In Focus: Climate Change Challenges for Financial Sector Players and the Companies They Provide With Capital – Measuring and Managing the Risk

August 2 2020

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

Some encouraging developments for you from the (1) capital markets community and (2) the corporate sector and (3) the combining of forces of each.

To start: Morgan Stanley has become the first major U.S. bank to join the Partnership for Carbon Accounting Financials and will begin measuring and disclosing the emissions generated by the businesses that it lends to and invests in.

Big deal, we say:  the sources of capital telling the world what the companies they lend to, invest in, are emitting…whether the company discloses that or not. 

PCAF is a global collaboration of financial institutions aiming to standardize carbon accounting for the financial sector.

The work of the partnership could profoundly change the way that financial institutions and their corporate clients address climate change issues (and disclose the result of same).

Morgan Stanley will lend its insights and expertise to help the coalition development global standard that can be used by all financial institutions to measure and reduce their own climate impact.

In addition to measuring its Scope 3 emissions – including financed emissions, defined by the Greenhouse Gas Protocol as Category 15 emissions.

Morgan Stanley’s announcement comes a year after the institution released a report outlining the financial benefits of decarbonization for businesses — with an earnings potential between US$3-to-$10 billion.

Also involved in the standards project on the Steering Committee: ABN AMRO, Amalgamated Bank, ASN Bank, Tridos Bank, and the Global Alliance for Banking on Values (GABV).

Today there are 66 institutions involve in the partnership, with $US5 trillion-plus in collective AUM. The partnership is planning on releasing the standard at the COP 26 global gathering.

The Morgan Stanley Institute for Sustainable Investing builds “finance solutions” that seek to deliver competitive financial returns while driving positive “E” and “S” solutions.  Audrey Choi is the bank’s Chief Sustainability Officer and CEO of the Institute.  More information is at: www.morganstanley.com/sustainableinvesting.

And here is the encouraging news from the corporate sector and the investor service provider community:  Microsoft (MSFT) is teaming with MSCI – the global investment community advisor on risk and ESG issues – to “accelerate innovation among the global investment industry”.

MSFT’s cloud and AI technologies along with MSCI’s portfolio of tools will be aligned to “unlock innovations for the industry and enhance the ESG ratings agency’s products, data and services”.

The collaboration begins with migration of MSCI’s products onto the Microsoft Azure cloud platform with Index and Analytics solutions and then on to the MSCI ESG products and ratings.

Going forward MSFT and MSCI will explore possibilities to further drive development of climate risk and ESG solutions for investors and corporates.

Third item:  Microsoft is aiming to become a Zero-Carbon Enterprise.  The company announced a “suite” of  initiatives to wipe out the carbon “debt” acquired  — get ready – over the lifetime of this tech company.  Every bit of carbon “debt” ever generated over several decades!

MSFT is joining forces with Maersk, Danon, M-Benz, Natura, Nike, Starbucks, Unilever and Wipro to create a new coalition – Transform to Net Zero. (Environmental Defense Fund/EDF is a founding member).  MSFT peer/competitor/fellow transformation of society company Apple is aiming to have net-zero impact on every product in the next 10 years.

These Top Stories are of a “fit” – as financial institutions develop new approaches to meeting climate change challenges the Global Carbon Accounting Partnership moves forward to bring a new standard to the financial services community.

And the MSCI / MSFT collaboration will be developing tools and resources that align with the standards effort.  MSFT itself is moving toward to become Zero Carbon tech company.  Do stay tuned!  Some details for you….

Morgan Stanley Becomes First U.S. Bank To Measure Carbon Footprint Of Its Loans (Source: OilPrice) Morgan Stanley has become the first U.S. bank to start measuring the emissions generated by the businesses it lends to and invests in, the bank said in a press release.

The news from Microsoft and MSCI on their collaboration:
https://www.msci.com/documents/10199/b8849622-7a48-1901-123e-29d39cca3814

As we prepared the above perspectives in our weekly newsletter, more related news came in:  Stefanie Spear, our colleague at As You Sow, alerted us that Bank of America and Citi Group joined Morgan Stanley in the commitment to publicly disclosure carbon emissions from loans and investments. (The two institutions are part of the Partnership for Carbon Accounting Financials, a global framework for financial institutions to measure and disclose the emissions from their lending and investment portfolios.)

And one more for you – Polly Ghazi of Triple Pundit (part of 3BL Media) prepared an excellent roundup of recent news that includes Morgan Stanley, BlackRock and Boston Consulting.  (And thank you to her for the mention of the G&A Institute’s S&P 500 research results on corporate reporting.)

We present 3BL media roundups in the weekly G&A newsletter, Sustainability Highlights — here is Polly’s post: https://www.triplepundit.com/story/2020/sustainability-reporting-new-highs/121006

America’s Tech Giants Address Climate Change, Global Warming With Bold Initiatives in 2020

August 12 2020

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

It’s global warming, you say?  Well, we have to say that it certainly is a hot summer in many parts of the world (north of the Equator) and the U.S. National Hurricane Center has a large list of names for the storms to come.

That’s Arthur and Bertha on to Vicky and Wilfred – 21 named storms so far, with “Isaias” whipping through as tropical storm and causing hundreds of thousands of homes and business to lose power this past week in the NY region. And it was not even a full hurricane in the U.S. Northeast!

And during this week, many communities in the American Midwest lost electric power. Not be provincial here – in the Eastern North Pacific there are storms to come named Amanda and Boris on to Yoland and Zeke.

For the Central Pacific? – Akoni and Ema, and Ulana and Wale are possibly coming your way.  So, can we say this is an effect of global warming or not?  Let’s say…yes, with a number of contributing factors.

Like steadily-rising Greenhouse Gas Emissions trapping heat in the atmosphere.

Think of methane (CH4), carbon dioxide (CO2), nitrous oxide (N2O-or-NOX), ozone, and a host of chlorofluorocarbon gasses steadily drifting upwards into the atmosphere and over time, changing weather patterns to create more super storms. Think: tornadoes, floods, more torrential rain coming down (hello, Houston and New Orleans!)

In the U.S.A. major companies have been steadily addressing their carbon emissions and putting in place important programs to reduce emissions, such as by adding renewable energy sources, and taking small and larger steps to conserve electric power use, and more.

But if you are a company using a lot of power…and constantly adding power…there are ever more challenges to address.

That’s the case as the world continues to move online for many activities in business, education, healthcare, investing, shopping, and more.  And coming online — we are seeing more AI, robotics, approaches to develop self-driving vehicles, machine-to-machine learning, more and more communication…5G systems…all coming our way.  All needing more power generated.

Over the past few days some of the major U.S.-headquartered, powerhouse tech firms have been announcing their plans to address GHG emissions…and in the process the companies have or are putting significant strategies and initiatives in place to protect the planet and do their part of address climate change.

Eight companies launched the Transform to Net Zero coalition, to accelerate action toward a net zero carbon economy. (The firms are A.P. Moeller-Maersk, Danone, Mercedes-Benz, Microsoft, Natura & Co, Nike, Starbucks, Unilever, Wipro, along with the Environmental Defense Fund.)

The examples for you this week in our Top Story choices are familiar names in the U.S. corporate sector: Microsoft, Apple, Facebook, Alphabet/Google.  Read on!

Top Stories

Progress on our goal to be carbon negative by 2030
(Source: Microsoft)
By year 2030, MSFT intends to be carbon negative and by 2050, will remove from the environment more carbon than the company ever emitted since its founding.  The company launched a new environmental sustainability initiative in January 2020 focused on carbon, water, waste and biodiversity.

Microsoft commits to achieve ‘zero waste’ goals by 2030
(Source: Microsoft)
By the year 2030, Microsoft will divert at least 90% of the solid waste headed to landfills and incineration from its campuses and datacenters, manufacture 100% recyclable Surface devices, use 100% recyclable packaging, and achieve 75% diversion of construction and demolition waste for all projects.

Facebook to buy 170MW of windpower in landmark renewables deal 
(Source: Power Engineering International)

Renewable energy developer Apex Clean Energy has announced a power purchase agreement (PPA) with Facebook for approximately 170MW of renewable power from its Lincoln Land Wind project in the US state of Illinois, making the social media giant Apex’s largest corporate customer by megawatt.

Apple commits to be 100 percent carbon neutral for its supply chain and products by 2030 
(Source: Apple)

Already carbon neutral today for corporate emissions worldwide, Apple plans to bring its entire carbon footprint to net zero 20 years sooner than IPCC targets. That “footprint” includes the company’s supply chain and products… every device sold! (Apple is already carbon neutral for its global corporate operations.)

Alphabet issues sustainability bonds to support environmental and social initiatives
(Source: Google)

As part of a $10 billion debt offering, Alphabet has issued US$5.75 billion in sustainability bonds — the largest sustainability or green bond by any company in history. During the past three years Google has matched the company’s entire electricity consumption with renewables…and has been carbon neutral since 2007.

Questions We Are Thinking About in the Midst of Major Disruption on Sustainable Investing Trends & Corporate Sustainability Journeys

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

As the global coronavirus pandemic continues to uproot our normal business, financial, economic and personal pursuits, questions that we could logically ask are…

(1) what impact does the virus crisis have on the ongoing corporate sustainability / ESG / citizenship efforts; and

(2) what is the investor reaction – does the move into more sustainable / ESG investment vehicles continue?

Some answers come from Sanghamitra Saha, of Zack’s, writing in Yahoo Finance – “Here’s Why ESG ETFs Are Hot Amid Pandemic”.

He begins by explaining that ESG investing has remained “hot” since the pre-outbreak period, and as Wall Street recorded its worst quarter overall since Q 2008, ESG ETFs appeared [somewhat] resilient to acute selloffs in Q1 2020. (Read, he says: “ESG ETFs Appear Unscathed by the Coronavirus Carnage”.)

These investment vehicles had US$8 billion-plus inflow in 2019, four times their total 2018 inflow. In the first three months of 2020 the flow into ESG Exchange Traded Funds was $6.7 billion — pushing total assets in such funds to $19 billion (only a bit less than the total in February 2018).

Several of these ETFs outperformed the S&P 500® and came close to the Nasdaq performance (which has been the hot place for returns in 2020, bouncing close to the 9000 mark as we write this).

What are some of the reasons for such outperformance even during the virus crisis?

The author shares perspectives from Morningstar and Bloomberg, and presents data on performance on some of the ETFs offered by Nuveen, State Street SPDRs, Vanguard, and iShares MSCI.

We’ve been seeing news and commentary about this trend since the start of the virus crisis as investors seek out what they consider to be more resilient, “safer” companies as packaged in the respective ESG ETFs.  What are public company managements doing to be part of this trend?

Mary Mazzoni, Senior Editor of Triple Pundit and Managing Editor of CR Magazine, shares news from the corporate sector in “Sustainability Isn’t Stopping:  Just Ask These Companies.”

The firms and the stories of their continuing sustainability journeys that she profiles include Bayer and Microsoft.

She begins by addressing the comments of business columnist John D. Stoll in The Wall Street Journal…that “several top companies are starting to put the brakes on their ESG programs due to economic strain…”

Pushing back in TriplePundit:  “Right now we’re all understandably consumed with the human suffering and economic strain posed by the pandemic…but we’re not convinced we’ll see a sunsetting of sustainability – and the eight corporate examples are just some of the reasons why…”

The two Top Stories present the two answers to the questions posed up top.  And throughout the collection in this week’s newsletter you’ll see other answers presented in slightly different form.

The good news from the G&A Institute offices is that our corporate clients continue with vigor and strong commitment on their respective sustainability journeys, even as operations are disrupted by the virus crisis.

Managers tell us that questions from their investors about sustainability, ESG and related issues continue to increase, and major customers continue to ask questions related to their own supply chain management.

2020 is a challenging year – and sustainable, resilient companies are stepping up to meet the challenges, setting a welcome pace.

Top Stories

Here’s Why ESG ETFs Are Hot Amid Pandemic
Source: Yahoo Finance – Environmental, social and governance (“ESG”) investing has remained a hot favorite among investors since the pre-outbreak period. Wall Street recorded the worst quarter to start 2020 since the fourth quarter of 2008. But ESG ETFs appeared somewhat resilient to acute selloffs in Q1 (read: ESG ETFs Appear Unscathed by the Coronavirus Carnage).

Sustainability Isn’t Stopping: Just Ask These Companies
Source: Triple Pundit – Over the weekend, a sustainability-focused Wall Street Journal article started making the rounds on social media. In it, business columnist John D. Stoll notes that several top companies are starting to pump the brakes on their…

And here’s some additional perspectives on the two questions to mull over:

Seven Ways To Make Business Truly Sustainable Post-COVID
Source: Forbes – We humans are a spectacularly resilient species. Wars, famines, plagues, economic crashes – we dust ourselves off and press on. So we will get beyond COVID-19. But is it too much to hope that, devastating as the virus’s effects…

Can companies still afford to care about sustainability?
Source: FT – Note — Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy….

Technology: Providing Vital Components Influencing the Fight Against COVID-19

G&A Institute Team Note
We continue to bring you news of private (corporate and business), public and social sector developments as organizations in the three societal sectors adjust to the emergency. This is post #17 in the series, “Excellence in Corporate Citizenship on Display in the Coronavirus Crisis” –

16 April 2020   #WeRise2FightCOVID-19   “Corporate Purpose – Virus Crisis”

By Lama Alaraj – Sustainability Reporting Analyst-Intern at G&A Institute

As the tasks of our everyday world are put on hold, all around the world we are playing the waiting game, hoping for an end to this madness.

While at home, waiting for the world to be “normal” again, often our only source of communication with the outside is through our tech devices.

Without most people doing much to get ready for the unanticipated spread of the virus, technology for connecting with one another and the outside world was widely-available and already serving as our first source of comfort…and tech connectivity remains so during this crisis.

Where we stand today: Many sectors in our economies are muted and our reliance as a global society leaning on the digital world greater than ever.

What about after the crisis ebbs and then eventually passes? This is a survey of what is happening in the virus crisis and how tech companies are lending their support. And what developments during the crisis might be breakthroughs for future use.  Here is a round-up of what tech companies are doing in the virus crisis.

#  #  #

Blue Dot
From the beginning of the crisis, this Canadian tech startup had caught on to the danger posed by virus even before the WHO released an official statement. Blue Dot used a cloud-based GIS platform that works to detect infectious disease outbreaks around the world. This sophisticated technology also uses AI to send alerts about diseases tailored to the affected region (source: Bluedot, 2020).

The power of knowledge enabled by these approaches to use of advanced technology is unrivaled. Artificial intelligence (AI) has the capability of harnessing a previously unthinkable amount of data to sift through, then applying results to an algorithm and calculating vital information that influences our responses (Source: Bowles, 2020).

Technology tools were not only able to detect the first few cases of COVID-19, but through this innovative software development, Blue Dot was able to predict the region the disease was going to spread to from the initial location at Wuhan.

The CBS Network program “60 Minutes” had a good look at the technology and approach behind the success of the Blue Dot detection capabilities.  The program:  ‘The Computer Algorithm That Was Among the First to Detect the Coronavirus Outbreak”.

Subtext:   On New Year’s Eve, a small company in Canada was among the first to raise the alarm about an infectious disease outbreak. Its computer algorithm calculated where the virus might spread next. The technology could change the way we fight another contagion.

You can see the segment here: https://www.cbsnews.com/news/coronavirus-outbreak-computer-algorithm-artificial-intelligence/

We are seeing the global tech giants partnering with the American government to fight against the pandemic. Supercomputers and Artificial Intelligence are the key components in the battle.

#  #  #

The IBM supercomputer (Watson) is built to analyze standard mathematical problems utilizing AI to generate algorithms based on various models.

In Oak Ridge National Laboratory, the IBM technology was used to look at 8000 different drug compounds – quickly narrowed down to 77 that are believed to be possible components of a future vaccine (Gil, 2020).

This supercomputing / processing power has helped in the current crisis by being able to conduct rapid research that otherwise would have taken years.

Although technology has not yet found a solution for our current dilemma, the foundations and resources these companies are providing are based on valuable insights — giving us relief from trying to understand this disease completely in the blind.

The relationship between health and technology — which has been going on for years —  is now leading the fight in the combat zone.  And there are many promising opportunities for society in the post-crisis, thanks to tech advances.

# # #

Microsoft – another global tech giant — has introduced a Healthcare chatbot. The bot uses machine learning to quickly assess COVID-19 symptoms and provide a resolution of whether you should stay home or seek medical help. The US Centre for Disease Control and Prevention (CDC) is currently using this innovation.

#  #  #

A statement from Alphabet’s Google Inc, and Apple Inc was released recently in regards to the latest development against the fight. The tech giants are now going to utilize AI through our smartphones in order to be able to track the movement of COVID-19.

The end result is that our smartphones will actually start sending us warnings when we have come into contact with a person who has tested positive with the deadly virus.

#  #  #

Although this is an incredibly sophisticated innovation that can help us flatten the curve, where do we draw the line when it comes to AI and our morals and ethics?  And personal privacy?

There have been a lot of positive changes coming out from this sector that will aid the world’s health professionals with resources to speed up the process in finding a cure.

However, the concept of utilizing surveillance and accessing our private medical records is an area of concern for many. This exact turn in events is what makes humankind fear the coming of AI.

While economies around the world are experiencing a global shutdown and many are suffering due to this, some tech companies have actually experienced new growth.

#  #  #

Zoom, a video conferencing application, actually experienced a dramatic surge in the amount of users (10X user growth just in days!).

Many people in all walks of life had to adapt quickly to the new norm and Zoom presented its platform as the easy, available answer to be able to connect multiple users at once making meetings, interviews, school classes possible. (The company did experience problems and suffered wide public criticism in the rollout to a broader audience, with many new users mostly unfamiliar with the platform.)

As Zoom shows, the world as we know it every day can be completely transformed in the blink of an eye.

In a world that has just turned dark, our strength must not be divided. Zoom in its concern for society gave us the platform to jump back into our accustomed social constructs in order to hold onto some sense of normal — but for many, through a digitalized lens.

# # #

Bloomberg LP reported that Samsung was experiencing growth in the crisis. The company released their results for the Q1 with an unexpected increase in sales by 5%.

The positive performance of some tech companies can be attributed to the economic shock we are in due to the pandemic. The instantaneous lock-downs across the world changed the consumer demand pattern, where the almost-complete transition to work from home and adaptation to social distancing spiked a demand in video gaming — and thus demand for semiconductors that Samsung provided (Kim, 2020).

#  #  #

Cautionary Note
The growth the companies are currently experiencing may not be sustainable throughout the rest of the year due to the continuing, aggressive economic downturn and spreading of the virus.

With all these changes that we are seeing it is important to take into account the concern that some may not be able to take part in this ongoing transition. Many businesses have completely shut down for the time being without being able to continue production from home.

We are asking ourselves the questions: What will happen to these concerns when the virus crisis levels off and then subsides? What will happen to their workers?

Moreover, in areas where poverty is more prevalent, and rural regions, there is a real digital divide. This is becoming quite evident in the crisis.

Not every household has access to the internet (or can afford access) and therefore individuals and families cannot take part in the current state of daily life.

The opportunity to cling on to some piece of our world as we knew it is not available to all. For example, there are many school children who currently are not able to attend school, and without technology are missing out on continuing their education. Often, this is simply because they do not have adequate access to the internet or a machine to use for their class work.

We are seeing companies in the tech industry doing their part through the donation of large sums of money to various needy causes.  Examples:

# # #

Google has stepped up and is donating US$800 million to help governmental institutions and small businesses through this pandemic and economic crisis. The money will be supplied through channels of advertising credits/grants and loans (Zakir, 2020). Although this does not “fix” the detrimental effects of COVID-19, the tech giant provides temporary relief in dire times.

# # #

Chuck Robbins, the CEO of Cisco released a statement that the company will be donating “$225 million in cash, in-kind and planned-giving” to support the cumbersome fight against the pandemic.

During times of crisis, of course we do need business leaders like this CEO to help to meet peoples’ needs in order to provide humanity with hope and comfort amid the chaos. That includes shifting from normal production to emergency supplies for the medical community.

# # #

Honeywell has turned their operations over to producing N95 masks in their facilities, to help to address the global supply shortage. Efforts such as these are helping to make us more capable of coping through this crisis and the corporate contributions are helping buffer the severity of the pandemic.

The significance of the technology sector’s heavy involvement with the pandemic of today is no surprise. While many of us are sheltered at home, the internet has become our source of sanity. For many governments, artificial intelligence is their presumed knight in shining armor, ready to save the world.

I do believe that in the new normative we will not be shying away from our relationship with groundbreaking technology. However, there is much uncertainty in this transition.

#  #  #

The Future Outlook
Our heavy dependence on the technology sector during this crisis is going to have dramatic impacts in our labor force, education and our various economic markets. Moreover, current global economies who do not have a developed technological sector may be left further behind and unable to reap benefits from the current against the pandemic.

# # #

About the Author
Lama Alaraj
is a Sustainability Reporting Analyst-Intern at G&A Institute. She graduated from Dalhousie University (Canada) with a double major in economics and international development studies. Over the years, she developed a growing interest in the power of technology and how it manages to integrate in every sector in our global community.

In addition to the G&A analyst-internship, Lama is currently working as a marketing consultant for Web.com, a company built on web development.

Her personal goal is to take the knowledge she gains from this role and apply it extensively throughout any project or role she takes on.

Lama is very excited to be part of the G&A Institute community and to learn about how industries manage to adhere to their environmental responsibilities. Lama thinks that as the climate continues to change, the choices we make today are more vital than ever.

# # #

G&A Institute Team Note

In this series we are bringing you news of private (corporate and business), public and social sector developments as organizations in the three societal sectors adjust to the emergency.

New items will be posted at the top of the blog post and the items posted today will move down the queue.

We created the tag “Corporate Purpose – Virus Crisis” for this continuing series – and the hashtag #WeRise2FightCOVID-19 for our Twitter posts. Do join the conversation and contribute your views and news.

Do send us news about your organization – info@ga-institute.com so we can share. Stay safe – be well — keep in touch!

Household & Personal Product Industry’s Response to COVID-19 – Strong Display of Corporate Citizenship by the House & Personal Products Industry

G&A Institute Team Note: We continue to bring you news of private (corporate and business), public and social sector developments as organizations in the three societal sectors adjust to the emergency. This is post #11 in the series, “Excellence in Corporate Citizenship on Display in the Coronavirus Crisis.  #WeRise2FightCOVID-19   “Corporate Purpose – Virus Crisis”  –  April 6 2020 

By Kelly Mumford – Sustainability Reporting Analyst Intern – G&A Institute

The current reality around the world has shifted dramatically since the outbreak of COVID-19 a few months ago. As the number of confirmed cases and deaths continue to rise across countries like Italy, Spain, and the U.S., there have been many reactions across industries to help out.

As of today, more than 10,000 people have died in the US, and unemployment rates are now at the highest ever as I write this.

Overall, the economy is struggling and our healthcare system is overwhelmed. However, during this time, the corporate response has also been overwhelming.

Many companies and corporations across sectors are feeling the effects of this pandemic on their operations and at the same time acting to help those who need it the most during this time.

There have been some significant, well-publicized responses from U.S. tech giants Microsoft, Apple, and Amazon. These companies have donated millions to various response efforts across the country.

Many other corporations are also doing what they can to continue paying employees during this time.  Amazon is hiring tens of thousands of employees to help their delivery efforts.

Needless to say, corporate actions have been indicative of a commitment to corporate social responsibility during the coronavirus crisis.

This is a recap of recent actions by companies in the Household and Personal Products Industry.

In the Beauty Field: Estée Lauder Companies

The household and personal product industry is no different. Estée Lauder especially has been leading a strong example. Last week, Estée Lauder Companies announced it will being shifting production to hand sanitizer to help relieve the shortage that has severely affected those in the healthcare industry.

They are re-opening a temporarily-closed facility in suburban Long Island, New York to produce hand sanitizer and volunteer employees will be compensated. However, their efforts don’t stop there.

Estée Lauder is also donating US$2 million to Doctors Without Borders — the organization that is greatly helping countries around the world with less medical support fight the coronavirus.

Also, Estée Lauder made a $75 million dollar grant to support the establishment of The NYC COVID-19 Response & Impact Fund. This fund unites many philanthropies and will go to support many vital community organizations and social services.

Estée Lauder Companies awarded $800,000 to relief efforts in China such as the Red Cross Society of China, the Shanghai Charity Foundation, and Give2Asia with an additional $1.4 million of donations to the China Women’s Development Foundation to support front line medical staff.

It is easy to see with these actions the Estée Lauder Companies’ strong values and family commitment to corporate social responsibility is admirable. Their actions are a promising example of the good that can arise during crisis.

SC Johnson Steps Up to Help

Another huge name in the industry — SC Johnson, another large company with deeply embedded family values is furthering their efforts against COVID-19 with a $5 million donation. The company will put that money towards the needs of the healthcare workers on the front lines.

They will be delivering care packages to police, fire and medical personnel including cleaning and disinfectant products made by SC Johnson. This donation comes in addition to the $2 million and $1 million they have already donated to the CDC Foundation’s Emergency Response Fund and to other efforts in China, Italy and the U.K.

The company said it was continually assessing the most urgent needs of people around the world, and acting accordingly. They have supported many healthcare needs across Europe, Asia, and Latin America to protect families from spreading the virus.

This support has come in the form of cash, product donations, and educational programs. As their headquarters in located in Racine, Wisconsin they have also made a special donation to the town to help support school children in the area and first responders.

Local focus:  The donation will be provided through a partnership with the Racine School District, the Racine YMCA, and Ascension All Saints Hospital.

Lastly, as a way to support the most vulnerable groups during this time the company has also made multiple $25,000 donations to food pantries and homeless assistance organizations to help ease the pressure on these already strained groups.

SC Johnson’s donations and efforts during this pandemic demonstrate a strong commitment to their corporate social responsibility efforts but more important, their assessment of placing aid to some of the most vulnerable groups reveals a targeted and strategic approach to CSR.

The Company is not just throwing money “anywhere” — but rather being strategic in their assessment, and loyal to the community of their headquarters..

Procter & Gamble – Relief Funds and Continued Production

Procter & Gamble, another one of the largest enterprises in the industry, has set up a special relief fund for COVID-19.

P&G has a long running record of CSR reporting and supporting communities so it’s not surprising that they have been working with their partner organizations to provide support and relief to people during this time.

They have created a donation portal for receiving donations — which they will match all donations up to $500,000 and give donations to support the healthcare providers around the world.

The largest P&G factory in Pennsylvania will start production of face masks during the pandemic. Employees will have regular temperature checks, will be socially-distanced, and there will be constant sanitization of all areas. 

Their factories are still open during this time, recognizing that the wide range of their products are necessary for many households, in normal times and during the crisis.

* * * * * * * *

Kelly Mumford is a GRI Report Analyst Intern at G&A Institute. She is a recent graduate of the Development Planning Unit at the University College London. She holds an M.S. in Environment and Sustainable Development (with merit). Kelly led a group during their research on the water and sanitation practices of a coastal city community in Freetown, Sierra Leone. She now plans to pursue a career in sustainability, focusing on ESG and leveraging her research experience and the knowledge gained of sustainability reporting during her internship with G&A Institute.

Sources For Your Reference

G&A Institute Team Note
We continue to bring you news of private (corporate and business), public and social sector developments as organizations in the three societal sectors adjust to the emergency.

The new items will be posted at the top of the blog post and the items today will move down the queue.

We created the tag “Corporate Purpose – Virus Crisis” for this continuing series – and the hashtag #WeRise2FightCOVID19 for our Twitter posts.  Do join the conversation and contribute your views and news. 

Do send us news about your organization – info@ga-institute.com so we can share.   Stay safe – be well — keep in touch!

Recycling – The Circular Economy: Admirable Efforts, With Significant Challenges As The Efforts Expand & Become More Complex for Businesses

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

In these closing days of the year 2018, of course, we’ll be seeing shared expert perspectives on the year now ending and a look into the new year, 2019.  Sustainable Brands shared one person’s perspectives on three sustainability trends that are gaining momentum heading into 2019.

The commentary is authored by Renee Yardley, VP-Sales & Marketing of Rolland Inc., a prominent North American commercial & security paper manufacturer established in 1882. The company strives to be an environmental leader in the pulp and paper industry. A wide range of fine paper products is made using renewable energy, recycled fiber, and de-inked without the use of chlorine.  Rolland started making recycled paper in 1989 and adopted biogas as an energy source in 2004. The company is privately-owned and headquartered in Quebec, Canada.

The trends the author explains, do of course, affect users of all types of paper products — but also are useful for businesses in other sectors & industries.  He sees:  (1) a shifting of global recycling mindsets and in the circular economy; (2) more open collaboration and partnerships for impactful change; and (3) the need for more measurement and efforts to quantify impact.

Rolland is a paper supply company and so there is a focus on recycled (post-consumer) paper, fiber, forests, the recycled paper process, moving toward zero waste, municipal recycling in North America, and so on.

On recycling:  we are seeing reports now of problems arising in the waste stream; in the USA, municipalities are calling for a reduction of waste and automating processes (to help reduce costs).  There are new on-line marketplaces as well for buying and selling recovered items.  The “market solution” is a great hope for the future as we continue to use paper products (we are not quite a paperless society, are we?).

Part of the issues recycling advocates are dealing with:  China is restricting the import of recyclable materials (think:  that paper you put at curbside at home of business).  Consumers can be encouraged to reduce consumption but paper is paper and we all use it every day – so new approaches are urgently needed!

That leads to the second trend – developing and leveraging partnership & open collaboration:  Yardley writes that collaboration across the spectrum of an organization’s stakeholders can help to address supply-chain wide sustainability if an organization can “understand the wider system” it is operating in (citing Harvard Business Review).  And, if an organization can learn to work with people you haven’t worked with before.

Rolland, for example, leverages biogas as a main energy source, partnering with a local landfill to recover methane (since 2004).  This trend is on the rise, with the EU biogas plants expanding by 200% (2009-2015).

And then there is Measure and Manage:  Environmental measuring and reporting is an important part of a company’s sustainability journey – at the outset and continuing and at G&A Institute we stress the importance of reporting year-to-year results in a standardized format, such as in a GRI Standards report  — most important, including a GRI Content Index.

At the Sustainable Brands New Metrics conference in 2018, SAP explained that organizations integrating ESG objectives see higher employee retention, and minimizing of risk for investors.

Renee Yardley’s commentary is our Top Story choice for you this week – do read it and you’ll find excellent examples of how companies in various sectors (Ford, Microsoft, Starbucks, Patagonia, Unilever) are dealing with their sustainability commitments in the face of challenges posed.

Click here for more information on Rolland and its environmental / sustainability efforts and products.

 

This Week’s Top Story

Three Sustainability Trends Gaining Momentum for 2019
(Friday, December 14, 2018) Source: Sustainable Brands – In the spirit of looking ahead to 2019, we’ve identified three important societal trends for 2019, relating to sustainability in business…

Critical Development for CDP Responders in 2018 & 19: CDP Introduces Additional Alignment With FSB Task Force on Climate-Related Financial Disclosures Recommendations

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

Corporate ESG Data, Data, Data – it’s now everywhere and being digested, analyzed and applied to corporate equity analytics and portfolio decision-making.

Whether your public company participates in the annual round of organizing responses to the ever-more comprehensive queries from leading ESG / sustainability / CR rating agencies or not, there is a public ESG profile of your company that investors (asset owners, managers and analysts) are examining and applying to their work.

If you don’t tell the story of your firm’s progress in its sustainability journey, someone else will (and is).  And if you have not embarked on the journey yet…and there is not much to disclose and report on…you are building the wrong kind of moat for the company.  That is, one that will ever-widen and impair access to capital and affect the cost of capital.  And over time, perhaps put the company’s issues on the divestiture list for key investors.

This sounds a bit dramatic, but what is happening in the capital markets these days can be well described as a dramatic shift in focus and actions, with corporate ESG strategies, actions, programs, achievements, and disclosure becoming of paramount importance to a growing body of institutional and retail investors.

Consider these important developments:

  • The influential Barron’s editors, reaching hundreds of thousands of investors every week, beginning in Fall 2017 made coverage of corporate sustainability and sustainable investing a mainstay of the magazine’s editorial content.
  • Morningstar, the premier ranker of mutual fund performance, added sustainability to the analysis of funds and ETFs with guidance from Sustainalytics, one of the major ESG rating firms (and Morningstar made a significant investment in the firm).
  • SustainableInvest, headed  by Henry Shilling, former leader on sustainability matters for Moody’s Investor Service, noted that in 2Q 2018 as the proxy season was ending, 2018 voting was notable for the high level of “E” and “S” proposals, some achieving majority votes in shareholder voting at such firms as Anadarko Petroleum, Kinder Morgan and Range Resources.  Assets in 1,025 sustainable funds analyzed added $14 billion during 2Q and ended in June at US$286 billion; more than $1 billion was new net cash inflows, demonstrating investor interest in the products.

Significant:  according to the Harvard Law School Forum on Corporate Governance and Financial Regulations, two-thirds of investor-submitted proxy resolutions focused on having the company follow through on the 2-degrees scenario (testing) were withdrawn and company boards and managements agreed to the demand for climate risk reporting.

The FSB TCFD Impact on Corporate Sector and Financial Services Sector

The Financial Stability Board, an organization founded by the central bankers and financial leaders of the G-20 nations, created a Task Force on Climate-related Financial Disclosures (“TCFD”) to develop climate-related financial disclosures for adoption by financial services sector firms and by publicly-traded companies in general.

The 32-member Task Force, headed by Mayor Michael Bloomberg, announced financial recommendations for companies and investors in June 2017.

The essence of the recommendations:

  • Corporate boards and managements should focus on the risks and opportunities present and in the future taking into account a global temperature risk of 2-degrees Centigrade (3.5-F), and in the future, 4-C and even 6-C global temperature rises.

The risks (presented are not just to the affected companies but to the financial sector institutions investing in the company, institutions lending funds to the company, carriers insuring the company, etc.).

The risks and opportunities related to climate change should be thoroughly analyzed using the scenario testing that the company uses (an example would be projecting future pricing, regulations, technologies, and “what ifs” for an oil and gas industry company).

The company should consider in doing the scenario testing and analyzing outcomes the firm’s corporate governance policies and practices; strategies for the long-term; risk management policies and resources; establishing targets; and, putting metrics in place for measuring and managing climate risk.  Then, the next step is disclosing this to investors and other stakeholders.

Key Player:  CDP and its Wealth of Corporate, Institutional and Public Sector Data

The CDP – formerly known as the Carbon Disclosure Project – was founded almost two decades ago (2000) as a United Kingdom-based not-for-profit charity at the urging of the investment community, to gather corporate “carbon” data.

Timing:  soon after the start of meetings of the “Conference of the Parties” (or “COP”), organized by the United Nations as the Climate Change Conferences. (The “UNFCCC”.)

In the mid-1990s, the Kyoto Protocol emerged that legally-bound nations to their pledge to reduce Greenhouse Emissions (GHGs).  The U.S.A. did not sign on to the global protocol during the tenure of President George W. Bush, and the agreement reached in Paris at the COP meeting in 2015 was finally agreed to by President Barack Obama.

And then began the process of withdrawal under President Donald Trump.  The U.S.A. is now the prominent holdout (among the community of 197 nations signed on) in the global effort to address global warming before the danger point is passed.  In Paris, the COP agreed that the threshold was 2-degrees Centigrade.

Today, a growing universe of investors and many other stakeholders are increasingly focused on the role of carbon emissions in the framing of questions about what to do as scientists charted the warming of Earth’s climate.

And so — ESG / environmental data is critical to the mission of determining “what to do” and then implementing measures to address climate change challenges.

The Critical Role of CDP 

CDP over almost two decades since its founding has become the premier repository of corporate data related to climate change – with more than 6,000 companies’ data collected and shared in organized ways with the investment community.  (That includes the ESG data of half of the world’s public companies by market cap.)

The CDP emissions data focused has broadened over 16 years to now include water, supply chain, forestry (for corporates) and environmental data from more than 500 cities and some 100 states and regions available to investors.

Key user base:

  • 650-plus institutional investors with US$87 trillion in Assets Under Management.
  • Corporate Supply Chain members (such as Wal-Mart Stores) that collect data from their suppliers through CDP—a universe of 115 companies with over $3.3 trillion in combined purchasing power.

When the TCFD recommendations were being developed, CDP announced a firm commitment to align with the task force recommendations.

Following their release of the Task Force recommendations in July 2017, CDP held public consultations on a draft version of the TCFD-aligned framework. The current 2018 Climate Change questionnaire that corporations received from CDP is fully aligned with the TCFD recommendations on climate-related disclosures related to governance, risk management, strategy, and metrics and targets.

The TCFD recommendations are already aligned with the majority of CDP’s longstanding approach to climate change disclosure, including most of the recommendations for climate-related governance, strategy, risk management as well as metrics and target disclosure.

However, this year CDP has modified some questions and added new ones — the most impactful being on climate-related scenario analysis to ensure complete alignment.

Some modifications include:

The Governance section now asks for more information about oversight of climate change issues and why a company doesn’t have board-level oversight (if applicable). CDP also requests information about the main individual below the board level with the highest responsibility — and how frequently they report up to the board.

Next, in the risks and opportunities section, CDP now asks for the climate-related risk & opportunity identification, and assessment process.

As in past years, questions are posed in the Business Strategy module to allow companies to disclose whether they have acted upon integrating climate-related issues into their strategy, financial planning, and businesses.

CDP has also added a question for high impact sectors on their low carbon transition plans, so data users can gauge and further understand the sustainable and strategic foresight that these companies aim to achieve.

CDP also added a new question on scenario analysis, explaining that scenario analysis is a strategic planning tool to help an organization understand how it might perform in different future states.

A core aim of the TCFD recommendations is for companies to improve their understanding of future risks and develop suitable resilience strategies.

Finally, the TCFD recommendations highlighted five (5) sectors as the most important. In 2018, CDP rolled out sector-specific questions for the four non-financial sectors that the TCFD highlighted (they are energy, transport, materials, and agriculture).

TCFD also highlighted the financial sector – looking forward, in 2019, CDP is planning to release a financial sector-specific climate change questionnaire.

The TCFD resources for investors and corporate managers are embodied in three documents – (1) the Main Report; (2) an Implementation Annex; (3) the Technical Supplement for Scenario Analysis.  These are available at:  www.fsb-tcfd.org

G&A Institute Perspectives:

Our team has been assisting corporate managers in organizing the response to the CDP annual survey and we’ve tracked over the years the steady expansion of information requested of companies.

Our advice to companies not reporting yet:  get started!  The CDP staff members are very cooperative in assisting new corporate reporters in understanding what data are being sought (and why) and providing answers to questions.

CDP’s founding CEO Paul Simpson cautions:  “Big companies:  get better at telling those who hold the purse strings how climate risks could affect your bottom line.”

And so, our mission at G&A includes helping corporate issuers tell a better sustainability and ESG story, including the story told in the data sets communicated to 650-plus institutional investors by CDP!

CDP data is everywhere, we advise clients, including for example being part of the volumes of ESG data sets that Bloomberg LP shares on its terminals (through the terminal ESG Dashboard).

On the supply chain side, we point out that more than US$3 trillion is the collective spend of companies now addressing their supply chain sustainability factors and environmental impacts (customers see suppliers as part of their own CDP footprint).  Corporate leaders in this effort include Apple, Honda and Microsoft, CDP points out.

Resources:

CDP’s Technical Notes on the TCFD are available at: https://b8f65cb373b1b7b15feb-c70d8ead6ced550b4d987d7c03fcdd1d.ssl.cf3.rackcdn.com/cms/guidance_docs/pdfs/000/001/429/original/CDP-TCFD-technical-note.pdf?1512736184

The “A” List of CDP naming the world’s business leaders on environmental performance (160 firms) is at: https://www.cdp.net/en/scores-2017

The CDP USA Report 2017, focused on key findings on Governance, ESG and the Role of the Board of Directors is available at: https://b8f65cb373b1b7b15feb-c70d8ead6ced550b4d987d7c03fcdd1d.ssl.cf3.rackcdn.com/cms/reports/documents/000/002/891/original/CDP-US-Report-2017.pdf?1512733010

There’s an excellent interview with CDP CEO/Founder Paul Simpson at: http://www.ethicalcorp.com/disruptors-paul-simpson-atypical-activist-who-woke-c-suites-climate-risk

You can check out Henry Shilling’s SustainableInvest.com at: https://www.sustainableinvest.com/second-quarter-2018-sustainable-funds-investing-review/

 

The “100 Best Corporate Citizens 2018” Roster -– Published by CR Magazine

by Hank Boerner – Chair, G&A Institute

Now in its 19th year, the well known CR Magazine “100 Best Corporate Citizens 2018” list was just unveiled; this effort recognizes the ESG performance of public companies in the United States. (The publication is now titled Corporate Responsibility Magazine, published by 3BL Media LLC.)

Top Companies:
Microsoft
(MSFT) earned top ranking (#1), followed by Accenture, Owens Corning, Intel, and Hasbro (at #5).

The next five ranked companies are (#6) Altria Group, Cisco Systems, Ecolab, Johnson & Johnson, and NVIDIA Corp (at #10).

The biggest gainers for the year were Becton, Dickenson; IBM; Owens Corning; and Biogen.  The complete list is available in our Top Story (below).

Assembling the list does not rely on responding to a survey, publisher Dave Armon explains.  Each year the rankings measure the success of the “Brands Taking Stands” movement by celebrating the most successful, most transparent companies that report on their responsible practices. “We congratulate the company on the 2018 list for their commitment to corporate responsibility,” he said in announcing the rankings.

Methodology:
The list examines 260 data points of performance measures and disclosure, harvested from publicly-available information for every company in the Russell 1000® Index, in seven categories (environmental, climate change, employee relations, human rights, corporate governance, financial, and philanthropy & community support).  The underlying research is conducted by ISS Corporate Solutions (Institutional Shareholder Services).

The inaugural list was published in 1999 by the former Business Ethics Magazine, which segued into CR Magazine.

Coming up soon, CR Magazine in collaboration with the 3BL Association (formerly the Corporate Responsibility Association), presents the well known annual COMMIT!Forum conference, now re-branded as the 2018 3BL Forum by its new owners.

This year’s event is at MGM National Harbor near Washington DC, October 23-25; the theme is “Brands Taking Stands – The Long View”.

3BL Media LLC is the global leader in disseminating CR and sustainability content. Its brands include Triple Pundit; CSR Wire; 3BL Wire; 3BL Report Alert; Justmeans, 3BL Studio, and others. Corporate clients utilize the platforms for their sustainability, CR and related content distribution, communications and campaigns.

G&A Institute has collaborated with the 3BL Media staff and Corporate Responsibility Magazine on a long-term basis.  3BL content is carried daily on G&A’s news and opinion web-based distribution platforms.

The details for the “100 Most are in the Top Story:

Top Stories

Corporate Responsibility Magazine Announces 2018 100 Best Corporate Citizens
(Wednesday – May 09, 2018) Associated Profiles : CSRwire Source: CSR Wire — Corporate Responsibility Magazine (CR Magazine) announced today its 19th annual 100 Best Corporate Citizens list, recognizing the standout environmental, social and governance (ESG) performance of…

We’re a Long Way from NYC’s Stonewall Inn, But Still a Ways to Go for Corporate LGBT Policies, Says Investor Coalition

by Hank Boerner – Chairman, G&A Institute

We’ve come a long way since the gay & lesbian communities mobilized and began in earnest their civil rights campaigns of the 1970s and 1980s and into the1990s. It was the New York City Police Department’s wrongheaded “raid” on the Stonewall Inn in Greenwich Village neighborhood in June 1969 that provided the important spark for the long-term, winning campaign by LGBT community for equal rights and equal protection under the laws of the land. “Stonewall” became a rallying cry for the next installment of the continuing “journey” of the civil rights movement in the United States.

The 1960s/1970s were the era of civil rights protests — we were involved in or witnessed and were affected by the civil rights / voting rights movement; the counter-culture “revolution” (remember the hippies?); the drive for adoption of the ERA (Equal Rights Amendment to the Constitution); and the anti-war movement protests against the conflict in Vietnam.  These were catalysts as well for the LGBT equal rights warriors of the decades that followed the 1969 Stonewall protests.

Finally, in recent years, after years of campaigning by LGBT advocates, most states have been adopting protective measures to protect the LGBT community.  Same gender marriage is a reality in many U.S. jurisdictions.

On November 7, 2014 The New York Times carried an update — it was a “milestone year” for LGBT rights advocates, the publication explained.  Voters in the 3Ms — Maine, Maryland and Minnesota – favored same-sex marriage; the first openly-gay US Senator (Tammy Baldwin) was elected by Wisconsin voters.

Still, there was vocal and often fierce opposition to same-sex marriage and equal protection under the law for LGBT citizens.

About LGBT Policies and the US Corporate Community

Many large companies (estimate:70 companies in the S&P 500 Index to date) have adopted non-discrimination policies to protect LGBT employees in the United States, says the 2014 Corporate Equality Index (a national benchmarking tool of the Human Rights Campaign).

We see these policies and programs for inclusion described in the many sustainability and responsibility reports we examine as exclusive data partner for the Global Reporting Initiative (GRI) for the United States of America.

Still, legal protections for LGBT citizens are not sufficient in numerous US jurisdictions. “Homophobic” policies and attitudes still reign in too many US cities and states and local communities.

And policies, attitudes, practices in other countries?  Well, that’s really a problem, say sustainable & responsible investment advocates — and steps are being taken to address the situation.

The S&R investment advocacy campaign is focused on the LGBT employees of US firms working overseas.  In countries like Russia, one of the world’s largest industrial economies, which has harsh anti-LGBT policies. The US investor group points out that 79 countries consider same sex relationships illegal; 66 countries provide “some” protection at least in the workplace; and in some countries, homosexuality is punishable by death.

In a business environment that continues to globalize in every aspect, with American large-cap companies operating everywhere, the investor coalition is calling on US companies to extend their LGBT policies on anti-discrimination and equal benefits policies to employees outside the United States. A letter was sent by the coalition to about 70 large-cap companies (the signatories manage US$210 billion in assets.

Shelley Alpern, Director Social Research & Shareholder Advocacy at Clean Yield Asset Management explains: “Today, most leading U.S. corporations now have equitable policies on their books for their [American-based] LGBT employees. Ther’s a dearth of information on how many extend policies outside of the U.S. In starting this dialogue, we hope to identify best practices and start to encourage all companies to adopt them.”

The objective of the shareowner advocacy campaign is to stimulate interest in the issue and create a broad dialogue that leads to greater protection of LGBT employees of US companies operating outside of the United States.

Mari Schwartzer, coordinator of shareholder advocacy at NorthStar Asset Management compliments US firms with effective non-discrimination policies and states:  “While we are pleased that so many companies have adopted non-discrimination policies in the USA which incorporate equal protections for LGBT employees, the next phase of implementation is upon us — we must ensure that international employees are receiving equal benefits and are adequately protected.  Particularly those stationed in regions hostile to LGBT individuals…”

Signatories of the letters sent to companies include these sustainable & responsible investing advocates:  Calvert Investments; Jantz Management; Miller/Howard Investments; Office of the Comptroller of New York City; Pax World Management; Sustainability Group/Loring, Wolcott & Coolidge; Trillium Asset Management; Unitarian Universalist Association; Walden Asset Management; Zevin Asset management.

Companies contacted include:  Aetna, AIG, Allstate, Altria, Amazon, American Express, Apple, AT&T, Bank of America, Baxter, Best Buy, Boeing, Cardinal health, Caterpillar, Chevron, Cisco, Citigroup, Coca Cola, Colgate Palmolive, Costco, CVS Health, Delta, Dow Chemical, DuPoint, EMC, FedEx, Ford Motor, General Electric, General Dynamics, General Motors, Goldman Sachs, Google, HP, Home Depot, Honeywell, Human, IBM Ingram Micro, Intel, J&J, JPMorgan Chase, Lockheed Martin, McDonalds, McKesson, Merck, MetLife, Microsoft, Morgan Stanley, Oracle, PepsiCo, Pfizer, P&G, Prudential, Sears, Sprint, Starbucks, Target, Texas Instruments, United Continental, United HealthGroup, United Technologies, UPS, Verizon, Visa, Walgreen, Walt Disney, Walmart, Wellpoint, Wells Fargo.

Summing up the heart of the issue for investors (and corporate employees):  “Corporations must take the extra step to ensure consistent application of LGBT-inclusive workplace policies throughout their operations, regardless of location,” said Wendy Holding, Partner, the Sustainability Group of Loring, Wolcott & Coolidge.

The Corporate Proxy Season is Underway – ESG Issues Are in Focus

by Hank Boerner, Chairman, G&A Institute

It’s a new year and the 2014 corporate proxy season is really underway, and the topics in focus are reflective of asset owners’ and managers’ concerns about key societal issues. Managements taking no action on the issues, deciding the wrong actions, or boards and managers ignoring the facts regarding key topics of concern to the asset owners could lead to greater risk, lost opportunities, and dramatic hits on corporate reputation — and share price valuations.

And all of that that could affect the value of the investors’ holdings. Since many of the shareowners are fiduciaries (think of SRI mutual funds, public employee pension funds, state trust funds), the growing consensus is that as fiduciaries, asset owners have a duty to be vocal, to actively engage with corporate management, and to take strong stands on key ESG issues. And, in some cases, to bring those issues to the electoral process at proxy time so all shareholders can have their say. Of course, there is usually negative press resulting for some companies.

“Proxy season” used to be those times of year when certain gadflies showed up to (in the view of management and board) ” harass” the assembled corporate leadership. (Such pioneer proxy luminaries as the Gilbert Brothers and Evelyn Davis come to mind.)

Today, the proxy  season is actually a year-round engagement, with advocates such as the Interfaith Center on Corporate Responsibility (ICCR) institutional members active in dialogue with corporate managements and board members on various E-S-G issues. One sea change of a decade ago or more was the linking of traditional corporate governance concerns with environmental and social or societal issue concerns, and working through the barriers to getting their resolution to the proxy statement and to vote.

Linking “good governance” practices with progress (or lack of) on supply chain issues, or product stewardship, marketing practices, protection of natural resources, or lobbying and political spending, now helps advocates avoid the “no action” letter from the SEC that allowed corporate managements to ignore the shareholder’s resolution. (In the past, the usual practice of SEC staff was to advise the company protesting the draft resolution that “no action” would be recommended to the commissioners if the company ignored the draft.)

So what is in store for 2014 corporate proxy voting — what are the issues in focus? Sustainable & responsible investing (SRI) advocates are raising issues with companies about public policy and climate. (As we write this, every US state is in the grip of a cold wave, that is being linked to climate change by experts.)  For two decades now, investors have engaged company managements about climate change.

Now, coalitions of shareholders are involved in a larger collective effort — “Raising the Bar” — in response, they say, to the expanding and alarming scientific evidence of our changing climate. And, as long-term advocates like Tim Smith of Walden Asset Management point out, the resulting significant environmental and economic impacts on the corporate enterprise. Investor interests are very concerned about climate change.

A number of companies — AEP, Chevron, Conoco, ExxonMobil — have received draft resolutions by coalition shareowners urging boards and managements to re-examine their opposition to regulation and legislation intended to address climate change. That includes their lobbying on climate change issues and disclosing more about those actions to their owners.

It’s not just direct company actions in focus — the shareowners include the corporation-funded efforts of the US Chamber of Commerce , the oil lobby (American Petroleum Institute) and the National Association of Manufacturers in the lobbying and advocacy on issues…

Beyond climate change, other proxy resolutions call for companies to re examine their state-level lobbying, especially through such groups as ALEC (the American Legislative Exchange Council), which operates primarily with corporate contributions and promotes conservative public policy issues with :”model” legislation which often moves from state-to-state. (An example is the “Stand Your Ground” laws adopted by a number of states.)

The companies in focus include Microsoft, Pfizer, Time Warner Cable, and UPS. Among the prime movers in this initiative: State of Connecticut Retirement Plans, Zevin Asset Management, Sisters of Charity of the Incarnate Word, and Walden Asset Management clients.

Some companies are responding to shareowner concerns — Coca-Cola, John Deere, Dell, P&G, GE, GM, Unilever, and Wal-Mart have reduced their involvement or quit ALEC,according to information provided by Walden Asset Management.

Other concerns: ICCR’s David Schilling advises that an issue now in focus is the garment industry’s pricing policies, following the Rana Plaza tragic fire in Bangladesh (killing 1,000+ people). The “Accord for Fire and Building Safety” addresses pricing practices and the almost 300 institutional members of ICCR and other shareholder advocates are focused on current pricing models, outsourcing, and prevailing wages in developing countries.

And, from Green Century Capital Management we hear that more than 40 institutional investors representing US$270 billion in AUM are urging the other invesotrs, major palm oil products, consumers, and major shareholders in such companies as food marketers Kellogg and financiers HSBC to support an effort to not contribute to further deforestation or support human rights violations. “Fueling deforestation is bad business for any company seeking to position itself as a responsible, sophisticated global player,” says Lucia von Reusner, Green Century’s shareholder advocate.

Ceres helps to mobilize business and investor leadership on climate change. Rob Berridge, director of shareholder engagement, says investors Ceres works with are asking corporate managements to actively address forced labor, deforestation, habitat destruction, and accelerating GhG emission, and to develop and operate palm plantations more responsibly.

Consumer-facing brand companies — Uniliver, Kellogg, Dunkin Donuts, HSBC — are facing high-profile consumer campaigns on palm oil issues. Some companies are saying in response that they will purchase of finance palm oil that has been certified by the Roundtable on Sustainable Palm Oil (RSPO).

There is much more action to come in the days ahead as the peak of proxy voting nears — we’ll bring you news and commentary and insight on trends in this space.  Stay Tuned to the 2014 ESG-focused proxy campaigns.