It’s “Official” Now: The United States of America Is Withdrawing From the Historic Paris Accord on Climate Change With Notice to the UN

The big news of this week:  The USA is now “officially” withdrawing from the Paris Accord on Climate Change.  The one-year countdown to “USA out” is now underway.

In 2015 as the representatives of almost all of the nations of the world gathered in Paris, France for “COP 21” (or “the UN Climate Change Forum, the 21st yearly meeting of the Conference of Parties), an important agreement was reached:  the 196 nations would work together to attempt to limit global warming to below 2-degrees Celsius (3.5-degrees Fahrenheit) – or at least to not above 1.5C (2.7F).

The goals are temperatures above pre-Industrial Age levels; scientists say we have already warmed 1-degreeC (or 1.8F).  The Washington Post in reporting the administration’s now-official action on the Accord says that 1/10th of the globe is already at more than 2-degrees Celsius when you compare the last five years with pre-industrial levels.

That means all of the nations of the world have to work independently and collectively to limit carbon emissions to zero level between years 2030 and 2050. This would be done in part through “Intended Nationally Determined Contributions” (INDCs) enacted in each signatory country. Comparing the year 2030 (intended results) with year emissions levels of a quarter-century ago would mean cutting emissions by at least 40 percent – a Herculean effort for many nations, and especially for the big “emitters” of the industrial world – the USA, China, India and European states. 

The United States of America had representatives at the COP 21 meetings – including members of the corporate community; according to a letter to the White House from US Senators who attended, today, 900 businesses continue to support the Paris Agreement, including 20 of the Fortune 500s. 

President Barack Obama committed the USA to the Paris Agreement / or Accord by executive order and in November 2016 (with other almost 200 other nations) the climate agreement was confirmed by the state representatives in Paris.

In June 2017, six months into the succeeding administration, President Trump announced plans to withdraw from the Accord because “…it disadvantages the United States to the exclusive benefit of other countries.”  (More recently he described the agreement as a “total disaster” for the U.S.)

And so by various means and executive order, successor President Donald Trump “officially” began the withdrawal of the USA this week with notice to the United Nations. The ending of US participation in the global agreement will be in November 2020 – one day after Election Day next year.  Climate change issues including the status of the USA in the Paris Accord are today political issues in the context of elections at all levels of government including the presidency of the U.S.

Of course, numerous critics sounded alarm and anger at the president’s action (a campaign promise in 2016 and addressed by President Trump since taking office).  Susan Biniaz, lecturer at Yale University, for example, told The Washington Post: “While the world will not be surprised, it’s a sad reminder of where the world’s former leader on climate change now stands…the decision of two years ago [two withdraw] is now even more grotesque…”

Andrew Steer, leader of the World Resources Institute, said the move “…fails people in the United States who will lose out on clean energy jobs as other nations grab the competitive and technological advances that the low-carbon future offers.”

A successor in the White House could begin the process of rejoining the Paris Accord — depending on the election outcome next November.  And the pledge to do so could be “immediate” while the formal rejoining is now a more complex process.  Stay tuned to this important conversation!
Our Top Stories this week bring you several important perspectives on this issue.

Top Stories

Trump Makes It Official:  U.S. Will Withdraw from the Paris Climate Accord
Source: The Washington Post

Withdrawing from Paris Agreement will hurt U.S. economy and communities around the world
Source: Ceres

What U.S. Exit Means for Paris Climate Change Accord: QuickTake
Source: Bloomberg

On the U.S. Withdrawal from the Paris Agreement
Source:  U.S. Department of State Press Statement

Leaving the Paris Agreement Is a Bad Deal for the United States
Source: Foreign Policy

Capitalism – Needing Reinventing? Is Corporate Sustainability / Responsibility / Citizenship’s Focus on ESG Part of the Mix of Reinvention?

by Hank Boerner – Chair & Chief Strategist – G&A Institute

There are many voices raised now, joining in the public dialogues on corporate sustainability, corporate citizenship, corporate responsibility, ethics, good governance…and more.

The perspectives offered fit into the commentary stream on the future of capitalism — and how to make it work for everyone.

There are rigorous companion dialogues going on – and rapidly growing in number — related to the role of sustainable investing as more asset owners and their internal and external managers adopt new approaches, many focused on the analysis of corporate ESG performance and related outcomes.  We see this as further reinventing of capitalism. Do you?

On Corporate Purpose – How, What, Why and more – another public dialogue dramatically expanding since the release of The Business Roundtable’s revised mission statement in summer.

There are more voices being added to the expanding public dialogues on all of the above and more, which is what our newsletter’s Top Story focuses on.

A fascinating range of voices will be raised by Fast Company as the publishers spotlight “15 voices” working at the forefront of trying to reinvent our economic system…and together, the pursuit of important structural reforms and ideas to bring about “fairness” (much needed, we can argue, in 2019!).

The first voice “raised” by Fast Company is that of Darren Walker, Ford Foundation president who says in his essay “capitalism is in crisis” and explains why in his essay — “How to Save Capitalism From Itself”. 

As the editors of Fast Company explain, the voices to be raised in the future (that you will want to follow via Fast Company essays) include:

Zeynep Ton, MIT b-school prof who sounded the Good Jobs Institute;

Josh Silverman, CEO of Etsy (the artisanal marketplace) whose company’s social-impact initiatives are held to the same standard as financial reporting;

Fashion icon Eileen Fisher (champion of the B Corp movement);

Barry Lynn, founder of Open Markets Institute (who favors more regulation to address today’s monopolies);

Rachel Lauter, ED of Fair Work Center..and others!

Keep in mind Fast Company is a must-read for many GenExers and Millennials – and so you will want to keep up with the publication’s voices no matter what generation you belong to.

The Ford Foundation’s CEO essay is at: https://www.fastcompany.com/90411391/ford-foundations-darren-walker-how-to-save-capitalism-from-itself

Top Stories

Capitalism is dead. Long live capitalism
Source: Fast Company – For capitalism to thrive, the system needs to evolve to be fair, inclusive, and sustainable. Fast Company highlights companies and innovators leading the change.

And of importance, the public dialogue – and action! – on the SDGs:

Protecting Our Future: Moving from Talk to Action on The Sustainable Development Goals
Source: Forbes 

How an Italian Energy Company Revolutionized Sustainable and Impact Investing in Structured Credit
Source: Forbes 

First SDG-linked bond in the European market raises 2.5 billion euros
Source: UN Global Compact 

Feeding the 9 Billion in Year 2050 Is A Great Challenge for Society

by Hank Boerner – Chair and Chief Strategist, G&A Institute

The United Nations Population Prospects 2019 tells us that there will be nine billion souls to feed on this Good Earth by year 2050 (up from seven billion-plus of us today).

The greatest growth will be in Asian nations (such as India, China) and on the African continent. 

Consider: in just 900 months or 1,560 weeks there will be 4.7 billion people to feed in Asia and 4.3 billion in the nations of Africa.

Latin America, North America and Europe combined will total but 1.8 billion.

The 47 least-developed nations of the world are the fastest-growing (population) and the need to feed the world’s population bumps into the challenges as we work to reduce and eradicate poverty, promote more diversity, address the climate change crisis, improve healthcare and education, and find the money and political will to do all of this.

The numerous challenges implied in these projections include finding the available farmland & ranchland to grow the food that will be needed by the 9 billion; to do this even as cities expand and farmland shrinks as a result of urbanization; to assure that the farmers, especially in less developed countries, are able to survive economically; to replace today’s farmers as the population of such workers ages; to increase protein sources as the middle classes continue to rise in many countries in Asia and Africa in rising the economies of local nations…and more!

Oh, and we must consider that agriculture is a major factor in climate change with its array of carbon emissions, as well of use of (and often) because of bad practices the degradation of ever-more land for growing crops. 

Today’s example is burning the old growth Amazon forests (the “lungs of the Earth”) to make room for more cattle ranches (more protein!) and palm oil plantations. More cattle — all those people moving into middle class want meat!

There have been encouraging developments related to farming — some welcomed and some controversial. 

Hydro-farming and rooftop farming in urban areas are considered a plus; advances in genetically-modified crops are both welcomed and condemned, depending on your geography or business interests or public policy point-of-view. 

Fake meat is cheered in some quarters, condemned in others — even as leading meat producing companies and related purveyors explore the breakthroughs to consider both risks and opportunities. 

The National Geographic Society has offered up a five-step plan to feed the world. Step One is to freeze agriculture’s footprint (ag is one of the major contributors to GhGs); Step Two, grow more on today’s farms; Step Three, use our resources more efficiently; Step Four, shift diets (meat in focus); And Five, reduce waste. 

NatGeo experts say these five steps could help to double the world’s food supplies while cutting the environmental impact of agriculture.  Click here to read more.

This issue of our Sustainability Highlights newsletter we’ve aggregated food & agriculture-related content for your reading.  The three Top Stories are of interest, we think you’ll agree. 

Top Stories

The future of food is mobile, plant-based, and sustainable, experts say
Source: Geek Wire 

Farming Ain’t For Sissies, & Sustainable Farming Is Especially Tough
Source: Clean Technica 

How sustainable is tuna? New global catch database exposes dangerous fishing trends
Source: Science Daily 

Fashion, Style, Brand and Sustainability Are Today’s Coupling Terms Now for a Growing Number of Consumers…

by Hank Boerner – Chair & Chief Strategist, G&A Institute

We’re all consumers of one type or another.

We buy a variety of food and beverages, the latest electronic products, and an assortment of apparel and footwear products as needed — or desired!. 

So the questions come to mind…

What are you wearing?  Is it fashionable?  Stylish? And sustainable (as a product you want or need)?  Sustainably and responsibly produced?  In a global (mostly invisible) supply chain that you could say with certainty is “well supervised and responsibly managed”?

Do you identify yourself with the brand’s culture, ethos and sustainability and the praiseworthy efforts of the maker or the retailer in their declarations to the marketplace? 

Do you make sustainability a conscious buying decision?

A growing number of apparel & footwear brand producers/marketers are counting on “yes” answers to these questions.

In our monitoring of news and feature content from around the world and many prominent and not-so-prominent sources, we have been seeing a significant amount of content related to “fashion” and “sustainability” being coupled (as it, taken together as a given, like human nature (human + nature – a natural coupling).

The big bold industry and brand marketing names are part of the conversation: Victoria Beckham, Stella McCartney, Tommy Hilfiger, Gucci, and H&M are focused on sustainability and delivering the fashion + sustainability sales message in the coupling efforts (details in our story selections).

We’re presenting our “capture” of fashion and consumer-buying content this week in our Top Stories in the newsletter. 

In our constant monitoring we are seeing the trend in other consumer-facing areas of industry – in autos, toys, and a variety of food products and ingredients (palm oil, coffee beans, seafood/harvests of the seas).

The good news for society is that many more corporate leaders recognize the timely opportunity for their company to demonstrate that their company’s strategies and processes, and products & services offered in both consumer and B-to-B markets are “sustainable & responsible” … as now more frequently explained in the company’s sustainability report, in the 10-k, proxy statement, on its web pages…and on their products’ labeling. 

In this week’s Highlights newsletter we bring you a selection of the many news and feature stories focused on consumer marketing with a sustainability theme.

The range of coupled content (our product + sustainability) is growing by leaps and bounds and we try to select the most topical and informative content for you.

On coupling:  the best-selling author Malcolm Gladwells’s newest book is “Talking to Strangers”, a great read, we recommend. 

He explains why we are so overwhelmingly trusting of others (the strangers) as a basic human default and the concept of “coupling” — certain circumstances that can make certain assumptions, assertions and claims ring true for us.  

This comes to mind the acceptance of apparel, footwear and other brand marketers’ claims about “sustainability” in product and/or production. 

We are eager to invest belief in the claims. But do the facts support the claim?

Gladwell’s insights are terrific to contemplate as we receive the messages about sustainability from some brand marketers.

Top Stories

Fashion Brands Take Sustainability Further for Spring 2020
Source: Forbes 

Exclusive Q&A: Why Retailers Should Embrace Sustainable Supply Chains
Source: Retail Touch Points 

Why Sustainability Should Be Top of Mind for Retailers This Holiday Season
Source: Yahoo

Consumers want to buy sustainably—they just don’t know how
Source: Fast Company 

How Sustainability Became the Future of Retail
Source: Footwear News

Consumers Want to Buy Sustainably, but They Often Don’t
Source: Architectural Digest 

The Best 11 Brands for Sustainable Vegan Sneakers
Source: Love Kindly 

How can shoppers make sense of sustainable fish labels?
Source: The Guardian 

The Young People Move to the Streets to Protest Slow or Lack of Action on Climate Change Challenges…

by Hank Boerner – Chair & Chief Strategist, G&A Institute

When our young people take to the streets in significant number, there is usually a revolution of some type in store, history tells us.  Revolutions belong to the young, we can say with some certainty if history is our guide. 

Think: Young “Minutemen” in the American Revolution, youngsters on the barricades in the French Revolution, counter-sitters and marchers in the Civil Rights protests in the American South. 

Dramatic change followed these protests. And now, we watch the young men and women in the streets of Hong Kong.

So what to make now of at least four million young men and women flooding into the streets and plazas of large cities and local communities around the world to “protest” their views of “inaction on climate change challenges” by those adults in charge (government and business, especially).

In New York City, Rome, Amsterdam, Tel Aviv, Madrid & Barcelona, Montreal, Berlin, Vienna, and many other of the world’s cities, on September 20th hundreds of thousands of young people rallied in protest and called on leaders to protect our planet. 

There were marches, music, signs of all sorts, speeches, and other public expressions intended to draw attention to the dangers posed by climate change.

A real crisis in our time and a dangerous threat to the young men and women and their younger peers in the decades ahead!

As symbol of the moment, climate activist Greta Thunberg (at age 16) boldly sailed over the seas from her home in Sweden (rather than take a jet airplane) to get to New York City for the celebration of Climate Week and the gathering of leaders at the United Nations General Assembly).

In interviews she commented that she does not understand why world leaders — including the President of the United States — would mock children and teenagers for acting on science that advances evidence that climate change is real – and dangerous for humanity and our planet.

But business is responding – and investors and the public sector, too. 

In one of the focus features we bring you this week, in the Harvard Business Review author Andrew Winston tells us what 1,000 CEOs really think about climate change and inequality. (We know Winston from his best-seller, “Green to Gold”.) 

He reminds us that nearly 200 CEOs working through the Business Roundtable (BRT) declared that business is no longer just about maximizing shareholder profit.

Many more hundreds of CEOs are in agreement and many are focused on climate change.  Are we moving fast enough? 

A report from UN Global Compact and Accenture (“The Decade to Deliver: A Call to Business Action”) presents the views of more than 1,000 global executives on their views of sustainability.

All of the large-cap company CEOs interviewed believe that sustainability issues are important to the future success of their enterprises.  The biggest challenge is climate change. 

This week our Top Stories (plural) are presented as snapshots of where we are as consumers, investors, government leaders and yes, business leaders, focus on sustainability and especially climate change matters.

An appropriate footnote:  in rural Southwest Montana, a participant in the local rally by mostly young people had this to say in a letter to the editor of the Bozeman Daily Chronicle in response to criticism of the young peoples’ rallies:  

“Climate change is not a political issue. It is a life or death issue. Our children are asking in what way school matters when our future is disintegrating before our eyes. 

“Children have as much right and reason to march anyone.  They march because they can still see possibility, opportunity and reasons to fight four just futures. 

“Next time, maybe you should join us to understand what our kids are marching for.”

Our offerings for you this week:

After strikes, youth climate activists keep pressure on leaders
Source: Reuters 

What 1,000 CEOs Really Think About Climate Change and Inequality
Source: Harvard Business Review

Business leaders join the UN Global Compact Leaders Week to address climate crisis and advance the SDGs
Source: UN Global Contract

Banks worth $47 trillion adopt new UN-backed climate, sustainability principles
Source: UN News 

Markets face major risks over lax climate forecasts, top investors warn
Source: Reuters 

The second-largest gift to a US university was pledged to Caltech. It’s being used for climate research
Source: CNN 

Climate Activism Requires More Than Just Sustainability Statements From Brands
Source: Ad Week 

Most of world’s biggest firms ‘unlikely’ to meet Paris climate targets
Source: The Guardian 

Lead on global climate change and sustainability
Source: St. Peter Herald 

Editorial: Climate Week 2019
Source: Advanced Science News 

Climate crisis seen as ‘most important issue’ by public, poll shows
Source: The Guardian 

Do Consumer Favor Sustainable Brands for Their Products and Services Needs? NYU Stern School Research Dives Deep into the Data For Answers

by Hank Boerner – Chair and Chief Strategist, G&A Institute

Many people in consumer marketing are wondering about consumer preferences for “sustainable” products! In our weekly newsletter the G&A Institute team offers media and experts’ shared perspectives on various issues and matters related to corporate sustainability, responsibility; and, sustainable, responsible and impact investing.

In recent months the content shared frequently has focused on trends in the consumer market — to help answer the question of whether or not consumers reacting to brand-facing companies positioning themselves as sustainability leaders.

Is this type of brand marketing a successful strategy?  Worth the effort? 

So the important question in all of this “wondering” is: Are consumers now favoring sustainable or green (or pick your term of definition) for their products & services at retail? 

In our ongoing monitoring of news, feature and research results — such as for the fashion and footwear industries, the auto industry, food & beverages, and certain other categories — the results tell us brand leaders are now often introducing sustainable products alongside their usual cash cows. We included several items for you in this week’s newsletter along these lines. This was our top story:

Writing in the Harvard Business Review, Tensie Whelan, professor at New York University Stern School of Business, and leader of the NYU Stern Center for Sustainable Business, and Randi Kronthal-Sacco, director of Corporate Outreach for the Center (and formerly with Johnson & Johnson) describe the results of their recent in-depth research project. 

This research centered on trying to answer the question — do U.S. consumers actually purchase sustainably marketed products?  (Spoiler alert: yes – you must read the HBR article to find out more.) 

Whelan and Kronthal-Sacco used volumes of data sets from bar scan codes at retail for food, drug, dollar, and mass merchandisers, looking at 36 categories and 71,000+ SKUs, accounting for 40% of consumer products goods (CPG) sales over a 5-year period.

So, what did they find to be the largest share of sustainability-marketed products? 

Almost $1-in-$5 purchases at retail are for toilet tissue, facial tissue (think: forest products); milk, yogurt (the yield of countless dairy farmers); coffee (lots of attention on the global coffee-growing belt circling the Earth, and worker conditions therein); salty snacks (really?); and bottled juices (you’ll notice that Coke and Pepsi and other beverage marketers are advertising their shift away from sugary drinks). 

At the bottom of market share:  laundry care, floor cleaners and chocolate candy (accounting for a 5% share).

Say Tensie and Randi:  Pay attention, marketers and those all along the retail value chain, from grower field and factory floor to shelf space.  Consumers are voting with their dollars, for sustainable and against un-sustainable brands. 

Winners in the corporate sector include PepsiCo and Unilever; laggards include Kraft Heinz. (For the leader, Unilever:  think of the company’s sustainable labels like Seventh Generation, Sundial Brands and Pukka Herbs.)

And we are seeing in the many stories we bring you each week about consumers and sustainability, the future for sustainable CPG at retail is looking bright – look at the apparel industry.for examples  The agora is alive and well with many more sustainably-branded products on the shelves.  That’s the good news for sustainability professionals.

The NYU researchers used data from IRi (the research house for CGP, retail and health and beauty – information at: https://www.iriworldwide.com/en-US/Insights)

Congratulations to our colleagues Tensie Whelan and Randi Kronthal-Sacco at NYU Stern Center for Sustainable Business for sharing their insights and perspectives.

This Week’s Top Story

Research: Actually, Consumers Do Buy Sustainable Products
(Thursday – June 20, 2019) Source: Harvard Business Review – NYU Stern’s Center for Sustainable Business just completed extensive research into U.S. consumers’ actual purchasing of consumer packaged goods (CPG), using data contributed by IRI, and found that 50% of CPG growth from 2013 to… 

In the Skies Overhead – Global Airline Passenger Volume Set to Double Over Next Two Decades. What Could the Environmental Impact of More Air Travel Be?

by Hank Boerner – Chair and Chief Strategist, G&A Institute

Once upon a time in the early days of jet travel, business travelers accounted for three-quarters or more of the total passenger business of the major U.S. airlines (known as “trunk” carriers back in the day).  Fares were long set by Federal regulation and family-friendly, tourista-friendly fare packages were scarce or non-existent.  Airlines relied on the “have-to-travel-for-business” crowd. At full fare (regulated until the late-1970s).

As the U.S. transport regulations were significantly relaxed (scheduled carriers through Federal “de-regulation” in 1979), the number of U.S. airlines soared from 75 or so to 400 companies…and then began to steadily shrink as carriers merged or went out of business. But passenger travel continued to grow.

Consider:  The Federal Aviation Administration reports 2.7 million passengers move across 29 million miles of controlled airspace on 44,000 flights within the U.S. each day! (See Air Traffic by the Numbers for full details): https://www.faa.gov/air_traffic/by_the_numbers/media/Air_Traffic_by_the_Numbers_2019.pdf

IATA reports four billion annual passengers traveled on a global basis between 20,000 “city pairs”, doubling the global 1995 city pairs available to fliers (the airport centers) in 2017. Passenger traffic was heaviest in Asia-Pacific (more than one-third of the total); Europe and North America each had a quarter of the total number of passengers.  More information for you at: https://www.iata.org/pressroom/pr/Pages/2018-09-06-01.aspx

In response to this steady growth in passenger demand, as set fares were de-regulated airlines and seat price points steadily fell, airlines developed a bewildering array of fare offerings (“stay overnight on Saturday” etc).  And those reduced fares helped to bring many more non-business fliers to the American skies.  

Outside of the U.S., what were once “national flag carriers” (like British Airways, Air France, KLM, Al Italia (up for sale to private sector) and many others owned by governments) are now private sector companies — and these long-established carriers and their newer competitors are similarly filling their planes through offer of attractive fares and generous “packages” for retail customers, and connecting business and tourism fliers with many more cities.

And so – as author Stephan Rice points out in his Forbes commentary – IATA, the industry’s International Air Transport Association — sees the global commercial airline passenger business doubling over the next 20 years. 

More flying customers means more passenger airliners will be needed (with much more fuel consumed), more airports needed to accommodate the “to and from” of air travelers (or airports will have to be expanded and upgraded) …and all this means more pollution

Passengers are now becoming more aware of the impact of air transport on the environment and demanding more sustainable practices.  And they are willing to pay for it, some surveys show.

As air travel volume builds, what can be done to reduce the impact of air travel on the global environment? 

Dr. Rice suggests airports can be re-designed to be more sustainable (he cites enhancements at SFO International and Boston Logan as U.S. examples). Indira Ghandi International in Delhi has the first Leadership LEED Gold certificate.

Airlines could use biofuels; KLM had a biofuels test flight from Amsterdam to Paris; Honeywell arranged a flight over the Atlantic using petro-based fuel and camelina (a derivative of a flowering Mediterranean plant!); Singapore is using biofuels over the Pacific.

A 2017 survey of 700+ consumers showed that passengers were willing to pay an additional fee (up to 13% more) for a flight using biofuels — “…a portion of consumers value green initiatives and appear willing to contribute financially to support it…”

The U.S. carriers’ trade organization is “Airlines for America”; it promotes the “A4A’s Climate Change Commitment” for member airlines and is part of a worldwide aviation coalition committed to a global framework on aviation and climate change with emissions target goals. (The “Aspirational goal” is 50% reduction of CO2 emissions by 2050 relative to 2005 levels.)
Information at: http://airlines.org/a4as-climate-change-commitment/

IATA – the airline industry’s global trade association – has set three targets and four pillars to mitigate CO2 emissions from air transport. Information and fact sheets are available at: https://www.iata.org/policy/environment/Pages/climate-change.aspx

Author Rice describes the results of additional consumer surveys on the topic in his Forbes commentary.  He concludes:  “It is clear that the public wants sustainable aviation…and are willing to pay at least some costs for this. Some airlines and manufacturers are taking the lead, but the rest of aviation need to follow very quickly or get left behind.”  Read the details in his commentary, which is this week’s Top Story for you.

Stephen Rice is a professor at Embry-Riddle Aeronautical University and received his Ph.D. from the University of Illinois.

Hank Boerner personal note: I spent most of the first two decades of my career in the air transport industry. After my time as an aviation business journalist I was the first “corporate citizenship” manager of American Airlines and later, senior advisor to Royal Jordanian Airlines, then the fastest-growing airline in the world (for two years). In the 1970s, I served as organizer and executive director of the two “MECACON” conferences (Middle East Civil Aviation). On September 11, 2001 I was on duty again, with our team, serving my client, American Airlines in the New York City region in crisis management; and again, for the Flight 587 tragedy in November 2001. It’s a great industry creating opportunities for so many individuals and nations!

This Week’s Top Stories

The Public Supports Sustainable Aviation and They’re Willing Pay for It
(Friday – June 07, 2019) Source: Forbes – The International Air Transport Association has predicted that the number of commercial airline travelers will double in the next 20 years. This means that there will be more airplanes, more airports, and more pollution. The…

And – adding to the discussion – the Simple Flying web platform has an interesting story by Joanna Bailey on “sustainable jet fuel” – can it save the planet?  This is an ideal companion piece to the Top Story this week: 

What On Earth Is Sustainable Jet Fuel? Can It Save Our Planet?
(Friday – June 18, 2019) Source: Simple Flying – The use of sustainable aviation fuel is on the increase around the world. But what is this newfangled propulsion juice exactly, and is it the magic bullet to make aviation kinder to the environment?

For the Board Room and C-Suite –Questions and Advice From the Harvard Business Review About Corporate ESG and Sustainability

Corporate managers & executives: is your board “sustainability/ESG fluent”? And if not – why not?

by Hank Boerner – Chair and Chief Strategist, G&A Institute

Attorney Silda Wall Spitzer and John Mandyck, CEO of Urban Green Council, writing in Harvard Business Review explain that while “some” board members have become increasingly “sustainability/ESG fluent” many companies [still] don’t expect their directors to understand sustainability or ESG and don’t provide board room education on the subject matter.

Those enterprises are at a competitive disadvantage, the authors believe. 

An important game-changer for the board room and C-suite to understand is the profound influence of ESG as investment professionals (institutional asset owners and their management firms) increasingly use ESG data, ratings, rankings, and scores to analyze their portfolio holdings (and screening prospective investments).

These ratings, rankings, scores and comprehensive ESG profiles provide a foundation of corporate ESG data and information from the independent ratings agencies that the asset owners and managers use to refine their models and apply to portfolio management policies and practices.

The HBR authors explain the basics of this for the publication’s broad management audience – those men and women at the top of the corporate pyramid who should be aware of, understand and be focused on their company’s ESG strategies, actions and outcomes (or current lack thereof!).

The company’s sustainability scores provided by third party organizations are based on corporate disclosure and performance in three main categories (environmental, social, governance).

Here at G&A Institute we see the leaders in large-cap space embracing sustainability / ESG as evident by the results of our annual survey of the S&P 500 Index® companies’ sustainability & responsibility reporting. 

From the rate of about 20 percent eight years ago, we now find 86% of the 500 large-cap firms are now publishing such reports — many using very innovative and robust approaches.

We’re seeing that the mid-cap and small-cap companies are catching on to the trend and beginning their own sustainability journey that will result in still broader disclosure and reporting.  But not all mid- and small-caps are on board yet. 

This is an area of tremendous opportunity for leadership by companies who make the first move in their sectors and differentiate themselves from their industry and investment peers.

In our conversations with managers at companies just starting out on their sustainability journey (or contemplating same), we explain that there is already a “public ESG profile” of the company “out there” and being studied by investors.

Perhaps, being studied by a good portion of the company’s current shareowner base, depending on the size of the company (the market cap), geography, sector or industry classification, or other factors.

The often- scattered and diverse elements of the existing ESG public profile come from the company’s financial filings, regulatory filings (such as for environmental data), financial and other analyst reports, the company’s web site postings, ESG “brochure-type” reports — and a host of ratings and scores created by the ESG ratings providers and used by investors.

There are more than 200 such ESG / sustainability ratings organizations of varying size and type.  The major influencers for institutional investors include ESG raters such as MSCI, Sustainalytics, and Institutional Shareholder Services (ISS), and ESG data providers such as Bloomberg and Thomson Reuters.

What directors and executives of all public companies need to understand is that important decisions about their companies are being made in large measure now by the foundational work of these organizations and their many peers around the world.

And if the company does not tell the story of its sustainability journey, others will (and are).

Potential Impacts:

The work of the ESG ratings firms also can affect company-customer relationships; employee recruitment and retention; business partnerships and collaborations; relations with civic leaders and the communities the company operates in; for global players, the countries they operate in; the stock exchanges their issues trade on; their insurers and re-insurers views of the enterprise…and other aspects of corporate finance.

While “ESG” and “sustainability” may be seen as touchy-feely and “non-financial” concepts in some board rooms and C-suites, the material ESG issues are really about the company’s risk management profile, the quality of leadership at the top, competitive advantage, sustainability in the traditional investment view (the company has lasting power and is a long-term value proposition), and more.

As for being “non-financial”, the HBR authors point to a Harvard B-School study that found that $1 invested in a company focused on ESG resulted in $28 return vs. $14 for those companies not yet focused on ESG.  What director would not want to brag about this kind of achievement that is real and financial? It’s time to stop thinking of ESG as being touchy feely and squishy!

The HBR commentary is good basic overview for directors to help them understand the role of the board in overseeing and helping to shape the strategies and actions that will comprise their company’s sustainability journey. 

Author Silda Wall Spitzer is the former First Lady of New York State and co-founder and CEO of New York Makers, which curates NYS-made gifts and events that “define New York State”.  She is a former private equity director. Information at: https://newyorkmakers.com/

Co-author John Mandyck is CEO of Urban Green Council; its mission is to transform buildings in New York City and around the world through research, convening, advocacy and education. More information at: https://www.urbangreencouncil.org/aboutus

This Week’s Top Stories

What Boards Need to Know About Sustainability Ratings
(Friday – May 31, 2019) Source: Harvard Business Review – Corporate boards of directors must tackle questions about sustainability in a new and urgent manner. If they don’t, they will hear from investors about their lack of action. In just the latest indication of the investor… 

S&P 500® Index Companies’ ESG/Sustainability, Responsibility Reporting Hits 86% For Year 2018 – Latest G&A Institute Research Results…

by Hank Boerner – Chair and Chief Strategist, G&A Institute

The G&A Institute’s S&P 500 Index(r) analysis for the constituent companies’ 2018 reporting is complete.

For the eighth year, the G&A Institute research team has examined the ESG, Sustainability, Responsibility & Citizenship disclosure and reporting practices of the S&P 500® Index companies — and determined for year 2018 that 86 percent of the almost 500 public companies were publishing reports in various formats for public viewing.

This is a 1% increase over the 85% reporting trend determined by G&A researchers for year 2017. When the research effort began eight years ago (for 2010 reporting, in the 2011 examination) the number of companies among the 500 was just below 20%.

In the beginning of January each year, the current team of G&A analysts begin their examination of the prior year’s reporting trends. 

The S&P 500 companies (not always an exact number) are closely examined to determine public disclosure and reporting practices for activities that may be branded “corporate sustainability, or responsibility or citizenship, or even environmental” that appear in print, web or hybrid versions.

The initial results are double checked by other analysts and by EVP Louis Coppola, the architect of G&A’s research efforts since 2011.  G&A Institute Senior ESG Analyst Elizabeth Peterson assists as team leader in the coordination of the analysts’ research (she has been involved in the effort for several years now).

G&A’s team report analysts who contributed to the research this year are: Minalee Busi, Jessica Caron, Emilie Ho, Jess Peete.

The S&P 500 Index research results are widely cited by investors, analysts, company managers and other stakeholders in their own work and have become a standard reference for those citing the dramatic increase in corporate sustainability reporting. 

Institutional investors cite the results in urging non-reporting companies to begin reporting to shareholders on their sustainability journey.

You can see the full report in the news release that is linked as the Top Story this week.

FLASH REPORT: 86% of S&P 500 Index® Companies Publish Sustainability / Responsibility Reports in 2018
(Thursday – May 16, 2019) Source: Governance & Accountability Institute, Inc. – Highlights from Governance & Accountability Institute, Inc. Research: “Sustainability reporting” rose dramatically from 2011, when roughly 20% of companies published reports, to 72% just three years later in 2013. From 2013 to…

Today, We Have Corporate ESG Comparisons Galore – The Institutional Investor Has Access to Volumes of ESG Data Sets & Information – Where Can Others Find Scores, Rankings and Ratings of Public Companies?

by Hank Boerner – Chair and Chief Strategist, G&A Institute

These days the comparisons of companies ESG strategies and performance in sectors and industries and among investment peers (those companies chasing similar sources of capital) are continuing to gain momentum. 

There is a sizable universe of third party players — ESG raters, rankers, scorers — busily analyzing, measuring and charting company ESG performance.

These organizations assign proprietary scores, rankings, ratings and various kinds of comparisons (company-to-company, company to industry etc) for their investor-clients. (The institutional asset owners and their asset management firms.)

Companies typically get to see how they are doing when they inspect their ESG service provider profiles…but those data and information sets are not always publicly available. They are the secret sauce provided to investors — institutions holding equity or bonds or researching candidates for investment.

So how should the person without access to the major ESG service providers’ confidential output understand where the public company sits in the views of the analysts (at least the highlights, such as scores assigned)? 

Slowly but steadily some of the volumes of information provided to investor clients by the major ESG ratings agencies are making their way into public view. 

For example, you can see a public company’s Sustainalytics highlights on Yahoo Finance. For Apple Inc. / NASDAQ: AAPL “ESG Total Score” information, click here.

Our colleagues at CSR Hub® share a number of Ratings & Rankings and other CSR and ESG highlights on their web site and their “ESG Hub” information (which is available on the Bloomberg Terminal®)  CSR Hub is at: https://www.csrhub.com/

Now a neat presentation comes our way from Visual Capital, authored by Jenna Ross.  This is a mapping of “The Countries with the Most Sustainable Corporate Giants”. 

Remember BlackRock CEO Larry Fink’s letter to corporate CEOs urging them to serve a social purpose to deliver not only financial performance but also show how it makes a positive contribution to society? 

Following on that theme, Corporate Knights “2019 Global 100 Report” data and ranking of the “most sustainable corporations in the world” is presented in visualization format.

Corporate Knights scores companies on a mix of metrics after screening for those with at least US$1 billion in revenues and sufficient sustainability reporting:  resource management; employee (or human capital) management; financial management; “clean” revenue; supplier performance. 

The United States comes out at the top of the charting with 22 of the 100 companies on the list, followed by France (11), Japan (8), Finland and United Kingdom 7), and Canada (6).  No company in China or India made the list.

Of the “Top 10-star players” only one is from the USA – the REIT Prologis Inc.  Denmark has two companies; the rest are one-off listings from other countries.

Author Jenna Ross sums up: “It’s clear that sustainability is a strong differentiator in the business community.  The world’s largest – and smartest – companies are leading the charge towards a greener, more equitable future.” 

We think you’ll find the charting of this Global 100 fascinating and very useful – and there are many other clever and useful visual presentations on the web site.  Check out our Top Story for this week.

This Week’s Top Stories

Mapped: The Countries With the Most Sustainable Corporate Giants   
(Wednesday – May 08, 2019) Source: Visual Capitalist – Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.