This morning, the BBC had a headline,

Hundreds of thousands evacuated as floods ravage southern China

Somewhere in the article, it says, “there are concerns that climate change is exacerbating the situation“.

Richard and I started our careers differently. They led us to the same place.

Sometimes, you cannot afford to wait for evidence.

David Hume, the eighteenth-century philosopher best known for his work on causality has much to be blamed for. His discussions of how two things happening do not make them causal, but we need the weight of sufficient after-the-fact experience for causality to be considered has too often become reasons for inaction.

I am a scientist by training. My first jobs were research positions — initially as a doctoral student in physics, then as a researcher at the University of Tokyo, and finally to lead my own research group and lectureship at the University of Oxford. This was before moving into finance and investments.

I know about the importance of evidence, but I also know scientific progress comes from the counterfactual — asking what may happen if what is not known and for which there is no evidence were to happen.

In the case of climate change, sufficient evidence to change from saying “there are concerns” to saying “climate change exacerbates” will only come too late.

Richard started his career taking investment risks. He tells stories of being quizzed on the worst thing that can happen and how much will he lose. His boss’ worst nightmare was always a jumbo jet crashing into a nuclear reactor in Sweden. All this training came to bear for him in 1992 when Sweden raised interest rates — not by the 0.75% the Fed or the 0.25% the Bank of England managed to do this month — but by 375% in one go.

His training is what makes him ask what happens if climate change is causing the flooding? Mine led me to the same question. Once we ask that, it is clear there is no place to hide. Climate change will bankrupt us.

Our modern society is far too interconnected for the disruptions in one place not to lead to a cascade of disasters. Climate change creates increasingly frequent disruptions beyond our ability to cope. It makes us lose faith that tomorrow will be better than today. This is the faith that keeps our economies from collapsing.

The problem, though, is David Hume has taught us to look for the clearly identifiable triggers and there are always more readily identifiable triggers.

If a car runs over a pedestrian, we identify the driver as the cause. The fact that the volume of traffic is high does not enter into the process. Too high a volume of traffic means if it is not this driver, it will be another driver; and if it is not this pedestrian, it will be another pedestrian. However, Hume says driver-pedestrian are the identifiable causal combinations. The volume of traffic? We do not need to consider it.

In this same way, we do not see climate change as the cause of the flooding. We see it as the failure of civil engineering. We, therefore, favour building dams and improving storm drains over taking action to reduce greenhouse gas emissions.

When I joined LTCM after leaving Oxford, I unknowingly joined the Dream Team of market wizards and Nobel laureates. With only about 200 people working out of three offices, we made in one year twice the profits Disney made with its global reach. In 1997, I personally made more than my lifetime prospective earnings in academia would have been, and in a month in 1998, I lost it all. Over that same month, LTCM lost all of its assets — over $4 billion.

LTCM saw opportunities in the equivalent of failures of civil engineering in the financial markets. It failed to see them as symptoms of a much greater problem — that the whole financial environment is fundamentally changing. It failed to accept its own activities were corrupting the very environment it was operating in. Everyone else who mimicked LTCM also failed to register the same.

Richard, however, had a great year in 1998; this is why we make such a good team.

Some things require us to say we cannot wait for sufficient evidence before we take action because the evidence will always come too late with the consequences unacceptable.

Climate change is such a situation.

We cannot wait to see if we build out enough renewables, we will reduce our oil, gas, and coal production. Climate change will have bankrupted us before that.

We cannot wait to see if the pledges of net-zero will come true by 2030, 40, 50, 60, …. We will have used up all the carbon budget, leaving us with no room for a second try.

We cannot wait to see if carbon capture can be developed to the capacity we need. We would have lost the ability to feed the world.

That is why we need to consider Transformational Ownership now.

We have to take the step that presumes climate change will stay unchecked despite our other efforts. This is the only way to give confidence that tomorrow may be better than today, that there will be some carbon budget left for us to try again, and very basically, that we can keep growing food.

So, what can you do? If you hear climate change is mentioned, remember Transformational Ownership.