♪ >> Welcome to Canada Files .

I'm Valerie Pringle.

Mark Carney clearly loves a challenge.

He served as Governor of the Bank of Canada, during the 2008 financial crisis.

Then Governor of the Bank of England during COVID and Brexit.

Now he is the UN Special Envoy on Climate Action and Finance.

Tackling perhaps the biggest challenge of all,climate change.

He's encapsulated his views on markets and morals in his book, Value(s), Building a Better World for All.

It's a huge mission but he's determined to try.

>> Hello Mark.

>> Hello Valerie.

>> You've had some enormous challenges to deal with over the past 15 years.

Financial crisis, COVID, Brexit.

Tackling climate change must be the hardest.

>> It is the hardest actually.

It's an interesting challenge.

Because what happens during the day is I get more optimistic.

Because I meet lots of people virtually or physically who are amazing technical experts.

They're coming up with hydrogen fusion, for example.

I was talking to someone this morning about that.

People who are rolling out masses of solar and wind energy, part of the solutions.

Governments who are getting their act together.

People in the financial sector increasingly focusing on this.

So I get more enthusiastic.

And of course, the groundswell from youth around it.

Then I get up in the morning and I look at the numbers.

In terms of how small our carbon budget globally still is.

We're rapidly depleting it.

It's a very narrow path for us to accomplish what we're trying to do.

>> When did the penny drop for you?

That you said this isn't working, it isn't sustainable.

>> I guess the penny really dropped for me when I became governor of the Bank of England.

One of the parts of that job is to oversee the fourth largest insurance industry.

That includes Lloyds of London which does something called re-insurance .

It basically has to pay out if there are huge extreme weather events.

Like a massive hurricane in the Gulf of Mexico, flooding in New York City, droughts in the prairies, etc.

What was happening is the number of those events had been going up about 3 times over the past 25 years.

The cost of those events-- it wasn't just the number, they were more extreme.

Worse droughts, bigger hurricanes had gone up 5 times.

Adjusted for inflation, of course.

I realized at that point, it was an immediate threat to the insurance industry, by extension the financial sector, over time, our economy and that I was one of they .

>> Is that how you engage people?

Is it self-interest, property damage?

What makes it real for people?

Because that's been the problem.

>> Let's take another manifestation of climate change.

Over the course of my lifetime, literally, the number of animal species have gone down by 70%.

It's an absolutely shocking figure.

Another figure--over the course of the last year, de-forestation has been the size of the Netherlands...Holland.

It's absolutely enormous, these shifts.

Part of it is to make it tangible-- just the scale of what's happening.

But also to admit that it's only as things have come into the market, if you will, it started to affect things with a price.

That people, or something approaching the majority, have begun to feel the immediacy of the problem.

One of the great challenges with climate change, is by the time it's obvious to everybody, it's too late to really do something about it.

>> Also this balance between everybody says the government should be doing that.

They have conferences and make promises.

You're focused more on industry and private sector.

Is more innovation drive coming from them, than governments?

How does that balance work?

>> It takes everybody.

That's the first thing.

Most of the investment and innovation will come from the private sector.

But of course, the private sector needs governments-- and needs finance in order to fund those innovations.

So you need all three.

And governments respond to people.

So before governments respond, and that is the experience-- people tend to be ahead of governments.

It really does matter that we've had groundswells of interest and passion about sustainability.

People changing how they vote, how they consume, what they care about.

Then governments start to respond.

>> I think you were in the General Assembly.

>> ...when Greta Thunberg spoke.

>> I was.

>> You have stolen my dreams and my childhood with your empty words.

We are in the beginning of a mass extinction and all you talk about is money and fairy tales of eternal economic growth.

How dare you?

Was that like a dagger in your heart?

>> It was incredibly powerful.

I was there.

Surrounded by people who, for the most part, were there because they fundamentally cared about this issue.

You went into the General Assembly feeling this is a key issue but feeling kinda good about it.

>> We're the good guys.

>> We're on the right side and you're laser-hit .

In fairness, laser-hit because not enough is being done.

Which is her point.

She has the relentless logic of the carbon budget and confidence of youth.

The many contributions that Greta has made-- she'll make more, one of them is to always bring it back to there's less than 300 gigatons on the carbon budget.

We have less than a decade in order to get our emissions down.

What are you doing about it today that's going to make a difference?

We part company on how to do it--how to address that.

Because in my view, I'll use the example of the pandemic, we shut our economies down.

We got to a position collectively where emissions fell about 8% over the course of a year.

I'll average it to a year.

We need to do that year after year after year.

We shut down 1/4 of our economy.

It's not like we're going to shut down 1/2 our economy the next year, 3/4 the year after.

Shrinking our way to address climate change will not work.

We have to invest and grow, in order to get there.

The key thing that I've tried to get across-- A is to put in the building blocks for that investment.

The next point is to get across that one of the key issues is how and what we value.

If we truly value sustainability, guess what!

That shows up in what we're willing to pay for things, ...in growth and jobs.

That's part of what's changing.

We just need to change it faster.

>> You tell a really interesting story anecdote in your book.

It starts off in a room with Pope Francis.

Is it a parable?

>> It's....we were at a lunch and he says, "We're going to start this meal with wine."

It's Italy, the Vatican, so we start with wine.

We don't do that with the Bank of Canada to be clear.

And wine has many things-- a bouquet, richness of taste, colour, alcohol.

It enlivens all of our senses.

At the end of the meal, we'll have grappa .

Grappa is one thing.

It's alcohol...wine distilled.

Man...humanity is many things but he says man.

He's rational, passionate, altruistic, self-interested.

The market is one thing.

It's self-interest.

Your job, and he points to all of us, is to turn the grappa back into wine, the market back into humanity.

Discuss.

And that's right!

Markets don't have values, people do.

So how do we organize ourselves so that markets are helping to deliver the values that we, as humanity and people really rate?

We've been talking about sustainability.

It's also solidarity.

Everyone moving ahead.

It's fairness.

It's responsibility.

But you need that dynamism , in my view, of the market to get there.

>> It's quite a journey for a guy from Fort Smith, Northwest Territories.

You talk about your dad and mom giving you a real social conscious underpinning.

Tell me about them and how did that work?

>> We were up north.

I was born, as you say, in the NWT.

We were there because they were young teachers.

They felt that was the frontier, that's what needed... it was an adventure but also a higher calling, if you will, to teach in the north.

To work with the First Nations there which is what they did.

We moved all the way south to Edmonton.

Which for many people is about as north as you go.

Where I spent most of my school time.

I remember my dad continued to work in the history and philosophy of education.

He'd always be going off to social justice workshops.

But I've had that sense of the power of community and our ability to constantly improve, basically.

>> You went off to Harvard.

That must have been a big launch.

Harvard, Oxford, Goldman Sachs.

A real trajectory.

Rocket ship success.

Then made a choice to do public service-- come and work for the Department of Finance in Canada.

And the Bank of Canada.

>> For me personally, it was more a question-- it was a delay.

I always felt I'd go into public service.

After my doctorate, that was my intention.

For a variety of reasons, I spent more time in finance.

But I really wanted to get back...deliberate.

When the opportunity came, David Dodge who was then governor, a great Canadian and great global economist, took a chance on me.

For which I'm really grateful.

>> There must have been times, particularly at the Bank of England because you were the first foreigner to do it-- walking around, going holy moly.

This is insane.

What am I doing here?

>> Yeah...virtually all the time, I think.

>> You went to schools and said if a clown like me can be governor of the Bank of England, so could you!

>> There's a real point to that.

It's often the advice given to younger people.

It's the right advice.

A truism that's true.

About the importance, as much as possible, working on things that you're passionate about-- that really interest you.

People you respect.

Companies or institutions who share your values.

Then good things happen.

Opportunities open up.

I wouldn't have become the governor of the Bank of England obviously, if I hadn't become the governor of the Bank of Canada.

I wouldn't have had that opportunity if I hadn't had a sense of public service from my parents.

It didn't mean that I'd necessarily would get all that.

But it led to it.

What's important in those situations-- remembering who you are and where you're from.

I'd reminders of Canada, my Irish heritage.

Someone had given me a map of County Mayo where my grandfather was from.

I remember having to get his birth certificate for something once.

His father signed with an X.

>> Interesting.

>> You think about education, the path and how quickly things can move.

You think about work on development and climate.

>> Valerie: That's a story.

>> Everything is possible, basically.

>> Tell me about the financial crisis.

What you learned and who you learned from.

I guess you were dealing with Hank Paulson, Ben Bernanke.

>> It was worse than it looked, without question.

The world...the system was collapsing in on itself.

Huge ramifications, some of which came to light.

Others which were prevented.

I learned a number of things from them.

Ben Bernanke, cool under pressure the entire time.

Other people, not always, under pressure.

You learn a lot about people under pressure.

Some of the key things I took away-- Tim Geithner who was later the Treasury Secretary, very senior in the US Fed at the time, a plan beats no plan.

When you're in a bad situation, you've got to have a plan.

Think of Shackleton getting out of Antarctica.

Plan beats no plan.

Secondly, you need overwhelming force.

It doesn't help to do little things, come back and do more.

You need overwhelming force to stop a panic.

Ultimately that can only come from the state,from government.

All of these markets, particularly in finance, are ultimately backstopped by the state.

The challenge is, you come out of a situation like that, is to leave to the market what should be theirs.

The risks that they should bear while keeping that underpinning of the state.

Because in the end, the damage that will be done by the implosion of the financial system-- you should never get to that position, but once you're in that crisis, you have to stop it.

So that really hit home, also that we were privatizing gains and socializing losses.

So we needed to make sure more of those losses fell on the market.

So you need structures where you give people & institutions responsibility to take tough decisions early enough.

So you prevent the bad things.

You push the losses or consequences early enough onto the private financial sector so the public doesn't face those consequences.

There's an element of that with climate.

We're bringing forward adjustments, huge changes that need to happen or we all will be paying the price.

>> COVID...was so much about inequality to me.

Some people suffered disproportionately at such a level.

>> Absolutely.

It began as a real moment of solidarity.

No-one was immune.

We were all affected by it.

The metaphor we were all in the same storm.

But then it turned out we were in different ships.

As so often is the case.

So the economic costs fell disproportionately on those less well-off.

The incidence of disease fell disproportionately.

The initial access to vaccines, in many cases, and other treatments, again unequal access.

It's been, at a time at the same point-- this is the stark contrast, where we never valued public services more.

Applauding rightly first responders, medical profession, scientists.

We never needed them more.

We never had greater solidarity.

Yet you had these inequalities.

The light shone on them.

I don't think you can come out of those experiences-- the same as with climate and the financial crisis.

When you have crises, the vulnerable-- there'll be some high profile losses over there, the vulnerable are affected the worst.

They take the hit.

That's why there's a responsibility to do what we can to prevent those crises.

Also a responsibility to lean against those impacts, and ensure that we truly are all in this together.

One of the lessons of economic history is that when we have these big technological revolutions, the industrial revolution being the example, we had universal primary education.

The 2nd industrial revolution, everyone goes to high school.

The computer revolution, 70% of people go to post-secondary.

So we need those changes.

We're basically going into the 4th industrial revolution.

AI being the most prominent but huge changes in genomics, life sciences, the green revolution.

Great but recognize that we need better education to respond to that.

A lot more mid-career training.

Lifelong learning.

We need a new financial system, or new parts of it.

So that more people have access to cost-effective, cheap and fair finance-- just two examples.

Because the past, we'd wait half a century before those things started to change.

There's a lot of damage that's done over that period.

Instead we can do a lot of good over the next 25-50 years.

>> If we accelerate it.

>> If we accelerate and recognize it.

We make some of the changes we're already doing.

>> Because the long term stuff, you've got to fight pessimism.

...Bill Gates said something, "Zero carbon and a decade is a fairy tale."

>> Yeah!

I think what Bill Gates has done on climate is he's very effectively divided up the solution.

These are the things we can roll out at scale today.

Wind and solar.

Hydro power, if you have it.

Maybe nuclear is part of the solution.

It's cost-effective today.

We can invest in it.

It's what we should be doing now.

Now I, Bill Gates, and a bunch of other very smart people are going to focus on the technologies we're going to need next decade.

Hydrogen, small modular reactors, direct air capture.

Pulling carbon out of the atmosphere.

Some people focused on fusion.

Other break-through technologies to use his terminology.

We're going to put money behind those so when we get to the end of the decade, those will be ready to build out at large scale.

...so he's not nihilistic at all.

He's very practical.

It just shows that we need everything.

We need people.

Yes, we do need windmills.

But we're not going to solve...

When I went to the UK, it was probably, not because of me but, 10% of power generation from wind is now 40%.

It will be the majority.

40% on average is from offshore wind.

Wind as a whole for the UK.

as generated in the UK.

Absolutely, I think it's under appreciated, just the scale of change that's going on.

When you're at an inflection point, it's hard to see.

After the fact, it's very obvious because the lines go up.

We're absolutely at an inflection point on addressing climate change.

It doesn't mean we can relax and we'll definitely get there.

But it does mean we have a shot.

>> You've expressed an interest in politics.

How are you going to be able to tell when the time is right.

The conditions, I don't know.

>> I think a couple of things.

One is having been around politics and policy in various ways, I can see how essential it is, and how powerful it can be when it's focused on the real issues.

The issues that are going to affect people today.

But very much build a better and fairer country for tomorrow.

So I'm interested in that.

The question is how do you influence it?

Influence it with ideas, building blocks or do you go on the front line?

The front line--those opportunities come up rarely, maybe not at all.

The important thing, at least if you're someone like me, is to always be trying to contribute.

And certainly not keeping your ideas to yourself, solutions that you think might work.

Helping anyone who asks to the extent you can.

That's basically the way I approach it.

>> The jobs that you do and what you want to focus on.

Do you feel your plate is full now?

>> Yes, my plate is pretty full.

I'm UN's Special Envoy.

I like saying that.

Not just an envoy, Special Envoyon Climate Change .

A $1 a year.

They owe me $3.

Don't work for the UN.

Or someone donate to the UN.

So they can pay their special envoys.

That is a huge privilege / responsibility.

It's a defined objective but an undefined role--how you do it.

So I focus on helping to organize the financial sector.

So every financial decision takes climate change in account.

Sometimes it's decisive or just of interest.

But always thinks about how this investment or loan-- does it bring us closer to that goal or farther away?

>> You spent a chapter in your book on humility.

Which isn't a word most people would assign to politicians, central bankers-- you know, big important people.

>> I try to go through in the book, some of the core values we talked about--a number of them.

I think humility always does come in.

To be clear, humility doesn't mean to be passive, in the end.

We shouldn't be incapacitated by humility.

Humility, if I'm a central banker risk manager, I'm thinking about what can go wrong?

Recognize and plan for failure, literally.

So when these shocks happen-- climate, COVID, financial, you're ready for it.

>> The final question for these interviews is always, what does being Canadian mean to you?

>> I think it means virtually everything we've talked about-- when I think about it.

No disrespect to...Fort Smith but start from relatively humble beginnings.

Sense of perseverance which is the town motto.

Sense of community.

I'm the beneficiary of public education, health care, public attitudes.

A real sense of being in it together.

Canada's the world.

The world is in Canada.

Yet we're all Canadian and have that shared sense.

It pretty much means everything.

>> Thank you so much.

>> It's been a pleasure talking to you.

>> My pleasure >> And we'll be back next week with another episode of Canada Files .

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