The Media – And Sustainability & CR Thought Leadership, For Both Topic-Focused and Mainstream Media Coverage

by Hank Boerner – Chair, G&A Institute

The “media” that we choose to get our news, commentary, research results, even crossword puzzles, movie reviews, the latest scientific papers and maybe information about what our friends are up to (such as “social media”) are usually self-selected.  

We tune in to what we want to read or watch or listen to…for information / education / entertainment…and it also helps to define us in many ways.

So here at G&A Institute as we broadly monitor for content related to both our day-to-day and long-term focus areas (the list of topics and issues is long), when we see these things pop up in “not-the-usual places,” we are cheered.

This weekend, for example, we picked up on the following, which were encouraging in that senior management publications are read beyond the folks involved in sustainable investing and corporate sustainability or ESG issues and topics.

In Focus:   MIT Sloan Management Review

This is the publication of the prestigious Massachusetts Institute of Technology’s MIT Sloan School of Management.  “Share Your Long-Term Thinking” was one feature article. Companies need to be more forthcoming about their strategies for long-term value creation when they communicate with investors — especially about ESG issues, write authors Tim Youmans and Brian Tomlinson.

Their observation is that over the past five years, CEOs have faced mounting pressure to produce short-term profits. CEOs do think about the long-term, have long-term plans (detailed and extensive) and these typically are closely held.  Result: corporate strategy and practice are not captured in investor communications.

They then offer six reasons why long-term plans should be disclose and how to do that.  One of these is to help investors understand ESG issues through the eyes of management — because a majority of investors see ESG factors as financially material and expect sound management of material ESG factors to deliver better performance over the long-term. 

Tim Youmans is engagement director for Hermes Equity Ownership Services and Brian Tomlinson is research director for the Strategic Investor Initiative at CECP.

They conclude for the magazine’s audience (aimed at corporate executives and senior managements in the main): “The long-term plan is a new tool in the regular sequence of periodic corporate-shareholder communications and represents an unprecedented opportunity for leading companies and investor together to drive sustainable value creation and help to clarify the role of the corporation in a sustainable society.”

That is not all for the MIT Sloan Management Review audience in the Spring 2008 issue.

“Why Companies Should Report Financial Risks From Climate Change” is another feature — this from Robert Eccles and Michael Krzus.  They  focused on the Financial Stability Board’s Task Force on Climate-related Disclosures [recommendations].

“Investors and the rest of the world is watching to see how companies will respond to the TFCD recommendations” — the ask here is that company managements will expand their disclosure to report on the risks and opportunities inherent in climate change in such documents as the 10-k.

Boston Common Asset Management LLC and ShareAction organized a campaign with institutions representing US$1.5 trillion in AUM participating to pressure financial institutions (especially banks) to implement the recommendations.

Companies should follow the recommendations, authors Eccles and Krzus argue, because this could lead to evolving better strategies to adapt to climate change — and be able to explain these strategic moves to the their investors.

They focus on the oil and gas industry, looking at disclosures in 2016 by 15 of the largest industry firms listed on the NYSE.  A few have made good progress in adhering to the TCFD recommendations (so there is not a “blank slate”); there is work to be done by all of the companies in enhancing their disclosures to meet the four top recommendations (in governance, strategy, risk management and metrics and targets areas).

Their article is an excellent summation of the challenges and opportunities presented for such companies as BP, Chevron, ExxonMobil, Sinopec, Statoil, Total, and others in oil & gas.

Bob Eccles is a well-known expert in corporate sustainability and sustainable investing and is visiting professor at Said Business School at the University of Oxford. Mike Krzus is an independent consultant and researcher and was a Fellow of G&A Institute.

Wait, there’s more!

The magazine’s columnists had important things to say as well.

Kimberly Whitler and Deborah Henretta penned “Why the Influence of Women on Boards Still Lags,” applauding the rise of the number of women on boards and offering two important criticisms — the growth rate is slowing and boards do that do have female members often limit their influence.

Although there are measurable positive results of female board inclusion — they cite Return on Equity averaging 53% higher in the top quartile than in the bottom — women still are not making more rapid inroads with fewer reaching the most influential board leadership positions, even with more women on boards than 10 years ago.

The authors set out ways for making more progress in board rooms.  And they advise: “For real, lasting change that wins companies the full benefits of gender-diverse decision-making, boards need to look beyond inclusion — and toward influence.”

Kimberly Whitler is assistant professor of business adminstration at the University of Virginia’s Darden School of Business; Deborah Henretta is an independent board director on the boards of Dow Corning, Meritage Homes Corp, NiScource Inc and Staples (she was a Proctor & Gamble executive).

There is much more for executives and board members in the issue, which has the overall theme of: “In Search of Strategic Agility – discover a better way to turn strategy into results.”

The content we outlined here is powerful stuff (our own technical term) to crank into corporate strategy-setting, and savvy execs are doing just that, as we see here at G&A as we pour through the more than 1,500 corporate reports we analyze each year with titles such as Corporate Sustainability, Corporate Responsibility, Corporate Citizenship, Corporate Environmental Sustainability, and more.

And so it is very encouraging when we wander beyond the beaten path of reading the reliable staple of sustainability-oriented and CSR-oriented media to see what the senior management thought leadership media are doing!

We recommend that you read through the Spring 2018 Strategy magazine from MIT Sloan.  Link: https://sloanreview.mit.edu/

Broadening Activism Among Institutional Investor Classes on ESG Issues – Here to Stay, Says Proxy Advisor CEO

“Operating under the radar” — that is, various categories of institutional investors getting active in the “investor activist” game?  Bruce Goldfarb, CEO of Okapi Partners, describes a sea change that he sees that is underway, the trend in how large institutions are approaching in the [investor] push for corporate change.  The lens is the annual corporate proxy season and the many campaigns therein, including the 2017 campaign.  Okapi is one of the influential proxy advisors for both investor and companies, working on some 48 campaigns during 2017.

What did the firm’s leader see as patterns?  Well, for starters, large mutual fund advisories and ETF complexes (like Vanguard, Fidelity, BlackRock, State Street) — these organizations with many trillions’ of dollars in corporate holdings in their portfolios, “…have become increasingly intent on holding public company boards and management teams accountable in higher ESG standards,” CEO Goldfarb notes in our Top Story (published on the digital Forbes Investing platform).

As many of us well know, the first iteration of ESG was about the “G” — for several decades, the focus was on corporate governance issues.  (Such as: investors pushing for separation of Chair and CEO, the often described example of a popular campaign in the G space).  Over time, the emphasis on environmental and social issues (“E” and “S”) broadened the approach to the familiar ESG measurements because the E and S issues are tied to share performance and confidence (or lack of) in management.

The CEO in the interview points out that a climate change proposal at ExxonMobil recently was passed by a wide margin (investors supported the demand that the company publish an annual assessment of the impact of global warming policies) while a decade ago a push by investors in proxy campaigning to separate chair and CEO positions and a few environmental proposals failed by a very large margin.  Things are a-changin’ in the proxy arena.

In 2017, there have been (so far) 430 resolutions filed that address “S” and “E” issues, compared to 370 a year earlier.  Investors, says CEO Goldfarb, see the connection between ESG policies and stock performance more clearly now.

In our conversations with corporate managers (at all size enterprises) it is clear that the managers want to press the Investing Case upward to their bosses in the C-suite and board room.  Why should we make the investment in a sustainability effort, the question often goes, and the answer is that among other things, corporate performance and a scorecard of sorts on top management has a proxy, too — that is, the ESG performance of the enterprise!

You’ll find more from perspectives shared by the Okapi Partners CEO in the Forbes interview by staffer Antoine Gara in our Top Story this week.

Top Stories This Week…

An Insider Explains Why Wall Street’s Big Money Focus On Sustainability Is Here To Stay
(Friday – July 28, 2017)
Source: Forbes – When a hedge fund launches a major activist campaign calling for changes at companies here and in overseas markets it’s real news.

Meet Hank Boerner, Chairman & Co-Founder, Governance & Accountability Institute @ #Intro2ESG Training

Presenting at Introduction to ESG, Sustainable & Impact Investment OneDay Training
The How & Why of Applying ESG to Corporate Valuations
Hosted by Zicklin School of Business at Baruch College/CUNY on June 15th

Introduction:  For professionals in the capital markets, and in the corporate sector, G&A Institute and Global Change Associates are teamed to present a one-day professional training program, hosted by Zicklin School of Business at Baruch College/CUNY, in midtown Manhattan.  This is an excellent introduction to the application of ESG factors to investment making decisions and corporate valuations.  Find out more at https://intro2esg.eventbrite.com

ESG = the corporate environmental, social or societal and corporate governance factors to be evaluated by the financial analyst, asset owner, asset manager, and others in the capital markets in looking beyond the financial in selecting public companies for “buy/sell/hold” portfolio management decisions. (This is also referred to as “sustainable investing,” “impact investing,” and similar titles by practitioners.)

The outstanding faculty presenting during the one-day course will include experts in ESG / sustainable / impact investing, covering topics such as best practices; data sources; analytical tools; research resources; methodologies; why ESG matters; and realized outcomes using these approaches to analysis and investment management.

MEET ONE OF YOUR COURSE LEADERS
Hank Boerner
Chairman & Co-Founder, Governance & Accountability Institute, Inc.
Topic:  Introduction to Corporate ESG Strategies, Performance, Actions — What is Corporate ESG & Why It Really Matters to Shareowners

* * * * * * * *

CAREER BACKGROUND: HANK BOERNER
Henry (Hank) Boerner is Chairman and Chief Strategist of Governance & Accountability Institute, Inc., a New York-based (for-profit) research, knowledge management, advisory and strategies service provider.  The company serves clients in the corporate sector, in capital markets organizations and organizations in the not-for-profit sector.

Hank leads the Institute team’s client engagements dealing with client engagement in such areas as sustainability, corporate responsibility, corporate governance, issue management, crisis management, disclosure, and strategic corporate communications.

During his career he has been a business & financial journalist, corporate manager, corporate strategist, issue management consultant, and senior level strategy advisor. For 30 years he has provided corporate and investment community clients with issues management strategies, advice and programs.

Hank’s current work is focused on identifying and addressing ESG issues (corporate environmental, societal, governance performance factors) and assisting corporate managements in developing their ESG strategies, organizing teams and initiatives, coaching executives, and facilitating disclosure and structured reporting on the progress of the company’s sustainability journey.

Hank was a managing partner in the Rowan & Blewitt management consulting organization for two decades before co-founding the Institute.  (The Rowan & Blewitt issue and crisis management practice served Fortune 100 clients,  and was acquired by Interpublic Group of Companies – NYSE:IPG.)

Hank is active in key professional organizations including: the US Forum for Sustainable & Responsible Investing (US SIF); its analyst network, SIRAN; the National Association of Corporate Directors (NACD); New York Society of Securities Analysts (NYSSA – he is chair of the Sustainable Investing Committee); and,  the National Investor Relations Institute (NIRI).  He was recognized by the NACD in the prestigious Directorship 100 ranking, in 2011 and 2012 as one of “people to watch in corporate governance affairs.”

He serves on the Global Advisory Council of Cornerstone Capital Group, a New York-based financial services firm that applies sustainable finance across the capital markets (investment consulting, investment banking).  Principal:  Erika Karp, former head of global research, UBS.  Information at  http://cornerstonecapinc.com/bios/hank-boerner/

Hank has been a contributing editor for Corporate Finance Review ( a journal for CFOs and corporate finance managers) published by Thomson Reuters) from 2002 to 2015, commenting on trends in corporate governance, sustainability and related issues.  He now provides this commentary to T-R’s “Accounting & Compliance Alert” service. He has authored commentaries for Financial Times, Bloomberg BNA, and numerous print and digital platforms.  He is co-author of “Strategic Governance – Enabling Financial, Environmental & Social Sustainability,” published in 2010.  His current boo — “Trends Emerging — a Look Head Ahead of the Curve in ESG / Sustainability / CR / SRI”  will be published in July 2016.

Earlier in his career, Hank was a board-elected officer and head of communications of the New York Stock Exchange, managing NYSE communications and advising listed companies on timely disclosure, transparency and disclosure and reporting. At the start of his corporate career, he was American Airlines’ national corporate responsibility officer; later, he was a senior communications officer of the NY Metropolitan Transportation Authority.

He served as staff advisor in New York Governor Nelson A. Rockefeller’s administration, and later, provided counsel pro bono to Governor Mario M. Cuomo and Attorney General and then Governor Eliot Spitzer. Presently, he is informal advisor to New York State Comptroller Thomas DiNapoli, sole trustee of the New York State Common Fund, the retirement system for public employees throughout the state.

For more information about the course and how to register, visit: https://intro2esg.eventbrite.com

Meet Peter Fusaro – Chairman – Global Change Associates @ #Intro2ESG Training

Presenting at Introduction to ESG, Sustainable & Impact Investment OneDay Training
The How & Why of Applying ESG to Corporate Valuations
Hosted by Zicklin School of Business at Baruch College/CUNY on June 15th

Introduction:  For professionals in the capital markets, and in the corporate sector, G&A Institute and Global Change Associates are teamed to present a one-day professional training program, hosted by Zicklin School of Business at Baruch College/CUNY, in midtown Manhattan.  This is an excellent introduction to the application of ESG factors to investment making decisions and corporate valuations.  Find out more at https://intro2esg.eventbrite.com

ESG = the corporate environmental, social or societal and corporate governance factors to be evaluated by the financial analyst, asset owner, asset manager, and others in the capital markets in looking beyond the financial in selecting public companies for “buy/sell/hold” portfolio management decisions. (This is also referred to as “sustainable investing,” “impact investing,” and similar titles by practitioners.)

The outstanding faculty presenting during the one-day course will include experts in ESG / sustainable / impact investing, covering topics such as best practices; data sources; analytical tools; research resources; methodologies; why ESG matters; and realized outcomes using these approaches to analysis and investment management.

MEET ONE OF YOUR COURSE LEADERS
Peter Fusaro
Chairman, Global Change Associates
Topic:  Case Study of Corporate Malfeasance: The VW Emissions Scandal

A conversation with Peter:

Q: How is your day-to-day work related to the Intro to ESG, Sustainable & Impact Investment Certificate Program to be presented at Baruch?
[PF]  I work broadly in the area of corporate finance for sustainability for private companies in the area of clean energy, clean water and sustainable agriculture. Most of my work centers in clean energy arena for both electric power generation and transportation. 

Today, I work on solar energy finance as well as energy storage with advanced batteries and fuel cells. I work with a  hydrogen manufacturing company for both energy storage and transportation of fuel cell vehicles. In the past I have worked on taking the lead out of gasoline with the US EPA and was a consultant to the Toyota Prius development team. 

Because of this expertise, I am intimately aware of the VW emissions scandal and its ramifications in terms of corporate governance for that company.

Q:  What can attendees expect to learn from your session?
[PF] Course participants will learn that the VW emissions scandal is not a one-off crisis event. That Volkswagen has committed many transgressions in the past 25 years and tried to cover them up. I will go through the specifics of how they tried to get away with the fraudulent use of software to hide defects in their diesel fuel technology of their engines.  So far, this has lead to over US$15 billion in fines and great damage to their corporate reputation. It is a text book example of corporate malfeasance.

Q:  What advice do you have or opportunity that you see for attendees who complete the Certificate Program?
[PF] Attendees will learn not only the basics of ESG but also come away with some ideas on what to look for investment in public companies. The rigorous ESG screens are still evolving but with the expertise of the instructors for this program, course participants will learn what analysis is needed to vet both investment and sustainability parameters within companies. Moreover, they will learn what red flags to look for in any due diligence process.

* * * * * * * *

CAREER BACKGROUND: PETER FUSARO
Peter C. Fusaro is a best-selling author, keynote speaker and thought leader on emerging energy and environmental financial markets.  He’s Chairman of Global Change Associates, a financial services advisory in New York City, and author of “What Went Wrong at Enron,” as well as 15 other books on energy and the environmental financial markets.

Peter has been on the forefront of energy and environmental change for more than 40 years, his work focusing on how to use energy more efficiently and in an environmentally-benign manner.  His current focus is on environmental financial market acceleration toward the goal of the low-carbon economy through sustainable finance in renewable energy, clean technology and resource efficiency.  Peter founded and runs the Wall Street Green Summit — now in its 15th year. Information at: www.wsgts.com.

Peter served at the US Department of Energy in the 1970s where he worked on removing lead in gasoline with the U.S. Environmental Protection Agency (EPA), as well as co-writing an Environmental Impact Statement on LNG (liquefied natural gas) safety and siting.

He was a senior policy analyst in the New York City Mayor Office of Energy & Telecommunications, where he created the first energy efficiency programs for electricity and natural gas with Con Edison (the electric utility) and Brooklyn Union Gas in the mid-1980s.   In the early-1990s he established his consultancy and implemented energy efficiency and conservation programs for the Port Authority of New York & New Jersey, including lighting retrofits, mechanical systems and energy savings.

Peter worked with the Toyota Prius development team on electric power issues in the mid 1990s. He has run a cleantech venture capital fund as well as worked with hedge funds on portfolio construction. Today, he works with several clean energy technologies and fund managers in clean energy project finance.

Peter was graduated with an M.A. in International Relations from Tufts University and a B.A. from Carnegie-Mellon University.  Peter was an adjunct professor at Columbia University, where he taught a popular renewable energy project development and finance course each fall semester to second year graduate students.  He is on the advisory board of Bard College’s MBA in Sustainability program as well as having served for eight years on the External Advisory Board of the ERB Institute for Global Sustainable Enterprise, Ross School of Business, University of Michigan.

For more information about the course and how to register, visit: https://intro2esg.eventbrite.com

Meet Eric Kane – Health Care Sector Analyst, Sustainability Accounting Standards Board (SASB) @ #Intro2ESG Training

Presenting at Introduction to ESG, Sustainable & Impact Investment OneDay Training
The How & Why of Applying ESG to Corporate Valuations
Hosted by Zicklin School of Business at Baruch College/CUNY on June 15th

Introduction:  For professionals in the capital markets, and in the corporate sector, G&A Institute and Global Change Associates are teamed to present a one-day professional training program, hosted by Zicklin School of Business at Baruch College/CUNY, in midtown Manhattan.  This is an excellent introduction to the application of ESG factors to investment making decisions and corporate valuations.  Find out more at https://intro2esg.eventbrite.com

ESG = the corporate environmental, social or societal and corporate governance factors to be evaluated by the financial analyst, asset owner, asset manager, and others in the capital markets in looking beyond the financial in selecting public companies for “buy/sell/hold” portfolio management decisions. (This is also referred to as “sustainable investing,” “impact investing,” and similar titles by practitioners.)

The outstanding faculty presenting during the one-day course will include experts in ESG / sustainable / impact investing, covering topics such as best practices; data sources; analytical tools; research resources; methodologies; why ESG matters; and realized outcomes using these approaches to analysis and investment management.

MEET ONE OF YOUR COURSE LEADERS
Eric Kane
Health Care Sector Analyst,
Sustainability Accounting Standards Board (SASB)
TOPIC:  About SASB & More Effective 10-K Disclosure

A conversation with Eric:

Q. How is your day to day work related to the Intro to ESG Certificate Program?
[EK]  As the Health Care Sector Analyst at SASB, I work to identify material sustainability issues and to provide evidence of financial impact and standardized methods of accounting. This work ultimately helps to inform how and why sustainability factors are integrated into corporate valuations. 

Q. What can attendees expect to learn from your session?
[EK]  Attendees will learn about SASB’s standards setting process, and how the organization is working to enhance corporate disclosure on material sustainability issues.

Q. What advice do you have or opportunity that you see for attendees who complete the Certificate Program?
[EK] There is a tremendous amount of growth around sustainable investing.  By learning what organizations and strategies are leading this aspect of the market, attendees will be well positioned to participate and excel in the field.

* * * * * * * *

CAREER BACKGROUND: ERIC KANE
Eric re-joined SASB in July, 2016 as the Health Care Sector Analyst. Prior to his work at SASB, Eric served as a Senior Consultant at Context. In that role, he advised numerous Fortune 500(r) companies on sustainability strategy and reporting.

Eric was also a Senior Analyst at Innovest Strategic Value Advisors, where he managed a global team of analysts that rated utility companies on the basis of environmental, social, and governance performance. While at Innovest, Eric served as the Lead Author of the Carbon Disclosure Project Report 2007: Global FT500.

The Report, which was written on behalf of 315 institutional investors with combined assets of US$41 trillion, analyzed how the world’s 500 largest companies were responding to the risks and opportunities associated with climate change.

Eric holds a Master of Public Administration from NYU Wagner Graduate School of Public Service and a degree in political science from Bates College.

For more information about the course and how to register, visit: https://intro2esg.eventbrite.com

Meet Kate Starr, CFA, CIO, Flat World Partners @ #Intro2ESG Training

Presenting at Introduction to ESG, Sustainable & Impact Investment OneDay Training
The How & Why of Applying ESG to Corporate Valuations
Hosted by Zicklin School of Business at Baruch College/CUNY on June 15th

Introduction:  For professionals in the capital markets, and in the corporate sector, G&A Institute and Global Change Associates are teamed to present a one-day professional training program, hosted by Zicklin School of Business at Baruch College/CUNY, in midtown Manhattan.  This is an excellent introduction to the application of ESG factors to investment making decisions and corporate valuations.  Find out more at https://intro2esg.eventbrite.com

ESG = the corporate environmental, social or societal and corporate governance factors to be evaluated by the financial analyst, asset owner, asset manager, and others in the capital markets in looking beyond the financial in selecting public companies for “buy/sell/hold” portfolio management decisions. (This is also referred to as “sustainable investing,” “impact investing,” and similar titles by practitioners.)

The outstanding faculty presenting during the one-day course will include experts in ESG / sustainable / impact investing, covering topics such as best practices; data sources; analytical tools; research resources; methodologies; why ESG matters; and realized outcomes using these approaches to analysis and investment management.

MEET ONE OF YOUR COURSE LEADERS
Kate Starr, CFA
Chief Investment Officer, Flat World Partners
TOPIC: What Investors Need to Know About the Rising Importance of Impact Investing

A conversation with Kate:

Q:   How is your day-to-day work related to the Intro to ESG, Sustainable & Impact Investment Certificate Program to be presented at Baruch?
[KS] Here at Flat World Partners, we help family offices, foundations, pension funds, and wealth advisors build customized investment portfolios that drive positive environmental and social impact.  We look at everything from direct investments in early-stage companies to public equity and fixed income and think about how ESG works across asset classes.

Q:  What can attendees expect to learn from your session?
[KS] I’ll be focusing on “impact investing” — what it means and where it fits into an overall portfolio from both an investment and a client service perspective.  We’ll talk about the issue of impact measurement and how to think about simple, effective ways to do it. Last, we’ll discuss some of the most interesting themes and strategies that we’re seeing in the market right now.

Q:  What advice do you have or opportunity that you see for attendees who complete the Certificate Program?
[KS] Our entire business is focused on impact, or sustainable investing, because we believe that it represents the future of investing.  Clients have already woken up to the fact that finance and investment plays a big role in shaping the world around them. 

Finance and investment teams who can recognize that demand and lead their clients to a better future will be the ones to be sustainable over the long-term.

* * * * * * * *

CAREER BACKGROUND: KATE STARR
Kate leads investment strategy and portfolio development at Flat World Partners. In her prior role at the Heron Foundation, Kate formed and led the team that invests Heron’s approximately US$300 million portfolio for impact. Working with the board and staff, Kate developed the investment policy statement and implementation plan to move the foundation to invest 100% of its assets for mission.

Kate started her career as an economics and equities analyst at First Asset Management and moved into research on microfinance in Tanzania.  She is a Chartered Financial Analyst (CFA), co-leading the Sustainability Committee at the New York Society of Security Analysts (NYSSA),.  She serves on the investment committee of the Christopher Reynolds Foundation; and, serves as an advisor to the Sustainability Accounting Standards Board (SASB) and the Mission Investors Exchange.

She was graduated from Indiana University with an Honors degree in English and Italian, and earned a Master’s degree in International Relations from Johns Hopkins School for Advanced International Studies.

For more information about the course and how to register, visit: https://intro2esg.eventbrite.com

Climate Change Risk? Nah – The Deniers & Destroyers Are At Work – White House Attempts to Roll Back Obama Legacy

Deniers/Destroyers are at work – at US EPA — the White House — hoping/wishing for rollback of rich Obama legacy positions on climate change issues…

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

March 28, 2017

In classic-CNN style we bring you !!!BREAKING NEWS!!! – the Climate Change Deniers and Environmental Regulatory Protection Destroyers are at work in Washington DC today.

You’ve heard the news by now: President Donald Trump and EPA Administrator E. Scott Pruitt are preening and pompously strutting as they announce the important beginnings of what they want (and hope!) to be the rollback of important environmental and public health protections of the Obama Administration … you know, the “job killers” that were at work putting coal miners out of business.

At least that’s some of the twisting, grasping, pretzel-elian logic that underpins the actions taken today (which in turn tells the Trump loyal voting base that yes, still another campaign promise is being carried out on their behalf).

During his early months in office, President Barack Obama signed important Executive Orders that addressed climate change issues and global warming challenges — and please here do note that these and other Presidential EOs are always based on (1) the existing statutes enacted by Congress and (2) the authority of the Office of the President.

You remember some of the key statutes involved in these issues  — The Clean Air Act (CAA); The Clean Water Act; (CWA) the foundations laid by the all-empowering National Environmental Policy Act (NEPA) …and other landmark legislation sensibly reached on a bipartisan basis over the decades since American rivers burst into flames.

Today, President Donald Trump signed [a very brief] EO with a flourish — the “Promoting Energy Independence and Economic Growth” Executive Order.

The action orders the U.S. Environmental Protection Agency to begin the [legal] process of un-doing or re-doing the nation’s Clean Power Plan, the keystone to President Obama’s actions to address global warming. (Or “climate change” if one is skittish about being on the side of the angels on this issues.)

Here is what today’s EO covers:

  • Executive (cabinet) departments and agencies will begin reviewing regulations that potentially burden the development/or use of domestic energy sources — and then suspend, revise or rescind those that “unduly burden” the development of domestic energy resources…beyond the degree necessary to protect the public interest.
  • All [Federal] agencies should take appropriate actions to promote clean air (!) and clean water (!) for the American People — oh, while following the law and the role of the Congress and the States concerning these matters. (One hopes this includes Flint, Michigan residents. We can hear great, cogent arguments in the Federal courts about all of this.)
  • Costs are to be considered — regarding “environmental improvements for the American People” — as, when “necessary and appropriate” environmental regulations are to be complied with…and the benefits must be greater than the cost.

This is encouraging, if only that it is stated to provide cover for legal challenges: Environmental regulations will be developed through transparent processes that employ the best available peer-reviewed science and economics!

  • All Federal agencies are to review actions that are described in the Trump Executive Order and then submit to the [White House] staffed departments and the Vice President their plan(s) to carry out the review for their agency.

Here’s The Important Deny/Destroy Actions

By swipe of pen, the President revoked these important cornerstones of the Obama Administration climate change legacy:

  • Executive Order 13653 (November 1, 2013) – “Preparing the U.S. for the Impacts of Climate Change.”
  • President Memorandum (June 25, 2013) – “Power Sector Carbon Pollution Standards.”
  • Presidential Memorandum (November 3, 2015) – “Mitigating Impact on Natural Resources from Development and Encouraging Related Private Investment.”
  • Presidential Memorandum (September 21, 2016) – “Climate Change and National Security.”
  • Report of the Executive Office of the President (June 2013) – “Climate Action Plan.”
  • Report of the Executive Office of the President (March 2014) – “Climate Action Plan Strategy to Reduce Methane Emissions.”
  • The Council on Environmental Quality guidance (August 5, 2016) – “Final Guidance for Federal Departments and Agencies on Consideration of GhGs and Effects of Climate Change in NEPA Reviews.”

And The Very Important Clean Power Plan…

  • A review of the EPA’s “Clean Power Plan,” to be suspended, revised or rescinded, or, new rules proposed following the steps necessary. This will affect:
  • The final rules of the Clean Power Plan (October 23, 2015) – “Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generation Units”;
  • Final Rules (October 23, 2015) – “Standards of Performance for GhGs from New, Modified and Reconstructed Stationary Sources: Electric Utility Generating Units;
  • Proposed Rule (October 23, 2015) – “Federal Plan Requirements for GhGs Emissions from Electric Utility Generating Units Constructed before January 8, 2015”; “Model Trading Rules: Amendments to Framework Regulations”.
  • The Interagency Working Group on Social Cost of Greenhouse Gases – convened by the Council of Economic Advisors and the Director, Office of Management and Budget (OMB) — is disbanded, and the documents that established the “social cost of carbon” no longer represent public policy.

Beyond these specifics, the EO also orders the Secretary of the Interior to review its rules, and any guidance given, and (if appropriate) suspend, revise and rescind these. Included:

  • Final Rule (March 26, 2015) – “Oil and Gas: Hydraulic Fracturing on Federal and Indian Lands”;
  • Final Rule (November 4, 2016) – “General Provisions and Non-Federal Oil and Gas Rights”;
  • Final Rule (November 14, 2016) – “Management of Non-Federal Oil and Gas Rights”;
  • Final Rule (November 18, 2016) – “Waste Prevention, Production Subject to Royalties, and Resource Conservation.”

For the record: The EO is intended to (1) promote clean and safe development of “our Nation’s vast” energy sources; (2) avoid regulatory burdens that constrain production, energy growth and job creation; (3) assure the Nation’s geo-political security.

US SIF Weighs In

The influential trade association for sustainable, responsible and impact investing swiftly responded. Lisa Woll, CEO of US SIF, commented:

“On behalf of our 300 institutional members, US SIF belies the Administration should be working aggressively to reduce carbon in the atmosphere and that this Executive Order accomplishes the opposite.

“The United States is paying a high economic price from the ravages of severe drought, wildfires and storms associated with increased atmospheric levels of carbon. This is not the time to retreat from the call to protect current and succeeding generations from the catastrophic implications of further, unrestrained climate change.”

In the US SIF biennial survey of sustainable and impact investment assets, it should be noted here that U.S. money managers with US$1.42 trillion in AUM and institutional asset owners with $2.15 trillion in assets consider climate change risk in their investment analysis — that is three times the level in the prior survey in 2014.

Now — Investors – NGOs – State and local governments – social issue activists — business leaders — Federal and State courts — can push back HARD on these moves by the Trump Administration.

What do you think — what do you have to say? Weigh in our this commentary and share your thoughts – there’s space below to continue the conversation!

Climate Change Resolutions / and Investors’ Voting — “Hurricane” Coming in 2017 Shareholder Voting?

“Stormy Weather Ahead Warning”:  Climate Change Resolutions / and Investors’ Voting — “Hurricane” Coming in 2017 Shareholder Proxy Voting Season?

Guest Commentary – by Seth DuppstadtProxy Insight Limited

The United Nations‘ consensus reached in the “Paris Agreement” (COP 21), the goal to limit global temperature rise to within 2 degrees Celsius could turn shareholder support for climate change resolutions from a squall into a powerful hurricane at U.S. energy and utility companies this proxy season. says our team at Proxy Insight.

Example cited:  The BlackRock Investment Stewardship Team’s new guidance on climate risk engagement made the possibility of a Category 5 storm conceivable — if companies aren’t responsive.

During the 2016 corporate proxy season, a particularly successful subset of shareholder-sponsored climate change resolutions — known as 2 Degree Scenario (“2DS”) proposals —  averaged 37.73 percent shareholder support:

ISSUER MEETING DATE % FOR
Devon Energy Corporation 8-Jun-16 36.06
Southern Company (The) 25-May-16 34.46
Exxon Mobil Corporation 25-May-16 38.14
Chevron Corporation 25-May-16 40.76
FirstEnergy Corporation 17-May-16 31.9
Anadarko Petroleum Corporation 10-May-16 42
Occidental Petroleum Corporation 29-Apr-16 48.99
Noble Energy Inc. 26-Apr-16 25.1
AES Corporation (The) 21-Apr-16 42.21

 

This was a notably high level of support for a first-round shareholder proposal — especially for climate change related. *

Example:  The proposal at Occidental Petroleum almost gained a majority with 48.99% of votes cast in support (not including abstentions).

Proxy Insight data show Institutional Shareholder Services (ISS) recommended For votes for all nine 2DS resolutions, while proxy advisor Glass Lewis opposed one.

The shareholder resolutions ask companies to stress test their portfolios and report on financial risks that could occur in a low-carbon economy.

Up to 17 2DS resolutions are expected to move to vote at U.S. companies in 2017 proxy voting, according to Ceres.  (Ten will be filed at companies not having these resolutions before).  The next scheduled company voting on 2DS will be at AES Corp on April 20th. A preliminary proxy indicates Duke Energy shareholders will be voting on May 4.

*excluding non-US “Strategic Resilience for 2035” proposals (2015/16)

 TOP-10 INVESTORS (AUM) MOST FREQUENTLY SUPPORTING “2DS” CLIMATE CHANGE RESOLUTIONS

Investor For Against Abstain DNV Split
Deutsche Asset & Wealth Management 100.00% 0.00% 0.00% 0.00% 0.00%
Legal & General Investment Management 100.00% 0.00% 0.00% 0.00% 0.00%
Legg Mason Partners Fund Advisor, LLC. 100.00% 0.00% 0.00% 0.00% 0.00%
AXA Investment Managers 100.00% 0.00% 0.00% 0.00% 0.00%
APG (Stichting PF ABP) 100.00% 0.00% 0.00% 0.00% 0.00%
Schroders 100.00% 0.00% 0.00% 0.00% 0.00%
M&G Investment Management 100.00% 0.00% 0.00% 0.00% 0.00%
Aviva Investors 100.00% 0.00% 0.00% 0.00% 0.00%
Canada Pension Plan Investment Board (CPPIB) 100.00% 0.00% 0.00% 0.00% 0.00%
California Public Employees’ Retirement System (CalPERS) 100.00% 0.00% 0.00% 0.00% 0.00%

Information is available at:  https://www.linkedin.com/pulse/climate-change-voting-calm-before-storm-seth-duppstadt

Proxy Insight is the leading provider of global shareholder voting analytics.

Visit www.proxyinsight.com for more information, where you can also sign up for a trial or contact Seth Duppstadt, SVP Proxy Insight Limited at: seth.duppstadt@proxyinsight.com  Telephone:  646-513-4141

World’s Largest Asset Manager on Climate Risk Disclosure — the BlackRock Expectations of Public Company Boards and C-Suite

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

Monday, March 13, 2017 — The world’s largest asset management firm has clear expectations that corporate managements will disclose more on climate risk to their shareholder base…BlackRock speaks out.  Corporate boards and C-Suite – Important News for You….

You all know BlackRock — this the New York City-based “world’s largest asset manager guiding individuals, financial professionals, and institutions in building better financial futures…”

“That includes offerings such as mutual fund, closed-end funds, managed accounts, alternative investments, iShares ETFs, defined contribution plans…”

And — “advocating for public policies that we believe are in our investors’ long-term interests…” “…ensuring long-term sustainability for the firm, client investments and the communities where we work…”

For BlackRock, Corporate Sustainability includes: (1) human capital, (2) corporate governance (3) environmental sustainability, (4) ethics and integrity, (5) inclusion and diversity, (6) advocating for public policy, and (7) health and safety.

In terms of Responsible Investing, the BlackRock approach includes (1) investment stewardship and (2) having a sustainable investing platform (targeting social and environmental objectives AND the all-important financial return).

So it should not come as a big surprise to the boards and managements of literally thousands of public issuers that BlackRock has great expectations regarding the individual company’s (in a portfolio or hope to be) climate change disclosure practices.

What We Are Doing/How We Do it – Shared by BlackRock

Right now the BlackRock managers are sharing with other asset owners & managers their approach to sustainable investing. There are important lessons for corporate managements in these explanations:

As part of the investment process, BlackRock continues to assess a range of factors (that could impact the long-term financial sustainability of the public companies or companies).

Over the past two years, a number of projects have helped BlackRock to more fully understand climate change. BlackRock believes that climate risk (climate risk/change issues) have the potential to present definitive risks and opportunities that could or will impact long-term shareholder value.

The BlackRock team members also contributed to external initiatives such as the Financial Stability Board’s (FSB) Task Force on Climate-related Financial Disclosure (TCFD) and the continued development of the voluntary reporting guidelines of the Sustainable Accounting Standards Board (SASB).

Larry Fink – the influential CEO of BlackRock — sent letters directly to the CEO’s of public companies in 2016 and then again recently (2017) that called attention to the need for the companies to help their investors better understand the ESG factors most relevant to the firm to generate value over time.

That especially includes more robust disclosure and reporting on the issues related to climate risk. (We need to keep in mind that “risk” has a companion — “opportunity,” as represented in the Chinese pictograph for a crisis.)

BlackRock’s Investment Stewardship Team meets with portfolio company managements and votes BlackRock shares at proxy voting time; if an issue is in focus and the C-suite will not make progress on the issue, the team will elevate the concern to the company’s board room. And they “may” in time vote against director nominees and for shareholders proposals that are on the right side of BlackRock’s own concerns.

Company Boards and Executives – for 2017

BlackRock engages with 1,500 companies (on average) every year. As (according to BlackRock) climate risk awareness and its engagement with companies on the issues is being advanced, and as the asset management firm’s own thinking on climate risk continues to evolve, that issue is on the table for the Investment Stewardship Team discussions with company managements in 2017.

Companies “most exposed” to climate risk will be encouraged as part of the discussions to consider reporting recommendations coming from the FSB Task Force.

And, the board will be expected to have “demonstrable fluency in how climate risk affects the business and management’s approach to adapting to and mitigating the risk. Corporate disclosure on all of this will be key to the ongoing relationship with the investor – BlackRock (with US$5 trillion and more AUM).

Other Investment Management Peers

Tim Smith, Director of ESG Shareholder Engagement at Walden Asset Management (Boston)

Tim Smith, Director of ESG Shareholder Engagement at Walden Asset Management (Boston) and long a robust and powerful voice in the sustainable investing movement, applauded BlackRock’s shared information.

“The announcement that climate risk will be a priority in their engagements with public companies is an exceedingly important message being sent by one of your largest shareholders. That they believe climate risk is a priority reinforces the importance of the issues for senior managements of public companies. We’re hopeful that BlackRock’s announcement and engagement on climate risk will result in active support for shareholder resolutions on climate change.”

Walden and others filed their own shareholder resolution with BlackRock asking for a review of the asset manager’s corporate proxy voting process and record on climate change.

BlackRock has been accused by investment peers for its proxy voting practices. For example, Climate Wire reported in 2016 that IF BlackRock and its large institutional investment peers had supported a climate resolution filed with Exxon Mobil (this was part of the not-for-profit Asset Owners Disclosure Project) the resolution would have passed in the final vote by shareholders.

We’ll see what the 2017 BlackRock moves mean in the corporate proxy season getting underway now with continued investor focus on climate change / climate risk / global warming disclosure and reporting demands.

As corporate sustainability consultants and advisors, we at G&A Institute (and as part of our pro bono research work as the exclusive Data Partners for the Global Reporting Initiative (GRI) in the United States) analyzed more than 1,500 report sustainability reports in 2016 — and we are seeing an increase now in 2017 early survey results that corporate disclosure on climate risk issues is definitely on the increase.

We will soon release the results of our team’s analysis of S&P 500(r) on sustainability reporting and related issues. Recall that our analysis last year found that 81 percent of the 500 companies were doing structured sustainability reporting.

There’s more information for you here:

https://www.blackrock.com/corporate/en-us/about-us/investment-stewardship/engagement-priorities

https://www.blackrock.com/corporate/en-us/literature/market-commentary/how-blackrock-investment-stewardship-engages-on-climate-risk-march2017.pdf

Asset Owners Disclosure Project:  http://aodproject.net/

Tim Smith / Walden Asset Management:

http://www.waldenassetmgmt.com/team/smith-timothy

 

 

News From the Sustainability Front as The Trump White House Makes Controversial Moves on ESG Issues — Actions and Reactions

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

February 23, 2017
Forward Momentum! – Sustainability 2017

Are you like many of us having sleepless nights and anxiety spells as you watch the antics of the Trump White House and the creeping (and similarly moving-backwards) effects into the offices of important Federal agencies that the Administration is taking over?

Consider then “other news” — and not fake news, mind you, or alt-news — but encouraging real news that is coming from OTHER THAN the Federal government.

We are on track to continue to move ahead in building a more sustainable nation and world — despite the roadblocks being discussed or erected that are designed to slow the corporate sustainability movement or the steady uptake of sustainable investing in the capital markets.

Consider the Power and Influence of the Shareowner and Asset Managers:

The CEO of the largest asset manager in the world — BlackRock’s Larry Fink — in his annual letters to the CEOs of the S&P 500 (R) companies in January said this: “Environmental, social and governance (ESG) factors relevant to a company’s business can provide essential insights into management effectiveness and thus a company’s long-term prospects. We look to see that a company is attuned to the key factors that contribute to long-term growth:
(1) sustainability of the business model and its operations; (2) attention to external and environmental factors that could impact the company; (3) recognition of the company’s role as a member of the communities in which it operates.

A global company, CEO Fink wrote to the CEOs, needs to be “local” in every single one of its markets. And as BlackRock constructively engages with the S&P 500 corporate CEOs, it will be looking to see how the company’s strategic framework reflects the impact of last year’s changes in the global environment…in the ‘new world’ in which the company is operating.

BlackRock manages US$5.1 trillion in Assets Under Management. The S&P 500 companies represent about 85% of the total market cap of corporate equities.  Heavyweights, we would say, in shaping U.S. sustainability.

* * * * * * * *

As S&R investment pioneer Steve Viederman often wisely notes, “where you sit determines where you stand…” (on the issues of the day).  More and more commercial space users (tenants and owners) want to “sit” in green spaces — which demonstrates where they “stand” on sustainability issues.

Consider:  In the corporate sector, Retail and other tenants are demanding that landlords provide “green buildings,” according to Chris Noon (Builtech Services LLC CEO). The majority of his company’s construction projects today can easily achieve LEED status, he says (depending on whether the tenant wanted to pursue the certification, which has some cost involved). The company is Chicago-based.

This is thanks to advances in materials, local building codes, a range of technology, and rising customer-demand.

End users want to “sit” in “green buildings” — more than 40% of American tenants recently surveyed across property types expect now to have a “sustainable home.” The most common approaches include energy-saving HVAC systems, windows and plumbing. More stringent (local and state) building codes are also an important factor.

Municipalities — not the Federal government — are re-writing building codes, to reflect environmental and safety advances and concerns. Next week (Feb 28) real estatyer industry reps will gather in Chicago for the Bisnow’s 7th Annual Retail Event at the University Club of Chicago to learn more about these trends.

* * * * * * * *

Institutional investors managing US$17 trillion in assets have created a new Corporate Governance framework — this is the Investor Stewardship Group.

The organizers include such investment powerhouses as BlackRock, Fidelity and RBC Global Asset Management (a dozen in all are involved at the start). There are six (6) Principles advanced to companies by the group that including addressing (1) investment stewardship for institutional investors and (2) for public corporation C-suite and board room. These Principles would be effective on January 1 (2018), giving companies and investors time to adjust.

One of the Principles is for majority voting for director elections (no majority, the candidate does not go on board). Another is the right for investors to nominate directors with information posted on the candidate in the proxy materials.

Both of these moves when adopted by public companies would greatly enhance the activism of sustainable & responsible investors, such as those in key coalitions active in the proxy season, and year-round in engagements with companies (such as ICCR, INCR).

No waiting for SEC action here, if the Commission moves away from investor-friendly policies and practices as signaled so far. And perhaps – this activism will send strong messages to the SEC Commissioners on both sides of the aisle.

Remember:  $17 trillion in AUM at the start of the initiative — stay tuned to the new Investor Stewardship Group.  These are more “Universal Owners” with clout.

* * * * * * * *

Not really unexpected but disappointing nevertheless:  The Trump Administration made its moves on the Dakota Access Pipeline (DAPL), part of the Bakken Field project work, carrying out a campaign promise that caters to the project’s primary owners (Energy Transfer Partners**) and other industry interests, S&R investors are acting rapidly in response.

The company needed a key easement to complete construction across a comparatively small distance. Except that…

  • The Standing Rock Sioux Tribe says the route would cross their drinking water source, impact their sacred sites, and threaten environmentally-sensitive areas;
  • would violate treaty territory without meeting international standards for their consent; (this is the 1868 Fort Laramie Treaty, which according to the U.S. Constitution, should be the supreme law of the land);
  • and ignore alleged shortcomings in the required environmental review (under the National Environmental Policy Act – NEPA).

These are “abuses”, and banks and financial services firms involved may be complicit in these violations by the nature of their financing, S&R investors note. Their involvement in the project financing could impact their brands and reputations and relationships with society. And so S&R shareholders are taking action.

Boston Common Asset Management, Storebrand Asset Management (in Norway) and First Peoples Worldwide developed an Investor Statement to Banks Financing the DAPL. The statement — being signed on to by other investors — is intended to encourage banks and lenders to support the Rock Sioux Tribe’s request for re-routing the pipeline to not violate — “invade” — their treaty-protected territory. The violations pose a clear risk, SRI shareholders are saying.

The banks involved include American, Dutch, German, Chinese, Japanese, and Canadian institutions.  They in turn are owned by shareholders, public sector agencies, and various fiduciaries — “Universal Owners,” we would say.

The banks include: Bayerische Landesbank (Germany); BBVA (Argentina); Credit Agricole (France); TD Securities (Canada); Wells Fargo; ABN AMRO (The Netherlands); Bank of Tokyo-Mitsubishi UFJ; and Industrial and Commercial Bank of China, and others.

The shareholders utilizing the Investor Statement say they recognize that banks have a contractual obligation with the respect to their transactions — but — they could use their influence to support the Tribe’s request for a re-route…and reach a “peaceful solution” acceptable to all parties.

As The Washington Post reported on January 24th, soon after the Trump Administration settled in, President Trump signed Executive Orders to revive the DAPL and the Keystone XL pipelines. “Another step in his effort to dismantle former President Barack Obama’s environmental legacy,” as the Post put it.

One Executive Order directed the U.S. Army Corps of Engineers to “review and approve in an expedited manner” the DAPL. Days later the Corps made their controversial decision, on February 7th reversing course granting Energy Transfer Partners their easement. This week the remaining protestors were removed from the site (some being arrested).

The sustainable & responsible & impact investment community is not sitting by to watch these egregious events, as we see in the Investor Statements to the banks involved. The banks are on notice — there are risks here for you.

* * * * * * * *

May be what is happening in the asset management and project lending activities related to the project is the IBG / YBG worldview of some in the financial services world:  I’ll Be Gone / You’ll Be Gone when all of this hits the fan one day.  (Like the massive Ogalala Aquifer being contaminated by a pipeline break. The route of the extension is on the ground above and on the reservation’s lake bed.  Not to mention the threats to the above ground Missouri River, providing water downstream to U.S. states and cities.)

* * * * * * * *

Energy Transfer Partners, L.P:  (NYSE:ETP)  This is a Master Limited Partnership based in Texas.  Founded in 1995, the company has 71,000 miles of pipelines carrying various products. The company plans to build other major pipelines — the Rover Project — to carry product from the shale regions (Marcellus and Utica) across the Northern U.S. state east of the Mississippi.  ETP LP acquired Sunoco (remember them?).

Mutual Funds – Bond Holders – other key fiduciaries with brands of their own to protect — are funding the operations of ETP LP.

Brand names of equity holders include Oppenheimer; Goldman Sachs Asset Management; CalPERS; JPMorgan Chase.  Bond holders include Lord Abbett, PIMCO, Vanguard.  There are 567 institutional owners — fiduciaries — with some 45% of ownership, according to Morningstar. Partners include Marathon Petroleum Company (NYSE:MPC) and Enbridge (NYSE:ENB). (Bloomberg News – August 2, 2016 – both firms put $2 billion in the project and related work.)

The Partnership used to have an “Ownership” explanation on its web site — now it’s disappeared. But you can review some of it in Google’s archived web site pages here: http://webcache.googleusercontent.com/search?q=cache:http://www.energytransfer.com/ownership_overview.aspx&num=1&strip=1&vwsrc=0

* * * * * * * *

We are seeing in developments every day (like these above with non-governmental strategies and actions) that hold out promise for corporate and societal sustainability advocates and sustainable investment professionals that with — or without — public sector support, the Forward Momentum continue to build.

We’ll share news and opinion with you — let us know your thoughts, and the actions that you / your organization is taking, to continue the momentum toward building a better future…a more sustainable nation and world.

Out the Seventh Generation, as the Native American tribes are doing out in the American West in protecting their Treaty lands.  In that regard we could say, a promise is a promise — the Federal and state governments should uphold promises made in treaties.  Which are covered as a “guarantee” by the U.S. Constitution that some folk in politics like to wave around for effect.

FYI — this is Article VI:  “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land, and the Judges in every State shall be bound thereby…”