GRESB at the Decade Mark – the Global Real Estate Sustainability Benchmark Serving Investors, Real Estate Asset Owners and Managers, Developers…

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

A decade ago, two large institutional investors — PGGM Investments and APG Asset Management –and Maastricht University (The Netherlands) launched “GRESB” to try to develop more efficient access to comparable and reliable data related to the ESG performance of their investments.  (GRESB=Global Real Estate Sustainability Benchmark.) 

The initial research for the approach was done by Dr. Nils Kok and Sander Paul van Tongeren.

As the 10-year anniversary is observed in 2019, consider that GRESB data now covers US$4 trillion in real estate and infrastructure value, and the small group of pioneers (there were 10 founding members) is part of a considerable global network of institutional investors, asset owners/managers, and stakeholders including industry partners, ESG service providers and media platforms.

GRESB – Benchmark for Real Assets

The GRESB mission is to assess and benchmark the ESG performance of “real assets” (think: real estate and infrastructure) and move toward standardization and validation of such ESG data for consideration by capital market players.

Real estate and infrastucture industry players can have vital business intelligence to compare where they stand against peers and develop strategies and action plans to catch up or surpass peers — along with a reliable means of sharing their ESG data with investors.

To give you an idea of how far the concept of the GRESB approach has come, today there are more than 1,000 entities participating in the 2019 real estate assessment and 17 funds and 393 assets participating in the 2019 infrastructure assessment. 

GRESB covers 100,000 assets in total (of which 66,000 are reported at the asset level for the real estate market).

The GRESB annual survey for asset owners can be challenging — but worth doing for the company.  The annual surveys are organized in (7) specific categories with 50 or more questions for responders’ consideration…the results are scores assigned by GRESB. 

A Guidance Document helps responders (asset owners/managers) organize their effort to strive for a higher score (“100” is tops; downward scores from there represent percentages).

GRESB real estate assessment is a reporting framework for listed property companies, private property funds, developers and investors that invest directly in real estate.

The GRESB developer assessment focuses on development activities.

GRESB bold name members today include CalPERS, Credit Suisse, BlackRock and Aviva on the investing side; and, CBRE, Brookfield, Centerpoint and Manulife Real Estate on the real estate management roster. (Click here for the Member list)

GRESB is reviewing its 2019 results on a global basis with briefing in world capitals.  There’ll be shared insights on trends and best practices and reflection on “lessons learned” in the first decade of GRESB.

For the meeting near to you, check GRESB events.

Governance & Accountability Institute teamed with GRESB management to produce an introductory webinar – “GRESB in 60 Days:  Tech, Tools & Best Practices to Respond…” 

Here you can find out why these reports matter, and how to get started on the GRESB journey.  Guest speakers include Matt Ellis, Founder of Measurabl (a G&A partner organization); Mark Delisis, at Avalon Bay Communities; Ulrich Scharf of GRESB; and Hank and Lou from G&A Institute. You can tune in here.

Here is information from Measurabl on GRESB.

The G&A Institute team advises and supports several real estate management client organizations.  For more information about our services to the industry, please email info@ga-institute.com.

The Top Story

GRESB expands its ESG coverage of the real assets industry 
Source: GRESB – The Benchmark for Real Assets 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

This Week’s Top Stories

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

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:

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.

Seven Compelling Corporate Sustainability Stories For You – How Entrepreneurs Are Managing Their Sustainable Business and Meeting Society’s Needs

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

How do we structure a more sustainable (and responsible) business – it’s a question we are regularly asked here at G&A Institute. By big firms and small companies — publicly-traded or privately-owned (and numerous planning to go public).

As we get into the conversation, what often becomes clear is that the company really was founded to meet some kind(s) of societal need, and sometimes it actually created a need (think of the popularity of the Apple eco-system or the early days of the Ford Motor Company and the “horseless carriage”) that it fills, benefiting society.

And in the firm’s “growing up and maturing” phase the leaders want to be recognized as a sustainable and responsible enterprise.

There are well-known corporate models that can help point the way for a management team.  We explain the successes of our “top performers and reporters” roster as examples of how the industry leaders (depending on sector and industry) have achieved clear, recognized leadership in sustainability. Their stories are inspirational as well as instructive.

(Tip:  read the companies’ GRI reports for a deep dive into corporate strategies, programs, collaborations, and achievements – our team dives into 1,500 corporate reports and more each year in our work as GRI Data Partners for the USA, UK and Republic of Ireland.)

But what about smaller enterprises, not “giants” in their industry, or niche players, run by talented entrepreneurs and managers who want to do the right thing as they build their business?  How do we find their stories?

You know, like the early story of Ben & Jerry’s (ice cream), two young guys with borrowed money operating a small store (a renovated gas station) in downtown Burlington, Vermont; the founders, Ben Cohen and Jerry Greenfield, built their business as a pioneer in social responsibility. (In 1985, the Ben & Jerry’s Foundation got 7.5% of annual pre-tax profits to fund community-oriented projects and supporting dairy family farming was a priority – like the duo’s support of Farm Aid.)

What we have for you today are the stories of seven perhaps less well-known firms briefly profiled by tech blogger Kayla Matthews in her guest commentary on the Born2Invest platform.  The quick-read profiles explain the companies’ business models and how they try to operate as sustainable enterprises.

These are: Prime Five Homes (building $1 million eco-mod homes in Los Angeles); LaCoste (marketing the well-known crocodile brand of clothing); Liberty Bottleworks (recycled water bottles); Cleancult (paving the way for more efficient detergents); Andean Collection (marketing jewelry from the rainforest and providing Ecuadorian women with jobs ); Blockchain (technology); Wash Cycle Laundry (eco-friendly local laundry service).

What is interesting is that each of the companies, the author explains, develop products and manufacturing processes that benefit employers, employees and Mother Earth by striving for and being (more) sustainable.  The stories are fascinating – and very appealing in this age of anxiety for many of us.

These stories remind us of the 2018 “Sense of Purpose” letter sent to public company CEO’s by Chairman and CEO Larry Fink, who heads the world’s largest asset manager, BlackRock. As a fiduciary, he explains, BlackRock engages with companies to drive the sustainable, long-term growth that the firm’s clients (asset owners) need to meet their goals.

And society, he explains to the CEOs receiving the letter, “…is demanding that companies, both public and private, serve a social purpose.”

To prosper over time, Mr. Fink wrote, “…every company must not only deliver financial performance but also show how it makes a positive contribution to society…without a sense of purpose, no company can achieve its full potential.”

You can read Larry Fink’s letter to corporate CEOs here – it well worth the read: https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter

You can follow Kayla Matthews on her tech blog, Productivity Bytes, where she often connects technology and sustainability topics: https://productivitybytes.com/

And do read our top story – it’s a fascinating and brief read to learn more about these innovative companies striving for greater sustainability and societal responsibility.

This Week’s Top Story

How 7 Eco-Friendly Businesses Are Changing The Sustainability Game
(Tuesday – September 11, 2018) Source: Born To Invest – To save the planet, it’s going to take cooperation from everyone, including both individuals and corporations. In fact, an increasing number of corporations are realizing that modern consumers are growing more environmentally…

Focus On The Corporate Sustainability Journey This Week – News & Opinion All Around the Topic in Various Communications Channels…

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

Remember the great Beatles’ song…Here, There and Everywhere?  That’s what seems to be happening with “Corporate Sustainability” these days.

The news and commentary seem to be everywhere now, with an examination of how the corporate sector is embracing the concept and developing strategies, action plans, assigning teams and moving forward to address ESG issues.

When we began our sustainability news, commentary and research sharing at Governance & Accountability Institute more than a decade ago, the items were few and far between, skimpy and more periodic than regularly appearing.

Today, a widening range of media and communications channels bring us the news of what the players in the corporate sector are doing — and how institutional investors and other key stakeholders are responding to same.

We see numerous news stories and commentary about what companies are doing in their sustainability journey…and how this matters in so many ways for the issuer (such as improved risk management, more effective investor relations, greater access to capital, enhanced reputation for recruiting and retaining human capital, preferred supplier status, and more).

G&A Institute is the data partner for the USA, UK and Republic of Ireland for the Global Reporting Initiative (GRI) and in this role, we gather and analyze (and then database) the corporate sustainability and CR reports of literally hundreds upon hundreds of companies.

The progress we’ve seen companies making in their journeys is encouraging and pretty astounding if you think back just 10 years or so (to the dark days of 2008).

And so as companies move ahead in the journey and greatly expand their disclosure and reporting, the communication channels light up with the “sustainability” news, commentary and research focused on a company, a group of peers, investors, an industry or a sector.

We selected a few examples for you this week.  First, from the food processing industry, an examination by Kevin Piccione (he describes his company’s effort – Sealed Air, an early sustainability adopter).

He cites the World Economic Forum finding that most “sustainable companies” outperform their peers by a third – but only 2% actually achieve or exceed their sustainability goals. So why do they succeed?  A brief review for you.

The second article for you is Harry Menear’s more in-depth piece from Energy Digital, examining which companies stand out for “green credentials”.

His focus is on the Corporate Knight’s “Top 10 Sustainable Companies” roster, which is drawn from comprehensive research on 6,000 companies worldwide across all industries (for companies with US$1 billion revenues).

The companies were scored on energy use, carbon, waste and clean air production, innovation expenditures, taxes paid, diversity of leadership, supply chain management, and other elements of the sustainability journey.  Which companies made the Top 10?  The link is below for your reading.

The third item is a note of caution from Bloomberg by Emily Chasan and Chris Martin — who point out that in the midst of the growing enthusiasm about corporate sustainability, there are some companies that investors call out for their “corporate greenwashing” (and they name names).  The authors cite the recent Ceres report on this (500 companies were analyzed).

They write:  Companies are still making questionable claims but accountability is rising.

Emily and Chris tell us companies (and their executives) are being forced now to admit to greenwashing (that is, “gushing” sustainability claims with a tenuous grip on reality).

Examined:  Mid-American; VW; Wal-Mart; Amazon; AB InBev SA.  There are perspectives shared on this by Calvert,  CalSTRS, BlackRock, Neuberger Berman, DWS Group, UBS.

And there are as always many items that our editors share this week in the Highlights, as we say, drawn for you from the many communications channels that our team monitors every day.  Let us know your thoughts as to how we are doing and what you would like to see!

This Week’s Top Stories

Achieving your sustainability goals does not mean sacrificing profits
(Thursday – August 16, 2018) Source: Food Processing – Nearly 90% of business leaders believe that sustainability is essential to remaining competitive and despite the clear link between sustainability and profit, only 2% of companies either achieve or exceed their sustainability…

Top 10 Sustainable Companies
(Monday – August 13, 2018) Source: Energy Digital – Which companies stand out for their green credentials? Energy Digital finds out.

Investors Are Increasingly Calling Out Corporate Greenwashing
(August 20, 2018) Source: Bloomberg – Corporate sustainability reporting has risen dramatically over the last few years, with 85 percent of the S&P 500 index producing annual corporate responsibility documents in 2018, up from just 20 percent in 2011, according to the Governance & Accountability Institute. That’s partially due to investor demand. Assets in sustainable investment funds grew 37 percent last year, according to data tracked by Bloomberg.

Barron’s Magazine Heralds the Arrival of Sustainable Investing to the Mainstream In Special Issue This Week – Sustainable Investing Version 2.0 Is Here!

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

The influential Barron’s magazine is published on Mondays by Dow Jones & Company with distribution to almost a half-million retail and institutional investors (300,000+ for print version, the rest digital or combination).

Barron’s says it has been “delivering market-beating stock picks and investment advice to wealthy readers since 1921…”

In Fall 2017, the Barron’s editors picked up the pace on coverage of sustainable investing, adoption of ESG approaches and related topics and positioned its expanding coverage with the statement: “Sustainable Investing is a Powerful Force in Today’s Capital Markets.” T

he October 7, 2017 issue was devoted to sustainable investing and the cover story was “The Top Sustainable Funds” for investors.

Editor Beverly Goodman explained: “As a team of seven writers and I began work on Barron’s first special edition devoted entirely to sustainable investing, we realized something – we could not get people to stop talking about it! CEO’s wanted to tout the strides they are making in labor practices and protecting the environment. Fund managers wanted to talk about how adding ESG criteria to stock picking isn’t that much of a stretch from the multitude of decisions they routinely use.”

And so: Barron’s would now cover this burgeoning style of investing on a regular basis. “We are only in Version 1.0 of sustainable investing – 2.0 is where ESG is not a separate category but a natural part of active management.”

The October 2017 issue’s cover story was about sustainable mutual funds based on data provided by Morningstar using Sustainalytics data – 37% of the 203 funds achieved a “high” or “above average rating” and beat the S&P 500® Index returns. (Only 28% of all large-cap mutual funds managed to do that.)

The Editors Began Steady Coverage of Sustainable Investing

Each of the issues that followed there would be some kind of coverage of sustainable investing. Barron’s followed up with another significant issue in February 2018 naming the sharing the magazine’s first ranking of sustainable companies for investor-readers.

Calvert Research and Management helped with the choices (using data from Sustainalytics, ISS and Thomson Reuters ASSET4) for the “Top 100 Sustainable Companies” rankings.

The top five positions were held by Cisco (#1), salesforce.com, Best Buy, Intuit, and HP (at #5). Said Calvert CEO John Streur: “This list gives people insight into companies addressing future risks and into the quality of management.”

Now – The Mainstream Impact of This Week’s Issue

The editors continued to ramp up coverage in each issue since late-2017. And this week’s issue (dated June 25) positioned Sustainable Investing Version 2.0 for its audience. This week’s content included:

The cover story is about “The New Conscience of Wall Street” – focused on BlackRock CEO Larry Fink and his “Investing With Purpose Theme.” (Subtitle: Larry Fink’s Mission: How the BlackRock CEO is leading a sustainable revolution on Wall Street.”)

One of the articles is a debate between George Serafeim (Harvard B School professor and stalwart advocate for sustainable investment) and Adam Sessel (CEO of Gravity Capital Management): “Does Sustainable Investing Lead to Lower Returns?”

The traditional Barron’s approach to a panel of expert to explore an investing topic is this week’s “ESG Roundtable: Great For the World, Good For Investors” – featuring Erika Karp of Cornerstone Capital; Todd Ahisten, Parnassus Investments; Jon Hale, Morningstar; and Roelfien Kuijpers of DWS Group (the asset management spin off of Deutsche Bank).

There is a “Getting Started in Sustainable Investing” guide for readers, including a Glossary and suggestions for mutual funds “with a purpose”.

The feature about Larry Fink is entitled, “In Defense of Social Purpose” – and his argument for sustainable investing that editors say has “ignited a burning debate about his concept…and him.”

Fink’s words in his CEO letter, says writer Leslie Norton, “…amounted to a Rorschach test for a polarized nation. As the debate rages on over immigration, climate change, guns, income inequality, and other issues, even considering their economic impact on a company looks like a political statement. Yet Corporate America and Wall Street are increasingly doing that…”

To hear CEO Fink tell it, writes Norton, “…short termism is a scourge of corporate thinking and is encouraged by the financial media…” And…ignoring ESG can take a toll…

With this feature there is a neat “Road to Sustainability” chart showing the evolution of SRI from the 1960s to today with many societal issues described along the way to 2018.

Other features include “The Trump Bump: A Silver Lining for ESG Investors” – telling readers that in the month after the November 2016 election results were in, investors’ money flowed into ESG mutual funds and ETFs; the flow into the 275 mutual funds and ETF’s focused on ESG was 10-fold over the prior month!

And, the backlash continues; since November 2016, inflows to ESG-focused mutual funds and ETFs is averaging $700 million per month, which is three times the pace of the prior 12 months. This lifted ESG focused funds to $118 billion to date. 

Looking at fiduciaries, the editors say that $23 trillion is not invested in pension, separately managed accounts and other funds using ESG approaches.

Barron’s editors have selected “The 20 Most Influential People in Sustainable Investing” – the Who’s Who in ESG – you will want to see that list.We are cheered to see our US SIF colleagues Lisa Woll, Tim Smith, Amy Domini, Matt Pasky, and John Streuer in the Top 20!

There is also an interview in the special issue with Jeremy Grantham and how the respected value investor (he’s on the list) is a force in increasing awareness of climate change.

Finally, the Barron’s conference unit scheduled its first “Impact Investing Summit” in San Francisco (last week) and Crystal Kim reports on that event, with focus on the Millennials and their generation’s increasing impact on investing trends.

We at G&A Institute think this is a tipping point moment for investors, as the Barron’s editors position sustainable investing as now a mainstream

# # #

Footnotes:  We prepared a brief about Barron’s coverage in October 2018 on our “G&A Institute’s To the Point!” web platform, and a follow up brief in February 2018.  You can find the in-depth briefs at:

https://ga-institute.com/to-the-point/the-authoritative-barrons-magazine-now-sets-the-pace-sustainable-investing-is-a-powerful-force-in-todays-capital-markets-so-say-the-editors/

https://ga-institute.com/to-the-point/proof-of-concept-for-sustainable-investing-barrons-weighs-in-with-inaugural-list-of-top-100-sustainable-companies/

There is information about Morningstar’s focus on sustainable investing mutual funds and ETFs at:  https://www.morningstar.com/articles/745467/morningstar-sustainability-rating.htm

Be sure to check out the special issue of Barron’s at:https://www.barrons.com/this_week

 

 

A Big Year, 2018 – Tipping Points For Developments in Corporate Sustainability & Sustainable Investing…

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

Volume & Velocity!
Those may be well the key characteristics of developments in corporate sustainability and in sustainable in the year 2018.

Linda-Eling Lee, Global Head of Research for MSCI’s ESG Research Group and her colleague Matt Moscardi (Head of Research Financial Sector, ESG) this week described what they are projecting in the traditional early-in-the-year setting out of key ESG trends to watch by the influential MSCI ESG team:

Bigger, faster, more – that’s how Linda describes the “onslaught of challenges happening soon and more dramatically that many could have imagined” in the corporate sector” (including public policy, technology, and climate change as key factors).

Investors (in turn) are looking for ways to better position their portfolios to navigate the uncertainty of the 2018 operating environment in the corporate sector.

As the “heads up” for investors and companies– the five key 2018 trends projected by MSCI’s ESG researchers/analysts:

  • Investors will be using ESG “signals” to navigate the size/shape of the Emerging Markets investment universe to pick the winners for portfolios.
  • The first steps are coming in “scenario testing” for climate change (this is systematically looking at risks emanating from company carbon footprints across asset classes, with short- and long-term transition scenarios).
  • The fixed-income universe will see acceleration (velocity) with the alignment of ESG frameworks by investors across all asset classes.
  • And this is very important for the corporate sector:

Investors are looking beyond the growing volume of corporate disclosure and reporting for data.
Keep In Mind: 65% of a company’s rating by MSCI is based on data sources beyond the corporate reporting!

 

  • MSCI sees 2018 as the Year of the Human – it’s about human talent, talent, talent!  That is, what companies do to help in the transitioning to new working environments (with the changes brought about by automation, artificial intelligence, robotics) that will be factored into the analysis of public companies by the MSCI ESG team, and measured over time (for outcomes over a 3-year horizon).

Linda Eling-Lee observed:  These are the major trends that we think will shape how investors approach the risks and opportunities in 2018.

Already, at the Davos meetings this week, major global firms in IT are creating an initiative to “tech-reskill” one million people to meet the global skills gap challenge inherent in the “Fourth Industrial Revolution” (firms are Cisco, Accenture, CA Technologies, HP, Infosys, Salesforce, SAP, Tata Consultancy, others).

What we think company managements / boards should expect in the “volume and velocity” context:  many more investors (the volume / especially large fiduciaries) are embracing comprehensive ESG factors in their analysis and portfolio management approaches with a faster uptake of this trend among the mainstream elements of the capital markets players (the velocity).

Voluntary reporting by companies has its limits in providing a full picture of the companies’ ESG risks,” the MSCI ESG researchers note. “In 2018 we anticipate that the disclosure movement reaches a tipping point, as investors seek broader data sources that balance the corporate narrative and yield better signals for understanding the ESG risk landscape actually faced by portfolio companies”

# # #

Buzzing:  The Larry Fink CEO-to-CEO Message for 2018

Speaking of significant influence, the head of the world’s largest asset management firm sent an important CEO-to-CEO letter to stress the importance of companies having “a social purpose”

Background:  BlackRock engages with about 1,500 companies a year on a range of ESG issues, meeting with boards of directors and CEOs, and other shareholders when that is needed.

Each year, CEO Fink reaches out to the CEOs of companies in portfolio to alert them to the key issues in focus for BlackRock (as fiduciary).

For 2017-2018, the key Investment Stewardship priorities are:

  • Corporate Governance / Accountability
  • Corporate Strategy
  • Executive Compensation Policies
  • Human Capital (again — there’s the focus on talent management)
  • Climate Risk Disclosure

Larry Fink is the Founder, Chair, and CEO of BlackRock and heads the firm’s “Global Executive Committee.” BlackRock is about to celebrate its 30th anniversary in 2018.  It now manages more than US$6 trillion (Assets Under Management-AUM).

Of this, $1.7 trillion is in active funds managed by the company.  As one of the world’s most important and influential (and trend-setting) fiduciaries BlackRock engages with company management to drive the sustainable, long-term growth clients need to meet their goals.

“Indeed,” CEO Fink said in his letter to CEOs, ”the public expectations of your company has never been higher.”

“Society is demanding that companies, both public and private, serve a social purpose…to prosper over time, every company must show it makes a positive contribution to society.”

“Without a sense of purpose, no company…can achieve its full potential…it will ultimately lose the license to operate from key stakeholders…”

# # #

The Key Word on Responsible Investing Growth is Global, RBC Reported

In October 2017, RBC Global Asset Management (RBC GAM) conducted its second annual global survey of asset managers.  Two-out-of-three respondents said they used ESG considerations, and 25% will increase their allocations to managers with ESG investment strategies to offer in 2018.

Does ESG mitigate risk…or drive alpha?  Answers were mixed.  Some asset managers are increasing their allocation and others are skeptical, especially about the accuracy and value of the available data on corporate ESG performance.

For 2018:  RBC sees responsible investing as a global trend, with many managers incorporating ESG in analysis and portfolio management due to client (asset owner) demand.

# # #

Tracking Company Behaviors – The RepRisk ESG Risk Platform

One of the leading producers of research and business intelligence for the banking and investment communities is RepRisk, based in Zurich, Switzerland. The firm started in 2006 to serve bank clients wanting to be alerted to real or possible risk issues in the corporate sector.

RepRisk developed artificial intelligence and data mining tools, that along with human analysis, “reduces blind spots and sheds light on risks that can have reputational, compliance and financial impacts on a company…”

Today, there are 100,000-plus companies in the RepRisk database (both listed and non-listed, from all countries and sectors). The firm started out monitoring 100 companies for clients.  The daily screening is delivered in 16 languages and about 50 companies a day are added for screening.  Is your company one of those tracked?  What are the risks tracked?

# # #

Does Adoption of ESG Approaches Sacrifice Corporate Performance?

Robeco, one of the world’s leading financial services firms (based on The Netherlands), and a sister company of RobecoSAM, managers of the Dow Jones Sustainability Indexes, looked at the question of whether or not the adoption of ESG / sustainability approaches “cost” the company performance.

Adopting sustainability approaches does require investment, but companies with poor ESG performance also have greater risks and “seriously under-perform” their peers.  And investors “win” by investing in the better performers (that reduce risk, strategize around climate change, reduce bad behaviors).

Says Robeco:  “…a growing body of evidence concludes that companies which are progressively more sustainable today will reap the rewards of the future…and it may save their businesses…”

The Company’s positioning:  “Robeco is an international asset manager offering an extensive range of active investments, from equities to bonds. Research lies at the heart of everything we do, with a ‘pioneering but cautious’ approach that has been in our DNA since our foundation in Rotterdam in 1929. We believe strongly in sustainability investing, quantitative techniques and constant innovation.”

# # #

CalPERS, America’s Leading Public Employee System – Corporate Engagement on Diversity Issues

“CalPERS: is the California Public Employee’s Retirement System, the largest state investment fund in the United States with about $350 billion in total fund market AUM.

CalPERS sent letters to 504 companies in the Russell 3000 Index to engage on the issue of diversity on the companies’ boards of directors.

CalPERS request:  the company should develop and then disclose their corporate board diversity policy, and the details of the plan’s implementation (to address what CalPERS sees as lack of diversity in the companies).

“Simply put, board diversity is good for business,” said Anne Simpson, CalPERS’ investment director for sustainability.

Starting in Fall 2017 and into 2018, CalPERS is monitoring companies’ progress on the matter and making it a topic for engagement discussions.  If a company lags in progress, CalPERS will consider withholding votes from director-candidates at annual voting time (at annual meetings).

# # #

The Climate Action 100+ Investor Initiative

 Sign of the times: More than 200 investors supporting action on climate change by the corporate sector are focusing on the board room of such companies as ExxonMobil, Boeing, GE, P&G, Ford, Volvo, PepsiCo, BP, Shell, Nestle, Airbus, and  other  enterprises (the “100” plus companies in focus) to dialogue on their GhG emissions as contributions to global warming.

The 100 corporates are said to account for 85% of the total GhG emissions worldwide – they need to step up, says the Coalition, and develop strategies and take action (and disclose!) to address the issue.  The investors manage more than $26 trillion in AUM, and are coordinating their efforts through five partnerships…

# # #

McKinsey Weighs In – ESG No Longer “Niche” – Assets Are Soaring

The McKinsey & Co. experts studied ESG investing and reported to corporate clients that of the $88 trillion in AUM in the world’s capital markets (in late-October), more than $1-in-$4 (25%-plus) are invested according to ESG principles.  That’s a growth of 17% a year, and ESG has become “a large and fast-growing market segment.”

# # #

Investors Are Not Forgetting – Rana Plaza Still in Focus

One of the characteristics of the sustainable investing market players is having-the-memory-of-the-elephant.  Do you remember the Rana Plaza apparel factory tragedy of five years ago?  Most media reporters and commentators have moved on to other crisis events.

Investors are signing on to a statement – “Investors Call on Global Brands to Re-commit to the Bangladesh Accord for Fire and Building Safety” – with focus on the upcoming fifth anniversary of the statement signed (in May 2013) after the accident that killed more than 1,000 workers in Bangladesh.

Reforms were promised in the Accord by industry participants and trade unions.

# # #

Another Example of Investor Action – McDonald’s

“In a win for the health of the world’s oceans,” began the As You Sow shareholder advocacy group announcement, “McDonald’s Corp. agreed to end the use of polystyrene foam packaging – worldwide! – – by the end of 2018.

The advocacy group had campaigned to have the fast food retailer stop using foam cups and takeout containers.

A shareholder proposal filed by As You Sow in May 2017 requested the company stop using polystyrene and 32% of shares voted (worth $26 billion at the time) voted to support.

# # #

Finally – What a Low-Carbon Economy Looks Like – California Dreamin’

The State of California is the world’s sixth largest economy all by itself!

While President Donald Trump upon taking office fulfilled one of his signature campaign promises – beginning the process of withdrawal from the historic COP 21 Paris Accord on climate change – California Governor Edmund (Jerry) G. Brown, Jr is moving ahead with his state’s plans to move to a low-carbon economy.

The Global Climate Change Action Summit is scheduled for September 2018 in San Francisco, California.

The theme, as described by the governor:  “Sub-national governments” (cities & states), business sector leaders, investors and civil society leaders will gather to “demonstrate the groundswell of innovative, ambitious climate action from leaders around the world, highlight economic and environmental transition already underway and spur deeper commitment from all parties, including national governments.”

Says the governor: “California remains committed to a clean energy future and we welcome the responsibility to lead on America’s behalf…”

# # #

Coming:  ISS QualityScores for “E” and “S” for 1,500 Companies

As we communicated in early January, Institutional Shareholder Services (ISS) has expanded its long-term focus on corporate governance to encompass “E” and “S” issues for its QualityScore product for fiduciaries (its client base).  In late-January it is expected that ISS will issue the first wave of scores for 1,500 companies in six industries, expanding to 5,000 companies in additional industries by mid-year 2018.

The first 1,500 companies to be scored are in Autos & Components; Capital Goods; Consumer Durables & Apparel; Energy; Materials; and, Transportation.

The QualityScore is a Disclosure and Transparency Signal that investor-clients are seeking, says ISS, and an important resource for investors to conduct comparisons with corporate peers.

Keep in mind:  ISS serves its 1,700 clients with coverage in 117 global markets.

# # #

There’s much more information on this and other critical 2018 tipping points for corporate managers and investment professionals in the comprehensive management brief from the G&A Institute team posted on our G&A Institute’s “To the Point!” platform for you.

We’re presenting here more details on the MSCI trends forecast, the BlackRock CEO-to-CEO letter about Social Purpose for the Corporation, California’s move toward a low-carbon economy,  RepRisk’s focus areas for corporate behavior…and a host of additional important developments at the start of the year 2018 that will shape the operating environment throughout the year – and beyond! Read the brief here!

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