The 'Bond Vigilante' Exposing Fossil Fuel Risk
A Matter of Degrees
Dr. Leah Stokes, Dr. Katharine Wilkinson
4.8 • 533 Ratings
🗓️ 16 August 2021
⏱️ 43 minutes
🧾️ Download transcript
Summary
Since the Paris Climate Agreement was signed in 2015, banks and large investors have dumped $3.8 trillion into fossil fuels.
It's a staggering number. This is why writer and activist Bill McKibben calls money the "oxygen" that fuels the fire of global warming. While the wildfires burning around the world are getting worse each year, it's like the world's bankers are blowing on those fires, making them even bigger.
For this episode, we have a story about two people who are trying to cut off that supply of oxygen to global lenders and the insurance companies backing them. It comes from our executive editor, Stephen Lacey.
We'll hear from Ulf Erlandsson, founder and chief executive of a non-profit called the Anthropocene Fixed Income Institute. Ulf is a former bond trader who calls out deals in corporate and government lending that would be a disaster for the climate. He's helping bond traders "short" these bad investments.
We'll also hear from Elana Sulakshana, an energy finance campaigner with the Rainforest Action Network, about why insurance companies are enabling trillions of dollars to pour into new fossil fuel infrastructure.
Resources:
- Anthropocene Fixed Income Institute
- Stop the Money Pipeline
- Banking on Climate Chaos report
- Insure Our Future climate scorecard
Follow our co-hosts and production team:
A Matter of Degrees is a production of Post Script Audio. For more episodes, visit our website.
Transcript
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| 0:00.0 | Global financial markets run on credit, this vast network of loans known as bonds. |
| 0:05.8 | The bond market is essentially just a big lending market. |
| 0:08.8 | It's worth tens of trillions of dollars more than the stock market. |
| 0:12.0 | Every day, traders all over the world at hedge funds, pension funds, and money managers are making simple bets. |
| 0:18.1 | Is it a good idea to lend this money or not? |
| 0:20.7 | Essentially, companies and governments and everyone, they need to borrow money. And that |
| 0:25.4 | sort of keeps on rolling the whole time. So maybe you had a two-year loan, you need to renew that. |
| 0:30.5 | Then you have to go back to the market. And the investor, the bond trader, actually, is the one |
| 0:35.0 | who lends the money, who buys the bonds. |
| 0:38.2 | That's Ulf Erlinson. |
| 0:39.3 | He's a former bond trader himself. |
| 0:41.2 | For years, he worked with a Swedish pension fund making judgment calls on whether to loan money to this company or that government for 10, 20 or 30 years. |
| 0:49.4 | You can have 10, 25 deals a day on your screens. |
| 0:53.3 | You need to make investment decisions, which am I going |
| 0:55.9 | to buy, what am I going to sell against it, et cetera, et cetera. So it's a quite active type of |
| 1:01.6 | trading environment. And there's a certain type of trader in this vast world of high-stakes |
| 1:05.9 | global lending called a bond vigilante. |
| 1:18.7 | A bond vigilante is someone who's shorting, so negatively investing in bonds in order to drive up interest rates on that bond until a place where that issue almost goes bankrupt. |
| 1:27.0 | There aren't that many of them out there, |
| 1:28.5 | and they aren't particularly well-liked. |
| 1:31.1 | It's a life of starvation and high risk |
| 1:33.8 | to be a bond vigilante, |
... |
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