Terra Incognita For Climate Change Policy – “Dead Ahead” As #44 Leaves / #45 Assumes Responsibility for Public Policy

We are about to enter “uncertain terrain” or as the ancient Romans called it, terra incognita - when it comes to what [national] public policies the United States of America will / or will not pursue in the days ahead regarding the complex issues surrounding “climate change” (or dare we say…”global warming”).

Elected officials may /or may not / pay attention to, or adopt the recommendations emanating from, the Federal government’s official research and analysis bodies and those closely affiliated with the U.S. government. Politics. Worldviews. Business/vested interests. Pandering to the base. Ignorance – deliberate and otherwise. All of these can get in the way and cloud the political lens of the U.S. senator, member of the House, appointed cabinet officer (the secretary)…and higher up.

In this last week of the eight-year reign of the 44th Chief Executive, Barack Obama, the influential National Academy of Sciences (NAS) put out a report and made recommendations that contained a specific metric that we will no doubt be hearing about no matter the side of the climate change issues we are on.

The question posed is:  what is the “social cost of carbon???” The answer from NAS is $36 per ton for carbon dioxide. Remember that “monetary cost” number: $36 per ton when we do a proper cost-benefit analysis (positive, negative) on the various impacts on human societies (flood, drought; impacts on agriculture, human health, etc.). ALL have economic consequences. (The new report is an updating estimation of the social cost of carbon in 2017.)

NAS is a private, not-for-profit society established by an Act of Congress and signed into law by President Abraham Lincoln in 1863. The society provides independent, objective advice to public sector leaders in the fields of science and technology. Consider this: Over the years some 500+ members have won the Nobel Prize.

Under the NAS banner, there are two important subgroups: The National Academy of Engineering (1964) and the National Academy of Medicine (1970).  All together, there are 6,000 experts involved from the various field. NAS says in the matters of engineering, science and medicine, Congress and the White House issue legislation (laws, which become rules) or Presidential Executive Orders based on the society’s recommendations.

The hometown newspaper of the nation’s capital published the results with an appropriate headline: “Scientists have a new way to calculate what global warming costs. Trump’s team isn’t going to like it.” (The Washington Post story by Chelsea Harvey is our featured story this week.)

And you can purchase the report from NAS / The National Academies Press in paperback (“Valuing Climate Change” – $80.00) or download a FREE PDF copy as a guest at https://www.nap.edu/catalog/24651/valuing-climate-damages-updating-estimation-of-the-social-cost-of

Featured Story

Scientists have a new way to calculate what global warming costs. Trump’s team isn’t going to like it.
(Friday - January 13, 2017)
Source: Washington Post - How we view the costs of future climate change, and more importantly how we quantify them, may soon be changing. A much-anticipated new report, just released by the National Academy of Sciences, recommends major updates to a…

The Results Are In: Sustainable, Responsible, Impact Investing by U.S. Asset Managers At All-time High — $8 Trillion!

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

We have an important update for you today: The US SIF Report on “US Sustainable, Responsible and Impact Investing Trends, 2016,” was released this week.

The top line for you today: In the U.S.A., sustainable, responsible and impact (SRI) investing continues to expand — at a rapid and encouraging pace.

As we read the results of 2016 survey report, we kept thinking about the past 30 or so years of what we first knew as “socially responsible,” “faith-based,” “ethical” (and so on) approaches to investing, and that more recently we declared to be sustainable & responsible investing (SRI). And even more recently, adding “Impact Investing”).

At various times over the years we tried to visualize “how” the future would be in practical terms when many more mainstream investors embraced SRI / ESG approaches in their stock analysis and portfolio decision-making.

We’re happy to report that great progress continues to be made. It may at times have seemed to be slow progress for some of our SRI colleagues, especially the hardy pioneers at Domini, Trillium, Calvert, Zevin, Walden, Christian Brothers/CBIS, As You Sow, Neuberger Berman, and other institutions.  But looking over the past three decades, always, in both “up and down” markets, and especially after the 2008 market crash — sustainable, responsible and impact investment gained ground!

And so, we in the U.S. SRI community anxiously look forward to the every-other-year survey of U.S.A. asset owners and managers to measure the breadth and depth of the pool of assets that are managed following ESG methods, SRI approaches, etc.

Here are the key takeaways for you in the just-released survey by the U.S. Forum for Sustainable & Responsible Investment (US SIF), the trade association of the SRI community that has tracked SRI in its survey efforts since 1995-1996, and the US SIF Foundation.

2016 Survey Highlights:

• At the start of 2016, ESG (“environmental/social/governance”) factors were being considered for US$8.72 trillion of professionally-managed assets in the United States of America.

• SRI Market size: that is 20 percent / or $1-in-$5 of all Assets Under Management (AUM) / for all US-domiciled assets under professional management (that is almost $9 Trillion of the total AUM of $40.3 trillion).

• This is a gain of 33% over the total number ($6.572 trillion in AUM) in the previous US SIF survey results at the start of 2014.

• Surveyed for the 2016 report: a total of 447 institutional investors, 300 money (asset) managers, and 1,043 community investment institutions. This can be described as a diverse group of investors seeking to achieve positive impacts through corporate engagement -or- investing with an emphasis on community, sustainability or advancement of women.

Drivers: Client demand is a major driver – the U.S. asset owners hiring asset (money) management firms are increasingly focused on ESG factors for their investments — as responsible fiduciaries.

ESG Criteria: Survey respondents in the investment community had 32 criteria to select from in the survey, including E-S-G and product related activities (ESG funds); they could add ESG criteria used as well.

What is important to the investors surveyed?  The report authors cited responses such as:

• Environmental investment factors — now apply to $7.79 trillion in AUM.
• Climate Change criteria – now shape $1.42 trillion in AUM – 5 times the prior survey number.
• Clean Technology is a consideration for managers of $354 billion in AUM.
• Social Criteria are applied to $7.78 trillion in AUM.
• Governance issues apply to $7.70 trillion in AUM, 2X the prior survey.
• Product specific criteria apply to $1.97 trillion in AUM.

The Social criteria (the “S” in ESG) include conflict risk; equal employment opportunity and diversity; labor and human rights issues.

Product issues include tobacco and alcohol; these were the typically “screened out” stocks in the earlier days of SRI and remain issues for some investors today.

Mutual Funds:
Among the investment vehicles incorporating ESG factors into investment management, the survey found 519 registered investment companies (mutual funds, variable annuity funds, ETFs, closed-end funds). Total: $1.74 trillion in AUM.

Alternative Investment Vehicles:
There were 413 alternate investment vehicles identified as using ESG strategies (including private equity, hedge funds, VCs). Total: $206 billion in AUM.

Institutional Investors:
The biggie in SRI, with $4.72 trillion in AUM, a 17% increase since the start of 2014 (the last survey). These owners include public employee funds; corporations; educational institutions; faith-based investors; healthcare funds; labor union pension funds; not-for-profits; and family offices.

Community Investing:
The survey included results from 1,043 community investing institutions, including credit unions; community development banks; loan funds; VC funds. Total: $122 billion in AUM. (These institutions typically serve low-to-moderate income individuals and communities and include CDFI’s.)

Proxy Activism:
SRI players are active on the corporate proxy front: From 2014 to 2016, 176 institutional investors and 49 money managers file / co-file shareholder resolutions at U.S. public companies focused on environmental (E) or social (S) issues. (The number remains stable over the past four years, the report tells us.) The major development was that where such resolutions received 17% approval from 2007 to 2009, since 2013, 30% of resolutions received 30% or more approval.

Methodologies/Approaches:
There are five primary ESG incorporation strategies cited by US SIF: (1) Analyzing, selecting best-in-class companies, positive choices for the portfolio; (2) negative approaches / exclusionary approaches for certain sectors or industries or products by/for the fiduciary; (3) methods of ESG integration — considering various ESG risks and opportunities; (4) impact or “outcome” investing, intended to generate social (“S) or environmental (“E”) impact along with financial return; (5) selecting sustainability-themed funds of various types.

Commenting on the survey results, US SIF CEO Lisa Woll observed that as the field grows, some growing pains are to be expected. . .with the continuing concern that too often, limited information is disclosed by survey respondents regarding their ESG assets. While the number of owners and managers say that they are using ESG factors, they do not disclose the specific criteria used. (This could be, say, criteria for clean energy consideration, or labor issues of various kinds.)

The US SIF biannual survey effort began in 1996, looking at year-end 1995 SRI assets under management. In that first year, $639 billion in AUM were identified. By the 2010 report, the $3 billion AUM mark was reached. That sum was doubled by the 2014 report.

Year-upon-year, for us the message was clear in the periodic survey results: The center (the pioneering asset owner and management firms) held fast and key players built on their strong foundations; the pioneers were joined by SRI peers and mainstream capital market players on a steady basis (and so the SRI AUM number steadily grew); and investors — individuals, and institutions — saw the value in adopting SRI approaches.

Today, $1-in-$5 in Assets Under [Professional] Management sends a very strong signal of where the capital markets are headed — with or without public sector “enthusiasm” for the journey ahead in 2017 and beyond!

There is a treasury of information for you in the report, which is available at: www.ussif.org.

Congratulations to the US SIF team for their year-long effort in charting the course of SRI in 2015-2016:  CEO Lisa Woll; Project Directors Meg Voorhes of the US SIF Foundation and Joshua Humphreys of Croatan Institute; Research Team members Farzana Hoque of the Foundation and Croatan Institute staff Ophir Bruck, Christi Electris, Kristin Lang, and Andreea Rodinciuc.

2016 survey sponsors included: Wallace Global Fund; Bloomberg LP; JP Morgan Chase & Co.; Calvert Investments; TIAA Global Asset Management; Candriam Investors Group; KKR; MacArthur Foundation; Neuberger Berman; Saturna Capital (and Amana Mutual Funds Trust); Bank of America; BlackRock; CBIS (Catholic Responsible Investing); Community Capital Management Inc.; ImpactUs; Legg Mason Global Asset Management / ClearBridge Investments; Morgan Stanley Institute for Sustainable Investing; Sentinel Investments; Trillium Asset Management; Cerulli Associates; and, Walden Asset Management.

A footnote on terminology: Throughout the survey exercise and reporting, terms used include sustainable, responsible and impact investing; sustainable investing; responsible investing; impact investing; and SRI. These are used interchangeably to describe investment practices.

About US SIF:  This is a three-decade old, Washington-DC-based membership association that advances SRI to ensure that capital markets can drive ESG practices. The mission is to work to rapidly shift investment practices toward sustainability, focusing on long-term investment and the generation of positive social and environmental impacts.  SIF Members are investment management and advisory firms; mutual fund companies; research firms; financial planners and advisors; broker-dealers; non-profit associations; pension funds; foundations; community investment institutions; and other asset owners.

Governance & Accountability Institute is a long-time member organization of the U.S. Forum for Sustainable and Responsible Investment (US SIF).

As part of the G&A Institute mission, we are committed to assisting more investing and financial professionals learn more about SRI and ESG — especially younger professionals interested in adopting SRI approaches in their work.  G&A is collaborating with Global Change Advisors to present a one-day certification program hosted at Baruch College/CUNY on December 14, 2016.  Details and registration information is at: https://www.eventbrite.com/e/intro-to-corporate-esg-for-investment-finance-professionals-certification-tickets-29052781652

Register Now & Save 10% for the “Building a Best-in-Class CSR Department” CSR Certificate Program September 28-29, 2016 Two-Tracks: Corporate & Nonprofit/Philanthropy

LaborDay10_CSRProgram_forG&AFeaturedEventLabor Day Sale — Save 10% on Registration!
Click here to register & save now!

Governance & Accountability Institute and The Institute for Ethical Leadership at Rutgers Business School Newark are joining forces for the Fall two-day CSR Certificate program.

Theme as “Building a Best-in-Class CSR Department,” participants will have a choice of two tracks — one for corporate responsibility topics and the other for not-for-profit / social sector organization topics, with plenary sessions to share knowledge and experience with all participants.

Topics include:

  • The Ethics of Corporate Responsibility
  • Industry Specific Metrics and Measurements
  • Sustainable Development Goals
  • CSR Trends – Locally, Nationally and Internationally
  • CSR Through the Investor Lens
  • Materiality – Identify & Focus on Strategic ESG Issues

The two-day, “deep dive” into CSR and related fields of philanthropy including corporate foundation work, corporate sustainability, risk management, and ethics. Rutgers IEL notes: “Executives in both for-profit and not-for-profit fields and their teams need to develop the skill sets, networks, and ever-increasing expertise to achieve their CSR goals, and deliver value to their organization. This certificate program will be presented over two-days with an outstanding faculty of speakers who are experts in their fields.”

Confirmed faculty and guest presenters include:

  • Erika Karp, CEO of Cornerstone Capital Group (formerly head of research for UBS)
  • Mary O’Malley, Vice President of Corporate Governance, Prudential Financial, Inc
  • Ellen Lambert, President of PSEG Foundation and Chief Diversity Officer
  • Wanda Lopuch, Chair of the Board at The Global Sourcing Council(GSC)
  • Georg Kell, Founding Director of the United Nations Global Compact (UNGC), and now Vice Chairman, Arabesque Partners

The program will take place at the Rutgers Business School campus in downtown Newark, New Jersey on September 28 and 29, 2016.

Labor Day Sale — Save 10% on Registration!
Click here to register & save now!

For more information contact Louis D. Coppola, EVP of G&A Institute, at lcoppola@ga-institute.com

CSR Certificate Program – 2 Day Fall Offering by Rutgers Institute for Ethical Leadership and Governance & Accountability Institute

New York, NY (August 29, 2016) - Rutgers Institute for Ethical Leadership and Governance & Accountability Institute are partnering to offer the Fall 2016 CSR Certificate Program. The two-day sessions will be held on September 28 and 29 at the campus of the Business School of Rutgers University in downtown Newark, New Jersey.

Early bird pricing is in effect through August 31, 2016. To register for the course, go to:
https://www.eventbrite.com/e/csr-certificate-program-sept-28-29-tickets-26809141865

The Program Offering 

The September program will feature two tracks for participants: (1) the Corporate CSR Executive Track, and, (2) the Nonprofit and Philanthropy CSR Track. Plenary sessions and keynote speakers will bring participants in the two tracks together for group sessions during the two-days. Topics include:

  • “The Ethics of CSR”
  • “Industry-Specific Metrics and Measurements”;
  • “CSR Trends — Locally, Nationally, Global”;
  • “CSR Through the Investor Lens”;
  • “Materiality – Identify & Focus on Strategic ESG Issues”.

The two-day, “deep dive” into CSR and related fields of philanthropy including corporate foundation work, corporate sustainability, risk management, and ethics. The partnering organizations notes: “Executives in both for-profit and not-for-profit fields and their teams need to develop the skill sets, networks, and ever-increasing expertise to achieve their CSR goals, and deliver value to their organization. This certificate program will be presented over two-days with an outstanding faculty of speakers who are experts in their fields.”

Confirmed faculty and guest presenters include:

  • Erika Karp, CEO of Cornerstone Capital Group (formerly head of research for UBS);
  • Mary O’Malley, Vice President of Corporate Governance, Prudential Financial, Inc;
  • Ellen Lambert, President of PSEG Foundation and Chief Diversity Officer;
  • Wanda Lopuch, Chair of the Board at The Global Sourcing Council (GSC);
  • Georg Kell, Founding Director of the United Nations Global Compact (UNGC), and now Vice Chairman, Arabesque Partners.

Location

The two-day course will be held at 15 Washington Place, in Newark New Jersey, easily reached by train from Newark’s Penn Station (with frequent service from New York City and Philadelphia). The business school urban campus is convenient to Newark International Airport, and numerous nearby hotels. Participants will have Wi-Fi access. Refreshments and food will be supplied throughout the course.

Early bird pricing is in effect through August 31, 2016. To register for the course, go to:
https://www.eventbrite.com/e/csr-certificate-program-sept-28-29-tickets-26809141865

 

ABOUT GOVERNANCE & ACCOUNTABILITY INSTITUTE, INC. 

Governance & Accountability Institute is a New York City-based research, consulting and educational services company working with corporate sector and investment community clients. Typical engagements include preparation of sustainability, CSR and citizenship reports; peer benchmarking; customized ESG research (environmental, social and governance performance); investor relations; corporate communications; and third party engagements. The company is the exclusive Data Partner for the Global Reporting Initiative (GI) for the USA, UK and the Republic of Ireland.

 

ABOUT THE INSTITUTE FOR ETHICAL LEADERSHIP

The Rutgers Institute for Ethical Leadership works with the business sector, the public sector, not-for-profits and other organizations in the social sector, and within Rutgers University, to provide leaders and future leaders with education and training, and critical thinking tools, needed to make ethical decisions. Program offerings include Ethical Leadership Conferences; Cultural and Ethnic Arts Executive Leadership; Collaborative Action Newark; Speakers Series; and certificate programs in a number of areas, including most recently, Corporate Social Responsibility (CSR). The Institute’s mission is to strengthen ethical leadership to enhance civil society. Judy Young, MBA, is the Executive Director of the Institute.

For more information, contact:
Louis D. Coppola, Executive Vice President, Governance & Accountability Institute, Inc.
Tel 646.430.8230 ext 14, Email lcoppola@ga-institute.com
Web www.ga-institute.com

Jessica Johnson, Senior Program Coordinator, Rutgers Institute for Ethical Leadership
Tel 973.353.1135, Email jjohnson@business.rutgers.edu
Web www.business.rutgers.edu/iel

Join Us for Our Second CSR Certificate Program with The Institute for Ethical Leadership at Rutgers Business School Newark Titled “Good to Great — Building a Best-in-Class CSR Department” (September 28-29, 2016)

Here’s news to share for those working in corporate social responsibility, and professionals who seek career opportunities in the field.  And for social sector professionals who want to advance in their careers having the benefit of greater knowledge of corporate social responsibility.

The Institute for Ethical Leadership at Rutgers Business School Newark and Governance & Accountability Institute announce their second program in the two-day learning and knowledge-sharing curriculum leading to a Certificate in Corporate Social Responsibility (CSR).

The theme is “Good to Great — Building a Best-in-Class CSR Department.”  This session builds on the success of the introductory program held in May 2016.

The Fall program will be on September 28 and 29, 2016 at the Rutgers Business School campus in downtown Newark, New Jersey.  Registration opened this week for the two-day course.

An outstanding group of keynoters, panel moderators and speakers is lining up for the program.  Participants will have a choice of two tracks — one for corporate responsibility topics and the other for not-for-profit / social sector organization topics, with plenary sessions to share knowledge and experience with all participants.

To date, among those confirmed as faculty are outstanding corporate sector responsibility leaders Mary O’Malley, Vice President of Corporate Governance,Prudential Financial, IncEllen Lambert, President of PESG Foundation and Chief Diversity Officer one of the nation’s leading energy providers.

In the not-for-profit sector, Wanda Lopuch, Chair of the Board at The Global Sourcing Council (GSC); and Georg Kell, Founding Director and long-time leader of the United Nations Global Compact (UNGC), and now Vice Chairman,Arabesque Partners, are confirmed presenters.

The topics to be covered in the two-day program in the corporate track and select plenary sessions are:

  • CSR Executive Panel – CSR Executives from sustainability leadership organizations will share their knowledge and experience with program participants.
  • CSR Practitioner Panel – Multiple members of the same CSR team share their experiences with cases presented of CSR-focused teamwork inside the enterprise.
  • Sustainable Development Goals (SDGs) — How these are integrated with corporate strategies and how the not-for-profit / social sector could align missions with SDGs.
  • CSR / Sustainability Reporting Standards – Learning more about the globally-accepted reporting and disclosure standards increasingly used by major corporations.
  • ESG Research – New trends in environmental, social & governance analysis and third party research recommendations to investors.
  • CSR Through the Investor Lens – How today’s investors are embracing the CSR approaches as they seek “Alpha” returns for their portfolios.

We’ll be sharing news of the program in following newsletters. For more information contact Louis D. Coppola, EVP of G&A Institute, at lcoppola@ga-institute.com

For Additional Details & To Register, Go To:
https://www.eventbrite.com/e/csr-certificate-program-tickets-26809141865

Corporate CEO Weighs In on Sustainability With Advice for His Peers, NGOs, Government

It’s good to hear from corporate CEOs on sustainability issues, and especially relevant when a CEO offers advice to his peers based on his own experience and values.  Mads Nipper, Group President & CEO of the Illinois-based Grundfus Pump Corporation, attended the UN Global Compact meeting in New York City and offered his perspective on the influential Huffington Post platform.

CEO Nipper sees the collaboration of corporate leaders, government leaders and NGOs as critical to the implementation of the Sustainable Development Goals (SDGs) out to the target year of 2030.  His own enterprise is focused on SDG 6 and 13 because (he explained) clean water and sanitation is critical to advancing human health and safety.  Nipper’s company products are focused on clean water and waste water solutions and so the SDGs are important elements of strategy-setting.

The CEO points out that 600 million-plus Planet Earth residents lack access to clean (and safe) drinking water and 2.4 billion – one third of the planet’s population – lacks adequate water sanitation.  Yes, this is a marketing opportunity to the Grundfas enterprise, but embracing of the SDGs (goals and objectives) is also among the key imperatives driving strategy.  “Sustainability is a Mind Set” is his essay title.  You see the company’s products address water supply and water sanitation challenges, in commercial and residential settings. And so, climate change (with floods occurring more often in many more settings) and water control is a critical mission for building owners and managers – and for society.

CEO Mads Nipper explains this in his Huff Post commentary (see link below), written in the setting of the gathering of global leaders in New York City to discuss (among other things) the SDGs and impact of these 17 goals/169 targets on the business community.

G&A’s own Louis Coppola attended the UNGC Leaders Summit at the United Nations last week and he adds that one of the most inspiring speakers at the event came from a 16 year old named Xiuhtezcatl Roske-Martinez, of the “Earth Guardians,” who was first recognized by the US government for action on Climate, and is now suing the US government for not doing enough to curb climate change for his generation.

You can watch this inspiring young leader’s speeches and learn more about Earth Guardian’s here:  http://www.earthguardians.org/

If you’re interested in learning more about how G&A Institute can assist your organization to create a strategy around the SDGs please contact us at info@ga-institute.com.

Sustainability is a Mindset
(Wednesday - June 22, 2016)
Source: Huff Post - Sustainability cannot be limited to a single department in a company, words in a glossy report, or on a poster on the wall. It should be the focal point in every business’ purpose.

Will We See Mandated Corporate Reporting on ESG / Sustainability Issues in the USA?

by Hank Boerner – Chairman – G&A Institute

Maybe…U.S. Companies Will Be Required…or Strongly Advised… to Disclose ESG Data & Related Business Information

Big changes in mandated US corporate disclosure and reporting on ESG factors may be just over the horizon — perhaps later this year? Or perhaps not…

Sustainable & responsible investing advocates have long called for greater disclosure on environmental and social issues that affect corporate financial performance (near and long-term). Their sustained campaigning may soon result in dramatic changes in the information investors and stakeholders will have available from mandated corporate filings.

We are in countdown mode — in mid-April the Securities & Exchange Commission (SEC), the agency that regulates many parts of the capital market operations and especially corporate disclosure and reporting for investors issued a Concept Release with a call for public comments.

Among the issues In focus are potential adjustments, expansions and updating of mandated corporate financial reporting. One of these involves corporate ESG disclosure. The issue of “materiality” is weaved throughout the release.

Among the many considerations put forth by SEC: expanding corporate disclosure requirements for corporate financial and business information to include ESG factors, and to further define “materiality.” Especially the materiality of ESG factors.

The comment period is open for you to weigh in with your opinion on corporate ESG disclosure and reporting rules — or at least strong SEC guidance on the matter.

SEC has been conducting a “Disclosure Effectiveness Initiative,” which includes looking at corporate disclosure and reporting requirements, as well as the forms of presentation and methods of delivery of corporate information made available to investors. (Such as corporate web site content, which most feel needs to be updated as to SEC guidance.)

The umbrella regulatory framework — “Regulation S-K” — has been the dominant approach for corporate reporting since 1977 has been the principal repository (in SEC lingo) for filing corporate financial and business information (such as the familiar 10-K, 10-Q, 8-K, etc.).

Investors Want More Corporate ESG Information

For a number of years now, investment community players have urged SEC to look at mandating or offering strong guidance to public company managements to expand disclosure and reporting to substantially address what some opponents conveniently call “non-financial,” or “intangible” information. An expanding base of investors feel just the opposite — ESG information is quite tangible and has definite financial implications and results for the investor. The key question is but how to do this?

Reforming and Updating Reg S-K

In December 2013 when the JOBS Act (“Jumpstart Our Business Startups”) was passed by Congress, SEC was charged with issuing a report [to Congress] on the state of corporate disclosure rules. The goal of the initiative is to improve corporate disclosure and shareholders’ access to that information.

The Spring 2016 Concept Release is part of that effort. The SEC wants to “comprehensively review” and “facilitate” timely, material disclosure by registrants and improve distribution of that information to investors. Initially, the focus is on Reg S-K requirements. Future efforts will focus on disclosure related to disclosure of compensation and governance information in proxy statements.

Asset managers utilizing ESG analytics and portfolio management tools cheered the SEC move. In the very long Concept Release – Business and Financial Disclosure Required by Regulation S-K, at 341 pages — there is an important section devoted to “public policy and sustainability” topics. (Pages 204-215).

ESG / Sustainability in Focus For Review and Action

In the Concept Release  SEC states: In seeking public input on sustainability and public policy disclosures (such as related to climate change) we recognize that some registrants (public companies) have not considered this information material.

Some observers continue to share this view.

The Concept Release poses these questions as part of the consideration of balancing those views with those of proponents of greater disclosure including ESG information:

• Are there specific public policy issues important to informed voting and investment decisions?

• If the SEC adopted rules for sustainability and public policy disclosure, how could the rules result in meaningful disclosures (for investors)?

• Would line items about sustainability or public policy issues cause registrations to disclose information that is not material to investors?

• There is already sustainability and ESG information available outside of Commission (S-K) filings — why do some companies publish sustainability, citizenship, CSR reports…and is the information sufficient to address investor needs? What are the advantages and disadvantages of these types of reports (such as being available on corporate web sites)?

• What challenges would corporate reporters face if ESG / sustaianbility / public policy reporting were mandated — what would the additional costs be? (Federal rule making agencies must balance cost-benefit.)

• Third party organizations — such as GRI and SASB for U.S. company reporting — offer frameworks for this type of reporting. If ESG reporting is mandated, should existing standards or frameworks be considered? Which standards?

The Commission has received numerous comments about the inadequacy of current disclosure regarding climate change matters. And so the Concept Release asks: Are existing disclosure requirements adequate to elicit the information that would permit investors to evaluate material climate change risk? Why — or why not? What additional disclosure requirements– or SEC guidance — would be appropriate?

Influential Voices Added to the Debate

The subject of expanded disclosure of corporate ESG, sustainability, responsibility, citizenship, and related information has a number of voices weighing in. Among those organizations contributing information and commentary to the SEC are these: GRI; SASB; Ceres; IEHN; ICCR; PRI; CFA Institute; PWC; E&Y; ISS; IIRC; BlackRock Institute; Bloomberg; World Federation of Exchanges; US SIF.

The overwhelming view on record now with SEC is that investor consideration of ESG matters is important and that change is needed in the existing corporate reporting and disclosure requirements. You can add your voice to the debate.

For Your Action:

I urge your reading of the Concept Release, particularly the pages 204 through 215, to get a better understanding of what is being considered, especially as proposed by proponents; and, I encourage you to weigh in during the open public comment period with your views.

You can help to ensure the SEC commissioners, staff and related stakeholders understand the issues involved in expanding corporate disclosure on ESG matters and how to change the rules — or offer strong SEC guidance. Let the SEC know that ESG information is needed to help investors better understand the risks and opportunities inherent in the ESG profiles of companies they do or might invest in.

SEC rules or strong guidance on ESG disclosure would be a huge step forward in advancing sustainability and ESG consideration by mainstream capital market players.

Information sources:

The SEC release was on 13 April 2016; this means the comment period is open for 90 days, to mid-July.

Helpful Background For You

Back in 1975 as the public focus on environmental matters continued to increase (all kinds of federal “E” laws were being passed, such as the Clean Air Act and Clean Water Act), stakeholders asked SEC to address the disclosure aspects of corporate environmental matters.

The initial proposal was deemed to have exceeded the commission’s statutory authority.

In 1974 the ERISA legislation had been passed by Congress, and pension funds, foundations and other fiduciaries were dramatically changing the makeup of the investor community, dwarfing the influence of one once-dominant individual investor. After ERISA and the easing of “prudent man” guidelines for fiduciaries, institutional investors rapidly expanded their asset holdings to include many more corporate equities.

And the institutions were increasingly focused on the “E,” “S” and :”G” aspects of corporate operations — and the real or potential influence of ESG performance on the financials. Over time, asset owners began to view the company’s ESG factors as a proxy for (effective or not) management.

While the 1975 draft requirements for companies to expand “E” and “S” information was eventually shelved by SEC, over the years there was a steady series of advances in accounting rules that did address especially “E” and some “S” matters.

FAS 5 issued by FASB in March 1975 addressed the “Accounting for Contingency” costs of corporate environmental liability FASB Interpretation FIN 14 regarding FAS 5 a year later (September 1976) addressed interpretations of “reasonable estimations of losses.” SEC Staff Bulletins helped to move the needle in the direction of what sustainable & responsible investors were demanding. Passage of Sarbanes-Oxley statutes in July 2002 with emphasis on greater transparency moved the needle some more.

But there was always a lag in the regulatory structure that enables SEC to keep up with the changes in investment expectations that public companies would be more forthcoming with ESG data and other information. And there was of course organized corporate opposition.

(SEC must derive its authority from landmark 1933 and 1934 legislation, expansions and updates in 1940, 2002, 2010 legislation, and so on. Rules must reflect what is intended in the statutes passed by Congress and signed into law by the President. And opponents of proposals can leverage what is/is not in the laws to push back on SEC proposals.)

There is an informative CFO magazine article on the subject of corporate environmental disclosure, published September 9, 2004, after the Enron collapse, two years after Sarbanes-Oxley became the law of the land, and 15+ years after the SEC focused on environmental disclosure enhancements. Author Marie Leone set out to answer the question, “are companies being forthright about their environmental liabilities?” Check out “The Greening of GAAP” at: http://ww2.cfo.com/accounting-tax/2004/09/the-greening-of-gaap/

And we add this important aspect to corporate ESG disclosure: Beginning in 1990 and in the years that followed, the G1 through G4 frameworks provided to corporate reporters by the Global Reporting Initiative (GRI) helped to address the investor-side demand for more ESG information and the corporate side challenge of providing material information related to their ESG strategies, programs, actions and achievements.

The G&A Institute team sees the significant progress made by public companies in the volume of data and narratives related to corporate ESG performance and achievements in the 1,500 and more reports that we analyze each year as the exclusive data partner for The GRI in the United States, United Kingdom, and The Republic of Ireland.

We have come a very long way since the 1970s and the SEC Concept Release provides a very comprehensive foundation for dialogue and action — soon!

Please remember to take action and leave your comments here:

http://www.sec.gov/rules/concept.shtml

A Fascinating Look Into the 21st Century – The Forbes Interview With Hank Boerner by Chris Skroupa

Of interest, The Forbes interview by Chris Skroupa of G&A Institute chair and chief strategist, Hank Boerner.  As we move deeper into the 21st Century, what are some of the ingredients for business success?  To a significant degree, these will include the important foundations put in place in the 19th and 20th Century.  As we innovate, we also build on the previous decades’ innovations, Boerner suggests.  And while it is difficult, of course, to predict the future, we can look at what worked in terms of breakthrough thinking and tinkerers’ insights (such as John Rockefeller, Thomas Edison, Henry Ford, Steve Jobs, all the way back to the 18th Century breakthrough by James Watt and the steam engine) that led the way for industrialization and continue to point the way in the 21st Century to future innovations and breakthrough thinking (like that of Elon Musk).This is a fascinating conversation that we think you will enjoy reading.  It’s a good companion piece to the insights offered by Sustainable Brands’ Dimitar Vhalov.

And do tune in to the Skytop Strategies and G&A Institute conference on the 21st Century company coming in June at Baruch College/CUNY in New York City – click here for more information.

The 21st-Century Company: Is It Different From Companies Of Yesteryear?
(Tuesday – April 22, 2016)
Source: Forbes – Christopher P. Skroupa: Here we are in the middle of the second decade of the 21st Century. What is different for “21st Century companies” from those of the previous century? Hank Boerner: In general, there is a fascination with the concepts of centuries and decades. Kids growing up in the 1960s were different from those of the 70s and so on. Decades as we recall them may be somewhat similar, but there are very dramatic differences between centuries in business, politics, culture, economics, and other human endeavors…

FAST APPROACHING: The Deadline For Registering for the Corporate Social Responsibility Certificate Program at Rutgers Institute for Ethical Leadership

CSR CERTIFICATE PROGRAM – FACULTY / COURSE UPDATE
REGISTER FOR THE 2-DAY COURSE HERE

The first sessions of the new Corporate Social Responsibility Certificate program is just a week away — there are a few remaining days for registration. The two-day program begins on Wednesday, April 27 and continues on Thursday, April 28 at Rutgers Business School in Newark, New Jersey.

JOIN YOUR CSR PROFESSIONAL COLLEAGUES ON APRIL 27-28, 2016

  • Representatives from organizations such as Johnson & Johnson and the United Way of St. Louis.
  • Participants traveling from multiple states including MD, MO, NC, NJ, NY and VA.
  • Network, learn and earn your certificate from an accomplished group of real world experts in the field of CSR & Sustainability.

DAY 1 
Topics to be presented on Day One by experienced CSR, Ethics and Philanthropy professionals include:

  • Overview of CSR (Speaker: Ellen Lambert, PSEG)
  • CSR & Ethics (Speaker: James Abruzzo, Rutgers Institute for Ethical Leadership)
  • CSR — Ethics, Business & Society (Speaker: Kevin Lyons, Rutgers Business School)
  • Global Risks & CSR Dinner (Speaker: Tim McClimon, – American Express)


Ellen-Lambert-217pxPRESENTER SPOTLIGHT
ELLEN LAMBERT
Topic: CSR Overview

Addressing: What does CSR look like across companies including employee engagement, marketing and culture; what are the trends on the local, national and international basis?

The veteran CSR professional will present a broad look at corporate citizenship including fundamentals, a discussion of how different corporations create the scope and navigate their citizenship, culture and employee involvement. This will include an analysis of a number of different industries and corporate social responsibility models.

DAY 2
The program continues on Day Two (April 28) with sessions on:

  • CSR & Implications for the Non-profit Sector (Speaker: Peter Hansen, NJPAC)
  • Materiality & the Case for Sustainability (Speakers: Louis Coppola, G&A Institute and Peter Roselle, Morgan Stanley)
  • CSR and Return on Investment (ROI) (Speakers: Eric Fernald, MSCI)

Peter-Hansen-217pxPRESENTER SPOTLIGHT
PETER HANSEN
Topic: CSR and Implications for the Nonprofit Sector – utilizing case studies of corporate foundations that have aligned products, services and social investments

Addressing: This session will explore how the development and adoption of CSR platforms by public and privately-held corporations have accelerated.

There is a considerable impact — both positive and negative — on nonprofits when corporations align their strategic philanthropy with their business goals. This session will briefly examine three CSR programs and the positive and negative impact of each on nonprofit organizations. A critical outcome of this presentation is to help participants understand the strategic philanthropic priorities of select corporate sectors.

To learn more about the CSR Certificate program, call 973.353.1134, email leadership@business.rutgers.edu, or visit http://www.business.rutgers.edu/iel/csr.

<< CLICK HERE TO REGISTER ONLINE NOW >>
Note: 10% discount applied for 2+ registrants from the same organization

 

ABOUT GOVERNANCE & ACCOUNTABILITY INSTITUTE

G&Alogo_open_140pxlGovernance & Accountability Institute is a sustainability consulting firm headquartered in New York City, assisting corporations in executing winning strategies that maximize return on investment at every step of their sustainability journey. The G&A team helps corporate and investment community clients recognize, understand and address sustainability issues to address stakeholder and shareholder concerns. G&A Institute is the exclusive Data Partner for the Global Reporting Initiative (GRI) in the USA, UK and Ireland. A G&A team of six or more perform this pro bono work on behalf of GRI. In 2015, they analyzed more than 1,200 sustainability reports in this role and databased more than 100 important data points related to each report.

G&A’s sustainability-focused services and resources include: counseling & strategies for the corporate sustainability journey; sustainability reporting assistance; thorough materiality assessments; stakeholder engagement; benchmarking; enhancing investor relations; sustainability communications; manager coaching, team building and training; issues monitoring & customized research; advice on third party awards and recognitions. Visit G&A at www.ga-institute.com

ABOUT THE INSTITUTE FOR ETHICAL LEADERSHIP

rutgers_bschool-logox200pxThe Institute for Ethical Leadership at Rutgers Business School works with business and government, nonprofit and philanthropic organizations, and within Rutgers University to provide leaders and future leaders with the education, training and critical-thinking tools needed to become more effective leaders and managers and make ethical decisions for real-world challenges. For more information, visit www.business.rutgers.edu/iel.

Sounds Like a Good Sustainability Strategy in the C-Suite / Board Room — But What About On the Ground in Locations Thousands of Miles Away?

Many businesses over the past three decades have reshaped themselves, becoming “multi-national enterprises” (MNEs in NGO-speak), thanks in great measure to the advances in information and other technologies, where everywhere is a keyboard click away for communication, and to the end of the Cold War in 1989-1990.  Corporate organizations have also become “flatter,” with power and influence dispersed (more) to the far reaches of the operations or supply chain footprint.

Since 1970 and the first Earth Day, corporate leaders have addressed environmental issues with innovative ideas and solutions, making many parts of this planet a very cleaner place to live, work and play.  But what do these changes, some very dramatic, mean when ideas and innovations created at the top of the organization have to be applied at the very bottom by local managers and employees?

What sounds good at “the top” (strategy and course of action) may or may not work on the ground for the organization  at locations thousands of miles away.  Folks in charge there may not get the word, have little real power to implement, or may be working under conditions that are not conducive to implementing the strategy.  This applies to the continuing embrace of corporate sustainability by MNE’s or all shapes and sizes, in all industries and sectors and geographies.  The author of our Top Story this week explores some of those issues for us.

Richard Brubaker is Founder & Managing Director, Collective Responsibility, a Shanghai-based organization set up to aid in the development and execution of projects in Asia that focuses on solving environmental, economic and social challenges in the region.  He shares some lessons learned in his commentary.

As the C-suite of the MNE in the developed country creates appropriate strategies and focuses on “big picture” issues (think, what do we do about our carbon footprint in the post-Paris public policy environment), the people on the ground half-a-world away may be struggling with very different issues. (We recall the old saying, “when you are up to your butt in alligators it is hard to remember the mission is to drain the swamp.”)

The locals may be using a different language; dealing with different concerns; seeing the C-suite / HQs mission as being misaligned with the local mission; where KPIs may not apply….and more.  The commentary is timely, and coming from an experienced Asian hand, as we celebrate Earth Day #46 on 22 April, marking a time when corporate executives and boards may be looking into :”what can we do locally” in the operations to make an impact as global populations focus on environmental issues.  Including at the very local level!

The first Earth Day (April 22, 1970 – almost a half-century ago) is considered by many to be the spark that helped to create the modern-day environmental movement.  There’s more about the history in the Earth Day.org files:http://www.earthday.org/about/the-history-of-earth-day/

“Why don’t they care?” Why top-down sustainability strategies are often doomed to fail
(Wednesday – April 13, 2016)
Source: Eco-Business - Effective sustainability strategies must speak the language of local employees and other stakeholders, writes Collective Responsibility managing director Richard Brubaker…