty concentrated on the next -- the tech sector, so you have not had a broad market. we are vulnerable to headline levels and setbacks for a few individual stocks. and the stock gapping out is a potential risk. the more broad one which is not

specific to 2020, but we do see, when we look across the landscape of regulation, that liquidity is becoming a bit stickier. we are seeing capital being allocated to being almost trapped with individual parts of businesses, which means we are getting this odd spike. there are odd bouts of volatility just because the volatility because the the -- it could not move around the system as it needed to. i think that remains a risk. ♪ francine: if you look at risks to the downside, what are your top three ones? >> it is uncertainty that is at the top of the list. uncertainty can become by many factors. trade tensions were last year's number one. we had seen that from the start of the year, we got climate shocking us in australia with the fires. we had tensions in the middle east. now there is concern about a sars-like virus. i think we have to recognize this is the new normal. we are also keen to see

governments stepping up on the policy front. monetary policy has served us well. cannot be the only savior of global growth. whether we would be ambitious enough on the policy side. and we want to see how the consequences of prolonged interest rates may play out. ♪ >> it is a single-digit world. there is all the rationalization. there is interest rate parity, which i am going to call a sophisticated strategy, i guess ok, and then there is the macro bet. how do you recover after 2019 on the macro side? >> well, 2018 i think was a lesson learned.

the tightening of central banks all around the world wasn't intended to cause the downturn, wasn't intended to cause what it did, but i think lessons were learned from that. and i think it was really a marker that we have probably seen the end of the boom-bust cycle. >> we never leave the boom-bust cycle. i love to call hindle berger, and he said financial crises are hardy perennials. they always come back. look, bubbles are detected at first. next year, maybe the year after that, maybe in five years we will talking not about the subprime bubble, but about the equity bubble. ♪ viviana: coming up, more conversations from davos. bank of england governor mark carney says it has become impossible to overstate the impact of climate change. mark: it is becoming pretty clear that if it is not the biggest problem, it is in the top three. viviana: and hong kong's leader is under pressure to resign, but

carrie lam tells bloomberg she won't run away from a city in crisis. carrie: i will do my utmost to stay in this position, to help arrest the current situation. viviana: this is bloomberg. ♪

♪ viviana: you are watching "bloomberg best." i'm viviana hurtado. this week marked the launch of bloomberg green. this new initiative aims to become an indispensable guide to understanding the scale and impact of climate change. it features news and analysis with an emphasis on helping find

solutions. we are using clear data and rigorous reporting across all of bloomberg's platforms. this year, for the first time, the top five concerns at the world economic forum were all related to the environment. the conference theme, stakeholders for a cohesive and sustainable world. in an onstage conversation for bloomberg's francine lacqua, bank of england chair mark carney framed the challenge for business and government. mark: any journey, any transition is easier if you know where you are going. the clarity of the objective, the clarity of direction and policy, even if it is starting relatively small, low carbon footprint, with a credible trajectory toward where it is going, or a sustained r and d effort or you know highlights around certain stores that work in certain areas, all those things signal to individuals, companies, to investors, where to put their money, where the opportunity is. and then what the market will do is it will pull forward adjustment. it will act more rapidly than policy will help fill in. and we will have, without

question, public attitudes and pressure and other things also help shape those decisions as well. and i think that is part of what we are seeing in terms of the response. because the response, again, in finance, if you look at what is happening in finance, you have the core of the financial system, all the investors, wanting information about what? about the transition. now different investors are going to have slightly different views on how fast it is going, where to put their bets, that is fine. you have bank of england and a number of other central banks that will do this as well, stress testing their banks for a transition to net zero. ok? so the world's largest complex natural system, that is what we

are doing. at the core of the system, these questions are being asked, and are you on the right side of the -- right side or the wrong side of that transition? and what you going to do about it? francine: why are investors recognizing these issues? is it protesters or something else? mark: i think it is a combination of issues. the biggest asset owners will be around 30 years from now and see the implications on their assets. the people at the frontline, the insurance industry, what they are dealing with the pricing and cost of this every day. and as well, people responding to their clients and actually they are not disembodied, these institutions. they are made up of individuals, and they can see the imperative. and in the end, what is the market system, what is it there for? it is to solve problems. it is to find solutions. it is becoming pretty clear that this is, if it is not the biggest problem, it is in the

top three and therefore that is where the market will go. ♪ anne: mark carney -- viviana: mark carney was just one of many leaders in davos who spoke with bloomberg about the climate crisis. blackrock is making an all-out commitment to investing. >> climate change is not going to be fixed by a central bank. viviana: coming up, perspectives on politics and policy is our review of the world economic forum continues. >> let's look at the factor and let's look at how the economy evolves. viviana: this is bloomberg. ♪

♪ viviana: welcome back to this special edition of "bloomberg best" we are featuring conversations from the world economic forum in davos. i'm viviana hurtado. in 2020 the annual conference drew nearly 3000 attendees from 117 countries. this includes at least 119 billionaires, 53 heads of state, and central bankers. on friday ecb president christine lagarde spoke with bloomberg about policy and politics. ♪ christine: we need to do a lot of stock taking, looking at the effectiveness of what we have

done, learn from other countries around the world as well in the process. the fed is undergoing the same exercise. and we need to take time to reach out to the parliament, to academics, to people interested in the issues, to hear the voices, to understand what their views are. we will listen to markets as well, but they are one of the voices that we will listen to. francine: and economists believe monetary policy at ecb will be on autopilot for the next two years. is that a mistake? christina: no. i just told you. to those who think it is autopilot, i think that is ridiculous. there is forward guidance which is strong, which is setting a very clear timetable. but let's look at the facts. let's look at how the economy evolves. that is what we do. we need to be fact-driven, we

need to be clear in our communication, and i am saying today, don't assume it will be on autopilot. francine: yesterday you talked extensively about negative rates. you said tiering is working well, but the side effects of negative rates mean you need to scale it back. christine: we need to be attentive to that. financial stability is not our first driver of concern and consideration, but we will have to look at it, of course. yeah. also that we need to have a banking sector in the euro area that acts as a good channel of transmission. ♪ tom: what is the most efficacious way for europe to speak to the president of the united states on trade? >> directly. forthright. with trump you have to be quite clear. tom: who is the voice that is going to sit across the table from the president? >> that is the president of the european commission, because this is a european thing and we are united in the european union on trade. we always have. one of the few very successful things we are doing. there are many issues, climate change, migration, but some of -- one of the consistently successful things we are dealing within the european union is trade. that we have to work with the u.k. also when they are leaving from the next week onwards.

we have to get u.k. deal, so i am optimistic because we know it it is important for trump, we know it is important for europe. ♪ tom: the perception of europe is that it is full of socialists, full of leftists. >> that is very wrong. tom: it is full of left-wing politicians that don't want to do business, who have no interest in business and put a big wall around the bloc. >> we want in a center-right agenda, liberal reforms, reducing taxes, deregulation and an inclusive economy. we have got 40%. we have an absolute majority. we beat the populists of the left and right at their own game and i think this sends a positive signal that traditional center-right parties in europe, provided they have the right agenda, can actually win agendas and certainly beat populists and beat the rhetoric of the left, which in the middle east let us to a second crisis. ♪ francine: the u.s. has put you on a currency manipulator

watchlist. does that impact the ability for you to trade? >> we are in a very good dialogue with the americans. we have to explain the situation. we have to see it is overstated by the way statistics are set up. and we have also very low inflations. at the moment we have zero inflation. it is an instrument to maintain a reasonable monetary policy. in switzerland. francine: does it worry investors if the u.s., -- i don't know if you get called when you are on the currency manipulator list, and does it hurt your credibility? >> it should not because we can explain that very well.

we do not manipulate currency. that we have to intervene in order to steer monetary conditions in switzerland. so what is very important is that we never intend to weaken the swiss franc, to get an advantage over other countries, but rather we have to avoid that the swiss franc doesn't become too strong and we have a deflationary environment in switzerland. ♪ tom: give us an update within south africa, where moving rates around, does it effect of the economy? does it have -- is monetary policy an effective tool for you? >> at the moment it is. if it wasn't, we wouldn't be using it. and we have used it quite effectively. as a small economy, we do not have the problems that the developed world has where it is a lower bound. tom: how charming. that is a good flexibility it looks like. >> but then our forecast still for us is on price stability. we have been adjusting policy to

deal with the challenges of price stability. ♪ francine: of course it is expected to do pretty good in canada. despite this, is there anything you worry about? >> we always worry about the state of the global economy and the challenges that might be around the corner. clearly, from our perspective, making sure we have a strong trading relationship with the united states and mexico is job one. that is why we are getting on this first and foremost. we will keep managing other risks, the risks around household risks, risks around household debt we are concerned about. francine: and productivity. can you fix productivity?

>> we have to try to get at the things we can get at. we have a big focus on worker training. we obviously are a country that continues to embrace immigration so that we can deal with the changing and challenging demographics in our country. those things are important building blocks. we are also looking at how we can make the regulatory framework even more advantageous. canada is a good place to do business. we want to keep improving it. ♪ >> what we have seen is really unprecedented. i mean that. and i have confessed and taken full responsibility for misjudgment and for the sort of lack of a full assessment of the situation in taking forward the bill. but let me make it clear, hand on my heart, that bill was well-intended to ensure hong kong could discharge its international obligations in tackling serious crime and also

to plug a loophole in our existing regime, without having any legal assistance on criminal matters that have anything to do with other parts of china. haslinda: you have said you are willing to quit, if you could. would you quit if that could help resolve the crisis in hong kong? carrie: it is not difficult to quit. but walking away from such a big dilemma and problem now is, in my view, not very responsible. so i -- haslinda: but it is one of the demands of the protesters, that you resign. would you, if it was for hong kong? carrie: my judgment right now, because we have several crises we need to manage at the same time, i will do my utmost to stay in this position to help arrest the current situation. ♪ >> we have been quite clear and on the record, of course climate change has an impact. we have had bushfires in australia for thousands of years and indeed we have a regular bushfire season, but we absolutely acknowledge climate change has worsened the intensity of these fire events. and that is something we know

very clearly at the moment. francine: the prime minister said he wants to tread very carefully on climate targets because he doesn't want to hurt jobs in intensive industries. >> what we are saying is that we are focused and committed to policies that are environmentally effective and economically responsible. i mean, we do have commitments to effective action on climate change. in fact, we are one of a handful of countries that have not just meet but beat its emission targets agreed to in kyoto by more than 400 million tons of co2. on a per capita basis that is removal by half. we are on track to beat our nations targets agreed to in paris. that is more ambitious than the european union, canada, new zealand and other countries around the world. so we do have effective measures, but in the end what we are guided by a particular measure will make things better for the environment and not actually inadvertently make things worse, as well as being economically responsible. ♪ viviana: plenty from davos still

ahead. more conversations about climate change, how it is spurring businesses to change their practices and also changing the flow of capital. >> i think shareholders are starting to show that sustainability matters to them. viviana: this is bloomberg. ♪

viviana: you are watching "bloomberg best." i'm viviana hurtado. let's get back to the topic of climate change. it was the central theme of this year's world economic forum. it is an issue bloomberg will cover in depth through the

bloomberg green initiative. this week, it launched. many of the business leaders who spoke with bloomberg in davos discussed the importance of sustainability and environmental responsibility, starting with the chief executives of global energy companies. ♪ >> the industry hasn't seen anything like this for decades and decades, so it is a big part of what many of the big energy companies are doing. we spend a lot of time on it. stay tuned, there will be more coming. you know, 2 billion more people on the planet, one third more energy needed. we need to reduce emissions, increase energy. it will take all forms. we need to be careful about our investment. it is going to transform itself in the next decade. companies need to get on with

this. and many of us are. tom: do you see climate issues as an existential risk for a longevity of a company like bp? bob: about 10 years ago we got over production volume. it is about value over volume and running a company, you have to think about value. where that comes from can be all kinds of things. we have a big renewable business today, biofuels and wind businesses. they don't have the same returns that we have today. we have got to set up policies around the world to change the demand patterns of the market, because it isn't supply that creates economics, it is supply and demand. you can't do it with supply. you actually have to change the demand profiles. ♪ >> [indiscernible] cleaner and more competitive. is our generating an industry jobs, huge and positive. i think it is not only the point of how you produce electricity, which you produce in a more efficient manner, in a cleaner manner, that is what you have to contemplate. not only look -- that skip does that. that is better. you have to look forward.

the country makes it more sustainable. that is what we are doing. francine: you are investing big. if you take a look at your investments in austria alone, you pumped in $500 million in both wind and solar farms. i mean, what kind of potential, what kind of growth, and after australia, where do you go? >> in the state, we have invested $35 billion. now we are investing the range of $4 billion to $5 billion a year. that is already a new line we are already making. we are pleased to do so. the demand is there, and we would like to contribute with as we have in the united states with more efficient, more clean energies, to do the same thing

in australia as well. ♪ >> early last year we announced our new statement of purpose for petrol gas. it reads like, not to be a progressive energy and solutions partner and reaching a sustainable future. i think what i like to point out, oil and gas is not dead. you know, this is our new statement of purpose. and as soon as all of that, we are really looking at our portfolio. so at our portfolio, and this year we have allocated around 5% of our capex for renewable energy, for new energies, which is solar and wind. so i think this is futureproofing the organization. because you know, this energy transition is what many call a key to additional energy requirement instead of a transition. i still believe oil and gas will play a major role, but will be complemented by other forms of energy. ♪ tom: single-used plastic is still a big concern, in fact increasingly so.

what can you do to adapt? changing the packaging, but we would still be stuck by assuming brings the same way in 20 years? >> the good news is, these that plastic bottles and cans are very high-value items. we can collect them back. we set ourselves a goal, for everyone we sell by 2030, taking them back and basically re-using that material to make new bottles. sweden in the coming months here will be the first market where the package we sell will be recycled material. and then what you achieve is not just zero packaging waste, but you have a much lower carbon footprint. we can solve two problems in one go with a circular economy. ♪

>> what we are seeing now much, much larger consumer interest and also we are seeing much more interest from financial markets. and i think that is a good thing because it means you get rewarded for the effort you are doing in that space. francine: when you look at the world economy, is there a danger that when recession hits, green initiatives are left behind? >> i think the momentum that has been reached is such that it is here to stay. that tipping point is either past us or already here, and will stay with us. and that is a good thing. it should not be cyclical in terms of a big commitment. it is certainly not cyclical when it comes to our commitment. ♪ >> i believe we are facing a climate crisis. i think every company has to do something. i have children and i have a grandson, and they are going to look at me and say, what did you do? and our employees are also asking us, expecting us to do something. haslinda: how much shareholders, how much pressure are

shareholders putting on companies like astrazeneca to do the right thing? >> i think shareholders are starting to show sustainability matters to them. there is more and more shareholders are asking what we do in this area. the pressure i believe is not yet strong enough, to be frank, and companies will have to incentivize to do something about this climate crisis. haslinda: how should they be incentivized? >> well, i think ultimately everybody's going to be incentivized by their own employees. as a leader, you also go home every day and talk to your children, and children are going to look at us, and say, what did you do for me? our grandchildren will look at us and say, what did you do for me? our employees, especially the millennials, young people are expecting us to do something. ♪ haslinda: when you speak to chief executives, has something really changed? do the protests matter, does greta thunberg matter so how they view the world and how they invest? >> it seems to me like, yeah, it has changed. at least some of them have children, and they have the same discussion when we have talks we have with our children. they have to ask the same questions. dad, what are you going to do to help us in the future? so when i talk to company

leaders, then they very much talk about sustainability. changing strategy of the companies. francine: do you think this is a movement that is here to stay? i don't know if you call it a movement or do you call it a conscience, but is there a danger that it is fashionable are a couple of years and then people will forget about it? >> everyone should be above that where it is just talk and talk and talk and then they go away and nothing has happened. we have to change the system. it is not, we don't have to fix the system, but we have to become aware of the external problems are part of the interior system logic. we have to change that. i hope we can talk in davos about it. ♪

viviana: this is "bloomberg best." i'm viviana hurtado. we are looking back at the 2020 world economic forum. blackrock chairman and ceo larry fink recently warned that climate change will upend global finance more than many leaders expect. blackrock is the world's largest fund manager. he pledged it will make sustainability a focus of its investment strategy. in davos, he spoke to editor-in-chief john michaelwaithe at the bloomberg event, the year ahead. ♪ >> being in the capital markets for 44 years, it is very clear we in the capital markets, we bring risk forward. we don't wait until the risk is

in front of us. there are times it happens, and that was the great financial crisis, but in most cases, we navigate the risk, and through that process we mitigate most risk. there is a greater belief in the science and as a result of that now, we should not avoid the conversation about climate change, because climate change is now becoming an investment risk, and no different as investors focus on a yield curve or whatever forms of risk we have. it was very clear to me now we need to bring forward better risk tools to navigate risk. and this is, a component of the letter asking more companies to was be more self reporting on things like says be and tcfd, so we have better clarity on how each company is navigating these issues. i am not here to tell you these are the best tools, what we are suggesting no. they are good tools now and hopefully we have better tools. i believe we are on this long

path. in 2019, most of the sustainable funds outperformed regular funds. now you could argue that is a big, giant momentum trade. >> you had a lot of -- >> yes, we had record flows. >> particularly into esg. >> record inflows in esg. and so, a part of the announcement, everyone of our products will have some sort of sustainable counterpart, so we can bring this forward and have more investors as part of this dialogue. but i want to just say one really important thing that i did not write about, but i kind of inferred. in my mind, one of the central themes, central paragraphs was, climate change is going to be a 50-plus-year journey, and we as a society, as humans, we are going to use carbon for a long time. the key is to try to find ways of mitigating those risks while we are dependent on carbon. carbon recapture, there are many

things we need to be doing. but my greatest concern is not that we as investors and we the capital markets are not going to find a lot of capital to invest these project. my biggest fear is the dependability and the dependency we have on governments, because i don't see governments working towards these long-term objectives. john: is there any sign since you started this that governments have gotten better at dealing with these issues you want them to look at? >> some governments have, but most are not. most governments are focused on electioneering and election cycles that we are not seeing any true long-term planning. and this is one of the fundamental problems with climate change. it requires real planning. climate change is not something the federal reserve and all the

central banks are going to be able to fix. my 40-odd years in this business, we have had five very large financial crises. we had central banks who were able to navigate those crises, mitigate it. i'm not saying people weren't harmed by that, but we were able to by and large fix those crises. climate change is not going to be fixed by a central bank. it is going to be fixed by a combination of public and private. ♪ viviana: that wraps up our review of the 2020 world economic forum. you can find much more conversation from davos at bloomberg.com, along with all the latest business news and analysis 24 hours a day. thanks for watching. i'm viviana hurtado. this is bloomberg. ♪

♪ carol: welcome to "bloomberg businessweek." i'm carol massar. jason: i'm jason kelley. carol: this week, tesla hits $100 billion, speeding past volkswagen to become the world's second-biggest carmaker by value and leaving skeptics behind. jason: free trade is dead. long live managed trade. carol: jason, we've got a bloomberg businessweek exclusive. a first look at porsche's super bowl commercia