MIc'd Up | The Sustainability Revolution, With Al Gore

Event Overview

• The Milken Institute convened a "Sustainability Revolution" summit featuring Los Angeles Mayor Eric Garcetti, former Vice President Al Gore, and World Bank President Jim Yong Kim.
• The event focused on the intersection of climate action, economic growth, and sustainable investing, highlighting a shift from fossil fuels to renewable energy as the primary driver of the new global economy.

Los Angeles Case Study: Economic and Environmental Synergy

• Economic Growth: Los Angeles has accelerated out of recession faster than California and the U.S., achieving a job growth rate approximately 75% faster than the national average.
• Emissions Reduction: The city recorded an 11% reduction in greenhouse gases in 2016, coinciding with an 11% drop in its unemployment rate.
• Job Creation: Over the last four years, Los Angeles added approximately 30,000 green jobs, a figure exceeding 60% of the remaining coal jobs in the United States.
• Energy Leadership: The city is the top solar city in the nation, with a cleantech incubator attracting $160 million in venture capital in the past year.
• Equity Initiatives: The city launched an electric vehicle car share program in its poorest communities and employed veterans to install solar panels in neediest zip codes.
• Civic Engagement: 402 U.S. cities, led by mayors from both parties, formed the "Climate Mayors" network to commit to the Paris Agreement after the U.S. federal government's withdrawal.

Al Gore: The Climate Crisis and the Sustainability Revolution

• Urgency of Change: Cumulative man-made global warming pollution now traps daily heat energy equivalent to 400,000 Hiroshima-class atomic bombs.
• Temperature Records: 17 of the 18 hottest years on record have occurred since 2001; in the last summer, the North Pole experienced winter temperatures 50°F (28°C) above normal for the first time.
• Extreme Weather Frequency: "Once-in-a-thousand-year" weather events have occurred 14 times in the U.S. over the last seven years, a frequency that defies statistical probability.
• Ocean Impact: 93% of excess heat energy is absorbed by oceans, increasing storm intensity; Superstorm Sandy has shifted from a "once-in-500-year" to a "once-in-25-year" event.
• Agriculture and Food Security: Climate-induced droughts and heat are driving food insecurity, with the UN warning 20 million people in the Middle East are on the verge of starvation.
• Renewable Cost Parity: The levelized cost of solar and wind has dropped below the cost of coal, effectively turning renewables into "free flows of investment-seeking opportunities."
• Market Dynamics: Since 2010, global investment in renewables has far exceeded fossil fuel investment; in the U.S., solar and wind comprised 62% of new electricity generation capacity last year.
• China's Shift: China is now generating 54% of its new power capacity from renewables, while India shifted from 65% new coal capacity (two years prior) to 65% new solar and wind capacity (last year).
• Technology Deployment: Half of the world's buses are projected to be electric within seven years, driven by a Chinese-dominated market and mandatory phase-out laws in other nations.
• AI Efficiency: DeepMind's AI management of Google's server farms reduced energy consumption by 56% without new hardware, illustrating the potential of digital tools to manage physical resources.

Jim Yong Kim: The Role of the World Bank and Capital Allocation

• Funding Commitment: The World Bank committed to allocating 28% of its resources to climate change, targeting approximately $30 billion annually by 2020.
• Capital Barriers: Major economies (China, India, Philippines, Vietnam, Pakistan, Indonesia) cite the high cost of capital as the primary barrier to renewable energy adoption.
• Fiduciary Responsibility: Academic research, including the Oxford-Arabesca study, indicates that failing to integrate Environmental, Social, and Governance (ESG) factors may constitute a violation of fiduciary duty.
• Corporate Performance: 17 out of 28 industry sectors studied showed that companies integrating ESG management outperform their peers in market returns.
• Apple Example: Apple became the largest company to run on 100% renewable energy while maintaining its status as the most profitable company in history.
• Carbon Pricing: Gore advocates for a global carbon price, noting that while direct carbon taxes face political resistance, cap-and-trade systems (implemented in the EU, California, and China) are gaining traction.
• Policy Mechanism: A global cap-and-trade regime could be enforced through WTO rules, treating unpriced carbon like a value-added tax refundable at the border for countries without such fees.
• Infrastructure Risks: The World Bank faces pressure to de-risk investments in fragile developing nations, yet the greatest financial risk lies in the failure to invest in climate mitigation and adaptation.

Forward-Looking Statements and Strategic Shifts

• Generational Shift: Corporate hiring is increasingly driven by younger talent demanding employment at firms with strong values, forcing business leaders to adopt sustainability to attract top talent.
• Africa's Leapfrog Potential: Africa is bypassing traditional landline and grid infrastructure, similar to the mobile phone revolution, to build decentralized solar energy grids in East, West, and Southern Africa.
• Natural Gas Re-evaluation: Gore has shifted his view on natural gas, arguing that methane leaks (84x more potent than CO2 over 20 years) and new pipeline infrastructure investments negate its role as a viable transition fuel.
• Global Commitment: Despite U.S. political volatility, 502 U.S. cities, 16 states, 130 global companies, and the majority of college campuses have committed to 100% renewable energy.
• Political Outlook: Gore predicts that political power will shift toward climate action through legal accountability, noting that major carbon polluters are facing lawsuits based on tactics similar to the tobacco industry's historical delays.
• Investment Timeline: Gore projects solar electricity costs could reach one cent per kilowatt-hour by the end of the current calendar year.
• Legacy Motivation: World Bank leadership acknowledges that future generations will hold them accountable for the scale of action (or inaction) taken during their tenure.