Debating Whether Climate Risk Is Already Priced In

ESG is constantly evolving. Over the years, it has shifted from socially responsible investing to impact to sustainable finance. While the terminology continues to change, what hasn't changed are the underlying science, market pressures, tangible physical and financial impacts of the climate crisis, as well as increasing regulatory scrutiny and rising consumer expectations. We aim to filter out the noise by speaking with industry experts to identify what is really driving value. Welcome to ESG Currents, brought to you by Bloomberg Intelligence. Today, on ESG Currents, we're changing up the format and Oxford's style debate around the motion to the extent that matters for investors. Climate risk is already priced in. If markets are efficient, climate risk should already be reflected in asset prices and investors can rely on price signals. If it isn't, investors may be misallocating capital at scale and facing stranded assets and potentially abrupt disorderly repricing. This is not a debate around climate science or about climate politics. It is a debate about financial markets, risk, valuation and whether climate exposure is already reflected in prices today. I am Grace Osborne, the Mayor of ESG integration analyst and your host for this episode. Speaking for the motion is Dr. Jacob Tommey, co-founder and CEO of Theor Finance Labs, where he has helped develop sustainability tools including Pacta and asset impact. He is also research director of the Neavitful Policy Response and Professor and Practice at SoS University of London, author of two books on sustainability and writes a monthly column for responsible investor. Speaking against the motion is Dr. Ben Kordekut, the founding director of the Oxford Sustainable Finance Group and coordinating lead author on finance for the IPCC's seventh assessment report. Ben chairs the advisory group of the International Transition Plan Network, advising institutions managing trillions in assets across every major asset class and brings a global perspective on how capital markets are responding to climate risk. Each side will deliver opening statements followed by rebuttals, cross examination and closing remarks. I will intervene to keep us focused and within time. Let's begin. Jacob, the floor is yours. Thanks and thanks for the opportunity to speak here. And the Oxford style debate pattern and tradition. It's my job not just to make the case for the motion but also to define it. And I think today in particular that's going to be very, very key. So just to sort of set the terms of the conversation. First of all, obviously this is on Bloomberg. And so what we're really caring about is whether it's price to the extent that matters for investors. We're not saying that everyone out there in the world is thinking about climate change the right way. We're not saying that all the economic assets or all economic activity is taking this into account. We know there's still people buying water from properties. They might not be on top of the topic yet. But we're looking at financial markets and vices and where they're pricing right. So let's just make sure we're clear on that first matter. The second is we're not asking about whether in a doomsday scenario we might see some repricing right. So we're not asking if an alien invasion tomorrow happens all financial markets where repriced doesn't mean it was misprice today the probability of an alien invasion right. We're just looking at given what we know about the climate science is a correctly price or not. And then that gets me to the third point. What do we mean with climate risk. And of course we're here really straddling two parts of the conversation. One of them is the risk from climate change impacts on the economy what we'd normally call physical risk. And then on the flip side we're also trying to figure out what the risk is if we're trying to prevent those risks from happening the first place. Which we normally call transition risk. And obviously that makes my job a bit harder because I have to make the case that both these risks are price but as I hope listeners will appreciate once I'm through with my side of the conversation will all agree that indeed that is the case risk our price. So let me start with the case of why the motion is correct. First of all we obviously know that for many sustainability professionals modern portfolio theory is an impossible word. But this is really the foundation for the case here is that markets are correctly pricing these risks. And of course the core condition for that to be the case is that markets need information. And anybody who's sort of subscribe to Bloomberg or any other publication will not have missed the fact that climate change is real that the transition is happening. Whatever your view on the climate science as you said in introductory remarks we can see evidence of the climate changing investors are exposed to that information where they believe it or not will get into in a minute but there's no informational gap here anymore right we see the state of play. And it is very clear from the evidence that investors are reflecting that state of play what was the best performing sector in 2025 better than tech better than anything else it was the green sector green technologies best performing sector according to Jeffries in 2025. What about the insurance companies spiking insurance premium climate risk regions with drawing all together. It seems like they're on top of the topic as well and we've got a world of academic research suggesting that climate risk are reflected ECB is just published something about the European central bank we've got so us in imperial college who've done a study showing that country sovereign risk exposure is linked or sovereign pricing is linked to the climate risk that they're exposed to. The fact of the matter is it's just not 2010 or 2015 anymore maybe I would have had a harder job making a case 10 15 years ago but the information is there now the carbon bubble is not still around the corner we've seen the growth in renewal bulls we've seen all these explosive trends and so I would say that investors are pricing. Now of course there's going to be some listeners out there is going to say how could you possibly make that case you know Armageddon is around the corner we've got the doomsday glacier we've got Amazon dieback we're sitting here in London we've got the ocean current collapsing any day now and putting London on our mile of ice sure all these scenarios are out there but for one they are very long term scenarios and as we all know financial markets are not so much. And two we're not looking at these probabilities these low probabilities as the central case and as we know from our pricing if something has a 1% or 0.1% probability even if it's an extreme event it's just not going to move financial prices massively. The other thing I'll say and then close with this thought is we've actually asked investors what they think this is some sort of a mystery of voodoo let's sort of read a crystal ball or read the tarot cards we ran a survey we work we have this climate forecasting project called inevitable policy response last year we surveyed over 100 investors we surveyed over 300 experts around the world and we asked them what did they think the transition would look like and they're not the only thing that we can do is we can do that. And they're not believing in a world anymore where there is no economic transition again whatever your view on the climate science they don't believe in the 1.5 degree goal that's for sure but they also don't believe in a world anymore where nothing else happens we know that 1/2 degrees is off the table but when we actually plugged their views into our risk models and showed what kind of repricing would happen if they were wrong the risk from the power sector went down to 1%. Now if been on the other side is going to make the case that 1% is mispricing to the extent that's material for investors then fine I think I'll lose this debate but otherwise I think I've got the facts on my side thank you Jacob so to summarize markets are correctly pricing this risk the transition is happening and investors are fully exposed to the information needed to reflect the state of play and with that our hand over to Ben for his position against this motion is 1% risk even did it is just 1% risk and mispricing to the extent that. It is material to the investor great well thank you grace and thank you Jacob and I think you will lose Jacob and I have a great deal of respect for your work and the work of the finance labs but I think you have set yourself an impossible task today and let me explain why the motion is to the extent that it matters for investors climate risk is already priced in and so to win the debate Jacob must convince you that all climate related risk is going to be a big risk for you to be able to do that. I think you will be able to convince you that all climate related risks that matter for investors are already priced in across all markets for all investors all the time my task is much easier. I need only show that some material climate risks are not currently priced in by some investors some of the time if markets are anything short of perfectly efficient on climate the motion falls at that first hurdle. I think there is a symmetry at the heart of this debate and I believe that proposition has already fallen at that first hurdle but obviously we want to keep this a bit more interesting. I am going to draw on findings from the European Central Bank the Bank of England and the Bank for International settlements to show that the institutions that supervise the global financial system have reached the opposite conclusion to the motion the opposite conclusion to Jacob and the proposition. I am also going to use the proposition's own research to make the case against their motion. There are structural reasons why capital markets are poorly equipped to price climate risks these are not temporary inefficiencies that are going to self correct their features related to how markets work. So first climate risk does involve deep uncertainty not the kind of uncertainty markets handle well this is not coin flip uncertainty with known distributions but ambiguous probabilities contested by our distributions are nonlinear dynamics where uncertainty is this deep markets either attached the wrong prices or apply discount rates that very long tell losses that is not priced in. Second, investment mandates, benchmarks, and career risk, shorten investor horizons. A pension fund CIO who knows that coastal real estate will be impaired over 20 years, still faces a benchmark measured over 12 months. Long dated for suitable risks are systematically discounted away. And when the repricing does come, it comes all at once because physical climate shocks and policy shifts hit many portfolios simultaneously. You cannot diversify away from climate risk. Now, let me move to some of the evidence I mentioned before. So the ECB, the European Central Bank, in 2022 did a climate risk stress test and found that 80% of significant eurozone banks at either basic or no climate related risk management practices in place. What followed was not reassurance that markets were going to self-correct. What's happened is that there's been a multi-year enforcement escalation. In March 2023, the ECB issued binding supervisory decisions to 28 banks that had failed to manage climate related risks with the threat of penalties to be enforced afterwards. In November 2025, the ECB issued its first climate related risk fine against a banker. In February of this year, it fined credit agriculture, 7.6 million for the same failure. And the ECB has, as of January this year, formally embedded climate and nature-related risks into its core supervisory and monetary policy functions. So if climate risk were already priced in, the supervisor of the eurozone banking system would not be issuing binding decisions, imposing fines and restructuring its own operations to address it. And that progression from 2022 highlights widespread in adequacy across the financial system, particularly the banking system. The Bank of England found something similar in its climate by an export tree scenario. And there, it found that firms were assessing climate risk for counter parties and finding wildly different results for the amount of climate risks that the counter parties face by a factor of 10 for the same borrower. And that highlights, again, some of the issues here in relation to supervised firms pricing these things. The Bank of International settlements, they published a study last year focused on sovereign bonds and physical risk. They found that transition risk is associated with high sovereign yields, particularly for high-mitting countries. But they found that physical risk was not being priced into sovereign borrowing costs at all. And given that sovereign bonds are the bedrock of the global financial system, they're the benchmark for interest rates, influence the pricing of every other asset class, the most liquid asset. That is a very significant gap and shows why this motion can't hold. I mentioned Jacob's own work, excellent work, which I agree with strongly. But fear his organization published research from their 1 in 1,000 initiative showing that once you incorporate climate tipping points, ecosystem decline, and social risks into financial stress scenarios, the losses in equity markets from climate change could be amplified by a factor of 2.5 to 3.5 times compared to standard estimates. So Jacob's own shop says that standard models may be underestimating climate-related financial losses by a factor of 2.5 to 3.5. And if that's right, clearly the motion does not stand. So where does that leave us and just to close? So the proposition must defend the world where every material climate risk is already priced in, for every investor everywhere all the time. That's obviously a hard thing to demonstrate. Jacob hasn't demonstrated that. Unfortunately, that is not the world we live in. We live in a world where the ECB, the Bank of England, the BIS have found that these things are not being priced in. There's lots of other research I could cite as well. The proposition's own organization has said this too. And then it's also worth just remembering too that there are climate risks that not even the best research groups in the scientific community fully understand or can properly model tipping points, cascading hazards, compounding events. You can't actually price some of these things. There are unknown unknowns and unknown unknowns. So I think with that, it's very clear that the motion fails. And sorry, Jacob. Thank you, Ben. OK, Jacob. So are you now convinced that climate risks are in fact not fully priced in? Given your own research, house, their finance labs, one in 1,000 initiatives. Essentially, once you incorporate climate tipping points, ecosystem decline and social risks into the financial stress scenarios, the losses in equity markets from climate change could be amplified by a factor of 2.5 to 3.5 compared to standard estimates. Is this enough to change your mind? So Ben's obviously delivered the knockout blow. As in, he's self-respecting. Research analysts will tell you the moment they get cited. They go into a state of shock and paralysis and immediately feel compelled to agree with the counterpart. No, indeed, I am not fully convinced. Despite Ben's eloquently citing our own research, we're just a small thing, tank the little engine that could. But Ben works for Oxford, obviously. And that's where the real research happens. And the real work is done. And he cited so many wonderful studies, but not the one that his shop put forward that did show how much cost of capital had now shifted in favor of green technologies. And how that had really fundamentally transformed as sort of from a risk-premier perspective in particular over the last couple years. I just wanted to interrogate maybe two or three points that been highlighted. And also that I feel like the audience should really try and reflect upon as they think about where they stand on this motion. So I think the first thing is the idea that to believe that climate risk or mispriced, you have to believe that all investors are pricing climate risk. I just don't think that's the right way to think about it. If you said to me now that if you take AI or any other risk, well, there's a handful of investors who are not really on top of the AI trend. And that means the AI dynamic is not properly reflected. We wouldn't really think about it like that. What we're just saying is that when this big market, there are a lot of many players in the market. They have a lot of many different views. And all these players do have the informational access, not the least things to Bloomberg, I should say, not getting paid for this shout out, that about the climate issues we're talking about. And the fact that some of them are choosing to ignore them doesn't mean it's mispriced. It just means that they've concluded that that information is not material for pricing. Then we don't accept, expect or accept that for things to be properly priced, every investor has to agree that's a material risk. And every investor has to integrate it or in fact integrate it in the same exact way. There's I think one area to interrogate. The second one is about this radical uncertainty. And I have something sympathy for that. For sure, especially as we're thinking about the world more broadly, it feels like when have it things been more uncertain than they have been today, name your topic of choice over the last couple of months. But actually, I think on this topic, a lot of the uncertainties gone away. And on the one hand, on the transition side, obviously in particular, we really know where these green technologies are going and know the trajectory of them. And so there's obviously some risk profiles in different assumptions. But I don't think people would talk about uncertainty when it comes to that topic anymore. And on the physical risk profile, I mean, sure, 20 years, 30 years, 40 years, but insurance companies are writing one year insurance contracts. We've got short term, return-prose, return-profiles that we're working towards. And I don't think it's true that over the next three to five years, we have radical uncertainty when it comes to physical risk, for example. It doesn't mean that there may not be tail events. We could see in the next couple of years a dramatic shift in some of the tipping points been highlighted, some of the social dynamics to been highlighted. But again, from the distribution of a pricing perspective, that is sort of in the normal order of things. And just because a tail event materializes, doesn't mean we were wrong about thinking of it as a tail event exantist. So I think those two areas in particular are really when investors try and think about whether they think it's price now or not after this conversation we're having. I think they need to kind of wrap the head around. Yeah, good points, Jacob. I might just come back on some of them. And I think obviously it was a difficult notion, meanly set by Bloomberg. And obviously we can agree. You're just buttering me up, Ben. I'm not talking for it. You know, investors are increasingly pricing these risks and have the means to do so. But I think the way you are characterizing it, that investors are kind of going through a process and then deciding to not price these risks. I don't think is right. I think there might be some investors that are doing that. I think there are all sorts of reasons why institutions have found it hard to think about this systematically and kind of exclude it from their risk pricing processes. I mean, I think that's harder to say for large regulated firms, for example, in Europe. But I think you could point to all sorts of financial institutions around the world where they haven't gone through some sort of systematic process to go, no, we're discounting the risk to see the risk. They're like investment committee going north. This, please. Although perhaps in the states in some cases, I'm with you. Yeah, exactly. And then I think you'll point around institutions going to have investors, they're going to have very different views, right? And they can disagree. And of course, that's what happens in markets, clearly. I think there's a sort of a view sometimes promoted by NGOs and others that sort of thing. That there is some single version of the truth when it comes out of time and risk. And everyone wants to adopt that. Yeah, that's not true. Maybe just one more thought and, you know, I'm going to tear, break up the former just tiny little bit. But one of the key points, obviously, in the motion is that the word climate risk specifically, right? And I sort of somewhat loose in the beginning said, you know, it's the impact of climate change directly. But I think a lot of the areas where probably investors are the least equipped to think about it are those second order effects that you talked about in my research as well, right? And you sort of pulled that into climate risk because they're driven by climate change, right? If we're thinking about resource conflicts, if we're thinking about climate related migration patterns, even if we're just thinking about political conflicts around the transition, you know, the extent to which that dominates the political dynamic, you know, the anti net zero, pro net zero forces, adage us with others, throats and many Western democracies now. And that obviously leads to reduction, social cohesion, all these second order effects. And I think that's the area where investors are clearly not on top of the topic, I would say. There is no evidence whatsoever that these second order effects are really well captured. You know, my, I can defend the motion by saying, well, those aren't climate risk in the narrow sense of the term. Those are the social risks. Those are other types of risk. But that's obviously the area where, you know, if you're thinking about climate risk, just as a matter of a storm, a flood, you know, we have these flood and storm maps, we have insurances responding to them. We see some pricing. Is it enough or not? Who's to say? But, you know, there is clearly some investor response to these realities and evaluation of these realities from a financial perspective, not a political perspective, not an ideological perspective, but in the overwhelming majority of cases from a financial perspective, where that falls apart is that moment when we're thinking about, right, if we do have habitability thresholds in India that are being crossed, if we have, you know, some of the conflicts around land and food security that are now come arising, potentially, as a result of climate change, where those things materialize. We're in absolutely uncharted territories and we're not really in tail risk territories because it's worth reminding ourselves that the Arab Spring was started by a food seller and a food seller responding to the conflicts around food security and food prices and those kind of dynamics, right? And so if we agree on the motion being climate in the second order social effects, I'll pull the white flag, but those are different things. And so in the narrow sense, I think when we're just talking about climate in the narrow sense, I actually think investors have really changed the way they think about this topic. So perhaps the way we define climate risks directly shapes whether we think it's being effectively priced in by investors. The more we expand that definition, particularly to include second order and seismic events, potentially the harder it's becoming to see that this risk is fully reflected in the markets. I think another interesting lens is the temporal considerations and how climate has been priced in. Both of you, I think, have touched on this but in quite different ways. Jacob, you pointed to emerging alpha and green technology, suggesting some kind of forward looking pricing of the opportunity. And Ben, on the other hand, you've emphasized that kind of shorter term investor perspective. Many risks still aren't there for being priced in. And Jacob, your point about the challenges of second order effects, things like food insecurity as not being fully captured seems to reinforce that gap. I'm curious, is this kind of where the fundamental mismatch lies effectively pricing climate risk requiring kind of a medium to long term horizon? Yeah, so much of the financial system remains structurally short term. And this creates kind of a disconnect between where risks and opportunities actually sit and where the capital is willing to go. So maybe this raises the question of whether we need more fundamental financial innovation to bridge that gap. So we take something like natural capital investments like mangroves, we know that they are a phenomenal asset for building resilience to physical risks and mitigating climate change through climate sequestration. But from an investor perspective, the profile is quite challenging. I think it can take around returns, take around seven years to materialize. And outcomes are quite uncertain on average. We see half of every $1 spent going into a mangrove project that fails. So on the face of this, it's not a great investment prospect. And by contrast to this, if we were converting that land for development, it may offer kind of faster, more predictable returns, even though it ignores the significant economic losses associated with removing natural protection systems. And I think this is where things like blended finance comes in, de-risking projects and making them more attractive to private capital. So perhaps kind of a broader question remains, do we need to fundamentally rethink and innovate within our investments structures if we're really serious about properly pricing in climate risk? We'll just jump in on that. I think a lot of people talk about blended finance. And what they're really talking about is transferring risk from the private sector to the public sector. And obviously, private investors are generally quite happy to do that and want to promote that. Now the question for the public sector is, well, what are we getting for taking on that risk? And is it proportionate? Is there a good value for money here? And there are going to be cases where that's true, and they're going to be cases where it's not true. But I think kind of pointing to blended finance and saying that that's the solution. I think it can be a solution for some things, particularly investments where there's significant positive externalities, right? So significant adaptation benefits, for example, where you have second and third order, you're avoiding second and third order negative effects or you're generating positive externalities. And nature-based solutions might be one of those things, for example, where it makes a lot of sense. But policy makers need to be quite as stupe and aware of the capacity of private investors to advocate for more risk transfer. I mean, I think on the time horizon point, agree with you on the blended finance point. This is the moment where the podcast gets boring because we're now starting agreeing with each other. No, not to worry. But on the time horizon point, you know, it's, I go back and forth on this at the moment. It just feels some days that everyone has now decided that climate and sustainability is out. And that suggests to me a very short term lens, because, you know, from a pure semantic point of sustainability, just another way of saying able to sustain yourself, that feels like it should still be important. And, you know, America, some American pun is like to say, facts don't care about your feelings. Well, the climate doesn't care about your feelings neither as we're finding out. But then on the other hand, you know, we are seeing still a lot of renewable deployment. And actually, when we run these forecasts with investors, where we go really inside the organization, figure out what they think about the transition, there's still quite a decent amount of optimism about medium to long-term trends. So it's like I said, I to be honest, I'm kind of going back and forth on this at the moment, because at least the noise on climate acts like there is no tomorrow, and not in the sense that climate is taking tomorrow away, but acts like whatever is happening in the White House and on Capitol Hill right now is a global truth about how we should feel about sustainability. But this signal does suggest that we are not entirely prisoners of the moment. And then that makes me, I don't know, hopefuls the right word, but at least hopeful to the extent that we, that we're not just short, short, short, short, short, short, short term, all the, all the, all the, all the time. Yeah, I think it's interesting, the time lags, whatever you're investing in, perhaps where you're investing in transition, where you may need substantial upfront capital expenditure. I think of something like the cement industry where they're investing vast amounts into carbon capture. But actually, those players that have invested, say, companies like Hyderberg and Hulsam have significantly outformed. I believe Hulsam is up about 60% in the last year, and that has had a time lag on it. And of course, the regulatory infrastructure of things like European emissions trading schemes with carbon prices had made this investment make sense in the short term. And Ben, you mentioned the role of regulatory enforcement in order for climate risk to be priced in. So I'm curious, do we need to create kind of regulatory transition risk in order for physical risk to be fully priced in, unprisoned climate ineffectively? I mean, I think it's an interesting point you make because if we take, you talk about the cost of capital, obviously, and you know, it's one of the reasons why folks are concerned about political instability is even if it dries up the oil price, it also might drive up inflation and by extension interest rates and by extension cost of capital. But I think we've kind of become accustomed to this idea and finance that we're sort of just the enabler, the sort of second fiddle to carbon taxes or to climate policies. And we just kind of got to wait for these climate policies to sort of give us the incentives to Ben's point earlier for policymakers to do their thing. And a lot of what we're looking at on the deal side, obviously, is just that the cost of capital is the killer that these are. you know, cost competitive, but the trouble is you have such high up front costs that when you're not looking just at the levelized cost of electricity or whatever the long term marginal cost of the product, but when you're looking at it from an investment case perspective and investment thesis perspective. The capital costs are just the killer and so that might mean that as we think about, you know, this topic moving forward. Actually, the primary determinant of whether some of the transition dynamics we're seeing right now will hold will be the extent to which central banks and financial markets are going to define costs of capital levels that are going to be viable for these investments to go ahead. And that won't be determined by the level of climate policy, but that will be determined by the level of political stability that will obviously be determined by the debate we just had about the extent to which people believe in the transition and believe in these technologies and it will be determined by financial regulation starting with monetary policy, but also a lot of the different conversations we've had been highlighted the enforcement actions against European banks and the sort of every the infrastructure around monetary policy that determines. The conditions of financial market participants. Yeah, I mean a key KPI, you know, is our our risk premier for clean energy technology is going down over time. And you know, part of that is as Jacob pointed out, you know, policy story. Part of that's also learning curves within finance, you know, financial institutions becoming familiar with new technologies, getting the deals, getting the pipelines and that also reduces risk premier. So that's important. I mean, these are things we actually track through an ongoing kind of observatory type tracking project that we have at Oxford for different energy technologies across the world looking at how risk premier are changing. I think the other thing, the other point just to pick up on was, you know, feels like climate sustainability is out. I mean, I think so I think you said that Jacob, I think there's a there's a, you know, I think we can get too focused on the equity market story. And then you miss out the kind of all the structural stuff that's that's going on and it is very easy to do that. So I obviously I would encourage people to focus on the structural drivers. And they're not going, they're not definitely an all going away. The signals are getting stronger and stronger. And I mean, sometimes I think this is sort of seen as a wolf and sheep's clothing dynamic, but the reality of the matter is is that the truth for a lot of sustainability solutions is to have a lower resource footprint. That's kind of comes with the territory for many sustainability themes we're talking about on the social side it comes with having just more stable and productive workforce right. So these things, you know, it's sort of there's always this debate about sustainability sort of good for business, good for the planet. And you know, we can debate about this till the cows come home, but in the very concrete realities of running your business trying to identify areas where you can be more efficient, trying to identify the areas where you can be less dependent on many of these resource commodities that are major sustainability risk drivers and have major externalities is in this day and age in 2020. The year of our Lord 2026 probably more sensible than ever, whether you like sustainability or not, whether you think it means that you're saving the planet while you're doing it or not. Simply sort of being ideological about rejecting that is the same kind of ideology for honest that sometimes exist or sometimes the sustainability tree hoggers are accused of right. And I don't know how productive that is for for investors and companies, whatever the political wins in whichever way they're blowing. I think it's interesting to about identifying those risks and touching something said earlier that we investors have the data and they're choosing not to use it and they're not ignorant to the risks. This is the part of the podcast where we pivot to the Bloomberg terminal. I think that is a very interesting point. One thing we were looking at recently is banks exposure to water stress and we didn't know this is of all the European banks 20 European banks and looked at eight very highly water intensive sectors. And then not only what is the water consumption that's being financed, but what is the water stress exposure and of those borrowers of those banks 16% of disclosing their water stress exposure. So how effectively can these banks maybe price that into their loans or just see that impact once it's already materialized through the water stress. This is interesting, Ben, you mentioned that we saw credit, agriculture in February have the 7.6 million euro fine from the ECB. So we are seeing financial implications from fines, but this might be much smaller magnitude than for example, a default on a 700 million euro loan due to disrupted operations or fully stranded assets due to water stress. I'm really curious if there is actually a factor oversight of risk that actually enables investors to price and climate risk. I mean, we've got two countervailing forces right now on the one hand, we all know research budgets are going down research capabilities are going down time and resources for these topics are going down. So I just say sustainability, right, but for, you know, if you talk to any bank and about the time they have to assess the loan and to assess where the process and the loan is obviously it's a very different world. It's bulk business. So, you know, the idea that this topic gets elevated in this sort of very short window that you have to assess these things is definitely currently can be questioned. On the other hand, we have more technology and capabilities never to assess these risk. Ben and I, we've been working on questions of asset level data for 10 years. And, you know, the idea that we're sustainability data comes from is your neat sustainability report with the children dancing around the school or the polar bear hugging a penguin. You know, that's sort of a little bit that's very 2015, I would say. The smart investors don't really use the sustainability reports. They use asset level data. They use crowd intelligence. They use obviously artificial intelligence and all the different things that come with these new tools. So we'll see kind of where that settles, I would say. And we'll see to what extent there continues to be a premium on being the smartest in the room. And if there is a premium for that, then especially on the topic like water stress where it's such a clear financial driver, right? These high exposed sectors that you're talking about, they're not like, you know, water cooler companies where you need the water cooler full of water so people can have chats about the rugby from the weekend. They need the water to run their business. And if they don't have the water, they can't run their business. And this is going to be something that, like I said, the smartest people in the room are going to assess. And where they don't necessarily are not necessarily just going to rely on some corporate disclosure, but going to rely on these. These new technologies to get a holistic view on the matter. Yeah, you know, I think Jacob's right to highlight some of these new technologies and, you know, the potential to deploy them quickly and effectively has grown very, very significantly with with AI. But I do think the future large part of the future financial analysis is geospatial and properly integrating geospatial data sets asset level data sets, but also other geospatial, especially determined data sets into financial decisions in a much more consistent way. And so I do think financial and this whether they're people or AI agents are going to need those capabilities. But you do need to do a lot of the kind of Jacob knows, you know, you need to do a lot of the kind of the grunt work at the beginning to make those data sets useful. So it's all very well having great asset level data. But if you don't know who owns the assets, then you can't link that back to securities. And that's. It has been very painful manual work, but AI makes that potentially much, much quicker. Yes, AI. We're hitting checking all the boxes. We reference the Bloomberg terminal, we reference AI and we disagreed. I mean, really, when are we back next week? Well, thank you both so much for joining us. We're absolutely fantastic to hear you debate the motion. And we'd be very curious to hear the audiences view. Do you believe that climate investors have priced in climate risk? Feel free to reach out to us on ESG currents at bloomberg.net or of course, IBS on the Bloomberg terminal. You can find more information on the cost of climate using the bi carbon damages tracker on bi ESG on the Bloomberg terminal. [MUSIC]