Affording an Unaffordable Utility Upgrade

Guest Column by John-Michael Cross, Policy Associate, Environmental and Energy Study Institute (EESI)

Last year, I moved into a 115 year-old home after years of living in modern apartment buildings. The house was in pretty good shape, but I knew from a career of advocating for home energy upgrades that it very likely needed efficiency improvements.

And my first Minnesota winter loomed.

I had a better idea than most at the likely price tag and benefits of the upgrades, but I was still left wide-eyed when the bills came due. The rebate checks from my electric utility helped a little, as did the lowered heating bills. But — we only were able to get the work done because my wife and I were fortunate and privileged to have the cash on hand to cover the upfront costs.

So many families are not as lucky and are unable to participate in utility incentive programs – even though these families would stand to benefit the most. In order to help households at all income levels reduce their high energy burdens, particularly in rural areas, utilities need to look at innovative financing models that eliminate upfront costs while increasing home comfort and energy savings.

Help For Rural Electric Cooperatives and Utilities

In 2014, the U.S. Congress created a way for rural electric cooperatives and other rural electric utilities to provide their members with the chance to upgrade their homes and businesses without any initial investment, paying for the insulation or other energy upgrades through a monthly fee on their utility bill.

The program — the Rural Energy Savings Program (RESP) — is administered through USDA’s Rural Utilities Services to provide rural electric utilities with zero-percent interest loans to capitalize customer-focused energy efficiency financing programs.

USDA defines “energy efficiency” broadly in this program – it even includes small-scale renewable energy projects! The utility just has to show that each financed project will cost-effectively lower overall energy costs for the participant. RESP funds can also be used for lighting upgrades, building envelope improvements, HVAC systems, water heaters, water and waste efficiency improvements, fuel switching projects, and permanently-installed energy storage devices.

Cooperatives can even apply for funds to fully replace aging, inefficient manufactured homes.

Note that RESP funds are provided at zero-percent interest for 20 years. Utilities then relend (or invest) these funds to their member-customers at rates of up to five percent for 10 years, though most utilities to date have kept rates below three percent.

Where To Find More Information

My organization, the Environmental and Energy Study Institute (EESI), has worked to promote RESP since its inception, and provides no-cost technical assistance to help interested cooperatives apply for the program.

Because RESP aligns with EESI’s primary goal of accelerating the transition to a new, low-emissions economy based on energy efficiency and renewable energy, we want to see as many rural cooperatives as possible take advantage this program.

We want to see these dollars invested in rural communities, helping lower bills and spurring local economic development. We also push financing models that emphasize equity and inclusion, so that everyone in a utility service territory can participate. (This includes using good bill payment history in lieu of a credit score if the upgrades are expected to produce a positive cash flow.)

Project Examples

Exciting RESP-funded projects are launching around the country. Some important examples:

  • In Washington State, one co-op launched “Switch it Up!” to provide debt-free financing for ductless heat pumps and heat pump water heaters that can cut heating bills in half, as well as the installation of electric vehicle chargers. One member organization that took advantage of this was the Outlook Inn whose owners were able to switch all 17 rooms from expensive propane heat to ductless heat pumps, which they couldn’t have afforded without financing.
  • A group of South Carolina co-ops created the “Help My House” program, which helps their members finance energy efficiency improvements to their homes through their electric bills. One member who took advantage of this program is now saving up to $250 a month on her summer energy bills – even with the loan repayment added to her monthly bill.

Many cooperatives taking advantage of this program have reaped additional benefits through RESP such as reduced per capita energy use and peak load shaving, which can reduce the need for new power generation facilities.

Rural utilities that want to apply should first submit a letter of intent to USDA (the agency provides a sample here). Once approved, the utility must put together the full application. More than $100 million is available in the current round, with letters of intent due by September 30, 2019.

Interested in learning more? Please contact me at jmcross@eesi.org to learn how you can take advantage of this program and what EESI can do to help.

Have You Tuned in to The Green New Deal? The “GND”? — You’d Better!

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

Here we are at the start of year 2019 and the nation’s 116th U.S. Congress. Radical and exciting ideas with something for everyone from Wall Street to Main Street to the Corporate Suite and Board Room are now on the table for discussion as this new Congress gets settled in.  We are tuning in to this emerging movement…

Question for you: Have you tuned in to the “Green New Deal”? The “GND” is a concept advanced first by The Green Party in the 2016 election cycle; the concepts gained traction bit-by-bit over time and have been embraced by a fiery new member of the 116th Congress as a platform for re-doing our economic system, our political system, public policies of many kinds.  As well re-structuring our nation’s monetary policy (with creative new stimuli suggested for financing important infrastructure in place to meet climate change challenges) …and more. Much more.

The new champion advancing the GND today is Representative Alexandria Ocasio-Cortez, a first-term democratic socialist from New York City.

The proposals are dramatic, bold, sweeping — with something that some people can love and champion and other condemn and do battle against.

We should recall here for perspective that the original New Deal was ushered in by newly-elected President Franklin Delano Roosevelt upon taking office in March 1933…in the midst of the Great Depression.

Sweeping, radical ideas were then needed to literally save the U.S. economy and avoid slipping into some form of communism, fascism, or worse. The stakes were high.

At the time, the country’s economy – and people! – were being crushed by the negative forces of the Great Depression, which followed the disastrous crash of the stock market in October 1929.

Manufacturers’ lots were filled with unsold merchandise, or in many cases factories were being shuttered and workers laid off. There was a global trade war looming (with passage of the Smoot Hawley protective trade legislation). Fascism was on the rise in Europe. European countries were in an expensive arms race. Many countries were not able to pay their debts. U.S. banks were closing by the scores and then in the thousands in this country. There were few safety nets.

Said President FDR: “I pledge you, I pledge myself, to a new deal for the American people. The country needs, and, unless I mistake its temper, the country demands bold, persistent experimentation. It is common sense to take a method and try it. If it fails, admit it frankly and try another. But above all, try something.”

Scientists and experts tell us today that climate change challenges represent the kind of threat that the Great Depression did for our nation, and that time is running short for bold action. 

“Try Something” – and so today in part inspired by the historic (and sweeping, long-lasting) New Deal accomplishments, key elements of our population – Millennials, civic leaders, business leaders, elected members of the House and Senate, NGOs – have been advancing some bold ideas for our consideration. Meet the concept of the “Green New Deal”.

Origins: As explained, elements of the Green New Deal originally were developed by The Green Party of the United States as its 2016 election platform — there were four pillars with pages-upon-pages of detail to explain each:

  • The Economic Bill of Rights
  • A Green Transition
  • Real Financial Reform
  • A Functioning Democracy

You can read the details of the Party’s GND here: https://gpus.org/organizing-tools/the-green-new-deal/

Will There Be Action in the 116th Congress?

Newly-installed member of the House of Representative Alexandria Ocasio-Cortez has introduced an 11-page draft text resolution to form a new select committee in the House to rapidly develop a plan of action to finance and implement the GND.

Her draft bill calls for creation of a Green New Deal (“GND”) Select Committee to be composed of 15 House members appointed by the Speaker of the House with authority to develop a detailed national, industrial, economic mobilization plan, for the transition of the economy to GHG-neutral (drawing down GHGs from the atmosphere and oceans), and to promote economic and environmental justice and equality.

The committee would draw on the expertise of leaders in business, labor, state and local governments, tribal nations, academia, and broadly-represented civil society groups and communities.

The actions taken would be driven by the Federal government in collaboration and co-creation and partnerships with these and other stakeholders:  business, labor, state and local governments, tribal nations, research institutions, and civil society groups and communities, the plan to be executed (for the U.S. to become GHG-neutral) in not longer than 10 years from the start.

  • The final Plan would be ready by January 1, 2020. Draft legislation to enact the Plan would be completed by March 1, 2020.

The Plan for a Green New Deal would have the objective(s) of reaching these “bold” and we can say, “radical” outcomes:

  • Dramatic expansion of existing renewable energy power sources and new production capacity to meet 100 percent of national power demand through renewable sources.
  • Build a national, energy-efficient, smart grid.
  • Upgrade every residential and industrial building for state-of-the-art energy efficiency, comfort and safety.
  • Eliminate GHGs from manufacturing, agriculture and other industries (including investment in local-scale ag in communities across the U.S.).
  • Eliminate GHG emissions from transportation and other infrastructure; upgrade water infrastructure to ensure universal access to clean water (UN Sustainable Development Goal #6).
  • Fund massive investments in the drawdown of Greenhouse Gasses.
  • Make “green” technology, industry, expertise, products, services, a major export of the United States, to become the undisputed international leader in helping other countries transition to completely GHG-neutral economies, to bring about a global Green New Deal.

The draft envisions the Plan to be an historic opportunity to virtually eliminate poverty in the U.S., to make prosperity, wealth and economic security available to everyone participating in the transformation. This could be done through job guarantees to assure living wages to every person.

Among the benefits seen:

  • Diversify local and regional economies.
  • Require strong enforcement of labor, workplace safety and wage standards, including the right to organize.
  • Ensure a “just transition” for all workers.
  • End harm faced by “front line” communities posed by climate change, pollution and environmental harm.
  • Protect and enforce sovereign rights and land rights of tribal nations (there are more than 300 in the U.S.A.).
  • Mitigate deeply-entrenched racial, regional and gender-biased inequities income and wealth.
  • Assure basic income programs and universal healthcare.
  • Involve labor unions in leadership roles for job training / re-training and worker deployment.

How to finance all of this? The draft text calls for financing by the Federal government, using a combination of the resources and abilities of the  Federal Reserve System, a [possible] new public bank, or a system of regional and specialized public banks, public venture funds, and other vehicles or structures.

Interest and returns would then return to the U.S. Treasury to reduce the burden on taxpayers and allow for more investments.

Paying For the GND

In the bill’s draft, a Q&A section notes: Many will say, how can we pay for this?

To which the Representative and supporters say:  Let’s look at some of the ways that we paid for the 2008 bank bailout, aid to the auto industry, extended quantitative easing programs, the same ways we paid for World War II and many other wars. New public banks can be created to ensure credit and combination of various taxation tools, including taxes on carbon and other emissions, and progressive wealth taxes) can be employed.  (The immediate news media frenzy was not over the many elements of the proposed actions but on taxing the rich.)

You can read the entire draft text at: https://docs.google.com/document/d/1jxUzp9SZ6-VB-4wSm8sselVMsqWZrSrYpYC9slHKLzo/edit#

More than 40 members of the new Congress endorsed the move, including Senator Bernie Sanders, Senator Corey Booker, Senator Elizabeth Warren — and a few dozen fellow House members with more sure to join the movement.

Emergent: A Movement?

This is now being described by supporters as a movement that aims to enact no less than dramatic, sweeping economic and climate change policies in the 116th Congress — and to in the process “change politics in America.”

The Controversial Conversation about GND

On the CBS “60 Minutes” program segment that will air this coming Sunday (January 6th), the congresswoman argues that the Green New Deal agenda can be financed by imposing a 70 percent income tax on the wealthiest Americans. That would be “a fair share” in taxes to fund an extensive clean energy infrastructure.

Representative Oscasio-Cortez has described herself as a democrat socialist – in the models set by President Abraham Lincoln (citing the Emancipation Proclamation in the midst of a great civil war) and President Franklin Roosevelt (whose New Deal programs re-shaped the American economy and political system).

She has focused on economic, social and racial justice as key issues to be addressed by the Federal government in her campaigning (she upset a long-standing Democrat House member (4th ranking Dem and Caucus Chair Joseph Crowley) in New York State in the November 2018 election. The Green New Deal would help in those efforts, while stimulating economic growth.

Ocasio-Cortez’s campaign platform included tuition-free education, universal health care and the Green New Deal developed by the Green Party as its platform.

During the 2018 campaign, she spent less than $200,000, compared to her opponent’s purse of more than $3 million.

Media Reactions

The right wing publication Washington Examiner warned that the Green New Deal would add trillions of dollars in debt and would represent “the most radical policy shift in modern U.S. history”. (We would ask: what about success of the New Deal of the 1930s  – was it worth the money invested by government?)

Fox News tells viewers that the GND legislation “would eliminate much of the U.S. fossil fuel consumption, dramatically increase America’s already skyrocketing debt, and transform the U.S. into a European-style socialist nation.”

Unfortunately, mainstream media such as CNN and daily newspapers (like the New York News full page headline) have been focusing on the drama of the proposed “tax on the rich” aspects of the concept and not the meat of the sweeping proposals, which American voters and business leaders might see as immediate and long-term opportunities for creating new wealth and a greatly-enhanced economy with many beneficiaries.

Important addition to the above:  On January 9, 2019, influential author and New York Times columnist Thomas Friedman weighed in.  He called to readers’ attention “A Green New Deal Revisited!” – his column today about the ideas he floated back in 2007 (that prescient commentary was about a Green New Deal), and expanded on in his best-seller, “Hot, Flat and Crowded”.

In that book (published in 2008 by Farrar, Straus and Giroux) has numerous comments on GHGs, energy, energy efficiency, environmental technology, environmentalism, green collar jobs, green hawks, the green revolution, and the Civil Rights movement and WW II analogies to the emerging green revolution.

Friedman today likes the urgency and energy [the representative] and groups like the Sunrise Movement are bringing to this task. He says:  So for now I say:  Let a hundred Green New Deal ideas bloom!  Let’s see what sticks and what falls by the wayside. 

He wrote today in the column:  Who believes that America can remain a great country and not lead the next great global industry?  Not me.  A New Green New Deal, in other words, is a strategy for American national security, national resilience, national security and economic leadership in the 21st Century.  Surely some conservatives can support that. 

Money, Money, Money!

The projected additions to national debt are of course especially in focus for those in opposition to the plan.

In the discussions we should keep in mind that the “tax reform” package passed by the 115th Congress added almost $2 trillion in national debt, with benefits for a narrower band of constituents; the non-partisan Congressional Budget Office (CBO) projected additional debt (from 2018 to 2028) with not too much criticism occurred short-term. (The commentary about the country’s staggering debt has been increasing lately.) The Republicans in Congress have talked about a second round of tax cuts (“tax reform 2.0”), which would add another $3 trillion to the Federal deficit (to be financed by still more debt).

The Social Media Universe Lights Up

In a Twitter post in December, as the social media universe lit up with mentions of the GND, Congresswoman Alexandria Ocasio-Cortez had tweeted: “…and we have #GreenNewDeal lift-off! Never underestimate the power of public imagination.”

While the first action taken by the new member of Congress called for establishing a committee, she writes on Twitter: “Our ultimate end goal is not a Select Committee. Our goal is to treat Climate Change like the serious, existential threat it is by drafting an ambitious solution on the sale necessary – a/k/a Green New Deal – to get it done.”

Note that the Congresswoman has about 2 million Twitter followers.

There’s a very well done commentary on the Green New Deal concepts for you on Vox: https://www.vox.com/energy-and-environment/2018/12/21/18144138/green-new-deal-alexandria-ocasio-cortez

And the Sunrise Movement has information focused on the political side as the public policy debate continues in the new House: https://www.sunrisemovement.org/gnd/

Putting Things in Perspective

We do live in the age of greater prosperity, compared as to the time when President Franklin D. Roosevelt took the reins of the nation at a very dark moment in our history.

Climate change challenges pose threats to the future of this nation, many experts posit, including many elements of the United States government itself.

Then, in the 1930s, one-in-four-households was unemployed. States and many cities were running out of relief money. Farmers were being foreclosed because of crop failures, lack of foreign markets, the failure of the bigger banks they borrowed from, and poor land management (recall the “dust bowl” crisis in the west). In America, fear was rampant – with men and women wondering where was the next meal or dollar coming from.

The New Deal title was inspired in part by a book of the same name by prominent liberal author / economist Stuart Chase, published in August 1932 (the presidential election was that November). At the conclusion of his screed he observed (about the radical recommendations he put on the table for discussion): “We do not have to suppose; we know that these speculations will be met with a superior smile of incredulity. The funny thing about it is that the groups are actually beginning to form. As yet they are scattered and amorphous; here a body of engineers, there a body of economic planners. Watch them. They will bear watching. If an occasion arises, join them. They are part of what [author] H.G. Wells has called the Open Conspiracy.”

The groups he referred to some eight decades ago were the American voters, small business owners, Big Business leaders, investment bankers, trade associations, chambers of commerce, government leaders, labor unions, farmers, and academics.

These are the stakeholders clearly identified and explained in the 2019 House draft text that may or may not gain traction in the House of Representatives and for sure not in the U.S. Senate, even among rank & file Democrats who should be in favor of many of the elements of the proposal as stated so far.

Some of the 1930s ideas of Stuart Chase (far left wing and radical they were at the time!) very quickly ended up as necessary public policy adopted to bring the nation out of the scary depths of the Great Depression by a new head of state (FDR) and his assembled Brains Trust.

The Green New Deal is a blossoming idea – yes, radical, of course! – that will be both loved and hated, criticized and championed by various segments of society.

Something For Everyone!

But there is something for everyone in the package and the Plan that could emerge if the Select Committee is formed and elements of the plan get implemented, as promised with the key elements of the American Society  participating.  The actions of the public and private sectors could be as breathtaking in the sweep of what is to be accomplished as were the achievements of the 1930s New Deal.

Those actions helped to create the most powerful economy and democratic political structure the world has ever experienced.  The laws, regulations, rules, policies and actions shaped the modern U.S. and global economies that have delivered benefits to many of us.

The Intergovernmental Panel on Climate Change (IPCC) cautioned us just a few weeks back that we had about 10 years to reverse course and accelerate measures to address the challenges of climate change. The supporters of the GND movement cite this clear warning as part of the rationale for radical and dramatic thinking, commitment and action over the next decade.

The Fourth National Climate Assessment was released by the Federal government shortly after that, and echoed the rising threats to our economy, businesses, the public sector, and the American nation’s well-being due to the dramatically rising threats inherent in climate change.

For more details on this, see our comments in our November 30 To the Point management brief at: https://ga-institute.com/to-the-point/tune-in-to-this-important-report-the-fourth-official-climate-science-special-report-issued-by-the-u-s-governments-global-change-research-program/

Possible GND Impact on Politics

Some presidential hopefuls have recently been saying that climate change will be among the top — if not the top — issues in 2020 races.

Billionaire Congressman Tom Steyer (California) said that climate change could help Democrats sweep into office in 2020. He told USA Today in December: “When we talk about what’s at stake here, we’re talking about unimaginable suffering by the American people unless we solve the problem over the next 12 years. And I think we are very far from doing that. And it is unclear to me that we can summon that will without having substantial political victories across the board.”

Re-elected House Speaker Nancy Pelosi has said that climate change will become a front-and-center issue if the Democrats take back the house. She told The New York Times in October days before the elections that she would resurrect the defunct Select Committee on Climate Change if the party wins back the House. (The Republican leaders killed the committee in 2011 when they took mid-term power.)

Representative Alexandria Ocasio-Cortez has taken Speaker Pelosi at her word and put the meat on the table with her draft bill.  (During the orientation of the new members, Ocasio-Cortez led a protest outside the Speaker’s office to draw attention to climate change.)

Ocasio-Cortez in the youngest member of the House, from New York’s 14th District in New York City, upsetting a leading Democratic member in the primary. She is a member of the Democratic Socialists of America and was an educator and community organizer in the [NYC] boro/county of The Bronx before running for office.

Background:  She was a winner of an Intel International Science and Engineering Fair in high school; was graduated from Boston University (cum laude); served as an intern in the office of Senator Edward Kennedy; was an organizer in Senator Bernie Sanders’ presidential campaign; was endorsed by Move On, Black Lives Matter, Democracy for America, and others. Including NY Governor Andrew Cuomo, Senators Chuck Schumer and Kirsten Gillibrand, and NYC Mayor Bill deBlasio.

And so against this background — we’ll see where the GND movement goes from here!

Do tune in and learn more about the critical elements of the plan being championed now in the Halls of Congress as the tempo of the conversation increases.  The “60 Minutes” program on the CBS network tomorrow night is sure to create a national buzz, pro and con, and ensure Representative Alexandria Oscasio-Cortez greater notoriety (and both support and condemnation) in the days ahead.

Created January 5, 2019 – updated January 9, 2019

Breaking News: $12 Trillion in Professionally Managed Sustainable Investment Assets — $1-in-$4 of Total U.S. Assets

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

Call it “sustainable and responsible investing” or “SRI” or “ESG investing” or “impact investing” – whatever your preferred nomenclature, “sustainable investing” in the U.S.A. is making great strides as demonstrated in a new report from US SIF.

The benchmark report issued today – “The Report on US Sustainable, Responsible and Impact Investing Trends 2018” – by the U.S. Forum for Sustainable and Responsible Investment (US SIF) puts things in perspective for investors and corporate managers:

  • At the beginning of 2018, the institutional owners and asset management firms surveyed reported total sustainable investment at US$12 trillion AUM – that is 26% of the total assets under professional management in the U.S.A. — $1-in-$4 of all investable assets!
  • That’s an increase of 38% since the last US SIF report at the start of 2016. The AUM of sustainable investments then was $8.72 trillion. That was $1-in-$5.
  • And that was an increase of 33% since the survey of owners and managers at the start of 2014.
  • Sustainable investing jumped following the 2008 financial crisis, with growth of 240% from 2012 to 2014.

The US SIF bi-annual survey of investors began in 1995, when the total of sustainable investments professionally managed was pegged at $639 billion. There has been an 18-fold increase in sustainable investing assets since then – at a compound rate of 13.6% over the years since that pioneering research was done.

The researchers queried these institutions in 2018:

  • 496 institutional owners (fiduciaries such as public employee pension funds and labor funds – these represented the component of the survey results at $5.6 trillion in ESG assets**).
  • 365 asset/money managers working for institutional and retail owners;
    private equity firms, hedge fund managers, VC funds, REITS, property funds;
    alternative investment or uncategorized money manager assets);
  • 1,145 community investing institutions (such as CDFIs).

What is “sustainable investing”?  There are these approaches adopted by sustainable investors:

  • Negative/exclusionary screening (out) certain assets (tobacco, weapons, gaming);
  • Positive/selection of best-in-class considering ESG performance (peer groups, industry, sector, activities);
  • ESG integration, considering risks and opportunities, ESG assets and liabilities);
    Impact investing (having explicit intention to generate positive social and environmental impact along with financial return);
  • Sustainability-themed products.

The top ESG issues for institutional investors in 2018 included:

  • Conflict Risk (terror attacks, repressive regimes) – $2.97 trillion impact;
  • Tobacco related restrictions – $2.56 trillion
  • Climate Change / Carbon-related issues – $2.24 trillion
  • Board Room issues – $1.73 trillion
  • Executive Pay – $1.69 trillion

Asset managers identified these issues as among the most important of rising concerns:

  • Climate change and Carbon
  • Conflict risk

Prominent concerns for asset owners included:

  • Transparency and Corruption
  • Civilian firearms / weapons
  • a range of diversity and equal employment opportunity issues.

The Proxy Voting Arena

The shareowners and asset managers surveyed regularly engage with corporate executives to express their concerns and advocate for change in corporate strategies, practices and behaviors through presentation of resolutions for the entire shareholder base to vote on in the annual corporate elections.

From 2016 to 2018 proxy seasons these resolutions were focused on:

  • Proxy access for shareowners (business associations have been lobbying to restrict such access by qualified shareowners).
  • Corporate Political Activity (political contributions, lobbying direct expenses and expenses for indirect lobbying by business groups with allocated corporate contributions).
  • A range of environmental and climate change issues.
  • Labor issues / equal employment opportunity.
  • Executive compensation.
  • Human Rights.
  • Call for independent board chair.
  • Board Diversity.
  • Call for sustainability reporting by the company.

Public employee pension systems/funds led the campaigns with 71% of the resolutions filed in 2016, 2017 and 2018.

Labor funds accounted for 13% of filings.

Asset/money management firms accounted for 11.5%.

A total of 165 institutional owners and 54 asset managers filed or co-filed resolutions on ESG issues at the beginning of the 2018 proxy voting season.

The ESG Checklist

The institutions and asset managers queried could answer queries that addressed these ESG, community, product factors in describing their investment analysis, decision-making and portfolio construction activities. This is a good checklist for you when discussing ESG issues and topics with colleagues:

The “E” – Environmental:

  • Clean technology
  • Climate change / carbon (including GhG emissions)
  • Fossil fuel company divestment from portfolio, or exclusion
  • Green building / smart growth solutions
  • Pollution / toxics
  • Sustainable Natural Resources / Agriculture
  • Other E issues

The “S” – Social (or “societal”):

  • Conflict risk (repressive regimes, state sponsors of terrorism)
  • Equal employment opportunity (EEO) / diversity
  • Gender lens (women’s socio-economic progress)
  • Human rights
  • Labor issues
  • Prison-related issues (for-profit prison operators)
  • Other S issues

The “G” – Corporate Governance:

  • Board-related issues (independence, pay, diversity, response to shareowners)
  • Executive pay
  • Political contributions (lobbying, corporate political spending)
  • Transparency and anti-corruption policies

Product / Industry Criteria:

  • Alcohol
  • Animal testing and welfare
  • Faith-based criteria
  • Military / weapons
  • Gambling
  • Nuclear
  • Pornography
  • Product safety
  • Tobacco

Community Criteria:

  • Affordable housing
  • Community relations / philanthropy
  • Community services
  • Fair consumer lending
  • Microenterprise credit
  • Place-based investing
  • Small and medium business credit

The report was funded by the US SIF Foundation to advance the mission of US SIF.

The mission: rapidly shift investment practices towards sustainability, focusing on long-term investment and the generation of positive social and environmental impacts. Both the foundation and US SIF seek to ensure that E, S and G impacts are meaningfully assessed in all investment decisions to result in a more sustainable and equitable society.

The bold name asset owners and asset managers and related firms that are members of US SIF include Bank of America, AFL-CIO Office of Investment, MSCI, Morgan Stanley, TIAA-CREF, BlackRock, UBS Global Asset Management, Rockefeller & Co, Bloomberg, ISS, and Morningstar.

Prominent ESG / sustainable investment players include Walden Asset Management, Boston Common Asset Management, Clearbridge, Cornerstone Capital, Neuberger Berman, As You Sow, Trillium Asset Management, Calvert Investments (a unit of Eaton Vance), Domini Impact Investments, Just Money Advisors, and many others.

The complete list is here: https://www.ussif.org/institutions

Information about the 2018 report is here: https://www.ussif.org/blog_home.asp?display=118

About the US SIF Report:  The report project was coordinated by Meg Voorhees, Director of Research, and Joshua Humphreys, Croatan Institute.  Lisa Woll is CEO of US SIF.  The report was released at Bloomberg LP HQs in New York City; the host was Curtis Ravenel, Global Head of Sustainable Business & Finance at Bloomberg. q1

Governance & Accountability Institute is a long-time member. EVP Louis D. Coppola is the Chair of the US SIF Company Calls Committee (CCC) which serves as a resource to companies by providing a point of contact into the sustainable investment analyst community

** Institutional owners include public employee retirement funds, labor funds, insurance companies, educational institutions, foundations, healthcare organizations, faith-based institutions, not-for-profits, and family offices.

Global Warming / Climate Change — What Are Current Weather Events and Dramatic Changes Telling Us?

By Hank Boerner – Chair and Chief Strategist – G&A Institute

The National Geographic describes “Global Warming” as a set of changes to the Earth’s climate, or long-term weather patterns, varying from place-to-place.  The dramatic changes in the rhythms of climate could affect the face of our planet – coasts, forests, farms, mountains…all hang in the balance.

So, also hanging in the balance:  the fate of humanity!

Explains NatGeo:  “Glaciers are melting, sea levels are rising, cloud forests are dying, and wildlife scrambles to keep pace.  It’s becoming clear that humans have caused most of the past century’s warming by releasing heat-trapping gases as we power our modern lives.  Greenhouse gases (GhGs) are at higher levels now than in the last 650,000 years.” *

“Climate Change” is the less politically-volatile term used by leaders in the public and private sectors (such as in the numerous shareholder-presented proxy resolutions that are on the ballots of public companies for owner voting and in the language of corporate sustainability reporting).

Carbon Dioxide emissions (CO2) released into the atmosphere have increased by a third since the start of the Industrial Revolution, and so addressing this challenge would logically be a prime responsibility of those who benefited most from the 200-year-plus revolution – pretty much all of us!

The political climate in most of the developed industrial world is mostly reflective of the will to do “something” – witness the almost 200 sovereign nations signing on to the Paris Agreement in 2015 (“COP 21”) to work together and separately to holding the temperature rise to well below 2-degrees Centigrade (3.5F), the pre-industrial levels — and pursuing efforts to limit the temperature rise to 1.5-degrees C above pre-industrial levels. (“As soon as possible.”)

The Agreement also calls for the increasing society’s ability to adapt to the adverse impacts of climate change and foster climate resilience including low GHG emissions development. **

The outlier nation to the agreement, sad to say, is the world’s largest economy and significant GHG emitter, the United States of America, which has begun the withdrawal process from the Paris Agreement.

This week we present a selection of top stories about climate change – and global warming! – to illustrate the effects of a changed climate around the globe.  And to send signals to the doubting policymakers in Washington DC that the threat is real!

The good news is that many corporate managements, powerful institutional investors, and public policy makers in a growing number of leaders in U.S. cities, states and regions are committed to the goals of the Paris Agreement and working to implement steps to hold the line – to build resilience – that will benefit all of society.

We really do have to hurry — take a look at what is happening around our planet:

This Week’s Top Stories:
Drought, Heat Wave, Wild Fires
— Is the Earth Burning Up?

Earth at risk of becoming ‘hothouse’ if tipping point reached, report warns
(Tuesday – August 07, 2018) Source: CNN – Scientists are warning that a domino effect will kick if global temperatures rise more than 2°C above pre-industrial levels, leading to “hothouse” conditions and higher sea levels, making some areas on Earth uninhabitable.

5-year drought raises questions over Israel’s water strategy
(Monday – August 06, 2018) Source: ABC News – For years, public service announcements warned Israelis to save water: Take shorter showers. Plant resilient gardens. Conserve. Then Israel invested heavily in desalination technology and professed to have solved the problem by…

Our climate plans are in pieces as killer summer shreds records
(Monday – August 06, 2018) Source: CNN – Deadly fires have scorched swaths of the Northern Hemisphere this summer, from California to Arctic Sweden and down to Greece on the sunny Mediterranean. Drought in Europe has turned verdant land barren, while people in Japan and…

Are devastating wildfires a new normal? “It’s actually worse than that,” climate scientist says
(Wednesday – August 08, 2018) Source: CBS News – California Gov. Jerry Brown has called the devastating wildfires tearing through Northern California “part of a trend — a new normal.” But one climate scientists says “it’s actually worse than that.”

Europe battles wildfires amid massive heat wave
(Wednesday – August 08, 2018) Source: ABC News – Record-breaking temperatures across Europe have forced people to sleep in a Finnish supermarket, uncovered a piece of World War II history in Ireland and are making it harder to battle the wildfires that have been raging in Spain…

Don’t despair – climate change catastrophe can still be averted
(Wednesday – August 08, 2018) Source: The Guardian – The future looks fiery and dangerous, according to new reports. But political will and grassroots engagement can change this…

Australia’s most populous state now entirely in drought
(Thursday – August 09, 2018) Source: CBS – CANBERRA, Australia — Australia’s most populous state was declared entirely in drought on Wednesday and struggling farmers were given new authority to shoot kangaroos that compete with livestock for sparse pasture during the…

Nearly 140 people dead amid Japan heat wave
(Thursday – August 09, 2018) Source: WTNH – Japan is dealing with a heat wave that had killed 138 people. The heat wave started back in May and has been roasting the country ever since…

Europe bakes again in near-record temperatures
(Thursday – August 09, 2018) Source: Phys.org – Europe baked in near-record temperatures on Monday but hopes were for some respite after weeks of non-stop sunshine as people come to terms with what may prove to be the new normal in climate change Europe…

* Greenhouse Gases are defined as a gas trapping heat in the atmosphere, contributing to the “greenhouse effect” by absorbing radiation:  carbon dioxide/CO2, methane, nitrous oxide, and flouorinated gases (such as chlorofluorocarbons, sulfur hexafluoride).

** The Paris Agreement is at: https://unfccc.int/sites/default/files/english_paris_agreement.pdf

INSTITUTIONAL INVESTORS LAUNCH ALLIANCE FOCUSED ON HUMAN RIGHTS

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

ICCR Provides Leadership for Investor Collaboration To Advance Corporate Sector and Investor Action on Human Rights Issues

The recently-launched Investor Alliance for Human Rights provides a collective action platform to consolidate and increase institutional investor influence on key business and human rights issues.

For nearly 50 years, the Interfaith Center on Corporate Responsibility (ICCR) has been engaging with corporate managements and boards, coalescing with asset owners and managers and waging campaigns on key E, S and G issues.

ICCR has become a major influence for investors at corporate proxy voting time, and in ongoing investor-corporate engagements.

Consider:  The member institutions have AUM of US$400 billion and influence many other investors (depending on the issue in focus at the time).

ICCR has 300-plus institutional investor members, many (but not all) are faith-based organizations. A good number of member institutions are leaders in making available sustainable & responsible investment products and services. (See representative names in references at end.)

Key issues in focus for ICC members include:

  • Human Rights (key: human trafficking, forced labor, fair hiring practices)
  • Corporate Governance (board independence, CEO comp, lobbying)
  • Health (pharma pricing, global health challenges)
  • Climate Change (science-based GhG reduction targets)
  • Financial Services (risk management for financial institutions, responsible lending)
  • Food (antibiotics in food production, food waste, labor)
  • Water (access, corporate use of water and pollution)

HUMAN RIGHTS IN FOCUS FOR NEW ALLIANCE

On the last issue – Human Rights – ICCR has long been involved in various Human Rights issues back to its founding in 1971 and has been organizing the Investor Alliance for Human Rights since late-fall 2017.  Here are the essentials:

  • Investor Alliance participants will have an effective “Collective Action Platform” for convening, information sharing, and organizing collaboration on action to make the case to corporate decision-makers and public sector policymakers (and other stakeholders) on the need for urgency in addressing human rights issues.
  • The umbrella of a formal alliance will help individual participants to build partnerships and develop collaboration within their own universes of connections (such as NGOs, other investors, community-based organizations, trade groups, corporate leaders, multi-lateral organizations, and other institutions and enterprises).
  • Among the work to be done is the encouragement and support of building Human Rights criteria and methodology into asset owner and manager guidelines, investing protocols, models, and to integrate these in corporate engagements and proxy campaigns, as well as to guide portfolio management. (Buy/sell/hold decision-making.)
  • All of this will help to expand investor reach and influence and strengthen advocacy for best practices in Human Rights by both companies and investors. Leveraging of broader investor influence is key in this regard.

The Alliance will provide participants with a “rapid response” resource to assure that the “investor voices” are clearly heard in corporate board rooms and C-suites, in public sector leadership offices, and in media circles when there are threats posed to effective actions and reforms in Human Rights issues.

The Alliance is outreaching to NGOs, faith-based institutions, academics, media, labor unions, multi-lateral global institutions, trade and professional associations, corporate managements and boards, and of course to a wide range of asset owners and managers.

# # #

The key player at ICCR for the Alliance is David Schilling, a veteran staff member who is Senior Program Director – Human Rights & Resources. (email:  dschilling@iccr.org)

David joined ICCR in 1994 and has led initiatives on human rights in corporate operations in Africa, Asia and Latin America, often visiting factories and meeting with workers on the ground.

David is currently Chair, Advisory Board of the Global Social Compliance Program; member, International Advisory Network of the Business and Human Rights Resource Centre; member, RFK Center Compass Education Advisory Committee; UNICEF CSR Advisory Group; and, Coordinator (with ICCR member institutions) of the Bangladesh Investor Initiative (a global collaboration in support of the “Accord for Fire and Building Safety”.

# # #

ICCR stresses that it sees its work “through a social justice lens.”  For more than two decades members and staff have worked to eradicate human rights abuses in corporate operations and across global supply chains, such as forced child labor in cotton fields in Uzbekistan.

The organization has an Advisory Committee of Leaders in Business and Human Rights (formed in late-2016).  Members include representatives of Boston Common Asset Management; Shift; Landesa; The Alliance for a Greater New York; Oxfam America; Mercy Investment Services; International Corporate Accountability Roundtable; and Global Witness.

# # #

ICCR has a long history in Human Rights progress.  The organization came together as a committee of the mainstream Protestant denominations under the  umbrella in 1971 to organize opposition to the policies and practices of “Apartheid” in South Africa.

Over time, the U.S. corporations operating in South Africa stopped operations there.  More than 200 cities and municipalities in the United States of America adopted anti-Apartheid policies, many ending their business with companies operating in South Africa.

Protests were staged in many cities and on many college & university campuses, and U.S. and European media presented numerous news and feature presentations on the issue.

In time, the government of South Africa dismantled Apartheid and the country opened the door to broader democratic practices (the majority black population was formerly prohibited to vote).

Over the years since the Apartheid campaign, ICCR broadened its focus to wage campaigns in other societal issues, including:

  • Focus on fair and responsible lending, including sub-prime lending and payroll lending.
  • Putting climate change issues on the agenda for dialogue with corporations, including the demand for action and planning, and then greater disclosure on efforts to curb GHG emissions.
  • Encouraging investment in local communities to create opportunities in affordable housing, job development, training, and related areas.
  • Promoting greater access to medicines, including drugs for treatment of AIDS in Africa, and affordable pricing in the United States.
  • Promoting “Impact Investing” – for reasonable ROI as well as beneficial outcomes for society through investments.
  • Promoting Islamic Finance.
  • On the corporate front, requesting greater transparency around lobbying by companies to influence climate change, healthcare and financial reforms, both directly and through trade associations and other third-party organizations.
  • Opposing “virtual-only” annual corporate meetings that prevent in –person interaction for shareholders.

Proxy Campaigns – Governance in Focus:

ICCR members are very active at proxy voting time.  Among the “wins” in 2017:

  • Getting roles of (combined) Chair & CEO split – 47% support of the votes for that at Express Scripts and 43% at Johnson & Johnson; 39% at Chevron.
  • More disclosure on lobbying expenditures – 42% support at Royal Bank of Canada and 41% at First Energy; 35% at Cisco and 25% at IBM.

# # #

Notes and References:

Information on the new Alliance is at: http://iccr.org/iccr-launches-new-alliance-amplify-global-investor-influence-human-rights

ICCR’s web site is at: www.iccr.org

And at http://iccr.org/our-issues/human-rights/investor-alliance-human-rights

The Alliance initiative is supported with funding from Humanity United and Open Society Foundations.

Influence and Reach:  The ICCR member organizations include the AFSCME union fund, Walden Asset Management, Boston Common Asset Management, Oxfam, The Maryknoll Fathers and Brothers, and Maryknoll Sisters, American Baptist Churches, Mercy Investments, Christian Brothers Investment Services (CBIS), Wespath Investment Management, Everence Financial, Domini Social Investments, Church of England Ethical Investment Advisory Group, Gabelli Funds, Trillium Asset Management, Calvert Group, Clean Yield, The Nathan Cummings Foundation, and other institutional investors.

 

 

 

 

 

Urban Centers – Preferable Place for Billions of Us to Settle Down — So What About Helping Growing Cities Become More Sustainable?

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

In focus:  With the majority of the population moving into urban centers in coming decades…how can the action of today’s city planners create a better future for us?  Scientific American shares some perspectives.

The Seto Lab at Yale University tells us that in 2008, the global urban population exceeded the world’s rural population for the first time – and that by 2050, 70% of the population will be living in urban areas.  Nearer term, by 2030 there will be 1.5 million square kilometers of new urban land area.  That will triple the global urban land area of the year 2000 as we entered the 21st Century.

The forecasts suggest a limited window opportunity to shape future urban development.  Author Chan Heng Chee offers suggestions in a very interesting Scientific American article for you – our Top Story this week.

Author Chan Heng Chee is Ambassador-at-Large for the Singapore Foreign Ministry, and chair of the Lee Kuan Yew Center for Innovative Cities at the Singapore University of Technology and Design.  We may remember her as the ambassador to the U.S.A. (1996-2012).

She reports from this year’s World Cities Summit  in Singapore, which this year focused on “Livable and Sustainable Cities: Embracing the Future Through Innovation and Sustainable Cities.”

One necessary ingredient for embracing sustainable development:  a visionary leader and a desire to implement the vision.  The availability of the Sustainable Development Goals is another.  Institutional structures are needed to put the vision in place (she offers examples from her home country of Singapore). And the fellowship of the city leaders worldwide is important – the example being the C40 Cities Climate Leadership Group.

The message: You are not alone – and collaboration and cooperation is critical if the civic, business, financial and other sectors are going to make the world’s urban areas sustainable in this century.  This is a fascinating report that you will want to read.

FYI – the Top 10 Cities roster today (in descending order) identifies:  Zurich (#1), Singapore, Stockholm, Vienna, London, Frankfurt, Seoul, Hamburg, Prague, and Munich at #10).

Top Stories

3 Ways Cities Can Become More Sustainable
(Monday – July 09, 2018) Source: Scientific America – With the majority of the population moving into urban centers in coming decades, the actions of city planners now could create a better future for us all. But how?

And related to this story:
UN forum spotlights cities, where struggle for sustainability ‘will be won or lost’
(Friday – July 13, 2018) Source: Modern Diplomacy – Although cities are often characterized by stark socioeconomic inequalities and poor environmental conditions, they also offer growth and development potential – making them central to the 2030 Agenda for Sustainable Development…

Cities and states mull straw ban
(Wednesday – July 11, 2018) Source: ABC Ban – Starbucks’ announcement that it will be going strawless soon to help the environment is part of a broader effort from private companies like McDonald’s and Marriott and cities like New York and Seattle to curb the use of plastic…

Information about the Seto Lab and its work in urbanization and global change: https://urban.yale.edu/research/theme-3

7 Reasons Why America is Rethinking Capitalism Now

Guest Post by Linda E. Dunbar

Global Public Affairs Executive: PR Strategist, Spokesperson, Employee Communications Leader Adept at Engaging Key Stakeholders.

7 Reasons Why America is Rethinking Capitalism Now

There is a move afoot to change capitalism as we know it. A radical overthrow by futuristic anarchist forces? Hardly. Actually, the US business community is bravely harking back to its pre-Milton Friedman roots.

In September 1970, the 5”0’, Brooklyn-born Friedman, a well-known American economist who would earn a Nobel prize in economics six years later, published an opinion piece in The New York Times.

The title — “The Social Responsibility of Business is to Increase Profits” — summed up his thesis succinctly. In his piece, he accused US business of “preaching pure and unadulterated socialism” in attempting to address social issues of the day.

Friedman’s dismissive view: “The business men believe that they are defending free enterprise when they declaim that business is not concerned ‘merely’ with profit but also with promoting desirable ‘social’ ends; that business has a ‘social conscious’ and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers.”

To set the scene, when Friedman wrote his piece, life was very different from today although there remains no shortage of societal issues for the US business community to address.

In 1970, a woman needed a man, any man, even her 17-year-old son, to sign a business loan, get a mortgage or a credit card regardless of her income. Her income would then be discounted by the lender by as much as 50 percent when deciding how much credit to extend. In those days…

Equal access to credit for all, at least on paper, would not come to be in the US until the Congress passed the Equal Credit Opportunity Act of 1974.

Just the year before, in 1969 Rep. Charlotte Reid (R-Ill.) became the first woman to wear trousers in the U.S. Congress and Barbra Streisand became the first woman to attend the Oscars in pants.

Also, in 1969 the Stonewall Inn riots in Greenwich Village launched the gay pride movement.

The unpopular Vietnam War would rage on another five years until the fall of Saigon in 1975.

Despite the passage of the historic Civil Rights Act of 1964, discrimination against minorities continued to be rampant. In Loving vs. the State of Virginia, the U.S. Supreme Court case that overturned “miscegenation” laws in the US, was decided in favor of the plaintiffs a mere three years after in the year 1967.

The first Earth Day was proclaimed in April 1970.

The animal rights movement had not yet gotten momentum. In fact, People for the Ethical Treatment of Animals (PETA) was not founded until 1980.

Following Friedman’s pronouncement, Corporate America and its corporate governance practices made shareholder value the end-all-and-be-all of corporate thinking.

Even if that approach clearly didn’t make any sense. Anyone in business today knows intuitively no customers no business no employees no business. But along with that pronouncement came the opportunity for many major U.S. companies to take a pass on societal issues, even issues that might have been caused by business practices (extractive industries and their activities affecting the environment come to mind).

Thankfully, we have come full circle and Corporate America — in fact the global corporate business community — is coming together to rethink capitalism and its societal impact. Recent comments by asset management giants and others have been well-received as we look toward creating change.

What does rethinking capitalism mean? And why now?

Better Capitalism. Tempered Capitalism. The New Capitalism. Conscious Capitalism.

Whatever it is called, helping to transform the short-term, insular thinking currently stifling the potential of American business and its ability to effectively connect with stakeholders is an important element of the movement.

Understanding that although businesses have an important fiduciary responsibility to shareholders, the enterprises exist for reasons other than to solely enrich shareholders (and business leaders who understand that perform better than those who don’t).

And the core: understanding your reason for existing, your purpose, what business you are really in is critical for long term success. As in do what you love and the money will follow.

“Purpose” turns out to be an effective organizing principle for many businesses. This thought process is catching on.

Here are my seven reasons why I think the time is ripe to rethink capitalism and mesh social impact and success.

1. Social media – Businesses just can’t ignore customers and employees any more. Before social media an unhappy consumer complained to roughly 17 other people. Now unhappy customers have a direct impact on reputation in a way they just could not before social media and a poor reputation eventually leads to lost revenue.

2. The Age of Authenticity — People in the US are tired of literal and figurative airbrushing. People want companies to do what they say they will. And they want them to strike the right note. If your advertising firm has advised you to be edgy, you have no margin for error. See number 1.

3. Millennials – There are over 79 million Millennials and the numbers of men and women Gen Z are close behind. They expect a different relationship between society and business — and they are not taking no for an answer. The idea that life is too short to be someone you are not or spending time in a way that you do not want to is part of their DNA. Gay, transgender, what have you, Millennials and Gen Z are not batting an eyelash. Equality, diversity, and inclusion are table stakes. They expect diversity, inclusion, equality where they shop, eat, work. If not, they will go somewhere else. Period.

4. Additional demographic shifts – The minority is becoming the majority and in 2019, the majority of U.S. children will be minorities. As demographics shift no business can be successful by leaving people out, be they customers or employee or potential customer or employees. This loops back to numbers 1, 2, and 3.

5. Climate change and the detrimental impact of humans on the planet is real – some problems we — business, government, NGOs, activists, the general public — have no choice but to tackle together. Like having air to breathe and water to drink.

6. The #Me too, #Times up Movement – Dignity, respect, and equality in the workplace, everywhere actually, are a given. And these movements have ramifications beyond sexual harassment. According to CNN, #MeToo and #TimesUp have pushed 48% of companies to review pay policies. Gender pay equity has been an issue since possibly the beginning of time and now we are seeing movement on this issue.

7. The data – The data says inclusive, diverse companies perform better.
How much better will companies perform when their purpose is at the core of what they do, long-term strategy is understood and embraced by everyone from the board on down, and stakeholders are effectively engaged? That remains to be seen but the prognosis is good!

If this article resonated with you, please feel free to connect with me directly and also like, comment or share.

7 Reasons Why America is Rethinking Capitalism Now

Email me at: linda.dunbar@outlook.com
Linked In: https://www.linkedin.com/in/lindaedunbar/

U.S. States and Cities — “Still In” to the Paris Agreement — and Great Progress is Being Made

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

This is our second commentary this week on the occasion of the first anniversary of the decision by the Trump White House in June 2017 to begin the multi-year process of formal withdrawal of the United States of America from the Paris COP 21 climate agreement…

The action now is at the state and municipal levels in these United States of America.

Where for years the world could count on US leadership in critical multilateral initiatives – it was the USA that birthed the United Nations! – alas, there are 196 nations on one side of the climate change issue (signatories of the 2015 Paris Agreement) and one on the other side: the United States of America. At least at the sovereign level.

Important for us to keep in mind: Individual states within the Union are aligned with the rest of the world’s sovereign nations in acknowledging and pledging to address the challenges posed by climate change, short- and longer-term.

Here’s some good news: The United States Climate Alliance is a bipartisan coalition of 17 governors committed to upholding the goals of the Paris Agreement on climate change. These are among the most populous of the states and include states on both coasts and in the nation’s Heartland.

The Paris meetings were in 2015 and at that time, the USA was fully on board. That was in a universe now far far away, since the election of climate-denier-in-chief Donald Trump in 2016.

On to the COP 23 and the USA

In 2017, two years after the Paris meetings, the USA officially snubbed their sovereign colleagues at the annual climate talks. A number of U.S. public and private sector leaders did travel to Bonn, Germany, to participate in talks and represent the American point-of-view. This included Jerry Brown, Governor, California (the de facto leader now of the USA in climate change); former New York City Mayor (and Bloomberg LP principal) Michael Bloomberg; executives from Mars, Wal-mart and Citi Group.

While the U.S. government skipped having a pavilion at the annual United Nations-sponsored climate summit for 2017, the US presence was proclaimed loud and clear by the representatives of the U.S. Climate Action Center, representing the climate change priorities of US cities, states, tribes and businesses large and small who want action on climate change issues.

Declared California State Senator Ricardo Lara in Bonn: “Greetings from the official resistance to the Trump Administration. Let’s relish being rebels. Despite what happens in Washington DC we are still here.”

# # #

As the one year anniversary of President Trump’s announcement to leave the global Paris Agreement (June 1, 2018), state governors announced a new wave of initiatives to not only stay on board with the terms agreed to in Paris (by the Obama Administration) but to accelerate and scale up their climate actions.

Consider: The Alliance members say they are on track to have their state meet their share of the Paris Agreement emission targets by 2025.

Consider: The governors represent more than 40 percent of the U.S. population (160 million people); represent at least a US$9 trillion economic bloc (greater than the #3 global economy, Japan); and, as a group and individually are determined to meet their share of the 2015 Paris Agreement emissions targets.

Consider: Just one of the states – California – in June 2016, according to the International Monetary Fund, became the sixth largest economy in the world, ahead of the total economy of France (at #7) and India (#8).

Consider: The US GDP is estimated at $19.9 trillion (“real” GDP as measured by World Bank); the $9 trillion in GDP estimated for the participating states is a considerable portion of the national total.

The states involved are: California, Colorado, Connecticut, Delaware, Hawaii, Maryland, Massachusetts, Minnesota, New Jersey, New York, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington, and the Commonwealth of Puerto Rico.

The initiatives announced on June 1, 2018 include:

Reducing Super Pollutants (including hydrofluorocarbons (HFCs), one of the Greenhouse Gases, and harnessing waste methane (another GhG).

Mobilizing Financing for Climate Projects (through collaboration on a Green Banking Initiative); NY Green Bank alone is raising $1 billion or more from the private sector to deploy nationally).

Modernizing the Electric Grid (through a Grid Modernization Initiative, that includes avoidance of building out the traditional electric transmission/distribution infrastructure through “non-wire” alternatives).

Developing More Renewable Energy (creating a Solar Soft Costs Initiative to reduce costs of solar projects and drive down soft costs; this should help to reduce the impact of solar tariffs established in January by the federal government).

Developing Appliance Efficiency Standards (a number of states are collaborating to advance energy efficiency standards for appliances and consumer products sold in their state as the federal government effort is stalled; this is designed to save consumers’ money and cut GhG emissions).

Building More Resilient Community Infrastructure and Protect Natural Resources (working in partnership with The Nature Conservancy and the National Council on Science and the Environment, to change the way infrastructure is designed and procured, and help protect against the threats of floods, wildfires and drought).

Increase Carbon Storage (various states are pursuing opportunity to increase carbon storage in forests, farms and ecosystems through best practices in land conservation, management and restoration, in partnerships with The Nature Conservancy, American Forests, World Resources Institute, American Farmland Trust, the Trust For Public Land, Coalition on Agricultural Greenhouse Gases, and the Doris Duke Charitable Foundation).

Deploying Clean Transportation (collaborating to accelerate deployment of zero-emissions vehicles; expanding/improving public transportation choices; other steps toward zero-emission vehicles miles traveled.

Think About The Societal Impacts

The powerful effects of all of this state-level collaboration, partnering, financial investment, changes in standards and best practice approaches, public sector purchasing practices, public sector investment (such as through state pension funds), approvals of renewable energy facilities (such as windmills and solar farms) in state and possibly with affecting neighboring states, purchase of fleet vehicles…more.

California vehicle buyers comprise at least 10% (and more) of total US car, SUV and light truck purchases. Think about the impact of vehicle emissions standards in that state and the manufacturers’ need to comply. They will not build “customized” systems in cars for just marketing in California – it’s better to comply by building in systems that meet the stricter standards on the West Coast.

US car sales in 2016 according to Statista were more than 1 million units in California (ranked #1); add in the other states you would have New York (just under 400,000 vehicles sold); Illinois (250,000); New Jersey (250,000) – reaching to about million more. How many more vehicles are sold in the other Coalition states? Millions more!

(Of course, we should acknowledge here that the states not participating yet have sizable markets — 600,000 vehicles sold in Florida and 570,000 in Texas.)

Project that kind of effect onto: local and state building codes, architectural designs, materials for home construction; planning the electric distribution system for a state or region (such as New England); appliance design and marketing in the Coalition states (same issues – do you design a refrigerator just for California and Illinois?).

There are quotes from each of the Coalition governors that might be of use to you. (Sample: Jerry Brown, California: “The Paris Agreement is a good deal for America. The President’s move to pull out was the wrong call. We are still in.”) You can see them in the news release at: https://static1.squarespace.com/static/5a4cfbfe18b27d4da21c9361/t/5b114e35575d1ff3789a8f53/1527860790022/180601_PressRelease_Alliance+Anniversary+-+final.pdf

# # #

In covering the 2017 Bonn meetings, Slate published a report by The Guardian with permission of the Climate Desk. Said writers Oliver Milman and Jonathan Watts: “Deep schisms in the United States over climate change are on show at the U.N. climate talks in Bonn, where two sharply different visions of America’s role in addressing dangerous global warming have been put forward to the world.

“Donald Trump’s decision [to pull out of the Paris Climate Agreement] has created a vacuum into which dozens of city, state and business leaders have leapt, with the aim of convincing other countries that the administration is out of kilter with the American people…”

# # #

At the US City Level

Jacob Corvidae, writing in Greenbiz, explains how with the White House intending to withdraw, cities are now in the driver’s seat leading the charge against climate change.

Cities have more than half of the world’s populations and have the political and economic power to drive change.

The C40 Cities Climate Leadership Group is the Coalition helping cities to make things happen. The C40 Climate Action Planning Framework is part of a larger effort to make meaningful progress toward carbon reduction goals and build capacity at the municipal level. Cities are expected to have a comprehensive climate action plan in place by 2020. This will include 2050 targets and required interim goals.

The cities have the Carbon-Free City Handbook to work with; this was released in Bonn in 2017 at COP 23. There are 22 specific actions that can (1) drive positive impacts and (2) create economic development. This September the Carbon-Free Regions Handbook will be available. There is information for you about all of this at: https://www.greenbiz.com/article/every-action-how-cities-are-using-new-tools-drive-climate-action

The clarion call, loud and clear: We Are Still In!  Watch the states, cities and business community for leadership on meeting climate change issues in the new norms of 2018 and beyond.

Dispatch From London and The Economist Sustainability Summit 2018

Guest Post By Juliet Russell – Sustainability Reporting Analyst, G&A Institute

The Economist’s third annual Sustainability Summit was convened in London on March 22nd, 2018. I attended as a representative of G&A Institute.

The discussions focused on how to shift from “responsibility to leadership”: how to lead and encourage co-operation on the path to progress.

I was impressed that significant players from a diverse range of sectors attended the conference, including representatives of Government, NGOs, Business and Academia. Panelists ranged from the CEO of Sainsbury’s, to Google’s Lead for Sustainability, to the Chair of the Board of Directors for Greenpeace and to a Deputy Mayor of London.

Each provided their own views and experiences of sustainability leadership and how to really see actions, instead of ‘just talk and promises’.

The key themes from the day centered around the need for collaboration, communication, shared responsibility, disruptive innovation, combatting short-termism and internalizing sustainability into core strategy and business models.

 

One of the most poignant messages for me was the need for understanding the urgency of the issues we are facing today, particularly in relation to climate change – “we are behaving as though the delta is zero and the delta is clearly not zero” (Jay Koh, The Lightsmith Group).

An attendee told a story of new LEED Platinum Certified buildings in Seattle that everyone is of course proud of — but in 30 years these super energy-efficient buildings will be underwater because we’re too busy focusing on small wins and continual growth, failing to act fast enough or understand the urgency when it comes to climate change and sea-level rise.

As quoted from Baroness Bryony Worthington of the Environmental Defense Fund – “…winning slowly with climate change is the same as losing!”

The conference was incredibly insightful, with such a breadth of timely and interesting topics, which highlighted different areas of debate and offered up potential solutions. Four of the panel discussions I feel are particularly worth highlighting:

1)    ‘A TALE OF THREE CITIES’
Discussion led by Mark Watts, Director of C40 Cities Climate Leadership Group
and featuring three city government representatives: Shirley Rodrigues, Deputy Mayor of London (Environment and Energy); Solly Tshepiso, Mayor of Tshwane, South Africa; and,  Karsten Biering Nielsen, Deputy Director of Technical and Environmental Administration for the City of Copenhagen.

The lack of adequate and strategic government action is failing so far in preventing climate change and also in reaching the United Nations Sustainable Development Goals (SGDs).

Mayor Solly discussed as example how slow progress on Paris Agreement targets were partly due to the lack of communication from top Government-level down to the city-level in South Africa. City-to-city communication and partnerships were touted as solutions to these kind of problems, as well as being vital in reaching the SDGs.

The C40 Cities Group facilitates this kind of partnership and network through the sharing of best-practice and successful innovation among their 92 affiliated cities around the world.

2)    ‘PIECES OF THE PUZZLE’
Discussion led by Christopher Davis, International Director of Corporate Responsibility and Campaigns from The Body Shop International.

This panel discussion focused around how to “do good and do well,”; Chris suggested that we need to be gearing business to be truly sustainable based on what the planet needs – not the economy or the shareholders – and creating benchmarks against planetary and societal needs.

Essential consideration for creating a sustainable business:  when sustainability is not an add-on function but embedded in the strategy and business model and thus integral to all activities. The Body Shop International management will know that they have been successful in their sustainability mission when sustainability is ingrained in everything the company is doing and they no longer have a need for a separate sustainability team.

3)    ‘CHANGING MINDS’
Discussion led Dr. Simone Schnall from the University of Cambridge and Prerana Issar from the UN World Food Programme.

This discussion revolved around the relevance of ‘nudging’ in changing behaviour (a behavioral economics approach) to push progress in sustainability. Dr. Simone discussed the concept of ‘nudging’ – creating a choice architecture, which is set up so that people are more inclined to go for the ‘beneficial’ option, gently pushing people to do the right thing.

An example of this might be in putting the recycled paper products at eye-level, with the products made from less sustainable materials at a more awkward height to see and reach.

Essentially, using nudging, we bypass the attempt at changing minds but still change the behaviour.

This can help to reduce problems such as ‘moral licensing’, where people feel licensed to do something ‘bad’ if they have just done something morally good (and vice versa). For example, when using energy efficient products, some people then feel they are able to use them more often because they are doing a ‘good’, which actually negates the positive efficiency benefit.

Nudging may be more and more necessary as actions towards sustainability become more urgent, as we can’t generally rely on society to make the best and informed decisions all the time. Though as nudging still relies on choice, is this enough to make us change? In reality, society may need more guidance and regulation and here, there’s a role for stricter governance and policy.

4)    ‘PIECES OF THE PUZZLE’
Discussion led by Marie-Claire Daveu, Chief Sustainability Officer for Kering.

Touching on the themes of innovation, partnerships and collaboration, Marie-Claire discussed a tool that Kering developed and are using: their Environmental Profit and Loss (“E P&L”).

Many people around the world and across sectors acknowledge that over-exploitation and degradation of the environment and our resources are partially due to the fact that these resources, our ‘natural capital’, have not been accounted for in economic decision-making and cost-benefit analyses.

Because of this, we are failing to internalize the negative externalities, which is crucial if we are to properly be accountable and responsible for our actions in society today, thus failing to understand the true environmental consequences of our actions.

Many businesses would fail to acknowledge the environment as a stakeholder unless it explicitly showed up on their profit and loss accounting.

Kering, a first-mover in their field, created and proposed an E P&L accounting tool as a way to do this and it can be applied throughout the entire value chain. This tool allows identification of impact areas and thus increases ability to reduce it.

Kering also provide their E P&L methodology open-source, to encourage other companies to follow and increase their accountability. This hones in on the knowledge-sharing and sharing of best-practice theme.

During the final session of the day, editors from The Economist newspaper came up with their main takeaways, the “four Ps”:

  • Pragmatic – that is, moving from debating who is responsible and asking, ‘is it really happening?’ to understanding that the situation “is what it is” — and we need to just get on with it. For this, collaborations at all levels will be key.
  • Persistent – sustainability needs to be talked about and implemented persistently, in order to become deeply embedded – not something that has the ‘fickleness of fashion’ – being ‘in’ the one day and passé the next. Persistence can help to bring a necessary sense of depth to the issues and challenges we are facing, in order to trigger action.
  • Problem – understanding reality and assessing our achievements: if we add up all of our efforts today, is it anywhere near enough? I’m sure you’ll all agree that the answer is most definitely not. How do we scale up these efforts effectively? We need to be mindful of the scale of the threats the planet and society face – increasing measurement and transparency can help to uncover this.
  • Prioritization – at present, we can’t robustly value different externalities, which is necessary for internalizing them and dealing in the most efficient and effective way. We must remember to be aware that each trade-off has consequences and consider alternative actions.

Coming away from this wonderful conference, it was clear to me that the main takeaway was of the potential of collaboration – within companies, within industries, between industries, and across sectors. This was picked up on in nearly every talk.

We need a whole ‘ecosystem’ featuring collaboration (involving business, NGOs, government, academia and citizens) in order to win with the current challenges we’re facing; to really progress in sustainability and work towards meeting the United Nations’ Sustainable Development Goals. The conference was undoubtedly a timely and powerful call for action.

G&A Institute Research Results: 85% of the S&P 500® Index Companies Published Sustainability / Responsibility / CR / Citizenship Reports in 2017

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

One of the world’s most important benchmarks for equity investors is the S&P 500 Index®, a proprietary market-value weighted “basket” of the top stocks that represent about 80% of the U.S. equity markets according to the index owner, S&P Dow Jones Indices/McGraw Hill Financial.

Market Clout:  There are about US$8 trillion in Assets Under Management benchmarked to the index  – companies included in the index have a market-cap of US$6 billion or more (ticker:SPX).

More than six years ago the G&A Institute team decided to focus on the companies in the index to determine their level of (or lack of) ESG / Sustainability / CR / Citizenship disclosure and reporting.

Our first look-see was for year 2011 corporate reporting activities and after scouring the known sources  — each of the corporate websites, IR reports, printed reports, search engines results, connecting with companies and more —  we found just about 20% or about 100 of the large-cap index 500 companies were doing “something” along the lines of what we can describe today as structured reporting.  There were numerous brochure-type publications that did not qualify as a structured report of value to investors and stakeholders.

The GRI Was a Favored Framework – Then and Now
A good number of the early reporting companies were following the Global Reporting Initiative (GRI) framework for reporting guidance (that was for G3 and G3.1 at the time), and some perhaps had some other form of reporting (such as publishing key ESG performance indicators on their website or in print format for stakeholders); GRI’s G4 was later embraced by the 500.  And now we move on to the GRI Standards, which we are tracking for 2018 reporting by the 500.

This initial research effort was a good bit of work for our analyst team because many of the companies simply did not announce or publicize the availability of their sustainability et al report. (Some still do not announce, even in 2017 and 2018!)

The response to our first survey (we announced the results in spring 2012) was very encouraging and other organizations began to refer to and to help publicize the results for stakeholders.

We were pleased that among the organizations recognizing the importance of the work was the GRI; we were invited to be the data partner for the United States, and then the United Kingdom and the Republic of Ireland.  That comprehensive work continues and is complementary to the examination of the 500.

The 2011 Research Effort – Looking Back, The Tipping Point for Sustainability Reporting

Looking back, we can see that the research results were early indications of what was going on in the corporate and investment communities, as more asset owners and managers were adopting ESG / sustainability approaches, investment policies, engagement programs — and urging more public company managements to get going on expanded disclosure beyond the usual mandated financials (the “tangibles” of that day).

Turns out that we were at an important tipping point in corporate disclosure.

Investor expectations were important considerations for C-suite and board, and there was peer pressure as well within industries and sectors, as the big bold names in Corporate America looked left and right and saw other firms moving ahead with their enhanced disclosure practices.

And there was pressure from the purchasing side – key customers were asking their corporate supply chain partners for information about their ESG policies and practices, and for reports on same.  There was an exponential effect; companies within the 500 were, in fact, asking each other for such reports on their progress!

We created a number of unique resources and tools to help guide the annual research effort.  Seeing the characteristics and best practices of sustainability reporting by America’s largest and for the most part best-known companies we constantly expanded our “Sustainability Big Data” resources and made the decision to closely track S&P 500 companies’ public reporting — and feed the rich resulting data yield into our databases and widely share top-line results (our “Flash Report”).

The following year (2013) we tracked the 500 companies’ year 2012 reporting activities – and found a very encouraging trend that rang a bell with our sustainable investing colleagues:  a bit more than half of the 500 were now publishing sustainability et al reports.  Then in 2013, the numbers increased again to 72%…then 75%…then 81%…and now for 2017, we reached the 85% level.  The dramatic rise is clearly evident in this chart:

Note that there are minor annual adjustments in the composition of the S&P 500 Index by the owners, and we account for this in our research, moving companies in and out of the research effort as needed.

Louis Coppola, EVP of G&A Institute who designs and manages the analysis, notes:  “Entering 2018, just 15% of the S&P 500 declined to publish sustainability reports. The practice of sustainability reporting by the super-majority of the 500 companies is holding steady with minor increases year after year. One of the most powerful driving forces behind the rise in reporting is an increasing demand from all categories of investors for material, relevant, comparable, accurate and actionable ESG disclosure from companies they invest in, or might consider for their portfolio.

“Mainstream investors are constantly searching for larger returns and have come to the conclusion that a company that considers their material Environmental, Social, and Governance opportunities and risks in their long-term strategies will outperform and outcompete those firms that do not. It’s just a matter now of following the money.”

Does embracing corporate sustainability in any way impact negatively on the market performance of these large companies?  Well, we should point out that the annual return for the SPX was 22% through 12-13-18.   You can read more in our Flash Report here.

Thank you to our wonderful analyst team members who over the years have participated in this exhaustive search and databasing effort.   We begin our thank you’s to Dr. Michelle Thompson, D.Env, now a postdoc fellow supporting the U.S. Department of Energy in the Office of Energy Policy Systems Analysis; and her colleague, Natalia Valencia, who is now Senior Research Analyst at LAVCA (Latin American Venture Capital Association).  Their early work was a foundational firming up of the years of research to follow.

Kudos to our G&A Research Team for their significant contributions to this year’s research report:  Team Leader Elizabeth Peterson; analyst-interns Amanda Hoster, Matthew Novak, Yangshengling “UB” Qui, Sara Rossner, Shraddha Sawant, Alan Stautz, Laura Malo Yague, and Qier “Cher” Zue.

We include here a hearty shout out to the outstanding analyst-interns who have made great contributions to these research efforts in each year since the start of the first project back in 2011-2012.  It’s wonderful working with all of these future leaders!

The reports from prior years are posted on the G&A Institute website: https://www.ga-institute.com/research-reports/research-reports-list.html

Check out our Honor Roll there for the full roster of all of the talented analysts who have worked on these reports and numerous other G&A Institute research that we broadly share with you when the results are in.  Their profiles (which we work with our valued colleagues to keep up to date as they move on to great success in their careers) are on the G&A website: https://www.ga-institute.com/about-the-institute/the-honor-roll.html

Footnote:  As we examine 1,500 corporate and institutional reports each year we see a variety of titles applied:  Corporate Sustainability; Corporate Social Responsibility; Corporate Responsibility; Corporate Citizenship (one of the older titles still used by GE and other firms); Corporate Stewardship; Environmental Sustainability…and more!

If you would like to have information about G&A Institute research efforts, please connect with us via our website.