The Climate Change Crisis – “Covering Climate Now” Can Help to Shape The Public Dialogue

Introducing a new series of perspectives from G&A Institute…

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

We are bringing you a series of commentaries on the climate change crisis to share news, research results and perspectives to you in an organized way.

Fact:  We are facing dire outcomes for humanity and planet if we don’t move faster with strategies and actions to address the challenges of climate change.

We’re calling our shared perspectives “About the Climate Change Crisis”.

Global Warming.  Droughts. SuperStorms. Floods.  Rising Seas. Outbreaks of forest fires.  Loss of Species.  Degradation of farmlands.  Food Shortages. 

These should be defined as crisis situations, no?

Despite these dangers, the public dialogue on “climate change” issues in the United States reflects in some ways the divide in public opinion on critical issues facing the American public, government, business, the financial sector.

Climate changing? Yes and No. Human activities  causing the changes? Yes and No.
Should we be worried? Yes and No.

And so it goes.

The United States of America participated in the 2015 Paris (COP 21) meetings and signed on to the Paris Agreement along with almost 200 other nations, with President Barack Obama becoming a signatory in April 2016 and in September 2016 by presidential action presented the necessary documents to the U.N. General Secretary Ban Ki-moon.

The People’s Republic of China also presented the documents, a collaboration negotiated by President Obama. (This step by Barack Obama avoided presenting what amounted to an international treaty agreement to the U.S. Senate for ratification, required by the U.S. Constitution – approval assuredly would not happen in today’s political environment.)

The U.S. also contributed US$3 billion to the Green Climate Fund.

And so also by executive order, his successor in the Oval Office, President Donald Trump in March 2017 with swipe of a pen signaled the start of the complex and lengthy process of removing the U.S. from the historic Paris Agreement to limit the damage of global warming.

By his side: EPA Administrator Scott Pruitt (since gone from the environmental agency).

The backdrop: scientific reports that 2016 was the warmest year on record to date!

And credible scientists telling us that we have a decade at most to get control of climate change issues!

Prior to becoming president Donald Trump declared among other things that climate change was a Chinese hoax. (One of his positioning comments on the subject: “The concept of global warming was created by and for the Chinese in order to make U.S. manufacturing non-competitive” – November 6, 2012 tweet.)

But climate change is real – and we face a climate crisis in 2019!

What Did the Current U.S.A. Leader Do?

President Trump on November 4, 2019 officially notified the international community – and specifically the community of the United Nations – that the process of withdrawal was beginning and would be complete one year from now — the day before Election Day 2020.

Note that in November 2018 the government of the United States of America published the fourth climate change assessment by key U.S. government agencies: the “Climate Science Special Report” was prepared by the U.S. Global Change Research Program of the Federal government. (We’ve including an overview in this series.)

The contents are of significance if you are an investor, a company executive or board member, an issue advocate, public sector officer holder or civic leader, consumer — or other type of stakeholder.

There are volumes of data and descriptions in the report presenting a range of “high probability” climate change outcomes in this the 21st Century.

Adding credibility to the Federal government’s report to the nation and the world:  11, 258 scientists in 153 countries from a broad range of disciplines (biosciences, ecology, etc.) published a report in the Bioscience Journal (November 2018) – “World Scientists’ Warning of a Climate Emergency” – setting out a range of policies and actions that could be (adopted, taken) to address the emergency.

Good News About News Media

Good news from the purveyors of news to millions of people: the publishers of Columbia Journalism Review and The Nation created the “Covering Climate Now” (the initiative was launched in April 2019) intended to strengthen the media’s focus on the climate emergency.  The lead media partner is The Guardian.

The founders are now joined by cooperating media that today reaches more than one billion people worldwide. Representatives of 350 newsrooms in 32 countries have joined to ramp up coverage of the climate crisis and possible solutions. The campaign is designed to strengthen the media’s focus on the climate emergency.

Combined, the cooperating media reach more than one billion people worldwide.

Participants in the campaign include Bloomberg, Agence France-Press, The Guardian, The Minneapolis Star Tribune, The New Jersey Star Ledger, The Oklahoman, Corporate Knights, The Philadelphia Inquirer, The Seattle Times, La Republica (Italy), The Hindustan Times (India), Asahi Shimbun (Japan), La Razon (Spain), Greenbiz.com, Huffpost, Mother Jones, Rolling Stone, Scientific American, Teen Vogue, Vanity Fair, and many many other communications platforms.

Partner organizations in the campaign include wire services, news agencies, newspapers, magazines, digital news sites, journals, radio, podcasters, and institutions like Princeton University and Yale Climate Change & Health Initiative.

Could it be that the press, especially the U.S. press, can turn the tide of public opinion (with the naysayers and public doubters) with increasing and accurate coverage of the climate story?

Is the “media awake”?   That question was posed and answered in September 2019 by Mark Hertsgaard (The Nation) and Kyle Pope (CJR editor) addressing the  initiative.

Their comments are here for you: https://www.cjr.org/covering_climate_now/climate-crisis-new-beginning.php

Is this where you get your news a participant? Check the list here: https://www.coveringclimatenow.org/partners

Participating publisher Corporate Knights points out to us that “climate change” was suggested as a term to use by pollster Frank Luntz to President George W. Bush instead of the more frightening term, “global warming”. Let’s not scare the people. Gently move them forward.

We do need to return to the more accurate and realistic title of global warming. The threats posed by warming of land and sea are visible to us – every day now!

But, OK, if climate change is the popular branding, then let’s talk about the climate change crisis or emergency (so says the media collaboration).

We’re presenting this series of climate change crisis commentaries to help to tell the story of the climate change crisis or emergency.

The title is About the Climate Crisis, following the lead of the collaborating journalists.

The Good News

The good news as background to the above is that cities and states are “still in” and implementing strategies and actions to follow the Paris Accord in their jurisdictions. 

Corporations participated in the Conference of Parties (COP) meetings and especially the Paris COP 21 meetings.

Companies have been launching and reporting on their sustainability journey — actively addressing climate change issues — and investors are building more climate change considerations into their financial analysis and portfolio management. 

Combined these actions are keeping the United States in the game and helping to maintain the nation’s edge in climate change matters. Of course, we can ALL do more!

Let us know how we are doing. And please do suggest to us issues and topics and developments that might be of interest to you and other readers of the G&A Institute’s Sustainability Update blog.

Please do Stay Tuned to our ongoing blog commentaries.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Our offerings for you this week:

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

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

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

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

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

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

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

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

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

Editorial: Climate Week 2019
Source: Advanced Science News 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Potential Impacts:

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

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

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

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

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

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

This Week’s Top Stories

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

Trump Administration Continues Attempts to Unravel U.S. Environmental Protections Put in Place Over Many Years – Now, Shareholder Proxy Resolution Actions on Climate Issues Also In Focus For Investors…

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

We should not have been surprised: in 2016 presidential candidate Donald Trump promised that among his first steps when in the Oval Office would be the tearing up of his predecessor’s commitment to join the family of nations in addressing climate change challenges. 

In late-December 2015 in Paris, with almost 200 nations coming to agreement on tackling climate change issues, the United States of America with President Barack Obama presiding signed on to the “Paris Agreement” (or Accord) for sovereign nations and private, public and social sector organizations come together to work to prevent further damage to the planet.

The goal is to limit damage and stop global temperatures from rising about 2-degrees Centigrade, the issues agreed to. 

As the largest economy, of course the United States of America has a key role to play in addressing climate change.  Needed: the political will, close collaboration among private, public and social sectors — and funding for the transition to a low-carbon economy (which many US cities and companies are already addressing).

So where is the USA? 

On June 1st 2017 now-President Trump followed through on the promise made and said that the U.S.A. would begin the process to withdraw from the Paris Agreement on climate change, joining the 13 nations that have not formally ratified the agreement by the end of 2018 (such as Russia, North Korea, Turkey and Iran).  

Entering 2019, 197 nations have ratified the Agreement.

A series of actions followed President Trump’s Paris Agreement announcement – many changes in policy at US EPA and other agencies — most of which served to attempt to weaken long-existing environmental protections, critics charged.

The latest move to put on your radar:  In April, President Trump signed an Executive Order that addresses “Promoting Energy Infrastructure and Economic Growth”.

[Energy] Infrastructure needs – a bipartisan issue – are very much in focus in the president’s recent EO.  But not the right kind to suit climate change action advocates. 

Important: The EO addressed continued administration promotion and encouraging of coal, oil and natural gas production; developing infrastructure for transport of these resources; cutting “regulatory uncertainties”; review of Clean Water Act requirements; and updating of the DOT safety regulations for Liquefied Natural Gas (LNG) facilities.

Critics and supporters of these actions will of course line up on both sides of the issues.

There are things to like and to dislike for both sides in the president’s continuing actions related to environmental protections that are already in place.

And then there is the big issue in the EO:  a possible attempt to limit shareholder advocacy to encourage, persuade, pressure companies to address ESG issues.

Section 5 of the EO“Environment, Social and Governance Issues; Proxy Firms; and Financing of Energy Projects Through the U.S. Capital Markets.” 

The EO language addresses the issue of Materiality as the US Supreme Court advises.  Is ESG strategy, performance and outcome material for fiduciaries? Many in the mainstream investment community believe the answer is YES!

Within 180 days of the order signing, the Secretary of the Department of Labor will complete a review existing DOL guidance on fiduciary responsibilities for investor proxy voting to determine whether such guidance should be rescinded, replaced, or modified to “ensure consistency with current law and policies that promote long-term growth and maximize return on ERISA plan assets”. 

(Think of the impact on fiduciaries of the recommendations to be made by the DOL, such as public employee pension plans.) 

The Obama Administration in 2016 issued a DOL Interpretive Bulletin many see as a “green light” for fiduciaries to consider when incorporating ESG analysis and portfolio decision-making.  The Trump EO seems to pose a direct threat to that guidance.

We can expect to see sustainable & responsible investors marshal forces to aggressively push back against any changes that the Trump/DOL forces might advance to weaken the ability of shareholders – fiduciaries, the owners of the companies! – to influence corporate strategies and actions (or lack of action) on climate change risks and opportunities.  Especially through their actions in the annual corporate proxy ballot process and in engagements. 

You’ll want to stay tuned to this and the other issues addressed in the Executive Order.  We’ll have more to report to you in future issues of the newsletter.

Click here to President Trump’s April 10, 2019 Executive Order.

Facts or not?  Click here if you would like to fact check the president’s comments on withdrawal from the Paris Agreement.

We are still in!  For the reaction of top US companies to the Trump announcement on pulling out of the Paris Accord, check The Guardiancoverage of the day.

At year end 2018, this was the roundup of countries in/and not.

For commentaries published by G&A Institute on the Sustainability Update blog related to the above matters, check out it here.

Check out our Top Story for details on President Trump’s recent EO.

This Week’s Top Stories

Trump Order Takes Aim at Shareholders Pushing Companies to Address Climate Change
(Wednesday – April 77, 2019) Source: Climate Liability News – President Trump has ordered a review of the influence of proxy advisory firms on investments in the fossil fuel industry, a mot that…

Environmental Threats to Us and Mother Earth – Seven Trends to Consider…and Develop Solutions From the Forum for the Future

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

This week we are celebrating Earth Day.  The first (in 1970) observance became a catalyst for action – soon after the first of a series of environmental-focused Federal legislation began to change dirty air to cleaner and then clean, and more laws to address a very unhealthy state of affairs in the U.S.A. (The Environmental Act, Clean Water Act, Clean Air Act, RCRA, etc.). 

But…the challenges for society have not gone away. The list of “hot ESG issues” grows by the week. 

Once an ESG issue emerges and people begin to dive into the details, a range of sub-issues arises.  In this corporate proxy season we are seeing top-line issues in focus and the underlying questions that investors have as they bring their resolutions to the companies for inclusion in the broader shareholder-base voting.

Example: Where “political spending” began as a broad issue the investors moved on to ask from where the company money was being spent directly(corporate donations to political party or candidate or PAC) to now, indirectly (is the company’s money going to business industry groups that lobby against shareholder interest – which ones, addressing what issues, how much money?) 

Some environmental challenges of the 1970s are still with us (consider the continuing impact of coal-burning, the state of global plastics disposal, and questions about water treatment such as in animal husbandry and fracking). And more issues are in focus under the huge bundle we refer to as “climate change”.

The evolvement of ESG as an integrated approach for investor evaluation of companies has complicated life for many corporate managers. 

In the recent past, a large-cap would assemble the “top 10” issues list for the management team and their direct reports to address.  For 3M, as example, “highway safety” and related issues under the heading would be high on the list (the company’s important product offerings would be directly impacted by changes). 

Today, that Top 10 list is all about the materiality of the issue(s) for many investors and companies — and how those issues are being measured, managed, how risk is being addressed and opportunities seized — and then reported to stakeholders.

In many large-cap companies a broader-based team will be busily shaping ESG strategy, policy, sustainability team practices and addressing issues-associated risk management on a much wider range of topics and subtopics. 

Timothy McClimon, head of the American Express Foundation, brings us his views on seven global trends – and their relevant issues – that are impacting the sustainability movement today. (You can think about how the seven impact your organization through the 2020s, the focus of the research and perspectives shared.)

He reviews the Forum for the Future’s report in a Forbes commentary.  The report is “Driving Systems Change in Turbulent Times” – with major implications for “how” or even “if” we will be able to address current global “E” challenges.  (Are patterns of behavior, structures or mindsets shifting toward or away from sustainability?)  Consider:

First – the plastics kickback; we continue to produce and then dispose of eight million tons each year with no real change in sight. (We are adding tons of material that will go “somewhere” and have an impact on society.)

Second – Climate change and the impact on mass migration; large parts of the world are becoming less hospitable and more people will try to move to safer places. Mass migrations are ahead. Perhaps as many as 2 billion persons will be affected by climate change and migrating away from their homes.

Third – around the world, Nationalism Marches Again; this is leading to fragmentation, intolerance, competition for fewer resources… complicated by growing inequality and a range of old and new “S” issues.

Fourth – We Live in the “On-Life” – by the end of this year, half of the world’s 7-billion-plus will be online, with issues arising (mental health, social cohesion, personal interaction, privacy and security, and more).

Fifth – The Rise of Participatory Democracy; cities and states lead the way in combating rising levels of protectionism and nationalism, which may usher in a new era of more local decision-making and civic participation.

Sixth – Asia’s Changing Consumerism; China leads the way with India, Japan, South Korea and Thailand close behind in moving more people into middle class status.  But, we are losing our global capacity to sustain them as the pursue the good life.  Millennials may slow the trend in Asia (they’re more conscious consumers).

Seventh – Biodiversity is Now in Freefall; scientists see mass extinction of some plant and animal species and one-fifth of the valuable Amazon rainforest has disappeared. (Something has to give to make room for growing food to meet the needs of the growing Earth population.) Little is being done about this, say the report authors.

How can we meet these global environmental challenges – what principles can be adopted to preserve the good life so many of the citizens of Earth enjoy today?  Some are spelled out in the Top Story for you.

Author Timothy J. McClimon is president of the American Express Foundation and serves on not-for-profit boards. He also teaches at New York University and at Johns Hopkins University.

Click here for more on the Forum for the Future (not for profit).

Each of the 7 trends has a chapter devoted to the issues. 
Click here for the full report.


This Week’s Top Stories

7 Global Trends Impacting The Sustainability Movement   
(Tuesday – April 16, 2019) Source: Forbes – the Forum for the Future advances seven trends that have major implications for how (or if) we will be able to address current global environmental challenges…

When Will Sustainable Investing Be Considered to be in the Mainstream?

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

“Movements” – what comes to mind when we describe the characteristics of this term are some 20th Century examples.

The late-20th Century “environmental movement” was a segue from the older 19th and early 20th Century “conservation movement” that was jump started by President Theodore Roosevelt (#26), who in his 8 years in the Oval Office preserved some 100,000 acres of American land every work day (this before the creation of the National Parks System a decade later).

The catalysts for the comparatively rapid uptake of the environmental movement?  American rivers literally burned in the 1960’s and 1970’s (look it up – Cuyahoga River in Ohio was one).

And that was just one reason the alarm bells were going off.  New York’s Hudson River was becoming an open, moving sewer, with its once-abundant fish dying and with junk moving toward the Atlantic Ocean.  Many East Coast beaches were becoming fouled swamp lands.

One clarion call – loud & clear — for change came from the pen.  The inspired naturalist / author Rachel Carson wielded her mighty pen in writing the 1962 best-seller, “Silent Spring”. 

That book helped to catalyze the rising concerns of American citizens. 

She quickly attracted great industry criticism for sounding the alarm…but her words mobilized thousands of early activists. And they turned into the millions of the new movement.

She explained the title:  There was a strange stillness.  Where had the little birds gone? The few birds seen anywhere were moribund; they trembled violently and could not fly.”  (Hint:  the book had the poisonous aspects of the DDT pesticide at its center as the major villain.)

Americans in the 1960s were becoming more and more alarmed not only of dumping of chemical wastes into rivers and streams and drifting off to the distant oceans —

—but also of tall factory smokestacks belching forth black clouds and coal soot particles;

–of large cities frequently buried beneath great clouds of yellow smog a mile high on what were cone clear days;

–of dangerous substances making their way into foods from the yields of land and sea;

–of yes, birds dropping out of the sky, poisoned;

–of tops of evergreen and other trees on hilltops and mountains in the Northeast burned clean off by acid rain wafting in from tall utility smokestacks hundreds of miles away in the Midwest…and more. 

Scary days. For public health professionals, dangerous days.

We will soon again be celebrating Earth Day; give thanks, we are long way from that first celebration back in spring 1970. (Thank you, US Senator Gaylord Nelson of Wisconsin for creating that first Earth Day!)

Most of our days now are (as the pilots cheer) CAVU – ceiling (or clear) and visibility unlimited. 

We can breathe deep and as we exhale thank many activists for persevering and driving dramatic change and creating the modern environmental movement… and on to the sustainability movement. 

And now – is it time (or, isn’t time!) for another movement along these lines…the sustainable investing movement going mainstream? 

Experts pose the question and provide some perspectives in this week’s Top Story.

In Forbes magazine, they ask:  “Why Hasn’t Sustainable Investing Gone Viral Yet?”

Decio Fascimento, a member of Forbes Council (and chief investment officer of the Richmond Global Compass Fund) and the Forbes Finance Council address the question in their essay.

In reading this, we’re reminded that such mainstream powerhouse asset managers as BlackRock, State Street/SSgA, Vanguard Funds, TIAA-CREF, and asset owners New York State Common Fund, New York City pension funds (NYCPERS), CalPERS, CalSTRS and other capital market players have embraced sustainable investing approaches. 

But – as the authors ask:  what will it take for many more capital market players to join the movement?  There’s interesting reading for you in the Top Story – if you have thoughts on this, send them along to share with other readers in the G&A Institute universe.

Or send comments our way to supplement this blog post.


This Week’s Top Stories

Why Hasn’t Sustainable Investing Gone Viral Yet?
(Wednesday – April 10, 2019) Source: Forbes – Let’s first look at what sustainability looks like in financial terms. In sustainable investing, the ideal scenario is when you find opportunities that produce the highest returns and have the highest positive impact. 

And of further reading for those interested:

SCARY STUFF: The Fourth Official “Climate Science Special Report” by the U.S. Government’s “Global Change Research Program”

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

Whether you are an investor, company executive or board member, or an issue advocate, or civic leader, these “high probability” outcomes should keep you up at night:  more superstorms; more drought; increased risk of forest fires; more floods; rising sea levels; melting glaciers; ocean acidification; increasing atmospheric water vapor (thus, more powerful rainstorms)…and more.

How about a potential drop of 10% in the U.S.A. Gross Domestic Product by end of this century?

These are some of the subjects explored in depth in the fourth “Climate Science Special Report” of the U.S. Global Change Research Program.  That is a collaborative effort of more than a dozen Federal departments, such as NOAA, NASA, US EPA, and executive branch cabinet offices of Commerce, Agriculture, Energy, State, Transportation, and Defense; plus the OMB (Office of the President).

The experts gathered from these departments of the U.S. government plus a passel of university-based experts, reported last week (in over 1600 pages of related content) on the “state of science relating to climate change and its physical impacts.”

The CSSR (the Climate Science Special Report) serves as a foundation for efforts to assess climate-related risks and inform decision-makers…it does not include policy recommendations.  The results are not encouraging – at least not in November 2018.

The National Oceanic and Atmospheric Administration (NOAA) is the lead agency working with NASA and other governmental bodies to develop the report – which analyzes current trends in climate change and project major trends out to the end of this 21st Century.  The focus of the work is on human welfare, societal, economic, and environmental elements of climate change.

Each chapter of the report focuses on key findings and assigns a “confidence statement” for scientific uncertainties. There are 10 regional analyses of recent climate change (such as the Northeast, and Southern Great Plains).

Some highlights:

(1) This period is now the warmest in the history of modern civilization.

2) Thousands of studies have documented changes in surface, atmospheric and oceanic temps;

(3) glaciers are rapidly melting;

4) we have rising sea levels;

5) the incidence of daily tidal flooding is accelerating in more than 25 Atlantic and Gulf coast cities.

The various findings, the authors point out, are based on a large body of scientific, peer-reviewed research, evaluated observations and modeling data sets. In this report, we should note, experts and not politicians speak to us in clear terms.

Global climate is projected to change over this century (and beyond) – the report is replete with “likelihoods” of events) and the experts state that with major effort, temps could be limited to 3.6°F / 2°C or less – or else.  Without action, average global temperatures could increase 9°F / 5°C relative to pre-industrial times – spelling disaster at the end of the 2100s.

The Financial Stability Board’s  (FSB) Task Force on Climate-Related Financial Disclosures (the “TCFD”) strongly recommendations that the financial sector companies and (initial) four business sectors begin to test scenarios against (to begin with) 2-degrees Centigrade (3.5°F) temp rise and increase from there.

The four industry groups in the Financial Sector are:  Banks, Insurance Companies, Asset Owners, Asset Managers.

The four non-financial business sectors are:  Agriculture. Food & Forest Products; Buildings & Materials; Transportation; Energy (Oil & Gas).

This new national assessment from the Federal government should be a valuable resource for investors, bankers, insurance carriers and a wide range of companies in their scenario planning (content related to alternative scenarios is in the report).

Click the links below for:

TCFD information is here: https://www.fsb-tcfd.org/

Our Top Story in Sustainability Highlights this week is The Washington Post’s take on the report and its issuance by the Federal government on what some officials considered to be a slow Thanksgiving Friday news period.  The news coverage that followed was anything but “slow”!

Washington Post – Climate story by Brady Dennis and Christ Mooney
Major Trump administration climate report says damage is ‘intensifying across the country’

(Friday November 23, 2018) Source: The Washington Post – Scientists are more certain than ever that climate change is already affecting the United States — and that it is going to be very expensive. The federal government on Friday released a long-awaited report with an unmistakable message: The effects of climate change, including deadly wildfires, increasingly debilitating hurricanes and heat waves, are already battering the United States, and the danger of more such catastrophes is worsening.

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.

The FSB Task Force (TCFD) on Climate-Related Financial Disclosure And The Dramatic Contents of the Intergovernmental Panel on Climate Change – Hot Topics

A Brief Checklist of the Discussion for You This Week…

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

The Intergovernmental Panel on Climate Change (IPCC) was organized by the United Nations Environment Programme (UNEP) and the World Meteorological Organization (WMO) in 1988 (30 years ago!) to provide a “clear scientific view of the current state of knowledge in climate change and its potential environmental and socio-economic impacts”.

In the late 1970s, the discussion about climate change and global warming began to, well, pardon the pun – heat up!  Foreign Affairs magazine, in 1978 posed the question:  “What Might Man-Induced Climate Change Mean?”

“The West Antarctica Ice Sheet and CO2 Greenhouse Gas Effect” appeared in the authoritative publication, Nature in the same year.  The debate was on — and multi-lateral organizations and governments began to take note and respond. Ten years later the IPCC debuted on the global scene.

Over the years since there have many meetings and studies produced, with 195 countries eventually joining the IPCC membership.  Including, significantly, China, the USA, the United Kingdom, the Russian Federation, Germany, France, Italy, Ireland, Israel… and many other sovereigns. The membership list is here: http://www.ipcc.ch/pdf/ipcc-faq/ipcc_members.pdf

Thousands of scientists – subject matter experts – regularly participate in the work of the organization, which is typically around task forces and delving into specific issues.  This gives the IPCC findings and recommendations “a unique opportunity to provide rigorous and scientific information to decision-makers”. The work is policy-relevant but also policy-neutral and never policy-prescriptive.

In October 2018 the IPCC issued a Special Report on Global Warming of 1.5C (above pre-industrial levels) and the rising threat of climate change, as well as sustainable development (think of the SDGs) and efforts to wipe out poverty.

The report and related materials are here for you: http://www.ipcc.ch/

Our Top Story comes from our colleagues at Ethical Corporation, authored by Karen Luckhurst.  She reports on the related activities during a two-days of  meetings at which the FSB’s Task Force on Climate-Related Financial Disclosure (TCFD) recommendations and the  IPCC Special Report were analyzed and discussed by corporate and organizational leaders.

She shares with us 10 top takeaways from the TCFD discussions and includes the comments on key players – Richard Howitt, CEO of the IIRC; Susan Beverly of Abbott; Richa Bajpai of Goodera; GRI’s Pietro Bertazzi (head of sustainable development); Laura Palmeiro of Danone; Professor Donna Marshal at USC College of Business; Mark Lewis at Carbon Tracker; Katie Schmitz Eulitt of the Sustainable Accounting Standards Board; Mairead Keigher of NGO Shift (human rights organization); Daniel Neale at Corporate Human Rights Benchmark; Craig Davies at EBRD (investments); and Andre Stovin at AstraZeneca.

Richard Howitt of IRRC told the group that there is a major alignment soon to be announced with other reporting standards agencies (GRI, CDP) – watch for that.

Do read the Top Story this week.  And, mark your calendars – the Ethical Corp “Responsible Business Summits” are coming to San Diego, CA on November 12th; to New York City on March 18, 2019 and on to London for June 10th convening.  There is more information at:http://www.ethicalcorp.com/events.

Governance & Accountability Institute has been a long-term event media partner of Ethical Corporation events for going on 8 years.

This Week’s Top Story

Ten takeaways from the Sustainability Reporting and Communications Summit
(Tuesday – October 16, 2018) Source: Ethical Corp – Reporting on the SDGs, alignment between reporting standards, and the Task Force on Climate, Climate-Related Financial Disclosure were big topics during two days of high-level discussion…

UN IPCC Warns Us: The Time to Act Is Now – The Window For Action on Global Warming is Fast Closing

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

The buzz for the past few days has been about the report of the UN Intergovernmental Panel on Climate Change (IPCC) that urged governments everywhere to “take rapid and far-reaching and unprecedented changes in all aspects of society” to avoid catastrophic events and conditions brought on by climate change.

Why?  The planet temperature could reach the critical point – keep 1.5 degrees Celsius / 2.7 F above pre-industrial levels in mind.  We must get measures in place to address the threats of floods, rising seas, food shortages, shrinking arable land, wildfires, rising seas…and more.

Today 195 countries are members of the IPCC (including the United States, United Kingdom, China, Germany, and France) — and thousands of scientists all over the world contribute to the work of the organization.

The panel based its findings on the current high levels of greenhouse gas emissions (GHG).  These are carbon dioxide (CO2), methane (CH4), nitrous oxide (NO2), and a number of fluorinated gases (such as hydrofluorocarbons). GHGs are measured in parts per million (ppm), parts per billion (ppb) and per trillion. The gases can remain in our atmosphere for years, decades, centuries.

The end effect is to make our Earth warmer and warmer over time.

And where do the GHG emissions come from?  Transportation, production of electricity, industry (using fossil fuels for energy, production), buildings (commercial, residential, industrial), and use of the land (agriculture, forestry, ranching).

The key takeaways from the IPCC report:  We have not done enough in the past / we are not doing enough now (to address global warming) – and we have to dramatically increase the critical steps needed to slow and stop global warming and move the global society back to the pre-industrial levels of GHG emissions (150 to 200 years ago).

The key is more aggressive and rapid reduction of carbon emissions.  Think about achieving that while continuing economic growth (everyone’s desire, everywhere); dealing with steadily increasing population growth (we are on our way to 9 billion level by 2050 says the UN); keeping public sector expenditures at levels that sustain our present way of life while allocating funds to address climate change threats; and, avoiding catastrophic upheavals of various kinds in the decades ahead.

The IPCC report is sobering.  Our Top Story this week is a good review by CNN of where we are today and the rapidly-diminishing days we have left to begin very serious efforts for a course correction.

IPCC background information is available for you at: https://wg1.ipcc.ch/

The U.S. EPA web site also has information at a glance for you: https://www.epa.gov/ghgemissions/sources-greenhouse-gas-emissions

You can also access the annual Inventory of U.S. GHG Emissions and Sinks there.

This Week’s Top Story

Planet has only until 2030 to stem catastrophic climate change, experts warn
(Monday – October 08, 2018) Source: CNN – Holding global warming to a critical limit would require “rapid, far-reaching and unprecedented changes in all aspects of society,” says a key report from the global scientific authority on climate change.