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TRANSCRIPT: Reuters
Newsmaker Event with World Bank
Group President Jim Yong Kim
June 19, 2013


World Bank Group President Jim Yong Kim, President and CEO of Thomson Reuters
James Smith, and President and Editor-in-Chief of Thomson Reuters Steve Adler
London, United Kingdom

Transcript

MR. SMITH: Good morning. We’re honored to have Dr. Kim as our guest this morning and
he comes here directly from attending the G8 meeting in Northern Ireland. This is President
Jim Yong Kim’s first major public event in London since he was appointed World Bank
Group President last year. This Newsmaker coincides with the release of an important new
World Bank report on climate change. There are hard copies of the report outside of the
auditorium and memory sticks on all the seats in the auditorium.


Dr. Kim’s made tackling climate change one of his priorities for the World Bank Group and
he’s called it a “fundamental threat to economic development and the fight against poverty.�
As he nears the end of his first year in office, Kim’s developing a new strategy for the World
Bank Group: to be put to the board at the annual meetings in Washington in October of this
year. This strategy will be based on two guiding goals for the organization: One, the end of
extreme poverty by 2030; and secondly, ensuring shared prosperity by boosting the
incomes of the bottom 40% of the population in each country.

We're pleased to have him with us here today and we’re pleased to be at the center of the
discussion at such an important time in the world. With that, I’ll turn it over to Dr. Kim.

DR. KIM: Thank you very much. It’s great to be here and I’d just - to begin with, let me
apologize, I’m fighting a bit of a cold and so you may have seen me popping – those are
throat lozenges, nothing else, I just want to let you know. I’m pleased to be here today to
release our new climate change report called “Climate Extremes: Regional Impacts and the
Case for Resilience�. Last year, we published a report on the challenges we’d be facing if
the global temperature rose to 4 degrees Celsius above pre-industrial levels. As you are
aware, 4 degrees Celsius presents us with a world of extremes that must be avoided at all
costs. Today for the second report, we asked scientists at the Potsdam Institute for Climate
Impact Research and Climate Analytics to prepare a climate forecast for a range of
temperatures up to 4 degrees Celsius with a special focus on 2 degrees Celsius. We asked
them to drill down for a detailed look at three regions: Sub-Saharan Africa, South Asia and
Southeast Asia because climate change will affect regions differently and because a 2-
degree Celsius world will disproportionately hurt the poorest.


The conclusions in this report should make all of us lose sleep over what our world will look
like in our lifetimes. The conclusions are clear. A world that warms by 2 degrees Celsius,
perhaps in just 20 or 30 years will cause vast parts of Africa, African croplands to wither,
submerge large swaths of cities in South Asia and kill off much of the fisheries in some
parts of Southeast Asia. We must do all that we can to avoid these catastrophes. This
report tells us that talking about climate change averages obscures the real dangers ahead.
It tells us that the rise of temperatures by a little over 1 degree Celsius on average is not a
matter of slightly warmer days. A 1-degree Celsius difference means that the world, for
instance, will start processing water much differently which will lead to shortages of water in
some places, flooding in other areas as well as more cyclones in still more areas.

Consider these forecasts in the report. In Sub-Saharan Africa by the 2030s, drought and
heat will leave 40% of the land now growing maize unable to support the crop any longer. In
South Asia, shifting rain patterns will leave some areas underwater and others without
enough water for power generation, agriculture or drinking. Sea level rise coupled with more
intense tropical cyclones could mean extensive flooding in coastal areas of Bangladesh as
well as in cities such as Kolkata and Mumbai. In Southeast Asia, at 2 degrees Celsius,
maximum fish catch will decline by 50% in the Southern Philippines. Loss of the coral reefs
would diminish tourism, reduce fish stocks, and leave coastal communities more vulnerable
to less frequent but increasingly violent storms. Across our regions, the growing movement
of impacted communities into urban areas could lead to ever higher numbers of people in
slums and other informal settlements being exposed to heat waves, flooding, mudslides and
epidemics of disease. This is a 2-degree Celsius world. It’s coming unless world leaders do
something about it. At the World Bank Group we’re doing everything we can to avoid a 2-
degree Celsius world in light of these and other findings on climate change, every project
that we do now will be informed by analysis that spells out any impact on climate change.
We are developing tools that help countries better assess and adapt to climate change,
including greenhouse gas emissions tracking, helping countries become more energy-
efficient and advising them on building more climate-resilient infrastructure. We’re working
with partners on building low-carbon climate-resilient cities, transforming the way we farm to
maximize productivity and resilience and doubling global renewable energy and efficiency.
And we can’t ignore the financing challenge. The world needs to find innovative ways to set
an appropriate price on carbon and roll back fossil fuel subsidies. If we can get prices right,
we can redirect finance to low carbon growth, lessen the chances of a 2-degree warming
and avoid a 4-degree world.

I hope this report will help convince leaders that the benefits of strong, early action on
climate change far outweigh the costs. Our successes and failures in this fight against
climate change will, in my view, define our generation. Thank you.

MR. ADLER: Well thank you, Dr. Kim. It’s great to have you here.


DR. KIM: Thanks, Steve.


MR. ADLER: You all probably know Dr. Kim's extraordinary credentials as a doctor, as an
anthropologist, a co-founder of Partners in Health, was recently President of Dartmouth
College. You may not know that he was the quarterback – this is important to people who
know American football – he was the quarterback of his high school football team in
Muscatine, Iowa and he was also point guard on the basketball team. So you immediately
know that the leadership skills started very, very early.


DR. KIM: Well don’t be too impressed, our football team lost every game and we had the
longest losing streak in the nation, 56 games in a row. So it was a multi-generational losing
streak.


MR. ADLER: It was a better introduction if you hadn’t said that. So again, let’s – since you
are just back from the G8 and I think everybody was very interested in what happened at
the G8, probably the most enduring image from the G8 is that wonderful Reuters photo of
Presidents Putin and Obama sitting there which has got to be a textbook study of the
meaning of body language because it's quite extraordinary. But one thing that did come out
that didn't actually get a lot of publicity was that the G8, in its communiqué, did endorse the
signing of a greenhouse gas emissions pact by 2015. How significant is it that the G8
supported it and Russia's going to be very important and that other emerging countries? Do
you think we're really heading towards that type of agreement?


DR. KIM: Well I sure hope so, Steve. In the United States, of course, now that you
mentioned it, of course President Obama's been very clear especially in his second term
that he's going to tackle this problem. John Kerry, the Secretary of State is probably the
champion previously in the House and the Senate on tackling climate change. So we have
a lot of hope that the United States is stepping forward. It's great that the G8 endorsed a
real movement, I think, toward a global agreement. The other country that I think has moved
a lot even in six months is China. I mean they have introduced some really aggressive, the
Shenzhen trading scheme, carbon trading scheme, they’re really serious about establishing
a national carbon market. And in my recent talks with them, they said that this past winter
where the pollution was so bad and the figures are coming out, now 1.2 million people died
last year as a result of the pollution. I mean these folks - In China. This is the black carbon,
the so-called short-lived climate pollutants that have just wreaked havoc in China. And so
there’s a new spirit in China. The new government, I think, is really committed to tackling
climate change. And so if we can get the European countries, the United States and China
to agree to really tackle this issue, that’s the huge bulk of the issue. This is where we really
have to make progress.


MR. ADLER: So climate change still remains a controversial topic despite the fact that there
have been so many scientific reports like this one. And there was a report in May that came
out in Nature Geoscience that's gotten a lot of attention that suggests a slowing of global
warming in the last 14 years. And opponents are doing the types of things you support have
seized on that and said look, this is not a serious problem as people have said. What’s your
read of that report and how significant is it in shaping global opinion on the topic?


DR. KIM: The critical thing is that you can’t really look at the last 10 years which that report
- it was really a 10-year study. And the key is looking back from pre-industrial times through
now and looking at what the trends are. Because of that report, the scientists went back and
asked the question, so what did happen? Did it really slow down? What was really the
reason for it? And it turns out that much of the carbon was absorbed in the deep ocean. So
for example, what we're seeing is that greater acidity when carbon dioxide goes into water,
it turns into acid makes the water more acidic. And so that's what has happened. So
presumably, the ocean has a carrying capacity. At some point it's going to stop being able
to absorb the carbon. And then the thing that we're really worried about is that that might
have happened because the carbon was enough to have the water absorb it. And then at
some point it's going to stop. And so we could see then a really rapid increase in global
temperatures. The point is right now there is 97%, 98% agreement that human-caused
global warming is a reality. And so in my view, in medicine, there's almost nothing that I can
think of that has 97% or 98% agreement. And so it's, if you disagree with the science of
human-caused climate change, you're not disagreeing that there's human-caused- that
there's human anthropogenic climate change. What you're disagreeing with is science itself.
And as far as I know it's the best we got, that modern science is the best we have. And so I
think it's really the time to stop arguing whether it's real or not. The scientists agree and I
think the effects that we're seeing today are really quite real. We have to move on to start
thinking about what we can do to both mitigate and adapt to climate change.


MR. ADLER: I mean thinking about your report, it's really highly apocalyptic. And my sense
is that people don't respond that well to long range apocalyptic predictions. And we face it in
business, we face it in everything, the short term versus the long term. So how do you get
people to focus on something that appears to be off in the future when they're facing so
many immediate problems, the economy's struggling, all the issues we all face. Why should
people focus attention or how can we get them to focus attention?


DR. KIM: Part of what we're trying to do in this report is bring attention to it. But in bringing
attention to it, the other thing that we want to do is just to give people a sense that there are
things we can do right now. We need a global agreement. We need a global carbon market.
We need countries all over the world to remove fossil fuel subsidies but those are really
hard things to get to politically. In the meantime though, there are so many things we can do
and one of the things that we're trying to stress in this report and all of the work we're doing
is there's an opportunity right now to move toward renewable energies. There's great new
technology. There's an opportunity right now to build cleaner cities. There are cities all over
the world that have already made huge strides. For example in New York City, Mayor
Bloomberg said we're going to reduce our carbon footprint by 30% by 2030. They're going
to get there by 2017. And all the companies and the buildings and the people of New York
City have gotten together and moved much more quickly than anyone thought. I was just in
Delhi and it's an amazing sight to be behind a bus in Delhi. Now I've been to developing
countries all over the world and you just expect black stuff to be coming out of it. Nothing,
because the Supreme Court mandated that all buses and even the little puttputt
motorcycles have to run in natural gas. So Hong Kong decades ago decided they're going
to cut the number of cars in the city of Hong Kong by half in a pretty short period of time. So
there's things we can do right now, cleaner cities, renewable energy and climate-smart
agriculture is a term that’s thrown a lot these days. But there's tremendously exciting things
that are going on in ways of new forms of agriculture, new ways of terracing and protecting
the river banks - these kinds of interventions can have a huge impact on preserving the
environment and actually putting carbon back into the ground. We have to now get to the
stage where we're working everyday to do the small things that we can do right now and
then push our leaders to come to these global agreements.


MR. ADLER: So you don't think the small things taken together add up to enough to make
a big change. But in part what you're saying is if we see some results locally it might
encourage global leaders to take it more seriously?


DR. KIM: Let's just take one issue, the so-called short-lived climate pollutants- this is an
issue when she was Secretary of State, Hillary Clinton really championed. I mean these
have a huge impact and it's the black carbon that has had such an impact. So the black
carbon is doing a bunch of things. Right now these are inefficient coal-burning factors that
are spewing this black stuff in the air. We can decrease short-lived climate pollutants
dramatically in a short period of time. Here's what it's doing. First of all it's getting in
people's lungs and killing people. This is what we're seeing in China. But it's also going up
into the air and covering the snow-capped peaks of mountains and that by making them
darker it absorbs some light and it increases the melting. But if we can take action on those
right now, we can actually delay the rise of temperature to two degrees centigrade. So
these are not small things. If we can move rapidly to more renewables, if we can build
cleaner cities and if we can institute climate-smart agriculture everywhere, we can have a
very major impact on global warming and we can do it today and the real point Steve is that
this is not a bleak future where nobody's showering and no one has energy. This is a bright
future where people do have energy, people are living in economies that are growing but it'll
just be a lot cleaner.


MR. ADLER: Okay. Your report goes into so many different risks to growth from global
warming. It's a little hard to get your arms around kind of what are the most serious ones.
What are you most worried about? Is it water or is it the lack of water, is it too much water? I
mean if we can focus on kind of one major problem perhaps in one major place, just
illustrate what you're most concerned about.
DR. KIM: Climate scientists say that carbon is the currency of climate change, water is the
teeth. We're already seeing struggles and conflicts over access to water. This is what I'm
most worried about. The fundamental issue, Stephen, and one I wasn't really aware of
before coming into this job is that the earth is fundamentally handling water differently. The
jet stream has changed. The El Nino and La Nina effects are changing.


MR. ADLER: Is that why it rains here now all the time? Instead of most of the time?


DR. KIM: Well this is one of the recent findings, is that the very wet summers are related to
the way that the earth is handling water differently. What some of the climate deniers say is,
how can you tie a particular event to climate change. And that's not what we're saying.
We're not saying that a particular event and climate change are directly causing and
related. What we're saying is that the climate change scientists have predicted that extreme
weather events are going to increase in number. And so we are having- I can't- I've lost
count of the number of once in a lifetime events that have happened in the last two or three
years. Duh, there's something going on here folks. Once in a lifetime events all the time? So
this is what the prediction is. And so it's a hard thing because there's not a direct if I do this,
this will happen. It's a kind of collective solidarity that we have to exercise on behalf of our
children. But it's not just on behalf of our children. Let me just give you an example. By the
2030 or 2040, if we get to two degrees Celsius, Bangkok could be underwater. So if you
Steve are planning to retire in Bangkok which is a great place, you’d have to rethink your
plans. This is very real. I have a 12-year old, 13-year old son actually just had a birthday,
and 4-year old son. And for them, this is real. And I can just see it. My kids already I can
see the way they’re going to talk to me. They’re going to say, oh thanks Dad, you were
President of the World Bank, what did you do when you knew this was going to happen to
us, how could you have given us the world where we know that so many people who don’t
have water, where we know- just think about it. 40% of the land today used to grow maize in
Africa won’t be able to grow it anymore. This is huge. So the UK government I think very
rightly has focused on nutrition. And they focus really I think brilliantly on something called
stunting which is kids who are lower height for age, meaning they’re malnutrition has gone
on for a long time, chronic malnutrition. This is going to be everywhere. I mean we’re going
to have this problem everywhere. And so for us, now that we have set this goal of ending
poverty, there is no way we’re going to get there by 2030 unless we begin to tackle this
issue aggressively.
MR. ADLER: I mean it strikes me for the World Bank, you’re in an interesting position on
global warming because there are some things one can do for people that would not be
favorable for the global warming side. And in the past the World Bank has for example
promoted coal-based projects in countries that didn’t have enough electricity. That would
not seem to be good for the environment. On that sort of trade-off, where would you come
out on kind of the coal trade-off? And you’ll probably go to the subject of clean coal, so do
you really think there’s such a thing as clean coal?


DR. KIM: Let me put it this way. I have two seemingly impossible things to reconcile. But in
fact I think that they’re reconcilable in a lot of different ways. On the one hand, we’ve got to
fight climate change. But we know that the vast, vast majority of the climate pollutants
certainly historically but even today are coming from the United States, Europe and China.
Those are the three main sources of carbon. We have got to make progress there. That’s
really where most of it happens. And then we’ve got this other issue which is very real to us,
is that people need energy to grow in order to grow. So let me give you an example. The
great Ellen Johnson Sirleaf who was also at the G8 meeting, she became President in a
country that had been in war for decades. And so now they’ve had 10 years of peace. But
they have a total of 21 megawatts of installed electrical capacity. That’s nothing, that’s like a
couple of city blocks in London. And so when I met with her and every time I speak to her
she says to me, I need energy and I need energy so that we can get private sector
investment so that I can create jobs. She said to me, I have 39 year old men who’ve done
nothing but be soldiers their entire life, they need jobs or they’re going to pick up their guns
again. So this is very real for her. And so in Liberia, I’ve got to figure out a way of quickly
providing her the energy she needs to keep her people living, to attract the kind of private
sector investment that will create jobs that will keep people living and not fighting in the
jungle. She needs electricity for hospitals, for schools. This is very fundamental. So I’ve got
to weigh those two all the time. And, you know, there some– we know that there are coal-
burning plants that are incredibly dirty, and we know we can make them cleaner. It's never
going to be as clean as solar or wind, but we know for sure we can make them cleaner. So
if I have an opportunity to go into a setting and turn an extremely dirty coal-burning plant
into one that's cleaner in a country that's extremely poor and needs the energy, I'm going to
try everything I can to avoid investing in coal. We know that's the dirtiest form of energy. I'll
do everything I can not to invest in it, but I can't look Ellen Johnson certainly from the eye
and say because the West has been polluting and China has been polluting for so long,
you're going to have to wait. You're going to have to tell your people that they're not going
to have jobs, that they're not going to have electricity for the hospitals, they're not going to
have electricity for the schools. I can't do that so I've got to figure out a way in every single
case to balance those two too.


MR. ADLER: So let's turn away from this for a moment, from global warming, and talk
about a few other things. One of the things the World Bank does is it estimates growth both
in the world generally and in developing markets. And the latest report showed growth in
developing markets I think at 5.1% in 2013, going up to 5.7% in 2015. Is that good enough,
and what do you see as the main threats to growth going forward, particularly take a look at
the potential elimination of quantitative easing in the US and maybe what Japan is doing?


DR. KIM: One of the things before – I'd be happy to go there, one of the things that I'd say
and in every single G-20 finance ministers meeting, I've made the point that climate change
is a short-term, medium-term risk to the global economy. And, you know, people still think
it's about their grandkids. It's really not. It's right in front of us. So let me put that on the table
first. It's a real threat. You know, the developing countries, let me just give you an example.
I was at the Tokyo International Conference on African Development. It's a wonderful
meeting where there were I think 50 heads of state from Africa. And the Japanese people
have been extraordinarily generous over the years to Africa, so it was wonderful to see
them all get together. And as I was walking in, I was talking with my Vice President for
Africa Makhtar Diop who was the Former Finance Minister of Senegal, and he said, you
know today, as opposed to five years ago – these meetings happen every five years – what
a different story. Five years ago in 2008, the African heads of state walk into that meeting
and people were thinking, what on earth is going to happen to Africa now that the economic
crisis looks so bad right now? What on earth is going to happen then? What happened then
was over 5% growth throughout that period of time. And now they're walking into this
meeting confident. Not a single African country's in hyper inflation. They have done so
many things right. They in fact walked in saying look, you know, we have more fiscal space
than just about any other– we've created that fiscal space. We weathered the downturn very
well. We took these difficult measures in terms of fiscal consolidation years ago. We got the
macroeconomics right. And now, what we want most is investment. It was really incredible.
And so I think that’s one of the things that now we have to worry most about. What the
African leaders are saying is, in this age of very low interest rates, why is it so difficult to get
access to long-term capital for infrastructure? The BRICS countries are talking about a
BRICS bank. Of course I meet with them all the time. And what they tell me is, look, we
have $4.5 trillion of necessary infrastructure that we have to build in the next five years. And
even for us in these low interest rate times, we're having trouble finding long-term capital.
So it's not a surprise if they're talking about a BRICS bank. $4.5 trillion, and in the amount of
capital out there in the world that's so small. So that's the real concern, that as quantitative
easing slows down – and another real concern is if there was a sudden stop to quantitative
easing, the developing countries are really worried about access to capital. So that’s one of
the things we're working on. There's a huge infrastructure need, and we've got to begin to
meet it. So we're working on developing something we're calling the global infrastructure
facility, where we're not only putting our own money into infrastructure but we're trying to
illustrate for investors – I mean again in Tokyo, there's $1.3 trillion sitting on the sideline,
earning very low interest rates. And so I went around trying to say look, Africa's a great
investment. We've increased our own investment in Africa ten-fold in the last 10 years. And
there's a very, very good return to be made. Moreover, what I tell the investors in Tokyo,
was that you can have the most wonderful double bottom line, you can make a good return
on your investment and you can also provide electricity for people who desperately need it.
To go back to the Ellen Johnson story, not only does she only have 21 megawatts of
installed capacity, she pays 54 cents a kilowatt hour which is five times what they pay here
in London, five times. So what these investors could do is make a good return off of
investing in energy and, at the same time, increase access and reduce the price of
electricity in places like Liberia. But, you know, the Japanese investors were saying, we
don't know. Africa's so far away. One journalist, the top financial journalist in Japan asked
me a question, saying, Dr. Kim, how can you ask us to invest in Africa after what happened
in Algeria? The Japanese were involved in the incident in Algeria. They lost lives. And I
said, you know, Africa's not a country. It's a continent. And there are huge difference
between Algeria and other parts of Africa. I said there are even differences in the
investment climate between Northern Mali and Southern Mali. And one of the things that we
have to do a better job of doing at the World Bank is to say, look, we think that official
development in systems is really important, but it's $125 billion a year, Steve. And I just told
you the numbers, $4.5 trillion over five years, so $1 trillion a year almost just in the BRICS
countries in infrastructure need. $125 billion a year is not going to touch it. Now, ODA is
really critical. And what we're trying to do is to make our investments with IDA, our
concessional loan lender for the poorest, every time we invest these very precious funds
that come from Official Development Assistance, we want it to leverage lots of private
sector investment. I mean that's the story for the future. The story for the future is
development won't happen unless the developing countries can get to private sector
investment.
MR. ADLER: You've been talking a lot about Africa, so just to come back to it, there's a lot
of talk of Africa rising and even the G-8 report said it was the next emerging continent. On
the other hand, enormous issues there with the Islamic radicalism in some places, Nigeria
and Mali. You were just in the Congo and you've gone to Rwanda with the UN Secretary
General. And, by the way, I think that you said the first time the UN Secretary General and
the Head of the World Bank have traveled together?


DR. KIM: On a mission anywhere, by the way.


MR. ADLER: Interesting. But I think a lot of people are curious about why the World Bank
put $1 billion into that war-torn region. And the question is, would it be effective to have that
type of aid for infrastructure and health and energy in a place that were fighting is occurring
at such a terrible pace?


DR. KIM: The Secretary General and I have been talking a lot about the historical missions
of these two institutions, the United Nations and the Bretton Woods institutions, the so-
called international financial institutions. And of the things he said is that, you know, the
intention of the founders always was that we would hand in glove, that we would work
closely together. But, you know, there's a great African saying, when the elephants fight, the
grass suffers. I've been the grass most of my life in these countries, working in the village
level, in the slums. And I have watched for years as these organizations have fought each
other, and I kept thinking, why on earth would you do that? And so we just made a
commitment that we were going to, at least from the top, we were going to send a message
that we want these institutions to work together like they've always been meant to work
together. And so I invited the Secretary General to come to one of our annual spring
meetings. And he kept saying, he said you know, everywhere I go where there's conflict, the
issue is not peace treaties. The issue is development, that if people have jobs, they will not
resort to the only thing that will provide them meals, which is becoming soldiers. So it's an
experiment and we hope that it's one that will work out very, very well. I don't think we have
any other choice. The idea is that rather than saying, we're not going to go in and work on
development projects until there's peace. What we're saying is, we're going to try to
leverage peace agreements with development. So we've essentially said that as long as
you abide by the peace framework, we're going to go in aggressively and use this $1 billion
for really basic things so that – half of it is for energy. One of the big investments is in
something that's very exciting, the Rusumo Falls hydroelectric power project which is a run
of the river project. In other words, we don't back up water. You use the run of the river to
create electricity. And you lose about 20% of the efficiency, but it's a very exciting project.
And that area desperately needs energy. It's amazing how little energy's available in that
region. And so energy is critical because companies won't come in unless there's energy. I
mean right now in Myanmar, we're working like crazy to create more power because
Korean and Japanese and Chinese companies want to come in, set up shop, and help. And
their governments have told them that they really want development to happen in Myanmar.
There's got to be a peace dividend, a democracy dividend there, but they need energy. So
we're, our goal in the Great Lakes region is to say go forward with the peace agreement.
That's really important. Do everything we can to address the serious social issues. But in
the meantime, just burrow forward on the kinds of projects that could truly have a
transformative impact. We're going forward believing that one of the ways of preventing
conflict is to have development, to have job creation especially for women, especially for
young people. That's the goal, we'll see how it works. We're not going to sit back for five
years and see how it works. We're actually going forward. We've made a commitment. So
we hope that sometime in the fall we'll be able to travel to the Sahel together as well.


MR. ADLER: I'm going to ask you one more question before we open it to the floor. We
have a lot of financial professionals in the room. People have been asking questions about
where to invest, how to invest. And you were in India too recently and you talked about how
big the infrastructure needs were and there was no way anybody was going to get that kind
of money unless you had private equity and sovereign wealth funds and other private
investors. Yet when you talk to investors, they're very concerned in India and many places
in emerging markets about corruption, about regulatory requirements that it's just so
onerous about unpredictability in terms of rule of law. I mean what do you say to those
financial professionals both in terms of going into India and other places in the emerging
markets in terms of just how risky are those investments?


DR. KIM: The most important thing I would say is please don't paint with too broad a brush.
Look specifically at specific industries. And I'll be very blunt about it, we have something
called the Asset Management Corporation at our private sector agency, the International
Finance Corporation. And at the Asset Management Corporation, we are now working with
sovereign wealth funds, we're working with pension funds. And they're putting money into
the Asset Management Corporation mostly because over the past 15 years, our internal
rate of return has been 20%. Not only have we made money, but we've done it really
focusing on development impact. The reason we're able to do so well is, first of all, our
borrowing costs are very low, I mean we have a very strong AAA rating, but also because
we're able to hedge our risk over the entire world. We invest in a lot of things over the world
and we're even investing in the so-called fragile and conflict-affected states. But the most
important thing is that most private equity firms don't have the people to be able to go into a
place like the Great Lakes region and realistically look at risk and reward. We've been doing
it since 1955, looking at the private sector and saying, in the poorest countries what are the
opportunities for investment? What are the investments that we feel secure about? Also, we
have another agency called the Multilateral Investment Guarantee Agency that provides
political risk insurance. In other words, if your company is nationalized, we'll make good on
your investment in that company and we've not had to pay very often because we make it
clear to the countries that it's not a good idea to do things like that. I mean, you know, if you
can do that, you can do that if you want. But then what happens is that the market will react
to you and your borrowing cost will skyrocket and you'll have trouble. We try to help
countries think about their path toward development in the modern market economy in a
way that makes sense for them and makes sense really for their people as well.


MR. ADLER: Great. Thank you very much. Let me turn it over to the audience. I’d like to
first call on Nina Chestney from the world’s largest independent news organization, Reuters,
whom may very well have a question. Take the microphone.


QUESTION: Hi, I wanted to ask about the UN climate process. You talked about China and
the way they’re moving forward the momentum on that, but isn’t it time that the status as a
developing country in these talks was perhaps notched up one because they are still a
developing country in the eyes of the UN climate deal process. Isn’t it time they became a
developed country to move things forward even further given their economic growth and
their CO2 emissions output. And also on the UN process, the deal may be signed by 2015
but it won’t come into force until 2020. Many scientists think that is too late to stop the rise
of global temperature. Is the UN process kind of redundant given its slow process progress
and isn’t it better to look at national efforts and try to make progress that way? Thank you.


DR. KIM: Thank you. So, in terms of whether China is a developed or a developing country.
You know, there have been a variety of arguments made over the years, but I think what
China is saying now which really is different is whatever you want to call us, we feel an
enormous sense of urgency to tackle this problem. I mean, the goals that they’ve set for
reducing their carbon footprint, for reducing short-lived climate pollutants are really, really
aggressive. I’m sure you know that when the Chinese government decides to do something
they move more quickly and more efficiently than just about any government I’ve ever seen.
And so I don’t know their designation is so important. I mean, I think that was part of an
argument for a while, we’re a developing country, we should be allowed to pollute. I don’t
think that’s what they’re saying now. I think they’re saying something really quite d ifferent
and in working with them I know that they are really serious. I mean, we actually provide
some assistance through the program for market readiness on helping them develop their
carbon market. So they are serious as any country that I know in terms of reducing their
carbon output. Having said that, it’s still an issue. They’re still building coal plants. It’s not
going to be simple but in terms of setting aggressive targets, there’s really, they’ve really
surprised many of us. As far as the UN process, again, I talked to the Secretary General a
lot about this because this is the top of his list of concerns. I think we have to think of it this
way: I think that there’s no question that we still have to support the negotiation process.
We’ve got to have a global agreement. We’ve got to do it. and for me, the fact that it doesn’t
come into effect until 2020 is really quite separate from what we have to do right now. And
that’s why we keep talking about, look, don’t sit back and say we can’t do anything b ecause
there’s no global agreement. That’s just a lame excuse in the face of what we’re about to
hand to our children in terms of the nature of the world that they’ll live in. And so, there are
things we can do right now. When I went to China last fall to visit the soon-to-be Premier Li
Keqiang, I didn’t sit in the chair for five minutes before he asked me. I want you to do a
major report on urbanization. And we know that China is, they are just hundreds of millions
of people going to move into the cities over the next decades. And so, he said we know we
can build cleaner cities and we want you to write a report telling us everything that people
have done all over the world. In fact, even telling us things we’ve been doing in China that
we don’t even know about so that we can scale it up, right? So the notion that we would be
able to deliver this report about building clean cities and China would sit and say, okay,
everyone do this, and to see it unfold in front of us is really quite exciting. So what they’re
saying and what everyone needs to say is please don’t use the lack of a global agreement
as an excuse not to take the very clear actions we can take right now to build a cleaner
planet.


MR. ADLER: Thank you. Other questions? Up front here.


QUESTION: I’m Monique Villa from the Thomson Reuters Foundation. And I have a
question because it’s very good to see your interest to invest in Africa, in many countries, in
India etc., which is really good. And the World Bank in 10 years has made a lot of efforts in
investigating corruption regarding the loans that you make and investment you make. Are
you satisfied with the results or do you think you should reinforce that?
DR. KIM: So it was one of my predecessors, my good friend Jim Wolfensohn, who first
uttered the “c� word as he says. And he gave a famous speech in 1996 called “The Cancer
of Corruption�. And ever since that time, and especially under Bob Zoellick, my immediate
predecessor, the World Bank has made fighting corruption a top, top issue. So last July 2,
my first day on the job, I walked in the door, they took me upstairs and I said, okay, you
have to make a decision, are you going to cancel the Padma Bridge Project in Bangladesh
or not? So I sat down and I looked at the evidence and there was clearly evidence that
there was corruption going on, so we cancelled it, my first day on the job. And we continue
to do that, but the other thing is that we continue to work in places where we know there’s
corruption, Afghanistan for instance, we put billions of Dollars into Afghanistan and we will
continue to work in Afghanistan even though that all around us we know that there’s
corruption going on. How do we fight corruption? Well, we own something like 20 armored
vehicles and I rode in one of them when I visited and they’re level 4 which means that they
can withstand an IED, but they can’t withstand missiles, so more details than I needed to
know at that time, but I was very proud of our team because they get in those vehicles and
they ride out into the country side and they check whether the money is going to where it’s
supposed to be going. And we’ve even set up a system in Afghanistan where citizens can
go and look at the projects and take pictures to make sure that things are actually
happening and they transmit the pictures back to the World Bank office to know that the
money’s actually going where it’s supposed to be going. And the really cool thing is that
we’ve given them a feature because there are checkpoints, informal checkpoints that are
set up so that if they take their phone and push one button, it erases all the pictures,
because we know that there will be people trying to stop them from doing this kind of work.
We’re very comfortable that we’re tackling corruption effectively. And every time we see, we
call it, and we’ll do things like cancelling important projects. But has that stopped corruption
everywhere? No, of course not, and it has not. But what we’re hoping is that by us being
more and more rigorous, we are setting a standard, all the other multilateral development
banks have same standard and we hope that that will spread to the government, but just
take the example of Afghanistan. What are we going to say? In 2000, there were 250,000
kids in school, zero girls in school, now there are 10 million kids in school, 40% are girls.
And we are at risk of going right back to the 2000 scenario unless we’re there especially
providing health education and social protection. They need jobs. The combatants need
jobs and so we’re working right now to try to develop the private sector in Afghanistan, so
you can’t sit back and say, well, we’re not going to work in any country where there’s a trace
of corruption because there are still poor people there, right?
And so, we’ll continue to work. We’ll continue to follow the money. We’ll still continue to buy
the armored cars, but it’s just a reality of the world that we live in and we hope that by us
continuing to be tough on it, that we can help countries move in a better direction.

MR. ADLER: Let’s take some more questions on the aisle in the middle here.


QUESTION: Hi, I’m Laurie Goering, also at the Thomson Reuters Foundation. We’re very
interested in this. I’m curious about China. You say is that right of course, that China is
really serious about this in doing a lot and aiming to do more, but at the same time, what
you see is that it’s the rate in growth in emissions that’s falling, not the rate of the emissions.
How does this all begin to add up to something that actually works? What is it going to take
for the emissions to fall, not just to slow the rate at which we’re getting to 4 degrees or
higher?


DR. KIM: Yeah. It’s a great question and it’s the question that we’re all asking. But the rate
of growth of the country as a whole is just so fast that they’re trying to keep up, right?
And I truly do think that we’ve not yet made the most of all the technologies that are
possible, meaning have they done as much they can in terms of really truly building clean
cities, because that’s where the vast majority of people are going to live, if they can really
make an impact on building clean cities, probably natural gas will be transitional fuel that
they’ll have to use, but they have, they’re investing more in solar, in wind, in other forms of
energy really than almost any other country. So I think what you’re going to see is over time
a gradual shift to renewables, a way of building cities that are clean, more efficient
buildings. All those things together we think will add up to an eventual drop. I know that the
Chinese government is committed to this, I mean, compared to the other large emitters,
their announcements recently had been the most aggressive, had been the most
aspirational, so my role right now is to run like crazy to try to continue to help them think
about specifically and in terms of the implementation, how they’re going to do it. So right
now, that’s why we’re working so much on cities. It’s such a big issue for them, they’re
putting into place their carbon output structure for the next generations in the way they build
their cities. So we’re desperately trying to catch up, the Chinese are really interested in
climate smartagriculture, they’re already doing some of it. We think that they can make a lot
of progress, and of course in the area of renewables, this is really important. The fact that
China is being so aggressive about their own carbon market is a really, really encouraging
sign for the possibility of a global agreement. Look, if we can get Europe, the United States
and China to agree on a price of carbon, it’s so much better for us because at that point,
investments will turn to low carbon investments and we’ll finally, we’ll have market
mechanisms working to help us battle climate change. And that’s going to be the ultimate
answer is that when market mechanisms are clear, and most companies have already built
the price of carbon into their future projections. They’re expecting it, so we just need to get
about coming up with the political solution as quickly as we possibly can. I hope that the
practical solution to the carbon market will happen long before 2020. That’s what we’re
going to keep pushing and we’re going to try to make it clear that this is both possible and
the right thing to do. Let me just say one other thing. I think part of it too is that we’ve not as
a community not been bold enough. I think what happens with extreme weather events is
something crazy happens and then the public turns to climate scientists and say, uh-oh,
now what? And we’ve always been providing small bore answers, well, things like put a
solar panel on your roof, and shower less, and I think what people think is that they think,
oh, I see, so you’re really not serious about this yet. What we have to do is put together a
plan that is equal to the challenge of climate change and we haven’t done that yet. We’re
working on doing it, but once the public, because as these extreme weather events continue
to happen, I think public opinion is going to change, just like it has in China. I think it’s going
to change throughout the world. And then at that point, the challenge will be on us to have a
real plan that’s equivalent to the challenge.

MR. ADLER: So to make sure our guests get a chance, could I just see non-Thomson
Reuters hands for a minute? Okay, up here, second row.

QUESTION: Still a journalist, I’m afraid. Geoffrey Lean of the Daily Telegraph. Thanks very
much. That’s been very refreshing and particularly refreshing to hear your emphasis on
short-lived policies which don’t often get the attention they deserve. But coming into that
and coming into China, there’s recent agreement between Obama and CE about reducing,
well, phasing out the HFC’s. It seems to me perhaps the biggest step for we’ve yet taken
including here too, is the future - and given the difficulty, given you say about 2020, given
the difficulty of getting everything to the US Congress, even if as agreement is made - is the
future more in these kind of bilateral agreements? At least initially. I don't feel that - to
anyone the importance of global agreements, having suffered through 23 years of
negotiations of them. I don't have great hopes that it will happen very soon.
DR. KIM: Well, I think we have to encourage any kind of agreement that anyone will come
to and I think that's my point today. Let me say again, the work that the Secretary-General
is doing on reaching a global agreement is just critical. We cannot- I mean, people were
traumatized by Copenhagen, we know that. That was a really difficult meeting but still, a
global agreement is critical. But in the meantime, whatever we can do should be welcomed
and I think that I was very encouraged by the agreement as well. But the thing that is most
encouraging to me is that I know from talking with President Obama's people working on
this issue and from talking with Secretary John Kerry, that the level of seriousness in the
United States at the top in tackling this issue just couldn't be higher. And I really think, as
the extreme weather events occur in the Midwest of the United States and as these
Hurricane Sandy's, we begin to understand the implications that the other legislators will
come around. And I don't know how long it will take but I hope it's not too long. And in
China, again, the discourse, the public discourse has fundamentally shifted in China. So,
these first steps are really important. Every time we see them, they should be encouraged.
Whatever agreement we can come to should be encouraged but in the meantime, I don't
think we should give up on the global agreements. We have to keep pushing in trying to
reach some kind of agreement.


MR. ADLER: Mark Jones is channeling questions from our Thomson Reuters Global
Markets Forum and I think, probably some of our guests have questions on there.


MR. JONES: Yes, a couple of questions. Picking up on some themes from quite a large
number of questions on Twitter with the #askWorldBank. So I'll give you both of them. First
one is about getting youth involved. So, Codrin Paveliuc from Belgium says there's quite a
lot of discussion about getting youth involved but when will we actually see some of this
happening and the World Bank's role in that? And second one is from Wanda, who echoes
another theme running through the questions, which is, "How do you answer critics of
energy efficiency goals who claim it will hurt the economy to implement higher standards?"
And she has in mind in particular, the United States.


DR. KIM: So on the first one, I would just encourage all young people to look at our
Connect4Climate work where we're specifically trying to engage young people and being
creative about it. But I have to say, this effort to combat climate change doesn't yet look like
a movement. And I have been extremely fortunate to participate in some movements. The
battle against HIV was a movement. And so one of the things I keep asking my friends in
the environmental world is, where is the plan and where is the movement? And they say,
"What do you mean?" I say, "Well look at HIV." We discovered the patients, not even the
virus in 1981. By 1996, we had treatment that really gave people, turn it into a chronic
disease. And that was not easy. There was a one group of activists, the people from ACT
UP, who went into the National Institutes of Health in the United States, threw blood on
people until they put billions of Dollars into HIV research. There are another group that
changed the rules of the Food and Drug Administration to get drugs to a fast track. They did
everything you needed to do in the value chain, if you let me borrow a business term, to get
to where they wanted to go. And I keep asking, where is the plan for that? And we don't
have it yet. There's not enough research, there's not enough technology being passed on to
the private sector. We don't have the pieces in place. And so it doesn't feel like a
movement. Young people got involved in the HIV movement because it felt like a movement
and they wanted to be part of something that powerful and exciting. We need that. And we
probably need the young people to lead on it. We need the young people to say, "Come on,
old folks, you know, you may be gone by the time this hits, but our world is going to be awful
and we're going to prevent that." But it hasn't happened yet. And in terms of the second
question, look, a lot of people say it's not possible to have green growth; that you either
have green or you have growth. Look, we have no choice. And I just, we're saying it now
but 2030 is not that far away. In 2030, my youngest son will be graduating from college,
right. And if there's a two degree Celsius world when he's graduating from college, I just- it
scares me and so what it tells me is, we have just got to find the way to have growth that's
green. And I'm convinced, looking at all the data on the potential of new technology, looking
at the potential of things like hydroelectric power, of geothermal power, of micro-grids using
solar and wind energy, I think that there is no question that it's possible and if we devote our
energy and our ingenuity to making it possible in all over the world, I think that in a great
sense will help us determine who the winners and losers are going to be. I think the winners
are going to be those who are able to grow their economies while also reducing their carbon
footprints. I mean, Germany's done that and it's very impressive the way Germany has
uncoupled growth from their carbon footprint. Germany's done it, they've made a big
commitment and that's where I'm going later this evening, partly to celebrate their
commitment to doing that. Every country in the world has to move in that direction.


MR. ADLER: I think we have time for one quick question and one quick answer. All the way
in the back there.


QUESTION: David Harris from FTSE, the index company. I mean, leading on from what
you were just saying, you've spelt out a very kind of passionate image of the transition to a
low carbon economy, the growth of kind of new emerging cleaner industries of the future.
For that transition to take place, will obviously require a redeployment of capital from
institutional investors. And what do you see as the barriers for institutional investors making
that kind of switch and how do you see us trying to overcome those barriers?


DR. KIM: I think the fundamental issue is that institutional investors are- it's hard for them to
get their head around the fact that there are people who understand the nature of risk and
reward in countries like Rwanda, that we just mentioned, as well as they understand the
nature of risk and reward around investing in information technology, for example. They just
can't imagine that we at the World Bank or the IFC especially, and at MIGA- can you
imagine, we provide- just to give you an example of how much we understand it, there's a
phenomenon in Rwanda where there are lakes and under, in the bottom of the lakes there's
methane; and that methane sometimes explodes. So it's a huge hazard. But at the same
time, you can actually get that methane out of the ground and use it for energy, right, so that
you're killing two birds with one stone. We guarantee a project like that. And that means we
understand a lot about the nature of risk and reward around projects that are as seemingly
arcane and exotic as that one. I think that's the biggest issue and we have to do a better job
and letting institutional investors know that we have looked at risk and reward since 1955 in
these countries. And that it's not just that you're going to make a good return, you're going
to make a good return and you're going to help countries move on the path towards
development. That double bottom line, the notion that Michael Porter talked about is shared
value. We have to be better at communicating that but they're skeptical. And they're
understandably skeptical and it's only going to really shift as certain investors start making a
lot of money and start having really good outcomes in these poor countries. And we're
committed to helping investors develop that sense of confidence.


MR. ADLER: Dr. Kim, thank you so much for being here.


DR. KIM: Thank you, Steve.


MR. ADLER: You can come back any time. Thank you.


DR. KIM: We really had a lot out of it. Thank you. Thanks very much. We just had a great
time.